Economic News

[prole]

In how many countries has deregulation and laissez-faire led to complete ruin in the last 30 years?

 

Um, I'd say we're still gathering that data (in real time).

[dmuja]

statistics show that purchasing power has decreased over the last 30 years for the overwhelming majority of Americans, which means that deregulation has not lead to an increase in purchasing power for anyone relying on wages to earn a living. On the contrary deregulation has enabled the casino economy of today where all economic growth, most of it virtual, debt-ridden or financed by taxpayers, is sucked by the upper 0.1% of the income brackets. In how many countries has deregulation and laissez-faire led to complete ruin in the last 30 years?

 

Thats my understanding as well - pretty smart post!

 

The mid and lower classes have nothing real left to buy with - ie no money, just credit which = debt.

 

You can't sell to people who have nothing left to give.

 

CHECK THIS OUT

[j_b]

Michael Moore's take on the bailout vote:

 

From talking to people I know in DC, they say the reason so many Dems are behind this is because Wall Street this weekend put a gun to their heads and said either turn over the $700 billion or the first thing we'll start blowing up are the pension funds and 401(k)s of your middle class constituents. The Dems are scared they may make good on their threat. But this is not the time to back down or act like the typical Democrat we have witnessed for the last eight years.

 

http://www.michaelmoore.com/words/message/index.php?id=235

[prole]

Well, what's the verdict? Did the Republicans slit our throats now to prevent us from being bled slowly later? Realizing Obama's impending victory, did they want to leave him with the worst conditions possible under which to govern? Did they sacrifice millions of American working and middle class people for the ideological purity of the "free market"? Last desperate stab at a hollow "taxpayer populism" for posterity while the ship goes down?

[tvashtarkatena]

I think the last explanation comes closest to the truth for the Repubs. Interestingly, it was many of the most progressive democrats that voted no along with them, for different reasons, of course; the way Bush/Paulson tried to ram a knee jerk package down everyone's throats being and the lack of trust of this oft used tactic being one, rewarding fat cats for bad behavior being another.

[glassgowkiss]

but the principles of our economy are strong....... yeah,

where the fuck are the neo-cons to put the spin on this one?

[StevenSeagal]

but the principles of our economy are strong....... yeah,

where the fuck are the neo-cons to put the spin on this one?

 

Spin

 

In his first public appearance since Friday night's debate, McCain said Democrat Barack Obama advocates tax-and-spend policies that "will deepen our recession,"

 

Summary: It's better to keep up with the current philosophy of cut taxes and spend even more! That way we can pass the fundamentally strong economy recession we're in to the next generation when I'll be dead and won't have to worry about it.

 

Later in the day, after a stunning rejection by the House of a bailout of the financial industry, McCain said Obama and his allies had "infused unnecessary partisanship" into the effort to steady the economy.

 

"Now is not the time to fix the blame; it's time to fix the problem," he said, speaking to reporters in Iowa.

 

 

Summary: The entire financial mess is Obama's fault! Now that I've said that, it's time for Democrats to stop pointing fingers and quit the partisan blame game!

 

 

 

 

[tvashtarkatena]

I've got two words for The Shitbag:

 

Land Slide.

 

Or maybe that's one word.

[pope]

Maybe the underlying cause of all of this is that, in addition to lenders extending credit to high-risk borrowers who couldn't make payments when the economy went south, our decreased purchasing power is a function of the fact that we don't produce anything worth exporting. With cheaper labor available elsewhere, and with a flood of inexpensive imports ready for purchase at Wallymart, we have essentially drained our wealth while working desperately to serve each other coffee, hamburgers and take-n-bake pizza.

 

The solution: isolationism. Let the consumer demand products made in U.S.A. Place enormous taxes on imported products to stimulate this demand. At the same time we should eliminate the possibility of collecting a paycheck from the govt. for doing absolutely nothing, in order to create a supply of labor for manufacturing jobs. Sounds harsh, but I believe this is in line with reality. The alternative is a bankrupt federal govt. that can't afford social spending or military spending or infrastructure spending, at which point we become the world's supplier of cheap labor to industrialized nations.....basically the inverse of 1950's America.

