Originally Posted by James50

...I knew from the headline it was ridiculous. Certainly not a high point for the WSJ...

-Take a second look.

Originally Posted by playwrite

For a very recent example that has flames shooting out my ears, look at this critique of some 'facts' presented by the now Murdoch-owned WSJ -

http://www.cjr.org/the_audit/a_62_pe...x_rate_wsj.php

Now there's a lot more to this critique, but let's just stop there. After reading this much, why would anyone ever read, let alone quote anything off the WSF editorial page again? This is just too much, that 'paper' couldn't be so bad as to lie so blatantly...

Good Lord. The Chittim's initial "apples and oranges" quibble, is legit', but the main thrust of Moore's article is not based on that:

http://online.wsj.com/article/SB1000...464445594.html

(Chittim neglected to include a link to the article for some reason)

...is in the editorial, then it it only "misleading" to idiots. Which is probably why Chttim works at Columbia instead of getting an honest job.

If anything, Moore's analysis underestimates the Progressives' fantasy tax rate vis a vis the 1970s, because he forgets to mention that state income taxes are a lot higher than they were back then (e.g., CT didn't even have an income tax), and the SS Ponzi payroll tax is higher now than it was then: 1971-1972: 9.2%; 1973: 9.7%; 1974-1977: 9.9%; 1978: 10.1%; 1979-1980: 10.16%, compared to 12.4% today.

Shittim also writes:

http://www.cjr.org/the_audit/a_62_pe...x_rate_wsj.php

But Moore knows full well that even if they wanted to, which they don’t, the Dems wouldn’t be able to enact every one of these. But he acts like they’re all coming...

Really? Then maybe Progressives should stop acting like they want them. Some people make the mistake of assuming that Progressives actually mean what they say.

Moore's key point vis a vis the 1970s is this:

You don't have to be Jack Kemp or Arthur Laffer to understand that a 29 percentage point rise in top marginal rates would make America a highly uncompetitive place.

What is particularly worrisome about this trend is the deterioration of the U.S. tax position relative to the rest of our economic rivals. In 1990, the highest individual income tax rate of our major economic trading partners was 51%, while the U.S. was much lower at 33%. It's no wonder that during the 1980s and '90s the U.S. created more than twice as many new jobs as Japan and Western Europe combined...

...Despite all of this, the refrain from Treasury Secretary Tim Geithner and most of the Democrats in Congress is our fiscal mess is a result of "tax cuts for the rich." When? Where? Who? The Tax Foundation recently noted that in 2009 the U.S. collected a higher share of income and payroll taxes (45%) from the richest 10% of tax filers than any other nation, including such socialist welfare states as Sweden (27%), France (28%) and Germany (31%). And this was before the rate hikes that Democrats are now endorsing...

Originally Posted by JDG 66

-Take a second look.



Good Lord. The Chittim's initial "apples and oranges" quibble, is legit', but the main thrust of Moore's article is not based on that:

http://online.wsj.com/article/SB1000...464445594.html

(Chittim neglected to include a link to the article for some reason)

...is in the editorial, then it it only "misleading" to idiots. Which is probably why Chttim works at Columbia instead of getting an honest job.

If anything, Moore's analysis underestimates the Progressives' fantasy tax rate vis a vis the 1970s, because he forgets to mention that state income taxes are a lot higher than they were back then (e.g., CT didn't even have an income tax), and the SS Ponzi payroll tax is higher now than it was then: 1971-1972: 9.2%; 1973: 9.7%; 1974-1977: 9.9%; 1978: 10.1%; 1979-1980: 10.16%, compared to 12.4% today.

Shittim also writes:

http://www.cjr.org/the_audit/a_62_pe...x_rate_wsj.php

But Moore knows full well that even if they wanted to, which they don’t, the Dems wouldn’t be able to enact every one of these. But he acts like they’re all coming...

Really? Then maybe Progressives should stop acting like they want them. Some people make the mistake of assuming that Progressives actually mean what they say.

Moore's key point vis a vis the 1970s is this:

You don't have to be Jack Kemp or Arthur Laffer to understand that a 29 percentage point rise in top marginal rates would make America a highly uncompetitive place.

What is particularly worrisome about this trend is the deterioration of the U.S. tax position relative to the rest of our economic rivals. In 1990, the highest individual income tax rate of our major economic trading partners was 51%, while the U.S. was much lower at 33%. It's no wonder that during the 1980s and '90s the U.S. created more than twice as many new jobs as Japan and Western Europe combined...

...Despite all of this, the refrain from Treasury Secretary Tim Geithner and most of the Democrats in Congress is our fiscal mess is a result of "tax cuts for the rich." When? Where? Who? The Tax Foundation recently noted that in 2009 the U.S. collected a higher share of income and payroll taxes (45%) from the richest 10% of tax filers than any other nation, including such socialist welfare states as Sweden (27%), France (28%) and Germany (31%). And this was before the rate hikes that Democrats are now endorsing...

OMG, let me see if I can dumb this down, whoops, I mean provide you with an elegant analogy to help in your understanding.

At the beginning of an argument, I tell you that the square footage of my trailer and those of all my neighbors in my trailer park, combined, had more square footage than your single puny trailer, and therefore, you are evil - why would you carry on a conversation with me beyond that?

Do you get it now?

"A ding if by land, a dong if by sea"

OMG, this has effectively ended all serious discussion of Palin running in 2012

http://youtu.be/oS4C7bvHv2w


Seriously, do you think her spin will be that she was drunk or on drugs?

When people stop believing in your bullcrap, what do ya do?

Well, kill free speech, right?

