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Is Obama Failing to Wreck the Economy?

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Do I really need to provide references for all the times the Republicans and other conservatives have prophesied that Obama's economic plans would wreck the economy? I think the greater challenge would be to find a conservative who didn't make such a claim!

A quick check of the Dow Jones Industrial Average shows the DJIA has risen 27% since March.  That's not bad.  And as tax lawyer and bond broker Hale Steward points out, since their March lows, the Standard and Poor's index has risen about 40% and the NASDAQ has risen about 50%!  He points out that these would normally be indicators of a bull market, but cautions that such is not the case, that growth will be sluggish for some time to come.

But that brings us back to the question – where's the economic train wreck that the conservatives claimed would be the sure result of Obama's economic policies?  Um…it ain't there.

In every recession (or Depression) since 1900, America's economy has only recovered after significant injections of government funds…and the current recession is no different.  The best example (especially for the history-challenged) is the Great Depression.  In FDR's first hundred days, he subsidized price supports for farmers; took America off the gold standard; instituted Social Security (which pays for itself), the Civilian Conservation Corps (whose works can still be seen today), and the Tennessee Valley Authority (which continues to provide tens of thousands of jobs even today), and the Federal Deposit Insurance Corporation (which has provided banking stability for generations).

One of the most important acts FDR passed in his first hundred days was the Glass-Steagal Act, which created a firewall between investment banking and commercial banking.  FDR's reasoning was, "There must be a strict supervision of all banking and credits and investments.  There must be an end to speculation with other people's money."  Somehow the conservatives think that it's wrong to have strict supervision over those bankers who hold the life savings of millions of American citizens.  That's why they (with Clinton's support) repealed the Glass-Steagal Act in 1999, and look where it got us!  The investment firms ran wild for several years, and then their house of cards began tumbling down in a way it never did when they were regulated under Glass-Steagal.

So is the massive amount of government stimulus used to brace up America's economy going to blow up in our faces?  Possibly, but significantly increased government spending is precisely how America has recovered from EVERY recession (or Depression) since 1900.  Remember what the saying was in the '82-'83 recession and the early '90s recession?  "All we need is a good war!"  Well, there's your proof right there — gearing up for a war economy is, in all but name, a government-spending stimulus package.

So what would happen if Obama had listened to the conservatives and had not implemented the stimulus package?  Japan already knows,  they tried to recover from their recession by cutting spending to the bone, and what happened?  The Japanese call it their economic "Lost Decade".

So for the conservatives:  where's the Obama train wreck?  It ain't here!  Why is the stock market doing so much better?  Yes, unemployment is still bad,  but just as with every other recession since 1900, improvement in unemployment always follows improvement in economy by at least a year, and often two years.

But wait — I think I see something!  There is a train wreck ,  but the only 'O' I see on it has a 'G' on one side and 'P' on the other.

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About Glenn Contrarian

White. Male. Raised in the deepest of the Deep South. Retired Navy. Strong Christian. Proud Liberal. Thus, Contrarian!
  • Clavos

    Um, Glenn:

    The stock market has recovered less than half of what it lost during the months following the election.

    Of course Bam hasn’t wrecked the economy yet; he hasn’t hit his stride in spending yet, either. Wait until that mountain of debt he proposes becomes actual reality.

  • Glenn Contrarian

    Um, Clavos –

    I notice you didn’t include the fact that, in the months following the election, BUSH was still the president…and that the current levels of the indexes are above where they were when Obama took office.

    It’s good to listen to conservatives like you…but one must also be careful to listen to what conservatives don’t say as well.

  • Clavos

    Who was President when it fell wasn’t my point, Glenn, but it fell on the news of the election results more than anything.

    My point was in response to yours:

    where’s the economic train wreck that the conservatives claimed would be the sure result of Obama’s economic policies? Um…it ain’t there.

    It “ain’t” not there, either, Glenn. In fact, as unemployment continues to skyrocket, and foreclosures continue to pile up, the train may not be wrecked yet, but it’s definitely not under control, and is still headed that way.

  • http://www.republicofdave.com Dave Nalle

    Nice to see someone else laying themselves wide open for being accused of being a polyanna about the economy.

    And before the PaulTards get here I’m going to say one word to you, Glenn. Hyperinflation.

    Is your wheelbarrow greased up and ready?

    Dave

  • Glenn Contrarian

    Dave –

    I take it you’ve got your own wheelbarrow out to catch pieces of the sky as it falls.

    Your liberty was in far greater danger under the prospect of a ‘permanent Republican majority’ than it ever was with Democrats.

    We dodged an economic bullet this time – but the bullet was deregulation. The gun was cocked and loaded by “The government IS the problem” Reagan, and fired in 1999 with the repeal of the Glass-Steagal Act (by a Republican Congress and fiscally-conservative Clinton).

    Maybe you feel comfortable with banks being able to gamble your life savings, but I don’t.

  • http://ruvysroost.blogspot.com Ruvy

    Glenn,

    Nice article, nice stats, and all. As Dave pointed out, you forgot one word – “hyper-inflation”. Get your wheelbarrow out. Actually, you forgot two more words – “debtor nation”.

    When Roosevelt pumped a fortune into the economy, the USA was a creditor nation. It remained one until Reagan’s first term. That debtor nation status casts a whole different shadow on what an American administration can or cannot do to recover its economy. Once foreigners get their fingers into America’s pie, it’s a lot trickier, and what Obama appears to prefer is to print money. And printing money with absolutely no backing (in fact negative backing) will bring you hyper-inflation. From the looks of thing, it wil bring us all hyper-inflation.