 

Every cloud has a silver lining. Soon you won't have to travel to experience a 3rd-world nation.

 

[JayB]

-Are you suggesting that increased competition in the telecommunications business would be bad for the consumer?

 

I am saying that deregulation in telecoms resulted in the building of unnecessary parallel networks that competed for too few customers, which lead to unrealistic price wars, frauds, score of bankruptcies, mass loss of jobs, industry consolidation, and new monopolies (...). Competition is good but if it profits only speculators and crooks while it destabilizes industries, it is not wanted. Moreover, in the case of cable for example, the infrastructure defines a natural monopoly, which should therefore be regulated.

 

-What, in your opinion, determines both real wages and real wage growth? There seems to be a theory embedded in your final paragraph, but it would be helpful if you'd make that explicit.

 

No, there is no theory involved since it is a statement from first principles: budgets depend on what comes in and what goes out. You, on the other hand, have a theory and it doesn’t work because, despite the books being thoroughly cooked (notably on inflation data), statistics show that purchasing power has decreased over the last 30 years for the overwhelming majority of Americans, which means that deregulation has not lead to an increase in purchasing power for anyone relying on wages to earn a living. On the contrary deregulation has enabled the casino economy of today where all economic growth, most of it virtual, debt-ridden or financed by taxpayers, is sucked by the upper 0.1% of the income brackets. In how many countries has deregulation and laissez-faire led to complete ruin in the last 30 years?

 

 

You seem to be convinced that it's possible to increase real wages by some method other than increasing productivity. What someone earns is ultimately a function of what someone else is willing to pay for the good or service that they produce. If the work that they put in every hour making widgets translates into ten-dollars worth of value in the final product, you'll find very few employers willing to pay them $15 per hour to make widgets. Unless, of course, the government uses tariffs, subsidies, or other constraints on competition to force consumers to fill the gap between what their efforts are actually worth, and what some external authority decides that they should be paid.

 

Paying line workers at GM $85 per hour might be feasible if the government forced anyone who wanted a drive to buy their cars from GM and GM only. Great for the 200,000 or so folks that the government wants to insulate from competition, bad for the ~250 million people who have to spend more of their limited monthly than necessary on an overpriced piece of crap. That's money that's no longer available to save, pay for groceries, etc. Everyone but the folks that Uncle Sugar has decided to take under his wing is materially worse off than they would be if GM had to compete for their business. Expand the GM model across the country, and attempt to protect every industry from competition - whether domestic or foreign - and everyone spends more than necessary on everything they buy, and everyone is poorer than they would be otherwise. Try the experiment yourself - pay the guy at the gas station $10 per-gallon for gas when you could get the same gas across the street for $4 per-gallon, spend $300 on the same bag of groceries that you could get for $150, and send 200% of the amount due to the folks at the power company, the phone company, etc every month and see what happens to your personal balance sheet.

 

I think both of us agree that we'd like it if real wages increased for every American. Unfortunately, I'm not convinced that one can accomplish this goal by legislative fiat or any other magic wand, much less by systematically insulating every industry and enterprise from competition.

 

 

[JayB]

Maybe the underlying cause of all of this is that, in addition to lenders extending credit to high-risk borrowers who couldn't make payments when the economy went south, our decreased purchasing power is a function of the fact that we don't produce anything worth exporting. With cheaper labor available elsewhere, and with a flood of inexpensive imports ready for purchase at Wallymart, we have essentially drained our wealth while working desperately to serve each other coffee, hamburgers and take-n-bake pizza.

 

The solution: isolationism. Let the consumer demand products made in U.S.A. Place enormous taxes on imported products to stimulate this demand. At the same time we should eliminate the possibility of collecting a paycheck from the govt. for doing absolutely nothing, in order to create a supply of labor for manufacturing jobs. Sounds harsh, but I believe this is in line with reality. The alternative is a bankrupt federal govt. that can't afford social spending or military spending or infrastructure spending, at which point we become the world's supplier of cheap labor to industrialized nations.....basically the inverse of 1950's America.

