We discussed this same thing back then. Cited were the Kennedy tax cuts and the resulting upturn. Who was it who also reminded what happened many years later because of those Kennedy tax cuts? Recession.

Deja vue. Tax cuts only for the rich have contributed to an economic malaise. When the first tax cuts started a recession, they used more tax cuts to mask the inevitable. Welcome to an economy created by Cheney's tax cuts.

Tax cuts are based on the theory that free money can cure all economic ills. But as predicted when we had this same discussion, free government money would make the economy get better (it did not boom - just improved). And now we must pay for all that free money with recession. Those who ignored the history of those Kennedy tax cuts are doomed to repeat it - and still deny it?

Bottom line - the Dow is lower than it was when George Jr entered office because he tried to fix the economy by throwing money at it while stifling innovation. We can expect his 'throw money at problems like a grenade' economics to cause a 36% drop in American incomes after causing the average American income to drop 2% over his past eight years. You would call that a better economy?

Most of the mid 2000s growth was fictitious paper growth and years of deregulation - Enron accounting was alive and well. Ie housing prices increased 40% too high. Assets attached to nothing real. Instant wealth when war consumes capital (that causes massive recessions four and seven years later ie Vietnam). Wealth created by putting more people deeper in the debtor column. Massive wealth converging on the rich. Economic numbers 'looked' better because the average American was spending 140% of his disposable income rather than 80% in order to 'keep up' and because money was so cheap (interest rates). More money spent on consumption rather than productive R&D and innovations. Numbers look good when real economic growth did not exist.

Average American incomes dropping by 2% while "Reagan proves that deficits don't matter" - destroying the Clinton balanced budget to have a drunken party and call that economic growth? Now we pay for his economic policies and tax cuts. Bottom line - growth finishes massively negative compared to world standards. Government throwing money like a grenade created minor economic improvements in those cited early years followed by much larger losses later.

"The only tax cut is one that cuts spending". An economic reality that George Jr has now proven but again.

Unfortunately, in making concessions to Republicans, the so called stimulus plan is now something like 42% tax cuts. That is the equivalent of requiring everyone to replant their lawns every year – another law that can create economic growth according to the numbers UT was citing. Those tax cuts mean the recession will be longer and worse years later into the next decade. Who noted what happened to the economy after those Kennedy tax cuts created a temporary boom? Deja vue. We see the resuting economics turmoil again because of tax cuts and other money games. Where it was predicted back in early 2000 when the full story of the Kennedy tax cuts were cited. "Only tax cut is one that cuts spending". Otherwise any gains are more than destroyed by the resulting recession. Money can never solve economic problems despite the many who even cited Kennedy tax cuts to justify George Jr's same economic solutions. Unfortunately, the myth continues to be promoted by politicians who work to prolong the inevitable recession.

But wasn't that a house of cards built on irrational exuberance and carefully orchestrated fraud?:confused:

Really hard question. Might require a philosophy major to work out.

To go further. We had easy access to capital and it was good times. A lot of stuff got built around here. We got big box stores, cool big-ass convenience stores, a bunch of new neighborhoods and the tax money built a nice new extension on the schools.

Now we have difficult access to capital and it's bad times. Does that mean the good times were fake? Well for one thing, all that stuff didn't go away. The box stores will get new names on them and the houses will be foreclosed on, but it just means other businesses will move in and other people will move to the houses.

The hard access to capital is because of a market failure leading to a crisis. Here's where the philosophers come in. It seems that crisis is inevitable. We had a market failure in 1929. We built protections. Now we have one in 2009 and we wonder if the protections failed.

Maybe it's more like a river; some rivers flood every 10 years, some every 50 years and some every 100 years, but the flood is inevitable.

So markets make us rich, but every 4 generations there's a major upset and a bunch of people suffer. Should we A) stick to the markets because the good times are very good, and not lost simply because bad times come? B) Stifle the markets so that there is less chance of upset, but not so many good times either?

Should we not build on the flood plain, where all the grains grow? Should we move to the mountains where there are no floods but very little grows?

I would say that the non-upset market is the norm, so productive that it pays off enough to make it worth it when the bad times show up.

Simply see the same thing in the 1920s. What made the roaring twenties possible? Innovations. Things like the electric motor, lights, and motor car. But these innovations existed in the 1800s?

