Because of the retirement funds of the middle class.
There is nothing wrong with insolvent private pension funds that cannot be cured with better Social Security.
But in January and up till June, the leftie blogs were insisting that TARP money would not be repaid.
And then it was repaid... with the quantitative easing money.
Where I come from, we call that a "shell game."
That's the same kind of game some EU governments play when they write off patently worthless third-world debt that, were it sold on the open market, would fetch at most cents to the €... and then proceed to book it as foreign aid to the tune of the full face value of the debt.
Smoke and mirrors.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
In other words, a successful government policy that rescued the retirement funds of millions could in theory have been replaced by a more successful program that would have required the intervention of the Magic Pony to accomplish.
"And then it was repaid... with the quantitative easing money."
Big fucking deal. To predict that banks would depend on the generosity of governments is to predict water will be wet. The reality is that last year the leftie blogs were all explaining to us that TARP money would never be repaid. Atrios trotted out his "lucy/football" line a number of times to general applause. And yet, most of the TARP money is back, a bunch went to save UAW jobs and now Obama is pushing a tax to take the rest back. Good management of the people's money.
You're the one who likes to pretend that you're framing-savvy. Tell me, how does the frame "the stock market is going up - score one for Blue Team" work? Does it increase or decrease the political clout of Wall Street? Does it support or diminish the notion in people's minds that profits are more important than wages? Does it favour the private sector over the public sector as the fountainhead of social progress? Does it increase or decrease the bargaining advantage of capital over labour? Does it increase or decrease Wall Street's ability to take the economy hostage?
Now, if your frame had been "rescued the ill-advised pension schemes that many Americans have unfortunately been forced to depend on by the gradual destruction of social security," you could have pulled the gradualist vs. radical card, and we could actually have had a discussion about the desirability or lack thereof of primarying every single fucking blue dog - Obama included - next election.
But if you adopt the enemy's framing right off the bat that there is only one God, the stock market, and Dow Jones is His prophet... then I'm not sure that there's a point in having that discussion.
The reality is that last year the leftie blogs were all explaining to us that TARP money would never be repaid.
The money has not been repaid. It has been renamed. On the substance, this is not a victory - the American taxpayer is still on the hook for Wall Street's bad bets. On the narrative level, it is not a victory either - Wall Street now has plausible deniability. Which means that the taxpayer is gonna stay on the hook for Wall Street's bad bets.
So how is this a victory, again? I mean, except for the fact that it gave Obama a chance to look like he turned the heat up on some fatcats. Which, y'know, is a victory. Of sorts. Specifically, of the same sort that NuLab enjoyed until it went into a burning tailspin.
Permit me, for a moment, to recapitulate the European experience with the proponents of the "third way" (Bliar, Schröder, Nyrup, you name them): They all whiled away a decade or so where on the substance they accomplished precisely nothing more than treading water, and they managed to shift the Overton window to the right while not doing all the things they didn't do.
Right now, Obama looks rather a lot like Tory Bliar with better makeup.
And just to be perfectly fucking clear, "the banks have always been corrupt and always will be corrupt" is not an excuse. For two reasons: First, it's clearly untrue - Roosevelt, to take just one bleedingly obvious example, cut the banks' balls off and had them for lunch. Second, even if it had been true, it would no more be a valid excuse than "well, rednecks have always beaten up homos and strung up black dudes, and they always will beat up homos and string up black dudes."
If you want this to be a debate between gradualism and radicalism, you have to have some kind of game plan for how the kind of gradual change that we are seeing right now can lead to the kind of outcomes we'd eventually like to see. Because not being Bush is not an agenda.
Follow the Dow, Jake. En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
All I said was that the market is up. Krugman and Atrios and others, confidently predicted last year that the Geithner plans would fail and we would be now nationalizing the banks at enormous expense. Instead, Obama has bought time, rescued IRAs, and improved his tactical position.
"The money has not been repaid. It has been renamed"
I'm sorry, but that's a weak reed indeed. The money has been, in actuality, repaid. If you want to claim that the subsidy of cheap fed window loans has permitted that repayment, I'm happy to agree, but it doesn't matter. The whole finance system is a mix of fraud and illusion and political chicanery anyways, but at this point the books show the money back in the hands of the government and available for spending on actual work like energy and industrial policy. If Krugman/Atrios/Taibbi had argued back in March 2009 that the Feds were going to artificially inflate the artificial finance market with artificial credit, everyone would have agreed that that was exactly what the Feds said they were going to do.
And just to be perfectly fucking clear, "the banks have always been corrupt and always will be corrupt" is not an excuse. For two reasons: First, it's clearly untrue - Roosevelt, to take just one bleedingly obvious example, cut the banks' balls off and had them for lunch.