    Yes, Reagan’s deregulation and the Glass-Steagal Act of 1999 contibuted heavily to the problems we face, and George Bush’s spending sprees did as well. But now Obama is handing out the cash like a drunk on a spending spree. Have some patience, Glenn. He will manage to wreck the economy.

  • http://www.republicofdave.com Dave Nalle

    Glenn, the mistakes of one administration don’t excuse the mistakes of another, especially not when they are largely the same mistakes.

    The problem with deregulating the banks was that they took the concept too literally. There was a genuine need to let banks have more flexibility to try different business models, but just ignoring them and letting them do anything at all was obviously not a great idea.

    Yet I also have to point out that banking deregulation has very little to do with the current crisis, because derivatives were not regulated under glass-steagal either, so they never got deregulated.

    Dave

  • Glenn Contrarian

    Dave – I’ll give you credit for pointing out that derivatives were not regulated, but you’re forgetting that much of this crisis had to do with the idea of ‘shared risk’, most of which came from a real-estate bubble.

    That, and remember the downfall of Washington Mutual? Even Bank of America had to dip into the TARP funds.

    The main cause wasn’t derivatives. They played a large role, but not compared to the meltdown of the housing market.

  • Glenn Contrarian

    Ruvy –

    I didn’t ‘forget’ hyper-inflation. The lessons of the Weimar Republic and modern-day Zimbabwe are too deeply etched into the memories of economists and government functionaries. I really do not think that’s much of a concern. Hyper-inflation is now used much more as a boogey-man to scare people into thinking that the sky is falling.

    If you want to worry about economics, worry about the transition of America from a manufacturing economy to a service economy. That’s where unregulated free trade is forcing us to go.

  • Clavos

    I really do not think that’s much of a concern. Hyper-inflation is now used much more as a boogey-man to scare people into thinking that the sky is falling.

    By definition, inflation is too much money chasing too few goods and services.

    Only six months into its hopefully short tenure, the Obama administration Treasury has already printed more than a trillion new dollars, and will inevitably need to print trillions more to cover its profligate spending plans.

    The result will be, as Dave and Ruvy note, not merely inflation, but hyperinflation.

  • Doug Hunter

    I’m of the general opinion that politics and the economy are not nearly as closely connected as most people would like to believe in the short term. I think it is more reasonable to look at the whole of social, cultural, and political changes at timeframes of closer to a generation to get any meaningful data on what might be working or not. Short term fluctuations are the products of chaos coupled with some weird mass psychological phenomenon. If everyone thinks the economy is bad then it is and vice versa.

    There is a large correlation between economic downturns and the government feeling it is appropriate to spend and regulate more. Unfortunately, in the real world there are no control groups or any real way to know what would have happened differently so we can never say definitively if our actions had any effect at all. My gut feeling is that business would cycle back up in a recession on it’s own without government intervention.

  • Glenn Contrarian

    So Dave, Ruvy, and Clavos have all predicted hyperinflation.

    Two years hence, I can hear it now: “The only reason why Obama didn’t cause America to descend into hyperinflation is because the Republicans talked (or forced) sense into his head!”

    In other words, yet another off-the-cuff prediction with a ready-made excuse for why it didn’t come true.

  • Glenn Contrarian

    Doug –

    My gut feeling is that business would cycle back up in a recession on it’s own without government intervention.

    As I pointed out in my article, ALL recoveries from recession/Depression in America since 1900 have come with economic ‘stimulus packages’ (usually by a different name). AND as I pointed out, the only modern example of a country trying to get out of a recession by not regulating its economy (and by austerity measures) was Japan…which is how they wound up with their economic ‘Lost Decade’ from which they still haven’t truly recovered.

    You can ignore history if you want…but it’s still history.

  • Clavos

    So Dave, Ruvy, and Clavos have all predicted hyperinflation.

    IF Obama is allowed to continue to spend like a madman. It does appear, however, that the American people are starting to put the brakes on him, as they begin to let their disapproval be known of the disastrous “health care plans” he and the dems have come up with .

  • Glenn Contrarian

    Clavos –

    Never mind that his ‘public choice’ option would increase competition in the marketplace, hm?

    I thought conservatives LIKED competition! After all, when was the last time a conservative came out against Wal-Mart?

    Not only that, but ever since Reagan claimed that government IS the problem, well, we all know how terribly, terribly inefficient the government is in every little thing it does…which begs the question – if the government is SO terrible and inefficient, and since NO ONE is forced to keep the government plan, what exactly do you have to worry about? I thought conservatives LIKED having the freedom to choose!

    Right now, my oldest son (who continues to suffer the effects of rheumatic fever) and my brother (who had a serious knee injury back in ’68) both cannot get a good health care plan. With Obama’s plan, yes, they can!

    But if I listen to you, it’s my patriotic duty to oppose any affordable opportunity to get health insurance for my oldest son and my brother. I understand your frustration with Medicare…but what coverage your wife DID get from Medicare is still 100% more than the health coverage my oldest son and my brother have, here in the richest country in the world….

  • Clavos

    Never mind that his ‘public choice’ option would increase competition in the marketplace, hm?

    Man, were you born yesterday? What the hell makes you think having government-subsidized insurance constitutes “competing” with private insurers?

    But if I listen to you, it’s my patriotic duty to…

    I’ve never said anything to you about “patriotic duty.” I think patriotism is bullshit mostly flaunted by ignorant rednecks and I would NEVER do ANYTHING for that reason, much less urge someone else to.

