Browsing the archives for the Economy tag.

Dow 36

Economy, Funny, Politics, US Economy, US Politics

Noting that Kevin Hassett, of Dow 36000 fame, is now director of economic policy studies at the conservative American Enterprise Institute and confidently proclaiming his neo-Hooverite recipes for tackling the financial crisis, Neil Sinhababu of Donkeylicious sighs, “I guess it’s kind of like the Iraq War, where you can give really bad advice and still hold onto an awesome think tank job.”

Which leaves us, he adds, only with the power of satire. Crude satire, to fit crude stupidity. Here’s Neil’s reworking of Hassett’s now-notorious book – and here’s mine:

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A bit of grin and bear it, a bit of come and share it

Economy, Politics, US Economy, US Politics
Soup line, part of Franklin D. Roosevelt Memorial (Image used under CC license from Flickr user gamillos)

"Soup line", part of Franklin D. Roosevelt Memorial (Image used under CC license from Flickr user Gabriel Millos)

If the erupting economic crisis hasn’t already led to soup lines and double digit unemployment, Kevin Drum argued yesterday, it is only thanks to the safeguards that were put in place since the crash of 1929.

Without Social Security, Medicare, unemployment insurance and deposit insurance; without the Treasury pumping capital into the banking system and the abandonment of the gold standard, we would already have reached that point.

So “thanks, FDR,” Drum writes*, “thanks, modern mixed economy” – and thank you LBJ as well, Eisenhower too, and all their counterparts here in Europe for that matter. Add those to your reasons to be cheerful. If it had been up to the Goldwater-Reagan ideology, this crisis would already have incurred much more suffering.

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* Though it’s an interesting afterthought that Roosevelt, “concerned about the moral hazard” involved, actually opposed creating the deposit insurance system, along with banking industry groups. Seems like the idea actually came from his left: he thought it went too far and even threatened to veto the legislation.

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Taking a moment to realise how different it could have been

Economy, European Politics, Politics, US Economy, US Politics, World Economy

This is Josh Moulitsas-Soros, acting CEO of Observationalism.com.

Most readers know that the views expressed on this blog are…

OK, just joking.

Ezra Klein uses the progressive blogosphere’s shitstorm in a teacup of the day to reflect on the agenda of the Third Way think tank, and how events since 2004 have overtaken it and made it irrelevant. It’s a good way to consider just how different things could have gone – and while we’re at it, to consider the looming reversal of roles between US liberals and European lefties.

It’s just four years ago, when Third Way was announced on November 11th, 2004, that this seemed like a good idea:

This was a week after John Kerry lost the presidential election, and the young organization was sold as a DLC for the next-generation. “As Democrats continue to stagger from last week’s election losses, a group of veteran political and policy operatives has started an advocacy group aimed at using moderate Senate Democrats as the front line in a campaign to give the party a more centrist profile,” wrote The Washington Post.

In other words, Third Way was formed under the theory that the Democrats’ problem in 2004 was that they were too far to the left, and as such, had lost middle class voters. The organization focused on upper middle class voters and followed the Mark Penn strategy of machine gun bursts of small, bite-sized policies meant to attract professional whites and rural voters.

Ezra does a good job in briefly sketching how quickly the Third Way’s strategy became an anachronism:

This year, Barack Obama was, on domestic policy, the most moderate of the major Democrats, which put him substantially to the left of every major Democrat running for president in 2004. His health care plan was more universal than Gephardt’s, his Iraq plan was more aggressively focused on withdrawal than Dean’s, and he was a black liberal from an urban center. Clinton and Edwards ran on similar platforms. None of them bore any obvious resemblance to the office park bait Third Way advocated. [..]

Third Way [..] were built as the vessel for a particular argument about the path to a Democratic resurgence, and their side of that debate lost. [..] Democrats have won atop something like the opposite of their advice and very different from their predicted majority coalition, which may explain why they’re acting so defensive.

All of which provides a good Zen moment to consider, even amidst my kind of bellyaching about Obama’s appointees, the blessings there are to count. You could have ended up with the Third Way recipe. Instead, the Democratic Party’s has moved left even as it gained political dominance.

This doesn’t just hold up in comparison with what the future looked like in 2004, either. Take the 850 billion euro economic stimulus plan the Democrats are preparing. That’s 6% of America’s GDP, more or less. Now compare the €200-billion stimulus plan that EU leaders eventually agreed on last week that involves the member states pumping the equivalent of 1.5% of GDP into their economies.

Alternatively, consider the £20-billion British stimulus package that Gordon Brown is proposing. On the eve of the EU summit, it stirred the German finance minister into a frenzied tizzy in Newsweek about “tossing around billions,” a deplorable “breathtaking switch” to “crass Keynesianism,” and the “breathtaking and depressing … speed at which proposals are put together .. that don’t even pass an economic test” – and that’s a plan that involves, if I’m getting the numbers right, all of 1.6% of British GDP.

Basically, after years in which European lefties like me groaned about a Democratic Party so milquetoast it would be a right-wing party in our countries, we’re suddenly faced with American peers who are moving more boldly to tackle the economic crisis than any EU government seems able or willing to do. While Obama’s party appears to be prepping a rapid shift of perspective to rediscover the wisdom of Keynesianism, the European governments are shackled by the EU’s deficit rules. It might not be long before we actually cast a jealous eye on those American peers we disdained just a few years ago.

