The American Spectator : The National Socialism of Obamanomics

Text Size

Feature

The National Socialism of Obamanomics

By James Srodes from the May 2009 issue

It's been tried before and found ruinous -- from our new May issue.

It is commonplace today to believe we should refer to the benign innovations of John Maynard Keynes during the Great Depression in order to understand what is driving President Obama’s team of economic strategists. But a look back to that time leads one to conclude the Depression-era economist who appears most relevant to what is going on bears the improbable name of Hjalmar Horace Greeley Schacht.

From his post as head of the Reichsbank, in a career that ran nearly 20 years, Schacht was in effective control of the shambolic German economy for successive Weimar Republic governments and the pre-World War II regime of Adolf Hitler. During that time he routinely talked one game and ran another. He was a vocal supporter of returning the global marketplace to the fictional discipline of the gold standard even as he implemented inflationary policies to jump-start a society paralyzed by chaotic politics at home and foreign demands for war reparations that had to be finessed at all costs. Much of what Schacht did found its way into Keynes’s landmark 1936 treatise, The General Theory of Employment, Interest and Money. Indeed, Keynes nodded in Schacht’s direction in the foreword to the German edition of his book, where he stated his economic theories “can be much easier adapted to the conditions of a totalitarian state than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire.”

Before devotees of our prince-president start reaching for their pitchforks and tar buckets, let’s be clear that the brand of national socialism now being practiced in Washington has nothing to do with the capital-lettered National Socialism that drove the horrible Hitler regime or the equally disgraceful brands of big-F Fascism practiced by Mussolini, Franco, Peron, and other despots of the last century and this. Schacht himself was a stiff-necked and bumptiously offensive self-promoter but he was never a Nazi, a fact Hitler himself recognized by putting him in a concentration camp toward the war’s end. And while the revenge-minded Allies tried him for war crimes, even the Nuremberg judges acquitted him. It is not a war crime to be a central banker, although it is a thought.

Obamanomics, if that is the word, also bears little resemblance to the idealized soft-socialism we attribute to the FDR era, or what came in harder form in the wave of nationalizations and state-owned enterprises that the Labour Party tried to run in Britain, or in the capital-S Socialist governments that held sway over the European Union. Neither Larry Summers nor Timothy Geithner nor Federal Reserve Board chairman Ben Bernanke want to take over the management of Wall Street’s banks, let alone have to set up complex government agencies to operate General Motors or any other business sector further down the Toxic Asset Rescue Plan food chain.

Instead of actually trying to take over the formal management of the private sector, the Obama plan is to use the printing presses of the Federal Reserve as a powerful lever to force private enterprise to serve the administration’s social agenda. Congress, pacified with pork injections, will have no policy role.

State governments, which once were seedbeds of innovation, are on a short leash held by the White House. When the president pointedly told a White House audience of big-city mayors, “We will be watching you,” it was not merely a warning to handle the anticipated flow of federal funds with probity; it was an injunction that programs with the administration’s imprimatur were to be given priority.

So it is not the socialism of the Old Left at work. To recognize this is to understand the growing undercurrent of fretful unhappiness festering among traditional liberal Democratic pols like House Speaker Nancy Pelosi or appearing on the far-left blogs of Daily Kos and the Huffington Post. But from the right or left, what’s happening is still alarming if one believes in free markets and a free society.

WHILE THE THREAT OF A new form of governmental diktat by printing press is troubling enough in the sense of lost civil liberties, consider this: What if it doesn’t work, doesn’t jumpstart things? Or, worse, what if Obamanomics is a cure for an ailment that turns out to be not as threatening as it was on Inauguration Day, and actually tail-spins us into a new cycle of artificial boom followed by, a couple of years hence, an even deeper spiral of financial paralysis, market failure, and collapse?

It has become a cliché in its own right that history does not repeat itself. But certainly the history of Hjalmar Schacht gives a frightening hint of what disasters lie ahead when economic policies are formed by tiny groups of elitists removed from any official oversight and insulated from the abrasive but necessary challenges of a democratic political system. In what turned out to be two separate careers, Schacht and three other close personal friends can be fairly said to have caused the 1 92 9 c rash and then to have muddled around making things worse in the Great Depression that followed.

The three chums, it turns out, were the heads of central banks themselves, the Bank of England, the New York Federal Reserve Bank, and the Banque de France. Starting in the early 1920s this quartet set out to create a new global financial system to replace the one shattered by World War I and left in dysfunctional crisis. The four, not surprisingly, became international media celebrities. “The Most Exclusive Club in the World” was the press nickname for their frequent secret conclaves. Their closeness was magnified by the absence of much input from the elected officials they nominally served.

Presidents, prime ministers, dictators, and especially national legislatures apparently had such an ignorant indifference to monetary strategy that they anxiously deferred to the dictates of the quartet of men judged to be wizards. There might be a slight historical echo in the current lack of real curiosity about what exactly the economic philosophy of President Obama might be so as long as Larry Summers, Timothy Geithner, and Ben Bernanke are standing in front of him. Instead of the four friends of the Exclusive Club, we now have the Three Amigos.

The Bank of England’s governor, Montagu Norman, was an eccentric, fragile dilettante determined to restore the bank to its prewar dominance of global finance. Norman was a press favorite, the very model of a British central banker. He sported a Van Dyke beard, velvet-collared cape, and slouch hat and made his transatlantic voyages to Club meetings under assumed names. He also was prone to emotional collapses at moments of crisis.

Benjamin Strong was chairman of the New York Federal Reserve Bank, which nominally was just one of 12 ill-defined regional institutions established in 1913. But since the Great War it clearly had succeeded to the Bank of England’s place in the sun. Strong looked like the classic Ivy League athletic type but in fact had become a bank clerk out of high school. Often sidelined with chronic tuberculosis and depression, Strong battled the fierce protectionist public mood and almost invincible ignorance within the U.S. Congress and White House to keep the United States internationally involved and globally dominant. Emile Moreau, the director of the Banque de France, was burdened by a rancorous personality in part caused by trying to restore his war-shattered nation’s international role as a trade and financial power abroad while at home he faced a political chaos where governments lasted for hours instead of years.

Norman and Moreau were determined to squeeze Germany for payments without killing the goose while they both diluted the wartime debts their own governments had incurred from America. There was just so much each could do for the other since at no time did their governments trust each other. Strong was determined to help all three revive as trading partners and repay their U.S. war debts, but without weakening the postwar boom in new American bank loans and export sales to all of Europe. Schacht, whose only hand during the frenzied 1920s was to use the threat of a default on Germany’s reparations, played them all. Yet the four maintained a personal intimacy with one another; they holidayed together, became family friends, and by today’s standards it all seems a little odd.

OF COURSE THE COMMITMENT OF the four central bank chiefs to revive the world was doomed to failure because it was founded on the myth that a return to pegging their currencies to a fixed measure of monetary gold was the key to stability and a return of public confidence. Gold in those days occupied the role held today by the myth of the almighty American dollar as the international vehicle for trade and finance. The comparison is apt. There was, by estimate, about $6 billion in monetary gold ($1.2 trillion by today’s purchasing power) in the central bank vaults of the four nations, more than $4 billion of which was stashed in Strong’s basement at the New York Fed.$

Page: 1 2 >

About the Author

James Srodes is the author of Franklin: The Essential Founding Father (Regnery). His email address is srodesnews@msn.com.

Letter to the Editor View all comments (130) | Leave a comment

BPT (Australia)| 5.1.09 @ 6:16AM

If Obama gets it all his own way, the United States will look like a failed African state. Take your pick. There are many.

