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Current feelings on Obama's Administration and upcoming midterms (pg. 5)
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| Comrade Stalin |
| quote: | Originally posted by Shakka
See above. I think you're talking out of both sides of your mouth a bit. |
What do you mean? I'm demonstrating how and why the private sector would be unwilling and/or unable to get back to full employment.
| quote: | | To an extent I certainly agree, but to an extent I believe reality must be allowed to play out while trying to simply manage the misery through the recovery. |
Tell that to a president whose reelection depends on how well the economy did during his tenure and tell that to homeowners losing their homes and clamoring for the government to do something about it. Ideologically, it sounds great, clean out the dead weight, make room for efficiency, but reality is much different, if you're president, or a homeowner.
| quote: | | Right...like 2009? It's easy to show a modicum of GDP growth when you're coming off a low base post economic crisis (recall the 5-handle figures we saw in 2009 off crappy comparisons in 2008?). We got that in 2009 and we got that in the mid-30's before everything fell right back apart again. Only during/after WWII did the economy return to sustainable, full-employment. If anything, the "recovery" in the mid-30's was Fed driven moreso than it was FDR-driven, though I'll certainly concede that several of FDR's back-to-work programs provided temporary employment for some. |
GDP and the stock market both doubled BEFORE World War II, with unemployment falling 10% from its peak, and you want to say that is just coincidence? What was Roosevelt supposed to do with massive bank failures and 25% unemployment? Sit around and "let the market take care of itself"? If he had done that, we might of had a communist revolution. |
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| Shakka |
| quote: | Originally posted by Comrade Stalin
GDP and the stock market both doubled BEFORE World War II, with unemployment falling 10% from its peak, and you want to say that is just coincidence? |
No. It doubled after falling 70% from pre-Depression levels. It's not hard to get a dead-cat bounce off of numbers as bad as they were, especially when there is economic stimulus involved. But was it sustainable? Clearly not because the economy suffered a major "double-dip" in the 1936-1938 period and ultimately it was only the war that ignited an economic boom that returned the nation to more "stable" long-term growth. |
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| pkcRAISTLIN |
| quote: | Originally posted by Shakka
No. It doubled after falling 70% from pre-Depression levels. It's not hard to get a dead-cat bounce off of numbers as bad as they were, especially when there is economic stimulus involved. But was it sustainable? Clearly not because the economy suffered a major "double-dip" in the 1936-1938 period and ultimately it was only the war that ignited an economic boom that returned the nation to more "stable" long-term growth. |
wasn't that double-dip due to deficit hawks wanting FDR to balance the budget? |
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| Shakka |
| quote: | Originally posted by pkcRAISTLIN
wasn't that double-dip due to deficit hawks wanting FDR to balance the budget? |
Not that I'm aware of. At least I really think the role of FDR is overly played insofar as to what was boosting the economy and what was driving real, stable, longer-term growth. I will grant that several New Deal programs created temporary employment (much as the hiring of hundreds of thousands of temporary Census workers last year made unemployment appear optically better for a short spell. That is derived demand and should be viewed with a lot of scrutiny, imho.
As I've studied it more recently, and if you try to think about actually living through it, from 1933-1937 there were 3 years of economic growth. Some may have been a little softer than others, but it generally looked like things were stabilizing. Unemployment had corrected somewhat and the stock market had seen a nice few years of rally. According to Bernanke, the critical mistake made back then was the Fed withdrawing stimulus too quickly which led to monetary tightening which hit an apparently still vulnerable economy hurtling it back into depression/recession. But in context, after 3 years of "growth," it is only natural to feel like the worst is over and things are on the mend. Back then the Fed felt it appropriate to tighten after a seemingly prolonged period of economic growth. Bank reserves were building in the system and the Fed feared it was going to be inflationary (Meltzer contends that banks were hoarding reserves because they did not want to lend). In any event, the Central Bank, fearing inflation, began draining liquidity from the system and the economy rolled back over.
I'm honestly not sure how much a balanced budget came into play (I'm not familiar with that part of the history if it exists), but back in the 30's we were also still on the Gold Standard, until it was abandoned in the mid 30's by FDR (and I believe much private gold was confiscated). |
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| pkcRAISTLIN |
yeah, it was an honest question because im not all that up on the details. these graphs get posted a lot when this discussion comes up though.
