Re;[lbo-talk] The real thing?

[Dwayne Monroe]

C. G. Estabrook (quoting article):

"Many analysts had hoped that the tax cuts, combined
with the boost from high defense spending, would help
jump start the economy. "

.........


This is the sort of thing that puzzles me.  How could
anyone believe that a one time infusion of a needed
but still modest amount of cash (relative to people's
debts, etc) and increased spending on items like
cruise missiles would "...jump start" the economy? 
Will 1 million people be employed building F-22
raptors? Are these "analysts" really so lacking in
common sense?


......

(article quote):

"While there should be healthy growth from these
factors over the next few months, the collapse of the
mortgage refinancing boom will be a strong
counteracting force in the near future. The first
impact will be the collapse of an industry employing
more than 350,000 people, but the longer term impact
on consumption will prove far more important. If
mortgage rates stay at current levels, the prospects
for the economy beyond the second half of the year are
bleak."


........


The housing market bubble (is there agreement now that
this is a bubble?) is truly frightening to me.

Around the corner from where I live, a house went on
sale a year ago for something like 1.2 million
dollars.  It's a lovely and spacious house and I can
understand both the seller and the Real Estate agent
asking a hefty price for it.  Still, a figure north of
one million (or even approaching one million) reflects
something besides the actual value of the house: it
shows an overheated and irrational market.

Now since most Americans derive a good portion of
their capital worth from home ownership (or, at least
having equity in homes they're still paying down) it
can only mean unpleasantness on a grand scale should
the market value of these homes drop seriously and
rapidly.


DRM

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