  • http://blogcritics.org/writers/christine-lakatos-/ Christine

    Glenn, just thought I’d mosey on over here to your article–lots of fireworks!

  • Ribbidy Rob Ribby Rob

    Not yet. His health care will though. But don’t blame him. He’s a rich boy and they don’t know.

  • tyman

    If you are going to write about history, you shouldn’t rely on high school history books. FDR has a legacy that most people do not understand. His policies will haunt us for a long time. If you study the great depression, you’ll see that he raised taxes on everyone and every company which halted spending and the creation of jobs. Social Security is a mess. It does not pay for itself. When it was created, people died at 60, but the genius politicians never decided to adjust for increased life span. The credit is as much politicians who created fannie mae and freddie mac. It’s not simple. Bigger government leads to less democracy. More government spending is going to raise the deficit and weaken our stand in the global economy.

  • http://www.republicofdave.com Dave Nalle


    The main cause wasn’t derivatives. They played a large role, but not compared to the meltdown of the housing market.

    I’d argue that without the factors of derivatives and government mandated lending to unqualified borrowers the real estate problem would have been very mild and limited to only a few states — a natural and trivial contraction of the market.

    Dave

  • Glenn Contrarian

    tyman –

    You should check your own sources, sir, instead of relying on Republican talking points.

    The Social Security system does two things right – one, it pays its own way (or at least it did, until Reagan started raiding it for funding), and two, the institution of Social Security numbers and tracking enabled America to have a very good and reliable taxation system – and if you think that’s a bad thing, try living in a country where they have no such system…and you’ll see imports are taxed disproportionately because that’s the only way the government can reliably collect taxes to stay in operation.

    The only bad thing about Social Security is how the numbers are leading to ease in identity theft – and no one could have seen that coming. When it comes to increased life span, it doesn’t take much to realize that sooner or later the SS age will be increased, just as it has been before. That, sir, is how SS will avoid going broke – indeed, that’s the only way it can avoid going broke.

  • Glenn Contrarian

    Dave –

    The government did NOT ‘mandate’ lending to unqualified borrowers. You’re apparently referring to the outlawing of ‘redlining’, which simply took away the lenders’ ability to say, “no, we don’t do business in that neighborhood”…which meant that many minorities couldn’t get home loans.

    Of course, if that’s not what you’re referring to, I’m sure you’ll correct me.

    When it comes to lending to unqualified borrowers, how about checking in once more to the history of ‘subprime mortgages’, because those were NOT ‘mandated’ by government, but pushed by lenders who were riding the wave of a bull market and ignored the growing bubble that wave was built upon.

  • Glenn Contrarian

    Christine – welcome! Git yer gun and start shootin’ – but unfortunately, I get the impression you just might start shootin’ in my direction….

  • Glenn Contrarian

    Clavos –

    So…how do you propose we help the one sixth of ALL Americans who don’t have health insurance or can’t get health insurance or whose insurance was dropped? AND how about the tens of millions more who are UNDERinsured?

    And remember that whatever YOUR plan may be, NO such plan has been offered by the Republicans. If we let the Republicans have their way, then nothing would get done.

    America’s been having this same argument since FDR (I think TR was the first to propose UHC), and where has this left us? YES, we DO have the very best health care in the world…but one-sixth of our population has NO access to it!

    So how are YOUR guys going to help my oldest son and my brother get insurance that they can’t get now?

  • http://blogs.news.com.au/dailytelegraph/sundaysurfer/index.php STM

    Glenn: “The government did NOT ‘mandate’ lending to unqualified borrowers”.

    I reckon it kind of did Glenn (not this administration though), just by virtue of the kind of policies that were in play at the time – by a circuitous route, though, which was not reining in Wall Street, thus allowing for an almost totally unregulated financial sector that, in its attempt to sell more and more credit derivatives (and line its own pockets in the process), meant that more and more subprime loans had to made so they could be parcelled up and sold as “investments”.

    Washington IMO almost allowed Wall Street to play the corporate equivalent of a giant Ponzi game. I can’t believe no one woke up to it before it happened.

    America forgot that it became rich by using a wealth of raw materials to make and sell quality stuff to others (a bit like the Poms on the other side of the ditch, who forgot it 50 years earlier), rather than shuffling bits of paper around or clicking mouses in NYC office blocks.

    And the result is …

    Well, here we are – in deep strife, or at least deeper than we’d all rather be.

  • Glenn Contrarian

    STM –

    No offense, friend, but there’s a bit of a difference between ‘mandate’ and ‘allowed to happen’.

    And that was my point – Washington (AKA ‘Lobbyist Capital of the World’) allowed this to occur through deregulation, and too little regulation is every bit as bad – and perhaps worse – than too much regulation.

  • Clavos

    So…how do you propose we help the one sixth of ALL Americans who don’t have health insurance

    1. OK. First of all, don’t FORCE the approximately 40% of those to buy insurance; it’s unamerican.

    Next (and this is the hardest part, because the Dems are beholden to the trial lawyers and most of them AND the Reps in Congress ARE lawyers)limit malpractice awards to actual damages plus SENSIBLE
    loss of income numbers — no more “pain and suffering” awards, and limit lawyers’ cut on the awards to no more than 10% of the award, plus costs — with the allowable costs strictly regulated and audited by court-appointed accountants. This will enable an enormous reduction in current medical costs, because it will eliminate the current need for superfluous CYA tests by the medics. These savings alone will enable coverage for everyone who wants it.

    Re-regulate the insurance industry such that they cannot turn down insuring pre-existing conditions, and eliminate all abuses consistent with allowing the insurance companies to earn a fair profit while serving the needs of the people.

