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Ding! Dong! Recession’s Gone!

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Now that the all-important events such as Victory Over Labor Day, Obama's Sell-out Speech, and Exploit the 9/11 Dead on 9/12 Day are all past, we can get back to the real news, which is:

Hallelujah! The Trillion-dollar Tribulation is ended! Happy days are here again!

At least, that is what is being touted in the Federal Reserve's Beige Book. The majority (11 of 12) of the Fed's economic regions indicated positive economic progress among the businesses queried about their profit prospects. Only the eggheads – the economists – really understand what is going on at the moment, which is that this good news is only temporary. So when Obama comes on television Monday and brags about the economic good he's done, ignore that man behind the TelePrompTer curtain!

Because the current positive economic numbers reflect the recent and meager public stimulus efforts of the Obama administration, there is doubt about how well the economy will continue once the effect of the CARS program fades out and the next wave of problem mortgage foreclosures looms. The economists warn that consumers will have to spend money to keep the rising slope as currently aligned, but with increased unemployment forecast for the foreseeable future, that isn't expected to happen. We'd do well for Christmas to include a lump of "clean" coal for everyone. We'll call it a "Diamond in the Rough"! But I digress.

Even those who are attempting to to hype the investors by spinning labor gold out of rotten economic straw are pulling their punches, noting that "the jobless are falling off the government's radar because their unemployment benefits have expired." More of a Main Street stimulus plan would have helped here — a lot! No consumption, no prosperity for all.

But don't let that little bit of sorry news deter Rick Santelli's "real Americans" from their revels! Wall Street has managed to bell the federal cat before any meaningful reform could be imposed on them. That way, any "fines" they may now incur in violating the trust of their clients would maybe only amount to a busy month's worth of expense account meals at the Bull Run Restaurant around the corner — including bar tab and tips. The Good Life Lives!

And Santelli's real Americans do have plenty to party about. Just in California alone, My Budget 360 reports that 76.8% of adjusted gross income increases realized in 2006 and 2007 went to the top 20% of California personal income taxpayers while the employment rate in the Golden State is dropped to a 30-year low. What this means in simple Tea Bagger American is that the wealthy aren't suffering the negative effects of the crashing economy that the economists see affecting the rest of us. With a U6 unemployment rate of over 20% in California, even these Toppers should be able to notice the empty strip malls and half-completed business complexes dotting the desert as they trip the light fantastic to drop another million on the Vegas crap tables. But then, "real" people can only see other "real" people. They can't see the rest of us. We're "indivisible", without liberty and justice at all. We'll go away if we're ignored long enough.

I watch with great interest to see whether the Toppers will finally notice the growing ranks of the jobless, homeless, and uninsured, as the forecast is for there to be many more of us po' folks in the near future. We'll be standing in the driveways of those five-star hotels begging to tote your luggage up to the car hops for a portion of the tip you give them! Can you see us now?

There will be many of us, so you should! Our income remained stagnant for the last ten years according to the Census Bureau, and what gains were realized went immediately to fund insurance company executive bonuses. That money Obama "pushed" on the banks would have been much better spent on all those "shovel ready" jobs that seemed to have disappeared into the gaping maw of Wall Street greed. We could have paid for that wonderful "health insurance reform" that Obama is about to push on us. It might really have ended the Great Recession.

One would think that the money mavens would get these points:

• Unemployed people cannot afford health care no matter what Draconian fine the Obama administration gets pushed through the Congress as part of the scam bill they claim is medical insurance reform.

• Without the banks using some of that TARP money for something other than new stock options and executive bonuses, more Americans are going to lose their homes as the next wave of failed mortgages flows across the land in the next few months. This will preclude hocking the house to cover the spouse.

• A significant number of people – such as the handicapped woman heckled at a recent town hall meeting – aren't going to be able to wrestle a refrigerator box to what empty space remains under a bridge somewhere, and no one will be there to help them because they will be too busy protecting their own scant belongings. Are we to die in the streets and decrease the surplus impoverished population? So it seems, both on Wall Street and Pennsylvania Avenue. They didn't lift a finger to help New Orleans, so why expect they will care about any other place — except Wall Street?