Deborah D| 5.1.09 @ 7:17AM

What was that Alan Greenspan comment from about 10 years ago? "Irrational exuberance" -- that's what I think when I hear people talk about an economic recovery. It will bounce back temporarily until the proverbial bull excrement hits the fan.

Buy your canned goods and gold and plant your garden because this cannot end well.

Bill| 5.1.09 @ 8:39AM

Those of us who were around when prime rate was 20% and the rates on certificates of deposit were in the teens can remember the run away inflation that accompanied that period. This indeed will not end well. But the people get what they wanted. The looked and saw a man who never accomplished anything but could read a motivational speech that someone else wrote. They never looked into his history or his understanding of world history and economics.
They heard the word change but never asked change to what. Like children they will learn from their mistake of not being informed and in their learning experience it will be costly for them and for the rest of us. Latest figure I have heard to service the debt is staggering. For a young family today it will cost them over a hundred thousand dollars. That is a very expensive education.

Ellis Wyatt| 5.1.09 @ 8:50AM

The economy is already headed for trouble in terms of inflation and higher interest rates due to the over the top spending response to this recession. If we were to add such items as the cap and tax and higher tax rates to the equation things only get worse. Unemployment will remain high, it is no coicidence that the economy has shed 2 million jobs since Obama took office. As a business leader we have read the map of what is to come and our layoffs this year have been to prepare for the future economic struggles that Obama owns outright. The recession was last years news, the troubles to come will be much worse.

The good news is Obama and the left are making a huge political gamble with their policies. If the economy doesn't return to solid growth with falling unemployment numbers by the end of this year the American public will have caught on to their ruse and negligence and I believe we will see a huge political shift back to what works. The middle of the fence moderates and independents decided to give Obama and the democrats a chance, but they won't have much patience as the economy turns worse.

Alan Brooks| 5.1.09 @ 9:24AM

we've heard all these alarums 16 years ago with Clinton-- and now his wife is Secstate. You people are swell prognosticators, but for a change of pace you ought to hire Newt to read his tea leaves for you.

Alan Brooks| 5.1.09 @ 9:27AM

bubble bubble toil and trouble,
what DO the conservatives predict?

Bob| 5.1.09 @ 9:41AM

This is one of the few, really smart analyses we've seen at AmSpec. The author correctly points out the pitfalls of Obama's plans. On the other hand, we now live in a society where information is distributed immediately and news is presented on a 24 hour basis. Furthermore, economic cycles are highly compressed.

If you understand that the current recession was caused by a bubble brought on by everyone using that bubble to create wealth, then you must believe that once this bubble is completely burst, there will be continued economic growth.

Everyone here seems to be a "chicken little" in taking a short term trend and then extrapolating it. But longer term, we are just dealing with another economic cycle. The beauty of American type capitalism is that it searches for voids and fills them. I watch the market every day and see this occurring.

The changes Obama is making are not as severe as those extremists on the right (and left) make them out to be. If he goes too far and it doesn't work, he will be replaced. In the end, if the economy gets better, he wins -- and if it doesn't, he loses.

Summers, Geithner, and Bernanke are smart and relatively conservative. Bernanke is one of the few economic experts of the Great Depression and Romer is one of the others. This team will make mistakes, but they are not ideologues and will form corrections as necessary. I find it humorous that the major complaint against these guys is that they are too close to Wall Street. Historically, this is one of the major things Republicans like about central bankers.

By the way, we will see inflation increase -- there is no way to stop it. However, the author is also correct in stating that this will lower how much it costs to pay back this debt. The rate of inflation will exceed the interest rate on these treasuries -- and that is not a bad thing. This is generally not publicized because few people understand how this affects the national debt.

Il Gecko| 5.1.09 @ 9:55AM

Thanks, Bob for some sanity. Things are getting shrill

JJ JR| 5.1.09 @ 10:08AM

Y'all,

Bill, nice posting. A good explanation of the dynamic that got this Marxist elected.

As I've said before, the reason why "the people get what they wanted" is an insidious and evergrowing ignorance of a large part of the population borne from now three generations of product from the voter production line i.e., our Stalinist public school system producing so many who are taught "what to think" vice "how to think. And the liberals have an increasingly easier time doing so. The media being in the tank for Obamanation is just the bow on top of the package.

J W Wright| 5.1.09 @ 10:16AM

Raising taxes and increasing production costs for consumer goods and energy seem like just the opposite strategy this economy needs.

Interested Conservative| 5.1.09 @ 11:26AM

Bob - how much of an inflationary correction can POTUS cause? As far as "severe" changes which "extremists" mke them out to be, won't the POTUS/Congress's changes only add to the negative impact in the aggregate?

Seriously, how sharp a downturn will it be if you add in the federally dictated auto industry restructuring (though it will be interesting to see how independent the bankruptcy court may be) as well as all the energy taxes and regulatory suppression (i.e. decline in coal usage, carbon tax, etc. . .).

I remember the 70s and 80s all too well, and there is a big difference between 14% inflation and 10% unemployment, and what we may be facing now - appreciably greater in both instances.

Then again, GM and Chrysler could be the Penn Central and B&O of the new millenium.

Son Of Sam| 5.1.09 @ 11:32AM

I wholeheartedly agree Deborah D...the tidal wave of spending that has been unleashed can only be dealt with in three ways:

A) raise taxes -- only on the rich? yeah, nice try, the ObamaNazis will whack the middle class, just as all liberals do. Don't worry, they'll soak the rich too.

B) borrow (and therefore push the problem to another day) Only problem with that is that a lot of governments, the Chinese front and center among them, have been making a LOT of noise lately about how they are worried about the debt they already hold for us. What happens when they decide that our trash is no longer their treasure?

C) PRINT MORE MONEY. Hmmmm, I wonder which option that I believe they'll take?

But wait, there's more....the ObamaNazis aren't going to be caught in the same trap as Jimmy Carter. Damned straight, they'll clamp down price controls! And when the price you're allowed to charge for a product is LESS than what it costs to produce it, production wuill plummet. Leading to huge shortages. And then this regime of traitors and tax cheats will try to smear those "eeeeeeeeeeevil corporations" for not producing.

Sage advice you gave us, Deb. To which I add, buy guns and ammo, and learn to get along with your neighbors. We're gonna need to depend on each other, because we damned sure can't depend on our so-called "leaders"

stay strong until freedom dawns
Son Of Sam
http://www.geocities.com/samadamssos

Ark Ashamed of Bill| 5.1.09 @ 11:47AM

It is important to remember that Obama is a third-generation leftist and that his party is a de facto Marxist party. No matter how his economic scheme can be labeled one can be sure that it will be a form of collectivism that will not yield beneficial results. Thomas Sowell provides an excellent critique of all the forms of collectivism in “A Road to Hell Paved With Good Intentions,” Forbes, January 17, 1994, pp. 60-65.

Bob| 5.1.09 @ 11:58AM

IC -- most people really don't understand inflation. They simply think that you pay more and get less. However, in a world economy, inflation is a relative measure. If other countries are also infusing capital into their economies, then that tends depress inflationary trends here. Because this is a worldwide recession, and other countries are in worse shape than us, you won't see unbridled inflation in the near future.

