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On August 06 2011 11:36 shinosai wrote:Show nested quote + Economists said spend during 2008-9 and spend we did. It save us from certain depression. If you doubt the depression looke at the climate back then. Lehman, AIG were failing, credit was freezing. Trust in banks was falling, sound familar? Now that things are more or less stable, extreme right wing has the audacity to claim we didn't need that spending. They call it reckless. What they are doing is extremely reckless.
(I don't have anything against the right, infact I think they are better at getting things done than the left, it's just the extreme that I do not like.) It didn't save us from depression. They just made another bubble (the bailout bubble) and it's going to pop and make things worse than they would have been if we simply let the market correct itself. It's not the recession/depression that is the problem, it's the cure. The economic boom is the problem. Trust in banks was falling. It should have! They made risky investments. They continue to do so. You think things are stable? They're about to fall apart and it's even worse now than it was going to be before. Spending money to stimulate the economy during recession only works if you saved money during the boom. We were already in debt. It made things better for a little bit but now they will be worse.
Good post. A lot of people blame Keynesianism for our economic woes but our leaders haven't really been following Keynes' advice, Keynes said to run surpluses in good economic conditions to have a "rainy day fund" for recession spending. None of the "Keynesians" that everyone's blaming have actually done that. (besides Clinton)
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On August 06 2011 11:36 Mohdoo wrote:
Karl Marx called it!
"Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and the State will have to take the road which will eventually lead to communism"
Karl Marx, Das Kapital, 1867
I always liked this one
"Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires."
— John Steinbeck
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http://www.bloomberg.com/news/2011-08-06/u-s-credit-rating-cut-by-s-p-for-first-time-on-deficit-reduction-accord.html
"S&P also changed its assumption that the 2001 and 2003 tax cuts would expire by the end of 2012 'because the majority of Republicans in Congress continue to resist any measure that would raise revenues.'"
edited for the full press release:
http://blogs.wsj.com/marketbeat/2011/08/05/sp-downgrades-u-s-debt-rating-press-release/
[...]The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.
[...]It appears that for now, new revenues have dropped down on the menu of policy options.
[...]The act contains no measures to raise taxes or otherwise enhance revenues, though the committee could recommend them.
[...]Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.
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So...there went my entire childhood's worth of patriotism. Looks like it's time to just get drunk and bemoan the fall of the century of the united states.
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On August 06 2011 11:36 shinosai wrote:Show nested quote + Economists said spend during 2008-9 and spend we did. It save us from certain depression. If you doubt the depression looke at the climate back then. Lehman, AIG were failing, credit was freezing. Trust in banks was falling, sound familar? Now that things are more or less stable, extreme right wing has the audacity to claim we didn't need that spending. They call it reckless. What they are doing is extremely reckless.
(I don't have anything against the right, infact I think they are better at getting things done than the left, it's just the extreme that I do not like.) It didn't save us from depression. They just made another bubble (the bailout bubble) and it's going to pop and make things worse than they would have been if we simply let the market correct itself. It's not the recession/depression that is the problem, it's the cure. The economic boom is the problem. Trust in banks was falling. It should have! They made risky investments. They continue to do so. You think things are stable? They're about to fall apart and it's even worse now than it was going to be before. Spending money to stimulate the economy during recession only works if you saved money during the boom. We were already in debt. It made things better for a little bit but now they will be worse.
Yes, we do need more regulation, but that was not my point. My point was that the actions and spending of the government prevented disaster. You claim that these actions merely delayed the bubble and that the upcoming bubble will be worse than the what would've happened if the gov did nothing. How do u substantiate your claim?
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Sad, but hopefully this will wake up the politicians in Washington and let them know that they can't just keep throwing money around and that they might have to tighten their belts a bit.
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On August 06 2011 11:38 Cassel_Castle wrote:Show nested quote +On August 06 2011 11:36 shinosai wrote: Economists said spend during 2008-9 and spend we did. It save us from certain depression. If you doubt the depression looke at the climate back then. Lehman, AIG were failing, credit was freezing. Trust in banks was falling, sound familar? Now that things are more or less stable, extreme right wing has the audacity to claim we didn't need that spending. They call it reckless. What they are doing is extremely reckless.