We are on our own — and it could still get worse. Will we see the Obama administration look the other way should child labor again rise in America? They would work for less! One US citizen tells of being impressed into supporting his family by working the fields outside of San Luis, AZ since he was 17. What took them so long? He could have been picking watermelons since he was 12! Should we not protect the wealthy by allowing other nationalities and races to send their children to work in the fields instead of to school? The Chamber of Commerce would love having lower wages and a less intransigent workforce to exploit! It would be much cheaper than outsourcing and off-shoring and re-importing! The US government already does little now to deter juvenile labor exploitation in the many countries covered by The U.S. Department of Labor's Bureau of International Labor Affairs report on child labor abuses (as required by the Trafficking Victims Protection Reauthorization Act of 2005 – passed by a majority Republican Congress, and signed into law by a Republican president, I might add). So why should we expect that the Labor Department would care about a bunch of impoverished imps manning the machines at the idle textile mills in the South, for instance? At least the machines would be generating revenue! Profit to the Real People!

So with the kids safely entrusted to the loving employer to keep them out of trouble, gangs, and drugs, what does that leave their unemployed Dad and Mom to do? Dad could grow drugs to sell to the swells while Mom peddles them a good time while enjoying it – just like what is now happening in Chattanooga. That way, every family member indiscriminately contributes to the economic needs of the family. From each according to his abilities, to each equally! So ends another chapter in the ongoing Horatio Alger American success story! Hurrah for capitalism!

But let's get serious, folks. Is this really the sorry state of affairs that the American people voted for last fall? Is this the change they were led by Obama to believe would make the nation different and better in many demonstrable ways?

No, it's not. He's let us down. Instead of bailing out the banks, he should have been bailing out the mortgage holders. In doing so, the banks could legitimately give themselves big bonuses for getting their institutions out from under economic calamity. Obama also would not have increased the federal deficit to a record $1.38 TRILLION of YOUR Money, a move which will prevent him from conducting any more rescues. Without the people working, where are all the revenues necessary to pay off the government debt going to come from? The private sector with its reams of tax breaks and exemptions? The investors who are only taxed 15% after they write off all their expenses? Please! The baby is ready to be drowned in the bathtub, so someone summon Grover Norquist.

Obama has shot his wad. He has lost the confidence of the world's lenders. No more automatic loans are forthcoming to prop up the sinking US Treasury. The Chinese are now about to issue financial securities denominated in renminbi as they ramp down their purchases of US Treasury bonds. Even those Marxists over at The Motley Fool are sounding the alarm over this, because they are reporting that Goldman Sachs is one of the largest foreign investors in Chinese banks. It will take a few years for the security to be viable, but the Chinese are patient and flush with bucks to cover them until it floats on its own. The Fools know this, and are right to be worried. The gravy train that gets spilled will include their own.

It doesn't stop there! The Swiss economy is deemed "more competitive" than the US, in part because of "growing concerns" that the US government would be unable to distance itself from private sector influences. This lack of separation is feared to affect the quality of auditing and reporting standards, which would further erode confidence in the US economic markets, and further aggravate the growing economic problems facing this nation. And Obama wants even more cooperation between dominant business and submissive government!

I tend to agree with the international bankers that the US government and the private sector have become too incestuously close, but there is one connection to the private sector with should have been closer. Warren Buffett, the Wizard of Wall Street, the Prairie Sage, the top investor who inspires the merely wealthy to spend thousands of dollars – no! $1.6 million! – wait! $2.1 million! – just to have lunch with him and talk money. Yet, as the Free Republic noted with unmuted disdain about a Wall Street Journal campaign funding report, The Rich Vote Republican, So Why is Warren Buffet Supporting Obama? You can begin to get an idea why – without spending $2.1 million – here.

Obama named Buffett as one of his advisors (as did Arnold, so Buffett's advice can't be called partisan), yet Obama has yet to clearly indicate or demonstrate that he is heeding the advice of the Oracle of Omaha. One would think that Buffett would advise Obama to heal Main Street before Wall Street, since an average of about 70% of the US economic activity comes from meeting the wants and needs of the working class. Without a healthy consumption base employed at good wages, how does the US economy again stand on its own two right feet?

Obama has abandoned the working class to their cruel fates in the hard, economic-based world he is helping to create. In it, are we to become world policemen or international door-to-door arms sales representatives? The only growth industry in America today is war! To jobs! To jobs! Freedonia's going to jobs!

It is beginning to look like the US is going to need to generate more wars in order to top the 68.4 percent of all world-wide weapons sales (The total value of which was $55.2 billion) made in 2008. The 2009 US weapons sales figure is expected to almost match the 2008 figure at $35.3 billion. But 2008's $37.8 billion in sales is nothing compared to the $128 billion for new wars approved by the Senate Appropriations Committee just a couple of days ago. It isn't clear if the $50 billion for Black Ops is included in this package, but suffice it to say if it's not that it's merely a drop in the Red Ink Sea – otherwise known as the Pentagon budget – which is almost $600 billion deep.

