RE: Chris 03.02.09 at 3:39 pm
To his & Rick’s comments – a big BOOYAH! Rick’s perspectives are right on – tho the right / best things to be done are so obvious to anyone paying attention that it becomes very clear, as well, that the powers controlling our government (since 1913 to now – the banks & Fed) are not interested in what is right / best (for all) but only for their greater profit and control. Mountains of evidence make this blatantly CLEAR. So a lot of time & effort could be better spent working on revealing this rather than discussing particular policies. This, like trying to eliminate a problem tree by clipping at its branches instead of its roots, will accomplish very little while the far greater control & power lies in the hands of the opposition (promoters of socialism / fascism, etc. – the Fed & banks). People need to get informed about just who / what they are, what they are doing (obscurely) – what their agenda is, etc. Most people are, and have been against the bailouts – especially of the banks, and all, but our sleezy congress still follows the dictates of the Fed!!! NO REAL MEANINGFUL / BENEFICIAL CHANGES WILL TAKE PLACE UNTIL WE GET RID OF THE UNCONSTITUTIONAL FED!!! Some Critical References that everyone needs to be familiar with: The Money Masters Video (Bill Still); G. Edward Griffin – “The Creature from Jekyll Island;”
Bud Burrell – The Greatest Crime in History;
Patrick M. Byrne – “The Dark Side of the Looking Glass”
John Perkins – “Confessions of an Economic Hitman”
AND, recent – Very insightful, eye opening Interview with G. Edward Griffin – on Feb. 28, 2009 (last Sat.) The “2nd Hour Guest Expert” (about 30 min.) here: http://www.financialsense.com/fsn/main.html
and, TO KEEP MORE WEALTH IN THE HANDS OF YOU – THE PEOPLE – SAVE KEEP POSSESSION OF YOUR INCOME TAXES – You can direct them into a revenue producing asset (in Solar Power) instead of giving your dollars to the government & the bankers. Better description, & contact here: tnns.org/energy-credit
%%%%%%
Thanks for the excellent links, Walt. “The Money Masters” was recently aired on PBS and lays out the bankers’ agenda, and the insidious reasons for the Fed’s existence, with great clarity.RA
Al HavermannMar 8, 2009 @ 9:43
Rick,
How soon your forget that most of the bailout occurred on Bush’s watch.
Al
%%%%%
Bush’s bailout was bank-by-bank, day-by-day, duct-tape stuff. Obama’s plan is far more ambitious and would steer the country toward eurosocialism, asphyxiating private capital in the process.RA
Chris LetiziaMar 7, 2009 @ 22:32
As hurtful as it would have been, if the Gov’t had done absolutely nothing about this “crises” 18 months ago, a lot of Wall Street firms and banks would have gone away but but we would now be in recovery. Sure wold have been better than what we now have.
Regards,
Chris
cameroniMar 7, 2009 @ 20:21
POOF!
That swooshing sound is a few trillion dollars of “VAPOR PAPER”
Gone and never to be seen again. It is the sound of your tax dollars evaporating into the black hole of the financial system without any explanation of where it really went. And no explanation will be forthcoming either. While the US dollar rises against a Euro disaster those now “real” US dollars are hard at work (in other peoples hands) buying up good quality tangible assets for pennies on the dollar.
Meanwhile, the rest of you poor suckers will be left holding the bag with useless and highly inflationary “vapor paper’ in 9 months time when the dollar finally tanks. And for the conspiracy theorists, do you not wonder if this was not the plan all along.
While we witness the greatest single theft in the history of Western Civilization hardly any opposition has been aroused. It is just too complicated isn’t it. Nor a wimper from the frightened masses or the newly unemployed. It’ a wonder isn’t it. Just “vapor paper” as we watch trillions of taxpayer commitments vanish before our eyes without explanation or accountability. And all the while we sleep well at night knowing that the Government has stated that “transparency” is a key to it’s policy and implementation of the stimulus package. (Good Grief! are they kidding us?)
Can a tax revolt be that far off?
Cam
Don ZuckerMar 7, 2009 @ 10:59
All technicians know or should have known by 2005 that the Dow and S&P were eventually going to revisit the point of breakout from 1982. The 30 year retracement was in the cards regardless of who was president or the p0licies of the administration. Moreover, our Founding Fathers message of the dangers of bankers invading our monetary system and the toxic consequences of it, are in fact, written in STONE in Washington DC. We know that Bretton-Woods and Glass-Steagal repeal played a big role in the the conduct of Wall Street fraud. It is dishonest to imply that our first honest president in a century is the cause of our national distress. It may well be that his policies are highly questionable. But it sure beats the increased risk of civil war. Don Zucker
AndyMar 7, 2009 @ 6:51
Rick,
I’m confused. I’m not a supporter for tax increases in general, but someone has to pay for the increases in spending brought on by the massive decreases in taxes that were given out to the rich during the Bush years. Obama just plans to let the tax cuts expire. If Congress wanted them to be permanent when they passed them, why didn’t they do so then? Clearly Congress figured out the obvious: Somebody has to pay for our government.
