# The Myth of Recovery...is it? **URL:** \ **Category:** Great Debates\ **Created:** [June 1, 2009, 11:39pm UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427 "2009-06-01T23:39:57Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 8, 2009, 4:16pm UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/61 "2009-06-08T16:16:34Z")
> [@Alex\_Dubinsky](#): > > I’m not sure it can. I don’t think you can “borrow” across the barrier that is the foreign currency exchange. I think people say this as an approximation, but it is not quite true. > > For example, let’s analyze “China is lending us money.” Chinese government exchanges the massive reserves of RMB it accumulates from fiscal surpluses and communist industry profits for USD. It then takes the USD and uses it to buy Treasuries. (The net effect is that we are left with RMB that we have to spend on Chinese goods while China is holding valuable Treasuries.) The dollars flow from (hypothetically-) American investors to American investors. There is no net money being lent to us (to fuel asset bubbles, etc.) that I can see. The RMB that we hold can’t raise American house prices (except in an indirect, psychological, “we’re rich biatch” sort of way). But the big Chinese surplus came from government policies discouraging internal consumption and encouraging savings - and trade barriers also. I’m getting over my head here, but wouldn’t cheap borrowing encourage the deficits we’ve seen, which was definitely stimulative. They also reduced interest rates which helped drive up housing prices, which encourage borrowing on the paper appreciation of housing, which definitely drove consumption. Say Greenspan had let interest rates rise in 2003/2004, after the recession was over. (OK, 2003 - he’d never do that in an election year.) Housing prices would moderate, consumption would fall, and the bubble would deflate - gently, we hope. That would reduce consumption and improve the balance of payments a bit, and we might have gotten to a stable situation with a much reduced level of pain. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 8, 2009, 4:21pm UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/62 "2009-06-08T16:21:02Z")
> [@Der\_Trihs](#): > > I didn’t say that it was; I was just responding to the claim that businesses _ **can’t** _ do things like drive down wages due to the lack of a central authority; they don’t need one. Sorry, you’re right. I don’t think they could really do this in a practical sense, even under Bush. But the point is, and I think you’d agree, that bad things can happen through natural market forces, which drive the same behavior as collusion would. The Invisible Hand often winds up in our pockets. ---
**Author:** ![Alex\_Dubinsky](https://avatars.discourse-cdn.com/v4/letter/a/dbc845/32.png) [@Alex\_Dubinsky](https://boards.straightdope.com/u/Alex_Dubinsky)\ **Post date:** [June 8, 2009, 4:21pm UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/63 "2009-06-08T16:21:30Z")
> [@Voyager](#): > > But the big Chinese surplus came from government policies discouraging internal consumption and encouraging savings - and trade barriers also. I’m getting over my head here, but wouldn’t cheap borrowing encourage the deficits we’ve seen, which was definitely stimulative. They also reduced interest rates which helped drive up housing prices, which encourage borrowing on the paper appreciation of housing, which definitely drove consumption. > > Say Greenspan had let interest rates rise in 2003/2004, after the recession was over. (OK, 2003 - he’d never do that in an election year.) Housing prices would moderate, consumption would fall, and the bubble would deflate - gently, we hope. That would reduce consumption and improve the balance of payments a bit, and we might have gotten to a stable situation with a much reduced level of pain. You didn’t answer my question of how Chinese surpluses, or any country’s money, can directly reduce our interest rates or open up more funds for borrowing. I must be missing something, because lots of people repeat it as fact, but my analysis made plenty of sense to me. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 8, 2009, 4:41pm UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/64 "2009-06-08T16:41:05Z")
> [@Alex\_Dubinsky](#): > > You didn’t answer my question of how Chinese surpluses, or any country’s money, can directly reduce our interest rates or open up more funds for borrowing. I must be missing something, because lots of people repeat it as fact, but my analysis made plenty of sense to me. More money to be lent drives down interest rates at auctions. Lower interest rates increase demand for loans. The extra money for mortgages came from mortgage backed securities, which helped increase the market for home loans and drive up demand. This encouraged lenders to lend to more people, and the desire for higher returns encouraged subprime mortgages to be written. It is clear the mortgage brokers, at least in some places, got incentivized to write these. I’d guess that there was some additional flow of money to China coming from offshoring, which would reduce wages that would stay here. This also increased profits, which went to the top few percent and which might have also encouraged the expansion of high return mortgage backed securities. I’ve never seen an analysis of is part of it, so that is just a guess. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [June 8, 2009, 4:59pm UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/65 "2009-06-08T16:59:31Z")