That swag-and-brag would settle a lot of subprime mortgages, rebuild a lot of collapsing infrastructure, develop new green energy technologies, and continue to provide a sufficient defense of the nation without going into deeper debt. We might even make some money on the deal!

But it is clear to me that Obama cares nothing for those of us (not me – I voted for Ron Paul) he once inspired to give him the White House. He's become so enamored of personal wealth that he aspires to it himself. He has become infected with the "More!" virus, and cares nothing for the starving little waif who asked for another portion for his meal. Obama will build us more workhouses and prisons, and he'll send more of us off to new wars fought only for the glory and profitable aggrandizement of the military-industrial corporatocracy.

Just don't expect him to care for "he who has borne the battle" when most of "him" comes marching home unfit to continue to provide "service". Nor expect any support for his widow, nor for his orphans, if he isn't marching anymore. There is no space on the spreadsheet for that uncapitalized expense. There is no profit in it. It would be unproductive, and productivity must increase at all times! The corporatocracy must be served! To Hell with all else!

Submit, citizen! Resistance is futile! You will be assimilated!

(Paid for by the Submit Dorothy and All of Oz, Kansas, and America Republican Corporate Committee)

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About pessimist

  • Glenn Contrarian

    Realist –

    You’re into grand conspiracy theories, aren’t you? Because if you weren’t, you’d never have posted this:

    “Obama will build us more workhouses and prisons, and he’ll send more of us off to new wars fought only for the glory and profitable aggrandizement of the military-industrial corporatocracy.”

    There is NO evidence whatsoever to back up these assumptions…but if one listens to you, one can just about hear the whup-whup-whup of the black helicopters (or maybe even the Black Panther helicopters) just over the ridge.

    When it comes to the burden of the recession borne by the little people like thee and me, it would do you well to do some objective research, and read some objective history. Why?

    Because every recovery from recession (or depression) in America’s history since at least the beginning of the 20th century has certain factors in common. These are:

    1 – Greatly-increased government spending (i.e. ‘stimulus’). The biggest example of this is not the Obama stimulus…but our national build-up before and during WWII – all of which was financed by governmental deficit spending.

    2 – Taxes were raised in order to provide that government spending which created millions of jobs every time…because regardless of what GOP Chairman Steele says, the government does create jobs, both public and private.

    3 – The unemployment rate never, ever, ever drops right away following a recovery by Wall Street. The unemployment rate always begins to drop one or (more often) two years after the recovery by Wall Street…and if you’ll think about it, this makes perfect sense – because businesses don’t recover overnight, and they don’t gear up for increased production overnight, and they don’t expand overnight, and new businesses don’t start overnight.

    Do you know why the status of and governance of the American people is sometimes called the “ship of state”? I found out when I tried qualifying as a lee helmsman on the USS Ranger (CV 61) back in ’84 – you can steer an aircraft carrier, but if you try to steer her too quickly or erratically, it’s almost impossible to point her in the direction she needs to go.

    And so it is with the American presidency: the president cannot simply wave the magic wand of legislature and change the country overnight. It takes time – years – to effect major changes. Look how long it took (and is still taking) to bring equal rights to all Americans. Teddy Roosevelt was the first president to support universal health care…but do we have it yet?

    Steering the ship of state also means that while you do care about the welfare of the junior enlisted down in the boiler rooms, you can’t just *poof* make their lives better…but you have to make the changes first in the lives of the senior officers who are responsible for the livelihoods (and lives) of those junior enlisted.

    So it takes TIME, Realist – and the bigger the ship of state (we’re at 300M crewmembers now), the longer it takes to make the changes that need to be made.

    THAT is what is real.

  • http://ruvysroost.blogspot.com Ruvy

    Aw Glenn. Yer spoiled! Even if that whole article was made out of whole cloth, what a cloth! Can you write that well? I sure as hell can’t!

    Give the man credit where credit is due. He should have gotten paid serious money for that article. Instead he puts it out here for nothing to get your piddling complaints. While you are at it, you can watch this video. This is my kind of economist. He cusses and makes it all so very clear, that I’ll forgive him his Bronx accent. And before you complain that he can’t be right, dig this. He predicted the 87 crash, the dot.com crash, the candidacy of Ross Perot and a whole slew of other events.

  • http://ruvysroost.blogspot.com Ruvy

    By the way, Glenn, if you are going to lecture on economic history, you better get your facts straight.

