David in D

The Recovery Was Too Expensive

Nice article Chris. I'm curious though, your metaphor of taking a pay cut then borrowing to fill in the gap seems a bit simplistic here. The borrowing, in the case of the nation, comes from itself. While I agree that the fiscal crisis will probably not lead to serious reform, and while it probably cost more than it needed to, I think it is hard to quantify the downside of a crisis. In other words, it is easy (as you admit in your Monday morning quarterback comment) to sit back and say "we are really getting only limited value from this bailout" but this is really an impossible statement; isn't it? How do you know what might have happened if the fed's actions hadn't been taken?

In general, I'm in agreement with you. But I get a little annoyed on Seeking Alpha with all the "ditto heads" and permabears and really, perhaps Bernanke deserves some real kudos. Who knows, my point is we cannot.

We are but fallible humans (actually meaning-making animals) seeking to do the best we can for ourselves in our social contracts. I think it's better to live in gratefulness for what has been done than perenial cynicism.

Confidence Games and Ponzi Schemes: No Way to Run the World's Largest Economy

Zmartmoney, perhaps you should take another look at Tim's graphs. You will note that it has been the supposed "conservatives" who have expanded the deficit most aggressively. Are you for more "trickle down" economics? It is precisely the wealth gap, generated under conservatives, that has contributed most decisively to the American economic meltdown. So yes, we need the pendulum to swing back towards sanity a bit after the last 30 years... but of course, no one on Fox News is going to tell you that.


On Aug 07 11:22 AM Zmartmoney wrote:

> The liberal/socialist agenda emanating from Washington requires that
> we be awash in easy money. How else will they pay to have most of
> the people sitting in the wagon, and the remaining few pushing?
> The liberal mindset seeks to have wealth for all, taken from those
> with "too much" and generously distributed by an all-knowing, wise,
> benevolent government master to those with "too little." Along the
> way, it wouldn't hurt if the wise masters were able to corner the
> market on power, which would allow them to spread their wisdom that
> much further. Liberals love to castigate conservatives for their
> "stinginess." In truth, that stinginess is actually self-preservation
> - the ant storing harvest for the coming winter, instead of the foolish
> grasshopper who wants to party till the snow comes. Children's stories
> are still quite useful for demonstrating enduring truths of life.
> There is no free lunch - there is only that one taken from someone
> else. Who are you going to take yours from? Welcome to socialism.
> This party can't stop - Washington can't afford for it to, as there
> are way too many things they want to spend money on first, remaking
> America in their image. BTW - don't mistakenly assume that Liberal
> means Democrat and Conservative means Republican. Look at the last
> decade that was run by Republicans and show me Conservatives in leadership
> positions. Party on dude...

The Worst Case Scenario (Someone Has to Say It)

Perhaps the author can contact Tim Lahaye and Jerry Jenkins (authors of the Evangelical "Left Behind" novels) and work on a third series of apocalyptic thrillers. Seriously, start writing fiction novels because I'm confident you could sell books based on these ideas. That said, I think the majority of what is in the original article is doom-and-gloom nonsense with no real basis in reality.

Grand Illusion: The Federal Reserve (Part 3)

James, thanks for a stimulating article. Fyi, I don't know what I think about the Fed, I need to do more research; but with that said you would be more persuasive if you were less polemical. This is intended to be a constructive suggestion because I think you have a lot to contribute to the public discussion on this issue. I've had to learn the same thing myself in the fields in which I have expertise. If you can manage to restrain your tirade, you will be taken more seriously by those who disagree with you or who might be swayed by you. Otherwise, a very good piece of work. Thanks again.

The Difference Between 1993 and 2009

Anton- While I think your proposal makes limited sense economically, it would have disastorous effects socially and that is a major factor that you have not weighed. I have no idea where you fall on the wealth spectrum, but clearly you do not have an interest in creating a win-win for everyone. Until poverty is alleviated in America and until the working class has wages that are increasing ahead of inflation we cannot will not see a lasting economic recovery.

Frankly, your 10% income tax proposal and the elimination of the capital gains tax heavily favors those with wealth at the expense of the poor and working class. What exactly do you propose the single mother with two kids and working for $8 per hour do? Cutting her health care access certaily doesn't help her. Seriously, I would like to hear you address the "poor/working class" in America -- what is your proposal for them?

Finally, your "low tax" agenda will not have another political chance in America for at least a decade. Bush 43 completely discredited it by giving tax breaks to the elite while running up huge defiicts. Republicans, at the moment, have NO credibility as fiscal conservatives. Therefore, if we are going to run big deficits let's at least take care of our poplulance instead of bombing innocent countries and giving contracts to Haliburton to rebuild them.

