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Friday, November 07, 2008

55 Flash Fiction - Tim & Sal #11

"I thought four more years would be a disaster," stated Tim.

"The past years have taken their toll upon the entire world's economy," replied Sal.

"I'm still not sure that I like global economics. Thank goodness, people opened their eyes."

"Indeed. Hopefully recovery will be rapid, although much more damage could still be in store."

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At Friday, November 7, 2008 at 9:26:00 AM EST, Blogger Mona $visitorIP said...

Well, collateral damage cannot be ruled out...

Economic policies that have been so successful in the past may turn otiose. The recent election also marks an end of the Reagan Revolution, a consensus of broad policies governing the country's economy that has reigned in Washington DC for nearly thirty years.

When the US electorate decided to chose Barrack Obama and his promise of 'change' they were not buying a mere propaganda message. What they did realize was that the existing policies were no longer providing the prosperity and security they wanted.

Mc Cain on the contrary, by supporting tax cuts and free trade was a regurgitation of Reaganism. Reagan's triple policy mix: income tax cuts, support for free trade and aggressive deregulation. It proved to be a combo so successful, it was continued by the next three presidents, including Democrat Bill Clinton.It was due to Regan's policies that the past three decades saw most sustained economic growth in the recent US history.

So what went wrong?

Answer: Regan revolution did a poor job of "spreading the wealth" ( to use Obama's words). Over the years this stagnation spread to middle class & the inflation adjusted income came down with the passage of time & there was an increased sense of economic insecurity.People lost & regained jobs more often, where Economy became a highway & individual wort became a roller coaster.

People got tired to work for economy. They now want economy to work for them. The major hazard of Regan's formulae running aground was a parallel rise of the emerging economies. the entry of Chinese & the Indian human resource into the global market helped depress the wages of even American middle class members. The sub prime crisis, itself a by product of too much cheap Asian capital was the straw that broke the Reganite back .

Obama should not be mistaken for a closet socialist. Although he recognizes the market as being the best mechanism for efficiently allocating resources to maximize production, he also recognizes that there are some things that the market does not do automatically.He is expected to focus on those parts of political economy which are impervious to the magic of the market. The expansion of health care & welfare system will be the major difference between Obama & Reagan consensus.

What is inevitable , following the Wall Street mayhem would be some partial rollback on some of the deregulation of the financial market.

'Obamanomics' will concentrate on ( like he said) increase of taxes on the wealthiest, reflecting his belief as taxes as a redistributive instrument.

Ultimately Obama is a scholar driven by empiricism. He will check policies with goals & measure efficacy of measures.He is pragmatic anf figures out what works ( it is evident in how he used online services to gather an unbelievable amount of campaigning funds via donations)

At Thursday, November 13, 2008 at 10:26:00 AM EST, Blogger S $visitorIP said...

Isnt Mona just a genius?


Hi Charles

At Thursday, November 13, 2008 at 7:58:00 PM EST, Blogger Charles $visitorIP said...

Hi Suzie,

She is. She always impresses me, and even breaks down my 55s to the point, even I can understand them. :)

At Thursday, November 13, 2008 at 11:47:00 PM EST, Blogger Mona $visitorIP said...

This comment has been removed by the author.

At Thursday, November 20, 2008 at 4:33:00 AM EST, Blogger Mona $visitorIP said...

Happy Thanksgiving To Charles & Sarah!

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