Econ 2009

[cheesehead]

George,

Look back at post #627.

What is the headline in the portion of Ernst's post that I quoted?

"Federal Tax Revenues Plummet Most Since 1932"

Do you see the word "recession" in there? I don't.

Do you see the phrase "Federal tax revenues plummet"? I do.

That's what I was referring to.

Look again. What is the article's first paragraph that Ernst quoted, and I quoted from him?

Do you see where it says, "The recession is starving the government of tax revenue"? The first words of the first sentence of the first paragraph? I do. It's not talking about just the existence of a recession. It's pointing out an effect of a recession -- what the recession is doing, not just that a recession is upon us.

Do you habitually latch onto the subject of a sentence and ignore the predicate? Doesn't the predicate often say what the subject is doing, rather than simply echo that the subject exists? Maybe you ought to read the predicate more often.

Originally Posted by Prime95

And thank you for admitting it was "your bad" for implying conservatives goal was this severe recession.

Please go back and reread post #633, where I said:

"I can see how you honestly interpreted a previous post that way ('wishing for a massive recession'), but that's not what I meant."

You see that part?

What I admitted was my bad was NOT "implying conservatives goal was this severe recession".

It was for having written in a manner that allowed you to falsely conclude that that was my implication -- after you had ignored the quoted title and the quoted lead sentence.

"I guess I was assuming that everyone would recall what I've written in the past on this topic -- what the conservative think tanks came up with after the 1976 election. My bad."

See that? The "my bad" was about that assumption -- the false assumption that led to my writing a sentence you could misinterpret after you ignored the article's title that Ernst and I quoted and you ignored the article's lead sentence that Ernst and I quoted.

Then, in response to my

Originally Posted by cheesehead

I meant was that the group of conservatives to which I referred have been working toward making the federal government cut social spending, not in a straightforward way by having Congress openly decide to do exactly that, but in what I consider a sneaky way of doing what they could to destroy fiscal responsibility

you responded:

Originally Posted by Prime95

I've never denied that. It is common knowledge and so obvious

It's "so obvious"?

Just a short while earlier you never considered that that was what I meant, while you twisted my words after ignoring the article title and lead sentence!

It wasn't so obvious to you when you wrote post #628, was it?

that I don't know why you harp on it so.

It's because of what you showed us in post #628, that's why -- that despite your attempt to belittle my message as "obvious", you've given us a sterling example of how it was not only unobvious, but seemingly unconscious to you in post #628.

It was a part of every Republican presidential campaign since at least 1980 -- not exactly a big, dark secret.

... but not part of your consciousness when you wrote post #628, was it?

Just another failed government idea / program -- Washington is full of them.

Failed?

It has brilliantly succeeded in getting us to a situation where government (state) has to drastically cut that evil social spending, or (federal) has to borrow so much that conservatives can trumpet it to make the general public forget how _they_ introduced Big Deficits in the 1980s.

[cheesehead]

Originally Posted by Prime95

P.S. Before you "cry foul" with "I never said I support clunkers or current deficits or whatever", please be aware that 98% of your bashing is reserved for conservatives, which certainly leads to the strong impression that you've got little to no complaints with liberals. Yes, I know, you're a moderate.

The way I see that I can best influence liberals is to persuade conservatives to avoid certain mistakes. If they would do that, then they can raise a much more effective voice to oppose liberal excesses than I ever could. As it is, the misguided conservative complaints and deceptions offset the effectiveness of their on-target messages.

[cheesehead]

Here's the sort of dumb conservative mistake I mean:

Republicans are making a mistake by being so near-unanimous in opposing Sotomayor.

As an article I read a few days ago pointed out, by opposing so solidly a judge who's clearly (to most of us, anyway) moderate, the Republicans are freeing Obama to nominate more-liberal judges in the future!

Obama will be able to claim that since Republicans have ignored his pleas for bipartisanship and went all-out to oppose such a moderate choice, he might as well nominate more liberal choices, since it's going to be a series of 60-40 votes in the Senate either way.

By allowing Sotomayor to be confirmed with a vote total more like 80-20 than 60-40, Republicans could have had influence to keep Obama's choices moderate by allowing him a bigger victory on a judge closer to the center.

Instead, they're making the mistake of going all-in against a moderate choice instead of reserving that for more-liberal nominations. They should have used Obama's expressed desire for bipartisanship as a lever to influence his nominations.

[Prime95]

Originally Posted by cheesehead

Look back at post #627...
Do you see the word "recession" in there?...
Do you see the phrase "Federal tax revenues plummet"?...
That's what I was referring to.

I see both phrases "the recession" and "is starving" in the lead sentence. This is also a thread dedicated to the ongoing global recession.

I'm happy to accept that your clarification that conservatives were working towards the "is starving" part rather than "the recession" part.

Now if you'd just retract that nonsense about the joys of owning Treasury bonds, post #627 will be all cleaned up.

Failed?