Don’t Blame Wall Street - At Least Not Completely

Pretzel Logic - Yeah, I said "Reaganomics has now been discredited" and I'll stand by that. Perhaps I need to nuance it a bit but without a doubt the doctrine that prosperity would "trickle down" and tax cuts for the wealthiest portion of America really benefit the general public is now in the trash heap. This isn't partisan politicing - I actually think Reagan did some great things - but the mythos that he helped normal working-class people such as myself is clearly false.

My comment about the 60's and 70's was (admittedly) not specific enough. What I meant is to say is that middle class wages, as compared with the wealthiest crust of America, were actually much closer than what we have today. Clearly we have a widening wealth gap now and a squeezed middle class and ABSOLUTELY Reagan's notion of a tax cut for all and huge deficit spending was the start of our disaster today. (And by the way, for everyone who want to assert that "defense spending in the 80's brought down communism" and thus were justified deficits, I suggest you look at the correlation btw oil prices and fall of the Soviet Union. Many Soviet economist, post-fall, cite that as the main actual internal problem for the USSR - not Reagan's antics.)

But I digress, instead or Reaganomics, we need a progressive tax code the lessens taxes for the middle class, holds upper middle-class taxes steady, and raises taxes on the wealthiest couple of percent of America. We should provide targeted incentives for job creation, but a tax cut for the wealthy and job creation are not directly (or at least efficiently) linked.

To repeat, trickle-down economics has been discredited along with the Bush tax cuts. I'd be interested to hear other thoughts on this along with Pretzel's comments.

Don’t Blame Wall Street - At Least Not Completely

Markos, I'm feeling a little bad for you since so many are hoping on your back (me being one of them earlier). So, I'll back off and reiterate that I agree with you that nearly everybody is guilty in some way with this disaster. I also appreciate that you are taking a contrarian view and pointing out that Wall St. shouldn't be the only whipping boys.

Here's where I think your article is nuts. To claim that Wall St. is responsible for America's prosperity because the guy "working at Wal-Mart" can "buy a car" misses the point. If lending didn't exist in its current form other possibilities would exist for transportation or other products (such as the scooter I ride to work) would be more popular and people would generally save money for what they absolutely needed (or they would ride the bus).

The problem IS precisely that people - encouraged by Wall St banks - spent more than they could afford and assets rose to meet that false demand. Yes the borrower is guilty of having a bigger appetite than his Wal-Mart wage could sustain, but the tax payer surely should not bail out the banker who made the loan to a person who couldn't repay it. The borrower and the bank should go bankrupt and this is exactly what many people such as myself are saying when we say "you are out of touch with mainstreet." We don't want to pay for other's bad mistakes and I don't think Armaggedon is going to descend on us if we don't bail out the banks... tough times for a while... but not disaster. My daughter (who is now 3) is not going to be paying for this bailout if I have anything to say about it.

Why This Bailout Can't Work - And What Will

Julian - All I can say is WOW! I'm glad you are not calling the shots in the upcoming economic turmoil. I think you would manage to exacerbate the problem by many factors. I'd think again about most of this post... although I do think you are right about the fundamental problem of overvalued assets.

Don’t Blame Wall Street - At Least Not Completely

Markos- Really, come on man, are you serious? Without a doubt, most Americans hold some of the blame; and there is certainly enough blame to go around in terms of government, the Bush Administration, ratings agencies, and Wall St. But do you really think the difference between America and the developing world is Wall Street? You have been in Manhattan too long.

Here's the truth. America was the great economic superpower it was because of the middle-class. Hard working, smart, dependable people who put great ingenuity to play for the whole world. Our greatest days were the 1960-70's when the middle-class got a fair shake and when the difference between the wealthiest crust of America was closer to the median American worker. That is what built America's economic prosperity.

Now that Reaganomics has been discredited, the Bush Administration is found lacking in all areas, and Wall Street's own inventions have imploded we would best use our energies figuring out how to reward the middle 90% of America.

Seriously though, you have to get a grip and go live a while with normal people!

The U.S. on the Precipice

WSBowles, it is frankly amazing to me that after eight years of a Bush-led White House - with Congress in tow - people like you want to assert that it is not the fault of the President and his party. Without a doubt Democrats in Congress own some of the blame but your assertion that Obama has anything to do with this frankly makes you look like an idiot.

I ask you. Which era did normal Americans do better 1992-2000 (Clinton) or 2000-2008 (Bush). I'm sure you'll assert the latter. Talk about blinded by politics. Vote Obama, he gives America a better chance than Grampa McSame and Falin.