Obama on Fiscal Responsibility

[ZenLunatic]

Also, it is possible to have inflation without collapse. It is also possible to fight inflation. I expect that this country is headed down that path. I am not ready to accept that we are headed for collapse.

 

So you accept we will have a big inflation problem. The only way to fight inflation is to reduce the money supply. When and how will we do that? How can we reduce the supply when the govt cant even function right now without borrowed money?

 

We are creating the dollar bubble and once that pops, goodbye.....

[bjorn_skurj]

Do we have a big inflation problem? Hadn't really noticed.

[OOO]

I thought this was fairly offensive:

 

[caliber66]

Fairly?

[myboyblue]

I'm no holocaust expert but I don't recall any of the victims having that sort of girth.

[ZenLunatic]

Do we have a big inflation problem? Hadn't really noticed.

 

Well the prices arent rising at this point, but we are pumping tons of money into our system now and plan to for awhile. Price of living will shoot up. There is still alot of liqudating at this point causes low prices, once it that ends, watch what happens. Those who hold cash will lose out.

[Artifice]

Well the prices arent rising at this point, but we are pumping tons of money into our system now and plan to for awhile. Price of living will shoot up. There is still alot of liqudating at this point causes low prices, once it that ends, watch what happens. Those who hold cash will lose out.

 

Offset by investing in commodities and cheap real estate.

 

The situation sucks if it is costing you your job/livelihood. But if you've got some cash lying around, it's a really good time to make long term plays in several areas.

[Sparky speaks]

Collapse orchestrated?

 

http://www.americanfreepress.net/html/coll...trated_169.html

[Good Old Neon]

Collapse orchestrated?

 

http://www.americanfreepress.net/html/coll...trated_169.html

 

Is this where we

[MrRain422]

Is this where we

[Good Old Neon]

Oh dear - Krugman's latest :

 

The Third Depression

 

Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as “depressions” at the time: the years of deflation and instability that followed the Panic of 1873 and the years of mass unemployment that followed the financial crisis of 1929-31.

 

Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline — on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses.

 

We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.

 

And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.

 

In 2008 and 2009, it seemed as if we might have learned from history. Unlike their predecessors, who raised interest rates in the face of financial crisis, the current leaders of the Federal Reserve and the European Central Bank slashed rates and moved to support credit markets. Unlike governments of the past, which tried to balance budgets in the face of a plunging economy, today’s governments allowed deficits to rise. And better policies helped the world avoid complete collapse: the recession brought on by the financial crisis arguably ended last summer.

 

But future historians will tell us that this wasn’t the end of the third depression, just as the business upturn that began in 1933 wasn’t the end of the Great Depression. After all, unemployment — especially long-term unemployment — remains at levels that would have been considered catastrophic not long ago, and shows no sign of coming down rapidly. And both the United States and Europe are well on their way toward Japan-style deflationary traps.

 

In the face of this grim picture, you might have expected policy makers to realize that they haven’t yet done enough to promote recovery. But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy.

 

As far as rhetoric is concerned, the revival of the old-time religion is most evident in Europe, where officials seem to be getting their talking points from the collected speeches of Herbert Hoover, up to and including the claim that raising taxes and cutting spending will actually expand the economy, by improving business confidence. As a practical matter, however, America isn’t doing much better. The Fed seems aware of the deflationary risks — but what it proposes to do about these risks is, well, nothing. The Obama administration understands the dangers of premature fiscal austerity — but because Republicans and conservative Democrats in Congress won’t authorize additional aid to state governments, that austerity is coming anyway, in the form of budget cuts at the state and local levels.

 

Why the wrong turn in policy? The hard-liners often invoke the troubles facing Greece and other nations around the edges of Europe to justify their actions. And it’s true that bond investors have turned on governments with intractable deficits. But there is no evidence that short-run fiscal austerity in the face of a depressed economy reassures investors. On the contrary: Greece has agreed to harsh austerity, only to find its risk spreads growing ever wider; Ireland has imposed savage cuts in public spending, only to be treated by the markets as a worse risk than Spain, which has been far more reluctant to take the hard-liners’ medicine.

 

It’s almost as if the financial markets understand what policy makers seemingly don’t: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating.

 

So I don’t think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs. It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times.

 

And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.

 

A version of this op-ed appeared in print on June 28, 2010, on page A19 of the New York edition.

 

Link - http://www.nytimes.com/2010/06/28/opinion/28krugman.html

 

James Kunstler puts it a little more bluntly:

 

Say what?

