To put it as simply as possible, the reason our economy is in full crisis mode is that the people who have run this country for the last eight years have been incompetent and misguided.And the board room has become filthy with greed. Both George Bush and John McCain have stated in the last few weeks that greed and corruption are what have caused our current crisis. As the President has said, "Wall Street got drunk and now they have the hangover."
What this proves is that corruption can happen anywhere and all of you free market fundamentalists are wrong about it being worse in the government. Sorry, it's something you are going to have to face. Your ideology is terribly flawed. In fact, if you look at when our major crises have occurred in this country (1929, 1987, 2001, 2007-8) they have all come during Republican rule. What does that say to you?
Now, I'll be the first to admit that over bearing government control is a bad thing. But no control at all is also equally disastrous. No regulation, which is what we have had for the better part of 30 years, is also bad. This inaction or sneaky winking from the Washington to Wall Street has put us into a crisis that shows no signs of letting up. Yesterday the market dropped 500 points with the news that Lehman Brothers is bankrupt and Merrill Lynch is being sold to Bank of America. AIG is also in danger.
This is all the result of what happens when you go off the deep end in regards to how our economy should be handled.
By the deep end, I mean people who make the claim that Barack Obama is a socialist. Barack Obama is not a socialist. Please keep your 9 year old girl hysterics out of the adult swim area. He is not going to make America a socialist state. He's not even going to go to an FDR style solution to solve our problems.
Take a look at his plan on taxes, for example:
- Make many Bush Tax Cuts Permanent
- Make "work pay" tax credit
- Index the Alternative Minimum Tax
- Reduce Estate Tax
- Automatic 401K and IRA plans, large saver's credits
- Other Tax Cuts (for college students, seniors, low income filers)
- Permanent R & D and renewable energy credits
Before all of you righties go apeshit, my source for this is...George Bush. The Bush Administration Treasury Department examined the economic effects of extending the capital gains and dividend tax cuts. Even under the Treasury’s most optimistic scenario about the economic effects of these tax cuts, the tax cuts would not generate anywhere close to enough added economic growth to pay for themselves — and would thus lose money. They estimate between 60 and 80 billion of lost revenue in other less optimistic scenarios.
So this would be an example of why we can't afford to spend another four years looking at only one side of the equation. This is what John McCain wants, sadly. If the majority of Americans aren't spending any money because the majority of wealth has been seized by a very tiny percentage of people, we will continue to see more and more of what happened yesterday.
Take a closer look at what Senator Obama is proposing. For more specifics on this plan, visit here. There are many sub sections and pdf files that go into extraordinary detail about how we can fix this mess. Look at the balance. This how America has always worked best.
It is my hope that some of you on the right will wake up and see that Senator Obama has the right amount of balance on this. It's terribly dangerous to be blinded by ideology and outright lies and that's just what's going on right now. Your pocketbook is going to begin to get hit and it is direct result of a flawed way of thinking that may ultimately be our ruin.
16 comments:
I'll post a bit on this in a few (with some actual support for your position, if you can believe that), but in the mean time, can you point to a specific policy and/or bill that the administration moved that will prove Obama's contention? This is a golden opportunity to win one for your side. Can you show me a bill that allowed this happen or an executive directive to regulators to look the other way on deceptive, unfair and/or bad business practice?
Well, this could be a long reply. I'm not sure if I could point to just one bill but I will certainly attempt to do so.
In general, I blame years of anti-regulation sentiment and the technical innovation of securitization, dating back to the 1980s, for the meltdown in the subprime mortgage market and the broader economic slowdown. The fact that securitization has been allowed to happen, in this case it would be a lack of bills not a specific bill, that has caused part of our problems now.
But let's use the example of Enron because it demonstrates the "bad" capitalism I am talking about. I pulled some of this information from Tradewatch and a link from the early days of this blog (so long ago...how the time flies)
Upon assuming office in 2001, Bush promptly scrapped plans put into place by former President Bill Clinton to significantly limit the effectiveness of other countries as tax and bank regulation havens. This action came at the height of high West Coast energy prices, probably allowing Enron to siphon billions to its offshore accounts.