As for the small business tax increases, I’ve yet to see a rational analysis of the situation. A LOT of noise, but not much else. Seems to me that all a small business has to do to avoid the tax increase is hire more people. Taxable income will fall, taxes won’t go up. The “tax increase” on small business is really a tax increase on the owner’s making more than $250K of personal income derived from the small business, not the business itself. All the business has to do to avoid more taxes is spend more money on growing the company, whether it be capital spending or labor. Taxes are imposed on income, not spending. Spend more, lower the income, lower the tax.
Can someone please explain why this is not the intended effect of Obama’s tax plan? Not with bombastic noise, but clear, unassailable facts. I’ve tried to search Google for this explanation, but so far all I can find is noise. Lots of noise. (Of course now that’s I’ve posted this I will find it, it works like support, complain about the problem, then find the solution before support can.)
Thanks,
Andy
%%%%%
Talk to some small-business owners, Andy, and report back to us. What do you think their incentive is for taking the enormous risk of starting a business in the first place, if not to to make more money than the average working stiff? In particular, ask them about health-care costs and the things Obama has proposed to make these costs not merely more burdensome, but prohibitive.
If Obama wants to create jobs, he need only jettison the hard-left vendetta — starting with rescinding ALL taxes on entrepreneurs for the next five years.
–RA
CarolMar 2, 2009 @ 19:39
Rick, thank you for providing a forum in which we can respectfully disagree without name-calling. And I do disagree with your idea of calling a two-year moratorium on paying our taxes. That would be seen as a default amongst our creditors. Why would they believe that we were only going to declare a two-year moratorium? Why not 3 or 4 or more? Why would they continue to buy our treasuries so we can buy products that we used to make before we shipped them overseas because we didn’t like environmental laws, worker safety laws, unions, etc? Furthermore, while government receipts may currently be $2.54 trillion, the service on that debt, we will not doubt agree, continues to accrue. Why would anyone buy our Treasuries? We will basically have stated, in a round-about way, that we are defaulting. We will see how this works when the next bank crisis happens, which will be the cascading of defaulted credit card debt.
Speaking of the banks, we can’t let them fail. The $700 billion bailout has been nothing but thrashing about in the dark to avoid (shudder) nationalizing them, which is nothing more than going in, firing the executive suite, cleaning them up and then sending them back out to the private sector. We’ve always done this. Another idea, from Joseph Stieglitz, would have been to take that $700 billion, accredit new banks with sufficient leverage to allow them to make loans to small businesses and individuals who can afford the debt.
As for Obama’s new budget, I am relieved that the American people will finally see just how much the wars in Iraq and Afghanistan cost – to see those costs actually show up on the books instead of the shell game of “emergency funding” for them.
I am attaching a Moody’s website with a graph showing the “bang for the buck” we get for tax cuts of different sorts, extending unemployment comp, temporary increase in food stamps, aid to local governments and infrastructure. It makes interesting reading. http://www.economy.com/dismal/graphs/blog/mz_012208_1t.GIF
Finally, I challenge you to look at a graph showing the objective results of the 30-year infatuation with the Laffer Curve. The results are anything but conservative.
Thank you for the opportunity to disagree. Best wishes.
AussieObserverMar 2, 2009 @ 19:01
I wonder how many people really understand the economic theory of J.M. Keynes. Whilst he is associated with the New Deal, he did not devise that strategy. I read Keynes a very long time ago (wish I still had the book) and I have recently renewed my interest in the subject. What I have noticed is that people talk about burying Keynesian economics but what Obama put in place is not what would have been prescribed by Keynes. First of all, I think that he would have analyzed the present economic data in a very different way, and his prescription would not have been something like porkulus. The one thing I picked up about Keynes recently was that he believed that in a time of war it is appropriate to raise taxes. Bush failed to follow that line of thinking, hence the debt worsened under G.W. Bush. However, in a time of unemployment one strategy that Keynes would adopt is reducing taxes, which is the opposite of the strategies adopted by Obama. What I am saying is that no one has been following pure Keynesian theory. Keynes actually stated that his theory would work properly in a communist society. I do not know if this is correct because I have not seen any analysis on whether Keynsian economics were adopted in Russia and elsewhere :). Keynes and Milton Friedman were responsible for the IMF and the World Bank. Not all of the policies associated with these institutions have been correct over the years. Also, prior to the death of Keynes, his theory was challenged, and he actually accepted the thrust of the challenge that was made – pointing out that what he wrote was a theory and open to challenge.