[futureage1]

Still trying to figure it out? Krugman didn't see this coming and doesn't address any of the larger issues that got us here. In fact, he still supports most of them. The truth is never going to appear in the New York Times, which is why they are bankrupt.Until the real reasons for the lack of jobs are dealt with there will be no changes. This is what happens when you have one-way free trade agreements that are nothing more than big corporate welfare bills to encourage the race to the bottom of the wage scale. The world never was and is not now flat.

 

We also now have a nation of monopolies and oligopolies who have no incentive to compete with their friendly competitors. They love free trade because they use it to increase their financial power to cut wages, jobs and eliminate competition. Until the anti-trust and free trade rules are fixed, there will be no real recovery in jobs. It all works great for the financial elite who are laughing all the way to the banks you bailed out, not so much for you as an individual. The people in this country need to learn they will never give enough to satisfy the bottom line of these companies that don't care about the U.S. or the people's well being. BP is a great example of this phenomenon. Has this country lost enough yet?

 

Doomed by the Myths of Free Trade

How the Economy was Lost

 

http://www.counterpunch.org/roberts02242009.html

 

The American economy has gone away. It is not coming back until free trade myths are buried six feet under.

 

America’s 20th century economic success was based on two things. Free trade was not one of them. America’s economic success was based on protectionism, which was ensured by the union victory in the Civil War, and on British indebtedness, which destroyed the British pound as world reserve currency. Following World War II, the US dollar took the role as reserve currency, a privilege that allows the US to pay its international bills in its own currency.

 

World War II and socialism together ensured that the US economy dominated the world at the mid 20th century. The economies of the rest of the world had been destroyed by war or were stifled by socialism [in terms of the priorities of the capitalist growth model. Editors.]

 

The ascendant position of the US economy caused the US government to be relaxed about giving away American industries, such as textiles, as bribes to other countries for cooperating with America’s cold war and foreign policies. For example, Turkey’s US textile quotas were increased in exchange for over-flight rights in the Gulf War, making lost US textile jobs an off-budget war expense.

 

In contrast, countries such as Japan and Germany used industrial policy to plot their comebacks. By the late 1970s, Japanese auto makers had the once dominant American auto industry on the ropes. The first economic act of the “free market” Reagan administration in 1981 was to put quotas on the import of Japanese cars in order to protect Detroit and the United Auto Workers.

 

Eamonn Fingleton, Pat Choate, and others have described how negligence in Washington DC aided and abetted the erosion of America’s economic position. What we didn’t give away, the United States let be taken away while preaching a “free trade” doctrine at which the rest of the world scoffed.

 

Fortunately, the U.S.’s adversaries at the time, the Soviet Union and China, had unworkable economic systems that posed no threat to America’s diminishing economic prowess.

 

This furlough from reality ended when Soviet, Chinese, and Indian socialism surrendered around 1990, to be followed shortly thereafter by the rise of the high speed Internet. Suddenly, American and other first world corporations discovered that a massive supply of foreign labor was available at practically free wages.

 

To get Wall Street analysts and shareholder advocacy groups off their backs, and to boost shareholder returns and management bonuses, American corporations began moving their production for American markets offshore. Products that were made in Peoria are now made in China.

 

As offshoring spread, American cities and states lost tax base, and families and communities lost jobs. The replacement jobs, such as selling the offshored products at Wal-Mart, brought home less pay.

 

“Free market economists” covered up the damage done to the US economy by preaching a New Economy based on services and innovation. But it wasn’t long before corporations discovered that the high speed Internet let them offshore a wide range of professional service jobs. In America, the hardest hit have been software engineers and information technology (IT) workers.

 

The American corporations quickly learned that by declaring “shortages” of skilled Americans, they could get from Congress H-1b work visas for lower paid foreigners with whom to replace their American work force. Many US corporations are known for forcing their US employees to train their foreign replacements in exchange for severance pay.

 

Chasing after shareholder return and “performance bonuses,” US corporations deserted their American workforce. The consequences can be seen everywhere. The loss of tax base has threatened the municipal bonds of cities and states and reduced the wealth of individuals who purchased the bonds. The lost jobs with good pay resulted in the expansion of consumer debt in order to maintain consumption. As the offshored goods and services are brought back to America to sell, the US trade deficit has exploded to unimaginable heights, calling into question the US dollar as reserve currency and America’s ability to finance its trade deficit.