Yes, after letting innovations sit stifled for a few decades, suddenly new products became fashionable. And then with those new products, the 1920s was a time of making more of those products and getting richer. Well the 1920s was also a period when the status quo again got good enough. And so financial markets boomed based only on economic activity - no longer on newer and more productive economic activity. Financial markets cannot tell the difference. But a shortage of innovation eventually results in recession.

In short the bean counter mentality of profits replaced the product oriented concept of innovation - new and better ways. People started getting rich by only doing more of the same rather than seeking better ways. But what made it worse - any protection from so much fraud was being removed under the name of deregulation. SEC had long been stripped of any real enforcement powers by simply not paying its people sufficiently - see Harvey Pitts testimoney before Congress. Financial instruments were created without any real basis in assets. Markets such as CA energy and oil were even being manipulated without regulatory knowledge or prosecution. Even loans were make routinely without zero due dilligence.

Unfortunately that 1920 economic collapse was so massive as to destroy a financial system that supported innovation. Remember, finance never creates innovation. But innovation always requires some financial support. Without that financial support, even those who innovate are stifled.


Example: how long did it take to build the Empire State Building including removal of the existing hotel on that property? 18 months. They were phenomenal innovators. But when the finance service industry collapses, innovators who created the Empire State Building never made a profit.

An innovator should make a profit. One without innovative products will always lose money (ie GM). But a profit does not mean innovation (again 1990s GM). Appreciate the complex concept.

Innovation was not happening (sufficietly) in 2000s America to justify those profits and salaries. Notice drug companies now with so few innovations in their pipeline. Major steel companies whose profits from obsolete technology plants were created only by a massive worldwide demand for steel. Expect those 'fear to innovate' steel companies (which does not include Nucor) to be hurting. Essentially most innovation is still coming from the west coast companies. We have yet to see how much innovation out there has been stifled by a corrupt finance industry.

We do know that late 1990s and 2000s profits were more often created by Enron style accounting - ie CA energy crisis, oil prices, LTCM and other hedge funds, GM that averted being saved by bankruptcy in 1991 by playing these money games, etc. IOW money games made possible profits of 2000s when necessary product innovations and productivity really did not exist.

And then we diverted more otherwise productive efforts to put 300,000 soldiers half way around the world which we have yet to pay for. This too meant more profits without anything productive.

As in the 1920s, finance only saw a shortage of productive economic activity too late. When finance finally discovered its empty shell, it collapsed and destroyed itself. In America, companies like GM that should have been in bankruptcy in 1991, instead, used those same money games to invent profits for another 15 years. GM continued to make crap products (no innovation) for 15 years before spread sheets finally made reality obvious.

2000 was not a productive decade for America. Too many of those good economic numbers were inventions created by money games and not by new innovative industries and products. The problem should have been obvious with LTCM and Enron. Instead we ignored it so that even the insurance industry (AIG) could create money where no real profits existed.

A major difference between 1920 and 2000; 1920s took out every industry. So far, America's productive industries (ie centered around a concept called the Silicon Valley) have remained innovative. We really do not yet know yet how many industries are still being innovative. Financials are still trying to catch up with economic realities. We should eventually know by the depth or length of the resulting recession if we can remove distortions created by government stimulus.

There have been other recessions with shortages of innovations. But only two were masked by massive financial fraud that continued to make money on myths rather than products - 1920 and 2000. During those periods, finance industry profits were massively higher than those of any other industry. Which makes no sense in an honest economy. Finance people are nothing more than glorified bankers. Even your stock broker is nothing more than a salesman. They are service people - not the innovators that make an economy prosperous and powerful. When that industry has higher profits, fraud and corruption is widespread. As in 1920 and in 2000.

Clinton created a much better economy than Bush did, and he raised taxes. You can't really compare this economy to that of the early 2000's. It's different in too many ways.

Also, I remember hearing (no I don't have a citation) during much of the past few years that the unemployment was actually worse than the numbers, because of people whose unemployment had run out, or who were working part time, not being counted. Bush did have a tendency to flub the numbers, or change the wording so things appeared better than they were, in order to support his agenda.

The protections failed because we've slowly gotten rid of them over the past 30 years. It's called deregulation.

Why would you think there were not so many good times under market regulation? I think that's wrong. There may not have been as many multimillionaires or billionaires, but the middle class was very strong. The American dream of owning a home and having a decent, well paying job was attainable for most people, even without a college education, because manufacturing was the backbone of the American economy. Health care was affordable and in most cases it was a benefit provided by the employer. And while there was still a lot of wealth concentrated at the top, it was spread much more evenly through the middle, and the people at the top did not own SO MUCH MORE of it. IMHO, that is a huge part of the problem... there is too much wealth concentrated at the top, among a very small percentage of people.

tw, great post!