 

Every cloud has a silver lining. Soon you won't have to travel to experience a 3rd-world nation.

 

Exactly how much has our purchasing power declined, and since when? I just placed a five minute telephone call to New Zealand for about a quarter. I made the call on a Chinese made MacBook that packs as much processing power as computers that would have cost about thirty times as much ten years ago, if it had been available to consumers at all, with software that I obtained for free on a high-speed internet connection that costs less than a typical local phone bill in 1990. Tomorrow afternoon I'll drive a '95 Toyota pickup with 201,000 miles on the original clutch, etc, to the airport and fly the first leg of a round trip journey that ran $1600 US, far less than the same flight would have cost before the days when airlines had to compete on price.

 

I've paid more for gas and groceries lately, but that's about it, and a good portion of that has been a consequence of the declining value of the dollar.

 

As far as the isolationism is concerned, how about attempting to make a go if it yourself before expanding it to the rest of society? Instead of exchanging your teaching abilities for money that you use to buy things that other people specialize in making, swear off trade entirely and grow all of your own food, drill your own fillings, power your home with whatever natural resources abound on your spread, and let us know how much better off you are at the end of the first year.

[bradleym]

Maybe the underlying cause of all of this is that, in addition to lenders extending credit to high-risk borrowers who couldn't make payments when the economy went south, our decreased purchasing power is a function of the fact that we don't produce anything worth exporting. With cheaper labor available elsewhere, and with a flood of inexpensive imports ready for purchase at Wallymart, we have essentially drained our wealth while working desperately to serve each other coffee, hamburgers and take-n-bake pizza.

 

The solution: isolationism. Let the consumer demand products made in U.S.A. Place enormous taxes on imported products to stimulate this demand. At the same time we should eliminate the possibility of collecting a paycheck from the govt. for doing absolutely nothing, in order to create a supply of labor for manufacturing jobs. Sounds harsh, but I believe this is in line with reality. The alternative is a bankrupt federal govt. that can't afford social spending or military spending or infrastructure spending, at which point we become the world's supplier of cheap labor to industrialized nations.....basically the inverse of 1950's America.

 

Every cloud has a silver lining. Soon you won't have to travel to experience a 3rd-world nation.

 

is your last name Smoot or Hawley?

[j_b]

You seem to be convinced ...

 

I know you’ll keep putting words in my mouth but there is nothing in your model that accounts for value other than monetary on short time scales, nothing in it would prevent slave labor or environmental plunder or monopolies for example, which incidentally explains why they all happen today.

 

I’ll be short but succinct: your model is fundamentally flawed because 1) it accounts for only one side of the balance equation; no real measure of supply or environmental externalities on relevant time scales, which suggests that your brand of economics isn’t a science, 2) it mostly ignores interaction between the economic sphere and the rest of society’s endeavors (education, health, …) that strongly affect economic output, and 3) it ignores that some sectors are natural monopolies (telecoms, transport, electricity, water, ..), which means that forcing competition leads to destabilization and waste.

 

Anyway, we can only guess the purpose of a 'supply and demand' dogma that has no second thought about paying CEOs and speculators billions in unearned money but claims it can’t afford to pay its workforce a living wage.

[tvashtarkatena]

I agree here. JayB's overly simplistic models attempt to put a closed system box around just a small piece of the equation, to the exclusion of human nature and resource limitations.

 

Regarding isolationism; this is an ideolog's denigration of the term 'localism', which is increasing and will continue to do so as energy becomes more expensive and scarce. Localism may look a bit strange in the future, however. Considering that it is 10 times more expensive to haul freight by rail then by ship, and 10 times more expensive to haul by truck than rail, we may see a world where the West Coast and China have more economic interchange than the West and East Coast. In addition, goods brought in by ship from Asia may be cheaper than goods made in Washington that must be trucked over the Cascades. America will gradually separate economically into West and East because of the basic economics of transport. Add to this the increasingly prohibitive cost of air travel; the most expensive kind, resulting in less cultural and business interchange between the coasts, and we may see a gradual splitting of the country across several fronts.

