Entitlement

[California Girl]

No, the economy tanked because of crazy investment products cooked up by Wall Streeters.

No, it didn't. It tanked because of a global imbalance between countries who consume too much and produce too little (like the US) and those who produce too much and consume too little (like China). But please don't let reality hit you in the ass. I know it's much more convenient to believe that 'the other guy' did it.

I disagree. The collapse of 2008 was a failure of credit markets.

I don't really give a shit whether you 'agree' or not. Global economists (real economists, not the twits on the 'left' or the 'right') agree on it - from all sides of the political spectrum. I tend to value their research based opinions over the opinion of some dude on the net.

 

[samjones]

No, it didn't. It tanked because of a global imbalance between countries who consume too much and produce too little (like the US) and those who produce too much and consume too little (like China). But please don't let reality hit you in the ass. I know it's much more convenient to believe that 'the other guy' did it.

I disagree. The collapse of 2008 was a failure of credit markets.

I don't really give a shit whether you 'agree' or not. Global economists (real economists, not the twits on the 'left' or the 'right') agree on it - from all sides of the political spectrum. I tend to value their research based opinions over the opinion of some dude on the net.

No. You're wrong. That's why you don't name any of the "Global economists" or cite any of their work that might make your case. The trade imbalance with China is a problem. Maybe a big problem. But that's not what brought down Lehman and Bear and sent the Dow down to 6600 and the U3 up to double digits.

Our current economic woes won't go away until faith in the credit markets is restored. The trade imbalance with China has little to do with that.

 

[editec]

The ALREADY WEALTHY are entitled to continue to be so no matter how much it costs the rest of us.

Doubt me?

How much money have the BANSTERS gotten from the Government compared to the other 299,000,000 of us?

 

[samjones]

The ALREADY WEALTHY are entitled to continue to be so no matter how much it costs the rest of us.

Doubt me?

How much money have the BANSTERS gotten from the Government compared to the other 299,000,000 of us?

I think that if you had to boil the Great Depression of '29 down to 3 preventable mistakes it would be:

* Government spending doubled
* Taxes were raises accordingly
* The Fed pursued deflationary targets.

This had the affect of monetarily dehydrating the economy and no matter what else came before or what else came after that may have worsened or hastened the Depression, I think if you look at those 3 factors as a matter of public policy you see the recipe for disaster.

And I think that most politicians, Democrat and Republican alike and most economists from all schools seem to think that not doing one of those 3 things is the answer to getting us out of this mess. I see 2 problems with this.

1. Doing the opposite of the thing that got you into a mess does not always get you out of that mess and there is some disagreement on the efficacy of Roosevelt's public works programs..... (No disagreement that lend/lease got us out of that old Depression right quick though).

2. This isn't a "monetary" crisis, this is a "credit" crisis and so the remedies are going to have to be different.

 

[DSGE]

I think that if you had to boil the Great Depression of '29 down to 3 preventable mistakes it would be:

* Government spending doubled
* Taxes were raises accordingly
* The Fed pursued deflationary targets.

Not sure why 1 and 2 are there, since it was almost entirely tight money. But I'll add in that if 3 didn't happen it wouldn't have got bad enough for 1 to have been a popular option.

2. This isn't a "monetary" crisis, this is a "credit" crisis and so the remedies are going to have to be different.

It is actually a monetary crisis. To begin with, credit is affected by monetary policy. But it's just regular old tight money. The Fed let nominal spending drop dramatically below trend:

 

[samjones]

Not sure why 1 and 2 are there, since it was almost entirely tight money. But I'll add in that if 3 didn't happen it wouldn't have got bad enough for 1 to have been a popular option.

2. This isn't a "monetary" crisis, this is a "credit" crisis and so the remedies are going to have to be different.

It is actually a monetary crisis. To begin with, credit is affected by monetary policy. But it's just regular old tight money. The Fed let nominal spending drop dramatically below trend:

Glad you asked. 1 and 2 are there because they indicate things we did that we shouldn't have done. In large part you can view the Great Depression as a disaster waiting to happen because of the way things were with protectionism and faulty financial institution infrastructure and the overreliance on the Gold Standard. But there were 3 things that were done that likely achieved the tipping point and those are your 3.

I'm sure that it gives you no end of joy to call this current crisis a monetary crisis, because if a man has a great hammer then every problem calls for a nail ... it's easy to pump more money into the system. We have a hundred ways to do that.

The problem is that this isn't going to fix the underlying structural deficiencies in our credit markets and we rely on our credit markets to drive the economy today in a way that we have never done before.

