"In The Long Run, We're All Dead"

"In the long run, we''re all dead"

This is the famous quote of late great John Maynard Keynes, founder of Keynesian Economy.

Today George W. Bush said economy will bounce back in the long run. The whole article is here so check it out.

http://biz.yahoo.com/ap/081018/meltdown_bush.html

There are a lot of questions exist here:

---Is George W. Bush knows anything about economy? Is he study economics in his college? The answer is no.

---In Economics term, long run mean period longer than 10 years. In other word, long run mean 10 years to infinity. So what Bush mean economics will recover in 10 years to infinity time period. When is it, President?

---What you mean by economy will bounce back? GDP will rise? Saving rate will rise? Interest rate will rise? debt level will fall? inflation rate will fall? Jobless claim will fall? unemployment rate will fall? Trade deficit will shrink? Dollar will appreciate?

Economy consist of so many thing and yet Bush think everything will recover and bounce back without mention which one recover first.

Well that's prove point 1 correct.

---"The federal government has responded to this crisis with systematic and aggressive measures to protect the financial security of the American people," Bush said. "These actions will take more time to have their full impact. But they are big enough and bold enough to work." Congress gave Bush a $700 billion plan to buy bad assets from banks and other institutions to shore up the financial industry.

This speech raise even more questions:

---Did the federal Government responded to this crisis with systematic and aggressive measures? exactly 1 year ago when the subprime bubble burst, every government official assured us that nothing is threatening the sound US economy. Few months ago, those same official came out again and said the same thing.

Besides that, what he mean by saying "systematic and aggressive measures"? Let us think what have the government did in the past year. All I can think of is lowering the interest rate to ground and inject money into the economy, and that's pretty much all they can do.

Wait a second, you may argue the whole subprime problem and credit bubble started with low interest rate and high money supply and you are absolutely right.

The credit bubble began with low interest rate and high money supply and US government try to fix the problem with the same way they started it. What is wrong with them?

A drug addict began with taking drug and we won't cure him with more drug, will we? Well, unless you are US government, no person in the world will do that.

---Bush also said the 700 billion bail out plan is bug enough to solve the problem.

700 billion vs 10 trillion of national debt. My math is poor but i think the 10 trillion is a lot bigger that the 700 billion.

Besides that, Fannie and freddie already taken away trillion of US dollar not to mention Bear, AIG, Indymac......

The US government have been pumping trillions of dollar into the economy and it does not solve the economy but now Bush think 700 billion is enough.

Let me tell you what 700b will do. 700 billion can only assure that some big and lousy companies won't foreclose. It will never solve the fundamental problem exist in the economy.

How can you solve a 10 trillion dollar economy with only 700 billion?