    In what was called the “Great Depression”, the United States was a creditor nation with a manufacturing base. Personal debt was low – as credit cards didn’t exist, and lots of folks who had bought iceboxes and washing machines on the installment plan had to painfully watch as they were taken out of their homes when they couldn’t make the payments. In addition, even after Roosevelt pulled in all the gold coins and gold-backed currency, the dollar was still backed up by a gold reserve.

    Today, there is no manufacturing base in the States. This was true two years ago, too, when I warned of an impending collapse in the States in comments to articles here. In addition, the United States is a debtor nation, with personal debt running to the thousands of dollars on average. There is no spending your way out of this. Your money has no backing. And gold? Gold is $1,000 an ounce, not $15 or $35. So spending funny money that has no backing will only devalue the currency until you can use $100 bills to wipe your rear end after an upsetting intestinal episode of the runs.

    And just as a Parthian shot for you, as strip malls start to empty out because businesses are shutting down, what will happen when commercial real estate starts to crash in value in about 9 or 10 months?

  • Doug Hunter

    “as strip malls start to empty out because businesses are shutting down, what will happen”

    Simple we’ll just fill em with ACORN offices and planned parenthood clinics. The genius economists that support wasteful government intervention can prescribe a proper program whereby half the unemployed get paid to dig holes and the other half to fill them.

  • Clavos

    the wealthy aren’t suffering the negative effects of the crashing economy that the economists see affecting the rest of us.

    This is true. Boats in the $150K range (what I call working man’s boats) haven’t been selling for months, but sales of those those priced at $1M+ never even paused.

  • zingzing

    clavos: “$150K range (what I call working man’s boats).”

    these are all pleasure boats, yeah? so is that meant with some sarcasm?

  • Glenn Contrarian

    Okay, Ruvy –

    You’re telling me to get my facts straight on economic history…show me even one recession since 1900 (including the Depression) in which the three common factors I listed did not apply.

    And FYI – the same factors are still true of our now-debtor nation, because we pulled out of two major recessions since 1990.

    C’mon, show me just one example, okay? And while you’re still griping about the stimulus package, you can consider what happened to Japan after their economic crash in the early 90’s – they tried a whole range of austerity measures…and spent an entire decade trying to dig themselves out of that recession. They call it their economic ‘lost decade’.

    Just show me one good example that proves me wrong, okay? Just one….

  • Glenn Contrarian

    zing –

    Clavos might be referring to low-end commercial fishing boats and the like. Those might well be called ‘working man’s boats’.

  • zingzing

    that’s why i asked if they’re all pleasure boats.

  • Clavos

    No sarcasm, zing. They are pleasure boats.

    I call them “working man’s boats” because they’re bought by people who depend on a salary or the income from a small business such as a dry cleaner or corner restaurant for their income and who have to take out a loan to buy the boat. These kinds of boats range in price from $100/150K through about $250K.

    From $250/300K up to a million is a different client, usually a professional or a senior manager in business, an airline pilot, etc., and those boats are usually paid for with the buyer’s own cash, without a loan. This client is well off, but not truly rich.

    Above $1M to $5M is yet another level of client; usually a medium to large business owner, real estate developer, rock star, film star, sports figure, etc. These begin the level of clients who are usually pretty immune to the vagaries of the economy.

    Above $5M are the really wealthy; people like Larry Ellison, CEO and principal owner of Oracle software and Paul Allen (Bill Gates’ ex partner), both of whom have been engaged for several years now in a rivalry to own the world’s largest yacht; Allen’s current boat, Octopus, is 412 feet long, cost him $200M to build and costs him $384K a week to maintain.

  • zingzing

    “Allen’s current boat, Octopus, is 412 feet long, cost him $200M to build and costs him $384K a week to maintain.”

    ugh.

  • http://drdreadful.blogspot.com Dr Dreadful

    Ah, just a pleasure dinghy, then. :-p

  • Clavos

    That’s it Doc. A pleasure dinghy with two (count ‘em, 2) choppers.

    I could retire on the commission for selling that boat…

    Anybody know Paul Allen’s phone number?

  • http://ruvysroost.blogspot.com Ruvy

    Glenn,

    You produce your way out an economic depression/recession. The war production of WWII required industrial expansion (the war production for ‘Nam, by contrast, did not). That industrial expansion laid the groundwork for the post-war prosperity. Initially, you borrow to pull off the production – but the loan gets paid back with interest. In the case of the government going deep into debt to finance WWII, the payments came in the form of the very generous (initially) GI benefits bill that got millions into home ownership and college.

    In 1982, computers and the profits made thereby (and a hefty load of borrowing to kill future recoveries) pulled the US economy out of the Reagan-Carter recession. But the expansion in productive capacity was not as large as after WWII, so the lasting benefits did not really last.

