Comments on: A recovery of two steps forward, one and a half steps back

By: dbm

dbm — Mon, 05 Oct 2009 20:34:29 +0000

To: NJ @ 11:17 AM 10/2:

Hoover’s real mistake was propping up wages and prices. This priced people, goods, and services out of the market, worsening and prolonging the depression. If Hoover had been a “do-nothing” President like some people claim, things would not have been nearly as bad.

And are you saying tax policy has a bigger effect on bubbles and busts than the Federal Reserve?

By: Tim

Tim — Sun, 04 Oct 2009 03:56:09 +0000

In March 2004, just 10 months after the “Jobs and Growth Tax Relief Reconciliation Act of 2003″, Jay Bookman wrote that the “fairest way” to judge if it had “worked as planned” “would be to measure the administration against its own numbers.”

The predictions were made by President Obama and Senator Reid:

Obama: Stimulus will create 4.1 million jobs
http://www.msnbc.msn.com/id/28590554/

Accord reached on final stimulus bill: $789 billion for 3.5 million jobs
http://features.csmonitor.com/politics/2009/02/11/accord-reached-on-final-stimulus-bill-789-billion-for-35-million-jobs/

We’ve seen the chart:
http://michaelscomments.wordpress.com/2009/10/02/september-unemployment-the-job-loss-accelerates/

And we’ve seen Jay Bookman’s hypocrisy.

By: Bill Murray

Bill Murray — Sat, 03 Oct 2009 18:41:43 +0000

In addition, I think that the entire Federal System is a Ponzi scheme. The whole world buys our treasury bonds, notes and bills. These debts are backed by the full ability of the Federal government to tax the income of its citizens and its corporations. As long as this money is coming in the bonds are OK. But the national debt is approximately equal to the entire gross national product for a full year and it is growing exponentially. I think there is no possibility at all that it could be repaid without a huge amount of inflation.

By: Bill Murray

Bill Murray — Sat, 03 Oct 2009 18:39:06 +0000

Our major problem is our economic system and our government’s failure to properly regulate or control it. Our economy was based on money having no real value. Just look at the condition of our banks. Most people recognize that there are a substantial number of bank failures. I believe that our banking industry’s recent operation has brought our country to the verge of a financial collapse. They, because of the lack of government control and regulation, are the responsible parties for the financial debacle we are in. What few people recognize is the fact that banks can generate, or manufacture, money. To an extent, they do lend deposited money for loans. However, they can lend up to ten times their “asset value” or the money they have on deposit, for mortgages, personal loans, automobiles, or any other item. In addition, they can generate new money up to ten times their stated asset value. It should be noted that this money growth can be exponential. In the event on a run on any bank the Central Bank is required to “bail them out”. This recently happened with a nimber of banks and the government has had to considerably increase the Central banks funding level.

In reality money has no real value unless it is associated with tangible assests whether it is a feather, gold or silver. Ever since the relationship was severed between gold and our dollar the real value of money gone down. Our nation requires a new and different monetary system, one that is more closely tied to value and or assets and not based solely on paper (debt). A gold or silver standard or something else of tangible value should be required or there may be a total financial collapse in not only our country but the world’s economic system as well. The bottom line is that all money in existance is debt and that the time has come to pay off or reduce that debt. If we don’t do it there could be a total monetary collapse. In addition, our monetary system and its policies has caused an unjust distribution of our nation’s wealth. Most of our nation’s wealth lies with the top few percent of its population. No country can survive long with that type of distribution.

In order of priority:

Restructure our economic system.

Establish controls and regulation over the banking industry.

Start rebuilding our infrastructure (roads and bridges) using the unemployed similar to the CCC camps and WPA used during the depression.

Approve a national health program.

By: N.J.

N.J. — Sat, 03 Oct 2009 01:54:44 +0000

Even more than that, it was the policies of the last eight years, which were conservative based, designed to save business owners money by eliminating high end high tech high paying jobs, and replace them with lower paying, lower tech, service jobs, with fewer benefits. The more money the average worker has to spend on basics, the more out of pocket expenses they have on health care, the less they can consume in other markets.

This is why the top down ideas of economy don’t work well. Those who run the businesses will always try to give their employees as low an income as possible and skimp on benefits, with the idea that no one else is doing it. But when his employees have to cut back on consumption of other businesses goods and services, those businesses make less money, so they have to cut back on what they pay their employees, the benefits they provide, and the entire chain of lowered consumption moves through the economy. The Europeans beat this even though they do not consume much within their own national markets. Their economies are very much based on production and export. The U.S. does neither. The workers have no real incentives to be very productive in an environment where they are basically like hamsters running on a wheel. Their real income never increases, and since they are running in place, they run nice and slow so as to not exhaust themselves for someone else’s benefit.

Conservatives can talk tax cuts all they want. The Bush tax cuts were not very popular with the working public. They didn’t get much out of them. Polls indicated that they didn’t even want them. The majority didn’t even mind the government raising taxes in order to keep paying down the national debt. The majority didnt even care much about government spending. Even today, the national debt is not at the top of the majority of American’s concerns.

