This is basic Keynesianism, folks. The economy will not right itself: Neither the credit nor the customers are there. Alas, politics prevents a stimulus package. Gloria Borger:
Consider the economy. There are ongoing discussions at the White House, for instance, about what to do about the awful jobs numbers.There is no third way.
"No one wants the states in bad shape as we head into the midterms," says an adviser. They also don't want to be seen proposing Son of Stimulus, because that would look like a) the stimulus didn't work and b) the price tag would be unacceptable.
So they're looking for a third way...
Once again, we face the old problem: When Republicans are in power, they can (usually) vote like Republicans without fear of losing power. But when Democrats are in power, they must vote like Republicans. Conservatism remains this nation's ideological default position.
We would have been much better off if McCain had won. As long as conservative propagandists can pretend that unregulated laissez faire is an untried ideal, we will never have a return to Keynesian sanity. Since 1980, this nation has remained in psychic thrall to the ideas and ideals of Milton Friedman. We've been hypnotized. Four years of Depression with a Republican in the White House might have forced us, finally, to snap out of our trance. Instead, we're going to get four years of Depression under Barack Obama -- a sell-out whose tepid half-measures have been ludicrously branded "socialist."
(The rest of Borger's piece is very strange. She begins by admitting that the Republicans have benefited immensely from their refusal to work with Obama. She ends by telling Dems to "force" the Republicans to work with them. How?)
Bill Ayers is an asshole. As you know, the right-wingers have been spreading the rumor that he wrote Obama's book, Dreams From My Father. The rumor is based on crap, but the righties won't let go of it.
In recent times, Ayers has twice "confessed" to writing the thing -- only to plead for his royalties.
It's a joke, son. Trouble is, many right-wingers can't understand any attempt at humor that doesn't remain on the level of Moe poking Larry in the eyes. In other words, Ayers just tried to use gas to put out a fire. Smart move, Bill.
Ayers did nothing but harm to the anti-Vietnam war movement and he's doing nothing but harm now. Boy, has he wasted his life.
"Our" terrorists: A friend to this blog has turned my attention to this L.A. Times story about the release of CIA files concerning anti-Castro terrorist Luis Posada Carriles -- who, with Orlando Bosch, masterminded the bombing of an airliner. He also engineered a series of hotel explosions.
The LAT reportage is skewed in ways that are both predictable and appalling. Posada was put on the Agency payroll in the early 1960s, well before the airliner attack. The Times quotes documents from that period which describe him as a man of good character, "reliable and security conscious." The article leaves the impression that Posada's turn to terrorism came as a shock to the Agency -- that the CIA was guilty of a "failure in its assessment of Posada."
Not quite. This is another one of those "It's not a bug -- it's a feature" situations.
If the LAT had examined this earlier 2005 document cache they would have found this document (pdf), which proves that the CIA knew about the plans to blow up the airliner months ahead of time, and did nothing to prevent it. (Posada himself was, in all likelihood, the unnamed informant -- and even if he wasn't, the document remains damning.) Bosch and Posada were funded by the World Finance Corporation, a CIA-linked money laundromat. Our old friend Brent Wilkes got his start with WFC.
17 comments:
Obama is bored with, or afraid of his job. He is constantly looking for a distraction, a trip, anything to get him away from his duties. Those who looked into candidate Obama understood that he never succeeded at anything and his main interest is the adulation of Obama. When Clinton took office, he gave his full attention to the U.S. economy, and the economy of 1993 was not as bad as the economy of 2009. Obama has done nothing to correct the structural problems facing the U.S. in the financial and economic front. I voted for McCain because I didn't want to see an an incompetent Democratic president ruin the best opportunity we would have to correct the Republican disaster. I put most of the blame on Democratic Party leadership for the election of Obama and if each one in the leadership is not reelected, it will be justified.
I like a lot of what you write and find it a shame that you buy what Krugman and the Keynesian clowns sell. You really think more debt can fix a system that is sick with the very same thing? Is that how you would run your house?
What happens when the stimulus ends? This is what happens.
http://tinyurl.com/y9pctjy
You've just pulled forward demand and added more debt to the system!