When I read Keynes we were moving into a period of stagflation – this was during the 1970s. It was evidence that in certain conditions Keynsian and Friedman economics do not work to balance the economy and to provide balanced budgets.
What I think of the Obama Administration spending spree is that it is the wrong prescription to fix the problem. I disagree with those people who have blamed Bush. I also disagree with those who place the blame on Wall Street for the present crisis. A proper analysis of the situation needs to consider the role of government and faulty legislation put in place by Carter and Clinton that required that financial institutions provided mortgage loans to those who could least afford them. This was a mandatory requirement that more than half of the loans of an institution had to be to this particular group. This is the starting point for any analysis.
The trillions of spending that has been proposed is absolutely obscene. There is no way that the “crisis” that took place should have had this form of response. The same form of irresponsibility has also taken place in Australia, and now Brown and other European countries want to repeat the same error. This is not Keynsian economics at work. This is just plain irresponsible behaviour by people who do not have a clue about economics or that there is a need to have a balanced budget. The response has been totally inappropriate for the given situation. There is not even the high rates of unemployment like in the 1970s.
Rick, I enjoy your writing and the picture is right out of something I’d do myself, however I think you aiming@ the wrong culprits in all of this. Is Obama supposed to just keep on with the FAILED policies of the last 30 yrs. ? Or should he at least try something different? Personally, I see NO easy way out of this mess. Doing nothing though is not an option politically @ this juncture. Let’s give his ideas some time to work themselves out before we judge them a failure.
Grass RangerMar 2, 2009 @ 15:51
It turns out that the giant sucking sound that Ross Perot predicted in the 92 election is actually going to be the US Govt sucking the life out of the US economy. What is the likelihood of US being able to borrow 2 trillion dollars this year from the chinese after we have stopped buying their products? Borrowing that much from our own economy dries up private capital for private investment. Instead of debt being destroyed by this depression, it appears most of this debt will be monetized by the Treasury and the Fed. We all should under no illusions about the result of that. Today’s market action is the economy bending over and puckering up to kiss its own butt goodbye.
phil barkerMar 2, 2009 @ 15:50
I recently read where the Financial Trust Index, newly compiled, and unveiled by the University of Chicago, and Northwestern University, showed only 20 % of the public have any confidence in the government’s handling of the financial bailout. This was encouraging because it meant that not all Obama voters were “Kool aid drinkers”, but were just fed up with Bush.
ChrisMar 2, 2009 @ 15:39
Wall street had the party and we got the hangover
The proposed stimuous plan will not nor can it work. This administration has already committed $7.5 trillion to go to Wall street, bankers and sundry future make work programs. If they really cared to get the ecomony going, this is a sure fire solution.
As the total tax receipts last year (individual and corp) was $2.54 trillion, refunding last years taxes and cancelling this years would be a third less costly than what is proposed and would be guaranteed to get this economy going. That despite the needed bankcruptcy of major banks and Wall Street firms. I really don’t think they care. Why has nobody proposed this sure solution?
%%%%%%%%%%
You’re right, Chris, it should have occurred to someone that canceling taxes altogether for two years — now *that* would have been a stimulus! — would have been far, far cheaper than spending/committing $11.5Tr and getting back absolutely nothing, as has proven to be the case so far.RA
It is the financial Wall St engineers of wealth creation (ooops! American entrepreneurs of innovation) that got USA into the mess and despite the concern over the stimulus money, there hovers over USA a gigantuan cloud. Once you open the Wall St financial books, the Credit Default Swaps totalling est. $55 T will bring the USA to total financial collapse. These wealthy innovators have brought the honest working Americans to the point of total foreclosure on their economic lives. It bedevils me to understand the reasoning that the so-called innovators will rescue America. Good luck.
OccdudeMar 2, 2009 @ 12:07
It is with heavy heart that I agree with you. All these policies that are purpotedly to “stimulate the economy” are going to pull the emergency brake on any recovery.
