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I’m No Economist

By Rabble Rouser Reverend Amy on February 26, 2009 at 7:12 PM in Banking Committee Hearings, Banking Institutions, Barack Obama, Ben Bernanke, Bernie Mac Scandal, Bernie Madoff, Christopher Dodd, Congress (House & Senate), Democrats, Earmarks, Economic Stimulus, Economy, Franklin Raines, Hoodwinking, Nancy Pelosi

But Paul Krugman is. And he had this to say about the team Obama has put together to deal with the economy: All the President’s Zombies. Nice title, eh? Pretty much sums it up, but Mr. Krugman does go on to explain:

Ben Bernanke’s testimony over the past two days gives us our best clue yet about where the administration and the Fed are going with bank rescue. And the answer seems to be … nowhere.

Simon Johnson and James Kwak read it the same way I do:

This is another sign of the serious brainpower that has been expended on finding ways to avoid or minimise government ownership of banks, and to avoid the slightest possibility of offending shareholders – shareholders whose shares have positive value primarily because of the expectation of a further government bail-out.

And The Economist’s Free Exchange puts it bluntly:

At this stage, I joked, I’d be just as happy with them just saying, “We have a strategy, we will continue to inject capital to prop up zombie banks indefinitely. That’s pretty much the whole plan and we’re counting on it bringing the financial sector back to life someday, somehow”. Is it just me or is that pretty much what Ben Bernanke said yesterday?

No, it’s not just you.

Well, that’s good to know. I mean, it seems like a whole bunch of us have been saying this makes no sense, and we don’t want our hard-earned taxpaying dollars going down the drain, but we felt like voices crying out in the wilderness. Perhaps we are not alone afterall:

I’d add a political-economy point. Here’s Noam Scheiber, in the new TNR economics blog:

Yesterday afternoon I spoke to a senior Democratic aide in the Senate who repeatedly emphasized that, the way things stand now, it would be almost impossible to get another cent for the banks. Congress has “bailout fatigue,” the aide said.

Indeed. As long as capital injections are seen as a way to bail out the people who got us into this mess (which they are as long as the banks haven’t been put into receivership), the political system won’t, repeat, won’t be willing to come up with enough money to make the system healthy again. At most we’ll get a slow intravenous drip that’s enough to keep the banks shambling along.

More and more, it looks as if we’re headed for the decade of the living dead.

I couldn’t have said it better myself. But like I said, I’m not a major economist who won a Nobel Peace Prize. Krugman is and did, so I’m gonna listen to him.

So speaking of banks wanting more money, guess who is back at the trough asking for more money from us, the taxpayers I’ll give you a hint – it’s an alphabet company. Yep – you got it, AIG:

Hell freakin’ yeah, they’re back. Some nerve, too, if you ask me, especially after their lavish spending ways. They want us to continue to subsidize them when tey have not demonstrated any fiscal restraint or responsibility?? Are you kidding me?

And while I am on this topic, it is high past time for the Democrats to stop blaming this situation totally on the Republicans. I can understand WHY they are trying to convince everyone that they had absolutely NOTHING to do with this, but the reality is that they have been in charge of BOTH Houses of Congress for over two years now. Where was their oversight of the SEC, in its non-existent oversight of people like Bernie “Made-Off”? Where were they when Franklin Raines ran Fannie Mae into the ground (and Raines, who left in disgrace, was one of Obama’s advisers)? Where were they when Jim Johnson ran Freddie Mac into the ground (and we know where Tim Johnson is – he was on Obama’s Veepstakes Search)?

So, yeah – Bush was horrible – we know that. But for the past 2 years, the DEMOCRATS have been the ones in charge of the purse-strings and the oversight, so stop the blame game, start taking some responsibility, and STOP HANDING OUT OUR MONEY LEFT AND RIGHT!!! Enough already!!

And that ESPECIALLY goes for you, Nancy Pelosi, with this new $410 BILLION dollar package chock-full of pork the House is proposing!! ENOUGH!!!

Linda C.

I think the banks and the share holders need to be offended. I don’t care if the share holders are offended. They made how much money off of the BS they were selling? No way can a shareholder be more offended than the tax payer.
Ellen D

OK let me get this straight.