    In 1987, again computers and its immediate by-products and applications, like the internet, pulled the States out of the business recession that the ’87 break in the market could have caused. Americans produced their way out of that recession even on a limited industrial base because of the tremendous profits to be made from computers. Again, the expansion in productive capacity was not that great, so the benefits reaped would not be long lasting. In addition, the computer business added something previously lacking in the business cycle – rapid obsolescence. So you could never really set down “permanent” productive capacity.

    The United States never really got out from under the dot.com bubble burst. Everything since March 2000 has been accomplished on borrowed money, with the backing for the borrowed money becoming less and less secure each year. And now the chickens are coming to roost.

  • Glenn Contrarian

    Ruvy, Ruvy, Ruvy…

    You produce your way out an economic depression/recession. The war production of WWII required industrial expansion (the war production for ‘Nam, by contrast, did not). That industrial expansion laid the groundwork for the post-war prosperity.

    And WHO paid for the war production and the industrial expansion that enabled it? The federal government using deficit spending. If we had not been in a war, this would have been called a STIMULUS! That was also the only time that we’ve been deeper in debt than we are now (relative to the GDP)…and thanks to the higher taxes (like the 91% top marginal tax rate) through the fifties and most of the sixties, we nearly paid it all off! Until Reagan came along, that is….

    In 1982, computers and the profits made thereby (and a hefty load of borrowing to kill future recoveries) pulled the US economy out of the Reagan-Carter recession.

    You’re young, so you probably don’t remember quite as well that the ‘computer boom’ didn’t happen until the 90’s. I think you’ll find that at the time, computers weren’t even in five percent of American homes.

    You did mention the ‘hefty borrowing’ – yes, Reagan opened the floodgates of deficit spending (Cheney said, “Reagan proved deficits don’t matter”)…but at the same time he slashed taxes. This meant that America began living on credit cards but took a pay cut from its income that would have paid for the credit cards.

    As you know, when you get a new credit card with a really high limit, you can live quite well for a while. This was known as deficit spending – and it pulled America out of the 81-83 recession. Today, such deficit spending would be called a “stimulus”.

    In 1987, again computers and its immediate by-products and applications, like the internet, pulled the States out of the business recession that the ’87 break in the market could have caused. Americans produced their way out of that recession even on a limited industrial base because of the tremendous profits to be made from computers.

    Dude – in 1987, less than one percent of American homes had access to the internet. That was the day of bulletin boards – and apparently I remember it a lot better than you do. Why don’t you do a little research – ’cause if you do, you’ll find that there was a little something called an “S & L scandal” that drove us into that recession…and it was exacerbated by something called “program trading” which was run by (gasp) computers!

    Here’s a quote from Forbes describing what happened in 1987: “After the Crash of 1987, many were predicting that a depression or severe recession would follow. They felt that the pattern would be similar to what happened after the crash of 1929. However, the Fed acted aggressively in 1987 to inject liquidity into the financial system and stabilized the situation. Those people who went to cash expecting a downturn missed some nice returns in the market in 1988 and 1989.” (boldface mine)

    What’s “injecting liquidity”? Today, we would call that a ‘stimulus’.

    The United States never really got out from under the dot.com bubble burst. Everything since March 2000 has been accomplished on borrowed money, with the backing for the borrowed money becoming less and less secure each year. And now the chickens are coming to roost.

    True…and false. The dot-com bubble was there because of overenthusiastic borrowers who would invest heavily in IPO’s that no sane investor before or after the dot-com bubble would have touched.

    But Bush was using credit cards and cutting America’s income at the same time, so yes, the chickens are coming home to roost…and it took a hideously huge stimulus to save our economy (and the world’s) from Depression and the horrors that can follow economic disaster.

    When you research history, Ruvy, I recommend that you let the facts determine your political belief, rather than allowing your political belief to determine the facts.

  • http://drdreadful.blogspot.com Dr Dreadful

    You’re young, so you probably don’t remember quite as well that the ‘computer boom’ didn’t happen until the 90’s.

    Oops, Glenn. Ruvy is about the same age as you, if not a little older. :-)

  • Glenn Contrarian

    Doc –

    My mistake, then. My apologies, Ruvy, for that assumption.

    But what I said about computers being in less than five percent of homes in ’82 and less than one percent of homes having the internet in ’87 still applies.

    I do appreciate the correction, Doc. Thanks.

  • http://ruvysroost.blogspot.com Ruvy

    Glenn,

    I see you only read the little snippets you disagree with and argue against them, ignoring their context.