Secondly, this notion of a government dictated auto industry restructuring is simply fear mongering. If you believe in markets, as I do, then the market will determine restructuring more than government. Chrysler's weakness -- and they have said this as well -- is that they are weak in small cars. The strength of Toyota and Honda is that they are strong in small cars. EVERYONE agrees that unless Chrysler can build successful small cars, they are toast. Remember that it takes 5-10 years to develop a new line of cars and in that period of time, we will see periods of high oil prices as we have seen in the past. Getting in bed with a company that produces small cars, i.e., Fiat, makes sense. The association of Chrysler with Daimler made absolutely no market sense. Remember, it was Chrysler who found Fiat -- not the government. However, Fiat could not consummate the deal with the current structure of Chrysler.

Now I would have preferred to see Chrysler just disappear, but no one in the auto industry wanted that as the Chrysler buyer was more apt to move to foreign cars than GM or Ford. (I did a marketing case study on Chrysler several years ago.)

Northern Rebel| 5.1.09 @ 1:02PM

We left Europe 230+yrs ago, for a reason, and it wasn't because we wanted to be more like them!

Here's a conservative making a prediction: The libs will (already have?) overreach, and the country's people who overwhelmingly live their lives as conservatives, will look up from their busy lives and be forced to gather some facts.

Once the American people are finally paying attention to "President" Teleprompter's vision, they will reject it, and him, with a resounding crash, at the ballot boxes. We are not a stupid country, just a busy one. The sleeping giant shall awake, and it won't be good for the American fascist party, that Arlen Specter now belongs to.

Better get crackin' libs, your time is running out!

dissident66| 5.1.09 @ 1:39PM

I hope & pray for a real REVOLUTION that will restore Constitutional Rule. If it requires the spilling of blood so be it. If it ends up with a divided nation that results in 2 or 3 separate nations, again so be it. There are causes greater than ourselves that are worth fighting, killing and dying for....should it come to that.

I am one of many hard working, law abiding guys that is trying to raise a family, make a little something for the future...who is tired of being screwed over by my own gov't and lambasted by liberal journalists and brain-dead, living in a fantasy world celebrities. There are millions of us...and the Leftists / Secular Statists had better watch their collective butts.

Tom Paine| 5.1.09 @ 2:05PM

Only a foolish stupid cunt would say we live under national socialism.

You morons need to study your history.

Am. Spec. readers are a bunch of neo-fascist racist hypocrites.

ds80| 5.1.09 @ 2:29PM

Tom Paine: "Am. Spec. readers are a bunch of neo-fascist racist hypocrites."

... hence, I guess TomPaine is a neo-fascist racist hypocrite. But that's just my guess. What **IS** known is that he's angry, vulgar, and brooks no criticism of his god Obama.

Tom: you may want to open your mouth wider before inserting foot next time.

Pingback| 5.1.09 @ 2:36PM

The President who keeps on giving: the British tortured Obama’s grandfather « Jim Bla links to this page. Here’s an excerpt:

…to such questions. You can ask the same questions about the shortcuts that flattened Hiroshima and Nagasaki. More articles: Mr. McCarthy respectfully declines - Ed Morrissey The National Socialism of Obamanomics - By James Srodes Ron Howard’s ‘Demon’ Defense Doesn’t Hold Water by Andrew Leigh Possibly related posts: (automatically generated) An Apology to Our British Friends Obama Sends Churchill Bust…

Old Texican| 5.1.09 @ 3:12PM

Old Texican| 5.1.09 @ 2:34PM
I just sent this e-mail to the Whitehouse:
Mr. President
PLEASE QUIT KILLING OUR COUNTRY!

Just because you had a deserter for TWO fathers, quit killing our hopes for our grandchildren.
We are NOT going to desert OUR children and grandchildren.

May God (allah) forgive you if you do kill the last best hope on this planet.
...So when do I expect a "knock on the door" in the middle of the night?
(Secret Service guys, I can only hope YOUR oath to defend the constitution was not a lie.)
Kenneth W. Bean
Houston, Texas

If I don't show up here soon, please make sure my day in court is upheld. I am now on a "list". The bad guys will try to kill or silence me soonest. That's OK. I have lived most of my life in freedom and liberty. Unlike our President, I have only visited places where they still kill you, then eat you...literally.
Our President was deserted by not one...but two fathers. He is a psychological wreck. He has an invisible history...no college transcripts...no lecture notes...no lawschool notes no "lecturer notes" as a professor in Chicago.
I have just this moment..."crossed the Rubicon". There is no retreat for me. Please pray I have the right words and an ability to express them before I am killed...and eaten.
Best regards
Ken

Todd| 5.1.09 @ 4:18PM

Tom Paine has revealed himself to be the vulgar, hateful person he is, a very nasty troll indeed. I guarantee the idiot did not read the article but just read the title and drew his conclusion. If he had an open mind, he might have actually learned something from it but we know he is not interested in learning anything that does not go along with his leftist paradigm. This fool probably ordered his copy of Open Veins off Amazon after Chavez's presented his gift and thinks he is learning history instead of Marxist propaganda.

Once again, Bob rushed to the defense of Obama's economic team of which Volcker has been effectively shut out from because he clearly does not support a centrally planned economy like the rest of them. And what basis does Bob make his statement that they are relatively conservative? After Tarp, the forced merger of BOA with Merrill Lynch, nationalization of AIG, Citi, GM, and Summers overt support for Keynesian policies on steroids, that is beyond laughable. Did you or did you not say Bob that Volker would be a very important part of the team and would be a moderating influence on inflationary policy? I think all the evidence says the contrary. I will also mention that Bernanke and Paulson (with Geithner at his side) forced Ken Lewis to not disclose vital information on the merger to shareholders which is clearly unlawful but we know by now they are above the law.

It seems top me that Bob thinks high inflation is a good thing and we can spend whatever we want and pay it back much easier. It worked well for Germany in the late 20's and early 30's right Bob?

Todd| 5.1.09 @ 4:21PM

grammar correction, to me and not top me

Michael Tomlinson| 5.1.09 @ 4:24PM

Please save us from such nauseating apologies for narcissist BO and his tax cheating Treasury Secretary Timothy Geithner. Of course, these ego maniacs want to run everything. That's why BO made a veiled threat to governors and mayors and Geithner has brazenly threatened to takeover businesses that didn't even accept TARP funds if he determines it is in the best interest of the nation. Sounds like they not only want to run everything, but plan to.

This is a radical administration with little respect for the Constitution, laws and traditions of the US. The goal is simple to transform the nation's political and business system into an oligarchy run by Democrats even if that means destroying political and economic freedom. Call it fascism, socialism or whatever you like, but it is bad news for the US and freedom.

While I do believe a large segment of the American electorate can be stupid (they elected Obama) I hope self-interest will wake up enough voters to stop ACORN and the Democrat's naked power grab.

In 1980 after 4 years of an earlier Democrat messiah (Jimmy Carter) the American people seeing their standard of living decline said NO to Democrat inflation, taxes, government spending and sky rocketing unemployment. Hopefully, self-interest will see a repeat of history and BO's oligarchy will come crushing down in a resurgence of traditional American conservativism and patriotism.

ben| 5.1.09 @ 4:48PM

Bob| 5.1.09 @ 9:41AM
"By the way, we will see inflation increase -- there is no way to stop it. However, the author is also correct in stating that this will lower how much it costs to pay back this debt. The rate of inflation will exceed the interest rate on these treasuries -- and that is not a bad thing. "
------------------------
Inflation lowers how much it costs to pay back the loans because the money borrowed will be of less value. This increases the costs of production and the costs of goods. (what could you get for a dime in 1950?) This also means that your spending power decreases thus making you poorer. Look at all the "poverty stricken" millionaires in Zimbabwe.
This is definitely a "bad thing".