It has brilliantly succeeded in getting us to a situation where government (state) has to drastically cut that evil social spending, or (federal) has to borrow so much that conservatives can trumpet...

I meant it has failed because the deficits are a time bomb that threatens the future of the U.S. far more than today's pesky little credit crisis. IMO, if fiscal discipline is not restored, in 20 or 40 years we may look back on 2009 as the good 'ol days.

[cheesehead]

Originally Posted by Prime95

I see both phrases "the recession" and "is starving" in the lead sentence.

... but you latched onto just the first, and ignored the title that reinforced the second.

Now if you'd just retract that nonsense about the joys of owning Treasury bonds, post #627 will be all cleaned up.

Okay, a flaw in that part is that for any particular individual investor, the supply of T-bonds is essentially infinite anyway. If the debt increases, that individual perspective is unaffected, so doesn't really change any individual's decision about where to invest. However, debt increase does, on an overall scale, collectively soak up money that could have gone into other investments, presumably counter to the wishes of most conservatives.

I retract it.

I meant it has failed because the deficits are a time bomb that threatens the future of the U.S. far more than today's pesky little credit crisis. IMO, if fiscal discipline is not restored, in 20 or 40 years we may look back on 2009 as the good 'ol days.

I agree that this is the enormous drawback to "Starve the Beast" on the federal level. That's why I, too, have generally referred to it as an abandonment of fiscal responsibility.

However, it works better at the state level, such as in California now.

[ewmayer]

A few points which I will later supplement with the news-of-the-day segment (or better, the "news of the day which Ernst deems particularly relevant according top his somewhat subjective criteria for economic newsworthiness" segment, conveniently abbreviated NOTD) on the liberal-vs-conservative debate:

1. Both the "liberal" and "conservatives" in DC have a persistent habit of talking bravely about "fiscal discipline" and "smaller/more-efficient/more-accountable/more-open government" but with equal persistence doing exactly the opposite when in office. As on Wall Street, in practice prudence and discipline are not rewarded in DC, and to a large extent, not by voters who put these folks into office, either. The GOP like to blather about "smaller government" while hugely increasing the parts of government they find appealing, e.g. defense and subsidies (or tax breaks) for the wealthy and big corporations. The Dems like to rail in populist fashion against Wall Street and Big Corporate interests, but are no less beholden to same than is the GOP. (Look at the lists of major donors to Obama and McCain, if you don't believe me). Both parties like to spend like drunken sailors on leave when it comes to Pet projects benefiting (or appearing to benefit) their constituents. The GOP wants too little regulation, and the Dems want too much, when what is really needed is a moderate amount of *effective* regulation. (Are you listening, Fed/Treasury/SEC/OTS/FDIC?) None of their major shenanigans that led to the current financial crisis would have occurred (or been anywhere near as large as they are) if key regulators had simple DONE THEIR JOBS, and key safeguards not been actively dismantled at the request of the Big Players.

2. I have noted before that two of the real biggies in the latter category of item (1) above (active dismantling of financial-regulatory safeguards) - specifically the takedown of the Depression-era Glass/Steagall regulations on investment banks and the disastrous Commodities Futures Modernization Act - occurred on Bill Clinton`s watch, with his blessing. Similarly, the congressional expansion of Federal Reserve authority to regulate lending standard and practices (which they only just recently decided to use, in laughably belated fashion) occurred under Clinton, as did the inflating of the first of the disastrous Greenspan-Fed-fueled speculative bubbles, dotcom. I should note that the myth of "Clinton leaving us with a balanced budget" - which I call a myth because it was only true in the very short term, and included the usual DC budget cheating used to make deficits look much less bad than they really are (e.g. "borrowing against the social security trust fund" - any of that money ever get paid back yet? I thought not) - was in no small part enabled by the one-time revenue windfall provided by grossly unrealistic equity valuations during the dotcom bubble. Clinton had the fortunate timing to have just left office when that bubble popped, so never had to deal with the financial aftermath. Of course W. Bush actively made things much worse by adding big tax cuts on top of the plunging government revenues in order to "stimulate the economy" (sound familiar?) and starting a needless (and incompetently planned and executed) war in Iraq, while the real bad guys he used as a pretext for same were where we should have been focusing our attention all along, in Afghanistan and Pakistan. Bush also allowed Greenspan to blow the biggest bubble of all in a desperate attempt to quick-fix the post-dotcom-crash-post-9/11 economy. We will be living with the consequences of that gross mis-and-malfeasance for decades to come, quite possible for all time, in the sense that it may lead to a collapse of American world financial/economic domination analogous to that of the British Empire in the century following the end of the Napoleonic wars.