(I don't have anything against the right, infact I think they are better at getting things done than the left, it's just the extreme that I do not like.) It didn't save us from depression. They just made another bubble (the bailout bubble) and it's going to pop and make things worse than they would have been if we simply let the market correct itself. It's not the recession/depression that is the problem, it's the cure. The economic boom is the problem. Trust in banks was falling. It should have! They made risky investments. They continue to do so. You think things are stable? They're about to fall apart and it's even worse now than it was going to be before. Spending money to stimulate the economy during recession only works if you saved money during the boom. We were already in debt. It made things better for a little bit but now they will be worse. Good post. A lot of people blame Keynesianism for our economic woes but our leaders haven't really been following Keynes' advice, Keynes said to run surpluses in good economic conditions to have a "rainy day fund" for recession spending. None of the "Keynesians" that everyone's blaming have actually done that. (besides Clinton)
keynesian isn't always spending from existing fund. Deficit spending works as well, but you do need to recover the money during the upswing, a move that politicains have neglected.
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Hate S&P all you want but they did the responsible thing by lowering the rating. This was the first time ever that the Debt Ceiling was used as a bargaining chip and all the way to the final bell. Given that the Debt Ceiling will have to be raised a couple more times in the next 4-5 years, they just didn't want to reward that type of behavior. You can't hold shit hostage and then claim ignorance when people take you seriously.
It's sickening that this happened, we get the government we deserve.
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On August 06 2011 10:51 DeepElemBlues wrote:
I'm sorry but this must be a joke. You are aware that the 2011 budget was for the Fiscal Year 2011, which runs from Fall 2010 until a few months from now? That isn't the budget that was at issue here, it's Fiscal Year 2012's budget.
Yes, I'm aware. And the debt ceiling would have been breached ... this week, during Fiscal Year 2011 and not a few months from now. I'm not sure where you're going with this, unless you think the Democrats should have had the Fiscal Year 2012 budget passed containing a debt limit increase several months ago, which just confuses me.
Both parties have said they want to reduce the deficit. Democrats said "let's deal with it later" and with the same kind of "spending cuts" we've seen from Washington for years; no real spending cuts at all. Republicans said not this time, if you're serious about cutting spending, then be serious about it.
The Republicans are serious about "Raaar! Spending Bad!" They have given no evidence that they are serious about a coherent way to address entitlements and the long term budget.
Show nested quote + The "crisis" we have originated from the right deciding to demagogue the debt ceiling to a greater extent that had ever previously been done; Hilarious, the Right are being "demagogues" about the debt ceiling while Moody's and S&P were saying again and again that the Democrats' preferred choice, a clean debt ceiling raise, would result in a downgrade.
The party out of power always demagogues about the debt ceiling issue. It's the point of the debt ceiling.
Show nested quote + for better or worse, the left would have happily left the budget discussion to the 2012 budget. Yeah, this sure is accurate, what with the political media reporting from actual Democratic operatives that they wanted to kick the can until 2013 precisely because they did not want to have that discussion during an election year. Who should I believe, them or you... Where do you get your information, Democratic Underground?
They wanted the debt ceiling issue past the 2012 election, yes, and were serious about this (it was a negotiating point). I have no idea how this contradicts what I said, as the debt ceiling increase =/= budget discussion. The debt ceiling is an entirely pointless construct designed to let whatever party is out of power whine about the irresponsibility of whoever is currently in power. Moody's and S&P tied downgrades to the debt ceiling because they wanted to use it as a convenient test of political will. The government failed S&P's short term test because a deal that fulfilled it (the 4.2 bil compromise) failed. The government is failing S&P's long term test due to a bipartisan inability to be serious about it.
The only times I've ever read Democratic Underground is when it shows up in a google search for something else.
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On August 06 2011 11:47 DeltaSigmaL wrote:Show nested quote +On August 06 2011 11:38 Cassel_Castle wrote:On August 06 2011 11:36 shinosai wrote: Economists said spend during 2008-9 and spend we did. It save us from certain depression. If you doubt the depression looke at the climate back then. Lehman, AIG were failing, credit was freezing. Trust in banks was falling, sound familar? Now that things are more or less stable, extreme right wing has the audacity to claim we didn't need that spending. They call it reckless. What they are doing is extremely reckless.