 

This begs the question; will it make sense for the United States to remain unified as a country once West and East stop trading and visiting with each other? As resource scarcity becomes more of a hardship, the political will to subsidize much of rural and suburban America's lifestyle will diminish. The more resource wealthy regions, such as the West Coast, will be pressured to stop subsidizing less productive regions, which will depopulate as a result.

 

 

Edited September 30, 2008 by tvashtarkatena

[prole]

it ignores that some sectors are natural monopolies (telecoms, transport, electricity, water, ..), which means that forcing competition leads to destabilization and waste.

 

Dude, I like having 3 or 4 different company's phone books stacked up on my stoop. It gives me more choice (freedom).

[glassgowkiss]

You seem to be convinced ...

 

it accounts for only one side of the balance equation; no real measure of supply or environmental externalities on relevant time scales, which suggests that your brand of economics isn’t a science,

 

economy is not a science. it's a system of trust. it's something that constantly evolves, therefor we can make assessments about the past and try to predict the future.

[prole]

"Naw man, the real world is simple. Pass me that cocktail napkin.

 

 

Now STFU and go buy an iPhone."

[glassgowkiss]

i am impressed with your drawings. my nephew drew something similar, when he was 3. maybe he should be a treasury secretary- same end effect. now be smart and show us a graph explaining "panic selloff".

[glassgowkiss]

all these people are wrong?

 

this is exactly why it is a good thing the bail-out failed in the form it was presented by the administration. i am sure some of the administration cronies will be unhappy, since they can't get their hands on this vast sum of public money. however life will go on, some of the banks will fold, some of the business will fold. predicted unemployment might reach 8%. but for a vast majority it won't change a thing and at least it won't wipe out SS trust fund now.

BTW to put some face to the numbers it would cost over 31K to pay for the debt this country has so far.

[prole]

The bailout deal might pass now that the Democrats have added some tax cuts as a sop to Republicans. Tax cuts. Hey, what's the difference between Republicans and a cocker spaniel that can't stop licking its balls? ...Nothing! The Republicans' stupidity is matched only by Democrats' spinelessness. I give up, burn it all.

 

Edited October 1, 2008 by prole

[tvashtarkatena]

It seems that the new bail out deal is even worse for the public than the old one due to the addition of even more regressive tax cuts. The increase in FDIC coverage from 100K to 250K is probably needed for businesses, not so much for individuals. The gaping whole in the plan, and one that greatly reduces its chances of bouying up the eonomy, is the lack of foreclosure/bankrupcy reform; the ability to re-negotiate primary home mortgages. This is the root cause of the current crisis. Not addressing it does not effectively address the crisis. It won't cost the Fed a dime, either, but, apparently, the GOP's base will have none of it.

 

Meanwhile, McCain's numbers continue to slip. It seems that his grandstanding over the past two weeks didn't quite come off the way he expected it would. Newly registered voters nationwide, and there are a lot of them of late, are breaking for Obama 2:1. Oops.

Edited October 1, 2008 by tvashtarkatena

[TBay]

 

Through the years from 1913 to 1971 the System of capitalism was changed to the present socialist-type economy when America was taken off the Gold Standard and Richard Milhous Nixon proclaimed by Decree (not Amendment)

 

"We are all Keynesian".

 

Since then we have become a complete socialist-type government in regards to economics.

 

This is the real truth and the bottom line of why we have this present situation.

 

and j_b makes a valid statement:

statistics show that purchasing power has decreased over the last 30 years for the overwhelming majority of Americans, which means that deregulation has not lead to an increase in purchasing power for anyone relying on wages to earn a living. On the contrary deregulation has enabled the casino economy of today where all economic growth, most of it virtual, debt-ridden or financed by taxpayers, is sucked by the upper 0.1% of the income brackets. In how many countries has deregulation and laissez-faire led to complete ruin in the last 30 years?