In the most recent polls of national priorities, American place the economy at number 1, health reform at # 2 and both together add up to 60 percent of the public who consider these two things as the highest national priority. The national debt comes in as a distant third, with only three percent of Americans thinking it is important at all. This one poll is done monthly and the national debt and deficit spending has not only been off the radar screen since Obama was elected, it has not been on the radar screen except among Republicans in Congress who have tried to whip this up as an issue.

These stats are a true indication of how insignificant the Tea Parties were. They did not reflect the concerns of the vast majority of Americans:

CBS News/New York Times Poll. Sept. 19-23, 2009. N=1,042 adults nationwide. MoE ± 3.

“What do you think is the most important problem facing the country today?” Open-ended
.
Economy and jobs

41%

Health care
19%

Budget deficit/National debt
3%

Moral values/Family values
3%

War/Peace (general)
2%

Iraq
2%

The President/Barack Obama
2%
Other
24%

Unsure
4%

http://www.pollingreport.com/prioriti.htm

By: Pokey

Pokey — Fri, 02 Oct 2009 19:44:06 +0000

JB,

Still waiting for you to answer the questions in my original post…

By: MM

MM — Fri, 02 Oct 2009 18:17:34 +0000

Jay,

I’d say the analysis actually shows a fundamental misunderstanding of how the economy works.

Increasing social safety nets has a cost. The cost can be paid by some combination of increased taxes and increased borrowing. Or we can inflate our way out. None of these helps the employment picture.

By: Kamchak

Kamchak — Fri, 02 Oct 2009 17:35:27 +0000

…any one know the cure for FUGLY?

A red card for Gandalf immediately leaps to mind.

By: Gandalf, the Wise

Gandalf, the Wise — Fri, 02 Oct 2009 17:27:36 +0000

I got this excerpt is from my son’s X-BOX, I think it needs some repair.

Beatles Rock Band

My Michelle
Lennon/McCartney
“Michelle, you smell,
these are the words that go together well,
Fugly Michelle”

There is more, but it’s a little rough, any one know the cure for FUGLY?

Just Sayin’
I am so glad you all missed me so!

By: Jay

Jay — Fri, 02 Oct 2009 17:08:59 +0000

Well, MM, I’d say that the trends we were seeing back then were the early warning signs of the economy we have today, but for the most part were ignored. We were a consumer-based economy, but the benefits of that economy were concentrating in a relatively few hands. Long term, a consumer-based economy requires that middle-class consumers do well, and they weren’t.

In one of the pieces you cite, published in February 2004, I wrote the following:

The components of the change are all too familiar. Computers and machines are replacing human workers, allowing business to produce more goods with fewer employees. Thanks to communications technology, investment capital and technical knowledge can be shipped instantaneously across the world with a touch of a computer button, a development that has freed businesses to seek the lowest possible labor costs wherever they can find them. And unleashed by a culture of greed, corporate executives have become extremely aggressive about cutting payrolls and outsourcing jobs overseas, knowing that if they can drive up the bottom line they will be rewarded with exorbitant pay packages and stock options that will make them multimillionaires.

The result has been an economic recovery that in more than two years has produced a healthy stock market and good corporate profits, but desperately few new jobs. “The U.S. economy is mired in a jobless recovery the likes of which it has never seen, ” as Morgan Stanley analyst Stephen Roach noted recently.

For countries such as China and India, though, the change is a godsend, producing long-needed investment and jobs to areas mired in poverty. For the time being, it is also good for business. As White House economics adviser Greg Mankiw argued recently, the shipping of high-paid U.S. jobs overseas, where they can be done much more cheaply, makes U.S. companies more efficient and profitable. If an $80,000 American computer programmer is fired and replaced with a $10,000 programmer in India, the $70,000 savings goes right to the corporate bottom line.

China, however, is a nation of 1.3 billion people, India a nation of 1.1 billion. Those two countries alone create a pool of cheap labor that global businesses will be able to tap for generations to come, in the process undercutting the bargaining power of U.S. workers. In effect, technology and globalization have brought those countries into the global labor supply and have swamped the market with available workers.

In the face of such powerful trends, it is becoming harder to argue that people control and deserve whatever fate the economy hands them. An American CEO may have become five times better paid in recent years, but he has not become five times wiser, more productive or harder working. CEOs are simply the lucky and undeserving beneficiaries of larger forces at work, just as the employees they have laid off are the unlucky and undeserving victims.

But if it is true that these trends cannot be halted or reversed, the challenge becomes adjusting to them. How do we help families cope when even two-earner households seem destined to have an increasingly hard time making ends meet? How should government policy be changed if jobs become less stable, if layoffs become more lengthy, if macroeconomic trends are concentrating wealth in relatively few hands, if more and more people are losing access to health care?

The dominant political ideology of the moment calls for removing the social safety net and forcing individuals to fend for themselves. It advocates cutting benefits for those struggling hardest to make it in the new economy, while cutting taxes to benefit those already reaping the biggest benefits.

In a different economy, that might be exactly the right approach. But that is not the economy that confronts us.

Looking back, I’d say that analysis held up pretty well.