    Regulate the pharma industry to the extent necessary for THEM to cover the costs of R&D (reputed to be as much as $1B per new med) and also turn a fair profit. Prohibit them from spending more than a specified limit of their revenue on consumer advertising, perhaps prohibit it altogether. Make most drugs available over the counter, as they currently are in other countries.

    The government’s only involvement beyond regulation, should be as payer for those who (according to predetermined criteria) are unable to pay for insurance and/or medical treatment themselves.

    2. Alternatively, I would accept a single payer system with the government as the payer (a political impossibility at this time), but with no power to control the medical aspect of the industry, except as specified by an INDEPENDENT regulatory organization comprised of equal representation from the medical providers, patients, insurers, and government.

    3. Or, adopting Dave’s five steps.

    But the first and most important step to be taken is tort reform. Without that, nothing will work well enough to make a difference. Before you come back at me with the Dem talking points about how small a percentage of overall costs are the tort awards, I’m aware of that. However, the point in tort reform is not the direct savings from awards, it’s the removal of that Sword of Damocles from over the physicians’ heads to reduce (if not eliminate altogether) the current practice of ordering numerous and expensive tests purely for CYA reasons. Limiting awards would also help to reduce malpractice premiums, which for high risk specialties are already prohibitive and are resulting in fewer physicians in those specialties; OB/GYN is an excellent case in point.

  • Bliffle

    Clavos says:

    “…limit malpractice awards to actual damages plus SENSIBLE
    loss of income numbers — no more “pain and suffering” awards,… This will enable an enormous reduction in current medical costs,..”

    Oh nonsense. The biggest claim of liability costs in medicine I’ve ever seen is about 2%.

    It’s a phantom.

    Besides, even when a large judgement is delivered (usually by a jury) it is routinely cut down to almost nothing by compliant appeals courts. Take a look at the Stella Liebeck vs. McDonalds on any leftist or rightists or otherwise web site.

  • Bliffle

    “Tort Reform” is a financial deadend, that’s why no one who has studied it cares about it one way or the other. Besides, it’s probably unconstitutional to deprive citizens of recourse to the courts, even if they are low-down, underachieving, miserable mere creatures instead of the glorious shiny wondrous corporations that we think should own the courts and rule the land.

  • Clavos

    Clavos ALSO said (but apparently bliffle didn’t bother to read):

    But the first and most important step to be taken is tort reform. Without that, nothing will work well enough to make a difference. Before you come back at me with the Dem talking points about how small a percentage of overall costs are the tort awards, I’m aware of that. However, the point in tort reform is not the direct savings from awards, it’s the removal of that Sword of Damocles from over the physicians’ heads to reduce (if not eliminate altogether) the current practice of ordering numerous and expensive tests purely for CYA reasons. Limiting awards would also help to reduce malpractice premiums, which for high risk specialties are already prohibitive and are resulting in fewer physicians in those specialties; OB/GYN is an excellent case in point.

    And yet, one of the docs in this hospital was recently hit with a $38 Million judgment.

    But nevertheless, I agree with you bliffle, that the savings will not be reflected by the reduction in awards, the savings in unnecessary testing and related protective practices will be substantial, however.

  • Clavos

    Besides, it’s probably unconstitutional to deprive citizens of recourse to the courts…

    I’ve never heard a single proponent of tort reform propose such a thing; that’s why it’s called tort REFORM, not tort ELIMINATION.

    And don’t you see something wrong with attorneys being allowed to charge up to 50-60% plus expenses for representing clients in tort actions? Where’s your championing of the peasants on that issue?

  • Glenn Contrarian

    Clavos –

    OK. First of all, don’t FORCE the approximately 40% of those to buy insurance; it’s unamerican.

    BUT leaving 16% of Americans without access to health care (other than hideously expensive emergency rooms) IS American?

    But leaving in place a system wherein half of ALL bankruptcies is due at least in part to health care costs IS American?

    But leaving in place a system wherein someone with a full-time job earning minimum wage CANNOT afford health insurance for himself, much less for his family IS American?

    But leaving in place a system wherein our government pays at least 40% more than ANY other modern industrialized democracy on the planet (while keeping us in 30th place on the life-expectancy list BEHIND third-world countries like Bosnia and Jordan)…THIS is American?

    Clavos, our health care system is BROKEN…so if something’s broken and one guy wants to fix it but the other guy doesn’t want to fix it, SURE, the guy who wants to fix it MIGHT make it worse, but the guy who DOESN’T want to fix it WILL leave it broken…and if the health care system isn’t fixed, it WILL get worse.

    YOU say Obama’s solution will make things worse. WE say his solution will make it better. MAYBE you’re right, and MAYBE you’re wrong…but if we do NOTHING (as the Republicans seem to demand), then it sure as heck WILL get worse!

    Given my druthers, I’d much rather have a single-payer system – but I don’t make policy. Your solution – and Dave’s – are just spitting into the wind, because you two don’t make policy. You two (and I) are just little people. We don’t make policy. The three of us – and all who do NOT make policy – essentially have ONE choice: to support Obama’s plan which MIGHT work or MIGHT make things worse, or to follow the do-nothing Republican lead, which WILL make things worse.

    My grandmother once said, “Do something, even if it’s wrong.” It wasn’t until a few years ago that I saw what she really meant. In this case, it’s support Obama to do SOMEthing, or support the Republicans and do NOthing. That’s the ONLY choice you have.

  • Clavos

    WTF Glenn?

    YOU asked:

    So…how do you propose we help the one sixth of ALL Americans who don’t have health insurance

    And I answered. With not one, but three possibilities.

