Forgot your password?
Type your email address below and click the sign up button to create an account.
I saw the HBO " Too Big to Fail" a couple weeks ago and I have also read the book by Andrew Ross Sorkin. It's not surprising that we come out with a different opinion.
I think we would've had 25% unemployment easily, because the banks and AIG would have gone into bankruptcy and the creditors would have only gotten pennies on the dollar. The banks were over leveraged and their assets were worthless....It's no telling what would have wouldn't happened, if we couldn't stop the run on the banks in time... This was a world financial crisis..... I think you have to explain what you meant by "farce" because I was sitting in front of my television watching the stock market crash,when Congress failed to approve the first TARP..... They came to their senses and passed it. Since then, just about everyone has paid the funds back with interest....The movie & book emphasize the important role Goldman Sachs played.
So you think I'm being irresponsible because I stated," while I think reducing the National Debt is important, it's not one of my priorities because it won't be paid off in my lifetime(15-20 years)... If you confiscated all our assets ,even the nickels and dimes behind the cushions and between the seats in your car, we couldn't pay off the National Debt... As I stated, keep the National Debt low in relation to GDP( low interest rates) because that still is sustainable ,until we get our fiscal house in order.
Making drastic cuts to lower the National Debt is irresponsible because that will choke off a struggling economy. Without jobs, the talking point (children and grandchildren) will not have money to go to college. Where would that leave them?
I've always thought that there is more than one way to look at a problem... Evidently not.
The managing editor of Time Magazine put it this way" I'm all for reducing the debt, but I don't quite understand how of doing so will create jobs. And while it is imported have a strong foundation for your house, if your house is burning down you don't worry about the foundation you put out the fire.
Hope all you watched "Too big to fail" last night on HBO. It was interesting seeing how they got all excited about how everything was going to go flop if the banks didn't take the money and loan it out. Well, they took the money but it wasn't loaned out. So, the TARP bailout was a farce. It had no effect on the events. Just goes to show they should have let the market forces dictate which company survives and which company fails.
Your comment, "I think that we need to stop worrying about the national debt because it won't be paid off in our lifetime and without short term deficits, we cannot grow. " is being so irresponsible. The current debt being passed on to future citizens will only mean a lower standard of living for them and maybe even the lost of their liberty.
"Surplus wealth is a sacred trust which its possessor is bound to administer in his lifetime for the good of the community." Andrew Carnegie
Couldn't find truthaboveall's attributed quotation. Surely an oversight.
The marks of the beast!
New poster with all 3 posts to my blogs?...Is this a pattern?Mmmm
The "hoard" was not to be taken literally but as a metaphor to mean that they are not broke,doing well,better off than middle class workers etc....Mostly to say "I'll save my tears for the unemployed."
In a Monday morning quarterback way, I agree giant mistakes were made, but I'm not so sure what truth certain plans would have worked.... We learned early on from Joe Biden, that the administration's economists and strategy leaders Larry Summers, Christina Romer, and Timothy Geithner misread the severity of the recession. The worst recession since the great depression needed a lot more targeted stimulus... Then they made a mistake trying to get republican votes by using a third of the stimulus for tax cuts. The democrats wasted some of the stimulus on pet projects. If it all would've been spent on high speed rail infrastructure and alternative energy projects, I think we wouldn't have a different result. If it would have failed, then I would be happy to say, OK we gave it our best shot; let's try your way. However, I think that would have worked.
As you know, the Fed is an independent body, and I give Ben Bernanke credit for his efforts in keeping us from going over the edge but he has a lot of people nervous, including his subordinates. He misread Wall Street because they're not interested in helping small business, when they can make much more money peddling derivatives with near zero interest rates money.
It's no secret that I'm not a supply sider... I think this economy has a demand problem, and I agree with the economist I mentioned when he said that" taxes and regulation and uncertainty is a myth" because businesses are doing pretty well but a lot of their profits are coming from overseas where they have shipped their jobs.... Healthcare is an uncertainty because the opposition had done a good selling job but it has a lot of problems that need to be worked through. I don't think people want to give back the good parts like availability, being denied for pre- existing conditions, and keeping your adult child on your health plan a little longer.
You may be right about all your points, but I look at this economy and see decades of bad habits have led us to this, and I'm now convinced it was foolish of me to think that we would be out of this mess in three years. I heard a good football analogy this morning.. The economist said" you can draw up your plan have all the people in place, but it's not a sure thing." Of course when it doesn't work, criticism will come, and it has.