At the same time, the Bush administration and certain members of Congress (Phil Gramm) waged a legislative and public relations campaign against the imposition of federal price controls in the Western electricity market. Such price controls remove the ability of companies exercising significant market share to price-gouge by effectively re-regulating the market. Bush's opposition to price controls unnecessarily extended the California energy crisis and cost the state billions of dollars.
By the time federal regulators stepped in to do something, Enron was set up to be doomed. They couldn't make any money unless they had the Bush-Gramm system in place. They needed to have the bad business practice and a winking government in place in order to make a profit.
As with some of the problems we are seeing now with the financial industry, Enron had no significant ownership asset and so, accumulated debt. Their profits were "air" and were the result of market manipulation and price-gouging consumers-a policy that was encouraged in the early days of the Bush presidency.
Give me a little more time and I think I could come up with more. Spend some time with that NY Times article. It explains things more intelligently than I could and I would be interested in your opinion.
There were/are laws in effect and once caught, the folks at Enron were prosecuted as they should have been.
I'll wait by the phone because to convince me, you need more than "sentiments" and mysterious "encouragement" from the administration.
Here is something for you to face Markadelphia. Go near the bottom and see who the groups denouncing the proposal were. Apparently it's all about affordable housing. Who are the ones blocking reform and oversight again markadelphia?
http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=print
Hey, I found some actual bills...
The Commodity Futures Modernization Act of 2000 or CFMA was the bill that Phil Gramm pushed through Congress...oddly signed by that liberal Bill Clinton. Phil Gramm's wife, Wendy, was on the board at Enron. President Bush vetoed various attempts to repeal this act in 2006-2008.
There's also the Responsible Lending Act, another Gramm gem from his days as a lobbyist. Initially billed as protection against predatory lending, it actually was loan shark protection as it pre-empted government interference in lending on both a state and federal level. President Bush and Congress signed this into law in 2003. Here is a direct link between our current crisis and actions taken by Bush and the Republican controlled congress.
If you really want, you can go back to the Gramm-Leach-Bliley Act, also signed by liberal Bill Clinton, which was another factor in what is going on right now with the sub prime mess. Take a look at the roll call of yeas on this one...
http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=106&session=1&vote=00105
McCain, Ashcroft, Frist, Gramm, Hatch, Santorum, Warner...these are all your guys, dave, and they made it happen.
In addition to those bills, it was/is the easiness in getting and mortgage, credit card, school loans, car loans, etc. So many millions of people who couldn't afford this debt received these loans and debts to finance their lifestyle and that's what is imploding. If you charge 5% for a 30 year fixed to people who only have a credit score above 750 and who have 20% in cash to put down on a house then you don't have the problem you have now. It was the Clinton Administration who lowered the standards for any Tom, Dick and Harry to get a mortgage because of the minority lobbyists groups who pressured the administration under the guise of "discrimination" (that lovely word we all know so well) to give loans to first timers and other people who were quite simply unqualified. It just continued under the Bush administration and they perpetuated the problem.
There are many examples of regulatory nonfeasance in the last few years that are the result of general apathy by the Bush administration.
In particular, the numerous food and drug quality scares over the past several years are the result of reduced staff and funding at FDA and USDA.
The aircraft maintenance scandals that shut down many airlines for days earlier this year were the result of a serious lack of ethical and regulatory enforcement at FAA. Add to that an antagonistic relationship between FAA management and the air traffic controllers (who are forced to work ridiculously long hours), and you have the potential for many really bad accidents.
The Bush administration has failed in its regulatory responsibilities coming and going. It has appointed many industry insiders to regulate the very industries they used to work in. Similarly, many of the people leaving the administration have gone to work for the companies they were just regulating.
In a very recent case an official of the Royalty In Kind oil program (the one with the sex and drug scandal) wrote a very detailed description for a contractor, quit his job, then applied for that very same contracting job and got it.
Now, these sorts of scandals happen in every administration. But Republicans are particularly prone to this kind of criminality because they are predisposed to eschew any kind of regulation or monitoring. So it's much more difficult for a Republican administration to know something's going wrong until it's far too late.