The Congress won’t give the banks any more money, so the banks will just stay frozen as they are now because to move in any direction sends them crashing down.

So then the shareholders would lose their money anyway and all business in the country and all consumer borrowing would have been frozen for so long that we would be in a major depression?

This is a plan?

Linda C.

Pretty much.

The first trillion didn’t unfrezze the banks, the second trillion isn’t going to unfreeze them either.

Obamastolemyboyfriend

But hey, the dems got to clean out the cookie jar before the crash and I personally think that was their plan. They propped it up until they pushed through their bs programs and then they’ll have to let it crash because there is no stopping it. You can’t tell me they didn’t see this coming. There are you tube videos of them having meetings about civil unrest, etc. What do you think they were planning was going to cause civil unrest? They took theirs and will leave us with nothing. Think about it. I have been reading and hearing about this crash for over a year by financial experts and you think the Government didn’t know?
Bull!

HARP

I will keep a light on for you in Canada.
trixta

ObamaSMB — You are sooooo right on the mark!
basil

Great analysis, OSMB.

I’m a Linda too

I wanna know why I keep getting Obama right, but our leaders can’t seem to see and read the obvious?

When Timmy G gave that pitiful speech, I said then…oops…anyone paying attention to the dollars they’re talking about for this bailout program? He only (sic) has 350 Billion left to spend and he’s talking 2 trillion dollar investment. That means I expect they will be asking for another trillion dollars. Only they’re not saying it NOW, because he’s trying to pass his massive payback “Porkumulus” bill first, THEN they’ll hit up Congress for more.

We are so screwed. Why cannot these folks pay attention to the obvious in front of their face. They work harder to make up sh!t.
Ignignokt

Should they let the shaking banks collapse and just pay off the FDIC insured accounts? I wonder how much that would cost? Hey, if it’s cheaper, maybe it should be considered.

They’d have to promptly make good on all of the insured accounts, of course. Otherwise there would be an overnight run on all U.S. banks, and the entire system would collapse.

elise

lgnignokt, what is your suggestion? The banks are the primary cause of the economic situation and throwing another trillion dollars their way won’t fix the problem. They loaned money for mortgages on homes the borrowers couldn’t afford. There have been standards in place for years for buying a house and they ignored them. If a buyer purchases a home for $250k and their income is $30k/yr and the buyer understands the payment will go up in five years and there will be a balloon payment due which they will not be able to pay, who is responsible? The bank or the buyer? The rule a few years ago was at least 10% of the purchase price as down payment and the mortgage payment no more than 30% of the yearly income. It was necessary to provide evidence of steady employment history and debt to income ratio. Instead, the banks have bent the rules to include people living on unemployment, child support and alimony then they put hundreds of these loans into bundles and sold them to other banks without disclosing the payment history to other banks. And those banks counted the toxic loans as assets to bolster their stock so the CEOs could demand huge salaries, stock options, perks and parachutes. Now they want American taxpayers to bail them out and our government is accommodating them. The new stimulus package will allow some home owners to re-finance their homes provided they first declare chapter thirteen bankruptcy which means they will default on other credit obligations. Can’t you see this is insane? More money will borrowed ( if the US can find lenders ) and the dollar will be worth less. It would be cheaper for the federal government to guarantee deposits, if they exclude the investors who are responsible this insanity, and focus on hard working people who don’t live above their means and pay their bills on time. I don’t believe these bailouts are necessary. We are being screwed.

KR

Hi elise, the banks are not completely at blame. The government (Carter and later Clinton) put the Community Reinvestment Act in place which set the stage for banks to be sued and forced to make loans to people who could not repay them. Once this ball started rolling lenders took advantage of the situation. And look who was directly involved in the 90′s suing Citibank.

http://www.docstoc.com/docs/1679005/Obama-Sued-Citibank-Under-CRA-to-Force-it-to-Make-Bad-Loans

mountainaires

Think about it. Fewer and fewer workers means less tax revenue, which leads to higher taxes for those who are working, and higher interest rates:

Mass layoffs on the rise in South Florida, across U.S.