Mixed results in the MidEast. Let's see how it plays here in the Land of the Free -

http://www.washingtonpost.com/blogs/...N3HH_blog.html

Republicans demand TV station yank ad claiming GOP plan would `end Medicare’
By Greg Sargent
Attention, people, this is important: The battle over whether it’s true that the Republican plan would “end Medicare” is about to play out in a critical way in New Hampshire.

The National Republican Congressional Committee, which oversees House races for the GOP, has written a sharply-worded letter demanding that a New Hampshire TV station yank an ad making that claim. Whether the ad gets taken down could help set a precedent for whether other stations will air Dem TV ads making this argument, which is expected to be a central message for Dems in the 2012 elections.

The NRCC letter was provided to me by the Progressive Change Campaign Committee, which is airing the ad on WMUR against GOP Rep. Charlie Bass. The letter — which calls on Comcast Boston to take down the ad and is unusually detailed and emphatic — reflects how badly Republicans want a halt to these Dem attacks. Here’s the letter’s core argument:

The Budget Resolution as approved by the U.S. House of Representatives does NOT end Medicare. In fact, the Budget Resolution makes no changes at all to Medicare for current or near retirees, as none of the Medicare-related provisions in the Budget Resolution would even take effect until 2022. This fact makes the Advertisement especially misleading, as the woman featured in the Advertisement is a current Medicare beneficiary, and would not have her Medicare benefits ended, or even changed in any way, under the Budget Resolution...

Additionally, the Budget Resolution ensures that Americans aged 54 and younger will still have Medicare when they retire by implementing a new, sustainable model of Medicare. This new version of Medicare would actually REQUIRE insurance companies to GUARANTEE coverage for seniors.

The letter argues that the claim that Republicans would “end Medicare” is “blatantly and wholly false, and has been deliberately crafted to mislead and frighten voters.” It also cites a recent Politifact analysis that pronounced the assertion “highly misleading.”

But there are plenty of people making the opposite case: That the GOP plan does, in fact, end Medicare. The argument is that the GOP plan would do away with the current, single payer, government-run system that guarantees payment for your major health care costs as you move into retirement. The GOP proposal would replace this with a system in which government gives premium support — that could over time fall short of health care costs — to seniors to purchase their own private plans. In other words, the new plan does away with the program we now call “Medicare” and replaces it with a different program — and hence “ends” it.

“The plan would replace our current system, in which the government pays major health costs, with a voucher system, in which seniors would, in effect, be handed a coupon and told to go find private coverage,” Paul Krugman wrote recently. Similar cases have been made by Steve Benen , Josh Marshall, and Atrios, among others.

“There’s nothing even slightly misleading about calling this an effort to end Medicare,” Matthew Yglesias wrote recently, adding that it’s “important for all progressives on the Internet to draw a line in the sand under this one.”

The GOP demand that Comcast Boston yank may give progressives a chance to draw that line — but if the ad does get pulled it could become tougher for Dems to amplify the claim going forward. This is an important test case, and it’ll be interesting to see how this plays out.

UPDATE: Here’s video of the PCCC/ Democracy for America ad:

http://youtu.be/JaMsWnM242M

You can smell the desperation.

ABC News: Anemic Jobs Growth, Higher Unemployment Bodes Ill for Economy

Unemployment rose from 8.8% in March to 9.0% in April, and has now risen to 9.1% in May.

GDP growth in the first quarter of 2011 was 1.8%.

The comparable period in Ronald Reagan's first term was 1983. The economy was in recession throughout most of 1981 and 1982. These are the quarterly growth rates for 1983 and 1984:

83 Q1: 5.0%
83 Q2: 9.3%
83 Q3: 8.1%
83 Q4: 8.5%

84 Q1: 8.0%
84 Q2: 7.1%
84 Q3: 3.9%
84 Q4: 3.3%

The average quarterly growth rate of the U.S. economy since WWII is 3.3%. It is safe to say at this point that Obama is not following the same trajectory as Reagan. The fact that unemployment is going up, not down, after all that has transpired in the last two years, is an utter condemnation of Obama's economic policies.

The stimulus and the Fed's "quantitative easing" have been providing a sugar fix to the economy for the last two years, and that fix is running out. The mortgage bailouts in the housing sector have prolonged the correction in the real estate market and led to a double dip. In short, all of the government action and massive spending over the last two years has succeeded in nothing more than cementing in place the economic maladies afflicting the country.

The private sector has been doing zip, zilch, nada. Because the country is being governed by people with precisely the anti-business, anti-free market, anti-capitalism ideological dogma represented so thoroughly on this board. Unless something changes, which appears to be all but impossible at this point, the Democrats can play all the political games they want, throw all the old ladies over cliffs they want, and nothing will save them.

A lot of people posting here deluded themselves about 2010 right up until the last day. You would do well to prepare yourselves for the consequences of the utter failure of the economic philosophy you promote. When 9.1% of Americans (the number is actually much higher) are unemployed, the time for games is over. Unless the Democrats can come up with something other than demagoguery, the fall they began in 2010 is going to be completed in 2012, and there will be a Republican president with both houses of Congress once again.

Originally Posted by playwrite

You can smell the desperation.

Indeed you can, but not where you think.

Boomers are about to find out that there is no defined benefit system that is going to survive the next 20 years. Most of the so called "promises" are going to be broken. Its all an illusion, and the money is simply not there or likely to be there in the future. The Millies are not going to be played for suckers.

The partisan games unfolding today are irrelevant as much as we might enjoy the battle. The chickens are going to come home to roost no matter who wins the next election.

James50

Originally Posted by JustPassingThrough

ABC News: Anemic Jobs Growth, Higher Unemployment Bodes Ill for Economy

Unemployment rose from 8.8% in March to 9.0% in April, and has now risen to 9.1% in May.