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What’s with the horsemen?

Economy, Politics, US Economy, US Politics

After I passed on John Judis’ take on the auto bailout here, we had a bit of a discussion in the comments section. So who could sketch my amazement to see, via TNR, that Bill Kristol – that Bill Kristol – gets it. Here he was, last Monday:

Last week, Senate Republicans picked a fight with the U.A.W. on union pay scales — despite the fact that it’s the legacy benefits for retirees, not pay for current workers, that’s really hurting Detroit, and despite the additional fact that, in any case, labor amounts to only about 10 percent of the cost of a car. But the Republicans were fighting Big Labor! They were standing firm against bailouts! Some of the same conservatives who (correctly, in my view) made the case for $700 billion for Wall Street pitched a fit over $14 billion in loans for the automakers.

There is, of course, plenty in his column to take issue with as well. But there don’t seem to be many nits to pick with this summary:

So Senate Republicans chose to threaten to filibuster the House-passed legislation embodying the George Bush-Nancy Pelosi deal. The bill would have allowed President Bush to name a car czar, who could have begun to force concessions from all sides. It also would have averted for now a collapse of the auto industry, and shifted difficult decisions to the Obama administration.

Instead, Bush will now probably have to use the financial rescue funds to save G.M. [..]. And Senate Republicans now run the risk of being portrayed as Marie Antoinettes with Southern accents.

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Damn right

US Economy, US Politics

Read John Judis on how the Republicans torpedoed the auto bailout.

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What We Can Learn from the 1979 Bailout

Economy, Politics, US Economy, US Politics

Almost thirty years ago, an automotive CEO appeared before Congress to ask for help.  His company was failing due to poor management decisions, run away gas prices and an overall economic slowdown.  If only he could get enough money to stay in business, his company’s next generation of small, fuel efficient cars would hit the market and lead to the company’s success.  His company employed 40,000 US workers and laying them off would be a disaster at a time when the economy was already struggling.  He’d even work for a dollar a year.  Sound familiar?

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Mistress market bottoms out as crisis sucks in millionaires, but toy boys spared a licking

US culture, US Economy

I’ve always wanted to be a Sun headline writer.

Soon it will be grape juice of wrath for mistresses, as the Moët’s off the table now multimillionaires are moved to downsize their despicable deeds of decadence. This shocking scoop comes courtesy of the Wall Street Journal (h/t TNR), which has its finger all over the pulse:

According to a new survey by Prince & Assoc., more than 80% of multimillionaires who had extra-marital lovers planned to cut back on their gifts and allowances. [..]

“Rich people are getting hit, and they’re all expressing the need to curtail unnecessary spending,” said Russ Alan Prince, president of Prince & Assoc., a wealth-research firm based in Connecticut. “Lovers are part of the same calculation.” [..]

Fully 82% of men in the study said they planned to lower the allowances to their mistresses, while more than three quarters planned to provide fewer gifts, less expensive gifts and fewer perks, like jet rides, resort vacations and top restaurant meals. [..]

“What we found in talking to the respondents is that the magic of the relationship with their lover fades after a while, so they’re more willing to let them go,” Mr. Prince says.

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Sometimes a chart is worth 1,000 words

Economy, Politics, US Economy, US Politics

This one comes via Kevin Drum at Mother Jones:

GDP growth vs. median wage stagnation

Yes – between the beginning of 2002 and the end of 2006, the United States GDP grew by over 15% – while the median wage flatlined, not going up by a single percent. In short, the country got ever richer – but the middle class saw nothing of that wealth. It was pocketed in its entirety by the wealthiest, with an assist from the tax cuts that the Bush administration heavily slanted in their favour.

Are there any recent historic precedents of such a disconnect, in which double-digit national economic growth was not accompanied by any improvement whatsoever for the average American? Was it this bad under Reagan, or Thatcher?

Pondering these numbers, Drum approvingly quotes an article by Joe Klein on Time’s blog Swampland: “We have had 30 years of class warfare, in which the wealthy strip-mined the middle class.” He adds:

For three decades we’ve artificially kept middle class wage increases far below the growth rate of the economy, and this trend has been even more pronounced over the past eight years. This has created an enormous pool of extra money that’s been — yes — strip mined and redirected to the rich, and fixing this is Barack Obama’s biggest and longest-term challenge.

If we restore the normal growth of middle class wages, it provides a sustainable consumer base for the entire economy; it reduces the demand for endless credit card debt; it brings down income inequality naturally; and it goes a long way toward keeping the financial sector under control and reining in Wall Street salaries without putting in place a bunch of artificial (and probably fruitless) regulations. [..] Stop the strip mining and economic vigor will follow. It’s at the core of everything.

UPDATE: Lane Kenworthy, a Professor of Sociology and Political Science at the University of Arizona, had a blog post earlier this month that traces the trend further back, to the Reagan era: Slow Income Growth for Middle America (h/t to A2K user Hawkeye). The pattern is pretty devastating – and he’s got a telling graph too:

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