I know it's easy to put all the blame on the administration (the buck stops here) the Fed and the democrats and economic theories that were used ,I will accept that, but I think it's a lot more than that...I have always considered you to be objective and pragmatic in your views,so I know your post have a lot of truth attached to it.
As a liberal I don't buy that non-business friendly administration because you can't get any more business friendly than Geithner,Summers and Bernanke and they might have lost Summers but John Daley is way too friendly.
MikeYou paint a gloomy picture of the future. I agree with most of what you say. I think the Keynesian experiment by our leaders has failed. John Keynes never intended the part of his theory that governments should put money into the economy should last so long. I read recently the other part of John Keynes theory was that government should put money aside in good times and then use it to pump up the economy in bad times. Somehow our leaders have forgotten that part.QE1 and QE2 were successful in pumping up the stock market. QE2 ends this month and the stock market is beginning to have withdrawal pains. The FED plans to continue using other funds (12 to 16 billion dollars per month) to ease the pain. This is sort of like putting cocaine users on methadone.Uncertainty about taxes, regulation, healthcare has made everyone uneasy. Our current Administration is definitely unfriendly to business and the private sector. All these economic theories that looked so good in the classroom have failed in the real world.
The wasteful government spending initiative headed by VP Biden announced today, seems like a no brainier. ABC reported that it could save 10s of billions of dollars, it's a start. 2000 duplicate websites eliminated ect.
Ok LegionI buy that but I think we have to see how much we are selling overseas opposed to what we are selling in the U.S....i.e. autos,cigarettes, and electronics...
Have a good night..dinner bell is ringing
Mike, what I meant was that if the economy is producing the same amount as before the downturn with less workers, then products are selling at the same rate too. Why make it if it isn't selling? True that statement was by the NYT writer, the second statement was by you, that inventory isn't selling so company s aren't hiring, but yet they are still producing the same amount domestically or overseas.
I think the disconnect is because the NYT writer is talking about the overall economy including financial markets ect., and you are talking about durable goods.
So my apologizes, although paper financial products (gains) are a lot different than manufactured goods.
For what it's worth I agree 100%; we should never cut back on education because that's was going to really make us or break us.... A less educated work force will eventually show up on a balance sheets ..... Brazil, India and China and not waiting on us to get our fiscal house in order..... They would love for us to slash R&D and education.
I never said that I was against correcting some trade imbalances; read my post;if the consumer will go for it,then let's do it..... I'm not in line with every step unions make because corporations and unions are in it for their bottom line... I have never worked for a union.
The $700 billion was to the financial sector but how can you forget a domino effect of that? GE would have gone down along with a lot of other companies who could not get funded. We have a credit based economy..... Even if the " Infrastructure Bank " got its start,they probably would need funding.
We disagree on the depression but that is not surprising...I imagine that is another left/ right argument..:-)
I'm not married to the " infrastructure bank" but the administration laid out for new proposals....Neither President Obama nor most economists see quick fixes to the nation's 9.1 percent unemployment rate. But the president's official jobs council offered a list of "fast-action" proposals that the council said could create more than a million jobs without the need for major legislation from Congress.... Read about them,pehaps you will disagree with one or two...You might disagree with all of them but they are proposals.
I may not be a economic genius but I know that economic proposals are not a truth certain but the basics probably are..... Each recession or downturn create their own different unique problems...IMO
I don't think some folks could see the light at the end of the tunnel if the "Gumbermint" gave them a goose that pooped golden eggs. We are tied to a world economy and until those mega-corporations start turning around the profits to real investments to compete with cheap labor we will be stuck in neutral. Right now the profit goes into their pockets not into improvement. We do not need mass man power to produce the best products with the most value. We need to step into the future with the best educated work force in the world and that will never happen laying off teachers and closing schools. Brains will out produce backs every time.
Mike,Import tariffs make US products more competitive by increasing the price of Chinese (or other) products. Yes, the consumer pays more, but there are more US workers working to make those products. I'm actually surprised you're not more for this as the unions have advocated this for years.
Sorry but patriotism doesn't make investments lucrative. Besides, the $700 million bailout was to the financial sector, not the manufacturing sector. No, in my opinion there will be no public sector/private sector partnership. I also don't think public sector construction will bring back the economy. It sure didn't during our first depression.
