The blame for the economic downturn

[Merijeek]

@ElvisL1ves

Etc. So what happened to all your equally-positive posts of earlier times about how foolish we all were for not seeing the benefit of Bush’s tax cuts, how his economic policies were providing permanent prosperity, how the recession of his early administration was all Clinton’s fault and Clinton’s surplus-fed boom was due to Reagan’s tax cuts … the *rest * of us haven’t forgotten. :rolleyes:

So what happened to change your mind?

Wait…I thought things were going well, and had been since the 9/11 recovery. And aren’t we most of the way to reinvigorating the manned space program?

-joe

[ElvisL1ves]

And we blew off the Kyoto treaty just in the nick of time, too. It would have crippled our economy.

[gonzomax]

@msmith537

What the shit are you going on about? Is it your implication that the wealthy have somehow conspired to destroy our education system and eliminate all low to middle class jobs because it somehow benefits them?
Maybe you should get your economic information from someone who doesn’t make ice cream for a living.

http://www.flickr.com/photos/25654418@N00/39623338 The financial architect for the Bushies made it pretty clear. They plan on defunding as many programs as possible. Privatizing is the end . Destruction is the means.
Ben Cohen makes ice cream. He also is a major businessman. Denigration is dishonest.

[ElvisL1ves]

The term you’re looking for is “drowning government in the bathtub”. Thank Grover Norquist, Cheney’s spirit guide, for that.

[gonzomax]

http://www.uwsem.org/mediacenter/2007/08/americas-growing-wealth-gap.html
Bernake and Greenspan have finally brought up the huge differences in wealth in America and how rapidly it is getting worse. Any one following econ will be aware of it.

[Voyager]

@Sam Stone

The list goes on. The government screwed the pooch with the Savings and Loan industry in the 1980’s, gave them so many protections that they kicked off the largest con in history, and then bailed out the people who invested in them, thus removing any penalties they might have suffered for making high-risk investments in S&Ls instead of safe blue-chip or bond holdings.

So, deregulation, which I know you worship, didn’t have even a teensy-weensy bit to do with the crisis?
From Here

Lack of net worth for many institutions as they entered the 1980s, and a wholly inadequate net worth regulation.

Decline in the effectiveness of Regulation Q in preserving the spread between the cost of money and the rate of return on assets, basically stemming from inflation and the accompanying increase in market interest rates.

Absence of an ability to vary the return on assets with increases in the rate of interest required to be paid for deposits.

Only gave the first few. Deregulation was not the only cause, but it was the primary one.

Far from being a fault of capitalism, this is largely the fault of government. Huge deficit spending, promoting the idea that we are all ‘entitled’ to a comfortable living, federal loan guarantees that reduce the risk of banks to lend money, government bailouts and subsidies of stupid plans and high risk ventures. Bankruptcy laws that give bad behaviour a fair bit of protection. Safety net programs which reduce the potential downside of economic disaster. Guaranteed pensions and social security which eliminate the need to save, and in some cases punish it.
And you wonder why people are overextending themselves and not saving money?

Many of these things were in effect in the '50s and '60s, with no obvious ill effects. Obviously you think it is better for the world if children and old people starve. Why did people save in the '50s when there was just as good Social Security? (The savings rate, thanks to 401Ks, might be better than you claim even today.) Maybe, just maybe, the stalling out of wages had something to do with it?

The deficits are going to get us, but I don’t think they’re the immediate cause of the problem. I do agree that we need to keep Republicans out of the White House so we can balance the budget again.

[Voyager]

@msmith537

What the shit are you going on about? Is it your implication that the wealthy have somehow conspired to destroy our education system and eliminate all low to middle class jobs because it somehow benefits them?

While it is not necessarily deliberate, don’t you think that the mantra that we need to have low wages to be competitive to maximize profits had something to do with this? The result was that people who couldn’t afford houses fell for bad loans, and some of the oh-so-smart rich got taken by bad bonds, and now have lost a fortune. And it is all the fault of the people with barely a high school education, or little English, who had the nerve to fall for what the brokers told them, who put a gun to the head of the lending industry, making them give them loans they could never repay.

Rich people good, poor people bad - that’s all you people know, isn’t it?

[XT]

@Voyager

Rich people good, poor people bad - that’s all you people know, isn’t it?

Seems to me that the converse is more true around these thar parts. Just take a good look at this thread.
Who is to blame for the current downturn? We are…such that anyone is ‘to blame’ for a needed readjustment to the market. We are collectively to blame. But that’s not what folks want to hear. They want to have it all, have it now…have their social programs and eat them to. Have defense AND several foreign wars plus everything else. Oh, and they want a house several times more expensive than they can afford along with a new big screen TV and the ceramic dog.