I just wish I was analyzing the history of this event rather than experiencing it firsthand. On an up note, the economic fallacy that “war ends recessions” ala the great depression hasn’t kicked in yet but that may be because everyone is too economically weak and pre-occupied with their own domestic issues to muster much energy on that thought, but stay tuned……
RichMar 2, 2009 @ 10:48
Taxing private entrepreneurial job creators and competing with them via public spending actually flogs permanent jobs drier than shipping them overseas, ensures current Shadowstats.com 18% unemployment may surpass 1933 highs of 24.9%…If we look past gushing AP & Time Magazine People Mag-Style propaganda about O autograph seekers in Congress, we find PollingReport.com Gallup USA Presidential Job Approval poll on 2/21/09 one month anniversary in office, found O at 59% approve vs 25% disapprove. For the record, W was 62% approve, 21% disapprove one month into office. Picking the new dog in the White House may not help…We predict from our armchair Os numbers may follow the Dow….Econocasts.net predicts punk economy may not bottom until 2013. This suggests O may, as he said, be a one term president. Oh well… The really interesting thing may be midterm elections in 2010, since borrowing and spending originate in the House. Much of the record $789 B Stim Bill spending deferred to 2010 to tilt these elections. Since the record of government bailouts by Hoover and others in contracting economies is that they did not work, perhaps The Constitution Party or even wrote-ins may carry the day. Anyone interested in running Independent to heal the pox on both parties? Mitt Romney of Bain Co frontrunner at CPAC…Regards*Rich
cpMar 2, 2009 @ 10:04
Agreed, jc
Many of us believe that the most intelligent course to pursue would be to allow all the debts to be acknowledged and let all corporations and individuals that are insolvent go bust. The resulting dislocation would be catastrophic, but would probably clear before the possible long drown out decline that we most likely now face.
Who has the political will to initiate this course? With the well coordinated attack machine of the shadow Republican party (Fox, Kudlow, Rush,think tanks etc) any Democrat would instantly bring ruin to his party for decades to come. As to political will, the Bush administation and their congressional lackeys showed none in dealing with financial prudence as they doubled our national debt and unleashed the greed hounds that accelerated this decline.
It’s true, Obama could have taken the course that Ron Paul suggests, but so could have Bush/Cheney. They could have done much to prevent this, but chose not to.
^^^^^^^^^^^
It seems the only politicallyfeasible course was the wrong one that has been so diligently pursued by Obama. No President could have said, as Ron Paul would, “Let all the banks (and automakers) fail!’ From a purely economic standpoint, though, the “Let ’em fail!” option was an absolute no-brainer. RA
Lion61Mar 2, 2009 @ 9:49
Hi Rick, seems to me the U.S. is an empire, not a republic. It appears to be crumbling from within due to overreach. It appears to be a taboo subject, but common sense would dictate, a country of 350M people simply can’t control the future of billions around the globe through military force or presence. We are witnessing the end of an era and the U.S. is falling, the way of all previous empires. Albiet at an accelerated rate. Discussion of domestic politics is a red herring. Shrink the empire and renewed prosperity may follow.
K MerryMar 2, 2009 @ 8:44
AIG is a black hole. Everything the government is doing is socializing losses, not stimulating. Deflation is here but this is just the lull in battle before severe inflation or hyperinflation re-emerges shortly. I just can’t believe that the American people have become so complacent, fearful, or ignorant to the consequences of such a monetary policy. A quote from Star Wars: “So this is how freedom is given up, by thunderous applause.”
CarolMar 2, 2009 @ 8:04
Complain if you will about Obama’s proposals but any comments about running up the debt after the Bush administration are complete hypocrisy – it took Bush 8 short years to double the national debt from the level run up by ALL previous administrations. And frankly, the damage done to the damage done to the middle class, wherein their income rose by 1% from the 2000 recession while the upper 2% gained in the hundreds of % – what, would you prefer that the unemployed go homeless and starve to death? It would be nice if the private sector could take up all the unemployed and get the economy chugging along again but where is the demand now since the shrinking middle class is drowning in debt? Demand? How could the vast middle class afford to demand anything? The last resort is the government. Quit bitching. The upper earners have had it all their way, to the detriment of the middle class, for the last 30 years. You want to see profligacy? Check out the debt run up by Reagan, Bush pere and Bush fils. Disappearing jobs? Well that’s been a thoroughly bipartisan “accomplishment” that Clinton fast tracked. No investigation, no heeding the warnings. What to look forward to now? Bite down hard as the fire sale of American assets go to our new landlords from the Middle East and Asia.
%%%%%%%%%%%
Blame falls equally on both parties –and on all of us over-borrowers — but that doesn’t make Obama’s solution any more acceptable. His spending so far dwarfs the ramping up of Bush’s budget. As for the supposed wisdom of substituting government demand for private demand, we’ll evidently have to see “Stimulus” fail miserably before we can bury that Keynesian notion for good.RA
will BelloMar 2, 2009 @ 8:02
Rick, In regard to your comment that the actions of this administration may be a deliberate calculated attack on capitalism. Are you familiar with the Cloward piven strategy ? If not here’s a link. http://www.discoverthenetworks.org/groupProfile.asp?grpid=6967
They are two professors from Columbia whose work has become the manifesto for the radical left. It is very unfortunate that at this point the radical left has taken over my party to the degree that moderates are actively being attacked from within.
Scary times, but on the bright side he is a gifted speaker!