GDP growth in the first quarter of 2011 was 1.8%.

The comparable period in Ronald Reagan's first term was 1983. The economy was in recession throughout most of 1981 and 1982. These are the quarterly growth rates for 1983 and 1984:

83 Q1: 5.0%
83 Q2: 9.3%
83 Q3: 8.1%
83 Q4: 8.5%

84 Q1: 8.0%
84 Q2: 7.1%
84 Q3: 3.9%
84 Q4: 3.3%

The average quarterly growth rate of the U.S. economy since WWII is 3.3%. It is safe to say at this point that Obama is not following the same trajectory as Reagan. The fact that unemployment is going up, not down, after all that has transpired in the last two years, is an utter condemnation of Obama's economic policies.

The stimulus and the Fed's "quantitative easing" have been providing a sugar fix to the economy for the last two years, and that fix is running out. The mortgage bailouts in the housing sector have prolonged the correction in the real estate market and led to a double dip. In short, all of the government action and massive spending over the last two years has succeeded in nothing more than cementing in place the economic maladies afflicting the country.

The private sector has been doing zip, zilch, nada. Because the country is being governed by people with precisely the anti-business, anti-free market, anti-capitalism ideological dogma represented so thoroughly on this board. Unless something changes, which appears to be all but impossible at this point, the Democrats can play all the political games they want, throw all the old ladies over cliffs they want, and nothing will save them.

A lot of people posting here deluded themselves about 2010 right up until the last day. You would do well to prepare yourselves for the consequences of the utter failure of the economic philosophy you promote. When 9.1% of Americans (the number is actually much higher) are unemployed, the time for games is over. Unless the Democrats can come up with something other than demagoguery, the fall they began in 2010 is going to be completed in 2012, and there will be a Republican president with both houses of Congress once again.

The simple truth about these economic hard times: there is no easy way out. President Reagan had it easy in contrast to President Obama; Reagan did exactly what John Maynard Keynes would have suggested for an inflationary time (cut back on government spending except on defense and business subsidies, raise taxes on the non-rich, and quit inflating the money supply). Such puts an end to an overheated economy. That is the solution for too much money chasing too few goods and too many people not wanting to low-paid, menial work such as retail sales clerking or fast food counter work. People must lower their expectations to get a saner world,

That was 1980. That was when people were getting 8% interest on regular savings accounts. Thirty years later what do we have?

Something more like 1934. There is just no way in which to make a quick buck except through outright gambles, from having a cash cow business, or from corruption and exploitation. Sure there would be huge money to be made by privatizing Medicare -- by a few companies that take advantage of a captive market. That would be political as well as economic fraud, the sort likely to turn many people Red politically -- Red as in adopting the hammer-and-sickle as a slogan.

America did get through the 1930s, the first two thirds two-thirds of the last completed Crisis Era that began with an economic meltdown analogous in many respects to that of 1929-1933, with genuine economic growth. The President of the time was widely castigated as the anti-business, anti-free market, anti-capitalism wrecker of every truism by which the economy had worked in recent years. Sure, those canons of trusting the tycoons and executives worked -- until the tycoons and executives created an economic order in which most people weren't keeping up with the economic growth of the time. A hint: the Gini coefficient for income in 2006 (eve of the financial/ real estate crash of 2007) was as high as it had been in 1929, the peak of the boom of the Roaring Twenties.

Speculative bubbles can have but one sequel: their collapse followed by a gutting of capital and the disappearance of profits. The only growth possible in the aftermath of a speculative bubble is small-scale, long-term, low-yield small businesses that owners can't easily sell off and can't milk. But they can build customer loyalty and they can keep relatives employed. Government can prime the pump with public works, but only so long as those public works are in construction. Government can guarantee old age benefits and the security of bank balances -- which it did as the Great Depression was underway and from the start of the recent downturn. But all in all, the 1930s were a good time in which to start a business as opposed to doing almost anything else. This time might be that again. Remember: the equity that one builds through the hardships of ownership and operation of a small business might not create easy lives for the founders of such businesses, but they can make life better for one's progeny.

Does anyone expect the ruling elites of American business to show any generosity toward working people? Just look at the politics that those elites support. Look at what they did in Germany, Italy, Japan, Spain, and Hungary in the 1930s when they got the reactionary governments that did their bidding. Workers became serfs in all but name. Industrial wages fell to levels best described as the margin of hunger. The workweek lengthened. Whatever existed of a welfare state vanished. Don't fool yourself: that is exactly what the GOP offers elites.

Don't fool yourself: institutions established in the New Deal and the Great Society may have prevented some outright starvation from which there is no recovery.

Originally Posted by pbrower2a

Government can prime the pump with public works, but only so long as those public works are in construction.

(Wow, PB. You wrote an entire post without mentioning "trickle down" or "nazis". Whatever meds you have gone back to, stay on them. You are actually making some sense. )

Sorry to lift out this one sentence, but this was the failure of the original stimulus. It went for all sorts of political payoffs and was almost completely wasted.

The big missing ingredient in the economy right now is investment in assets with a life over 20 years. This is primarily construction. If we had a normal amount of economic activity in construction, not a boom, but just normal contribution, our employment rate would be 6%. Unfortunately, there is almost a direct inverse correlation between the deficit and construction. As the deficit has gone up, construction has gone down. Perhaps this is coincidence, but more likely is that the unresolved deficit problem has raised uncertainty about the future to a point that no one can rationally invest in the long term. In economist talk - the risk premiums are too high.

(And before someone points it out, I am a commercial construction supplier. So, yes, I am talking my own book.)