Inventories are not being depleted enough for companies to hire in USA, factory's are adding employees overseas.....I would like to know the basis of your question.
Legion357I don't see a contradiction because they are making the same with less people.... Am I missing your point?
That's saying that the variables for yesterday's economy are not the same since employers are using technology,overtime, and part time employees to fill the gap....I don't understand your question.
"According to Catherine Rampell of the New York Times, since the recovery began, the economy is producing as much as it was before the downturn but employers are using seven million fewer workers doing that."
"The inventory won't jump off the shelf if 14 million people are out of the job and another 10 million have given up. The working consumer is still paying off old debts and saving more, leaving them with less disposable money to spend. "
???? Those two statements seem to contradict each other. If the same amount is being produced as pre-downturn, then the same amount must be being purchased currently.
You can make "worrying" your priority but that still won't reduce the National Debt.... I never said we couldn't take steps to sensibly reduce its rate of growth without choking our weak recovery.. The country has been in decline for decades; we used to be a world leader in patents; that is no longer true. What we thought was prosperity in the 1990s was merely a bubble; we continued in that trend......Facts are facts,liberal mindset or not.... We will not pay off the National Debt in our lifetime....BTW what is wrong with a liberal mindset?Ideologically superior ?
I don't usually worry about things I cannot control.
You may choose not to worry about the National Debt since it will not be paid off in your lifetime. I and many other rational people have great problems with spending money today that my grandchildren and great-grandchildren will be required to repay. Not to mention that this debt and the tax burden required to pay it off will negatively weigh on the economy for generations to come, promising future generations a less prosperous country than that into which I was born. That you can blithely shrug this off boggles the mind, but says a lot about your liberal mindset.
My bubble ruptured on September 15, 2008.:-) I have no way of knowing whether the private sector will go for this, but I heard they might be persuaded with a patriotic theme, much like the WPA of the 1929 Great Depression....The Fortune 500 does have $1.6 trillion in reserves, because the Fed is keeping interest low.... Didn't the American taxpayer come to their aid with a $700 billion bailout?
I mentioned taxes several times but the president is on record saying that he will not renew the Bush tax cuts, because he has already implemented 17 types of tax cuts for businesses. ... You might be right, but I'm still thinking as the inventories are depleted and the companies receive more purchase orders than they can meet with the curtain workforce.They will have to make a move... They will have to start hiring; taxes or not, to stay competitive. If they don't meet their orders; there are other companies out there to pick up the slack....I see the other view, whereby unnecessary regulations and some payroll incentives might ease up cash for more hiring.... Whatever works.
I'm 100% with you on trade imbalances but isn't an import tariff sort of like sales tax imposed by China on us? Do you think they will take this lightly? I think we need to rework all of our trade agreements.
I am a partisan but I don't have any of the 535 votes to cast, so all I can do is write a silly blog to vet my displeasure because congress is so hyper partisan...:-)
Sorry to bust your bubble, Mike. But the idea of government bonds is a no-starter. Businesses won't invest in them because of the low interest rate and foreign countries won't buy them because of the low interest rate and higher risk of default.
I do believe you've summarized the problem fairly well with one exception: the reason businesses aren't investing in more jobs is multi-faceted. One reason you didn't cite is the tax rate uncertainty. Obama has preached raising taxes. Businesses are tax-adverse (as are we all, if truth be known). If this uncertainty was resolved, businesses would be more prone to invest.
To me, the obvious solution that is not being articulated is import tariffs. The concept of free-trade has not worked well for the US. We have lost jobs to overseas outsourcing ever since we instituted that policy. Free-trade only works if the standard of living is uniform across the world (which of course, we know it isn't). China also has not played by the rules by keeping its currency artifically valued. This tilts the playing field their way. I think import tariffs on Chinese goods would definitely go a long way towards equalizing trade between the two countries.
BTW, I like this post better because you're suggesting solutions. Just don't buy this administration's (or any administration's) line because it belongs to your political party. I think party politics is what has caused a lot of problems. While party politics has always been a function of Washington, this escalated due to Watergate. Post-Watergate politics has been either "let's get the current president" or "let's get even for Watergate" depending upon which party you belong to. Somehow, we must get past this if we are to continue as one country. As it stands right now, the middle of the US is diametrically opposed to what the two coasts want in nearly every aspect of American life. If this trend continues, we will separate into two or more countries, which will not be a good thing.