 

As the American economy eroded away bit by bit, “free market” ideologues produced endless reassurances that America had pulled a fast one on China, sending China dirty and grimy manufacturing jobs. Free of these “old economy” jobs, Americans were lulled with promises of riches. In place of dirty fingernails, American efforts would flow into innovation and entrepreneurship. In the meantime, the “service economy” of software and communications would provide a leg up for the work force.

 

Education was the answer to all challenges. This appeased the academics, and they produced no studies that would contradict the propaganda and, thus, curtail the flow of federal government and corporate grants.

 

The “free market” economists, who provided the propaganda and disinformation to hide the act of destroying the US economy, were well paid. And as Business Week noted, “outsourcing’s inner circle has deep roots in GE (General Electric) and McKinsey,” a consulting firm. Indeed, one of McKinsey’s main apologists for offshoring of US jobs, Diana Farrell, is now a member of Obama’s White House National Economic Council.

 

The pressure of jobs offshoring, together with vast imports, has destroyed the economic prospects for all Americans, except the CEOs who receive “performance” bonuses for moving American jobs offshore or giving them to H-1b work visa holders. Lowly paid offshored employees, together with H-1b visas, have curtailed employment for older and more experienced American workers. Older workers traditionally receive higher pay. However, when the determining factor is minimizing labor costs for the sake of shareholder returns and management bonuses, older workers are unaffordable. Doing a good job, providing a good service, is no longer the corporation’s function. Instead, the goal is to minimize labor costs at all cost.

 

Thus, “free trade” has also destroyed the employment prospects of older workers. Forced out of their careers, they seek employment as shelf stockers for Wal-Mart.

 

I have read endless tributes to Wal-Mart from “libertarian economists,” who sing Wal-Mart’s praises for bringing low price goods, 70 per cent of which are made in China, to the American consumer. What these “economists” do not factor into their analysis is the diminution of American family incomes and government tax base from the loss of the goods producing jobs to China. Ladders of upward mobility are being dismantled by offshoring, while California issues IOUs to pay its bills. The shift of production offshore reduces US GDP. When the goods and services are brought back to America to be sold, they increase the trade deficit. As the trade deficit is financed by foreigners acquiring ownership of US assets, this means that profits, dividends, capital gains, interest, rents, and tolls leave American pockets for foreign ones.

 

Dollar should be replaced as international standard, U.N. report says

 

http://www.cnn.com/2010/BUSINESS/06/29/un.report.dollar/index.html?hpt=T2

 

By Gabriella Casanas and Mick B. Krever, CNN

June 29, 2010 7:14 p.m. EDT

 

New York (CNN) -- The dollar is an unreliable international currency and should be replaced by a more stable system, the United Nations Department of Economic and Social Affairs said in a report released Tuesday.

 

The use of the dollar for international trade came under increasing scrutiny when the U.S. economy fell into recession. "The dollar has proved not to be a stable store of value, which is a requisite for a stable reserve currency," the report said.

 

Many countries, in Asia in particular, have been building up massive dollar reserves. As a result, those countries' currencies have become undervalued, decreasing their ability to import goods from abroad.

 

The World Economic and Social Survey 2010 is supporting a proposal long advocated by the International Monetary Fund to create a standardized international system for liquidity transfer

[Winston Legthigh]

We also now have a nation of monopolies and oligopolies who have no incentive to compete with their friendly competitors. They love free trade because they use it to increase their financial power to cut wages, jobs and eliminate competition.

 

So, which is it? They have no incentive to compete with their competitors, or they eliminate competition?

[Good Old Neon]

I like how he consistently downplays mainstream news sources (and more often than not, rightfully so) right before he links to a mainstream new source, in this case, CNN.

 

I’ve come to the conclusion that human nature is to blame for our current financial woes and economic disparities, and has been since man’s first “financial” exchange – and will be until the human race is but a memory or we evolve in some fundamental way – until then, enjoy the calamity while trying to do as little harm possible.

 

To quote Jarvis Cocker, “cunts are still running the world” – it’s as true now as it was 500 years ago, and will continue to be true until we turn out the lights.

[bjorn_skurj]

Shutting off America from the rest of the world economically isn't a feasible solution. We are part of the global community now and forever, and we had better hustle our asses.

[futureage1]

Shutting off America from the rest of the world economically isn't a feasible solution. We are part of the global community now and forever, and we had better hustle our asses.