Bob| 5.1.09 @ 4:56PM

Todd, I see you've learned little about economics and your reading comprehension seems to be limited. Just as Keynesian policies are limited in their effect, trickle-down/supply side clearly has not worked either. It didn't work with Reagan and it didn't work with Bush. We have the numbers now and can prove those assumptions if you know how to normalize data and read graphical data.

What I have said, recognizing these shortcomings is that spending is stimulative, but at the end, you must ask if we got more back than we spent. I came out on the negative side of that. There were some spending items that were stimulative, and many others that were not. Certainly, in a down economy, you don't want to increase taxes, but over the longer term, tax cuts have not proven to be stimulative either. It is private enterprise that makes GDP grow, not tax policy.

Regarding inflation, I have said that there are both positives and negatives to inflation. Many people forget the positives. In the longer term, it is certainly better to keep inflation down as that strengthens the dollar. However, when you have increased debt at low interest rates, having moderate inflation will lower the cost of that debt. If the increase in inflation is higher than the coupon rate, then you are actually making money on your debt. That's why China has a huge fear of the current debt that they owe.

If you look at a chart of normalized GDP, you will see that the growth in our economy doesn't change much when inflation is high or low. That is simply fact. So, Todd, learn how to read the data yourself.

Bob| 5.1.09 @ 5:02PM

Ben -- you completely missed the point. Inflation is not an all or none proposition. Of course it is better to keep inflation low, but in our specific set of circumstances with the treasury rates low, moderate inflation will not cause a whole lot of damage because of offsetting positives and the fact that other countries are pumping capital into their economies. I am not advocating higher inflation as a policy -- I am just saying that moderately higher inflation over the mid-term is not going to hurt as much as people think. Now if the inflation level goes into double digits and stays there for a decade, we are certainly in trouble. However, from an econometric perspective, the odds of that occurring are extremely low. I have more faith in the private sector in the U.S. than it seems you do...

Todd| 5.1.09 @ 5:51PM

Bob,
As usual, you do not respond to what I said and make some arrogant insult but it is exactly what I expect from you. You make a crap statement like Bernanke, Geithner and Summers and relatively conservative and I asked you on what basis do you make such a statement. Compared with Karl Marx? And of course you ignored my question about Volker's complete marginalization by Obama and his team and the criminal acts under Bernanke along with Paulson and Geithner with the BOA and Merrill merger.

Your GDP argument is just complete rubbish, like it will just happen automatically no matter how intrusive and abusive the government is. By your arguments, the economy was just fine in the late 70's and early 80's nevermind double digit inflation rates which Volker under Reagan defeated. The stock market in the 1980's compared with the 1970's tells the story Bob however you spin it.

Now you stated it is private enterprise that grows the GDP and not tax policy. Do you deny that private enterprise is under attack under Obama Bob or do you deny the reality? The Cap and trade agenda will cause havoc in the private sector not seen since the price control policies of the New Deal. Does not having one of the highest corporate tax rates in the world negatively affect business and private enterprise since that is less money business has to invest? That is economics 101 Bob, less money sent to government to waste and to use to hire employees and capital expenditures. I have done cash flow models as a financial analysis so I know exactly the effect taxes have on a companies valuation and it is not small. If corporate tax rates were eliminated tomorrow, the stock market would rally like it never has before. Don't give me that garbage taxes do not matter because it is a lie. Corporate tax rate cuts would be real stimulus, not the fake stimulus we have been given now which we will all have to pay interest on.

Larry Summers cares nothing for private enterprise, the fact he peddles the lie of the government spending multiplier tells me everything I need to know about him. I cannot stand the sight of him, he is almost as ugly as that freak Paul Krugman and just as deceitful.

Independent| 5.1.09 @ 6:45PM

I linked here from Google news; it's my first foray and my last.

The article was well-written; some of the commentors were truly frightening. Bob obviously understands the concept of rational discourse, and makes and concedes good points. But then, Bob is not the majority here.

From the posts I can see that many are simply regurgitating misunderstands of buzzwords like fascist or socialist; others openly advocate for bloodshed and rebellion and civil war.

I'm glad, sirs, that you are American Spectators, and not participants. Please remain that way.

Alan Brooks| 5.1.09 @ 7:38PM

for the twentieth time, con/rightists are supposed to be mean, as libs are squishy and totalists are kill krazy.

this isn't a buddhist vegetarian pacifist site.

Bob| 5.1.09 @ 7:56PM

Gee, Todd, don't you know how to analyze data? Normalized GDP is the way we measure the growth of an economy -- not any averages of selected companies. You call an argument "rubbish" but provide no GDP data to refute that argument. Providing no trended data is truly rubbish. Furthermore, you don't seem to understand that stock values are unrelated to economic output. Lastly, the stock market grew faster under Clinton than Reagan. The reason GDP growth trends slowly over time is that business strategies are longer term in effect. When you make an investment, let's say to build a specific production line, you are doing it with the expectation of amortizing the expense of that line over a long period of time.

You talk about low business tax rates. You might want to take a look at the history of the Celtic Tiger. They lowered business taxes and for a period of time showed a lot of growth. However, that was like a Ponzi scheme as they needed to draw in more companies to pay for the services promised to the companies that were already there. As soon as that growth stopped, the Celtic Tiger has fallen apart. Specifically, when companies come to a place because of low taxes, they are the first to move out when times are tough.

So Todd, you obviously have little knowledge of economics, and it shows. My guess is that you have never had Economics 101, much less the higher level math to understand the underlying econometric data.

Now, from the studies that I've seen, I'd get rid of the corporate tax altogether and replace it with a consumption tax. There are several reasons for this, among them being able to get tax from goods produced in other countries and providing a disincentive for locating companies in tax havens thereby increasing the number of jobs in the U.S. Consumption taxes are much more efficient than corporate taxes in any event.

Todd| 5.1.09 @ 9:06PM

Bob,
GDP is just one factor in the equation Bob though very important but it does not tell the whole story. The negative effects of high inflation are not adequately displayed through GDP as it demonstrated in the late 70's with the stagflation experienced. I have shown that the US over the long-term has had much higher GDP growth than Western Europe because we have had a more market-based economy and therefore have a higher standard of living. I also gave you a chart showing that under Reagan, the stock market rose higher % wise than under Clinton. I will also add that Reagan's economic policies of lower taxes and regulations set the table for Clinton.

Lets watch how things unfold in Britain with their dramatic increase in taxes, it will not be pretty. Rich people with money to invest will take their money elsewhere and Britain is setting themselves up for an economic collaspe. Unfortunately under Obama, we are set to run the same course with the inevitable tax increases and lower GDP growth.

You are avoiding the questions I ask you Bob because you have no answer. You must be familar with the "crowding out" theory right Bob? There is a hell lot of crowding out going on now with all the bailout money and stimulus spending and making long-term investment decisions in today's economic climate is darn near impossible. When the government forces mergers and keeps vital information from stockholders and changes the rules of bankruptcy laws for political reasons, who can make any long-term investments with any certainty? We have Obama's "brilliant"economic team to thank for that and I do not see a rebound in GDP growth anytime soon under these anti-market policies.

Back to economics 101 for you Bob, with a reduced tax burden on private enterprise, GDP growth will obviously benefit as that extra money is invested in growth in jobs and profitablity. And of course lower personal tax rates will increase disposable income and money to invest, further growing the ecomony. And of course, the stock market will do very well under such conditions. Over the long-term Bob, the stock market and GDP growth go together though there can be quite a bit of variance I have taken lots of economic courses above the 100 level but I am not writing a dissertation here. Your theory of taxes having nothing to do with the growth of the economy is just plain bunk, I certainly never was taught anything like that in my numerous economic classes and is just plain dumb. Maybe you should publish your brillaint economic theories Bob if you are so convinced you are right.