Under the Keynesian Economics, wealth gets transferred to those who control it and everyone else is placed under its debt, just as it is today.

 

Eventually the debt becomes too great to keep propped up by artificial economics.

 

It builds debt, not wealth.

Except for the people who sit at the top of this system.

 

And is so cunning in its deceit, that only one in a million understand it, just like Keynes himself said.

 

"By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some....The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose." - John Maynard Keynes Economic Consequences of the Peace, 1920

 

Thomas Jefferson got it right!

 

I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.

 

[prole]

Through the years from 1913 to 1971 the System of capitalism was changed to the present socialist-type economy when America was taken off the Gold Standard and Richard Milhous Nixon proclaimed by Decree (not Amendment)

 

"We are all Keynesian".

 

Since then we have become a complete socialist-type government in regards to economics.

 

This is the real truth and the bottom line of why we have this present situation.

 

and j_b makes a valid statement:

statistics show that purchasing power has decreased over the last 30 years for the overwhelming majority of Americans, which means that deregulation has not lead to an increase in purchasing power for anyone relying on wages to earn a living. On the contrary deregulation has enabled the casino economy of today where all economic growth, most of it virtual, debt-ridden or financed by taxpayers, is sucked by the upper 0.1% of the income brackets. In how many countries has deregulation and laissez-faire led to complete ruin in the last 30 years?

Under the Keynesian Economics, wealth gets transferred to those who control it and everyone else is placed under its debt, just as it is today.

 

Eventually the debt becomes too great to keep propped up by artificial economics.

 

It builds debt, not wealth.

Except for the people who sit at the top of this system.

 

And is so cunning in its deceit, that only one in a million understand it, just like Keynes himself said.

 

"By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some....The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose." - John Maynard Keynes Economic Consequences of the Peace, 1920

 

Thomas Jefferson got it right!

 

I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.

 

You sir, are hopelessly confused.

[tvashtarkatena]

Through the years from 1913 to 1971 the System of capitalism was changed to the present socialist-type economy when America was taken off the Gold Standard and Richard Milhous Nixon proclaimed by Decree (not Amendment)

 

"We are all Keynesian".

 

Since then we have become a complete socialist-type government in regards to economics.

 

This is the real truth and the bottom line of why we have this present situation.

 

and j_b makes a valid statement:

statistics show that purchasing power has decreased over the last 30 years for the overwhelming majority of Americans, which means that deregulation has not lead to an increase in purchasing power for anyone relying on wages to earn a living. On the contrary deregulation has enabled the casino economy of today where all economic growth, most of it virtual, debt-ridden or financed by taxpayers, is sucked by the upper 0.1% of the income brackets. In how many countries has deregulation and laissez-faire led to complete ruin in the last 30 years?

Under the Keynesian Economics, wealth gets transferred to those who control it and everyone else is placed under its debt, just as it is today.

 

Eventually the debt becomes too great to keep propped up by artificial economics.

 

It builds debt, not wealth.

Except for the people who sit at the top of this system.

 

And is so cunning in its deceit, that only one in a million understand it, just like Keynes himself said.

 

"By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some....The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose." - John Maynard Keynes Economic Consequences of the Peace, 1920

 

Thomas Jefferson got it right!

 

I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.

 

Can you explain for us again who is at fault for the present crisis? Nixon for doing away with the gold standard? Socialists? Deregulators? Whoever invented fractional reserve banking way back in the Middle Ages? Also, how has our wealth been gradually transfered to the government exactly? Did this continue to happen even in times of zero national debt? Use as few sentences as possible, please. We're not interviewing Sarah Palin here.

[tvashtarkatena]

One of Bail Out's glaring omissons is the return to the gold standard. Two big problems with mortgage backed securities are a) no one seems to know what they're worth and b) real estate values are subject to speculation. We need to base our fractional reserve on something with tangible, intrinsic value that, unlike real estate, is neither volatile nor speculated on.

Edited October 1, 2008 by tvashtarkatena