 

[DSGE]

Glad you asked. 1 and 2 are there because they indicate things we did that we shouldn't have done. In large part you can view the Great Depression as a disaster waiting to happen because of the way things were with protectionism and faulty financial institution infrastructure and the overreliance on the Gold Standard. But there were 3 things that were done that likely achieved the tipping point and those are your 3.

I agree that they shouldn't have been done, but I still don't understand. They were reactions to the depression, not mistakes which caused it.

I'm sure that it gives you no end of joy to call this current crisis a monetary crisis, because if a man has a great hammer then every problem calls for a nail ... it's easy to pump more money into the system. We have a hundred ways to do that.

Not at all. Quite the opposite. It causes me great discomfort that monetary policy, something for which all intents and purposes is solved, is still not being implemented correctly by most central banks. Aside from that, the accusation is absurd. I presented evidence that the Fed allowed nominal spending to fall significantly below trend.

The problem is that this isn't going to fix the underlying structural deficiencies in our credit markets and we rely on our credit markets to drive the economy today in a way that we have never done before.

Nobody is disagreeing that there are structural deficiencies. But that doesn't explain the depth or length of this downturn. This is characteristically predominantly demand-side. Had NGDP stayed close to target, there still would have been a recession. But it would have been comparatively mild, and likely over by now.

 

[expat_panama]

...Bush lowered taxes and the economy has gone downhill since...

Huh, somehow you sounded like your gripe was rich people getting pay hikes, but now we're getting into tax-hikes. Is your idea that government should up taxes to keep high earners from increasing their incomes?

 

[EdwardBaiamonte]

the overreliance on the Gold Standard. .

thats sort of idiotic given that abandoning the gold standard, not relying on it, caused the Great Liberal Depression by allowing the money supply to shrink 33%!!

 

[EdwardBaiamonte]

I am always amazed that the best criticism the right wingers can give is that you backup your ideas with either quotations or sources. Do conservatives sit in empty noiseless rooms, and then through some magical unknown and unexplained medium, receive their brains, their minds and their knowledge. Can a wingunt please explain that process so that it makes sense to those of us who live in a world of information that must be culled, explained, and held up against the real world in which we live. Please tell us how that works, that ability you have to know things that you never heard read or were told? I'll wait for your explanation of life and learning in the vacuum of dark matter, life outside the social sphere. Should be interesting.

Dear, the economy tanked because of the Fanny Freddie liberal housing crisis, not the Bush tax cuts

That myth has been destroyed so many times you need a new scapegoat. -

You mean most of the liberal Federal government was organized to get people into homes the free market said they could not afford and yet the free market was responsible when people got into homes they could not afford??

Can even a liberal contend that with a straight face??


Heres what our two greatest economists and two greatest newspapers ( on left and right) said about it.

"First consider the once controversial view that the crisis was largely caused by the Fed's holding interest rates too low for too long after the 2001 recession. This view is now so widely held that the editorial pages of both the NY Times and the Wall Street Journal agree on its validity!"...John B. Taylor( arch conservative, author of the Taylor Rule)


" The Federal reserve having done so much to create the problems in which the economy is now mired, having mistakenly thought that even after the housing bubble burst the problems were contained, and having underestimated the severity of the crisis, now wants to make a contribution to preventing the economy from sinking into a Japanese Style malaise....... - "Joseph Stiglitz


If thats not enough read the Reckless Endangerment for a 400 page account or read the SEC lawsuit against Fanny Freddie.

 

[expat_panama]

...explain that process so that it makes sense...

...economy tanked because of the Fanny Freddie liberal housing crisis, not the Bush tax cuts...

Exactly what caused what is debatable, but something we all know is that employment, incomes, revenue, wealth, and production soared for years after the '03 cuts, and that the big plunge was '08-present along with the power shift in Washington.

 

[samjones]

Exactly what caused what is debatable

Exactly *what* caused "credit markets to fail" is debatable. What should not be debatable and ultimately will not be debatable is that is what happened in '08.

The failure of credit markets has had a profound effect on home prices, business intiatives and consumer spending and all of the above in combination gave us double-digit unemployment and a Dow at less than 50% of it's top value.

 

[samjones]

I agree that they shouldn't have been done, but I still don't understand. They were reactions to the depression, not mistakes which caused it.

They were reactions to the stock market crash of '29, which really wasn't that bad. The DJIA had merely retreated to the levels it was at in '28 - a phenomenon that I shall forever call the "11,000 paradox". The crash of '29 did call for govenment intervention and it received the worst kind of intervention. Policy errors that made a bad situation a terrible situation.

I fully appreciate the complexity of the situation we're in. I have to wonder if increasing the national debt is a step toward repairing the credit markets.

 

[expat_panama]

...What should not be debatable and ultimately will not be debatable is that is what happened in '08...