    So then you say:

    Your solution – and Dave’s – are just spitting into the wind, because you two don’t make policy. You two (and I) are just little people. We don’t make policy.

    You’ve just confirmed what I’ve long thought: it’s a waste of time to discuss anything with you.

  • Clavos

    it’s support Obama to do SOMEthing, or support the Republicans and do NOthing. That’s the ONLY choice you have.

    I don’t agree that those are all the choices, and I’ve NEVER advocated doing nothing, but if I believed that those WERE our only choices, then my choice would definitely be to do nothing, rather than enact the bullshit plans currently presented by Obama and the Dems.

    And thankfully and fortunately, it’s becoming increasingly obvious that most of the country agrees.

  • Glenn Contrarian

    Clavos –

    So given the choice you DO have, you choose to do nothing…which WILL result in a worse health care situation for America.

    Good job, Clavos – I’m sure the HMO’s and Big Pharma are real happy to hear that. Too bad your choice won’t help the millions of Americans who can’t afford health care, and won’t help those Americans whose ‘preexisting conditions’ (like my son and my brother) prevent them from getting good health insurance.

  • http://www.republicofdave.com Dave Nalle

    Glenn, your #22 shows a lack of awareness of facts surrounding the subprime situation. In fact, starting in 1996 HUD placed requirements on Fannie Mae and Freddie Mac for quotas of subprime loans they had to make and they passed those quotas on to banks. They then filled these quotas by not backing loans unless banks engaged in subprime lending.

    So, in fact, government policy was one of the prime factors in the crisis. Predatory lending practices came along because banks who were forced to make riskier loans to unqualified people were looking for ways to offset their losses and make some profit before the loan turned into a bad debt.

    Dave

  • http://blogcritics.org/writers/christine-lakatos-/ Christine

    Glenn, #23, “Git yer gun and start shootin'”! I don’t own a gun and even though I am a Conservative, I am actually for some gun control!

  • http://ruvysroost.blogspot.com Ruvy

    Glenn, your economy is broken and your government’s attempts to print itself out of trouble will only fail.

    But don’t believe me. Wait about 15 months or so when the effect of empty dollars begins to show itself in your economy. And you will see who is right. I’ll be waiting with a towel to wipe the egg off your face….

  • Lisa

    In Bush’s first year in office, the White House chief economist warned that the government’s “implicit subsidy” of Fannie Mae and Freddie Mac, along with all the loans to unqualified but “diverse” borrowers, was creating a huge risk for the entire financial system.

    Yes, banks were forced to make bad loans by government regulation.

    Rep. Barney Frank and other Democrats denounced would be Republican regulators (of liberal government intrusion into free market bank practices) as saying they had no concern for poor working families. Even suggesting racism.

    The housing crisis was an affirmative action time bomb. It finally went off, and the same people who created the mess are still in charge, blaming Bush.

  • Glenn Contrarian

    Dave –

    In fact, starting in 1996 HUD placed requirements on Fannie Mae and Freddie Mac for quotas of subprime loans they had to make and they passed those quotas on to banks.

    Before I reply, please provide a reference for this claim.

  • Bliffle

    Ruvy demonstrates how out-of-date his ideas are:

    “38 – Ruvy

    Glenn, your economy is broken and your government’s attempts to print itself out of trouble will only fail.”

    Actually, the Federal Reserve only actually prints enough currency to cover worn-out bills and to make sure cash transactions are covered. As plastic and other instruments have increased over the past 50 years the actual amount of bills in circulation has decreased because they aren’t needed. There’s about $900billion in cash bills outstanding, about half of which are known to be in foreign treasuries and other known places. About half is unknown, either sequestered or lost.

    Since the amount of cash EQUIVALENTS has increased a lot, one might conclude dollar bills are worth more than their face value. Of course, that value would only become evident if the cash equivalent markets had serious traumas.

    To increase the cash equivalents in circulation (which must be done to some extent just to accomodate increased trading) all they do is push a button (virtual button) on a computer screen. If that is properly commensurate to trading requirements there is no inflationary change.

    Where do you get your econ ideas? From your grandfather? Some 90 yr. old crone in a cellar?

  • Bliffle

    Clavos:

    “And yet, one of the docs in this hospital was recently hit with a $38 Million judgment”

    So? that will be appealed and progressively whittled down to almost nothing. Just look at the famous Lieback v. McDonalds case.

  • Bliffle

    Clavos says:

    “…
    I’ve never heard a single proponent of tort reform propose such a thing; that’s why it’s called tort REFORM, not tort ELIMINATION.”

    They ‘call’ it reform but their intention is elimination, or at least stifling.

    They’re trying to drive people into the clutches of “arbitration” outfits which are private, and paid by companies, and which are notorious for bias in favor of companies against individuals.

    Don’t be a sap. Don’t fall for it.

  • Clavos

    bliffle,

    Where I come from, which as you know is Mexico, we laugh at you gringos and your frivolous lawsuits, especially ones like the Lieback v. McDonalds case, which deserved to be thrown out of court from the start, not just “whittled down to nothing.”

    And you didn’t respond to my point about the lawyers getting up to 50 or 60 percent PLUS expenses. You think that’s right and meet and as it should be?

    I sure don’t.

  • http://biggesttent.blogspot.com/ Silas Kain

    Back to the original question, “Is Obama failing to wreck the economy?”

