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In the decade since 1999 lending by banks to businesses has been largely replaced by lending to consumers and investment in speculative securities . The following figures from the FDIC give the breakdown of banks' allocation of capital in the three primary categories in 1999 versus 2009 . 1. Business loans - 1999 , 947 billion ----- 2009 , 1.27 trillion 2.Real Estate loans - 1999 , 1.27 trillion ---- 2009 , 4.5 trillion 3. Securities and derivatives - 1999 , 1.03 trillion ---- 2009 , 2.4 trillion . As you can see loans to businesses have increased by less than 10% , while real estate loans have increased by about 300% , and investment in securities has increased by more than 100% . The only way an economy can grow is by investing in profit-producing businesses . Loaning money to consumers to buy houses and buying of financial derivatives only concentrate debt in NON-PRODUCTIVE ASSETS . Bo's moronic " cash for clunkers" and the $ 8,000 giveaway to home buyers only reinforce the bias toward shifting more of our capital into non-productive assets . The thinking seems to be that if he can only get the US consumer to resume spending far more money than he has available , that everything will be allright again . What is needed is to re-emphasize investment in business , which will help to generate profits that will lead to more jobs .

Yup! Sounds about RIGHT------->

Can't really argue with that.

I thought Bush tried that twice ….Get the consumers to spend more, while out of work…makes sense?

So for the last ten years, every time the President was speaking about the ability of the common man to own a home, he was leading us down the primrose path to financial ruin? Each time (about 3X a month) my credit card company sent me a letter with four checks to use anyway I wanted to, they were tempting me to do harm to the nation by spending money I didn't already have? And every time an American plant closed their doors for cheaper labor elsewhere, the people in charge of that decision were help undercut the value of the dollar on the world market?

Thanks for clearing that up for me.

All of your statements are correct Lolly . Ever since Reagan started the process , our government , no matter which gang of thieves was in power , has overseen the largest peaceful transferral of wealth out of one country in the entire history of mankind . The current administration has not only continued that trend , they have dramatically stepped up the pace . That is why we are in the financial mess that we are in and why it only continues to get deeper , despite the lies by our government that things are getting better .

It seems that this administration is continuing this practice. It gets back to my wondering iof presidents realy have that much power for they seem to continue the practices of the previous administration. i once thought that when the baby boomers hit 60 years of age there was going to be this huge tranfer of wealth beginning from one generation to another I thought the market would be flying since by age 60 most people have a home (if they are going to have one and that the majority of this money woul be invested (why i though the market could not go down until another 20 years) or just put in savings What an idiot is all I can say. Fortunately i also hedged my bets (because my brother in financial services thought i was nuts. He saw this coming back in the early 1990's and kept warning me.

The good news is that the American Recovery and Reinvestment Act, a k a the Obama stimulus plan, is working just about the way textbook macroeconomics said it would. But that’s also the bad news — because the same textbook analysis says that the stimulus was far too small given the scale of our economic problems. Unless something changes drastically, we’re looking at many years of high unemployment.
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The real news is that the maintaining of these abnormally low interest rates and printing of worthless dollars is leading to a bonanza of free cash for the financial institutions , which is fueling speculative fires in commodities and in garbage stocks . Profits are up for most US businesses purely because they are cutting costs by laying off workers . There is no real recovery . Slowing the pace at which jobs are being lost IS NOT A RECOVERY , it simply means that things are getting worse at a slower pace . We are doing almost EXACTLY what Japan has been doing for 20 years now , and it has not worked for them , where they had a far healthier economy and were not spending untold billions trying to be the policeman of the world . Stock prices and property values are still well below the levels they reached 20 years ago in Japan despite massive government stimulus that has raised their national deficit to a level where it threatens what is left of their economy .

The ARRA was a good idea but poorly implemented and doomed to failure from the outset.

Thought you were going to Sac. LLL?