&&&&
Thanks for the link, Will. In retrospect, Rahm Emanuel wasn’t kidding when he suggested that crisis represented opportunity. RA
jclarkMar 2, 2009 @ 4:53
“…. the stimulus package is deliberately anti-capital, a vengeful and self-destructive act against every GOP president since Reagan.”
Unfortunately, the GOP presidents have been huge spenders of precious capital, just as the DEMs have been. When it comes to taking America to her knees, they have all ‘spent’ us into oblivion.
Comments on this entry are closed.
RE: Chris 03.02.09 at 3:39 pm
To his & Rick’s comments – a big BOOYAH! Rick’s perspectives are right on – tho the right / best things to be done are so obvious to anyone paying attention that it becomes very clear, as well, that the powers controlling our government (since 1913 to now – the banks & Fed) are not interested in what is right / best (for all) but only for their greater profit and control. Mountains of evidence make this blatantly CLEAR. So a lot of time & effort could be better spent working on revealing this rather than discussing particular policies. This, like trying to eliminate a problem tree by clipping at its branches instead of its roots, will accomplish very little while the far greater control & power lies in the hands of the opposition (promoters of socialism / fascism, etc. – the Fed & banks). People need to get informed about just who / what they are, what they are doing (obscurely) – what their agenda is, etc. Most people are, and have been against the bailouts – especially of the banks, and all, but our sleezy congress still follows the dictates of the Fed!!! NO REAL MEANINGFUL / BENEFICIAL CHANGES WILL TAKE PLACE UNTIL WE GET RID OF THE UNCONSTITUTIONAL FED!!! Some Critical References that everyone needs to be familiar with: The Money Masters Video (Bill Still); G. Edward Griffin – “The Creature from Jekyll Island;”
Bud Burrell – The Greatest Crime in History;
Patrick M. Byrne – “The Dark Side of the Looking Glass”
John Perkins – “Confessions of an Economic Hitman”
AND, recent – Very insightful, eye opening Interview with G. Edward Griffin – on Feb. 28, 2009 (last Sat.) The “2nd Hour Guest Expert” (about 30 min.) here: http://www.financialsense.com/fsn/main.html
and, TO KEEP MORE WEALTH IN THE HANDS OF YOU – THE PEOPLE – SAVE KEEP POSSESSION OF YOUR INCOME TAXES – You can direct them into a revenue producing asset (in Solar Power) instead of giving your dollars to the government & the bankers. Better description, & contact here: tnns.org/energy-credit
%%%%%%
Thanks for the excellent links, Walt. “The Money Masters” was recently aired on PBS and lays out the bankers’ agenda, and the insidious reasons for the Fed’s existence, with great clarity. RA
Rick,
How soon your forget that most of the bailout occurred on Bush’s watch.
Al
%%%%%
Bush’s bailout was bank-by-bank, day-by-day, duct-tape stuff. Obama’s plan is far more ambitious and would steer the country toward eurosocialism, asphyxiating private capital in the process. RA
As hurtful as it would have been, if the Gov’t had done absolutely nothing about this “crises” 18 months ago, a lot of Wall Street firms and banks would have gone away but but we would now be in recovery. Sure wold have been better than what we now have.
Regards,
Chris
POOF!
That swooshing sound is a few trillion dollars of “VAPOR PAPER”
Gone and never to be seen again. It is the sound of your tax dollars evaporating into the black hole of the financial system without any explanation of where it really went. And no explanation will be forthcoming either. While the US dollar rises against a Euro disaster those now “real” US dollars are hard at work (in other peoples hands) buying up good quality tangible assets for pennies on the dollar.
Meanwhile, the rest of you poor suckers will be left holding the bag with useless and highly inflationary “vapor paper’ in 9 months time when the dollar finally tanks. And for the conspiracy theorists, do you not wonder if this was not the plan all along.
While we witness the greatest single theft in the history of Western Civilization hardly any opposition has been aroused. It is just too complicated isn’t it. Nor a wimper from the frightened masses or the newly unemployed. It’ a wonder isn’t it. Just “vapor paper” as we watch trillions of taxpayer commitments vanish before our eyes without explanation or accountability. And all the while we sleep well at night knowing that the Government has stated that “transparency” is a key to it’s policy and implementation of the stimulus package. (Good Grief! are they kidding us?)
Can a tax revolt be that far off?
