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Beet
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« on: March 02, 2009, 12:19:13 PM »

Good job Obama, this economy is your baby now.  You inherited a bad situation and have made it much worse with your reckless spending, lack of detail, and anti-business rhetoric. Talking down the economy isn't looking too good now is it?  You are turning a recession into a depression you asshole.

Yes if he had only followed Hoover's footsteps in giving unrealistically Pollyanish exhortations, all our problems would be solved.
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Beet
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« Reply #1 on: March 02, 2009, 02:33:17 PM »

5.5  months and counting since the failure of LB and we STILL do not have a banking solution which will close down failed banks in an orderly fashion.  Instead, the rules continue to change everyday.

We only date it from LB because that's the day the scale of the problems started to become apparent to *us*. It must have been apparent to Bernanke, Geithner, Hankson & Co. since they looked at the books at Bear Stearns. I'm not exactly sure what they were expecting to happen, or what they are expecting to happen now, but they sure as hell haven't gotten a grip on it 1 year later. Yeah I know we're not doing the cowboy thing anymore but a semblance of decisiveness would be helpful.
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Beet
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« Reply #2 on: March 02, 2009, 06:15:55 PM »

The economy has never really been "good" since 2001, although it wasn't always apparent at the time. First of all, look at the history of monthly job growth:



There are three hills there-- the leftmost represents the "seven fat years" under Ronald Reagan. The middle represents the Clinton years. The final represents the expanding economy of 2001-2007. Notice the final hill is much smaller. That's because job growth in the 2001-07 recovery was constantly anemic. Note that the chart uses absolute numbers too, so the hills should be getting progressively bigger in time due to a larger population. It's even clearer here:



The only reason the unemployment rate wasn't much higher was that the workforce participation rate dropped by about 2% between 2000 and 2005.

And what was the job growth of 2001-2007 based on? It was based on the housing market. Even before the credit crunch broke, Greenspan & Co. knew that the economy was hugely dependent on housing:



Not only jobs, but the entire economy was chugging along based on housing and the consumption boom that resulted from equity extraction from housing-



What's worse, the entire world was chugging along based on American and European consumption boom that resulted from the housing bubble.

This is why the bursting of the housing bubble has been so much more severe, than say, the bursting of the dotcom bubble. The dotcom bubble was a bubble in business investment and the stock market. The real economy was growing strongly in the 1990s, the dotcom bubble was just on top of that. In the 2000s, the real economy was stagnating, but housing was the only thing lifting it up.

Bush was dealt a bad hand. Greenspan, Robert Rubin, Larry Summers, etc. al had sat on their hands while a dotcom bubble built up, and trade deficit imbalances and lack of savings became a problem. The bursting of that bubble should have resulted in a deep recession, and possibly Bush's defeat for re-election in 2004. But it would have correct the imbalances. Instead, only the NASDAQ corrected and Greenspan built another bubble on top of the original one, that Bush rather cluelessly benefitted from. The result is that Obama has been dealt a catastrophic hand-- but unfortunately for him, he wanted the job and it's his responsibility to respond now. If he doesn't do well he'll be justly blamed.
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Beet
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« Reply #3 on: March 05, 2009, 04:35:25 PM »

True, but Obama needs to step it up.

As I said before, we are not in a crisis mentality, although we should be. The attitude today is far more lax than was the attitude on September 12th, 2001, when Americans universally recognized that we were 'at war', even though the damage done to the finanical system by the housing cataclysm is far worse than the damage on Sept. 11th and the human toll, over the course of many years, may be comparable or higher as well.

Take the stimulus bill, for instance, the one bill that should have been least controversial at all. It was only supported in Pennsylvania by 47% of the people, according to one poll. Sherrod Brown, the gentleman from Ohio, had to fly back from a private event so that it could pass by the skin of its teeth. It was criticized and attacked from all corners.

One shudders to think what would have happened had the Republicans controlled Congress. We probably would not even have a stimulus bill to this very day. Nor would we have a budget- the Republicans of today would probably force another government shutdown than to pass an Obama budget.

Compare that to the Emergency Banking Act of March 1933, which passed on the very first day of Congress's special session known as the 'Hundred Days':

"On March 9, 1933 the Senate passed the “Emergency Banking Act” after very little debate. Reportedly, congress then passed it in 38 minutes without any of them actually getting a chance to read it. This gave the Secretary of the Treasury the power to compel every person and business in the country to relinquish their gold and accept paper currency in exchange at a much lower valued rate.

This also gave FDR unlimited power during times of war or a declared national emergency, such as the Great Depression. Those powers could not be taken away unless the President decided that the national emergency was over."

And this?

WASHINGTON (AP) — For five weeks, Treasury Secretary Timothy Geithner has battled the worst economic crisis in generations with no key deputies in place. That's made for a rocky debut for the man President Barack Obama put in charge of addressing the financial crisis.

With an awkward first television appearance, a bank rescue plan that lacked promised specifics and two restructured bailouts that raised taxpayer risk, Geithner has failed to calm financial markets desperate for answers.

Critics say part of the problem is that Geithner is flying solo: Not one of his top 17 deputies has been named, let alone confirmed. And without senior leadership, lower-level Treasury employees can't make decisions or represent the government in crucial conversations with banks and others.

As Geithner strives to address the financial crisis, advance Obama's agenda and work with foreign leaders to stave off economic disaster, he's assembled a 50-person "shadow cabinet" of would-be appointees. Those people have received hall passes and can advise Geithner, but they lack any authority.

"Everyone would think it's a travesty if the Defense Department didn't have a lot of their people in place, because you're in a crisis fighting a couple of wars," said Tony Fratto, who was a Treasury spokesman under President George W. Bush. "But Tim Geithner is fighting wars on a few fronts himself, and he doesn't have the generals there to help him."
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Beet
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Posts: 28,806


« Reply #4 on: March 05, 2009, 05:55:00 PM »

True, but Obama needs to step it up.

As I said before, we are not in a crisis mentality, although we should be. The attitude today is far more lax than was the attitude on September 12th, 2001, when Americans universally recognized that we were 'at war', even though the damage done to the finanical system by the housing cataclysm is far worse than the damage on Sept. 11th and the human toll, over the course of many years, may be comparable or higher as well.

Take the stimulus bill, for instance, the one bill that should have been least controversial at all. It was only supported in Pennsylvania by 47% of the people, according to one poll. Sherrod Brown, the gentleman from Ohio, had to fly back from a private event so that it could pass by the skin of its teeth. It was criticized and attacked from all corners.

One shudders to think what would have happened had the Republicans controlled Congress. We probably would not even have a stimulus bill to this very day. Nor would we have a budget- the Republicans of today would probably force another government shutdown than to pass an Obama budget.

Compare that to the Emergency Banking Act of March 1933, which passed on the very first day of Congress's special session known as the 'Hundred Days':



I think you have hit on this somewhat correctly.  Obama lacks direction, so far, on the economic crisis; so do Democrats in Congress.

The poor transition, which is still ongoing, is also troubling.

The problem isn't that Obama (or Bush) created the crisis, it is the handling of it.  So far, it has not been good, but I still think it is just too early to tell.

Part of the problem is that the current crisis is still ongoing in playing itself out, while by 1933 the Depression had mostly played itself out already and it wasn't much more of a step to declare a holiday on all banks and debase the currency. Also by September 12th, the terrorist attacks were over. In each case, we could get a full sense of the problem we were being confronted with.

In the current case, the administration has to try and figure a response in the midst of the ongoing crisis.
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