Discussion in 'Soap Box' started by Mikeintx, Aug 29, 2009.
The video neglects to mention that what made Obama's circumstances different - and hence why he initiated debt the fastest - is the presence of one of the worst recessions since the Great Depression, coupled with two wars, and the advent of retiring baby boomers. None of his previous predecessors had to contend with that toxic mix, each of which could drive up spending enough on their own, much less together.
In Economics, when faced with a major government slowdown, the idea is to prop up the economy through spending until we're back on track, at which point we take advantage of the renewed economy to begin focusing on the debt. Basically, when faced between a recession and high debt, you start off with the former since it is the greater of the two evils, given that's it's doing the damage in the present (this is part of Keynesian economics, an admittedly contentious concept). If the government sat back and let everything fall apart, the recession would have certainly been much worse.
Pretty much every other country in the world initiated a stimulus package, in many cases on a far larger scale than we did with regards to percentage of GDP. Many of these countries - Asia minus India, and Western Europe, are recovering as we speak. They key thing we need to concern ourselves with is making sure we fulfill phase two: once things get better the government - and we ourselves - need to commit to paying back this debt and easing up on our spending.
Agree with Zurks post, especially that the recession would have been worse if the government had done nothing and let the banks fall as they may and the auto industry completely fall apart.
Also, there are signs, albeit debatable which indicate at least modest stability if not partial recovery at this time. The future will tell. The "experts" will eventually have to deal with the deficit, but Obama did what was necessary to stop the "bleeding".
You both make very valid points here, Obama got slammed with things that were created by the previous few administrations. I do believe some of the stimulus money was required to keep some of the major banking insitutions afloat to protect americans, but at the same time isnt it true only a small percent of the actual stimulus money has been paid out? On top that previous stimulus plans like cash for clunkers and the tax incentive for home buyers are coming to an end and some are estimating a double dip recession.
Also as of right now it looks like the bush tax cuts are going to be expired(I believe they expire in 2010) without renewal... now I thought Bush was an absolutely horrible president, but the tax cuts are one of the few things I believe he did right... which will most likely be another hit to our economy. Add to that the extra hits the economy will take due to the cap and trade tax, and health care... it just seems that our economy is on life support and these actions(and lack thereof) are shooting it in the foot.
On a side, and sort of related, note- I know two people personally that have been laid off in the last month and were told that they were laid off due to the company receiving stimulus money... they were told the company was using the money to outsource their jobs... have any of you heard anything else like this? Two people are not exactly a huge amount so im wondering lol
Mike, I haven't heard of anything like what you mentioned about the layoffs but I suppose anything is possible. I also heard of a "double-dip" recession and we are most definitely on life support as you mentioned. I'm frankly quite frightened at what the near future holds for this country regardless of who is in the presidency.
I am too shades... lately ive been listening to a lot of stuff by peter schiff(the ones here mostly: http://www.schiffforsenate.com/index.php/site/videos) and I really think the ideas he has would do our economy some good... granted either way things will get worse before they get better(hence why even when he is interviewed on fox the interviewers and other guests shake their heads as they believe he is a pessimist)... if you have some free time check him out and let me know your opinion.
Now all the sudden they care about spending!!!!
Where were you righties when bush was throwing money down a hole in iraq and giving unneeded tax breaks to billionares?
Clinton balanced the budget and you people impeached him for a BJ ...............
Then you elect bush twice who not only increased the size and spending of gov at record levels, he also ruined the economy, and destroyed our standing worldwide!!!!!!
thank you conservatives.................. NOT!
I give Obama a little leniancy because........ well, he is cleaning up bush's mess
On another note: Everyone knows that healthcare is a must fix for our economic future
Also: Everyone knows it is the strategy of conservatives to create unsustainable debt and deficits in the hopes that it will force massive cuts in social programs
Apparently you are not aware of a few quiet important factors:
1. War (Iraq or Afghanistan) is a very profitable business for the weapons industry.
The owners of the USA weapon industry are also the very same people
that holding the economy alive by investing in businesses
the more money those investors have, the more they will invest into the economy of USA
therefore on every dollar you throw on a war, you gain back 2 dollars.
Iraq is not a hole USA throws money in, USA throws money in the corporations
that producing the equipment used in Iraq and so on.
