Does Our Economic Attitude Matter? A Hole in the Bucket.

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Ohg Rea Tone is all or nothing. He is educated and opinionated, more clever than smart, sarcastic and forthright. He writes intuitively - often disregarding rules of composition. Comment on his posts - he will likely respond with characteristic humor or genuine empathy. He is the real-deal.

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Does Our Economic Attitude Matter? A Hole in the Bucket.

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Well, they (whoever they is) measure consumer confidence.  What do you suppose that is about?  Consumer confidence is a measurement of the confidence people have about their ability to sustain their life style – in a manner of speaking.  The consequence of positive attitude is that people will spend their money because they have confidence that more is coming.  Negative consumer confidence implies that people will not spend their money.  Attitude does matter.  Gratitude rhymes with attitude for a reason.

So what?  The American economy is 70% consumer driven.  We have nothing to fear but fear itself – and you can quote me on that.  This sort of economics is not nearly as complicated as default swaps or derivatives, whatever those things are.  We are talking about simple supply and demand.  If people have confidence in their future they will create demand – and the supply will follow.

There are some disconnects in the national discourse on the economy.  Fancy economists take the ‘consumer driven’ idea to another level.  Those fancy economists believe that if banks have money to loan then people will have money to spend – and spend they will.  The Federal Reserve thinks the whole thing is about them, about the banks.  Banks drive the economy by helping people consume.  There is a certain amount of logic in that idea.

But some take it to another level yet – if business has money to invest then people will have jobs to earn money – and then they will spend and the economy will thrive.  It follows that if banks have money to lend to business then business will borrow and invest and create jobs and consumers will have money and the economy will thrive.  Again – it is all about the banks if you follow that logic.

There is another level – If the Government will loan money to the banks then the house built from cards will grow higher.  This is beginning to sound like one of those childhood nursery rhymes.  But there is a hole in the bucket dear Liza – a hole.

President Obama took office a couple of months ago and right away began signing legislation to loan money to the banks and similar investment companies – following the logic of the fancy economists.  President Obama began his tour of duty by telling the folks back home that the fix is in but it will take awhile for the bucket to stop leaking.  The 24/7 news media followed every move.  The drama built.  Attitude was on the line.

Attitude remains on the line.  Attitude is everything.  Most of us regular folks do not grasp all of the intricate default swap language.  We do understand unemployment.  President Obama understands attitude very clearly.  He understands that attitude in infectious.  Both optimism and pessimism permeate the air around them.  President Obama understands this, so he began his administration with caution and has gradually shifted to optimism.

The pundits get more air time than the President.  We are inundated with the variety of speculation on matters of economics.  The problem with people like this writer is that we need controversy to sell our product.  Controversy sells.  The pundits need controversy.  Optimism is not nearly as controversial as pessimism.  So what gets the headlines?  Pessimism.   I am listening to Morning Joe as I type.  The panel is expounding on the horrors of 11 Trillion dollars in debt.  When Joe Scarborough was in Congress he approved budgets based on growth projections.  Simply put, our Government tax revenues are based on the health of our general economy:  Sales are down, sales tax revenues are down.  People are out of work, income tax revenues are down.   So it follows that future debt projections are based on assumptions about our economic growth.  The 11 Trillion dollars is referred to as commonly accepted fact – but the 11 Trillion is merely based on a particular pessimistic economic growth projection. If Morning Joe used optimistic projections their show would be much less controversial, and they would risk losing ratings.

The President is trying to spread the sandwich in our lunch bucket with a heavy dose of optimism.  The pundits counter with pessimistic projections.  Sweet and sour economics.  President Obama is trying to save the country – the pundits are trying to save their jobs.  When the terrorists attacked on 911 President Bush said something like ‘go to Walmart, go to Disney World.’  He has been criticized for not asking the people to sacrifice – but his agenda was clear – maintain consumer confidence.  Bush knew that the economy could collapse with too much fear.

Presidents seem to like optimism.  Pundits seem to thrive on pessimism.

Attitude matters.

There’s a hole in the bucket, dear Liza, dear Liza,
There’s a hole in the bucket, dear Liza,
There’s a hole.

Then fix it dear Henry, dear Henry, dear Henry,
Then fix it dear Henry, dear Henry, fix it.

With what should I fix it, dear Liza, dear Liza,
With what should I fix it, dear Liza, with what?

With a straw, dear Henry, dear Henry, dear Henry,
With a straw, dear Henry, dear Henry, with a straw.

But the straw is too long, dear Liza, dear Liza,
The straw is too long, dear Liza, too long.

Then cut it dear Henry, dear Henry, dear Henry,
Then cut it dear Henry, dear Henry, cut it!

With what shall I cut it, dear Liza, dear Liza,
With what shall I cut it, dear Liza, with what?

With an ax, dear Henry, dear Henry, dear Henry,
With an ax, dear Henry, an ax.

But the ax is too dull, dear Liza, dear Liza,
The ax is too dull, dear Liza, too dull.

Then, sharpen it, dear Henry, dear Henry, dear Henry,
Then sharpen it dear Henry, dear Henry, sharpen it!

With what should I sharpen it, dear Liza, dear Liza,
With what should I sharpen, dear Liza, with what?

With a stone, dear Henry, dear Henry, dear Henry,
With a stone, dear Henry, dear Henry, a stone.

But the stone is too dry, dear Liza, dear Liza,
The stone is too dry, dear Liza, too dry.

Then wet it, dear Henry, dear Henry, dear Henry,
Then wet it dear Henry, dear Henry, wet it.

With what should I wet it, dear Liza, dear Liza,
With what should I wet it, dear Liza, with what?

With water, dear Henry, dear Henry, dear Henry,
With water, dear Henry, dear Henry, with water.

But how shall I get it?, dear Liza, dear Liza,
But how shall I get it?, dear Liza, with what?

In the bucket, dear Henry, dear Henry, dear Henry,
In the bucket, dear Henry, dear Henry, in the bucket!

But there’s a hole in the bucket, dear Liza, dear Liza,
There’s a hole in the bucket, dear Liza, a hole.

There’s a hole.

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