I can only laugh at that. The existence of low cost government loans to banks so that they can lend the money to the public at a higher rate, the ridiculous anti-democratic structure of the Federal Reserve, all of that was created under FDR. FDR created a reformed state capitalism, not a post-capitalism. In 1939, nearly a decade into the new deal, while Grapes of Wrath was published and the oakies were begging for jobs picking grapes, Harriman and Morgan and Prescott Fucking Bush were still wielding enormous political power.
"Because not being Bush is not an agenda."
For me it is an agenda in just the way that not being Hitler should have been an agenda in Germany in 1929. The US was inches from full fascism in 2006 and we are still damn near the brink. Stopping the Powell Memo plan, the evangelicals, and the militias is a pretty damn good plan as far as I am concerned.
FDR created a reformed state capitalism, not a post-capitalism.
Now who's letting the perfect be the enemy of the good here?
I'll reiterate what I've said before: If Obama during his first year in office had done half of what Roosevelt did in his first month in office, we would not be having this discussion.
People forget that Grapes of Wrath was 1939.
Arise you prisoners of starvation arise ye wretched of the earth it's time to audit the banks
That created a lot of jobs, didn't it? No?
Unlike the US national anthem. Fai de bèn a Bertrand, te lou rendra en cagant
There's a stirring revolutionary accomplishment
No. But the fact that it looks impressive by comparison to the current situation should tell you something.
OOOH! He audited the banks! There's a stirring revolutionary accomplishment if I ever heard one.
The Federal Reserve System was created in 1913 under Woodrow Wilson as a federally chartered collection of private banks with a public purpose--to deal with problems of recurring financial panics, such as that of 1907 by being able to supply "liquidity" in times of financial stress and to control the interest rates and money supply. It failed in its mandated mission in a spectacular fashion from 1929 to the mid-30s. Were Obama's Administration to have been even so bold as was FDR in auditing the banks and closing those in default, creating the FDIC and SEC, etc. or even being seen as making a serious attempt he, and progressive prospects, would be in much better shape.
Obama's problems do not arise mostly from the Progressive Left, who will at least vote for him in preference to most likely opposition candidates. The arise from the revulsion of the independents and the moderate Democrats against the current situation. This revulsion will be seized by the right wing and ridden to victory unless someone more progressive can make a clear and convincing case as to who will do what and grab control of events. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
Five days later he had the legislation he wanted. But then, FDR was all about action.
He didn't let his Fed Reserve determine policy...back then, the Fed Chief wasn't "independent" (code word for "beholden to monied interests, they understood this back then). It was an exec order which got the US off the gold standard.
On social issues, they almost immediately repealed the bible-thumpers Prohibition laws and got a constitutional amendment to that effect through.
And the aid to rural areas with the farm bill he rammed through was nearly immediate too.
Of course, Obama got elected in the equivalent of 1930, not 1932. But, it will be a measure of his fortitude to see how he responds to the obvious challenges facing him now that the US economic recovery begins to falter and the unemployment rate edges ever upward. Fai de bèn a Bertrand, te lou rendra en cagant
1933, interregnum or first 100 days
March 9. Emergency Banking Act March 20. Economy Act March 31. Civilian Conservation Act April 19. Abandonment of gold standard via RFC May 12. Federal Emergency Relief Act May 12. Agricultural Adjustment Act, inc. Thomas amendment May 12. Emergency Farm Mortgage Act May 18. Tennessee Valley Authority Act May 27. Truth-in-Securities Act, requiring full disclosure in the issue of new securities June 5. Abrogation of the gold clause in public and private contracts June 13. Home Owners' Loan Act June 16. National Inudstrial Recovery Act, inc. $3.3B appropriations for public works program e.g. WPA June 16. Glass-Steagall Banking Act June 16. Railroad Coordination Act
Source: Schlesinger Jr, Arthur M., The Coming of the New Deal. 1958. You might want a copy for reference. Diversity is the key to economic and political evolution.
citations
One never knows what one could miss, do one? Diversity is the key to economic and political evolution.
Facts contradict your recollection of fiscal policy ex War Production Board.
whatevs. Diversity is the key to economic and political evolution.
there's no need for this sort of confrontational crap, Cat. He's not 'shuffling shit' or ignoring your facts, he's having a good faith disagreement with your presentation of them and what they mean. Maybe we can eventually make language a complete impediment to understanding. -Hobbes
He's not 'shuffling shit' or ignoring your facts, he's having a good faith disagreement with your presentation of them and what they mean.
If you could stick to the arguments that would be nice.
I'm not seeing any bad faith here. I'm seeing a clash of frames and a marked difference in tactical and perhaps ideological analysis.
But yeas, the stock market is up and bonuses are back to normal. A collapse was averted, for some, yes. In the long run, we're all dead. John Maynard Keynes
Let us revisit in 2012... Fai de bèn a Bertrand, te lou rendra en cagant
15th US census, pdf page images and *.gov source links.