Or, I suppose it could be those evil capitalists to blame just wanting a buck and screw the little guy. Lets get rid of the rich! And trust guys who make ice cream to know what is what…

-XT

[vison]

I have seen the enemy, and he is us. “Pogo” said that, or something like that.

Of course “we” are responsible. Every one of us who imagines that the piper will never want to be paid. We are products of our culture. There is a machinery at work that makes money from our stupidity, that machinery encourages our stupidity. We have been dumbed down very thoroughly, sad to say.

[gonzomax]

Somebody who makes ice cream. You should be ashamed. of yourselves. He and Jerry took an idea and made a business that became national. Turned 12000 bucks into a huge business. I would think you corporate lovers would admire what they have done. It couldn’t be that you are diminishing their significance because you dont want to admit he has a credible opinion.
That is not fair.

[Voyager]

@xtisme

Seems to me that the converse is more true around these thar parts. Just take a good look at this thread.
Who is to blame for the current downturn? We are…such that anyone is ‘to blame’ for a needed readjustment to the market. We are collectively to blame. But that’s not what folks want to hear. They want to have it all, have it now…have their social programs and eat them to. Have defense AND several foreign wars plus everything else. Oh, and they want a house several times more expensive than they can afford along with a new big screen TV and the ceramic dog.

Or, I suppose it could be those evil capitalists to blame just wanting a buck and screw the little guy. Lets get rid of the rich! And trust guys who make ice cream to know what is what…

-XT

First of all, you surely remember the threads where some people (not you IIRC) said that the subprime crisis was caused by all those people getting loans that they couldn’t repay, and not at all by the bankers who gave them the loans (and aggressively ignored their ability to repay.)

And I’m sure you are right. I can’t imagine any reason why the CEO of a company would want to minimize the wages of the workers.

In the Times today the plight of the credit card companies is outlined. You see they structured credit limits and things so that creditors would just be able to pay the minimum payment, which maximizes their profits. Now that people can’t afford even that, the debts become bad. Who woulda guessed? In an ideal world no one would buy anything they couldn’t pay for in the next month. That’s what I do. But if everyone was like me, this economy would crash and burn.

There are many ways that companies could have minimized the pain of the inevitable bursting of the bubble. But by themselves, companies will never do so, since in the short run they would lose out to the more aggressive, and get sued by their shareholders. Only the government could look ahead and perhaps force tighter credit checks. But that would be more regulation, and we all know that

Companies and free marketers should stop blaming people for behavior which could easily be predicted, and which was encouraged. It’s the same thing as Communists blaming people for wanting to get ahead and not live for the state. They both only happen in fantasyland.

[XT]

@gonzomax

Somebody who makes ice cream. You should be ashamed. of yourselves. He and Jerry took an idea and made a business that became national. Turned 12000 bucks into a huge business. I would think you corporate lovers would admire what they have done. It couldn’t be that you are diminishing their significance because you dont want to admit he has a credible opinion.

Would you consider Bill Gates opinion valid then? He took a company GLOBAL…and his company makes more than Ben and Jerry’s a day I expect. How about other people who have created companies? Is there opinion equally valid?

It couldn’t be that you favor his opinion because he’s telling you what you want to hear, could it?

Don’t get me wrong…I like Ben and Jerry’s ice cream…but they basically know how to make ice cream and market. That doesn’t give them great insight into anything else.

-XT

[Voyager]

@vison

I have seen the enemy, and he is us. “Pogo” said that, or something like that.

Of course “we” are responsible. Every one of us who imagines that the piper will never want to be paid. We are products of our culture. There is a machinery at work that makes money from our stupidity, that machinery encourages our stupidity. We have been dumbed down very thoroughly, sad to say.

I agree, except maybe for the dumbed down part. People borrowed money from loan sharks all the time. Today they can get it from credit card companies. They still can’t repay, but at least they don’t get their legs broken.

I think people in the past were just as stupid - they just didn’t have big companies abet their stupidity.

[XT]

@Voyager

First of all, you surely remember the threads where some people (not you IIRC) said that the subprime crisis was caused by all those people getting loans that they couldn’t repay, and not at all by the bankers who gave them the loans (and aggressively ignored their ability to repay.)

I blamed both…and wasn’t really keen to bail out either.

@Voyager

And I’m sure you are right. I can’t imagine any reason why the CEO of a company would want to minimize the wages of the workers.

Why don’t these evil CEO’s lower wages to nothing then? Wouldn’t that maximize profits?