> [@LonesomePolecat](#): > > I live in a 360 sq ft studio apartment in which I am not building any equity. I drive a 13-year-old economy car. I buy most of my clothes at Good Will and other thrift stores. I buy store brands and shop at dollar stores. Almost all of my electronics are second hand, purchased at thrift stores and on eBay. I manage to put some savings aside every month, but not a great deal. To finance this life of fabulous luxury, I do general office grunt work. I’m not complaining, mind you. I’m doing better today than I was only a few years ago. Nevertheless, this doesn’t strike me as living far beyond my means on somebody else’s dime, nor does it seem like an “irrational expectation” not to want my standard of living to sink back into outright poverty where it was for so many years. You expect that, given your job, you should have a higher standard of living than you do. I would like to know where that expectation comes from. I mean what is “general office grunt work”? Did you go to college for that? What kind of career path does an office grunt have? My point is that we have an expectation of what our American standard of living should be and that it should continue to keep going up. Fair or not, it will not continue to go up and may even decrease if America does not stay competetive. ---
**Author:** ![LonesomePolecat](https://avatars.discourse-cdn.com/v4/letter/l/a88e57/32.png) [@LonesomePolecat](https://boards.straightdope.com/u/LonesomePolecat)\ **Post date:** [June 8, 2009, 5:43pm UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/66 "2009-06-08T17:43:16Z")
> [@msmith537](#): > > You expect that, given your job, you should have a higher standard of living than you do. No, I fucking don’t. I am angry because sanctimonious twits expect me to accept an even lower standard of living than I already have, which isn’t very high by American standards. > [@msmith537](#): > > I would like to know where that expectation comes from. I mean what is “general office grunt work”? Did you go to college for that? What kind of career path does an office grunt have? Screw that. I’m not going to write a goddam autobiography for you. To have worked so damned hard for such a modest standard of living, and then have some twit talk to me as though I were a spoiled teenager sulking because his parents bought him a new Ford instead of BMW–that really is just too much. > [@msmith537](#): > > My point is that we have an expectation of what our American standard of living should be and that it should continue to keep going up. Fair or not, it will not continue to go up and may even decrease if America does not stay competetive. And my point is that millions of people like me never participated in that standard of living to begin with. If you tell someone who’s lost his $12/hour factory job with benefits to outsourcing and now makes $7.50/hour stocking shelves without benefits, that his resentment is due to some irrational “sense of entitlement” – well, you’re liable to get a punch in the mouth. And you’d deserve it. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [June 8, 2009, 6:44pm UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/67 "2009-06-08T18:44:09Z")
> [@LonesomePolecat](#): > > If you tell someone who’s lost his $12/hour factory job with benefits to outsourcing and now makes $7.50/hour stocking shelves without benefits, that his resentment is due to some irrational “sense of entitlement” – well, you’re liable to get a punch in the mouth. And you’d deserve it. Yeah…I’m totally scared.:rolleyes: You ARE acting like a spoiled sulking teenager. You think that someone should pay you $X dollars whether or not there is a need for your labor. And when someone tells you otherwise you resort to insults, :rolleyes: faces, and impotent threats of violence. [This guy went from making $200,000 as a comodities trader to making $20,000 working at the restaurant he used to frequent.](http://finance.yahoo.com/career-work/article/107145/From-Ordering-Steak-and-Lobster-to-Serving-It;_ylt=AokHcZkUqR0tmsISdXgHus.CfNdF) Is his situation any different because he made $100 an hour instead of $12? I don’t want you to think that my attitude is “screw the poor”. What I am saying is that we need to figure out how to make it more attractive to bring working and middle class jobs to the US. ---
**Author:** ![Ruminator](https://avatars.discourse-cdn.com/v4/letter/r/b9bd4f/32.png) [@Ruminator](https://boards.straightdope.com/u/Ruminator)\ **Post date:** [June 8, 2009, 7:04pm UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/68 "2009-06-08T19:04:10Z")
> [@LonesomePolecat](#): > > I am angry because sanctimonious twits expect me to accept an even lower standard of living than I already have, which isn’t very high by American standards. > > To have worked so damned hard for such a modest standard of living, > … > > And my point is that millions of people like me never participated in that standard of living to begin with. If you tell someone who’s lost his $12/hour factory job with benefits to outsourcing and now makes $7.50/hour stocking shelves without benefits, that his resentment is due to some irrational “sense of entitlement” Yes your current living situation is “modest” but that’s irrelevant in comparison with the rest of the world. You say you drive a 13-year-old used car? Several millions in Asia, Africa, Latin America are driving used _bicycles_. Or _walking_ several miles to fetch their daily water needs. Are you “entitled” to a new car or even a used one? Not really. You need to compete for that car (and also compete for the petroleum resources to fuel that car) against the millions of poor people in the global economy that want to raise _their_ standard-of-living and trade up from bicycles to cars. Your sense of not being able to “accept” a lower standard-of-living is of no concern to the citizens of developing countries. No need to punch **msmith537** in the mouth… you need to redirect your hate out on the millions of Chinese, Aficans, Latinos. What’s your proposal? Wanna nuke em? ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [June 8, 2009, 7:22pm UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/69 "2009-06-08T19:22:36Z")