    Let’s try the whole quotes, shall we?

    The war production of WWII required industrial expansion (the war production for ‘Nam, by contrast, did not). That industrial expansion laid the groundwork for the post-war prosperity. Initially, you borrow to pull off the production – but the loan gets paid back with interest. In the case of the government going deep into debt to finance WWII, the payments came in the form of the very generous (initially) GI benefits bill that got millions into home ownership and college.

    I acknowledged that the US government went deep into debt to produce armaments for the British, and eventually for themselves – and pointed out that the debt got paid in a number of ways. Lots of guys who never would have bought a house in the 1950’s did so because they had worn a uniform in the 1940’s. And all this fuelled even more productivity – and prosperity. I grew up in that golden era and never forgot it.

    Had there been no war, Glenn, there would have been no reason for the government to invest so heavily in production – that would have been called “socialism”, and never would have gotten past congress. Roosevelt would never have gotten the shining rep he did of pulling the States out of the Depression of 1929.

    Bottom line – the United States government expanded productivity so as to provide a base to repay the deficits it ceated. Every bout of deficit spending – until 2001 – was based on that concept – even Reagan’s drunken binge in the early 1980’s.

    My memory is a bit better than yours, Glenn. I learned how to use a computer in 1980, and to use a PC in 1983 – when you could still read “IBM-DOS” on the black screens because Bill Gates had not stolen the system from IBM yet. While the computers did not explode into homes, they did explode into offices – and selling business applications – like Visicalc, Lotus 1-2-3, Word and its predecessors were big business in those years. And while the internet did not explode into homes till 1990, when I finally bought my first home computer, the other innovations the computer introduced icreased productivity, and made real money. Loans got paid back – until the dot.com bubble and bust.

    Finally, you talk about the Fed “injecting liquidity” into the economy in 1987-8. Injecting liquidity (easing credit, and printing limited amounts of money) is not the same thing as handing $80 billion to a company to cover its losses, or billions more to car companies to cover their inability to produce, ect., etc.
    There has been no “stimulus” package under either Bush or Obama; there has been the irresponsible burning of your money to no good purpose. Maybe you don’t care if some politician hands a corporate mogul money so that he can cover his bad bets while you lose your home, but lots of other folks get enraged at such things – because it’s unjust. Ideology has nothing to do with this. Justice – or rather injustice – does.

    Wake up Glenn! Deficit spending is done against the productive power of an economy. When the economy has no potential to produce, you cannot afford to go into heavy deficits – especially with the Chinese, Russians and Arabs looking over your shoulder.

  • Glenn Contrarian

    Ruvy –

    I meant that apology, btw.

    Again, when it comes to the computers, before the 1990’s that industry was still relatively small fry compared to the totality of Big Oil, Detroit, and the financial sector – not to mention Big Pharma, the HMO’s, and the military-industrial complex.

    And there are different means of stimulus – the WWII deficit spending went to manufacturing because that’s what we needed to win. The 1987 ‘liquidity injection’ went to, as you said, easing credit and the money supply – and the stimulus (at least the part that went to Wall Street) went for the same purpose.

    Ruvy, on its face a ‘stimulus package’ that puts one far deeper in debt sounds like a bad idea – but I think you’ll find very few Fortune 500 companies today that don’t run a constant load of debt.

    The fact remains that austerity measures (other than increased regulation) have never pulled us out of a recession, that our recessions have ALWAYS been preceded by massive tax cuts and deregulation, and injections of massive amounts of taxpayer dollars (in whatever form) and (usually) tax increases have been part of every recovery from recession we’ve made.

    One more thing – I don’t like our debt to the Chinese, Russians and Arabs any more than you do. But just keep in mind that before Reaganomics, our deficit was only a mere fraction of what it is now.

    Higher taxes is not necessarily an evil thing. Remember that during the 1950’s – America’s economic glory days when we bestrode the world like a colossus – the top marginal tax rate was 91%.

  • Clavos

    I think you’ll find very few Fortune 500 companies today that don’t run a constant load of debt.

    And you will also find very few that are solvent with a debt load that exceeds their ability to repay it, unlike the USA.

  • Clavos

    But just keep in mind that before Reaganomics, our deficit was only a mere fraction of what it is now.

    And before Obama it was half what it is now — in eight months!

  • Clavos

    Remember that during the 1950’s – America’s economic glory days when we bestrode the world like a colossus – the top marginal tax rate was 91%.

    America’s colossal status then was in spite of, not because of, that tax rate.

  • http://ruvysroost.blogspot.com Ruvy

    Glenn, all this is nice, but you ignore the basic feature that allows all economic growth to proceed – productivity.