Answer me this one question Bob, do you actually believe in the multiplier effect for government spending being above 1 like your hero Larry Summers tells us? I can get numerous economic studies that prove otherwise whatever that troll Krugman thinks. It is a scam to increase the power of central planners like themselves since power is what they are after.

I will agree with your last paragraph though I think we would disagree very much on what the level of the consumption tax will be since you believe in a big government nanny state and I do not.

Todd| 5.1.09 @ 9:55PM

I came across this on espn's website about Larry Summers which I enjoyed. For those who frequent espn, this was written by Gregg Easterbrookin in his TMQ article. Easterbrook is a liberal as his praise for Axelrod indicates but I think he nails Summers and Harvard rather well.

He Got $135,000 For A Speech, And We Bet He Didn't Even Have an Opening Joke: A rule of news management is: When you have something bad to announce, announce it Friday evening, because Saturday's newspapers are the least-read of the week. Early this month, at 10 p.m. on a Friday night, the White House announced that in 2008, presidential economic adviser Larry Summers received $2.7 million in speaking fees, almost all from Wall Street and banking firms now being given taxpayer bailout money. Summers also received $5.2 million as an adviser to a hedge fund that has not been bailed out. Considering Summers is a poor public speaker -- I've twice been in the audience to hear him drone on with vague generalizations and statements of the obvious -- plus considering most of his economic predictions of recent years have been wrong, it is very hard to believe Summers' speeches actually were worth $2.7 million. Summers, the White House says, gave 40 speeches last year for an average fee of $68,000 -- which makes him one of the highest-paid speakers ever. And I can assure you, he is at best a below-average public speaker.

"If you pay me $135,000, I will mumble a few vague generalizations."Goldman Sachs paid Summers $135,000 for a single talk, the kind of speaking fee normally reserved for ex-presidents. Such an absurd fee, conveyed when Summers was known to be consulting with likely future president Barack Obama, sure looks like a polite gratuity conveyed in the hopes of future favors. The Wall Street companies hiring Summers to speak probably didn't want to hear him drone on; more likely, they wanted his good will if he got back into a high government post. (Goldman Sachs has received at least $13 billion in bailout money, via AIG.) How can Summers possibly be allowed to participate in decision making involving Goldman Sachs, or any financial firm he's received a "speaking fee" from?
Late that Friday night, the White House also disclosed that Summers, a former president of Harvard, received $587,000 in teaching salary from Harvard in 2008. This surely makes Summers the highest-paid professor in world history. How could Summers possibly have done $5.2 million worth of work for a hedge fund, and traveled the country to give 40 speeches, and done $587,000 worth of teaching at Harvard? Tuesday Morning Quarterback reiterates a longstanding cause: Harvard alums, stop giving to Harvard! Give to any of the hundreds of fine colleges where your money can make a difference. Don't give to Harvard only to have your money lavished on a wealthy "professor" who's busy somewhere else doing something else. Elocution note: Summers might be a highly paid dud as a speaker, but TMQ heard Obama political adviser David Axelrod speak last week at Colorado College, and Axelrod was terrific -- funny, charming, substantive. How much was Axelrod paid for his speech? Nothing! Maybe there is a law of nature: The more a speaker is paid the worse the speech, and vice versa.

Grant| 5.1.09 @ 11:29PM

Everything Pres. B. Hussein Obama does was shaped during the time he spent as a lad with Frank Marshall Davis. (You have to go a little deeper than the Wiki article to uncover the paedophilia.) Or, maybe it was the time in the Indonesian Madrasah. Or, for that matter, maybe it was Pres. Obama's journey to Pakistan on a foreign passport. All three, maybe?
I guess it doesn't matter which one, does it?

Woody| 5.1.09 @ 11:35PM

Economics, shmeconomics!
What really matter is who was that guy on Air Force One over NYC, and who was that little girl if she wasn't his daughter? What could he have possibly done to get a perq. like that from POTUS?

aware| 5.2.09 @ 8:53AM

Bob since you love your charts and graphs, look into the late 1929 to mid 1930 economic data. After the crash of Oct. '29 by late spring '30 stocks had regained 70% of their value, some businesses were hiring, and the experts were saying a recovery was underway. What they did not reckon on was the effect of government anti-recession measures.
If you compare the Panic of 1919-1920 with the Great Depression you will see the major difference is how the Federal gov. responded, or in the former didn't respond. The first was over in a year and a half and the latter lasted till 1946. My point is the response has a worse economic effect than the crash.
Inflation is not rising prices, it is the increase in monetary supply. Only the money supply can be inflated, rising prices across the board are the result of inflation. That is why if one commodity doubles or more in price it does not spark an across the board increase in all related prices, as we saw with oil last summer. Consumers cut back on other things to make up for the high gas prices and so cancel any trend for higher prices economy-wide.
To get across the board price increases something has to happen with the medium of exchange, i.e. money. Only the central bank has this ability as it can increase the money supply at a whim. Again run away prices are the result of inflation but the inflation itself is the increase in the money supply. This is exactly what causes bubbles in the first place and the bust is always proportional to the boom that precedes it. Hence the central bank is what drives the boom/bust cycle.
As far as the intelligence of the players involved goes, I am a 142 I.Q. but that hasn't stopped me from doing very stupid things, and probably won't in the future. I have a friend that is a 160 and his personal life is a series of very stupid moves. Sometimes the only real result of intelligence is an increase in arrogance.
Central planning of an economy is impossible but that doesn't stop smart people from trying no matter the consequences. In a true free market the consumer drives production and that is the only way that the buyer can get what they want. The planners or producers cannot fill this role no matter what their intelligence or plan.

Also Keynes General Theory is NOT an economic work, it is a political philosophy to grow State power and State control of the economy that masquerades as an economic theory. This is why it is popular with the ruling elite. It erects an artificial wall between micro and macro economics that fails to take into account individual action at the higher level and so is flawed as an economic theory. But to grow the State it is solid gold.

Bob| 5.2.09 @ 11:26AM

Todd, you don't know what you're talking about. The chart I showed on GDP was adjusted for inflation. So your argument against GDP is moot.

Regarding long term investment decisions by companies, I can see you've never been involved in any of them in real life. When you make a capex decision, it is based upon the product, market, and competition. You know that with any longer term decision, you will go through economic cycles so economic variants play a minor role in such decisions. Not only do you need to attend Econ 101, but you also need to attend Business 101.

Again, you make a statement about GDP growth with NO DATA. Presenting theories without corroborating data is like believing in intelligent design. If you had ever had Econ 101, you'd be up to your neck in data. That's how I know you've never studied economics -- you don't use data. And by the way, market indexes are also affected by inflation. It looks like you didn't consider that, did you?

You said that stock markets and GDP go together with some variance. Yes, and the variance is primarily in the stock market, not the GDP. That's because GDP depends upon consumption and production which is not dramatically affected by the gambling on stocks or market manipulation -- or for that matter, the extreme effect of bubbles. That's why you don't look at market indexes for economic growth. Why don't you check with the economists at the Heritage Foundation for your theories on how the market is a better indicator of economic growth than normalized GDP (which you don't even understand, obviously). Perhaps you can even find some market charts there? Good luck...

As to the multiplier effect, from a pure economics standpoint, that is difficult to prove either way because of the timeframes involved and the measurement tools. As an aggregate measure, however, we can say with relative certainty that tax cuts over the shorter term are NOT stimulative. It is more difficult to say that when you are talking about the level of taxation over more than three decades, however. But the data there is far more limited. If you understood data, you'd see the point. But you don't....