3. Obama ran on nice words like "change you can believe in" and "shared sacrifice", and has delivered/required nothing of the kind. Economic fundamentals - despite the extremely well-orchestrated "green shoots" propaganda campaign by the O administration and their media lapdogs - continue to be dire, and most of the money from the ongoing multi-trillion-dollar bailouts and stimuli appear to flowing to the same crony capitalist crooks as caused the crisis, who appear to be doing their part to repay the favor by blowing a huge stock market "recovery myth" bubble. That is helping Obama in the very short term, but as with all such bubbles, at some point reality will catch up, and then watch out. The 4th arm of government (i.e. Big Finance) will continue the Pump as long as it suits them (they are busily using their taxpayer-funded inflated stock prices to recapitalize and hand out lavish bonuses), and most of them will likely make money on the way down, as well. (I'd love to have access to Giant Squid Inc's balance sheet, to see when they start dumping their price-inflated holdings on Retail Bagholder Joe and going short the markets). The new administration has embarked on a binge of reckless deficit spending which puts even Dubya Bush to shame, and (unlike the spending binge under FDR in the 1930s) I see no sign of a significant portion of that borrowed money at least going to sectors where it will provide a basis for future economic growth. I had hopes for at least the "green" part of the stimulus, but that is dwarfed by onrushing monster scam (and hidden tax) which is cap-and-trade and the oh-so-manipulable "market" for carbon credits. (I will have more to say about that and Goldman Sachs` major role in it in a later posting to the Global Warming thread). "Cash for clunkers" might qualify, except that the restrictions on it means that many perfectly good vehicles (especially ones for which the environmental cost of driving the old car for another 10 years is less than for building a new one, even a new fuel-efficient one) are getting taking out of service, and many consumers are being encouraged to take on more debt as a result. (Not to mention that 4 of the top 5 cars being purchased as a result are foreign-made, and even if they are being *built* here that still means that a large portion of the resulting "economic stimulation" will flow overseas.) The Big-Pharma-and-Insurance-cosponsored "national healthcare" legislation is shaping up be another multitrillion-dollar boondoggle, because it makes no serious effort to tackle the root causes of exploding healthcare costs. (For example, as proposed, the federal govt would not make a serious effort to negotiate lower prescription drug prices with manufacturers, and the bill would actually *forbid* states from attempting to do so on behalf of their own citizenry - I bet Big Pharma "fully supports" that part of the plan).

Originally Posted by Prime95

I meant it has failed because the deficits are a time bomb that threatens the future of the U.S. far more than today's pesky little credit crisis. IMO, if fiscal discipline is not restored, in 20 or 40 years we may look back on 2009 as the good 'ol days.

Uh, unless I`m misunderstanding your point, "Run up the credit card in order to Feed the Beast unlimited meat" is every bit as big a problem as the "Starve the Beast" (as actually practiced by most of its self-proclaimed advocates) option.

[cheesehead]

George, if you're composing a reply to my latest, please note that I've just completely revised a part.

[Prime95]

Originally Posted by cheesehead

What's to retract? Can you refute any of it?

Conversely, can you prove any of it? After all you're the one making some vague claim that since conservatives are wealthy and own treasuries, that they are in favor of a "starve the beast" policy.

Yet, increasing deficits puts upward pressure on interest rates which drives down the value of bonds.

And, huge national debt may well lead to a policy of printing money which causes inflation which again drives down the value of bonds.

There's an investigative rule: "follow the money".

Here's a much less convoluted "follow the money" for conservatives/Republicans. If taxes are lowered, the rich keep tons more of what they make. The grateful rich will bankroll conservatives so they can stay in power. Screw the unemployed, welfare recipients, fiscal responsibility, and the long-term future of the country.

And how do liberals and Democrats "follow the money"? It might look like this:

If we shower the masses with free gov't goodies that we take from the wealthy and future generations, they will be grateful and will vote for us so we can stay in power. Screw the evil rich, fiscal responsibility, and long-term future of the country.

Pick your poison. Unless this country wakes up you are doomed either way.

[Prime95]

Originally Posted by cheesehead

George, if you're composing a reply to my latest, please note that I've just completely revised a part.

Oops, I replied too quickly.

[__HRB__]

Originally Posted by ewmayer

None of their major shenanigans that led to the current financial crisis would have occurred (or been anywhere near as large as they are) if key regulators had simple DONE THEIR JOBS, and key safeguards not been actively dismantled at the request of the Big Players.

Your assumption is that regulators

1. have the necessary information to do their jobs
2. have the necessary tools at their disposal to do their jobs
3. have the necessary incentive to do their jobs

All three must be fulfilled, or regulation will fail. So, before you complain about regulators not doing their job the way the designer (you) intended, please:

1. figure out, why there is such a strong tendency for regulators to be dishonest, delusional fools
2. explain (wrt 1.), how you can keep a straight face when you say that one can regulate the regulators without giving more power to dishonest, delusional fools

[Prime95]

Originally Posted by ewmayer

A few points ... on the liberal-vs-conservative debate.

As usual, a brilliant reply from Ernst.

I don't really want to focus on the Republican/Democrat blame game. They both bear some responsibility, as do the non-partisan regulatory agencies, greedy, short-sighted Wall street and corporate executives, and spend-happy American consumers.

The more important questions are how do we get out of the mess and/or what happens if we don't.