In The Politically Incorrect Guide To The Great Depression And The New Deal, economist Robert P. Murphy, Ph. D., gives us a very useful comparison of what happened in another recession that occurred in the 1920s when so-called laissez-faire economics was practiced and the more famous economic collapse when it wasn't. "The annual unemployment rate peaked at 11.7 percent in 1921 [the other Great Recession year], but it had fallen to 6.7 percent by the following year, and was down to an incredible 2.4 percent by 1923," Murphy writes. "That is how a market with flexible wages and prices quickly corrects itself after a Fed-induced inflationary boom."... "From an estimated annual rate of 3.3 percent during 1923-29, the unemployment rate rose to a peak of about 25 percent in 1933," two U. S. Bureau of Labor economists reported in 2001. "The economy reached its trough in 1933; but although unemployment had reached its peak, economic recovery was slow, hesitant, and far from complete." "As shown below, the unemployment rate was still nearly 15 percent in 1940 [16th US census]. Read more...
"The annual unemployment rate peaked at 11.7 percent in 1921 [the other Great Recession year], but it had fallen to 6.7 percent by the following year, and was down to an incredible 2.4 percent by 1923," Murphy writes. "That is how a market with flexible wages and prices quickly corrects itself after a Fed-induced inflationary boom."...
"From an estimated annual rate of 3.3 percent during 1923-29, the unemployment rate rose to a peak of about 25 percent in 1933," two U. S. Bureau of Labor economists reported in 2001. "The economy reached its trough in 1933; but although unemployment had reached its peak, economic recovery was slow, hesitant, and far from complete."
"As shown below, the unemployment rate was still nearly 15 percent in 1940 [16th US census].
Read more...
The Second World War.
Massive infusion of cash into the economy, lots of things destroyed. Labor force of the industrial countries cut by about 45 million out maybe about 400 million at the start of the war. So roughly 12%.
So we have: 1) lots of broken things, 2) fewer people to fix them.
Not so creative destruction but it did the trick.
I'd like to think that we'll find another way out, but I have the sinking feeling that this is at least a possibility.
The second more limited one being that growth in China collapse, and it descends into another period of internal disorder like 1911-1949.
If companies can no longer get product from China, that's the same as taking a huge portion of the global labor force off the market. With the downward pressure on wags relieved, you can have growth in demand as wages start to pick up globally. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
However, I still cannot foresee how, in the immediate future or my lifetime, Keyesian prescriptions for Chinese domestic market or Friedman prescriptions for Chinese capital market will relieve OECD deflationary wage trends. Montary inflation over all simply discounts every investment metric I can think of.
Not that that standard says alot. Diversity is the key to economic and political evolution.
Part of the reason that China isn't developing the same way that Taiwan or Korea did is that those countries had much, much smaller populations.
Remove those workers from the global labor force because there's internal disorder in the country (which is likely if growth slows, which is probable in the next few years) and suddenly you have a lot less workers to do the same amount of work. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
China's total population is an outlier relative to that of any other OECD member. Also, total factor producitvity (TFP) immediately discounts estimated transaction costs of collective and disaggregate labor market bargaining power given automated technology transfers and "leakages." Moreover, Taiwan's and S.Korea's industrial growth (or GDP) have enjoyed ("profited" from) decades of US FDI and favored-nation trade status for decades more than China's WTO-sanctioned participation in integral OECD economic policy/capital formation.
I don't think this line of reasoning will take you where you want to go, presumably labor market reconciliation. Diversity is the key to economic and political evolution.
Sorry - that's right-wing spin. Sure, it created a booming war economy, but FDR's policies ended the depression. Maybe we can eventually make language a complete impediment to understanding. -Hobbes
My original point still stands -- what we're currently witnessing is NOT a collapse equivalent to the depression; and the political environment Obama stepped into is different from the one FDR stepped into. Everything else remains to be seen as they also say. Maybe we can eventually make language a complete impediment to understanding. -Hobbes
On the latter, I think it is wrong to interpret the recent rise in government bond yields as a sign that the sustainability of public finances is at risk. En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
Of course, 15 years of banks accummulating treasury bonds with very limited private investment due to strong war economy regulations of private industry also left the banks with a huge ability to lend and the private sector with a huge ability to borrow, leading to massive credit to fuel the boom. En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
Exactly. FDR took office in 1933. Do not underestimate what three years of suffering can do to people's attitudes. As I said - he had a very different political environment from the one Obama inherited. And Obama is taking steps to avert COMPLETE collapse, such as what happened after 1930. Seems to me to be working, but as you say, only time will tell. Perhaps we still do have a 25% unemployment rate, several million homeless, and whole towns having armed standoffs with authorities to keep their property in our future, but I doubt it. Maybe we can eventually make language a complete impediment to understanding. -Hobbes
Even now, the political climate is much different from what it was 3 years ago, even 1 year ago. And how many percentage points has unemployment changed? I just don't think there's any way anyone who's read about conditions during the depression can possibly argue in good faith that conditions in 2009 are comparable to conditions in 1933. Maybe we can eventually make language a complete impediment to understanding. -Hobbes
But if Obama indeed gets behind this new policy with all his ability I think he can make a real difference. Perhaps the most important thing he could do would be to conduct a series of tutorials from the oval office that serve to educate the population as to how the economic system really operates. how the theories currently being used obscures that operation and to whom the benefit accrues. The other thing is to make the argument for public financing of federal elections. Even the business people are making that plea now. Even if such a policy has to be pushed through in budget reconciliation it could save the country from perpetual corporate rule. Else, the concern is that business contributions for Democrats, let alone progressives will dry up. And the vast majority of that corporate money will not be supporting Obama or the Democrats. But the hour is late. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
I believe you are in California, so you perhaps have noticed that there are whole towns which sit empty. And, you probably know this as well, the number of homeless has grown, and sits at around 3.5 million in the US (and growing) while thanks to Clinton's Welfare "Reform," about 6 million folks get no aid from the Federal government other than foostamps.