    The first question that has to be asked is why are we pinning everything on Obama? The Legislative branch of the federal government controls the purse strings. Article I, Section 8 specifically states: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

    To borrow money on the credit of the United States;

    To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

    To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

    To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

    To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

    To establish Post Offices and Post Roads;

    To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;

    To constitute Tribunals inferior to the supreme Court;

    To define and punish Piracies and Felonies committed on the high Seas, and Offenses against the Law of Nations;

    To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;

    To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;

    To provide and maintain a Navy;

    To make Rules for the Government and Regulation of the land and naval Forces;

    To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions;

    To provide for organizing, arming, and disciplining the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;

    To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings; And

    To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

    Our political system is not monotheistic. The Judeo-Christian standard of one God does not apply to government. Barack Obama may be the point man, but the members of Congress are the collectors of the money. Wake up, America.

    The second point I would like to make is that Reaganomics did not and will not work in the United States. I supported President Reagan and I make no secret that had I to do it over again, I would follow the same path. That being said, I have discovered in these last 12 months that it is quite apparent the Federal government has it wrong on the economy. These are some facts about small business in the United States according to the Small Business Administration:
    Small firms:
    • Represent 99.7 percent of all employer firms.
    • Employ about half of all private sector employees.
    • Pay nearly 45 percent of total U.S. private payroll.
    • Have generated 60 to 80 percent of net new jobs annually over the last decade.
    • Create more than half of nonfarm private gross domestic product (GDP).
    • Hire 40 percent of high tech workers (such as scientists, engineers, and computer
    workers).
    • Are 52 percent home-based and 2 percent franchises.
    • Made up 97.3 percent of all identified exporters and produced 28.9 percent of the known
    export value in FY 2006.
    • Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited.

    Why is it that small businesses never get a break? Why does Congress continue to bail out the large corporations and succumb to the whims of the special interests? Has it occurred to anyone that it is time for trickle up economics? Small businesses employ the most people as a block of the employed, yet we are the same ones that get taxes, fees and regulations pushed down our throats at every turn. Small business owners are penalized for not being a part of the Wall Street machine, yet the Wall Street machine needs small business to survive. Lines of credit to keep small businesses afloat for day-to-day administration are harder to find every day. Yet the large mega-banks, corporations and financial services industries are the ones getting our money to survive.

    In order for the United States to get back onto the track of liberty, prosperity and peace it begins with shoring up small businesses from the little farm town in Iowa to the neighborhood deli in Manhattan. We ARE the backbone of America and we’re the first forgotten by the consumer.

    Borrowing from George W. Bush’s plea to go shopping he left out an important caveat. Spending money at WalMart or Target isn’t patriotic. Trading with your local merchant in helping preserve your local economy is the “American” thing to do. That’s patriotism at the basest level. There’s no doubt changing the buying pattern of the American consumer may be difficult. But these are times to make the tough choices.

    During World War II, people sacrificed. There was rationing of flour, sugar, gasoline and even steel. That’s the way it was. Families across this nation sacrificed because it was their civic duty. We’ve lost sight of that simple concept. Doesn’t anyone believe in civic duty or civic pride any more? We are consumed by consumerism and where has it gotten us?

    So, back to the question at hand. Is Obama failing to wreck the economy? No, he’s not. We did a good enough job of it on our own with members of a corrupt, morally bankrupt Congress leading the charge.

  • http://ruvysroost.blogspot.com Ruvy

    So, back to the question at hand. Is Obama failing to wreck the economy? No, he’s not. We did a good enough job of it on our own with members of a corrupt, morally bankrupt Congress leading the charge.

    Silas,

    While I agree with a good deal of what you have said above – Americans have managed on their own, all without the little “boy wwonder’s” help to wreck economy – the “boy wonder” is leading you over the shoals of disaster and hyper-inflation.

    The answer you pose is in response to the set-up of a straw-man argument of the title (“did you stop beating up your wife, yet?”). The American econopmy was very sick long before Obama bedded his first wide-eyed girl.

    But RIGHT NOW he is in charge, and leading the charge as well.

  • http://biggesttent.blogspot.com/ Silas Kain

    Well, Ruvy, with all due respect Barack Obama is NOT in charge. He’s treading on a political minefield and has to play the game because Washington politics is such that unless you play their game nothing is accomplished. Ask Jimmy Carter about Washington politics. He tried telling us the truth years ago and it got him kicked out of office because we citizens of the United States tend to live in a fantasy world. Were this union of states in Europe there would be general strikes. Were it in the Middle East there would be rampant violence. While I don’t advocate the latter, I see us following down that inevitable path. The United States is about to embark upon a very violent journey and I’m frustrated as to what we can do as a people to prevent it.

  • http://www.republicofdave.com Dave Nalle

    Before I reply, please provide a reference for this claim.

    Glenn, I refer you to the Washington Post. That article will tear down a lot of your assumptions about the role that “progressive” government policies played in the mortgage crisis.

    Dave

  • http://biggesttent.blogspot.com/ Silas Kain

    Here’s an example of how we tend to cut off our noses to spite our faces. There’s a steep rise in anti-gay hate crime in Provincetown this summer. While local police are doing a great job, the bottom line is that radical right wing gay haters are having a field day beating up my fellow homos. Well, now. Gays pump million s into the Provincetown economy. In fact were it not for the gay community many of the services available to Provincetown residents would be a thing of the past. If this is how gay hating locals are going to treat the hands that feed them, it’s time to move on. I wonder if Galveston Texas would be a good place for us to trade? Ah, screw that. Rick Perry won’t stand for the pretty boy of the year competition. Let’s settle in Alaska.

