The Fourteenth Banker Blog

July 26, 2010

Facing Reality II

Filed under: Running Commentary — thefourteenthbanker @ 7:57 AM

From Mish, the budget and economic perspective in one of our most beautiful states. Go West Young Man!

The only way out, they say, is to make dramatic, permanent changes. The choices that lie ahead affect not only the state budget, but the kind of place Oregon will become: What kind of schools will we have? Which criminals will go to prison? Who gets help when they need it? What kind of business climate do we want? And how much do we all pay in taxes?

“The public is going to have to understand that we will have a very different Oregon in 2020 than we did in 2010,” says John Tapogna, president of ECONorthwest, one of the state’s top economic consulting firms.

There is much more in the article including a lengthy discussion of four problems Oregon faces.

  • Problem 1: Our income is shrinking
  • Problem 2: We have more people in need
  • Problem 3: We’ve locked up a lot of money
  • Problem 4: We can’t grow our way out

These are deep, deep problems. Personal Income must grow. Budgets must work. Long term imbalances must be fixed. Higher taxes can be a partial solution, made less painful if personal income is growing. But Civil Servants must shoulder their share also. Fix Problem number 1 and the rest gets easier. To do that you must have financial intermediation in the public interest.

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3 Comments »

  1. “you must have financial intermediation in the public interest”

    Not necessarily. You must have a financial intermediation that serves a public purpose… not just a public interest. You have been much too active financing houses to buy houses or to import goods instead of financing the small businesses and entrepreneurs that can bring you the next generation of decent jobs.

    Comment by Per Kurowski — July 26, 2010 @ 10:28 AM | Reply

  2. We have lived through a roughly 30 year period of stagnant incomes while the cost of living has increased beyond our means. In order to survive many substituted debt for income. Incomes will never rise as long as jobs are exported.

    The formula for recovery is simple, incomes must rise, the cost of living must decline and debts must be discharged. None of which can occur until we are honest about job formation and the cost of living. Adding the purchase price of housing to the CPI would go a long way to restoring cost in the CPI. Looking back to the formulations of the 60′ and 70’s of the CPI will give us a more accurate estimate of cost.

    Until we replace income with the cost of living we will continue to lag economically.

    Taxation on the top needs to return to Reagan levels and used to pay down the debt. Supply side has failed as a look at the Bush policies has proven.

    Comment by ella — July 27, 2010 @ 9:38 AM | Reply


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