Employers have been dismissing more workers in mass layoffs in recent months, both nationally and in South Florida.

After 21 years at the same Fort Lauderdale boat company, Robert Mulder lost his job. Mulder was laid off in November along with dozens of his co-workers, and now they face a job market that’s expected to get worse.

Mass layoffs are putting more people like Mulder out of work. The U.S. Department of Labor said Wednesday that 238,000 people lost their jobs in mass layoffs nationwide in January, a 60 percent increase from January 2007.

Nearly 2,600 people have been affected in Broward and Miami-Dade counties so far this year — and it’s only February.

This time last year, the number was less than 900.

Many of them face the prospect of long-term unemployment. Mulder and countless others, well-established in their careers, were suddenly thrust into a labor market that hasn’t enough jobs to go around.

”It’s pretty tough out there,” said Mulder, who was his company’s accounting manager and assistant controller. “Hopefully something will turn around, but you listen to the news and you get more depressed about what’s going to happen. I’m looking for stuff at lower salaries, temp to perm, anything.”

But the cuts won’t affect only the people whose jobs are eliminated. As the number of available jobs shrinks, competition will be keen for whatever’s left. That could push down wages.

”It isn’t just bad for people who are losing their jobs,” said Bruce Nissen, a labor sociologist at Florida International University. “It’s bad for everybody in terms of our incomes.”

The layoffs, which the Labor Department says affected 19,301 Floridians in January, cut across industries and geography.

The department defines mass layoffs as those involving 50 or more workers at a single company. Florida companies sometimes disclose smaller cuts to the state but also may fail to disclose larger cuts.

[...]

Whatever the causes, mass layoffs can have a deep and lasting effect. Those laid off tend to be older and have years invested in their careers, said University of Florida economist Dave Denslow.

These people have found work they are comfortable with, and are abruptly forced to start over.

”It takes them a long time to find a new job,” Denslow said, adding they often have to take a pay cut. What’s more, research suggests that even years later, they may still be making less than their peers who were never let go.

”On average,” Denslow said, “you’re hurt forever.”

http://www.miamiherald.com/business/story/922174.html

And, think about this. Defaults of entire countries means less trade, which also cuts revenues:

IMF Seeks $500 Billion to Double Funding

16 Nations on Verge of Default

KEVIN CARMICHAEL

Globe and Mail

February 26, 2009 at 11:53 AM EST

The International Monetary Fund says the financial crisis could push as many as 16 nations into default, and that it will need to double its lending capacity to mount an appropriate response.

In a 31-page report released today in Washington, the fund argues that it will need the equivalent of about $500-billion (U.S.) to prop up governments that have been crushed by the collapse of the global economy.

http://business.theglobeandmail.com/servlet/story/RTGAM.20090226.wIMFreport0226/BNStory/Business/home
mountainaires

“The largest Asian central banks have gone on record that they are curbing their purchases of US debt. And they are also diversifying their huge reserves, steadily moving away from the dollar. The risks have simply become too many and too serious.” —W. Joseph Stroupe, Editor, Global Events

h/t The Big Picture

More bad news:

The global economy will contract even more than previously expected in 2009, as recessions in non-U.S. developed countries will likely be as bad as and possibly much worse than that gripping the United States, according to research firm IHS Global Insight.

http://www.marketwatch.com/news/story/Outlook-global-economy-seen-worsening/story.aspx?guid=%7B050CB9C9%2DFE3F%2D4F45%2D9E28%2DF48951634B25%7D

Pepsi and IBM More Credit Worthy than the US Government

http://georgewashington2.blogspot.com/2009/02/pepsi-and-ibm-are-now-more-creditworthy.html

“GM Posts $30.9 Billion Loss as Wagoner Seeks New Aid”

“Feb. 26 (Bloomberg) — General Motors Corp. reported a $30.9 billion annual loss, the second-biggest in its 100-year history, as Chief Executive Officer Rick Wagoner asked the Treasury for more cash to survive through 2009.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=ad5tp1hvKipk&refer=home

MOSCOW — Concern of a deepening financial crisis in Central and Eastern Europe escalated Wednesday when Standard & Poor’s Ratings services downgraded Ukraine sovereign debt deeper into junk status.