It shouldn't but it is. We really ought to agree on things we can both see, and we should be able to know the difference between seeing something and imagining it.

...The failure of credit markets has had a profound effect on home prices, business intiatives and consumer spending and all of the above in combination gave us double-digit unemployment and a Dow at less than 50% of it's top value.

Now, that part's a great place to start. Let's first look together at the DOW--

--and agree that it's about 90% of it's '07 peak. Then maybe we can take a hard look at anything else we can both see happening in '08.


.

 

[midcan5]

No rightie answered my question in Post 20? Come on folks, is it transmitted through the air into your noggins or what?

Someone mentioned Fannie and Freddie again but gave no proof, without proof or collaborating evidence one can only conclude the poster is misinformed or stupid. I hope the former.

http://www.usmessageboard.com/economy/170723-who-really-wrecked-the-economy-5.html#post3740587

http://www.usmessageboard.com/economy/138954-five-zombie-economic-ideas-that-refuse-to-die.html "The global financial crisis that began with the collapse of the U.S. subprime mortgage market in 2007 ended by revealing that most of the financial enterprises that had dominated the global economy for decades were speculative ventures that were, if not insolvent, at least not creditworthy." Five Zombie Economic Ideas That Refuse to Die - By John Quiggin | Foreign Policy


"The conservative economic policies of the 1920s -- low taxes, little regulation, lack of anti-trust enforcement -- did nothing to stop the August recession and the October stock market crash." from GD summary link below

I think that if you had to boil the Great Depression of '29 down to 3 preventable mistakes it would be:

* Government spending doubled
* Taxes were raises accordingly
* The Fed pursued deflationary targets....

You're kidding right?

I am always amazed at how much the revisionist nonsense of corporate think(?) tanks has influenced the unlearned among the partisan right. It is as if they have never read a book or even lived in the real world. An excellent outline of the GD is here for those who still think. Timeline of the Great Depression


"Keynesian theory is central to understanding the Great Depression. We'll review just the theory here, and reserve for other sections the opportunity to see if the events of the 1930s bear out the theory." A Review of Keynesian Theory


"The economy continually sank throughout Hoover's entire term. Under Roosevelt's New Deal, it rose five out of seven years.

Attempts to blame Big Government for the Depression do not withstand serious scrutiny. The Smoot-Hawley Tariff had a minor impact because trade formed only 6 percent of the U.S. economy, and reducing trade gave Americans only that much more money to spend domestically. Hoover's other attempts at government intervention came mostly during his last year in office, when the Depression was already at its depth.

The first nations to come out of the Great Depression -- Sweden, Germany, Great Britain, and then everyone else -- did so after they adopted the Keynesian solution of heavy deficit government spending.

Keynesian economic policies have eliminated the depression from the world's economies in the six decades that have followed." Summary


More on Great Depression, "...as the United States economy was sinking deeper, many believed that a sound recovery would come only by the government leaving the economy alone. They believed in a natural process of liquidation -- the ruination of the weak and the survival of the efficient. And, indeed, the U.S. economy bottomed in 1932. Things could only get so bad in a society not engaged in a civil or international war or not suffering from some great catastrophe such as plague, widespread draught or the kind of catastrophe the dinosaurs had suffered.

In the United States, hitting bottom meant that manufacturing was down 48 percent from what it had been in 1929, and that the prices farmers received for their products were down 44 percent. The stock market was down 80 percent from what it had been in 1929, and 25 percent of the work force was still unemployed. Recovery started around the same time that it did in other countries. With the interconnectedness of economies in the world, it was more than a coincidence that economies in Europe also bottomed in 1932. And with economies having hit bottom, the issue became the speed of recovery -- a matter affected by government policy." The Great Depression, to 1935

Good book on GD: [ame=http://www.amazon.com/Great-Depression-New-Deal-Introductions/dp/0195326342/ref=sr_1_8?ie=UTF8]Amazon.com: The Great Depression and the New Deal: A Very Short Introduction (Very Short Introductions) (9780195326345): Eric Rauchway: Books[/ame]

Huh, somehow you sounded like your gripe was rich people getting pay hikes, but now we're getting into tax-hikes. Is your idea that government should up taxes to keep high earners from increasing their incomes?

"There is no historical evidence that tax cuts spur economic growth. The highest period of growth in U.S. history (1933-1973) also saw its highest tax rates on the rich: 70 to 91 percent. During this period, the general tax rate climbed as well, but it reached a plateau in 1969, and growth slowed down five years later. Almost all rich nations have higher general taxes than the U.S., and they are growing faster as well." Tax cuts spur economic growth

http://www.alternativesmagazine.com/25/beaton.html


"Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone." John Maynard Keynes


Links for great depression:
http://www.huppi.com/kangaroo/Timeline.htm
http://www.huppi.com/kangaroo/Summary.htm
http://www.hyperhistory.com/online_n2/connections_n2/great_depression.html
http://www.fsmitha.com/h2/ch15wd.html
http://gusmorino.com/pag3/greatdepression/
http://historymatters.gmu.edu/d/6787

 

[expat_panama]

No rightie answered my question...