 

We always were part of the global community. What's not feasible is continuing these policies. It's not cutting ourselves off. We had trade before, but I guess you overlook that,when America was actually prosperous. Our trading partners have the same safeguards in place themselves. We also should not be competing with slave labor wages. That is an unfair trade advantage. That is also not building up the world, but exploiting the third world for the benefit of a privileged few, who hoard their money,hamper progress and innovation.(think alternative energy) It has nothing to do with hustling. You are the one being hustled. Look at the wealth disparity. It is at an all time high. These policies are not working. Right now, we are being left behind. Wake the hell up already.

[bjorn_skurj]

We always were part of the global community. What's not feasible is continuing these policies. It's not cutting ourselves off. We had trade before, but I guess you overlook that,when America was actually prosperous. Our trading partners have the same safeguards in place themselves. We also should not be competing with slave labor wages. That is an unfair trade advantage. That is also not building up the world, but exploiting the third world for the benefit of a privileged few, who hoard their money,hamper progress and innovation.(think alternative energy) It has nothing to do with hustling. You are the one being hustled. Look at the wealth disparity. It is at an all time high. These policies are not working. Right now, we are being left behind. Wake the hell up already.

I am awake, and I am upset too about the extermination of the middle class in this country. I myself am on the leading edge of those who grew up middle class but are being dragged into working poor. What's the plan for reversing the wealth disparity? Redistributing it? Outlawing capitalism? Making people who vote Republican who don't make over $100,000 a year get their head examined? Restoration of Eisenhower-era tax brackets?

[MattZ]

I am awake, and I am upset too about the extermination of the middle class in this country. I myself am on the leading edge of those who grew up middle class but are being dragged into working poor. What's the plan for reversing the wealth disparity? Redistributing it? Outlawing capitalism? Making people who vote Republican who don't make over $100,000 a year get their head examined? Restoration of Eisenhower-era tax brackets?

 

No, apparently, the plan is to angrily post on the fan message board of a band that rose from the ashes of Uncle Tupelo. Wake the hell up, already.

[ih8music]

No, apparently, the plan is to angrily post on the fan message board of a band that rose from the ashes of Uncle Tupelo. Wake the hell up, already.

 

Don't be so ignorant. I bet he posts this stuff on many Internet message boards.

[The High Heat]

No, apparently, the plan is to angrily post on the fan message board of a band that rose from the ashes of Uncle Tupelo. Wake the hell up, already.

The word "seminal" is required in the Wilco origins description, sir.

[Guest Speed Racer]

And "alt-country" and probably also the phrase, "American Radiohead."

[bjorn_skurj]

While we banter wittily, the Chinese are WORKING.

[futureage1]

I am awake, and I am upset too about the extermination of the middle class in this country. I myself am on the leading edge of those who grew up middle class but are being dragged into working poor. What's the plan for reversing the wealth disparity? Redistributing it? Outlawing capitalism? Making people who vote Republican who don't make over $100,000 a year get their head examined? Restoration of Eisenhower-era tax brackets?

 

Do you have any idea what you are talking about? What we have now is not capitalism it's corporatism. That's a big difference. I love capitalism when we had it our nation was prosperous. To blame only the Republicans is ridiculous. Clinton passed NAFTA and Obama is working on the Korean Free Trade deal Bush couldn't get through. Obama appointed the commission to privatize Social Security, just like Bush wanted to do.

 

We should stop subsidizing companies to offshore and then pay no taxes. At this point, I would take even the Clinton era tax brackets. 15 million jobs and counting lost should be unacceptable. Blaming one side or the other is futile when they both sell you out. These situations are not irreversible, but if everyone is happy to be working three jobs that's fine with me. I am not working poor and have been quite comfortable through this. That doesn't mean I don't see my neighbors and friends having their lives destroyed. I am sorry to hear that you are being dragged down. I wish you could recognize what caused that. My loyalty is to the American people, not a political party. Divided we fail.

[futureage1]

No, apparently, the plan is to angrily post on the fan message board of a band that rose from the ashes of Uncle Tupelo. Wake the hell up, already.

 

From a guy that has been wrong about every issue since Obama was elected. I thought the bailouts were good and necessary and would save homeowners. I already know you're plan: sit back and do nothing and not talk about anything about what caused it. Funny I haven't been to this board for months and the same threads are still going. Given the mostly inane posts contained in these threads, I am well within my right to state my opinion, which I back up with facts, not denial, the angle you are coming from. Anytime you want to post counterpoints to show how am wrong I'll be sure to read them.

[Guest Speed Racer]

From a guy that has been wrong about every issue since Obama was elected.

 

Um...takes one to know one?