The KGB Oracle Forums General Public Discussion (SPECIAL ACCESS) KGB Political Debate Central Real cost of partisanship

You could demonstrate me how and where I went wrong. I promise I will make an effort to consider your point of view. At the very least both of us have to do some additional research and will be more educated in our unchanged opinions.

Yes, this is valid criticism.

Still, lets go through mental exercise of what would happen if Dems proposed functional, balanced budget. Such budget would include cuts to social spending, cuts to military spending, across-the-boards tax increases. In effect such budget would a) alienate Dem base (your average voter is not smart enough to understand necessity), energize GOP base (Tea Party and all) and all but guarantee _undeserving_ 2-house majorities to Republicans. Plus it is not even guaranteed to get passed, it can get voted down (not solving the problem) and still used to full extent as a political weapon.



Something both of us can agree on. I'd go even farther, while I acknowledge that crisis-era bailouts were necessary to prevent complete meltdown, I still want to see anyone voting for them gone. I also want to see people responsible for de-regulation that lead to this crisis voted out as well.

I actually do not think the bailouts were needed, just the people who have been painted as the "authority" as to their necessity were mostly people who had everything to gain by the bailouts happening.

If the market had been allowed to correct naturally, and the "too big to fail" had been allowed to fail - the immediate correction would have been harsher but we would have been able to have a real recovery and not be still sitting here waiting for the other shoe to drop.

Just because a few cronies of the corrupt system like Geithner and Bernanke and some ultra Keynesian loudmouths like Krugman say something is needed does not make it so. Their doomsday predictions of the world ending if the ultra corrupt politically tied segment of the banking industry was left to burn were much exaggerated.

This was tried during Great Depression, only this time around there isn't Great Britain empire and Hitler's Europe burning through all reserves to wage war. US without WW2 would probably still be suffering from Great Depression well into 50s.

I am not so sure your analysis of what would happen is entirely accurate. But its not provable either way.

If you want to talk about pertinent deregulation, you have to go back to Clinton.

But I blame Fed bubble economy combined with Bush spending combined with the culture of corruption for the previous and the coming crash. Deregulation may have helped shaped the way in which it manifested but with such unsound fundamentals in terms of govt and monetary policy bad things were going to happen. You cant just control the side effects of such poor fundamentals with a bit of regulation.

I have read many sides to the regulation debate.. and in many regards much of it is six of one, half a dozen of another. My end take is that while some regulation can certainly be useful, getting overly mired in which regulations or lack thereof are the "culprits" is missing the forest for the trees.

Its interesting that you bring that up, because FDR was a Keynesian extremist who attempted all sorts of bailouts and stimulus.

Hoover raised taxes to extreme levels. The overall response was very interventionist.

None of it worked. The country suffered for a decade under the type of remedies that the left proposes today as panacea.

As far as bailing out the actual banks, well the situation was completely different in terms of the way the acute problem was structured. But the fundamentals of inflationary monetary policy and malinvestment in a bubble economy are shared as underlying causes.

All the banking bailouts have done is kick the can down the road, and ensure that the next crash is even more devastating.

To dovetail on what Derid said, it's worth noting that for the rest of the world the Great Depression, was just a depression lasting a couple of years. How much shorter might ours have been if not for FDR's Keynesian policies?

I like how effortlessly we migrate to different topics, but it is interesting discussion so lets keep going.

Great Depression "what ifs" is nothing but a speculation, so lets not go down that mental masturbation path.

We do have couple valid comparisons - Great Depression in US, and Great Depression elsewhere in the world. I'd say comparing France Australia that went with austerity and New Zealand that went with welfare state to US during Great Depression would be valid comparison. Any idea how this compares?

Second comparison - austerity vs. bailouts during recent crisis. EU is on the verge of collapse, and they decided to go austerity direction. By comparison US is in much better shape.

If you indicate you are really interested, I will go into it further later. There are many extreme differences in the US and EU situation. A few quick points:

First, not all of the EU is in dire crisis. Countries that acted more responsibly are not in such a crisis... and countries that have abundant natural exports are also ok.

Second, the currency itself is in crisis (Euro) - and its situation is much different than that of the dollar. Going into the differences, beyond the obvious is an endeavor of many many pages not a couple quick paragraphs.

Third, much of the EU problems were enabled by our own corrupt malfeasance.. see the effect of Goldman Sachs dishing out Fed printed money to Greece for example. It really resembled a crack dealer a lot more than it did a healthy banking relationship.

Fourth, Greece stopped the Keynesian spending because noone would lend them money anymore - and leaving the Euro would create complications... they wouldnt be able to import hardly anything , and they have nowhere near the resources to become an autarky. Greece austerity is their last resort aside from withdrawing from the Euro and printing their own unbacked currency. If they did that, who would trade anything for such a currency?

Fifth, regarding Spain.. there is a great clip here on this forum where a Spanish economist details for Krugman exactly how Spain got in the mess its in. Things like handing out thousands of dollars to anyone who wanted to rent a flat.. bubble economy, etc

I will have to look at New Zealand/Australia , since their fundamental economic makeup is so different from ours and they are small economies relatively speaking so I typically do not pay them much mind and would have to look and see if I thought a valid comparison could be made.

Just to clarify, I am talking about Great Depression of 20th century and trying to draw parallels between that and crisis of 2008-now.

Point I am trying to make is that austerity isn't necessary best policy in crisis situation, and that by 2007 bailouts were all but inevitable with alternative of having Great Depression II and 50%+ unemployment and complete lights-off @ banking system.

I also disagree with you labeling any stimulus as Keynesian, I think you are stretching that term past its breaking point.