(this is just the overview though)
2. billionaires will invest in businesses only if there can be profits made out of it.
with USA economy it is very difficult as the investors have to pay to the workers
in american terms its lots of money (Americans earn the highest salaries)
so many will invest in other country's where workers get less money for harder jobs.
so the only way to keep the billionaires to invest in the local economy
is to make sure they have profits, and the only way for them to have
profits high enough to motivate them, is only by reducing taxes.
(this is also just an overview)
SO INSTEAD OF PLAYING THE ROLE OF A STUPID AMERICAN
TRY TO UNDERSTAND HOW THE SYSTEM WORKS FIRST!
That is the way capitalism works
but if only Americans would of understand that semi socialist system is the way to go..
I mean imagine the weapon industry would of belong to the government and not to some rich fart...
and healthcare, if only it would of belong to the government instead of private hands
BUT NO... AMERICANS ARE FAIL!
Bob I understand your anger here, but its not as black and white as democrat and republican... I know a lot more "conservative" minded people that hate the way Bush spent money, I know I sure as hell do. As hard as it is, I think everyone really needs to try to forget the finger pointing and political affiliation for a bit and focus on the facts and what needs to be done. Bush was a horrible president, so its okay what Obama is doing? And most understand there needs to be reform in healthcare, some just believe the way obama wants to do it is not the right way.
Plain and simple I am sick of politicians capitalizing off of people's fear by passing bills that are destroying america. Bush used the fear of terrorists to do it and now obama is using the fear of the economy and healthcare to do it. They are BOTH horrible presidents.
And Just.me I am not even going to reply to your anti-american bs that you love posting in this forum, please stay out of my threads in the future. Thanks.
dude its not MY anti american bs
its an international "anti american bs" that is spreading around the world really fast
and its happening for a reason
USA loosing its popularity as the land of freedom and endless opportunity's
and today me and many others can see Americans who left USA, sort of running away.
Hell, i think it was a week ago when i read CNN news saying that Americas elites
are running away in their yachts
and this topic only shows me that you guys are not really happy with your life
and weird enough, with your democratic system its the system YOU VOTED FOR
anyways, its pointless really
as a patriot is a blind person, i know it because i used to be a patriot too...
patriotism is a VERY dangerous thing
Great, state facts, do not generalize by stating ALL AMERICANS ARE FAIL!!!!!! And for the record I do not give a shit what any other country thinks about america, as you should not care what other countries think about your own country.
Bush was a horrible president, so its okay what Obama is doing?
In a way it does give him some leniancy.
Obama is not a liberal, surely you realize that by now.
But IMHO, it is much more important to PREVENT the hard right from regaining control. So yes that does give him a little leniancy.
I've actually read that anti-Americanism isn't as high as it's often assumed, except of course in countries we've otherwise harmed (which, let's face it, is understandable). America's image has been tarnished but the average non-American is mostly critical of our government and it's actions abroad (or in their own country!) not necessary America as a whole.
It's positive to note that many of the banks we bailed out have actually begun to pay us back, altogether almost $40 billion. Granted this isn't a huge sum by comparison to our deficit but it's a step in the right direction and at least some consolation that things could certainly turn around for the better.
As for Obama, I really don't consider him all that bad. Most presidents have historically had abysmal starting points (including relatively popular ones like Reagan and Clinton). I feel it's too early to make an polar judgment of him as either good or bad, especially with so much on his plate, much of it inherited from years if not decades worth of structural or political flaws (not that he shouldn't be held to scrutiny or should get away with scapegoating predecessors). He's made numerous mistakes but for the most part I think he's well-meaning.
Most analysts (and 80% of economists) have agreed that his bailouts - while understandably unpopular - were a necessary evil to stabilize the economy; he's even taken steps to curb that sort of thing from every happening, which is at least something to look out for. As for healthcare, the plan is actually not too unfeasible...or at least it wasn't, until all these lobbies and committees took it apart, added to it, etc. Conceptually, it's a right step but it's just the bargaining, bickering nature of our legislative system that's a detriment. A mixed system has worked everywhere else (and more cheaply and efficiently than believed): we've just got to agree on how and to what degree we execute.
Alas, those are all issues to be discussed separately and I don't mean to go on a tangent like I always do XD
Bob, despite the fact I disagree with you I am glad to hear you actually admit there where many people wouldn't.