  • Irene Wagner

    Of course, one attack in seven years is one attack in seven years too many, but does the event really constitute a “steep rise in anti-gay hate crime in Provincetown?” The perp was a lone 23 year old preppie on a bender, not a crowd of “radical right wing gay haters…having a field day.”

    It would be unfortunate if there really were other incidents in P’town this summer, and if so, really unfortunate that the press hasn’t recorded them. The article I linked to is a few weeks old, but was written after the summer ’09 was well underway. I haven’t found any news stories of similar incidents in Provincetown that were written since then.

    The United States is about to embark upon a very violent journey and I’m frustrated as to what we can do as a people to prevent it. You may be right about the very violent journey, Silas. It seems to me the victims (your “side” and my “side”) are being manipulated and polarized by hype and distractions, instead of being allowed to focus on facing and standing up to, together—nonviolently because we’d outnumber them–the real enemy.

  • Clavos

    I wonder if Galveston Texas would be a good place for us to trade? Ah, screw that. Rick Perry won’t stand for the pretty boy of the year competition. Let’s settle in Alaska.

    You wouldn’t like it, trust me. It gets the shit knocked out of it almost every hurricane season, and it’s in Texas.

  • Irene Wagner

    Yeah, Clavos, but so is Austin.

  • Clavos

    Yeah, Irene, but Austin is only geographically in Texas, whereas Galveston is there geographically and existentially.

  • Bliffle

    Silas Kain is quite pertinent in #45:

    “Why is it that small businesses never get a break? Why does Congress continue to bail out the large corporations and succumb to the whims of the special interests?”

    Partly because small businessmen and many conservatives see all businessmen (including the Big Guys) as their compatriots. But it’s not true: the biggest enemy of small business is big business because of the extraordinary privileges accorded to big business, and because the destiny of big business must be to crush the little guys and take their goodies.

  • Doug Hunter

    Here is some additional support for Nalle’s housig crisis claim.

    1994 Article about Clinton Administration starting to pressure Fannie Mae to make more low income and minority loans (interestingly Barney Frank is fighting against it back then):

    Business Week 1994

    1999 Clinton Administration pressure results in Fannie Mae making more subprime loans:

    NY Times 1999

    Bush administration trying to reign in Subprime, Democrats (and some paid off republicans) fighting the administration and again using the old race and class issues. Has nice Barney Frank Quote:

    “These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis… ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.” – Barney Frank (D) (some exaggeration, huh!)

    “I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing” – Melvin Watts (D)

    NY Times 2003

    From Wikipedia:

    In 1995, the GSEs like Fannie Mae began receiving government tax incentives for purchasing mortgage backed securities which included loans to low income borrowers. Thus began the involvement of the Fannie Mae and Freddie Mac with the subprime market.[109] In 1996, HUD set a goal for Fanny Mae and Freddie Mac that at least 42% of the mortgages they purchase be issued to borrowers whose household income was below the median in their area. This target was increased to 50% in 2000 and 52% in 2005.[110] From 2002 to 2006, as the U.S. subprime market grew 292% over previous years, Fannie Mae and Freddie Mac combined purchases of subprime securities rose from $38 billion to around $175 billion per year before dropping to $90 billion per year, which included $350 billion of Alt-A securities.

    Of course, the government had nothing to do with it. It was those bad evil greedy capitalists and Bush!

    Same old formula: Government interferes with marketplace causing marketplace to fail, government and it’s supporters blame failure on evil private interests leading to more government and starting the cycle anew.

  • Clavos

    Nice post, Doug.

  • Doug Hunter

    Well, Clav, there’s plenty of blame to go around. One of the things that really disgusted me when researching the roots of our current crisis was finding out that we had ample warnings and even a test run during the 1998 Asian crisis when several Subprime lenders went out of business.

    There’s a nice HUD report which you can find free online somewhere that goes to great lengths to expose the dangers of subprime lending, then talks about how Fannie and Freddie are looking forward to jumping into the market.

    HUD Subprime Report

    Certainly private interests acted greedy and stupid, but is it purely coincidental that the crises immediately followed the GSE’s getting into the market. I can understand a bit the rational of investors (if you are able to overlook the obvious details of lending 100+% to people with a history of nonpayment) that if the government’s buying them, it can’t be that bad. It added some legitimacy to something that was on a collision course with failure.

  • Doug Hunter

    “The biggest claim of liability costs in medicine I’ve ever seen is about 2%.”

    Just a quick input as I have no idea how this applies to medicine. In building, which I am familiar with (and in no small part fostered my dislike for bureaucrats and crooked pols who are drawn to real estate/construction like flys to a rotting corpse), there is much more added cost from lawsuits than just what is directly spent. For example, I never was sued but spent alot of IMO unnecessary fees for third party inspectors, engineers, architects, and other specialists reports to cover my ass. It varied greatly depending on the project but I’d estimate it cost maybe 10% extra to build for someone else due to lawsuit avoidance methods. If you were the ultimate owner of the building you’d just cut that out.

    So, in my case 0% direct lawsuit cost still resulted in 10% increased costs. I’d assume that Doctors have some similiar tradeoff to make and the lawsuits, while bad for damaged real estate, are nothing compared to maiming and killing someone.

  • Bliffle

    Doug,

    Good posts! It’s about time you put some good meaty citations up on BC. I’ll explore them later – have to go to Orvis for a new pair of pants.

  • Clavos

    Exactly, Doug. It’s a strawman to use that 2% figure, the 2% is barely the tip of the iceberg.

    Among the unnecessary costs generated by the possibility of torts are the numerous expensive tests ordered by doctors, not for good sound medical reasons, but simply to keep them covered from a legal standpoint.