...Is your idea that government should up taxes to keep high earners from increasing their incomes?

"There is no historical evidence that tax cuts spur economic growth. The highest period of growth in U.S. history (1933-1973) also saw its highest tax rates on the rich...

LOL -how can you expect righties, lefties, or the rest of us bother to answer your questions when you won't answer ours about what you want with our incomes?

 

[midcan5]

No rightie answered my question...

...Is your idea that government should up taxes to keep high earners from increasing their incomes?

"There is no historical evidence that tax cuts spur economic growth. The highest period of growth in U.S. history (1933-1973) also saw its highest tax rates on the rich...

LOL -how can you expect righties, lefties, or the rest of us bother to answer your questions when you won't answer ours about what you want with our incomes?

I want nothing from your income, I'm fine. Now your turn.

 

[expat_panama]

...I want nothing from your income, I'm fine...

Based on what you've been posting my guess is you don't like my making more wealth than median US incomes, and that you like my giving up the wealth I've created to pay high taxes for your favored entiltlements. That guess means you're not fine and you do want my income. If I'm guessing wrong then either say what you do want or my guess will be all we got to work with.

 

[editec]

The ALREADY WEALTHY are entitled to continue to be so no matter how much it costs the rest of us.

Doubt me?

How much money have the BANSTERS gotten from the Government compared to the other 299,000,000 of us?

I think that if you had to boil the Great Depression of '29 down to 3 preventable mistakes it would be:

* Government spending doubled
* Taxes were raises accordingly
* The Fed pursued deflationary targets.

This had the affect of monetarily dehydrating the economy and no matter what else came before or what else came after that may have worsened or hastened the Depression, I think if you look at those 3 factors as a matter of public policy you see the recipe for disaster.

And I think that most politicians, Democrat and Republican alike and most economists from all schools seem to think that not doing one of those 3 things is the answer to getting us out of this mess. I see 2 problems with this.

1. Doing the opposite of the thing that got you into a mess does not always get you out of that mess and there is some disagreement on the efficacy of Roosevelt's public works programs..... (No disagreement that lend/lease got us out of that old Depression right quick though).

2. This isn't a "monetary" crisis, this is a "credit" crisis and so the remedies are going to have to be different.

Thank you for your thoughts.

The answer to the question you didn't bother to respond to depends on who you ask. Bernacke claims the answer is 1.8 TRILLION. Bloodberg claims the number is 16 trillion dollars.

I recently read one economic study whtht posits the current number (note that this help is still forthcoming) more like $26 trillion.

 

[samjones]

Thank you for your thoughts.

The answer to the question you didn't bother to respond to depends on who you ask. Bernacke claims the answer is 1.8 TRILLION. Bloodberg claims the number is 16 trillion dollars.

I recently read one economic study whtht posits the current number (note that this help is still forthcoming) more like $26 trillion.

I didn't respond because I don't know. I know it was alot. But I see no reason to conclude that bailing out banks is anything other than an attempt to right the credit markets.....which is too bad, because it does seem like simply throwing money at the problem.

In fact, I don't know what the solution to the problem is, but I get the impression that you can look at 3 policy decisions that caused the Great Depression:

1. Increase the size of government
2. Increase taxes
3. Deflate the currency

And you can see that the political tug-of-war that is happening right now is all about doing the opposite of one or more of those 3 things.

But this isn't an economic crisis caused by bad economic policy. This is a monetary crisis caused by non-functional credit markets. So we're trying to fix the problem by doing the opposite of what causes a similar problem 80 years ago and I have to wonder about the wisdom of that. In the meantime, I read people writing about credit in terms of whether we or our government should or should not borrow and fewer people talking about the actual structural problems with the credit markets that exist.

It's too easy for people to borrow money.
It's still too easy for some people to default on loans
FICO is a joke
HELOCs are routinely abused
Mark to market accounting doesn't work
The US Government has become the "borrower of last resort" for the world and I don't know if that was ever really intended
Credit swaps remain badly underregulated
Too many people borrow too much money for college

Smart people. People here on this board. People you read in the paper - seem only to be able to think of this in terms of "create jobs" and "restore the housing market" and "keep the DJIA high". Great goals, but what about fixing the credit market problems that got us into this mess in the first place

[/rant]