YATTA, BITCHES!

Make no mistake, we are experiencing the beginning of the worst economic times since the dustbowl. Possibly worse, if you want the truth.

But people don't want the truth, do they? The wheels have fallen off the monster truck of state, but since we're still sliding on the chassis rather than rolling over, everyone pretends that things aren't that bad. The band is still playing, so we can all rearrange the deck chairs on the Titanic, and pretend that the band will play on.

Well, wake the fuck up. Things really ARE that bad...the lights are going out all over the world, and nobody knows when - or if - they will ever come on again. The proof of this was listening to that waterhead Paulson at the Fed babble on last month about how the recovery will begin in the second half of the fiscal year. Now, how the FUCK would he know that? He doesn't. He's making a prediction that sounds reassuring, but is far enough out that he assumes nobody will remember it when summer rolls around, the harvest is in...and we are not saved.

Herbert Hoover said the same thing, back at the beginning of 1932: "Prosperity is right around the corner". As a note to those of you who don't study Doom, 1932/33 was the worst fiscal year of the depression.

The worst part about this is that the problem WAS fixable. The bailout was intended to allow the banks to steal capital from us, so they could loan money (specifically, OUR money to US). Our economy functions on lines of credit, and all that was required to turn this from disaster to a mere recession was for them to actually LOAN THAT MONEY OUT. However, thanks to a weak-sister congress, the language of the bailout bill changed it instead into a massive giveaway with no accountability. The bankers took the money, smiled, and then wrote themselves some bonus checks and used the rest of the money, apparently, to buy up assets. When asked about it, they laughed in congress' face, and told them that they don't have to tell anyone where the money went, and by the way, give us the other $350 Bn, please.

Well, I have something to say to those bankers. Something that should have been said long ago, when they first refused to renegotiate the toxic mortgages that started this whole mess. Listen closely, my fat larcenous friends, for this is very, very important:

WE WILL FUCKING EAT YOU.

That's right. I, for one, will not starve because of your greed. When the deal goes South and it all comes crashing down, I will eat you before I starve. I will use your skull as a wine glass. I will gnaw on your bones with my very own teeth.

My son informs me that eating people is actually very unhealthy. Something about "prions" and mad cow disease. But what does he know? He hasn't been around long enough to really understand DOOM. He lives at that wonderful age of 15, where Really Bad Things happen to other people, and tomorrow's biggest worry is whether or not he'll get to feel up Suzy Rottencrotch under the bleachers during the homecoming game.

Well, I'll ask him again, in a few years, after the lights have gone out and the coyotes begin eying us with interest. When he's learned how to make fuel out of alcohol, and we all live by pillaging those who still try to stand still and grow things. Bankers will be a rare delicacy by then; no longer low hanging fruit dangling from the light poles.

Be warned. The easy times, the years of light and prosperity are behind us, brought low by the same greed and stupidity that has plagued the human race since Og the Caveman decided to corner the market on edible berries. Rough times are ahead, and even if we DON'T get to eat bankers, we can at least stockpile A1 Sauce.

Or kill me.

I didn't think they we going to lend that money(ours) out.
I thought they would use that money(ours) as collateral so they could borrow more money(ours) from the Fed at 0% interest, and loan it out(to us) at 5% to 29% interest.
Then when we pay that money back, the banks could pay back the Fed(us), pocket the interest to pay back the bailout(to us), and pay their green's fees.
No?

The whole thing is a racket. It seems to me the banks and financial institutions are just looking for work arounds to each and every dollar they get from the tax payer to do business as usual and keep those in the rich seat rich. Meanwhile the solutions from the Obama team is to attack middle America with new taxes and penalties for working hard and making something. The only way this will work is for Congress to remove all the excess that does not directly make jobs for the 1/2 million people recently out of work. For them the rest of these detail we all have spent hours discussion and researching mean squat.

You're still looking at this as a democrat problem.

Interesting. Eat the rich. Not a new solution.

Big up Lemmy.

FTR (no pun intended) this was spraypainted on a bridge on the A41. I saw it every time I stayed over at my BF's. No matter how often I saw it, it always raised a smile. Then again - I'd usually just had sex.

Actually I am not. I am looking at their track record for the last 2 plus years of empty promises. Don't think I view the Republickins in a much better light.

I view both parties in precisely the same light. Exactly the same. There is no difference, none at all.