James50

Originally Posted by James50

(Wow, PB. You wrote an entire post without mentioning "trickle down" or "nazis". Whatever meds you have gone back to, stay on them. You are actually making some sense. )

You missed my reference to some fascistic regimes that treated working people horribly. But that referred to the last 4T.

Sorry to lift out this one sentence, but this was the failure of the original stimulus. It went for all sorts of political payoffs and was almost completely wasted.

True -- like tax cuts and business subsidies. Those do not create prosperity so much as they either make pump-priming impossible or shift wealth from group of struggling people to people who own a big chunk of the political process.

The big missing ingredient in the economy right now is investment in assets with a life over 20 years. This is primarily construction. If we had a normal amount of economic activity in construction, not a boom, but just normal contribution, our employment rate would be 6%. Unfortunately, there is almost a direct inverse correlation between the deficit and construction. As the deficit has gone up, construction has gone down. Perhaps this is coincidence, but more likely is that the unresolved deficit problem has raised uncertainty about the future to a point that no one can rationally invest in the long term. In economist talk - the risk premiums are too high.

The recent economic downturn might have more than the collapse of the financial markets due to the implosion of the Dubya-era housing boom. One contribution to the end of the somewhat-good times was the end of the costly Big Dig in Boston. You are right to associate the construction cycle to the business cycle. It might not be everything, but it is much. But rationality as a cause for big projects? What is rational about preferring a fifteen-minute drive across a toll bridge instead of a two-hour ferry trip? What is rational about disliking traffic jams?

By the way -- what do you think of Governor Rick Scott (Crook, Florida) and Scott Walker (Corporate Stooge, Wisconsin) rejecting federal funds for high-speed rail construction in their states soon after inauguration? Both did exactly what Big Oil told them to do even if such was economically bad for their states. High-speed rail looks like a good deal for Florida, which has a fast-growing population, many of whom really shouldn't be driving. Wisconsin has well-defined areas of dense population. The decisions astounded me. But captive markets -- those are worth buying politicians for if you are a profiteering monopolist or cartel.

Construction work sops up labor both in the direct construction itself and in the materials (often prefabricated) themselves. Did you notice that the early thirties had a flurry of big construction projects -- like the Golden Gate and Bay Bridges in the San Francisco Area, Hoover Dam, the Tennessee Valley Authority, and the George Washington Bridge across the Hudson? When those came to an end, so did the boomlet of the mid-1930s. The Crash of 1937 followed. Great bridges devour huge quantities of steel and concrete.

Need I direct you to my own state? The Mackinac Bridge in Michigan built in the mid-1950s was built largely of steel, and while the steel was being shipped to some otherwise-absurd place where few people live, almost anyone in good physical condition could get work in a steel mill supplying it. Michigan would have probably liked to have shown its bridge connecting its two large peninsulas on its state quarter, but that didn't quite work out because the Mackinac Bridge looks much like the Golden Gate Bridge except for its paint job. But once the bridge was built the demand for steel suddenly dropped, and a little recession ensued. No, it wasn't that the 1958 car models were ugly.

(And before someone points it out, I am a commercial construction supplier. So, yes, I am talking my own book.)

James50

House Republicans, and some Republican governors, $crewed your business. If anyone should be a Keynesian, then you should be.

Originally Posted by James50

(Wow, PB. You wrote an entire post without mentioning "trickle down" or "nazis". Whatever meds you have gone back to, stay on them. You are actually making some sense. )

Sorry to lift out this one sentence, but this was the failure of the original stimulus. It went for all sorts of political payoffs and was almost completely wasted.

The big missing ingredient in the economy right now is investment in assets with a life over 20 years. This is primarily construction. If we had a normal amount of economic activity in construction, not a boom, but just normal contribution, our employment rate would be 6%. Unfortunately, there is almost a direct inverse correlation between the deficit and construction. As the deficit has gone up, construction has gone down. Perhaps this is coincidence, but more likely is that the unresolved deficit problem has raised uncertainty about the future to a point that no one can rationally invest in the long term. In economist talk - the risk premiums are too high.

(And before someone points it out, I am a commercial construction supplier. So, yes, I am talking my own book.)

James50

The losses in construction are largely due to the steep losses in home equity and over all property values.

Originally Posted by Exile 67'

The losses in construction are largely due to the steep losses in home equity and over all property values.

So who sponsored the Babbitt-like practice of selling people houses that they could never afford? When?

Bubbles burst. The weaker their logical and financial foundations, the more catastrophically they burst.

Originally Posted by James50

(Wow, PB. You wrote an entire post without mentioning "trickle down" or "nazis". Whatever meds you have gone back to, stay on them. You are actually making some sense. )

Sorry to lift out this one sentence, but this was the failure of the original stimulus. It went for all sorts of political payoffs and was almost completely wasted.

The big missing ingredient in the economy right now is investment in assets with a life over 20 years. This is primarily construction. If we had a normal amount of economic activity in construction, not a boom, but just normal contribution, our employment rate would be 6%. Unfortunately, there is almost a direct inverse correlation between the deficit and construction. As the deficit has gone up, construction has gone down. Perhaps this is coincidence, but more likely is that the unresolved deficit problem has raised uncertainty about the future to a point that no one can rationally invest in the long term. In economist talk - the risk premiums are too high.

(And before someone points it out, I am a commercial construction supplier. So, yes, I am talking my own book.)

James50

I don't think it is a causation thing, really, I think both the deficits and the lack of long-term infrastructure investment are both symptoms of 3T "Apres moi, Le Deluge" sentiment. We need to get people to care about the long term, again.

Keynes once said that "in the long run we are all dead", but a lifetime is a long time.

Originally Posted by pbrower2a

So who sponsored the Babbitt-like practice of selling people houses that they could never afford? When?