    If your laws turn your bourse into a casino, close the damned casino or reform the laws. Obama (and Bush before him) have done neither. Pouring alcohol into a drunks mouth won’t sober him up or cure him, and pouring money into Wall Street will not teach the idiots there not to gamble with it and lie to you.

    Nothing your government has done has done anything to increase productivity – at all. And if you can’t produce, you cannot produce your way out of economic disasters. That is a deadly reality you cannot challenge.

    Your “hope and change” is a prescription for hoping you still have change at the end of the year, let alone four years.

    Sorry dude. Here, (and in Canada) lying accountants are called corrupt thieves. In the States, they are called followers of the general rules of accounting. You have to stop lying to yourselves before you will get anywhere.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    A valid point.

  • Glenn Contrarian

    Clavos –

    On the deficit…WHY is it so much higher now? Because of a stimulus package that was needed to keep us out of a depression. It was NOT because of starting illegal wars or giving tax cuts to the wealthy.

    And I wish for once in your life you’d do some objective RESEARCH on the tax rates and their effect…because if the high top marginal tax rates are SO bad, dude, IIRC it didn’t go below 50% until Reagan! If those high rates are as bad as you (and all of conservativedom) believe, we would have been in a depression for twenty years instead of being able to pay off the WWII debt.

    But I’m learning something on BC – that conservatives HATE having to do objective research.

  • Clavos

    Because of a stimulus package that was needed to keep us out of a depression. It was NOT because of starting illegal wars or giving tax cuts to the wealthy.

    Again a strawman, Glenn. The discussion was regarding the size of the deficit. You can’t refute my point about its size, so you try to steer the discussion to another focus.

    You do that a lot, Glenn. You are a devious debater; we’ve all seen that time and again.

  • http://ruvysroost.blogspot.com Ruvy

    And just as a Parthian shot for you, as strip malls start to empty out because businesses are shutting down, what will happen when commercial real estate starts to crash in value in about 9 or 10 months?

    Never got an answer to that one, Glenn….

  • Glenn Contrarian

    Clavos –

    That’s not a distraction. That is a POINT.

    Let’s use a metaphor, then – a family household.

    Now the man of the house has been in charge of the money for eight years…and he’s frittered away the money on computers, HDTV’s, a new car…stuff which seemed nice at the time, but in the Big Picture wasn’t really that important.

    Then the household’s finances start to go WAY south and the woman takes over the bills. She sees that there is absolutely no way their current income will service their debt, and the only way to stay out of bankruptcy is to take out a second mortgage (even one at a high interest rate).

    This second mortgage will effectively double the family’s overall debt…but it will save them from bankruptcy.

    So whose fault is all that extra debt? The woman’s, for taking out the second mortgage that doubled their household debt (but saved them from bankruptcy)? Or the man’s, for getting them in that position in the first place?

    Obama didn’t ruin the economy, Clavos. It was in really, really bad shape when he took over…and he did what needed to be done. Medicine rarely tastes good…but it’s often very necessary.

  • Glenn Contrarian

    Ruvy –

    I didn’t answer because I don’t like to make such assumptions that such will or will not happen.

    Yes, I’ve seen the same reports, the doom-and-gloom of the coming wave of commercial real estate bankruptcies…and I see a lot of empty businesses in my county, too.

    But you know what?

    (1) That’s not Obama’s fault – if you’ll recall, he took over an economy that was in the worst shape it’d been in for nearly eighty years.

    (2) Obama had to put out the worst fire first…and if those “too big to fail” banks had failed, it’s not just the consumer loans that would have dried up, but it’s the commercial loans that would have been even harder to find. As it is, commercial loans have tightened significantly…but they can still be had. Such would NOT have been the case if the Big Finance companies hadn’t been bailed out.

    (3) This particular fire had four sections – (1) Big Finance, (2) the real estate market, (3) growing unemployment, and (4) the commercial (i.e. small business) climate.

    Since Obama’s taken over:

    – he has put out the fire of Big Finance;

    – the real estate market is stabilizing overall (still dropping in some areas, gaining in others);

    – unemployment is still growing, but at a MUCH slower pace than when Obama took the reins. We had been losing over 700K jobs/month, and IIRC it’s down to just over 200K. These things cannot be corrected overnight.

    – As I said, Obama had to put out the worst fires first. I don’t know what he can do (if anything) to help the commercial real estate market…but much of any economy is ‘mere’ psychology. It’s accepted by most economists that the worst is over, that things are looking up.

    So give it time, Ruvy, and stop assuming the worst. You get fewer ulcers that way.