(I don't have anything against the right, infact I think they are better at getting things done than the left, it's just the extreme that I do not like.) It didn't save us from depression. They just made another bubble (the bailout bubble) and it's going to pop and make things worse than they would have been if we simply let the market correct itself. It's not the recession/depression that is the problem, it's the cure. The economic boom is the problem. Trust in banks was falling. It should have! They made risky investments. They continue to do so. You think things are stable? They're about to fall apart and it's even worse now than it was going to be before. Spending money to stimulate the economy during recession only works if you saved money during the boom. We were already in debt. It made things better for a little bit but now they will be worse. Good post. A lot of people blame Keynesianism for our economic woes but our leaders haven't really been following Keynes' advice, Keynes said to run surpluses in good economic conditions to have a "rainy day fund" for recession spending. None of the "Keynesians" that everyone's blaming have actually done that. (besides Clinton) keynesian isn't always spending from existing fund. Deficit spending works as well, but you do need to recover the money during the upswing, a move that politicains have neglected.
The point is that there's a 0-balance.
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On August 06 2011 11:38 Cassel_Castle wrote:Show nested quote +On August 06 2011 11:36 shinosai wrote: Economists said spend during 2008-9 and spend we did. It save us from certain depression. If you doubt the depression looke at the climate back then. Lehman, AIG were failing, credit was freezing. Trust in banks was falling, sound familar? Now that things are more or less stable, extreme right wing has the audacity to claim we didn't need that spending. They call it reckless. What they are doing is extremely reckless.
(I don't have anything against the right, infact I think they are better at getting things done than the left, it's just the extreme that I do not like.) It didn't save us from depression. They just made another bubble (the bailout bubble) and it's going to pop and make things worse than they would have been if we simply let the market correct itself. It's not the recession/depression that is the problem, it's the cure. The economic boom is the problem. Trust in banks was falling. It should have! They made risky investments. They continue to do so. You think things are stable? They're about to fall apart and it's even worse now than it was going to be before. Spending money to stimulate the economy during recession only works if you saved money during the boom. We were already in debt. It made things better for a little bit but now they will be worse. Good post. A lot of people blame Keynesianism for our economic woes but our leaders haven't really been following Keynes' advice, Keynes said to run surpluses in good economic conditions to have a "rainy day fund" for recession spending. None of the "Keynesians" that everyone's blaming have actually done that. (besides Clinton)
Agreed in full, this is the problem as there has just been increased spending both in good/great times and now bad times, more for some countries less for some. Problem is when reaching around 100% debt level then there is cause for concern, especially as debt of the population is high as well and not low like in Japan with 200% debt. IF there are no new macro causing productivity to rise immensely like after the world war.
Now the crisis needs us to borrow to stimulate the economy while debt is too high and people are afraid and the last part that people are afraid one cannot stress enough, that is always what is the triggering factor of the crisis and AA+ might be it. So Keynesian is not faulty and how can we get people to spend if there is money to borrow but people are afraid to spend, just what happened in Japan when they had their crisis.
Edit: Question to regard, will Monday be the day that gradually the world's only super-power will stop acting like one globally, with reduced spending for military bases and withdrawal from their abroad operations as part of its inevitable spending cuts? Kind of scary actually and with a possible Euro meltdown the world is going to change quite abit.
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I love reading about people blaming these politicians but it is hardly ever mentioned that the citizens of the United States of America put them in office to begin with.
I'm going to quote from V for Vendetta - "Well certainly there are those more responsible than others, and they will be held accountable, but again truth be told, if you're looking for the guilty, you need only look into a mirror."
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On August 06 2011 11:47 DeltaSigmaL wrote:Show nested quote +On August 06 2011 11:38 Cassel_Castle wrote:On August 06 2011 11:36 shinosai wrote: Economists said spend during 2008-9 and spend we did. It save us from certain depression. If you doubt the depression looke at the climate back then. Lehman, AIG were failing, credit was freezing. Trust in banks was falling, sound familar? Now that things are more or less stable, extreme right wing has the audacity to claim we didn't need that spending. They call it reckless. What they are doing is extremely reckless.