    Then there’s the issue of insurance premium costs, which in some high-risk specialties such as neurosurgery, can reach $250K per year, per doc.

    Neurosurgeons can and do make it up in their fees, which adds to the overall cost to the patient (and thus to the payer, whether Medicare or Humana), but other specialties which are also high risk but which can’t charge the necessary fees, such as OB/GYNs, simply leave that specialty. In some cities, here in Miami for example, there is literally a shortage of OB/Gyns, whose ranks have shrunk to less than half what they once were.

    Primary care docs are also dwindling, in part because of insurance costs, but also because Medicare and Medicaid have cut their payments to them, and the private insurers have followed the two government programs, as they always do. All the plans put forth thus far by the Dems include provisions for further cuts in fees.

    There may come a day when we’ll have to be able to speak Hindi or Tagalog to communicate with our PCPs.

  • http://www.republicofdave.com Dave Nalle

    If Bliffle can afford to buy pants at Orvis then our economic crisis can’t be all that bad.

    Dave

  • Clavos

    I have some Orvis shirts, I know what you mean, Dave.

  • http://biggesttent.blogspot.com/ Silas Kain

    Irene, with regard to your comment about P-Town, I’ve been told from several friends who frequent it that there’s a definite shift in attitude towards gays by the general public. Some have even decided not to return for the rest of the summer. Whilst most of these “hate” crimes don’t appear in the media, there is an underlying level of discomfort and that’s just not right.

    I also heartily agree with you on the manipulation comment. I think all sides are being manipulated which frustrates me to no end. Inasmuch as I advocate for individuals looking up the information themselves, I’m practical. Not many would take the time to look at the money trail. Special interests don’t care what political affiliation a member of Congress maintains. They just shower the powerful members with contributions and other perks of office. We need term limits in Congress. We need election reform. We need less former employees of Goldman Sachs in the Treasury. The problem is that we have so many damned needs that one is perplexed as to which need to tackle first. Anyone who thinks that health care reform will be achieved this year is living in a fantasy world. So we might as well stop wasting our energies on the issue for now and work toward something achievable.

  • http://biggesttent.blogspot.com/ Silas Kain

    Don’t gay men with the most disposable cash shop at Orvis?

  • Clavos

    I don’t know, Silas. My shirts are gifts from my sister-in-law.

    She gives me a couple of ‘em every Christmas.

  • Bliffle

    I was starting to order the Orvis 14 pocket poplin pants online, when I discovered there’s a store 30 minutes away, so I rushed there to get immediate pants gratification but was disappointed by the thin stock. I wasn’t even tempted by the fly rods, either (all graphite), which is unusual. So now I’m back online ordering my pants and plotting a trip to Orvis East Coast. Maybe I better visit my cousin in NH. But that’ll have to be in October for leaf-peeping.

    I lead a hard life.

  • http://handyfilm.blogspot.com handyguy

    Ben Bernanke is more responsible for the decision to ‘print money’ than is the president. And Bernanke has fairly convincingly said he’s got it covered — that earlier this year deflation was a much more real potential peril than hyperinflation.

    He says he can wind the money machine down…that most of the ‘new money’ does not consist of paper dollars actually in circulation, but rather electronic figures on banks’ [and, backing up the banks, the Fed’s] balance sheets.

    He’s a Republican, not a wild-eyed liberal, and knows a heckuva lot more than either Clavos or myself, to name two, about money policy and its consequences.

    Left/right politics gets mixed up into this argument of course — which doesn’t seem to add one tiny bit of caution or uncertainty to the doomsayers on here.

  • Irene Wagner

    Silas, I appreciate your taking the time to explain to me what you meant. Come what may economically, I’d rather live poor with a diverse set of neighbors who respect and can depend on one another, than surrounded by material comfort and isolated in my own little ideologically impenetrable enclave.

    So we might as well stop wasting our energies on the issue for now and work toward something achievable. Living comfortably and in harmony with a diverse set of neighbors would work, too, of course. Here’s hoping for that atmosphere in Provincetown, and everywhere. But first things first.

  • http://thingsalongtheway.blogspot.com/ Cindy

    Yeah, the economy must be pretty darn good! One guy managed to make it out alive with his retirement finances intact. That proves Capitalism works!

    (I may be wrong, but I think Prof. Bliffle mentioned somewhere that he’d stopped trusting the stock market with his savings. Something like that.)

    16 pockets? One could make a pack-husband with pants like that! ;-)

  • http://www.republicofdave.com Dave Nalle

    The Orvis in Manhattan is well stocked. The one here in Austin was not well stocked and soon shut down. Your best bet is ordering online. But IMO anything you can get at Orvis you can get better and cheaper from L. L. Bean.

    Dave

  • http://thingsalongtheway.blogspot.com/ Cindy

    Oh, I re-read, only 14 pockets. Darn. That might be a problem. I guess I’ll just get him a backpack to carry the ice for my martini.

  • Bliffle

    Glenn asks:

    “So how are YOUR guys going to help my oldest son and my brother get insurance that they can’t get now?”

    But Glenn, you don’t get it. Nobody wants your brother and your son to actually get insurance, because then they would get health care and that would increase the “Medical-loss ratio”, which would decrease Wall Street profits.

    You see, your brother and your son can’t afford the premiums that the insurance company would have to charge to cover costs AND tack on their Usual Markup.

    As far as the insurance industry is concerned your brother and son should just quietly go someplace and die.

    Get it?

    And, as more time goes by, more people will slip off the bottom of the desirability ladder and become … expendable.