Aware -- I am in basic agreement with your statements. This is exactly why Todd is wrong about markets representing economic growth. I have some disagreement with what you've said about bubbles, however. While monetary policy does affect bubbles, the major factor is "irrational exuberance", i.e., money chasing higher returns thereby creating more demand pushing the price artificially higher. All bubbles also have risk attenuation whereby origination and effect are disconnected.

With regard to central planning, it is necessary at some level. Total control is virtually impossible, but elements such as electrical grids, interstate highways, military/national defense, etc., are necessarily centrally planned events.

With regard to Keynes/Supply-Side theories, both of them are really political and not truly economic in nature. The proofs tend to be anecdotal and not scientific.

DaveS| 5.2.09 @ 12:58PM

Gee, Tom Paine: your vulgarity makes the point - for your opponents. Insofar as our Prince President is concerned, he has no opposition from the so-called MSM part of the 'free press' anymore.

Chrysler-Fiat is going down, and only new legislation will save it against Ford and the remnants of GM. If I buy a car this year (90% chance) I guarantee you it will not be Chrysler and a 1% chance it will be Government Motors. In a much earlier posting I asked if the North American General Managers of Toyota, Honda, et al, were going to testify in front of Congress in December- or why they wouldn't - and it is clear THEY and their American employees do not factor in the equation. Now, updating to today, has anyone asked Ford and its bondholders what they think of the Chrysler - I mean UAW - fix? The same UAW works at both companies and I can see the UAW boss pressing to make the situation uniform across the Big Three. Ford must to this day be privately grateful it did not take a single funny money dollar.

None of this approach has ever worked before, but remember that success is not the endpoint for BHO - it's transformation. Lastly, if I were a big-city mayor, I'd be counting down the days until I didn't have this dope threatening me.

Curtis Rasmussen| 5.2.09 @ 10:37PM

Total Insanity.

http://www.breitbart.tv/html/330913.html

Socialists can run anyone out of business as long as they make the rules.

Pingback| 5.3.09 @ 7:32AM

The National Socialism of Obamanomics links to this page. Here’s an excerpt:

…He warned recently, “We’re in a government-dependent financial system; I never thought I would live to see the day.…We’ve got to fight to get away from that.” The ghost of Hjalmar Schacht must smile. Read More Share and Enjoy: Related posts: The Masters Challenge at Delaware National Country Club Do you like golf? You may not have made it... GEL REALLY BIG PICTURE: Following our National Debt Here’s a…

Roberts Howard| 5.3.09 @ 8:55AM

Unlike the august company of trained economic historians and planners who have thus commented, I can make no claim to being much more than a person who can read an article all the way to the end and appreciate the content. I found this article to be thought-provoking and very instructive. It brought up facts and perspectives I had not considered. I shall re-read the article, offer thanks to Mr. Srodes for his insights and leave the rapid, reflexively delivered commentary and critiques to the panjandrums the Internet produces. One wonders, how this nation could ever get into any difficulties when we have so many brilliant minds as represented here.

aware| 5.3.09 @ 1:25PM

Bob, sorry for the delay but I always like to consider your points before replying. With bubbles, in order for the "irrational exuberance" to take place the bubble must exist first in order for there to be an object for this exuberance. And this attribute is always seen in the later stages of the bubble, the base of the Ponzi pyramid is broadest at the moment of collapse. The exuberance is an effect but not the cause of the bubble. As I said before it is the Fed that sets out the bait that attracts the victims. A commodity based monetary system would prevent this from happening because the commodity can't be created out of thin air by fiat. A period of REAL SAVINGS would have to precede any credit expansion, which means more modest and steady investments. The period 1870 thru 1910 is a perfect example of this in America.A true freemarket resulted in steadily falling prices. With a strong, commodity based (gold and silver) currency, it gave one of the only examples of real increasing standards of living and innovation that is sustainable.

Borrowing is like spending the future now but it can't be sustained so there always comes a "gap" as reality asserts itself.

As to the two schools of economic theory, it is a false argument for the very reason you point out, neither is a bona fide economic philosophy. Like watching two wrestlers in a boxing ring it doesn't make sense cause neither is what it pretends to be.

The only real economic school there is is the Austrian, or so called. They predicted this and other economic problems in the past. On the basis of these accurate predictions I tend to listen to them and find their understanding of the market to be better because they did not start with a political bias.

Bottom line, I believe that this and other problems in the economy to be mainly the fault of the Federal government. Did others contribute to the meltdown? Absolutely! But to grill stupid executives about "mismanagement" with hundreds of millions in private market money while they oversee the criminal mismanagement of tens of trillions of public money (not to mention THEY created the environment and had 9[!] Federal agencies riding herd on the rotten scoundrels the WHOLE time !) to be more than hypocritical. It smacks of straw men, of scapegoating, and is the mark of moral bankruptcy. We wouldn't put up with that in our personal relationships, but when it comes to the pronouncements from on high from the apparatchiks of the State, we respond with a deference to their good will that borders on reverence. but you already know my anti State attitude so I won't go into it.
As an illustration, they went down the road to this debacle to"make home ownership more affordable", and yet now they are doing everything in their power to stop deflation in home prices! Doesn't lower house prices make ownership more affordable better than anything? So they are pulling both ends of the rope and in futility because economic reality is still deflating these prices anyway cause they are still overvalued. Another circular waste of time that consumes hundreds of billions of dollars that has been removed from the private economy and all of our pockets. And they do hundreds of things just like this and show the real propensity to double down at the drop of a hat (or Dow). Every dollar spent by government is an example of 70 to 80 cents wasted.
By the way I'm not an economics or history degree holder. Or any other type, just curious and self taught so take what I say with a grain of salt:)

Bob| 5.3.09 @ 2:18PM

Aware -- If you look at the history of "bubbles", it is NOT true that they must be known to exist before they form. What you do is to look at the potential of bubbles to exist. Here's a chart of home prices in the U.S.

http://www.investmenttools.com/median_and_average_sales_prices_of_houses_sold_in_the_us.htm

You'll notice that by 2003 the potential for a bubble existed and by 2004 the probability increased significantly. By 2005, any rational economic observer would call for irrational exuberance. In retrospect, we can see that the bubble actually began in 2001. However, the actions that caused this rise actually started in the early 90's with the growth of securitization.

I agree 100% that the Fed (with Greenspan) was a big part of this (and he should have known better). But I don't consider the Fed a part of politics so I don't group it with the rest of government. As the Fed eased credit, it lowered bank risk and thus made it more profitable to lower lending standards.

Adding to this bubble was the growth of Alt-A mortgages. Their growth coincides with the bubble. Interestingly enough, it was securitization that led to the growth of Alt-A mortgages. The lending argument (and I saw this personally in my company), was that the price of homes was continuing to rise, so defaults would not lead to lending losses as you could resell the home and get back most, if not all, of your money. We expected higher default rates on Alt-A mortgages and that factored into the equation. The decision to put these, and also 110 and 125 mortgages, out HAD NOTHING TO DO WITH THE GOVERNMENT. It had everything to do with hedge funds and private investors achieving higher return rates on mortgage backed securities. Given the low treasury rates, even if they entailed some risk, most wealthy investors and sovereign funds thought is was worth it.