(I don't have anything against the right, infact I think they are better at getting things done than the left, it's just the extreme that I do not like.) It didn't save us from depression. They just made another bubble (the bailout bubble) and it's going to pop and make things worse than they would have been if we simply let the market correct itself. It's not the recession/depression that is the problem, it's the cure. The economic boom is the problem. Trust in banks was falling. It should have! They made risky investments. They continue to do so. You think things are stable? They're about to fall apart and it's even worse now than it was going to be before. Spending money to stimulate the economy during recession only works if you saved money during the boom. We were already in debt. It made things better for a little bit but now they will be worse. Good post. A lot of people blame Keynesianism for our economic woes but our leaders haven't really been following Keynes' advice, Keynes said to run surpluses in good economic conditions to have a "rainy day fund" for recession spending. None of the "Keynesians" that everyone's blaming have actually done that. (besides Clinton) keynesian isn't always spending from existing fund. Deficit spending works as well, but you do need to recover the money during the upswing, a move that politicains have neglected.
Well I think there's room for debate there, I personally don't believe that deficit spending works and I don't think that the multiplier effect exists, but of course it depends on who you talk to.
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Lets face facts , the fiat USD is dead , hence the entire world fiat monetary system will collapse with it as faith in paper collapses.
Time to return to a gold/silver backed currency.
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On August 06 2011 11:52 RJGooner wrote:Show nested quote +On August 06 2011 11:47 DeltaSigmaL wrote:On August 06 2011 11:38 Cassel_Castle wrote:On August 06 2011 11:36 shinosai wrote: Economists said spend during 2008-9 and spend we did. It save us from certain depression. If you doubt the depression looke at the climate back then. Lehman, AIG were failing, credit was freezing. Trust in banks was falling, sound familar? Now that things are more or less stable, extreme right wing has the audacity to claim we didn't need that spending. They call it reckless. What they are doing is extremely reckless.
(I don't have anything against the right, infact I think they are better at getting things done than the left, it's just the extreme that I do not like.) It didn't save us from depression. They just made another bubble (the bailout bubble) and it's going to pop and make things worse than they would have been if we simply let the market correct itself. It's not the recession/depression that is the problem, it's the cure. The economic boom is the problem. Trust in banks was falling. It should have! They made risky investments. They continue to do so. You think things are stable? They're about to fall apart and it's even worse now than it was going to be before. Spending money to stimulate the economy during recession only works if you saved money during the boom. We were already in debt. It made things better for a little bit but now they will be worse. Good post. A lot of people blame Keynesianism for our economic woes but our leaders haven't really been following Keynes' advice, Keynes said to run surpluses in good economic conditions to have a "rainy day fund" for recession spending. None of the "Keynesians" that everyone's blaming have actually done that. (besides Clinton) keynesian isn't always spending from existing fund. Deficit spending works as well, but you do need to recover the money during the upswing, a move that politicains have neglected. Well I think there's room for debate there, I personally don't believe that deficit spending works and I don't think that the multiplier effect exists, but of course it depends on who you talk to.
In my eyes, one of the most positive thing to arise from recent history is that its now socially acceptable to question the dominant economic logic.
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Dude if only the Democrats were allowed to give us more debt from their failed stimulus policies, than they wouldn't have downgraded the US. /s
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On August 06 2011 11:13 Cassel_Castle wrote:Show nested quote +On August 06 2011 11:11 Fleebenworth wrote:
It's a sign of the utterly stupid foundations of the system that these firms, who rated junk bonds as 'AAA' based on what turned out to be bribes, are still looked at as influential and serious people. They should be in jail. I don't like putting non-violent criminals in jail any more than I like the death penalty, but that's a discussion for another thread. If they're fined and known to be corrupt then they're both punished and not a danger to anyone.
Regardless of your feelings about incarceration, fraud is usually punished with a prison stay in this country. The fact that these firms committed fraud which played NO SMALL PART in disappearing trillions of dollars (which invariably creates more violent crime) and are still looked at as lynchpins of the modern international financial system is not just a joke, it's absurd.
As it is they have faced no punishment of consequence at all for their criminal actions.
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On August 06 2011 11:58 iPlaY.NettleS wrote:
Lets face facts , the fiat USD is dead , hence the entire world fiat monetary system will collapse with it as faith in paper collapses.
Time to return to a gold/silver backed currency.
