Economics

Fundamentalist, you know that I, like Hayek, do not consider reasonable social insurance - including health care - either socialism or a threat to individual liberty. So I wouldn't call either party genuinely socialist. But, looking at all government activity, they are both more statist than I'd like.

bampbs, you're wrong! The GOP has never been worth a damn! But then, neither has the Democrat party. Democrats are socialist; Republicans are socialist-lite. What a choice!

rewt66, feel free to ignore what I say. I do the same for you most of the time. The Republicans are the most preposterous, lying hypocrites in my entire experience of politics. If we are in a debt hole, they put us there. If people don't like the bank bailouts and stimulus, they began while Bush was still President because he recognized that circumstances obviously required such actions. Only someone completely gullible, believes that Republicans, after 30 years of the most unjustified fiscal irresponsibility in American history, are going to behave responsibly once they are again in a position to borrow and spend. "Deficits don't matter", remember ? It is all a contemptible fraud that has gone on for decades. I have never seen a party willing to do such damage to the country for political advantage. They are a disgrace to the memory of a party that I once admired, and will be irrelevant within a generation if they don't shape up; picking up seats in a midterm will do nothing to change that. If the Democrats were not gutless, the GOP would have been slashed by ridicule based only on the facts of their time in power, and their time saying "No!" I suggest that you recall who was reelected in '96 after Gingrich overplayed that game. Do these people never learn ? I don't like the Democrats any more than I did in '95, but I have come to loathe the Republicans since then. My turning point came in '96, when I sat out the election in disgust.

If the Democrats will not rip into the Republicans, I will. The GOP hasn't been worth a damn since GHW Bush left office.

bampbs,

Like it or not, here's how it's going to go down.

The Federal gov't will grow its debt by paying off the debt of Wall Street, homeowners who live beyond thier means, and states and local gov't, school districts that lived beyond thier means.

Social Security rates and retirement age will rise, and payouts lowered, in order to payfor some of the debt. Taxes at the state, local, and perhaps federal lwvel will rise for the average guy.

Regards

rewtt, the big difference is monetary policy isn't able to distribute money where it is needed, it simply inflates the existing trend. So you get higher consumable prices while incomes and bubble assets continue to flatline or fall. You get more uncertainty and so people need to save more due to low expectation of future income and rising expectations of living costs. With a temp tax cut around $300 billion, a lot of that debt at higher interest would be paid off freeing up a whole lot of cash for many years and restoring a lot of confidence, or giving enough to buy another property or maybe allow people to refinance at a rate that in line with our expected future growth.

Bamps, you don't borrow and spend when you already have a bunch of high interest debt. You refinance. You borrow and invest, or you borrow and pay down higher interest debt.

bampbs:

Of all the blind demagogues who post here, you are the most tedious. It's all the fault of the Republicans; they're in a conspiracy to wreck the economy so that they win the next election. Post after post after post. Maybe it never gets old for you, but it sure gets old reading it.

Why do you think the Democrats are about to get thrashed? It's because much of the country is disgusted with the stuff that the Democrats are shoving through. Many of us have decided that WE DON'T WANT THIS STUFF.

So, in a country with an allegedly representative government, doesn't that make the Republicans the ones who are actually listening to the people that they are supposed to represent?

But at least in this post you included something worth reading. "If monetary stimulus isn't working, neither will tax cuts." I'm not certain, but I suspect that you're right on that one; your stated reason (that people are focused on deleveraging) seems sound.

If monetary stimulus isn't working, neither will tax cuts. When people want to pay down debt, it's impossible to get them to borrow. That's why Uncle Sam has to borrow and spend until confidence recovers. The $300mil tax cut portion of the stimulus was useless.

Paying off private debt is going to be great for the medium and long term. But it's going to be a longer and much more unpleasant wait if the Feds don't invest in infrastructure maintenance and repair to put construction back on its feet.

Of course, that's what the Republicans want, and I can't believe they've been getting away with it.

R.A.:

Why the scathing reply because they put "demand" in quotes? Why don't you actually point out the alleged errors in analysis, instead?

It sounds more like something else in the article caused your outrage, and rather than address it, you took a potshot at a convenient, easy target.

"THE writers of the Wall Street Journal's editorial page seem to have their own special brand of economics (emphasis below is mine):"

Larry Summers has a wierd brand of economics.
I think it's called socialism .

WASHINGTON (AP) -- The Obama administration is trying to jump-start its sputtering attempts to tackle the foreclosure crisis with an effort to assist homeowners who owe more on their properties than their homes are worth.

Starting Tuesday, the Federal Housing Administration will permit lenders to give these borrowers refinanced loans backed by the government. The lenders will be required to forgive at least 10 percent of the original mortgage amount.
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Regards

Well, I had come to believe he was poking fun at supply-side econ, but maybe not.

I am only guessing, but I think the point being made was that according to the WSJ, the injection of stimulus money affected the demand curve, while ignoring the existence of the supply curve. Hence the comment, "they've only got one line on their charts".

Of course, I'm just guessing that was what was meant.

I think Ryan is losing it.

Thanks, Doug! I didn't understand what the WSJ meant by putting the scare quotes around demand, either. Too subtle for me.

Well then, that explains the conservative fascination with supply side economics. Who knew you could change the world with one line?

I also thought it was a good article.

The big problem is Larry Summers, who pushed for deregulation of the markets under Clinton. Why is he still around? The only guy I trust is Volker.

The authors are correct when they say the '09 priorities were screwed up. The Administration should have went after financial reform before the Health Care bill. Because they did the opposite, the reforms are watered down.

"In return for adding nearly $3 trillion in federal debt in two years, we still have 14.9 million unemployed. What happened?"

We transferred Financial Sector and Household Sector debt to the Federal Government, and bailed out the states.
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Looks like the Treasury will make some money back selling warrants (stock) they bought in '08 or '09.

Hartford Financial: 52.09 million warrants, bought at $9.79, selling them soon around $21

Lincoln Financial Group: 13.05 million warrants, bought at $10.92, selling soon around $24

http://www.treasury.gov/press/releases/tg846.htm
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Regards

I've always liked the phrase "timely, targeted and temporary."

Fundy, I'm not 100%, but I think it's the quotations around "'demand'" which make it look like WSJ considers demand a suspect theory. As in "Those leftists and their 'demand.' Whatever that is, I suppose it has one horn, two wings and smells like patchoulli."

I don't understand RA's foaming at the mouth. I thought the WSJ article was good. Can someone explain it to me?