Cam
All technicians know or should have known by 2005 that the Dow and S&P were eventually going to revisit the point of breakout from 1982. The 30 year retracement was in the cards regardless of who was president or the p0licies of the administration. Moreover, our Founding Fathers message of the dangers of bankers invading our monetary system and the toxic consequences of it, are in fact, written in STONE in Washington DC. We know that Bretton-Woods and Glass-Steagal repeal played a big role in the the conduct of Wall Street fraud. It is dishonest to imply that our first honest president in a century is the cause of our national distress. It may well be that his policies are highly questionable. But it sure beats the increased risk of civil war. Don Zucker
Rick,
I’m confused. I’m not a supporter for tax increases in general, but someone has to pay for the increases in spending brought on by the massive decreases in taxes that were given out to the rich during the Bush years. Obama just plans to let the tax cuts expire. If Congress wanted them to be permanent when they passed them, why didn’t they do so then? Clearly Congress figured out the obvious: Somebody has to pay for our government.
As for the small business tax increases, I’ve yet to see a rational analysis of the situation. A LOT of noise, but not much else. Seems to me that all a small business has to do to avoid the tax increase is hire more people. Taxable income will fall, taxes won’t go up. The “tax increase” on small business is really a tax increase on the owner’s making more than $250K of personal income derived from the small business, not the business itself. All the business has to do to avoid more taxes is spend more money on growing the company, whether it be capital spending or labor. Taxes are imposed on income, not spending. Spend more, lower the income, lower the tax.
Can someone please explain why this is not the intended effect of Obama’s tax plan? Not with bombastic noise, but clear, unassailable facts. I’ve tried to search Google for this explanation, but so far all I can find is noise. Lots of noise. (Of course now that’s I’ve posted this I will find it, it works like support, complain about the problem, then find the solution before support can.)
Thanks,
Andy
%%%%%
Talk to some small-business owners, Andy, and report back to us. What do you think their incentive is for taking the enormous risk of starting a business in the first place, if not to to make more money than the average working stiff? In particular, ask them about health-care costs and the things Obama has proposed to make these costs not merely more burdensome, but prohibitive.
If Obama wants to create jobs, he need only jettison the hard-left vendetta — starting with rescinding ALL taxes on entrepreneurs for the next five years.
–RA
Rick, thank you for providing a forum in which we can respectfully disagree without name-calling. And I do disagree with your idea of calling a two-year moratorium on paying our taxes. That would be seen as a default amongst our creditors. Why would they believe that we were only going to declare a two-year moratorium? Why not 3 or 4 or more? Why would they continue to buy our treasuries so we can buy products that we used to make before we shipped them overseas because we didn’t like environmental laws, worker safety laws, unions, etc? Furthermore, while government receipts may currently be $2.54 trillion, the service on that debt, we will not doubt agree, continues to accrue. Why would anyone buy our Treasuries? We will basically have stated, in a round-about way, that we are defaulting. We will see how this works when the next bank crisis happens, which will be the cascading of defaulted credit card debt.
Speaking of the banks, we can’t let them fail. The $700 billion bailout has been nothing but thrashing about in the dark to avoid (shudder) nationalizing them, which is nothing more than going in, firing the executive suite, cleaning them up and then sending them back out to the private sector. We’ve always done this. Another idea, from Joseph Stieglitz, would have been to take that $700 billion, accredit new banks with sufficient leverage to allow them to make loans to small businesses and individuals who can afford the debt.
As for Obama’s new budget, I am relieved that the American people will finally see just how much the wars in Iraq and Afghanistan cost – to see those costs actually show up on the books instead of the shell game of “emergency funding” for them.
I am attaching a Moody’s website with a graph showing the “bang for the buck” we get for tax cuts of different sorts, extending unemployment comp, temporary increase in food stamps, aid to local governments and infrastructure. It makes interesting reading. http://www.economy.com/dismal/graphs/blog/mz_012208_1t.GIF
Finally, I challenge you to look at a graph showing the objective results of the 30-year infatuation with the Laffer Curve. The results are anything but conservative.
Thank you for the opportunity to disagree. Best wishes.
I wonder how many people really understand the economic theory of J.M. Keynes. Whilst he is associated with the New Deal, he did not devise that strategy. I read Keynes a very long time ago (wish I still had the book) and I have recently renewed my interest in the subject. What I have noticed is that people talk about burying Keynesian economics but what Obama put in place is not what would have been prescribed by Keynes. First of all, I think that he would have analyzed the present economic data in a very different way, and his prescription would not have been something like porkulus. The one thing I picked up about Keynes recently was that he believed that in a time of war it is appropriate to raise taxes. Bush failed to follow that line of thinking, hence the debt worsened under G.W. Bush. However, in a time of unemployment one strategy that Keynes would adopt is reducing taxes, which is the opposite of the strategies adopted by Obama. What I am saying is that no one has been following pure Keynesian theory. Keynes actually stated that his theory would work properly in a communist society. I do not know if this is correct because I have not seen any analysis on whether Keynsian economics were adopted in Russia and elsewhere :). Keynes and Milton Friedman were responsible for the IMF and the World Bank. Not all of the policies associated with these institutions have been correct over the years. Also, prior to the death of Keynes, his theory was challenged, and he actually accepted the thrust of the challenge that was made – pointing out that what he wrote was a theory and open to challenge.