You say we need another stimulus package because the first did not go to job creation. The first was supposed to be all about job creation. Therefore, I would ask what makes you think the second would be any different given our current policy makers. I would argue we would be better off NOT WASTING any more money when we KNOW it will NOT go to job creation. We have the first as proof.
http://tinyurl.com/y8tr73l
Democrats need to remind the public that we are where we are because of Bush's eight year deficit spending spree.
Blame who you want for the melt down but if we had a less debt going into it we could afford to do another stimulus package.
But MrMike,
Obama knew the score coming in and said he could fix it.
So are you telling me he was lying?
He said if stim #1 was passed we wouldn't go above 8% unemployment. We are at 9.8% and rising. So that tells me if we get stim #2 we will get to 12%.
And when the Bush tax cuts expire that should give us another 2% boost.
What is killing us right now is uncertainty. New health care taxes? Yes or no? Higher energy prices? Yes or no? More regs on small business? Yes or no? Higher taxes? Yes or no?
No one is going to hire until all that is settled.
Of course Obama could have just cut business taxes. Then the money goes to the most profitable. i.e. those most likely to hire. Instead the money went to the cronies. Good politics. Bad business.
Well you know what they say? Three more years.
It is often claimed that WWII ended the Great Depression.
Keynesian economics accomplishes the same thing without a war.
The way Reagan did it was military Keynesianism -- a massive military build-up without a war. I wonder if that will be the prescription here? I don't think the Republicans will allow anything else.
Yeah, the deficit was Bush's fault, but who is in office right now? Who is in a position to fix the mess? Continually blaming the last guy won't cut it.
Obama wanted the job. He wanted it so damn much he was willing to cheat, race-bait, and vote-steal his way into it. So, now he's got it. And what, he didn't know he was inheriting a giant clusterfrack? Too bad. You wanted it, you got it. Now do your damn job.
Thanks for filling in the details on the Posada Carrlies story. A web of intrigue, indeed.
As for Bill Ayers - incredible! I assumed this was just typical right-wing disinfo when I first saw the story. I can't believe he's playing into their hands like that.
I find much to disagree with in these comments.
The lesson from the Clinton years is wrongly drawn. He did not use fiscal policy in any Keynesian way to work on improving the economy (even reneging on campaign pledges to try to do that). He eschewed such policies to rely mainly on a promise of help from monetary policy offered by Greenspan.
To many on both the left and the right, the policy looked wrong-headed. It did not yield noticeable results for several years, and probably worsened growth and unemployment (according to standard Keynesian doctrines) from what would have otherwise obtained.
Bottom line is that the policy worked out, and worked out well, but a) nobody could have known it would, and even Clinton was in despair over being forced into it, and b) it did not show its effectiveness for several years. As a matter of fact, it was widely assumed it was failing, even as it was working.
I cannot say for a certainty that Obama's plans may end up working, but this prior example from the Clinton policies ought to chasten any who think they can definitively say they will not.
XI
Have you heard that Bill Ayers is the real father of Sasha and Malia?
XI: Your error is very simple. The Zero boundary. You're ignoring it. See Krugman.
Joe, I bookmark Krugman's blog and read it regularly.
I'm aware that there is no room for monetary policy to loosen, considering the targeted interest rate level in the Fed funds rate is zero. And it is clear that this part of the Clinton economic policy playbook is not available to Obama, nor is it even a possible substitute for necessary spending and large deficits at this time.
My point was rather that although we now know Clinton's approach succeeded, and therefore, was succeeding (and could possibly succeed), there was no such assurance or knowledge at the time the plans were being implemented, or for years afterward.
I have said for a couple of years now that even if somebody came into office and did the exact right thing in policy, there is so much wrong starting off that the exactly correct policy might still look like an utter failure for a considerable period of time.
Economics probably dictate that it is finally necessary that America begins to live within her means, meaning a considerably lowered standard of living. Any president in office during such wrenching dislocating times will be damned, but perhaps having an orderly decline in our living standards is the best that anyone can do with this moribund economic condition.
XI
When Republicans are in power, they can (usually) vote like Republicans without fear of losing power. But when Democrats are in power, they must vote like Republicans. Conservatism remains this nation's ideological default position.