The ratings agency, which downgraded Latvian debt a day earlier, cited growing doubts that the Kiev government can fulfill aid requirements set by the International Monetary Fund, putting its two-year $16.4 billion standby loan agreement of last November in doubt.

S&P said it had lowered its long- and short-term foreign currency sovereign credit ratings on Ukraine to “CCC+/C” from “B/B”, and its local currency ratings to “B-/C” from “B+/B”. S&P added …

http://online.wsj.com/article/SB123556981445271321.html?mod=europe_home

HARP

This video game generation think…..if this spending binge won`t work…we can just start the game over again…..wrong….they will be paying for the rest of their lives.

mary

Thanks, Amy!

Great post. Tells it like it is! WHERE WAS THE DEMOCRATIC CONGRESS OF NANCY AND REID THE LAST THREE YEARS IN FULL CONTROL? And both Timmy and Raines were in charge of Fannie & Freddie–and both on Obama’s gravy train!

Why didn’t the “Democratic” Congress call the Iraq war a farce eearlier? Why were they so GUTLESS?

OBAMA THE “TRASH-TALKIN’ HOOP PLAYIN’ JOCK-IN-CHIEF” (cover of Men’s Journal!) WAS IN THE SENATE! TOO BUSY SENDING OUT HIS ANOREXIC RESUME FOR THE TOP JOB!!

trixta

Congress was not gutless; it was calculating how best to take advantage of the impending economic disaster. They figured the Repubs got theirs, and now it was time for the Dems to do the same.

mary

Just watched “ROLLOVER”—an old 70s movie with JANE FONDA about an alarming scenario of falling American reserves. It is incredibly relevant. If you can rent the video, please view this.

Mountaires: “Asian central banks are diversifying their huge reserves moving away from the American dollar”….frightening indeed.
Jackarooty

You do good work Amy!
Another example of buyer’s remorse on behalf of Mr. Krugman.

They are dropping like flies and I’m watching them go down. I never forget a slight and I’m keeping a count of them.

I wrote to a friend today “don’t blame me…I voted for Hillary then McCain”.

Schadenfreude…it’s a beautiful thing.

http://rabblerouserruminations.blogspot.com Rabble Rouser Reverend Amy

Thanks, Jackarooty! I appreciate your comments, too!

I hear ya – I haven’t forgotten the people who stabbed Hillary in the back, propped up this Empty Suit, and are now having the scales fall from their eyes…

So, what did your friend say?

Jackarooty

Hi Amy,
Actually it was a rhetorical response to her email about Obama. She is a lifelong conservative Republican (who was planning to vote for Hillary if given the chance) and she had gotten her panties in a wad after listening to talk radio all day!

Quick anecdote about her…she’s a professional makeup artist and was hired to do makeup for the 2004 Democratic Convention here in Boston. When Barney Frank found out that she was a Republican he refused to let her touch his face. Yes, the party of tolerance…my ass.

Btw, I love that you read your comments. I must agree with you regarding your previous post about Robert Byrd. The discourse was incredibly intelligent and civil with just the right amount of snark from the commenters!

http://rabblerouserruminations.blogspot.com Rabble Rouser Reverend Amy

Thanks, Jackarooty!

I have to say, when we aren’t inundated by trouble making Obots out to hijack the threads by nitpicking or downright verbal assaults, there are usually GREAT comments. I find the readers here to be well-informed, passionate, and often, VERY funny…

And of course I read your comments! I never really know when my posts are going to go up, so sometimes I’m a little late to the party (like this one), but yes – I care what y’all think!

Thanks for more info on your friend. You have got to be KIDDING me abt Barney! I used to live in Boston (years ago), earlier on in his tenure. I was so proud of MA for having elected him. Now, he is just like all the rest of them, though not even allowing someone who is a Rep. to work with him is absurd (and how did he find out, I have to wonder?). Such incredible tolerance from someone who has been the recipient of tolerance. WOW.

jbjd

That’s funny; we in MA used to say this about McGovern (against Nixon).

Jackarooty

Yup, and I voted for McGovern!