-Well:

http://www.rasmussenreports.com/publ...e_to_the_facts

Most elected officials cling to their ideological biases, despite the real-world facts that disprove their theories time and again...

But one huge exception to this rule is Democrat Barney Frank, chairman of the House Financial Services Committee...

"I hope by next year we'll have abolished Fannie and Freddie," [Congressman Barney Frank] said... "it was a great mistake to push lower-income people into housing they couldn't afford and couldn't really handle once they had it." He then added, "I had been too sanguine about Fannie and Freddie."

...you see, this is what he said way back in 2003:

http://www.nytimes.com/2003/09/11/bu...annie-mae.html

Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing. ''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

...ole' Barney wasn't too smart. Oh well.

Originally Posted by playwrite

OMG, let me see if I can dumb this down, whoops, I mean provide you with an elegant analogy to help in your understanding...

-Huh. No analysis of the effects of increased taxes on competitiveness:

Originally Posted by JDG 66

-
Moore's key point vis a vis the 1970s is this:

You don't have to be Jack Kemp or Arthur Laffer to understand that a 29 percentage point rise in top marginal rates would make America a highly uncompetitive place.

What is particularly worrisome about this trend is the deterioration of the U.S. tax position relative to the rest of our economic rivals. In 1990, the highest individual income tax rate of our major economic trading partners was 51%, while the U.S. was much lower at 33%. It's no wonder that during the 1980s and '90s the U.S. created more than twice as many new jobs as Japan and Western Europe combined...

...Despite all of this, the refrain from Treasury Secretary Tim Geithner and most of the Democrats in Congress is our fiscal mess is a result of "tax cuts for the rich." When? Where? Who? The Tax Foundation recently noted that in 2009 the U.S. collected a higher share of income and payroll taxes (45%) from the richest 10% of tax filers than any other nation, including such socialist welfare states as Sweden (27%), France (28%) and Germany (31%). And this was before the rate hikes that Democrats are now endorsing...

...actually, Moore misses the point that the Europeans are taking baby steps AWAY from the socual welfare state; the Obamaination wants to push us even closer TOWARDS it.

Originally Posted by playwrite

"A ding if by land, a dong if by sea"

Seriously, do you think her spin will be that she was drunk or on drugs?

-It'll probably be the same thing that the Teleprompter-in-Chief claimed when he bragged that he'd been to "all 57 states". Hahaha!

Originally Posted by Odin

I don't think it is a causation thing, really, I think both the deficits and the lack of long-term infrastructure investment are both symptoms of 3T "Apres moi, Le Deluge" sentiment. We need to get people to care about the long term, again.

Keynes once said that "in the long run we are all dead", but a lifetime is a long time.

In a 4T, people are obliged to accept investment strategies best described as "long term, low yield, and can't run". People begin to recognize that sustenance is no sure thing except at hard terms. In a 3T some might think that easy money is for all but the fools; at its end people realize that all the hoopla about easy money was foolishness. At that end the 4T begins in earnest . Eventually "only 2% interest on $100,000" or sustenance that comes from working seventy hours a week in a business that one starts is the best available. But it is the low-yield, long-term, can't run-from-without ruin investments that create capital when the usual sources of capital are no longer available.

Originally Posted by pbrower2a

So who sponsored the Babbitt-like practice of selling people houses that they could never afford? When?

Uh...Fannie Mae?

FDR?

New Deal?

Ring a bell?

The Federal National Mortgage Association (FNMA; OTCBB: FNMA), commonly known as Fannie Mae, was founded in 1938 during the Great Depression as part of the New Deal. It was set up as a government-sponsored enterprise (GSE), but it converted into a publicly traded company in 1968.[3] The corporation's purpose is to expand the secondary mortgage market by securitizing mortgages in the form of mortgage-backed securities (MBS),[4] allowing lenders to reinvest their assets into more lending and in effect increasing the number of lenders in the mortgage market by reducing the reliance on thrifts.[5]

The Federal National Mortgage Association (FNMA), colloquially known as Fannie Mae, was established in 1938 by amendments to the National Housing Act.[6] after the Great Depression as part of Franklin Delano Roosevelt's New Deal. Fannie Mae was established in order to provide local banks with federal money to finance home mortgages in an attempt to raise levels of home ownership and the availability of affordable housing.[7]

Originally Posted by JustPassingThrough

Uh...Fannie Mae?

FDR?

New Deal?

Ring a bell?

I was thinking more of entities like for-profit Countrywide Mortgage.

Have you ever read Babbitt (Sinclair Lewis)? The story takes place in the 1920s, and does it fit the 80-year rule!

Oh, you never have? Too bad.

Today we had short political discussion about the next election. An older friend of mine the earliest of early X'ers. (I think he was born Jan 2 or 3 61) Was saying that the Republican party doesn't want to win this next presidential election because no matter who wins is going to fail over and over again while the economy sputters. Look who is running, Donald Trump, Sarah Palin? They're jesters. I really think we might as well pencil Obama in for 2012 and I thought that before he said this because of the low quality of the Republican candidates. So the GOP may be dogging it until 2016 as far as running for president.

He also noted to watch out for Ryan who wrote the budget proposal who will probably be the Republican's pick for 2016 noting that he is an economist.

I thought it was interesting since my he knows nothing about the theory, but sees that the next few years will remain turbulent and that the party in power during the downturn will lose support for a long time. He may be looking back at the Great Depression as a model.

Originally Posted by pizal81

Today we had short political discussion about the next election. An older friend of mine the earliest of early X'ers. (I think he was born Jan 2 or 3 61) Was saying that the Republican party doesn't want to win this next presidential election because no matter who wins is going to fail over and over again while the economy sputters. Look who is running, Donald Trump, Sarah Palin? They're jesters. I really think we might as well pencil Obama in for 2012 and I thought that before he said this because of the low quality of the Republican candidates. So the GOP may be dogging it until 2016 as far as running for president.