  • http://theugliestamerican.blogspot.com Andy Marsh

    Bankruptcy really isn’t the big deal you make it out to be Glenn.

    If you’ve never done it, then why talk about it?

    And if you have, then why are you blowing it so much out of proportion?

  • Glenn Contrarian

    Andy –

    1 – that’s a metaphor.

    2 – bankruptcy is not that big a deal…if you don’t have so much to lose.

    3 – do you really want to see what happens when a nation goes bankrupt?

  • Doug Hunter

    “Higher taxes is not necessarily an evil thing. Remember that during the 1950’s – America’s economic glory days when we bestrode the world like a colossus – the top marginal tax rate was 91%.”

    You talk a good story Glenn, but you don’t do adequate research either. Whatever the tax rate, the overall tax as a percent of GDP has remained extremely stable since the 40’s. Also, the marginal rate and the effective rate are two different things. The wealthy paid effectively less percentage of their income in the late 70’s with a 70% marginal tax rate that they did in the 90’s with a 30+% marginal. (thise figures are from the CBO) I haven’t found hard evidence yet, but due to the need for the AMT and other devices I would assume that the 50’s and 60’s followed a similiar pattern. When marginal rates are high, the wealthy just find more loopholes, deduction, and credits or hide more income and transfer it into capital gains, shelters, overseas, etc.

  • http://ruvysroost.blogspot.com Ruvy

    Glenn,

    You seem to think I want to blame Obama for all of this. Maybe the conservatives who rant and rave here would like to but I certainly don’t. I’m a syndicalist socialist, not a conservative, but any intelligent socialist is a fiscal conservative – you want to preserve the value of the wealth you would have justly distributed in society.

    The fault for all of this goes to the bankers and the oil men corrupting the fools in Washington – for decades upon decades, not just the last two or three administrations. The rot has been going on since the oil companies got local municipalities to pull up the trolley lines, both local and intercity, and replace them with buses running on gasoline.

    That goes back a minimum of seven decades.

    In pretending to cure the economy, Obama has accelerated the fascism that Bush introduced onto the USA in 2008. Fascism does not necessarily mean restrictions on freedom of speech, though in the past this has always been the result. So that is one of the things you can look for in the not too distant future.

    For all of your arguments in comment #29, you cannot turn the clock back – and neither can Obama. Attempting to spend your way out of this mess might have worked in 1933. Roosevelt certainly tried it – and failed. The United States did not get out of the Depression of 1929 until it produced its way out, and American no longer has the productive capacity, and it is too deep in debt for other nations to sit idly by and NOT take advantage of kicking the Americans off of their ill gained throne of wealth.

    The wolves are baying about the door and America may still appear to have the wealth, but at some point, the break will come, and when it does, the wolves, the Arabs, Russians and Chinese, will loot you like the fattened calves you are.

    The only question will be, “how much force is needed for the new overlords to seize their goods?”

  • Glenn Contrarian

    Doug –

    The wealthy paid effectively less percentage of their income in the late 70’s with a 70% marginal tax rate that they did in the 90’s with a 30+% marginal. (thise figures are from the CBO) I haven’t found hard evidence yet, but due to the need for the AMT and other devices I would assume that the 50’s and 60’s followed a similiar pattern.

    I would really like to see links to your proof of this…and I’m not being sarcastic when I say this. Doug, you may not understand why I say this, but I LIKE being proven wrong! I really, really do – because in my own opinion, I never lose. If I’m right, I win. If I’m wrong, then I have gained knowledge I didn’t have before, and I still win.

    So if you can show proof of your contention, please do so – and if I can’t refute it I’ll thank you…as I always, always do to those who prove me wrong on something (even if they didn’t know they proved me wrong).

    That’s why when I post, I do so without being driven by pride, or by determination to win at all costs. If you can prove me wrong, I’m happy to see it – but I’ve seen precious few other people on forums and blogs who have the courage to overcome their pride, to admit when they’re wrong.

    When marginal rates are high, the wealthy just find more loopholes, deduction, and credits or hide more income and transfer it into capital gains, shelters, overseas, etc.

    Precisely! When the wealthy face much higher taxes, most of them simply reinvest in their own companies rather than give it up to the federal government! And what happens? The businesses grow better than they would have otherwise!

    This is precisely what happened in the 50’s…and why despite that really high tax rate for the wealthy, the major industries grew and grew and grew.

    How many major recessions did we have when the tax rates were so high? Zero…unless you want to count what happened as a result of the Arab Oil Embargo.

    Again, if you can prove me wrong, please do so!