Ignignokt

If gold is really a safer way of hanging onto wealth, why are so many people currently so damn eager to exchange their gold for your dollars? They’re spending a fortune advertising their willingness. Apparently they’re expecting profits from selling at current prices, or they wouldn’t be selling.

If people believe currency is really going to fall through the floor, why are people hoarding it instead of spending it for tangible goods that recently become less expensive? There are places out there that will gladly exchange your soon-to-be-worthless cash for all sorts of permanently valuable stuff. They’re called stores.

Why aren’t people placing bets on solid, cheap stocks yet? Has no one noticed that the big crash has already happened? The first to figure this out are going to become wealthy when things turn around.

(My last contrarian rant of the evening. Have a good one.)
TeakwoodKite

Rev Amy , Did you happen to see Tim the Turbo Man on JIM LEHRER last night?

JIM LEHRER: But here, again, using — forget the word “nationalization.” What does the government get in exchange from the banks for what they’re doing? Do they get stock? Do they get ownership?

TIMOTHY GEITHNER: Yes, the government gets an ownership stake in the company proportionate to the level of assistance we’re providing.

JIM LEHRER: Just like anybody else would if they bought stock, right?

TIMOTHY GEITHNER: Just like anybody else would if they get stock. So the government is getting a return on these investments to help compensate for the risk we’re taking

Has Timmy the Turbo Man check the ROI on bank stocks lately?

Watched the video all I got was that these bozo’s do not have a plan and are acting like the proverbial guy who can’t ask for directions, preferring to remain lost in fantasy land…just like anyone buy stock???
SWPAnnA

The obvious thing to those who’ve DONE the work, equipped, qualified and disciplined themselves to succeed, is that the Senate is corrupt and Congress is clueless. No Plan, no sweat equity, no wisdom. Socialism? Not hardly. State Capitalism is more accurate and the PARTY APARATUS have consolidated their grip on the Treasure.
http://! stodgie

the most amazing thing to me about the govies and bank stocks is who the preferred owners are ie the chinese. we can’t afford to piss them off. they own us. NO ONE TALKS OR WRITES ABOUT THAT! on rose the other night the ceo of morgan stanley was interviewed. he talked about how the chinese and japanese were major investors. the chinese own wells fargo.

Patience

The economist Niall Ferguson talks about this a lot. He refers to the symbiotic relationship as “Chimerica” and says it’s not in the interest of China to see America fail. He makes sense.

Seattle Moss

Patience..
I have been talking about hyper inflation. but after reading Ferguson I’m not sure that it will happen
What a good read!!!
http://www.theglobeandmail.com/servlet/story/RTGAM.20090223.wferguson0223/EmailBNStory/crashandrecovery/?pageRequested=1

Seattle Moss

This is the paradox….Printing money as Obama is going to do should cause hyper inflation. Obama thinks that credit is the solution and that Americans will buy again if we simply have the means to borrow…Wrong
Americans need to save and then they can get credit. Banks need to loan to businesses so they can produce products in the US.
The paradox lies in China..As long as they keep buying our debt then inflation is prevented however, if you watch Peter Schiff from the other night you may believe as I have believed that hyper inflation is around the corner
Bizarre Times!!!
http://www.youtube.com/watch?v=p-eE85uFv8k
TeakwoodKite

the deleveraging process has barely begun,

Call it the global foreclosure

Something LD has talked about. Interesting interview.

Seattle Moss

As you know, Chimerica – the fusion of China and America – is one of my big ideas. It’s really the key to how the global financial system works, and has been now for about a decade. At the end of The Ascent of Money, I speculate about whether or not that relationship will survive. If it breaks down, then all bets are off, for the U.S. and indeed for Asia. I think that’s really the key point. Both s ides stand to lose from a breakdown of Chimerica, which is why both sides are affirming a commitment to it.”

“It’s very interesting that the Chinese in the last week were saying such soothing things around the [Secretary of State Hillary] Clinton visit. This was only days after Treasury Secretary Tim Geithner used the dreaded ‘m’ word – currency manipulation.

Chris

Do you know if it is true that Hillary delivered the offer of eminent domain to China as collateral for loans to the US? Been reading this report and have not determined if true. I am sick at the thought but am waiting for confirmation. Thanks for any info.