And Zurk don't worry about the tangent thing it is easy to do and if anything makes us question things more and search for answers... One of the things I have to question regarding your post is about the 80% of economists having agreed with his bailouts... are these the same ones that didn't see the housing bubble popping? I still have a limited understanding of the economy, but I know Schiff for instance is very critical of the stimulus plan and is one of the few guys who went on national tv stating exactly what was going to happen with the recession. I know I have been talking about him a lot lately, but everything he says makes sense(to me at least lol).
Also some good points from one of my current favorite people(forgive the fact it is from earlier in the year): http://www.youtube.com/watch?v=zXJWzuIdqIg
Indeed, many of those economists are the ones that sadly failed to see the bubble pop. However even though they were wrong in that regard, economists still remain the best suited to analyzing and understanding these concepts, since it's within their field and remarkably complex.
My only gripe with the anti-bailout camp is that they've mostly failed to provide any credible alternative. I'm not going to say I liked the bailouts - no one but those execs did - but it really seemed to be the only way to keep the system from collapsing. After all, what ultimately triggered the Great Depression (which we came narrowly to approaching again) was the series of bank runs and the collapse of the credit market that brought down everything else tied with it.
As long as we stick to the plans to reform this bloated, convoluted sector, I think we're going down as right a path as any so far. Schiff was indeed one of the very few correct prophesiers of the crisis, so I can't blame you for bringing him up so much (a lot of people do actually, so he has gotten his due credit). However I disagree with what I feel is a contradiction in his logic: he feels government stimulus packages and regulation are the wrong way to go, even though allowing too much freedom in the market turned out to have been the other extreme that led us to this mess in the first place. I haven't read about any alternative solution he'd offer, though I'm sure it's out there and I've missed it.
Thanks for accepting my tangents
As I understand it, the collapse was a result of various deregulations throughout the years. (a hallmark of conservative philosophy btw)
for decades the mantra has been: Gov. is bad, regulation is bad etc etc....
Hell, corporations even have the same rights as a person.
This has resulted in the outsourcing of our manufacturing, a crumbling infrastructure, a stagnation of wages, more than half of all bankruptcies due to health, Enron, Blackwater etc etc
such as this:
The Gramm-Leach-Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, (Pub.L. 106-102, 113 Stat. 1338, enacted November 12, 1999) is an act of the 106th United States Congress (1999-2001) which repealed part of the Glass-Steagall Act of 1933, opening up the market among banking companies, securities companies and insurance companies. The Glass-Steagall Act prohibited any one institution from acting as any combination of an investment bank, a commercial bank, and/or an insurance company.
The Gramm-Leach-Bliley Act allowed commercial banks, investment banks, securities firms and insurance companies to consolidate. For example, Citicorp (a commercial bank holding company) merged with Travelers Group (an insurance company) in 1998 to form the conglomerate Citigroup, a corporation combining banking, securities and insurance services under a house of brands that included Citibank, Smith Barney, Primerica and Travelers. This combination, announced in 1993 and finalized in 1994, would have violated the Glass-Steagall Act and the Bank Holding Company Act of 1956 by combining securities, insurance, and banking, if not for a temporary waiver process. The law was passed to legalize these mergers on a permanent basis. Historically, the combined industry has been known as the "financial services industry".
I think this sums it up pretty well
How Deregulation Caused Great Recession
Making Sense of the Meltdown - Third in a Series on the Economic Crisis
By Sachin Chheda, Director, Wisconsin Fair Trade Coalition
Three key bad decisions stand out. First, the repeal of the “Glass-Steagall Act.” This important regulation, passed at the height of the Depression in 1933, stopped regular banks from acting like insurance companies and investment banks. This reduced risk to depositors and kept the economy essentially stable for 60 years.
However, strong economic growth in the 1990s led to the desire by the rich to get even richer, and a desire to merge huge corporations with business models that were essentially in conflict. Starting with the merger of Citibank and Travelers Insurance, pressure increased to end what was seen as an archaic regulation.
However, the repeal of Glass-Steagall, with President Clinton’s support, led to some predictable bad decision-making. In the new deregulated climate, banks were no longer required to make safe investments with depositors’ resources (your checking and savings accounts). Instead, they could invest in risky, creative financial instruments like credit default swaps and mortgage-backed securities. These risky investments crashed in 2008, and instead of just taking down a few investors crazy enough to gamble with their money, every big bank in America was at risk of failure.