I don't think business was solely to blame for this. Certainly profits (also known as greed) played a role. But it could not have been done at all, even with government pushing, without risk transference from the originators to the purchasers of securitized debt. Believe me, the companies that I worked for could not have cared less about the CRA, Frank, Dodd, and Fannie/Freddie. They did not enter our calculations. If we though we could increase profits while having little risk, we did it. Besides, with the Fed loosening credit, it didn't make sense to hold the debt because origination was the name of the game and the more debt we held, the less origination we could to.

Unless you actually worked in the industry, it is easy to blame government for this because most people don't know what a mortgage company profit statement and lending analysis looks like. But if you were involved in this kind of banking, it is really hard to blame government for pushing this kind lending.

The solution to this is relatively simple -- have realistic capital requirements (i.e., lower leverage) and have originators take some responsibility for the loans they provide. Yes, this is more regulation, but I'll tell you now that if we had to take responsibility for the debt we had created, our lending standards would have been much tighter. Our CFO used to laugh at the people who purchased our CDO's and couldn't believe the ratings they achieved from Moody's and S&P. But as long as they did, he was going to create as many of them as he could. After all, he needed to improve his quarterly results -- right????

aware| 5.3.09 @ 4:34PM

Bob, I may be confused, but in saying the potential for a bubble existed in 2003 ( I would in fact say it DID exist then) and that no one could deny it by 2005 and then say "rise actually started in the early 90's " aren't you agreeing that the "irrational exuberance" is more effect than cause?
The cheap money has to be available for the exuberant to become irrational, and lots of it!

I won't pretend to know the details of the investment business, so I defer to your opinion on these details. You seemed to have studied these and I tend to accept your judgment as to the short comings of this sector.

I do consider the Fed part of politics. It is the mechanism that hides the true cost (money wise) of government. By the use of bonds and other forms of borrowing it is able to "buy now and pay later" which leads many to believe there is no bottom to their pockets and that any program or action can be undertaken without any real consideration of the cost.
This is carte blanche to the professional political class who then hand out all kinds of public largess in order to be elected. The Fed, in essence, allows the central government to operate 1/3 to 1/2 more government than can be paid for at any given moment. This is another example of how they spend the future now. After all, in this case the people who will pay for today's bridge or plane don't have the benefit of even being a "constituency" so why not. To me , again the signs of moral bankruptcy. Fed financed moral bankruptcy.
What I humbly submit is that the Fed is a political entity with economic powers. And the arbitrary use of those powers, especially monopoly control over money supply and interest rates, is the cause of the boom/bust cycle.
Once the Fed sets the stage thru cheap money and credit, as you say back in the 90s, well I leave to you as to how in your particular field the madness ensued. There was a time when a business's primary purpose of giving value, honesty and good service for a fair profit would keep intelligent managers from having to beg for more State overseers to "stop me before I kill again!"

Businesses that operate to maximum( not "maximize") profit which leads them into moral hazards like this deserve to go bankrupt and they most assuredly would if not for tax payer funded State bailouts given to the favored few. Notice how you don't hear much Ford these days but a lot of GM and Chrysler. It will be interesting to watch how this plays out and should, but won't, settle the argument over State "helping" vs freemarket's creative destruction.

With the greedy, like the smug boss you describe, a real freemarket would be visiting their worst nightmare on them even as we speak with bankruptcies and liquidations and seizures, even the poor house. If I accept the premise of consuming greed wouldn't the real threat of seeing it all gone be the best stick to hold over them?
But action by the government is preventing this and sparing guilty, except isolated examples like Madoff. And they are trying to re inflate the credit bubble that just blew up! As a cure!

It becomes more a farce everyday! Natural law is a better manager of the course of human progress than this endless rule of the day/crisis (that again!) regime of today. No matter the great intentions, the end result of this seems to be preventing people from suffering the consequences of their own actions. And allowing them to carry on doing as much damage as possible. I may be harsh or even wrong in my assessment but if I'm right or even partly right this is a serious because rewarding wrong doers means you are going to get a lot more of it. And we are just talking economically! State fingerprints can always be found on the blunt instrument.

Sue| 5.3.09 @ 6:51PM

It's Carter and Nixon all over again; only this time the outcome will be a lot worse since 72 million of us are eligible for s.s. and medicare now. Where oh where is the money to come from? Fiat money? Worth nothing? That's probably what Obama has in mind. Then, the rationed health care for the baby boomers, he thinks that will get the Country off the hook; the liberals were planning on taxing the inheritances of the baby boomers, but with the stock market meltdown, that's a lost cause. Where oh where will the money come from? No one really knows. They are all flying blind and we're going to be "blindsided."

SPB| 5.3.09 @ 6:59PM

Reductio ad Hitlerum

Sordo| 5.4.09 @ 2:00AM

Old Texican, get a life. Pretending Obama is a Nazi doesn't make him one.
If you'd paid attention to the Conservative media instead of blankly staring with drool dripping down your mouth while you soaked up Sean Hannity or Rush Limbaugh's b.s. you'd probably notice that they're the real Fascists out there... imagined threats of socialist take overs, the need to sacrifice liberty and civil rights to protect against enemies that they can't point out for us except with the conveniently vague term "terrorists", or the hope that our elected government will fail so that people will become just desperate enough to put in place a tyrant who will keep their wallets fatter than the Bush administration could ever have dreamed. All of those are ideas Goebbels promoted to get the Germans checking "Nazi" at the ballot box. So why don't you stop pretending that the American people didn't legally elect him, recognize that it was the Bush administration who put us into this mess, and Keynesian economics has a much better track record than the deregulation nonsense that the Republican Party just won't give up on.

Marc Jeric| 5.4.09 @ 10:03AM

Things would get much clearer if we just rename our Democrat Party like this:
"Amerikanische Nazional-Sozialistische Arbeiter Partei".
This whole mess would immediately become as clear as "l'eau de roche", as the French are wont to say.

Old Texican| 5.4.09 @ 11:51AM

Dear Sordo
Nice appelation by the way.
Unless you are hopelessly uneducated, you know very well the results of ANY form of too powerful, too intrusive government.
Forget labels for a moment.
One day, if you want a choice of jobs other than another mindless bureaucrat, you will learn that the hard way.
Until then, best of luck!

Tony in Central PA| 5.4.09 @ 1:08PM

Not much discussion about the big difference this time versus 1929, which is our staggering national debt. I saw a 2007 CBO projection showing our government unable to meet its obligations between 2030 and 2040, and many regarded that as conservative at the time. After TARP 1, TARP 2, the $787 billion Trojan Horse Stimulus bill and whatever awful budgets Obama will pile up to follow Bush's awful budgets, I'm sure the day when our government can no longer pay the interest on its debt is soon approaching. I don't believe for one minute that we can print money to get out of this.

ARealist| 5.4.09 @ 2:04PM

Let's see; an asset bubble caused by the over accumulation of debt - consumer and govt. - fueled by copius quantities of cheap money courtesy of the Fed, China and Japan (the carry trade) and Wall Street greed, has burst; leaving those who have accumulated this debt in a deep hole; consumers, financial institutions and the federal govt.

The solution;

have the govt borrow trillions of dollars they do not have (just run those presses) in an effort to re-ignite consumption and maintain asset prices above those that the market will bear.

By some miracle that escapes me , we are all supposed to be OK with this because we have esteemed economists running the show- or at least utilizing their theories - (minus Volcker - he is merely being used as eye candy) from Harvard, Princeton, Cambridge, MIT, Oxford, etc.