I’m a Linda too

btw, thanks for a great post RRRA

…and, on top of all this, did you hear the latest?

Obama is proposing doubling the tax on all his backers, Hedge Fund Managers. This is hysterical!

“February 26th, 2009
Obama’s first budget: Higher taxes for hedge fund managers
Posted: 05:10 PM ET

By Scott Spoerry
CNN

WASHINGTON (CNN) — Hedge fund managers stand to pay much higher taxes on their earnings under proposals in President Barack Obama’s first budget, which was unveiled Thursday.

The administration proposes reclassifying managers’ partnership income as ordinary income, rather than capital gains — effectively more than doubling the rate of tax on the money from 15 percent to 35 percent, or even more.”

http://cnnwire.blogs.cnn.com/2009/02/26/obamas-first-budget-higher-taxes-for-hedge-fund-managers/

http://rabblerouserruminations.blogspot.com Rabble Rouser Reverend Amy

Thanks, IALT!

Oh, the irony, the irony…And not just them, but all of those Hollywood stars who backed Obama no matter what he REALLY did (as opposed to what he said), like Sean Penn bein gso thankful that this country finally elected a liar, cheat, and thief like Obama – that wasn’t how he put it exactly – that’s my translation!!

Or, like Rosie O’Donnell who said in a recent interview that Obama has done NOTHING for her to criticize, and that she is thrilled that he has the opportunity to restore our standing in the world.

Really? NOTHING?? Not his anti-gay marriage stance? Not that he picked an actively anti-gay, anti-choice man to run the DNC? Not that he supported FISA? Not that he has expanded the Faith-based Initiatives AND allowed them to hire people based on religion? Not that he is keeping extraordinary rendition and states secrets?? Not that he just proposed a MASSIVE budget bill on top of the other gazillion dollars for the stimulus package? I could go on and on, yet she find fault with NONE of these things??? Pathetic. Just pathetic how progressives and liberals have become JUST LIKE the Bush supporters they despised…

Obamastolemyboyfriend

Interesting, isn’t it, that Northern trust is partying major league at the taxpayers expense. No apologies. Do you think Obama is going to hold Northern Trust accountable (like he promised in his speech) after they gave him that sweet mortgage deal?

Come to think of it, Obama and MEchelle bought a house they couldn’t afford. Maybe they are behind on their mortgage payments and will be helped out by the mortgage bailout plan!
Patience

Simply out, Paul Krugman is an economist who’s very comfortable with government control, and not just of the financial industry. The only reason he criticized the “stimulus” bill is because he felt it wasn’t enough!

As is his wont, he gladly favors nationalization. Some favor it by default. Some favor a bit of it here and there. Some don’t want it.

Considering the fact that we have a spendthrift legislature and POTUS, the idea of wholesale nationalization worries the hell out of me. I bet Obama, Dodd and Frank are still raking in campaign cash from the banking/financial industry, just like they always have. The opposition is impotent, and they have only themselves to blame.

These are truly pathetic times.
http://www.sonicninjakitty.wordpress.com Sonic Ninja Kitty

Be careful of listening to anything Krugman says. First off, he writes for the NYT–’nuff said on that. Next, check out what his Nobel was awarded for–it was for a specific theory regarding protectionism during an industry’s infancy period so as to give it a chance to establish itself. With all due respect, I do not think he knows what he is talking about when it comes to general economics. He is a Keynsian (or “neo-Keynsian”–whatever!) and never recognizes (as far as I’ve read) the flaws in that school of thought.

There is a veritable army of award winning and brilliant economists out there who completely disagree with him!!! He first whined about Obama not making the “stimulus” package big enough (when we should be leaving it all alone and letting prices readjust) and now he’s complaining that the ‘infusion for banks is too slow’?? Please tell me, Paul, WHERE is this money coming from?? Please tell me what happens after we print all this green paper. Please stop with the chicken little ‘sky is falling’ today and start looking at the disaster we are creating for tomorrow!!