The Obama administration's solutions to these frankly morally rotten problems was advertised as the stimulus plan, which his Council of Econ Advisors chair now admits was only an insurance policy to "avoid a catastrophe," not a policy necessarily to get people back to work, so this is why, at least on the left, the stimulus plan has been criticized as too little, a tactical mistake. I mean, when you're historic first black President of the US and you lose Bob Herbert after only a year, it's saying something. And not that you're doing a good job.
See, unfortunately, these millions of Americans living from hand to mouth and in highly precarious housing situations have no one looking out for them. Many thought this would change, and are unhappy to see that they haven't, and I can't say I blame them, though I certainly did not expect changes, which is why I live where I live. Fai de bèn a Bertrand, te lou rendra en cagant
Too early to say. Technically speaking, it's still only 1930. Exactly. FDR took office in 1933.
Exactly. FDR took office in 1933.
That wasn't the point of the comment. The point was that the environment Obama inherited wasn't the same one FDR inherited. Maybe we can eventually make language a complete impediment to understanding. -Hobbes
Given that Obama's economic team are, while guided by false lights, not total fools and must have seen the same charts, it is hard to see optimism about a recovery as other than disingenuous happy talk and spin--which is blowing back on them and Obama. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
omg - that was my POINT! Maybe we can eventually make language a complete impediment to understanding. -Hobbes
He bought time, sure, but the time is up. Politically it's been up for a while, they just didn't care to notice until they lost an extremely safe Senate seat in a special election and finally people on the left other than Bernie Sanders started asking for Bernanke's head.
Economically, I'd rather doubt they have any time left, either, but we'll see, unfortunately my crystal ball only works for hockey (and no, the Habs will not make the playoffs this year, though spanking the Rangers like last night still is a pleasurable experience).
End of day, the Krugman/Black position has been to emphasize the solvency crisis aspect of the financial meltdown. The Geithner/Summers/Bernanke position has been to hope that the meltdown is more due to a liquidity crisis. The jury is still out, but my own view is that the latter position is as weak an equity position as all of those millions of homeowners whose mortgages are, in increasing numbers rounded to the million, underwater. Of course for this central issue, there is no credible plan... Fai de bèn a Bertrand, te lou rendra en cagant
I don't think there is a credible independent person in the US who would argue that the HAMP is anything but a big failure, all the serious finance and econ blogs (Krugman, Calculated Risk, Delong, et c.) agree on this but if you've got a cite to the contrary I'd love to see it. Fai de bèn a Bertrand, te lou rendra en cagant
Krugman has been warning since before Obama was elected that his stimulus plan was too small and that its likely failure would be interpreted as a failure of the concept of stimulus, not a failure to make it the right size... And here we are, a year after inauguration. En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
Could we get control of Goldman Sachs, Morgan Stanley, Wells Fargo, Citi and Bank of America in return for annual pensions of $1billion/year each for perpetuity and thereby be in the position to wind them down at minimum damage and spin off their useful functions into bite sized entities that would be such a deal as we cannot imagine. But they would want $50 or $100 billion each per year and that is not sustainable.
But their ongoing risk taking activities could end up costing even more than that for a few years. That is the scale of the problem. The above are top of the head estimates based on my sense from the reading I have been doing over the last years but I believe they are in the ball park. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
It isn't over, and the Tarp is just part of it.
I'd say neither side on this issue could be said to have had their case proven. The Tarp guarantees and the Fed's unconventional easing have potential effects downstream that could be rather negative.
And the repaid Tarp funds to date are only a small part of the story. Fai de bèn a Bertrand, te lou rendra en cagant