@Voyager

Companies and free marketers should stop blaming people for behavior which could easily be predicted, and which was encouraged. It’s the same thing as Communists blaming people for wanting to get ahead and not live for the state. They both only happen in fantasyland.

So…what then? Another regulation to protect people from themselves? Loans should only be given to people who can afford them? Works for me…but I wonders…yes I wonders…if all the folks currently screaming at the evil bankers for making those loans are going to be be saying the same thing when folks can’t get loans for houses in the future. I’m thinking some folks will be singing a different tune at that point…one that has a similar theme. The theme of that tune I’m thinking is going to be something along the lines of ‘What about The People?? Those evil bankers won’t give The People a break! Won’t part with their dirty money! The poor POOR PEOPLE!’

-XT

[gonzomax]

http://www.usatoday.com/news/nation/2005-06-13-greenspan-gap_x.htm
Ever hear of this ice cream man.?

[vison]

@Voyager

I agree, except maybe for the dumbed down part. People borrowed money from loan sharks all the time. Today they can get it from credit card companies. They still can’t repay, but at least they don’t get their legs broken.

I think people in the past were just as stupid - they just didn’t have big companies abet their stupidity.

Yeah, I guess you’re right.

Another thing is, there is so MUCH more to buy nowadays. Desire becomes as vast as the number of choices.

[Fear_Itself]

@Mosier

Job exporting and illegal workers are not the problem, because the unemployment rate is not exceptionally high.

Wrong. Unemployment is not the only effect of job offshoring and illegal workers. Wages in the lower and middle class have been stagnant for 7 years:

But most American workers have not shared in the growth and prosperity they have been helping to create. Surely, one measure of the success of an economic growth period is how much of that growth finds its way into workers’ paychecks. In a period of sharply rising inequality, however, this is no “slam dunk.” In fact, as much of the data in this brief reveal, many workers’ wages have been stagnant for a number of years, after adjusting for inflation, particularly those at the middle and lower end of the pay scale. For example, while productivity is up nearly 20% since 2000, the real median hourly wage is up 3% overall and 1% for men, with none of this growth occurring over the three-and-a-half years since 2003. At the top of the wage scale—at the 95th percentile—real wages are up 9%.

I am not saying that lagging wages are entirely due to offshoring and illegal workers, but what ever the cause, wage stagnation is a major contributor to the current economic downturn.

[XT]

@Fear Itself

I am not saying that lagging wages are entirely due to offshoring and illegal workers, but what ever the cause, wage stagnation is a major contributor to the current economic downturn.

I assume you don’t see the fundamental conflict in what you are saying here. Let me ask you…how do you propose wages continue to go up and we keep jobs here in the US exactly? How would that work in your own mind. Say you were king and could simply wave a wand and make it happen…what would you do?

-XT

[Sam_Stone]

@Voyager

So, deregulation, which I know you worship, didn’t have even a teensy-weensy bit to do with the crisis?
From Here
Only gave the first few. Deregulation was not the only cause, but it was the primary one.

The problem wasn’t deregulation, it was deregulation in combination with federal loan insurance. It set up a situation in which the loans S&L’s money would be guaranteed (to them) by the government, but the oversight of the loans would be weakened. What would you expect to happen?

Many of these things were in effect in the '50s and '60s, with no obvious ill effects. Obviously you think it is better for the world if children and old people starve. Why did people save in the '50s when there was just as good Social Security? (The savings rate, thanks to 401Ks, might be better than you claim even today.) Maybe, just maybe, the stalling out of wages had something to do with it?

It takes a generation or two. The people who grew up without these benefits and safety nets were very different people. The depression-era generation all tended to be heavy savers, as did their parents before them.

The deficits are going to get us, but I don’t think they’re the immediate cause of the problem. I do agree that we need to keep Republicans out of the White House so we can balance the budget again.

We’re going to have to start a betting pool on where the deficit will go if a Democrat gets elected. You seem to think Democrats are big budget balancers. That’s a crock. Bill Clinton managed it only because A) he got the ‘peace dividend’, B) The Republican Congress refused to pass his big-spending proposals, and C) he got to ride the tech boom.

Democrats today are busy ladling out even more pork than the Republicans did. Earmarks have gone up under the Democratically controlled Congress. Both Hillary’s and Obama’s eceonomic proposals would explode the federal budget.

[Fear_Itself]

@xtisme

I assume you don’t see the fundamental conflict in what you are saying here.

I assume that you don’t see that when wages are stagnant, purchasing power decreases, and the economy suffers. That addresses the OP. The rest of your response does not.