When I read Keynes we were moving into a period of stagflation – this was during the 1970s. It was evidence that in certain conditions Keynsian and Friedman economics do not work to balance the economy and to provide balanced budgets.
What I think of the Obama Administration spending spree is that it is the wrong prescription to fix the problem. I disagree with those people who have blamed Bush. I also disagree with those who place the blame on Wall Street for the present crisis. A proper analysis of the situation needs to consider the role of government and faulty legislation put in place by Carter and Clinton that required that financial institutions provided mortgage loans to those who could least afford them. This was a mandatory requirement that more than half of the loans of an institution had to be to this particular group. This is the starting point for any analysis.
The trillions of spending that has been proposed is absolutely obscene. There is no way that the “crisis” that took place should have had this form of response. The same form of irresponsibility has also taken place in Australia, and now Brown and other European countries want to repeat the same error. This is not Keynsian economics at work. This is just plain irresponsible behaviour by people who do not have a clue about economics or that there is a need to have a balanced budget. The response has been totally inappropriate for the given situation. There is not even the high rates of unemployment like in the 1970s.
Rick, I enjoy your writing and the picture is right out of something I’d do myself, however I think you aiming@ the wrong culprits in all of this. Is Obama supposed to just keep on with the FAILED policies of the last 30 yrs. ? Or should he at least try something different? Personally, I see NO easy way out of this mess. Doing nothing though is not an option politically @ this juncture. Let’s give his ideas some time to work themselves out before we judge them a failure.
It turns out that the giant sucking sound that Ross Perot predicted in the 92 election is actually going to be the US Govt sucking the life out of the US economy. What is the likelihood of US being able to borrow 2 trillion dollars this year from the chinese after we have stopped buying their products? Borrowing that much from our own economy dries up private capital for private investment. Instead of debt being destroyed by this depression, it appears most of this debt will be monetized by the Treasury and the Fed. We all should under no illusions about the result of that. Today’s market action is the economy bending over and puckering up to kiss its own butt goodbye.
I recently read where the Financial Trust Index, newly compiled, and unveiled by the University of Chicago, and Northwestern University, showed only 20 % of the public have any confidence in the government’s handling of the financial bailout. This was encouraging because it meant that not all Obama voters were “Kool aid drinkers”, but were just fed up with Bush.
Wall street had the party and we got the hangover
The proposed stimuous plan will not nor can it work. This administration has already committed $7.5 trillion to go to Wall street, bankers and sundry future make work programs. If they really cared to get the ecomony going, this is a sure fire solution.
As the total tax receipts last year (individual and corp) was $2.54 trillion, refunding last years taxes and cancelling this years would be a third less costly than what is proposed and would be guaranteed to get this economy going. That despite the needed bankcruptcy of major banks and Wall Street firms. I really don’t think they care. Why has nobody proposed this sure solution?
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You’re right, Chris, it should have occurred to someone that canceling taxes altogether for two years — now *that* would have been a stimulus! — would have been far, far cheaper than spending/committing $11.5Tr and getting back absolutely nothing, as has proven to be the case so far. RA
Aloha All
Let me interrupt myself long enough to ask if 6804 today is a tradeable bottom.
Maybe so for a big bounce:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3251493
It is the financial Wall St engineers of wealth creation (ooops! American entrepreneurs of innovation) that got USA into the mess and despite the concern over the stimulus money, there hovers over USA a gigantuan cloud. Once you open the Wall St financial books, the Credit Default Swaps totalling est. $55 T will bring the USA to total financial collapse. These wealthy innovators have brought the honest working Americans to the point of total foreclosure on their economic lives. It bedevils me to understand the reasoning that the so-called innovators will rescue America. Good luck.
It is with heavy heart that I agree with you. All these policies that are purpotedly to “stimulate the economy” are going to pull the emergency brake on any recovery.