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A second cyclical downturn officially began in May 1937 when FDR, always a fiscal conservative, mistakenly thought the economy had become self-sustaining and slashed public spending programs to balance the budget. These harsh and premature spending cuts caused another severe recession that ended after 13 months in June 1938. |
http://www.ourfuture.org/blog-entry...fdr-failed-myth
| quote: |
I'm honestly not sure how much a balanced budget came into play (I'm not familiar with that part of the history if it exists), but back in the 30's we were also still on the Gold Standard, until it was abandoned in the mid 30's by FDR (and I believe much private gold was confiscated). |
yeah, the quasi abandonment of gold (ie there was still a gold standard as far as im aware, FDR just set the rate of exchange, by all accounts on a whim!!!) certainly played a big role in the turn around. |
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| Groundhog Boy |
| quote: | Originally posted by Shakka
You know, you're absolutely right. I misspoke when I said TARP. I clearly meant to say the first round of fiscal stimulus. Sorry for the mix-up and thanks for calling me on it. It was certainly not an attempt to distort reality on my part.
Replace "TARP" with "fiscal stimulus round 1" and the statement stands. |
These types of comments are the problem when you only stick to partisan talking points. You know better, and know the effects. They haven't dropped unemployment down, but that was never the intent.
Honestly, I expect/ed better comments from you.
At the same time, this is also why I hit this board once a week anymore. There's no semblance of discourse. The only good thread is the stock one, and that suffers, too.
You know what would be awesome. If when the market is doing well, we actually capitalize as a nation (like the mid 90s when we were running a surplus), and when it sucks, we infuse. At least that's the way it works in responsible households (you know, what Tea Party advocates claim they're all for in theory, yet don't practice in reality). Instead, the most fervent are paying .50 per dollar when it comes to taxes vs. federal spending (see Alaska). |
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| Comrade Stalin |
| quote: | Originally posted by Shakka
No. It doubled after falling 70% from pre-Depression levels. It's not hard to get a dead-cat bounce off of numbers as bad as they were, especially when there is economic stimulus involved. But was it sustainable? Clearly not because the economy suffered a major "double-dip" in the 1936-1938 period and ultimately it was only the war that ignited an economic boom that returned the nation to more "stable" long-term growth. |
So you're saying in effect, "falling so low there was no other way but up". I'm sorry, but I respectfully just don't buy that. The correlation is way too strong. Almost the day he got into office, the economy began to improve. As for the double dip, I think PKC answered that pretty well.
And as for World War II, which got us out of the Depression...that was essentially a total takeover of the economy by the government. Rationing, production quotas, conscription of labor, etc, can all be considered a government intervention in the economy on a scale greater than anything else in our country's history. I don't hear anyone calling that socialism! |
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| Shakka |
| quote: | Originally posted by Comrade Stalin
So you're saying in effect, "falling so low there was no other way but up". I'm sorry, but I respectfully just don't buy that. The correlation is way too strong. Almost the day he got into office, the economy began to improve. As for the double dip, I think PKC answered that pretty well. |
OK, don't buy it, I don't care. Obama in February 2009 said it was a good time to buy stocks and the market went up. That must've been the reason, not that there was a ton of monetary and fiscal stimulus being applied. It galvanized things in the short-term and we got a major bounce in 2009. And now, here we are in late 2010, still with an unacceptably high unemployment rate and once again stagnating economic growth, having daily discussions on the merits of QE2. Why is the parallel so difficult to grasp. Deficit hawks on this board have been talking about short-term tradeoffs and the longer-term pain/collateral damage it would likely bring upon our system and the kicking of the proverbial can down the road. Here it is, plain to see, and you are unwilling to acknowledge it. The stimulus gave us a short-term sugar high and now we're sitting on an even larger pile of debt for it.
| quote: | | And as for World War II, which got us out of the Depression...that was essentially a total takeover of the economy by the government. Rationing, production quotas, conscription of labor, etc, can all be considered a government intervention in the economy on a scale greater than anything else in our country's history. I don't hear anyone calling that socialism! |
Whatever you want to call it, we did not have the debt-load going into the Depression that we have today. It's a lot easier to move an economy when it is not restricted by a potentially insurmountable debt load. We were able to grow out of it once the economy finally stabilized but I fear we're in a different boat today (which is why comparisons to Japan are so much more common--see today's front page NY Times article for example). |
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| Shakka |
| quote: | Originally posted by Groundhog Boy
These types of comments are the problem when you only stick to partisan talking points. You know better, and know the effects. They haven't dropped unemployment down, but that was never the intent.
Honestly, I expect/ed better comments from you.
At the same time, this is also why I hit this board once a week anymore. There's no semblance of discourse. The only good thread is the stock one, and that suffers, too.