Market Free For All
Second, when they had the chance, both the White House and Congress consciously decided to refuse to regulate. They didn’t just fail to act, or fall asleep on the job. They actively decided that risky derivatives (bets on the future price of securities, bonds, or other financial instruments) should not be regulated. By passing the Commodities Futures Modernization Act in 2000, and quashing attempts by the Commodity Futures Trading Commission to regulate derivatives, Clinton administration officials joined with right-wing loonies like Phil Gramm to allow a free-for-all in the financial markets – where gambling replaced prudent investing.
Wall St. Bets Take Taxpayers to the Cleaners
The third major bad decision was the Security and Exchange Commission’s move in 2004 to allow banks to voluntarily set their own risk limits. It used to be that banks could only risk 12 times the money they actually had (known as the debt-to-net-capital ratio). After the SEC removed the limits, some banks risked 40 times their capital or more – and left taxpayers on the hook to help depositors when their investments crashed.
These rules – or lack of rules – went global after the U.S. took the plunge. In a future column, we will address the role of predatory lending and the housing crisis, also viewed through the deregulatory lens. Suffice it to say that while we are demanding more investment in job creation, health care reform and access to collective bargaining rights for more workers, we need to also demand a fresh look at what a responsible regime of regulation looks like.
Great post Bob, you bring up some very good points.
I posted this in the modern liberalism thread which was originally posted on another forum by a doctor:
"3. On profit, the profit motive, a historical note.
There are no histories written in this, but I may change that.
Before Hillarycare debacles in 1994, insurance companies made their profit on investing the "float" (i.e., the premiums collected from members) and anticipated paying out in indemnity claims all the premium collection.
After the onslaught of HMOs, doctors and medical groups became decapitalized; all the loose change was sucked out of the sofa cushions. But what people lose sight of is the change that occurred in the Health Insurance Industry; the business plan now was collect premiums, invest, and also to deny and discount payments.
Profits soared, and now Insurance Industry was clearly aligned against doctors and hospitals and patients: the profits grew as employees were enrolled and payments were subsequently denied.
Now, can someone tell me why this arrangement should be preserved in Obamacare? Why will private and public money be funneled through these same companies, whose chief motive is the denial of service?
Under National Health Care, why are Insurance companies not turned into utilities, with a nice secure profit on collection of 6% or so?"
After reading this and then reading your post Bob, it sounds like the enviroment was set in the early 90's to start the huge skyrocket of healthcare costs.
Now in regards to the overall economy let me state that I do not believe there should be no laws, no regulations ever, but I do believe a free market system will prevail if properly setup. Now before you yell at me for this Bob let me say this... we do not have a free market now. When a big industry such as Tobacco can go into washington and put money behind people that are making the laws than we do not have a free market. We have a corporate system that uses the government for its own devices.
So saying the free market doesnt work because just look at our economy over the past few decades, well that logic itself is flawed because what we have is not a free market.
Okay Bob, I just read the full article you posted through that link on making sense of the meltdown and I do agree on many of the points in the article. Now my question is, why isnt it pissing you off that Obama and his administration is feeding into it the same way Bush did? Bernanke is being just as irresponsible as Greenspan was by keeping rates as low as greenspan did and it will only serve to reinflate another bubble. We are repeating the same mistakes as the Bush administration...
The late 90's we had the Tech bubble pop, greenspan lowered rates in the fed to a incredibly low amount... this allowed banks to create the housing bubble... which led to our current recession... so what happened? Bernanke lowered rates EVEN LOWER than greenspan... how is this responsible? On top of that Obama was given a million dollars in campagin contributions by one of the banks that profited the most off of the bubble collapsing... Goldman sachs... a bank that also benefited off of the stimulus package that obama pushed... hmmmm conflict of interest much?
Once again it goes back to the point that both sides are corrupt and I think this is why people are getting so pissed off now in america. We hated Bush and now people are starting to hate Obama too... the whole system needs an overhaul.
From what I learned, Bernake is supposed to be lowering rates - for now at least. Low interests rates help fight deflation, which is what ultimately tipped us over the edge and into a Great Depressions decades ago. The key, however, is that Bernake has to time it just right and raise them before they have the opposite effect - increasing inflation and thus wipping out our savings, purchasing power, etc.
I certainly agree about the overhaul though. It'll be slow and painful, if it'll ever happen at all, but it will certainly be worth it.