While it's true that Clinton signed the bills that allowed for lower-income homeowners to buy houses, it was the lack of oversight during the Bush administration that led to catastrophe. The adjustable rate mortgages and the risky financial instruments created to hide the instability of these loans all happened on Bush's watch.
Many economists (and columnists like Paul Krugman) had correctly identified the real estate bubble as the next crash as long as three or four years ago. Had the Bush administration been competent, those warnings would not have gone unheeded, and we wouldn't be lamenting Lehmann Brothers' demise today.
To put it as simply as possible, the reason our economy is in full crisis mode is that the people who have run this country for the last eight years have been incompetent and misguided.
That's pretty simple alright, and simple-minded to boot. This is though a classic display of the myth of the rightful ruler (see also The Lion King).
While you're at it, why not blame bad weather on the Bush Administration too.
"Now, you balance this out with the fact that we have to let the capital gains tax cuts expire in 2010 in order to increase revenue."
Never mind all the historical evidence that suggests otherwise. Give us an example of where increasing the capital gains tax rate increased revenue tot he government. Then you talk about the Hysterics of the other guys and then end your piece talking about Our Ruin. Who is scaring people again? Nice link above Facing The Truth, nice to know that democrats have been running fannie and freddie for all these years. Which 2 senators are in the top 3 in money received from fannie and freddie again? Anyone?
SW and Juris, there is no denying the fact that the repeal of Glass-Stegall with Gramm's bill caused the mess we are in. President Clinton's biggest mistake of his presidency was signing this bill. The free market doesn't always make things better. In this case, it made things worse.
Dave, you want Bush policy that has lead the economy to be in such a shitty state. Here is one from 2002 sourced from Policyalmanac.org
President George W. Bush hosted the White House Conference on Minority Homeownership to discuss public and private sector efforts to address the homeownership gap and increase the number of minority homeowners in America.
In June, President Bush announced the national goal of increasing the number of minority homeowners by at least 5.5 million by the end of this decade. Meeting the President's goal will not only help more Americans enjoy the benefits of owning their own homes it will also help strengthen America's economy. According to a study released today by the Department of Housing and Urban Development, meeting the President's goal will involve $256 billion in economic activity in the form of construction and remodeling jobs, spending on household goods, and other benefits.
The Bush Administration is working to increase homeownership among minority Americans through a number of new and expanded initiatives, as well as through ongoing programs administered by HUD and other federal departments, including:
Providing Downpayment Assistance. The single biggest barrier to homeownership is accumulating funds for a downpayment. The President has proposed $200 million annually for the American Dream Downpayment Fund to help roughly 40,000 families a year with their downpayment and closing costs. In addition, the Administration has proposed the use of Section 8 funding to assist with downpayments, and provides downpayment assistance to low-income and minority homebuyers through the Community Development Financial Institutions (CDFI) Fund at the Department of Treasury.
There is more to this, just search Policyalmanac.org
sara-
True enough, the free market does not make for a perfect world. Then again, only fools and the feeble believe in a perfect world.
The "free market" did not charter Freddie and Fannie - the federal govt did. And the govt set the rules by which they operated, and exercised (or not) oversight over those operations. You're so right - the free market did not create this situation.
Juris, c'mon. You are a smart person. You know as well as I do that the repeal of Glass-Stegall caused the mess we are in and that was all Phil Gramm and John McCain. Stop trying to blame the government for being corrupt when it was a lack of oversight that caused this whole mess.
No sara, the problem is bailing out bad corporate behavior - especially when that bail out has support from both sides of the aisle. Stop pretending it's all the fault of the "other guys". That is extremely childish and tedious, and refers directly back to my first comment on this thread.
OK, so we don't bail them out. Then what is your great plan? What do you think would've happened if we hadn't bailed them out?
Then what is your great plan?
No plan, great or otherwise. The companies fail. That sucks for sure, but that's what happens. Hopefully, the companies that spring up to take their place are smaller and more nimble and when one of them tanks it doesn't have as big an impact.
The economist Schumpeter described capitalism as "creative destruction". Companies (and even entire industries) that fail are often the seeds of new businesses. And most importantly, the lessons of failure must be learned. I've told my son many times that failure is not a bad thing - failing to learn from failure is.
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