Wednesday, October 24, 2012

Discussion Topic 10/24/2012;_ylt=AhoLZkReysMm4yjpkjCQ.ogHuodG;_ylu=X3oDMTN2N3Qxczg2BG1pdANGZWF0dXJlZCBMaXN0BHBrZwM3NGVkNDZkYS1jZjYxLTM5MjctOGNiYy0zODQ3MzEwZDBmZTUEcG9zAzQEc2VjA01lZGlhRmVhdHVyZWRMaXN0BHZlcgM3NThmY2JiMC0xYzQ3LTExZTItOWZmZi0wZGI0MmY1YTdiZTc-;_ylg=X3oDMTJqOHBvdW9lBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDNzM4NWQ0YjktOWZiZS0zMmUwLWFmZWItMTBlMzQ0OGU1ZGJlBHBzdGNhdAMEcHQDc3RvcnlwYWdl;_ylv=3
Gary shilling thinks the economy won't change much in the short run no matter who wins the election? Do you agree with that point and why?
Obama's strategy: Spending more on infrastructure and other stimulus to boost growth.
Romney's strategy: cut taxes and spending to decrease deficit.
Do you in favor of either one's philosophy?


  1. Tian Tan
    I actually agree with what Gary Shilling said, neither the two president candidates have the ability to turn the economy around in the short run. For Obama's Strategy, he has been doing so for 4 years including the recent QE3. But it seems that his strategy doesn't work so far with high unemployment. Romney's strategy seems promising but he is still unable to justify the math of the strategy. How can he decrease deficit while cutting tax and increasing defense expenditure and still able to create 12 million jobs? He said he can nail it by closing tax loopholes. But how, he has to tell more detail of it.
    I think people should look at the long run prospects. Should America spend more or not? The world economic model for the past ten years is America consumes, the rest of the World produces. I just don't think this model can last for another 10 year.

  2. Tim Shoji
    I agree that in the short run, neither will make a huge difference. For the long run, I think their different visions can set us on different paths. If we want to be on the path of growth, it is important to have both lower taxes and lower spending so the private sector can thrive. The federal government also needs to balance its budget in the long run because its spending is on an unsustainable path. If we can institute what the bipartisan Simpson-Bowles commission has recommended, we would be in a much better shape.

    They recommend things like:
    - Reform and simply the tax code (lower taxes across the board, broaden the base, end loopholes)
    - Cutting spending we can't afford (defense, redundant programs, tax-deductions...etc)
    - Don't make promises we can't keep (e.g. entitlement programs)
    - Don't disrupt the fragile recovery (gradual budget cuts)

    To this effect, Obama has really stayed away from talking about cutting spending in the long run. Due to the political pressures of the election, his rhetoric has focused more on closing tax loopholes for the rich and big corporations. On the other hand, Romney is not talking about cutting the budget slowly and responsibly.

  3. Mengyao Kong
    I agree with Gary Shilling that it doesn’t make a big difference for the whole economy whoever is going to win the election.
    We all know GDP depends on C+I+G+NX, in the short run, if the customers don’t have faith for the future, the Medicare plan, the recovery economy, they won’t spend money. The Q2 earnings report but Q3 seems the economy is going back to their origin again. The Dow slumps for 1.8%, which is the sharpest since June, so there is a little possibility that the customers are going to increase their spending. The investment and net export are also kind of constant in the short run. Then the government spending is the only way to recover the economy and so far we saw QE2 and 3. Obama insisted on infrastructure investment. However, my question is what if US have already had enough roads, railways and other stuffs. What is the government going to do after that?
    In the long run, I believe there is something government could do to increase the economy. However, I have doubts on both Obama and Romney’s plan. The Obama Medicare totally violates the economy principle. The customer lost their option and I think this is something people criticize the most. On the other hand, for Romney, the tax cut and the deficit cut in the same time seems unrealistic. Also, about the foreign policy, Romney said he would make a better relationship with China which makes Chinese government plays by rule. Believe me, if this comes true, there won’t be even a single Chinese student studying abroad.

  4. Amine Bensaid
    In my opinion if Obama wins the elections we will see little to no change in the short term, while in the long term the micro-economic environment could see a change if other different policies are implemented. The economy is not in recession but it is indeed slowing down, nevertheless the US economy is still recovering much better than Europe for instance.

    On the other hand, if Romney wins the elections, I think that we will see changes in both the short-term and long-term. The changes will be imminent because Romney's views of the macro and micro economic environment are very different from Obama's. So we will see major changes in taxes and government spending for instance.

    I am a true believer in the concept that the markets are always right. Like Ford stated, the markets are bearish at the moment mainly due the negative returns by numerous US firms. In my opinion the market direction will indicate if the new president's policy will have a effect on the economy or not.

  5. Glenn
    In my opinion, the economy will not be significantly impacted by the outcome of the election. Corporations tend to hold off major investment decisions until there is certainty as to who will be putting new policies into place. However, many things can change, even in the short-term (1 year or less) that we cannot foresee, and would impact economic activity.

    Certain sectors have picked their party, for example, the defense industry overall would rather have a candidate that has pledged to see to it that America's military remains the strongest, rather than a candidate who will cut the budget's growth rate. Certain industries may benefit from Obama's plans (companies that are contractors for infrastructure development, such as construction and engineering firms), vs. Romney's pans (defense, oil, wall st).

    It would be interesting to get data on the performance of certain industry sectors when we have a republican vs. democratic president. I think it can be done - this would be an interesting project for any analyst.

  6. Pian Li
    I agree that in the short term, the economies are not going to rebound heavily. Economy won’t change immediately after the election no matter who wins finally. But in a long term, compared to Romney’s plan, Obama’s plan seems less persuasive and powerful. Barely increasing the investment in infrastructure will boost the deficit definitely but not necessarily boost the economic growth. And many people won’t think they will benefit from this plan. But if cut the taxes in a heavy way, people are able to consume more and there is a chance that the economy will rebound. Thus, in a political level, Romney has more advantage.

  7. Jason Zhang
    I think in the short-run, no one can boost the economy. In the long-run, Obama's plan seem like there is hope that economy will rebound. However, Romney's plan doesn't seem to make sense to me. Why increase the spending on military when you have this amount of deficit? Why reduce overall tax rate which end up with more tax on middle class and less on rich people? Why bring back fundamental manufacture jobs? Given the minimum salary level of America I don't think it's affordable. The cost of compay will go up, price will go up, consumers spend less, how can that boost the economy?

    I think what America should do is to maintain the leadership in the long-run. Invest on new energy and education is betting on the future. If Ameica maintain the advantage in these area, it will bring more high quality jobs. More people study in US, more entrepreneurs graduate from school and creat jobs. The money generated by bussiness can contribute again to social warefare. It seems to me that it will be a possitive cycle.