Sometimes I get to hyperventilating when I think of all this disastrous meddling these loonie little gnomes are doing to our economic system! It’s not easy to maintain a semblance of sanity, here. Readings from Ron Paul, von Mises, and Friedman et al are the only islands of reason I can find.

James

Krugman has been dead on on his predictions during this crisis. He knows what he’s talking about and the White House would be smart to take his advice.

Patience

Even a lot of non-economists predicted this crisis. It wasn’t difficult to see that the housing market was irrational and what the consequences would be.

AF catfish

Krugman also criticized what the stimulus was spent on – he felt it should be spent on infrastructure because once the projects are completed, you have something to show for it.

If the stimulus is spent on the homeless, (my city is getting $95 million in stimulus money to spend on the homeless, grrreeeat) then when the money runs out cities are left broke again. (Unless cities can find a mayor to say no to the homeless advocates.)

Patience

I believe it was just last week that Krugman said in so many words that government spending during the Great Depression didn’t do the trick and that it wasn’t until WWII that the economy finally rebounded. There was certainly plenty of infrastructure spending before the war yet it didn’t solve unemployment and other economic problems.

Martin Feldstein says military spending is an appropriate/effective stimulus yet the more recent past seems to disprove it — military spending these days doesn’t involve the huge industrial effort as it did before — even as recently as the Reagan era.

I think too many economists are blinded by partisanship and their opinions are therefore suspect. They even regard history with jaundiced eyes.

Common sense tells me that the profligate spending recently proposed will crowd out the private sector vis a vis access to credit, and the certain increased taxation of not only the top 2% but many more of us will deliver a mortal blow unless our POTUS and legislators restrain themselves.

Time will tell, that’s for sure.

http://www.sonicninjakitty.wordpress.com Sonic Ninja Kitty

I believe it was just last week that Krugman said in so many words that government spending during the Great Depression didn’t do the trick

Yes, and Krugman thinks the answer is more spending! He frightens me.

I think your common sense is spot on.

James

No.

What Krugman said is that during the Great Depression, there was NOT enough spending. It was actually the REVERSAL of Keynesian ideas that made the country worse. In every year the government increased spending, unemployment went down. But then the fiscal conservatives convinced FDR that he had to try to balance the budget, so he increased taxes and LOWERED spending, and the economy went south. And so it wasn’t until WWII, the largest public works project in history, the government was able to get out of the depression.

Patience

It may have been just last week or so that Krugman said in so many words that it wasn’t until WWII that America recovered from the Great Depression. And there was certainly a lot of infrastructure spending before that war.

Martin Feldstein says military spending is effective stimulus yet the past few years seem to disprove it, maybe because military spending these days doesn’t involve the huge industrial effort like before — even as recently as the Reagan era.

Too many economists are blinded by partisanship that extends to regarding even known historical economic data with jaded perspectives. It’s not a perfect science — I’m married to an economist- by-training.

Common sense tells me that government borrowing required to finance the profligate spending proposed will crowd out the private sector. And taxation of more than just the top 2% will be required to pay the debt, delivering a punishing blow that could likely extend the recession unless our POTUS and legislators show some restraint eventually.

Time will tell.

Sassy

A brief paragraph that I read yesterday:

But the mortgage industry contends the measure will impose steep and unpredictable costs on its companies, which will be forced to pass them along to borrowers in the form of higher fees and interest rates.

Make no mistake about it, we are being taken, both coming and going!
http://noquarterusa No-nonsense-Nancy

When you put the corrupt Chicago political machine in charge of the counry can you really expect to have anything but what we have today and are looking forward to tomarrow? They have had this planned for years. It’s how communism gets started. Make the ecomomy so depressed and the people so poor that they are beholden to the government. They have no power left. This is why we the people need to fight this takeover of our country!
Miss H

We no longer have a United States of America. The Congress gives away trillions that we oppose. The country is being controlled by offshore bankers and billionaires that don’t give a rodent’s backside about you or the USA. They want us bankrupt. That way they can buy up our infrastruture (watch the roads we paid for become toll roads). Taxes will go thru the roof. Guns will be confiscated. You are rapidly becoming a controlled third world country. Urge your state to pass bills reaffirming state’s sovereignty.