He also noted to watch out for Ryan who wrote the budget proposal who will probably be the Republican's pick for 2016 noting that he is an economist.

I thought it was interesting since my he knows nothing about the theory, but sees that the next few years will remain turbulent and that the party in power during the downturn will lose support for a long time. He may be looking back at the Great Depression as a model.

Donald Trump is not running. I never actually believed he would anyway. That whole thing was more than likely a publicity stunt. But I do agree with you. As it stands right now, the Republicans don't really have anyone out there that looks too exciting who isn't a complete crackpot. Plus you may be right about the medicaid thing too. I have not been able to understand why they are pushing this. They have to know that they would lose a lot of the older population that helped them win in the 2010 elections by pursuing this. So maybe they are purposely shooting themselves in the foot because they really don't want to win.

Truth be told, Obama may be thinking..."Hey, if I lose. fine with me."... And who could blame him? I know I sure wouldn't want to be president right now.

Originally Posted by James50

(Wow, PB. You wrote an entire post without mentioning "trickle down" or "nazis". Whatever meds you have gone back to, stay on them. You are actually making some sense. )

Sorry to lift out this one sentence, but this was the failure of the original stimulus. It went for all sorts of political payoffs and was almost completely wasted.

The big missing ingredient in the economy right now is investment in assets with a life over 20 years. This is primarily construction. If we had a normal amount of economic activity in construction, not a boom, but just normal contribution, our employment rate would be 6%. Unfortunately, there is almost a direct inverse correlation between the deficit and construction. As the deficit has gone up, construction has gone down. Perhaps this is coincidence, but more likely is that the unresolved deficit problem has raised uncertainty about the future to a point that no one can rationally invest in the long term. In economist talk - the risk premiums are too high.

(And before someone points it out, I am a commercial construction supplier. So, yes, I am talking my own book.)

James50

James, you are one of the hardest people to figure out that I have ever known. I would describe you as one part southern gentleman, one part sensible businessman, and one part emotional anti-liberal. (You are I think more anti-liberal than genuinely conservative. I don't know why.)

I do not think--indeed I think I can say I know--that the stimulus was almost completely wasted. I assume that when you refer to "political payoffs" you are referring to the money that kept tens of thousands of teachers at work. Now, yes, most of them are Democrats, and you aren't, but that doesn't mean 1) that they aren't performing a useful function, 2) that they deserve a job, and 3) most important, that keeping them at work did not help the economy it did.

Meanwhile, I have no trouble at all accepting your diagnosis of the construction problem and the obvious solution seems to me a New Deal one: for the government to start some massive infrastructure projects, which, heaven knows, we certainly need. And indeed it would make sense to raise taxes to pay for them. But I'm not hearing you say that, either. Or am I?

Originally Posted by pbrower2a

The simple truth about these economic hard times: there is no easy way out. President Reagan had it easy in contrast to President Obama; Reagan did exactly what John Maynard Keynes would have suggested for an inflationary time (cut back on government spending except on defense and business subsidies, raise taxes on the non-rich, and quit inflating the money supply). Such puts an end to an overheated economy. That is the solution for too much money chasing too few goods and too many people not wanting to low-paid, menial work such as retail sales clerking or fast food counter work. People must lower their expectations to get a saner world,

That was 1980. That was when people were getting 8% interest on regular savings accounts. Thirty years later what do we have?

Something more like 1934. There is just no way in which to make a quick buck except through outright gambles, from having a cash cow business, or from corruption and exploitation. Sure there would be huge money to be made by privatizing Medicare -- by a few companies that take advantage of a captive market. That would be political as well as economic fraud, the sort likely to turn many people Red politically -- Red as in adopting the hammer-and-sickle as a slogan.

America did get through the 1930s, the first two thirds two-thirds of the last completed Crisis Era that began with an economic meltdown analogous in many respects to that of 1929-1933, with genuine economic growth. The President of the time was widely castigated as the anti-business, anti-free market, anti-capitalism wrecker of every truism by which the economy had worked in recent years. Sure, those canons of trusting the tycoons and executives worked -- until the tycoons and executives created an economic order in which most people weren't keeping up with the economic growth of the time. A hint: the Gini coefficient for income in 2006 (eve of the financial/ real estate crash of 2007) was as high as it had been in 1929, the peak of the boom of the Roaring Twenties.

Speculative bubbles can have but one sequel: their collapse followed by a gutting of capital and the disappearance of profits. The only growth possible in the aftermath of a speculative bubble is small-scale, long-term, low-yield small businesses that owners can't easily sell off and can't milk. But they can build customer loyalty and they can keep relatives employed. Government can prime the pump with public works, but only so long as those public works are in construction. Government can guarantee old age benefits and the security of bank balances -- which it did as the Great Depression was underway and from the start of the recent downturn. But all in all, the 1930s were a good time in which to start a business as opposed to doing almost anything else. This time might be that again. Remember: the equity that one builds through the hardships of ownership and operation of a small business might not create easy lives for the founders of such businesses, but they can make life better for one's progeny.

Does anyone expect the ruling elites of American business to show any generosity toward working people? Just look at the politics that those elites support. Look at what they did in Germany, Italy, Japan, Spain, and Hungary in the 1930s when they got the reactionary governments that did their bidding. Workers became serfs in all but name. Industrial wages fell to levels best described as the margin of hunger. The workweek lengthened. Whatever existed of a welfare state vanished. Don't fool yourself: that is exactly what the GOP offers elites.