I just wish I was analyzing the history of this event rather than experiencing it firsthand. On an up note, the economic fallacy that “war ends recessions” ala the great depression hasn’t kicked in yet but that may be because everyone is too economically weak and pre-occupied with their own domestic issues to muster much energy on that thought, but stay tuned……
Taxing private entrepreneurial job creators and competing with them via public spending actually flogs permanent jobs drier than shipping them overseas, ensures current Shadowstats.com 18% unemployment may surpass 1933 highs of 24.9%…If we look past gushing AP & Time Magazine People Mag-Style propaganda about O autograph seekers in Congress, we find PollingReport.com Gallup USA Presidential Job Approval poll on 2/21/09 one month anniversary in office, found O at 59% approve vs 25% disapprove. For the record, W was 62% approve, 21% disapprove one month into office. Picking the new dog in the White House may not help…We predict from our armchair Os numbers may follow the Dow….Econocasts.net predicts punk economy may not bottom until 2013. This suggests O may, as he said, be a one term president. Oh well… The really interesting thing may be midterm elections in 2010, since borrowing and spending originate in the House. Much of the record $789 B Stim Bill spending deferred to 2010 to tilt these elections. Since the record of government bailouts by Hoover and others in contracting economies is that they did not work, perhaps The Constitution Party or even wrote-ins may carry the day. Anyone interested in running Independent to heal the pox on both parties? Mitt Romney of Bain Co frontrunner at CPAC…Regards*Rich
Agreed, jc
Many of us believe that the most intelligent course to pursue would be to allow all the debts to be acknowledged and let all corporations and individuals that are insolvent go bust. The resulting dislocation would be catastrophic, but would probably clear before the possible long drown out decline that we most likely now face.
Who has the political will to initiate this course? With the well coordinated attack machine of the shadow Republican party (Fox, Kudlow, Rush,think tanks etc) any Democrat would instantly bring ruin to his party for decades to come. As to political will, the Bush administation and their congressional lackeys showed none in dealing with financial prudence as they doubled our national debt and unleashed the greed hounds that accelerated this decline.
It’s true, Obama could have taken the course that Ron Paul suggests, but so could have Bush/Cheney. They could have done much to prevent this, but chose not to.
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It seems the only politically feasible course was the wrong one that has been so diligently pursued by Obama. No President could have said, as Ron Paul would, “Let all the banks (and automakers) fail!’ From a purely economic standpoint, though, the “Let ’em fail!” option was an absolute no-brainer. RA
Hi Rick, seems to me the U.S. is an empire, not a republic. It appears to be crumbling from within due to overreach. It appears to be a taboo subject, but common sense would dictate, a country of 350M people simply can’t control the future of billions around the globe through military force or presence. We are witnessing the end of an era and the U.S. is falling, the way of all previous empires. Albiet at an accelerated rate. Discussion of domestic politics is a red herring. Shrink the empire and renewed prosperity may follow.
AIG is a black hole. Everything the government is doing is socializing losses, not stimulating. Deflation is here but this is just the lull in battle before severe inflation or hyperinflation re-emerges shortly. I just can’t believe that the American people have become so complacent, fearful, or ignorant to the consequences of such a monetary policy. A quote from Star Wars: “So this is how freedom is given up, by thunderous applause.”
Complain if you will about Obama’s proposals but any comments about running up the debt after the Bush administration are complete hypocrisy – it took Bush 8 short years to double the national debt from the level run up by ALL previous administrations. And frankly, the damage done to the damage done to the middle class, wherein their income rose by 1% from the 2000 recession while the upper 2% gained in the hundreds of % – what, would you prefer that the unemployed go homeless and starve to death? It would be nice if the private sector could take up all the unemployed and get the economy chugging along again but where is the demand now since the shrinking middle class is drowning in debt? Demand? How could the vast middle class afford to demand anything? The last resort is the government. Quit bitching. The upper earners have had it all their way, to the detriment of the middle class, for the last 30 years. You want to see profligacy? Check out the debt run up by Reagan, Bush pere and Bush fils. Disappearing jobs? Well that’s been a thoroughly bipartisan “accomplishment” that Clinton fast tracked. No investigation, no heeding the warnings. What to look forward to now? Bite down hard as the fire sale of American assets go to our new landlords from the Middle East and Asia.
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Blame falls equally on both parties –and on all of us over-borrowers — but that doesn’t make Obama’s solution any more acceptable. His spending so far dwarfs the ramping up of Bush’s budget. As for the supposed wisdom of substituting government demand for private demand, we’ll evidently have to see “Stimulus” fail miserably before we can bury that Keynesian notion for good. RA
Rick, In regard to your comment that the actions of this administration may be a deliberate calculated attack on capitalism. Are you familiar with the Cloward piven strategy ? If not here’s a link. http://www.discoverthenetworks.org/groupProfile.asp?grpid=6967
They are two professors from Columbia whose work has become the manifesto for the radical left. It is very unfortunate that at this point the radical left has taken over my party to the degree that moderates are actively being attacked from within.
Scary times, but on the bright side he is a gifted speaker!
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Thanks for the link, Will. In retrospect, Rahm Emanuel wasn’t kidding when he suggested that crisis represented opportunity. RA
“…. the stimulus package is deliberately anti-capital, a vengeful and self-destructive act against every GOP president since Reagan.”
Unfortunately, the GOP presidents have been huge spenders of precious capital, just as the DEMs have been. When it comes to taking America to her knees, they have all ‘spent’ us into oblivion.