You know what would be awesome. If when the market is doing well, we actually capitalize as a nation (like the mid 90s when we were running a surplus), and when it sucks, we infuse. At least that's the way it works in responsible households (you know, what Tea Party advocates claim they're all for in theory, yet don't practice in reality). Instead, the most fervent are paying .50 per dollar when it comes to taxes vs. federal spending (see Alaska). |
wut? This is directed at me? The comment was discourse. I recognized the simple error in my original comment as Occ pointed it out to me and I corrected the statement. My point stood correct, but I inadvertently mixed monetary policy actions with fiscal policy actions. Case closed. |
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| Comrade Stalin |
| quote: | Originally posted by Shakka
OK, don't buy it, I don't care. Obama in February 2009 said it was a good time to buy stocks and the market went up. That must've been the reason, not that there was a ton of monetary and fiscal stimulus being applied. It galvanized things in the short-term and we got a major bounce in 2009. And now, here we are in late 2010, still with an unacceptably high unemployment rate and once again stagnating economic growth, having daily discussions on the merits of QE2. Why is the parallel so difficult to grasp. |
I'm not talking about Obama, I'm talking about Roosevelt. I already stated that I don't think Obama has done enough, and that I would have liked to see a Roosevelt-style New Deal, where unemployment is drastically curtailed by government action. There is hardly a parallel because if Obama did do what Roosevelt did, he'd be called a communist, not that he hasn't already been called that. Obama hasn't done anything close to what Roosevelt did so the if we're going to compare the two, then compare the stats I posted from Roosevelt and his policies, and then compare to Obama's and his policy. My conclusion is, he hasn't done enough. He's a right winger compared to Roosevelt. But of course, that doesn't stop Republicans for blaming Obama for the high unemployment rate, when in fact it's the private sector that should be blamed, and if they want Obama to do something about unemployment, then stop the hypocritical argument of wanting smaller government. Republicans don't want smaller government. They want a government that caters to multinational corporations. But they want to tell us what we can smoke, who we can marry, and maintain obscenely high defense spending levels. Smaller government my ass.
| quote: | | Deficit hawks on this board have been talking about short-term tradeoffs and the longer-term pain/collateral damage it would likely bring upon our system and the kicking of the proverbial can down the road. Here it is, plain to see, and you are unwilling to acknowledge it. The stimulus gave us a short-term sugar high and now we're sitting on an even larger pile of debt for it. |
I am also a deficit hawk, but a pragmatic one. If the government wants to stimulate the economy, then I'd tell them to stop half assing and do it for real. Unemployment 10%? Again, do what Roosevelt did. If you're going to increase the deficit, then whatever it is spent on, better be worth it. Two wars and half-assed stimulus measures aren't it.
| quote: | | Whatever you want to call it, we did not have the debt-load going into the Depression that we have today. It's a lot easier to move an economy when it is not restricted by a potentially insurmountable debt load. We were able to grow out of it once the economy finally stabilized but I fear we're in a different boat today (which is why comparisons to Japan are so much more common--see today's front page NY Times article for example). |
I don't understand why the debt load is Obama's fault. Bush had a bloody surplus and squandered it. When a recession of this magnitude occurs, I don't think the president is worried about increasing the deficits, when if he doesn't do something he won't be reelected. Only ideologues want to stick to zero government action when it comes to economics. Reality is much different, no matter what party you are, Republican or Democrat, as demonstrated by Bush's complete abandonment of "free market principles". |
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| Shakka |
| quote: | Originally posted by Comrade Stalin
I don't understand why the debt load is Obama's fault. Bush had a bloody surplus and squandered it. When a recession of this magnitude occurs, I don't think the president is worried about increasing the deficits, when if he doesn't do something he won't be reelected. Only ideologues want to stick to zero government action when it comes to economics. Reality is much different, no matter what party you are, Republican or Democrat, as demonstrated by Bush's complete abandonment of "free market principles". |
I certainly don't and blame Obama for any debt issues that existed prior to his coming into office (I don't think I ever have). The debt mountain we face has been being built for decades. The reality of the situation we find ourselves in is very different from that of the Depression as far as debt goes (and the amount of stimulus likely required to move the economic needle, as well as the magnitude of the risks of collateral damage given how leveraged the system already is). That said, any massive new government programs and spending that have been passed and implemented since Obama taking the reigns (the additional trillions) are under his ownership. This is not so much a political issue for me so much as it is the reality we face and I don't know how much I think Mr. Obama truly "gets it". I simply agree with the Jeremy Grantham's of the world that view our situation as a long-term predicament that will lead to the proverbial "7 lean years" of economic growth (if not longer, depending on how long it takes to get out from under the leverage pile). I believe that, given the size of the pile, policy actions will have limited impact given that we're essentially "pushing on a string." It's not even as much about "free markets" or "zero government action" as it is about majorities jamming through poorly conceived legislation because they think they have a "mandate" to do something radical because things are so dire... |
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| Lebezniatnikov |
Good night for the GOP - looked like the Democrats were going to hold on for awhile there, but late surges in a couple races by the Republicans.
Politics aside, I just hope we get real policy debate in the next two years. Mixed government can be a good thing, and conservatives have some interesting and innovative ideas for governance... I'm just afraid that the Tea Party does not. The "Pledge for America" was a profoundly flawed policy document - GOP has a tough challenge to build a cohesive agenda. I wish them luck. |
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