The same genius economists that - with precious few exceptions - did not at all see the approaching train wreck, that disagree about the root causes of the Great Depression, that disagree about the best way to solve the mess in which we now find ourselves, that disagree about the efficacy of FDRs New Deal, that disagree about which tax rates will maximize economic growth AND also maximize revenues, that cannot predict interest rates one year out, that cannot predict the onset of a garden variety recession until the economy is well into a recession, that ALL deemed stagflation an impossibility until it actually happened, that never think, for one moment that when reality differs from their theory or pronouncements, that perhaps, just maybe, their theories are all wrong, that gave us the horrid inflation of the 70s (until rescued , albeit painfully, by Volcker), and that insist folks behave rationally in matters financial or economic despite the fact that irrational behavior is extant in ALL other human activities, that propose economic palliatives that, by some miracle, mirror the political ideology of the economist who is recommending a particular policy (imagine if the speed of light varied depending on a physicist's politics !!) , and that have an absolutely dismal record since 1929.

Yes, I know, it's NOT the economic theories that are wrong, it's the REALITY that's wrong.

Yes, I just convinced myself that all will be OK.

Just borrow and borrow and borrow, supported by printing and printing and printing. After all, when deeply indebted nations run the presses with abandon, history has demonstrated conclusively that all will be OK and that, under the guiding light of esteemed economists, a new Great Depression or Weimar Republic can be avoided.

Ah, yes, all will be OK.
I feel so much better know.

All brought to you courtesy of a govt. - the US Govt - that is the most indebted in the history of the world (after you add in un-funded liabilities of medicare, social security, a busted FDIC, a busted federal pension guarantee agency- just for starters).

Economic "science" is nothing more or less, as best described by the great physicist, Richard Feynmann, than a "cargo cult science."
(Look it up.).

Economics went to hell the day its practicioners adopted (more precisely, mimicked) the formalism of theoretical physics or mathematics; utilizing "proofs" and "theorems" to somehow describe the behavior of people going about their ordinary business. Of course, by "assuming" rational behavior, you can use the math.

What happens when the behavior is irrational. Well, simple, you IGNORE IT, and keep using the math.
What if the real world is, literally, too complex (as in complicated, not as in a complex number)?
Well, you simplify the analysis to assume away any problems that render the problem mathematically intractable, and , voila, you have a proof !!
Perfect !
What if the proof describes a fictitious scenario?
Well then, it's reality that must conform to the obviously correct proof.

The economic disasters that have occured post 1913 - the inception year of the FED- have been no less diminished as compared to the economic panics prior to 1913 (and some of those were real bad too).

I know I must be an economic ignoramaus to think that printing trillions of dollars and borrowing trillions of dollars you cannot afford to borrow, will not lead to prosperity and real economic growth. That saving and investing is the true path to prosperity. That having a stable currency is desireable. That no individual, no agency, no corporation and no govt. can spend it's way to true prosperity.

Geez, I wish I was not do dumb.

Old Texican| 5.4.09 @ 3:10PM

ARealist
Thank you!
I had to laugh to keep from crying.
You laid it out about as simply as may be.
Again, thank you!

Robert Rosencrans| 5.5.09 @ 7:09AM

Someone made the one dimensional comment that if Obama is wrong he loses, presumably the next election. The actual fact is that if Obama is wrong we all lose, our shirts. Correction made.

Trackback| 5.5.09 @ 10:51AM

出会い系　巨乳　近所, on 東京のセフレ, links to this page. Here’s an excerpt:

出会い系サイトでタダでＨをする方法念のためフリーメールを用意。Yahoo!のメールが無料で登録も簡単。infoseek、goo、livedoor、Exciteも人気。フリーメールで登録できる無料出会い系サイトを選ぶ。まずは大攻勢をかけまとめてどん...

Allen Williams| 5.5.09 @ 12:45PM

Obama's socialist economics fits right in with the Bilderburger's push for global government. . following that old familiar playbook move of.. 'first create a [chaotic] economic situation and then offer a solution that wouldn't be accepted otherwise.'

Welcome to the Bilderburg New World Order, Oberfuerher Kissinger sends his greetings...

Trackback| 5.5.09 @ 5:50PM

巨乳　出会い系　巨乳, on 広島のセフレ, links to this page. Here’s an excerpt:

出会い系サイトでタダでＨをする方法念のためフリーメールを用意。Yahoo!のメールが無料で登録も簡単。infoseek、goo、livedoor、Exciteも人気。フリーメールで登録できる無料出会い系サイトを選ぶ。まずは大攻勢をかけまとめてどん...

Trackback| 5.12.09 @ 2:40AM

無料　メル友サイト/無料　メル友サイト, on 人妻との出会い, links to this page. Here’s an excerpt:

結婚後の夜の生活に満足しない、そんな女性が数多くいることをご存知ですか？　この傾向は、実は、経済的に恵まれ、何不自由ない生活をしている20代の奥様に多いのです。ご主人が多忙だとか、年齢が離れすぎているとか、理由はさまざまですが、半年や1年以上あっちの方...

Ken Pitts| 5.22.09 @ 1:16PM

Re Alan Brooks: Nice moron yowp. Do you have anything informative to say?

出会い系| 5.27.09 @ 5:06AM

無料出会い系サイト-Google版-では安心の出会い系を無料でご紹介♪

Pingback| 7.17.09 @ 11:29PM

Barbara Boxer Represents Democratic Party – A History of Bad Politics and Acts of Non links to this page. Here’s an excerpt:

…of the Democratic Party, which has certainly become the majority – disenfranchising true liberals into retirement or changing political membership – who are determined to turn an American form of a socialist nation and adhere to constitutional law only when it suits them or can be used as a tool to quell opposition (like their constant abuse of the freedom of speech amendment) andinstall judicial…

Lingerie| 9.12.09 @ 11:10PM

sexy lingerie wholesale lingerie

mimi| 12.14.09 @ 10:57PM

cheap watches

guo| 7.1.10 @ 5:04AM

www.wmvconverterformac.com

yanyan| 10.10.11 @ 1:13PM

I just wanted to leave a comment to say that I enjoy your blog. Looking at the number of comments, I see others feel the same way! Congratulations on a very popular blog.mesothelioma attorney

balcuizar62| 10.12.11 @ 9:42PM

. while searching in Google came to know about your site. I was searching some information. I certainly love reading all that is written on your website.
yaz lawsuit

rechie| 10.24.11 @ 9:56AM

this page is really useful for studying american history, when i see this lot of information we gather. thanks for the author.

ruth| 10.17.11 @ 10:59AM

his was actually what I was looking for, and I am glad to came here! Thanks for sharing the such information with us

silver spot price

fiance visa| 10.17.11 @ 10:04PM

Yes, the main aim is for webmasters to submit their sites to gain links and hopefully higher ranking on the search engines. Hope this answers your question, I am kind of new on the forums and still trying to gain knowledge.
fiance visa

creamer| 10.19.11 @ 9:30PM

I am a newbie and your success is very much an inspiration for me.
Actos Lawsuits

L Tod Schlosser| 11.4.11 @ 1:21PM

He got what he deserved. They said a good CEO doesn’t grieve.” After the death, a gun safety briefing was held.
L Tod Schlosser

devourment| 11.4.11 @ 2:37PM

Nice information, many thanks to the author. It is incomprehensible to me now, but in general, the usefulness and significance is overwhelming. Thanks again and good luck!

L Tod Schlosser

PIERCE| 11.8.11 @ 3:20AM

To begin with making money together with your blog, initially use Google Adsense but gradually as your traffic increases, keep adding progressively more lucrative programs to the site.
filipina girls

chester| 11.11.11 @ 2:08AM

This is another really very amazing and interesting post. You have provided the post that is directly related to our interest. Thanks for this post.
zoloft lawsuit

The American Spectator