All currency is fiat currency. With a "gold standard" the government still just intervenes by changing the foreign currency reserves (and they HAVE to, that's why it can stay at a certain amount of gold per dollar). Have you even looked up why we went off the gold standard? Europe basically used it to attack the US like economic terrorists and we almost ran out of gold. There is nothing more special about gold than anything else. It's just some rare useless thing that we choose to worship. The only difference between our currency and a gold standard currency is that with a gold currency, the government steals a bunch of gold from people and sticks it in a temple. ER I mean fort. Then the government agrees to give a certain amount of gold for paper even though both are useless unless people have faith in them and agree to go through with the ritualistic motions. If anything, the fact that there are now so many practical uses of gold, like computers and such, means that our currency would be subject to shocks and manipulations by specific supply and demand pressures. That makes a gold currency worse now than ever.
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On August 06 2011 11:58 iPlaY.NettleS wrote:
Time to return to a gold/silver backed currency.
Doing so would kill the economy even faster.
If the economy does collapse, then going back won't hurt more (aside from the disadvantages of losing a fiat currency), but trying to pull off a tranistion now would be insane.
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On August 06 2011 11:43 DeltaSigmaL wrote:Show nested quote +On August 06 2011 11:36 shinosai wrote: Economists said spend during 2008-9 and spend we did. It save us from certain depression. If you doubt the depression looke at the climate back then. Lehman, AIG were failing, credit was freezing. Trust in banks was falling, sound familar? Now that things are more or less stable, extreme right wing has the audacity to claim we didn't need that spending. They call it reckless. What they are doing is extremely reckless.
(I don't have anything against the right, infact I think they are better at getting things done than the left, it's just the extreme that I do not like.) It didn't save us from depression. They just made another bubble (the bailout bubble) and it's going to pop and make things worse than they would have been if we simply let the market correct itself. It's not the recession/depression that is the problem, it's the cure. The economic boom is the problem. Trust in banks was falling. It should have! They made risky investments. They continue to do so. You think things are stable? They're about to fall apart and it's even worse now than it was going to be before. Spending money to stimulate the economy during recession only works if you saved money during the boom. We were already in debt. It made things better for a little bit but now they will be worse. Yes, we do need more regulation, but that was not my point. My point was that the actions and spending of the government prevented disaster. You claim that these actions merely delayed the bubble and that the upcoming bubble will be worse than the what would've happened if the gov did nothing. How do u substantiate your claim?
So I have to prove my claim, but you can arbitrarily claim that the government 'prevented disaster' without substantiating. I see. I will attempt to explain anyways.
When the housing bubble burst, we began to enter a recession.Since I believe in the strength of a free market, I believe businesses need to be allowed to fail when they perform poorly. Businesses that perform well should continue. Part of what created this problem is that banks were allowed to make risky investments with the public's money, due to both the government federally insuring our money (thus making it less risky for the bank to invest) and because investor banks and commercial banks are now essentially the same entity.
The banks essentially gambled with our money and lost. What should have happened afterward is that the banks fail and the federal government gives everyone back their money (since it is federally insured up to $100,000). It would have been a valuable and difficult lesson learned. If you invest poorly, you're fucked. Instead, we have the banks that failed with our money still around, and they're still investing. This seems like a terrible idea because they've already proven to be fiscally irresponsible. Amusingly, though, when an individual is fiscally irresponsible, they don't need to be bailed out, we need to cut entitlements. You can't have it both ways, though. Or I suppose you can, but it's hypocritical. Edit: And even if you make the argument that we should assist the banks because of how interconnected they are, fine, but the funds given were overly generous and without restrictions. We have no guarantee AT ALL after bailing these companies out that they will now become risk free and change to generate profit.
We're already in debt, so we can't actually bail these companies out without borrowing or printing money. So we print lots of money into the economy, and this causes inflation. Interest rates are extremely low, so the money will decrease in value faster than it is put into circulation at some point. Now, if we weren't in such heavy debt already, putting this money into the economy would be a pretty good idea, as it wouldn't cause such a great amount of inflation. However, because of the enormity of our debt, pumping this money into the economy is causing inflation. And in this inflation is another bubble: The bailout bubble. You don't fix a recession by creating another bubble, that just creates another recession as well. As I said before, the recession isn't the disease, the bubble is. The recession is just the market trying to correct itself.
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EPT