???...We're totally over the falls with our national debt. Both parties for decades have treated our money as simply something to be tossed from the back of a speeding bus. What's conservative about that?
SI:
Not so fast on that one.
From before the '92 election, when Perot put the deficit and debt issues front and center in the public debate, the Congress had already put into place the Gramm/Rudman/Hollings deficit reduction act.
True, the deficit 'reductions' 'required' by this bill were often gamed, rigged, gained from one-time asset sales, accounting restatements, etc. Finally, however, all the tricks had been exhausted, and GRH then required either taxes be raised, or a 25% across-the-board cut in all discretionary budget categories.
When Bush the Wiser was induced to break his no-new-taxes pledge, the Democratic majority Congress also instituted 'pay-go' rules (no new spending programs or tax cuts that weren't deficit neutral, i.e., fully paid for by new dedicated revenues or by cuts in existing programs), AND hard caps on discretionary program increases.
Clinton didn't want to keep them, but the Democratic majority Congress insisted that the pay-go rules, and hard caps, remain in place. Over time, not only did the budget go from deficit to surplus (3 years in the 'unified' budget including SS's surplus, 2 years 'real' on-budget surpluses), but something on the order of $400 BILLION was paid down on the publicly held national debt.
SO, as was said, Democrats in those days did indeed act in the most responsible, green-eye-shade deficit-hawk fashion, also known as fiscal conservatism. Against the will of the Democrats, Clinton even agreed to use the wrong, proven to be overly pessimistic projections of the CBO to guide his budgets, instead of the proven more accurate OMB projections, bending over backwards to be fiscally conservative. In fact, the country was on a glide path to pay off the entire national debt in about a 10 year period.
The evident danger at that time was the worry that the national debt might be retired too quickly.
XI
I agree with the first comment. IMO, Obama since taking office seems to be running on fear. I don't know if its the whole Pentagon/military-industrial complex, or just a faction of it, namely the neocons. Just the fact that Gates is still running things is the evidence. I believe it was Gates who leaked the Afghanistan papers which is forcing Obama's hand.
MS -
Of course Obama could have just cut business taxes. Then the money goes to the most profitable. i.e. those most likely to hire.
That doesn't work; the rich just keep the money and get richer.
It's bs, just like "we pass the savings on to you!"
Raising taxes on the wealthy, however, increases economic growth: the rich work harder so that they can have the same amount of money after taxes that they did before the increase.
XI -
It did not yield noticeable results for several years,
I've already refuted this claim (it's based on the false metric of recession recovery ending when unemployment reaches pre-recession percentage, rather than the actually-used metric of raw job numbers returning to pre-recession levels), but since it proved you wrong, you of course ignored it.
nobody could have known it would, and
Unless you were an honest economist, even or had a sufficient grasp of economic history. (Remember, Bill Clinton was a Rhodes Scholar in Economics).
As a matter of fact, it was widely assumed it was failing, even as it was working.
Again (as I said weeks ago), it was perceived to be failing because the conservative-dominated MSM and prgressives such as Michael Moore were both constantly saying it was, even though it was obvious at the time to anyone who actually looked that it was succeeding. Some indicators: by your own admission, by 1994, all the jobs lost in the recession plus an equal number had already been created; the deficit was down 1/3; the debt was about to receive a huge pay-down from the Deficit Reduction Act of 1993, and economic growth rate was about to take a upward jump (obvious from history) as a result of that same Act.
Sergei Rostov
Joe (not Cannon) -
that you buy what Krugman and the Keynesian
Well, one goes with what works, which would be Keynesianism. I suppose one could do what you want, but most people don't like a society such as would result, i.e. one with a 93% poverty rate (such as in the 1920's).
You really think more debt can fix a system that is sick with the very same thing? Is that how you would run your house?
Yes, it is. If I am in debt and still don't have sufficient income to meet my needs, I borrow more while doing things which will lead to a bigger income in future (even if that means taking on more debt than just meeting my needs).
(Another example of this is a student taking on more loans knowing that a better education will mean an increase in future income which will much more than make up for the temporary debt.)
If I do as you suggest, and don't take on more debt, I don't meet my needs, and consequently fall over dead. Is that how YOU would run YOUR house? If so, I sure hope you don't have kids.
Sergei Rostov
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