Don't fool yourself: institutions established in the New Deal and the Great Society may have prevented some outright starvation from which there is no recovery.

A fine post. Actually Ronald Reagan's "cuts" were fairly trivial and his military spending boost dwarfed them. Of course the 15-20% real interest rates did wring a lot out of the economy. And my guess is that there was a lot of room for expansion in the service sector in those days to take up some of the de-industrialization slack.

Ironically, Barack Obama has staked his political future and the country's future on the workings of the free market. At the moment he and we are losing his bet. And from what I can tell, his political consultants, who rule the world just as they did under Clinton and GWB, have persuaded him that even suggesting what really has to be done would be disastrous. Mustn't sound like a Democrat once you're in office, you see.

I just saw this interesting interview with Howard Dean,, who thinks a bad economy could even elect. . . .Sarah Palin. And I see increasing speculation that some Congressional Republicans want to bring about default because they think it can sink the economy and sink Obama. I haven't seen anything I definitely trust along those lines yet, but it wouldn't really surprise me.

A friend of mine, former poster here, just sent me this most interesting video featuring Paul Ryan being questioned about his admitted fondness for Ayn Rand. A one-minute video can be worth a thousand words. Actually the page has two videos and the second one is even more interesting. We have the possibility here of a right-wing Republican split.

Originally Posted by KaiserD2

James, you are one of the hardest people to figure out that I have ever known. I would describe you as one part southern gentleman, one part sensible businessman, and one part emotional anti-liberal. (You are I think more anti-liberal than genuinely conservative. I don't know why.)

As I have said before, quoting Walt Whitman, I contain multitudes, but I actually like your description and think it accurate. I am emotionally anti-liberal. It has to do with my day to day experience of liberalism. You do not understand the oppressive nature of business regulation. Any day, at any time, someone from the government can walk in and demand your full attention to matters that in your operations have only the most trivial impact. OSHA, EPD, EPA, IRS, DOL (Wage and Hour, ERISA), and Sales Tax auditors from any state in the country which has sales tax and where you do business. There are weekly, monthly, and quarterly reports. There is the effort it takes to keep up with it even though in your heart you know they can always find something wrong. Your ivory tower (I don't mean that in a pejorative sense) keeps you insulated from almost all of this. When you think liberalism, you think of the government helping people who need help, of a safety net. When I think of it, I think of hoards of unaccountable inspectors that can overturn my life in an instant over something that makes no difference except in their arcane world of regulations and rules. This creates a subliminal level of fear that is part of daily life. Of course, the government class wants it that way. It makes me easier to control. I hate it.

I had a particularly harsh inspection with regard to an environmental issue in 1993. The inspector was your worst nightmare - rude, condescending, and worst of all unknowledgeable about an arcane issue I had spent a good deal of time trying to understand. It seemed to me that the election of Clinton (who I had voted for) had somehow given this guy the permission to launch into his fantasy world of abuse to the malefactors he saw at every turn. It took me six months and over $10,000 in legal fees before the agency agreed they were wrong and decided to let the matter pass. I began to view the democratic party as the face of this jihad against small business and against me. I did not vote for a democrat again for 10 years. I still have to push aside the image of that experience whenever I vote for a democrat. You do not need to bother to tell me that this is an over-reaction. I know that, but emotions do rule us more than we are often willing to admit.

And when I see one of the political class getting caught with their pants down(often literally), my southern gentleman side kicks in as well. Glenn Reynolds (Instapundit) had a great comment on the mocking of Anthony Weiner yesterday.

I think there’s an important point in the comic value: The people who think they’re smart enough, and morally superior enough, to run everyone else’s lives are risible. They’re not smart enough to run their own lives competently, and they’re actually, overall, morally inferior — I mean, John Edwards, DSK, Arnold Schwarzenegger, Barney Frank, Tax Cheat Tim Geithner, just go down the list — and mocking them is inherently valuable. They pursue power, and they exercise power, as much for deference as anything else. Deny them that, and make it painful for them whenever possible. That’s my take.

Well, that's my take too. (And for a little more fun, see this article in the Daily Mail about Obama's menu choice in Toledo last week after Michelle goes all over the country talking about healthy diets.).

Whether its my Scots-Irish nature or my southern gentleman nature, I have to work to avoid becoming an anarchist.

I do not think--indeed I think I can say I know--that the stimulus was almost completely wasted. I assume that when you refer to "political payoffs" you are referring to the money that kept tens of thousands of teachers at work. Now, yes, most of them are Democrats, and you aren't, but that doesn't mean 1) that they aren't performing a useful function, 2) that they deserve a job, and 3) most important, that keeping them at work did not help the economy it did.

I was not thinking of the teachers, but of course you realize they are some of the the most unaccountable government employees out there. The idea of a tenure system for teachers working K-12 is completely absurd and makes accountability for educational results almost impossible. We are trying to substitute non-stop testing for what real accountability should look like. Give administrators the ability to get rid of under-performing teachers and you could have real accountability. I would trust the onsite evaluation of an experienced administrator over a group of tests any day, but the teacher unions block that at every turn.

I do not have the time for full exposition of the stimulus. Suffice it to say, that my impression from both left and right, is that it was the Pelosi democrats having the ability to fulfill every local wish for government funds that had accumulated for a generation. We are about in the same place we would have been without it except we have $800B more in debt. The little bit of recovery we have experienced is because of the actions of the Fed. Most of the fiscal policy since Obama was inaugurated has been counterproductive.

Meanwhile, I have no trouble at all accepting your diagnosis of the construction problem and the obvious solution seems to me a New Deal one: for the government to start some massive infrastructure projects, which, heaven knows, we certainly need. And indeed it would make sense to raise taxes to pay for them. But I'm not hearing you say that, either. Or am I?

