Letters to the Editor
aveutter
Published Letters: 198 Editor's Choice: 32
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The Anti-Depression mantra
[Read the article: The Great Depression: The sequel]
[Read more letters about this article: Here]There is one thing working in our favor, that is decoupling. Global economies decouple from each other at critical points, providing strength to the weak economies. Japan in the 90's did not collapse socially, and neither did Argentina.
The decoupling argument loses support when you remove the strongest economy in the system. Decoupling was also more effective when the world economies were less interdependent. The first Great Depression was economic failure on a global level. You can make the point that the worlds economies should have been LESS susceptible, and more likey to decouple in the 30's.
The majority of taxes are sales taxes, which impact the poor directly. Any failure of the consumer will be a failure of mostly state and local economies, which will spill over into Federal revenues. At some point in recent history the amount of revenues collected for SSN and Medicare eclipsed payroll taxes. I am pretty sure the government collects more money on behalf of these programs than they collect in taxes. That money then becomes a source of operating income, as the FEDs routinely raid those funds to run the government. The rest of spending is deficit spending. The answer to who is paying the most in taxes is moot, no one is, unless we count the long term obligations that accimpany deficit spending.
The problem with unfunded liabilities is that they are achieved at the expense of future growth. We are selling the next round of good economic times, for a hamburger today.
Wall Street believes that the overall global economic picture includes a middle class China and India, raising demand and boosting the global economy. These are the people who routinely sell us on capitalism in Russia, and who wonder, as the Dalai Lama does, what the world will look like if everyone has a car? General Motors treats that question as dogma.
Of course it won't work, if we all want to breathe and eat.
They also ignore the fact that highly inflationary economies (CHina and India) are at risk for systemic collapse, as in Weimar Germany.
But as one economic pundit said, it may not be a Depression, it will be 'A Long Gray Day for the Rest of Your Life', referring to Groundhog Day the movie.
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Who is this Bernanke fellow?
[Read the article: How to translate Fedspeak]
[Read more letters about this article: Here]Bush spend a week grooming his selection. Greenspan called Bush Sr. the most meddling of all the Presidents he served. The second Bush Presidency has really been little different than the first, including the war in Iraq. Given the preference Jr. has for politicizing as many bureaucratic positions as possible, the assumption that Bernanke is really the Under Secretary of Treasury has some merit.
Any Fed chief knows better than to predict economic recession because these statements tend to be self-fulfilling. However when Bernanke denied responsiblity for the dollar in a committee hearing, I thought I heard a fractious public servant struggling in a hamhanded administration. When I heard Paulson chide a Senator for talking down the economy, I thought I heard a nervous boss, worried that his executives would make improper remarks.
If their behavior is consistent, Bernanke has said everything interesting he is going to say (without a subpeona), because the combined powers of the Bush administration are sitting on these hearings like an 800 lb gorilla.
Bernanke is much less independent than Greenspan. Chalk that up to Bush, who has hired and fired more Generals in Iraq than was done in all of WWII. This is the corporate mentality, there are no loose cannons in the corporate boardrooms. Bernanke is really more of a soldier, carrying out the generals orders. Watch the testimony on BSC, they are ignoring Bernanke. When will someone say Heckuva job, Ben? Is he any more responsible for this mess, than Michael Brown was for NOLA?
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The Free Gasoline For Everybody Party
[Read the article: The Federal Reserve's "socialist" agenda]
[Read more letters about this article: Here]The FGEP asserts that if Bush had given the American people a trillion dollars in energy subsidies, and charged it to a deficit accounts, rahter than invade Iraq, the economy would in top shape right now. Imagine the difference between giving the MIC a trillion dollars, and the very few jobs that creates, (socialist government dependent jobs) and giving consumers a trillion dollars to spend.
The secret to the FGEP is that it transfers the borrowing needs of average Americans to the place where rates are the lowest, at the US Treasury. What do consumers pay for credit, 10%, or more? Small businesses are paying 20%!! One article said 30% in Virginia.
Treasury can sell bonds at 1/3 the commercial lending rate and lend the money (endlessly through an eternally recycling Discount window to consumers and taxpayers) and at least stimulate some consumer demand.
The problem occurs When you pass the level at which $4 of government spending is required to produce $1 of GDP, and then you are in a recession, or worse. Quite simply this program only costs a bit more than $1.00 to put $1.00 in each consumers pocket. Since consumer spending is around 75% of GDP you can see how efficent it would be. And long term economic growth should easily surpass the costs of servicing the new debt, not to mention to mess in Iraq which will take years to clean up.
Also assuming the positive correlation between the war in Iraq and oil prices, one can assume we would have been better off in the global oil markets as well if Bush would have stayed home and given us the money. We might have saved the entire trillion dollars in the price of crude oil alone.
This is infinitely preferable to the brand of capitalism Bush and his friends practise, and there is no need to lie about our intentions.
The motto of the FGEP is Socialism?! Bring it On!