Congratulations to the New York Times!
After more than six years of writing inane and naive stuff about the US economy, the paper finally had a eureka moment. Last Thursday it wrote about, “A Scarred U.S. Economy. Complete Recovery Looks Distant as Growth Lingers at Only 2 Per Cent.”
I’ve been calling it a broken economy.
But “scarred” is good, too, when you are just starting out down the road to honesty and enlightenment.
The Times really didn’t have much of a choice. The Congressional Budget Office came out the day before and downgraded the growth prospect of the US economy to just 2 percent a year.
And Treasury Secretary Jack Lew also bemoaned our slow growth.
After the Times piece ran, the International Monetary Fund cut its view of US economic growth — and took growth prospects for the rest of the world down as well because of America’s dismal recovery.
On Wednesday even the Federal Reserve joined the crowd and lowered its economic forecasts.
The IMF even speculated that the Federal Reserve wouldn’t be able to stop its addiction to Quantitative Easing bond buying. (More on that in a moment.)
So the Times jumped on board, although it did so in the business pages and not the front of the paper, where most of its optimistic misses have occurred.
Still, it’s good to admit your errors and confess in public. (The Times needn’t worry. With enough lobbying, the usual cajoling and a few massive and incomprehensible articles, it can probably win a Pulitzer for its economic coverage anyway.)
Of course, I’m not rooting for a bad economy. I — and more important, my kids — have to live in this weak business cycle. But I have to admit that seeing the Times munch on crow — and to do it after six years of careful preparation — is a bit rewarding.
Now that I got that out of my system, back to the issue at hand — the fact that the US economy can only grow at an abnormally slow 2 percent annual rate.
The problem with all those predicting 2 percent growth is this: They have been assuming that’s the floor from which the US economy will eventually climb.
What if 2 percent is as good as the economy gets because of excessive US debt, foolish money printing, corrosive politics and the fact that low interest rates have robbed savers of their ability to spend and maintain their lifestyle?
The Federal Reserve, of course, thinks it has things under control. On Wednesday, Fed chief Janet Yellen scaled back QE bond purchases by another $10 billion and said the Central Bank would continue to do so if economic conditions allowed.
Clearly Yellen thinks she will be able to continue these QE reductions. But I think (as the IMF does) that the Fed will need to stick with QE for longer than it hopes to, especially when the employment statistics lose the benefits later this summer of P.E.E. — Performance Enhancing Estimates.
If that’s the case, and the economy slows from even its tepid expansion, the country is going to need another plan. Luckily I happen to have one in my back pocket. It’s a little crumpled because people have been ignoring it for years even as the economy continued to disappoint, but I think I can still read it.
Here it is: Change the rules on retirement plans so that people can invest and spend some of the trillions they have saved. Let them, at least, buy real estate with the money.
The stock market bubble is something that’s pretty to look at — until it bursts.
But there’s little trickle-down benefit to the economy if all the gains are tied up in retirement accounts and do not help provide the economy with liquidity.
We need stimulus that neither Washington nor the Fed has been able to provide, and I think this’ll do it.
Wall Street will hate this plan because it will cause withdrawals from accounts financial firms are managing.
Well, screw Wall Street. It’s about time we started looking out for everyone else.
GM needs to get honest about the problems with the Camaro’s ignition.
I own a 2013 Camaro, and I like it a lot. I even like GM.
But I have a problem with the automaker pretending that only awkward people who push the driver’s seat too far forward are likely to accidentally move a Camaro’s key with their knee into the off position.
That turns off the entire car, which then has to be glided to a stop without power steering or power brakes or air bags.
As you can imagine, this is dangerous. And no other car I know of lets the driver move the key to the “off” position when the vehicle is in gear.
Yes, I tested this defect on an isolated road last Sunday and that’s exactly what happens when you move the key — you get a helpless car in the middle of the road.
But it’s not just a small segment of drivers who could be affected by this oversight.
The Camaro’s ignition is right next to the lever for the wipers and the paddle shifter for the alternative manual transmission.
Although I haven’t done it accidentally yet, it looks pretty easy to inadvertently swipe at the wipers or paddle shifter and hit the ignition key instead.
I think GM needs to fix this problem fast. I don’t want to die!