No, I think the obvious answer is for the government to get its fiscal house in order and restore some certainty about our economic future. In that environment, investing in long lived assets would make some sense. This is not the 1930s. We do not have the borrowing capacity we had then. Our government is many times larger than it was then. More borrowing for a Keynesian solution will only have the opposite affect as people perceive we are on the Titanic heading for the iceberg. On the great ship USA, we are all trying to gather up our belongings, hold tight to our loved ones, and looking for the non-existent life boats.

End of rant.

James50

Though I'm actually amused at Obama eating the chili dogs when Michelle wasn't watching. Typical of men, children, dieters, and anybody else whose eating patterns are watched over by microscope-wielding others. Victorian men used to slip off to their clubs in order to enjoy their whiskey and cigars and off-color jokes as well.

In these days of utter intolerance for playing hookey, it's fun to see the President doing so --- and in a way that harms neither interns nor hotel maids.

Originally Posted by ASB65

Donald Trump is not running. I never actually believed he would anyway. That whole thing was more than likely a publicity stunt. But I do agree with you. As it stands right now, the Republicans don't really have anyone out there that looks too exciting who isn't a complete crackpot. Plus you may be right about the medicaid thing too. I have not been able to understand why they are pushing this. They have to know that they would lose a lot of the older population that helped them win in the 2010 elections by pursuing this. So maybe they are purposely shooting themselves in the foot because they really don't want to win.

Truth be told, Obama may be thinking..."Hey, if I lose. fine with me."... And who could blame him? I know I sure wouldn't want to be president right now.

Yeah, I was thinking that if the GOP was trying to lose on purpose why wouldn't the Dems try to lose on purpose too. That would be an interesting election. Both sides trying to lose votes.

Originally Posted by KaiserD2

.... Actually Ronald Reagan's "cuts" were fairly trivial and his military spending boost dwarfed them. Of course the 15-20% real interest rates did wring a lot out of the economy. And my guess is that there was a lot of room for expansion in the service sector in those days to take up some of the de-industrialization slack.

Most of those "service" jobs were low-paid jobs appearing in shopping malls, box stores, and fast-food places. That sector, once growing, is now saturated, and it obviously has more potential for decline in a 4T as people are obliged to become more self-sufficient. These times are more like the 1930s than like 1980s in ethos. Can anyone imagine Millennial youth becoming "yuppies"? I think not; the economic basis of "yuppie-hood" is gone. I can more easily imagine a reversion to the times in which families (especially women discouraged from joining the paid workforce) did their own canning, sewing, and cooking. I like to believe myself as sympathetic to feminism as any man can be, but I can understand why a social order would drive most women out of the workforce so that male "breadwinners" can hold the jobs: unemployed, angry men are dangerous to a political system and to public safety due to revolutionary and criminal tendencies accentuated with male aggressiveness.

Ironically, Barack Obama has staked his political future and the country's future on the workings of the free market. At the moment he and we are losing his bet. And from what I can tell, his political consultants, who rule the world just as they did under Clinton and GWB, have persuaded him that even suggesting what really has to be done would be disastrous. Mustn't sound like a Democrat once you're in office, you see.

FDR saved American capitalism from its own worst tendencies -- its recklessness, its improvidence, and its tendencies toward thuggery. The dream of many plutocrats, executives, and big landowners is to return to the sort of capitalism that Karl Marx knew -- the stage of economic development when working people were exploited paupers just one illness or industrial accident, or one affront to the Boss who wielded God-like powers without mercy from a miserable demise. The true refutation of Marx is not so much the denial of "socialism" as the next inevitable phase of history, but instead that the proletariat becomes a market in its own right and begins to have a stake in the system. The worst plutocrats, executives, and financiers want a reversion to the high-margin, low-wage era in which most people suffer for their supposed betters. $crew 'em in their efforts to achieve such a nightmare!

Saving capitalism isn't a bad idea. A Scandinavian-style welfare state, probably the most decent system that we could have, depends upon a productive and efficient private sector.

I just saw this interesting interview with Howard Dean,, who thinks a bad economy could even elect. . . .Sarah Palin. And I see increasing speculation that some Congressional Republicans want to bring about default because they think it can sink the economy and sink Obama. I haven't seen anything I definitely trust along those lines yet, but it wouldn't really surprise me.

A bad economy and weak institutions made the rise of the Devil Incarnate possible in Germany in 1933. Sarah Palin is not quite that bad; as a crass demagogue she would be the predecessor of something awful. I think of Isabel Peron, a cranky and inconsistent figure who rode her late husband's cranky and inconsistent ideology to power and offended everyone by messing up the economy with hyperinflation. Sarah Palin is dumb enough and unreflective enough to not to have a clue, just like her supporters, that she is doing the harm that she does, and it doesn't have to be hyperinflation. What followed her was a military clique that imposed a plutocratic ideology as vile as any and a murderous repression as vicious as any that the KGB could impose in the USSR and its satellites. This 4T could culminate in Dirty Wars in which anyone who challenged the primacy of the plutocrats, financiers, executives, and right-wing clergy could be dumped from an aircraft into shark-infested waters. Add that to a heritage of colonial adventures and militarism, and an "America Gone Bad" could be even more of a menace to humanity than the Third Reich and the "Greater East Asia Co-Prosperity Sphere" combined.

Things can go very badly. We need to know the consequences of bad policies and bad politics. If we do what is right, then we will pull through as we did in the last 4T -- probably because we were more decent than our enemies and had a clear vision of a better world. But if we go bad, then all bets are off. This country needs to strengthen its public as well as private institutions and follow sane principles of economics -- one of which is that those who do the real work have a stake in the system.