> [@msmith537](#): > > My point is that we have an expectation of what our American standard of living should be and that it should continue to keep going up. Fair or not, it will not continue to go up and may even decrease if America does not stay competetive. You are defining “competitive” as a race to the bottom. Competing to offer the lowest pay and worst conditions just makes life hellish for everyone but the rich, and eventually will create the conditions for major unrest. While I’d like the Left to become more powerful in America, I’d rather it not be the sort of revenge driven Left that dumps capitalists in mass graves, which is the likely long term result of your ideas. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 8, 2009, 7:45pm UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/70 "2009-06-08T19:45:00Z")
> [@LonesomePolecat](#): > > And my point is that millions of people like me never participated in that standard of living to begin with. If you tell someone who’s lost his $12/hour factory job with benefits to outsourcing and now makes $7.50/hour stocking shelves without benefits, that his resentment is due to some irrational “sense of entitlement” – well, you’re liable to get a punch in the mouth. And you’d deserve it. Forget the punch in the mouth. The owner of that factory is going to wonder why he isn’t selling his product anymore. The people he now employs in China can’t afford it, and the people he used to pay can’t either, now that they’ve maxed out their credit cards and they’re behind on their mortgages. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [June 8, 2009, 10:22pm UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/71 "2009-06-08T22:22:22Z")
> [@Der\_Trihs](#): > > You are defining “competitive” as a race to the bottom. Competing to offer the lowest pay and worst conditions just makes life hellish for everyone but the rich, and eventually will create the conditions for major unrest. While I’d like the Left to become more powerful in America, I’d rather it not be the sort of revenge driven Left that dumps capitalists in mass graves, which is the likely long term result of your ideas. And what is it you think the Left is going to do for you? Force companies not to outsource? Provide massive benefits to working class poor out of the pockets of the wealthy? Create unskilled jobs out of thin air for the undereducated to work at? Errect trade barriers to isolate the United States from the world? ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [June 8, 2009, 11:11pm UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/72 "2009-06-08T23:11:02Z")
Force the rich to pay their fair share. Put in ( or rather, put in AGAIN ) the kinds of regulations that can prevent this kind of meltdown. Create a national health care system, which will make for a healthier America for less money. Crack down on monopolies and corruption and corporate crime instead of looking the other way. Impose better environmental and safety regulations. Fight such dangers as terrorism _ **effectively** _. And a wide variety of other things. The Right is incompetent, corrupt, amoral, greedy, and often outright malignant or irrational. Among other bad qualities. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [June 9, 2009, 1:51am UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/73 "2009-06-09T01:51:36Z")
> [@Der\_Trihs](#): > > Force the rich to pay their fair share. Put in ( or rather, put in AGAIN ) the kinds of regulations that can prevent this kind of meltdown. Create a national health care system, which will make for a healthier America for less money. Crack down on monopolies and corruption and corporate crime instead of looking the other way. Impose better environmental and safety regulations. Fight such dangers as terrorism _ **effectively** _. And a wide variety of other things. The Right is incompetent, corrupt, amoral, greedy, and often outright malignant or irrational. Among other bad qualities. And the rich create their wealth from…where exactly? ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [June 9, 2009, 2:07am UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/74 "2009-06-09T02:07:40Z")
> [@msmith537](#): > > And the rich create their wealth from…where exactly? Various ways; gambling ( stocks and such ), various forms of money shuffling where money is all they contribute, fraud, as parasites on the people who do the actual work, or they inherit it, or steal it via some legal loophole, or the government, or more likely a combination. Luck, obsession, and ruthlessness. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [June 9, 2009, 2:12am UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/75 "2009-06-09T02:12:10Z")
> [@Der\_Trihs](#): > > Various ways; gambling ( stocks and such ), various forms of money shuffling where money is all they contribute, fraud, as parasites on the people who do the actual work, or they inherit it, or steal it via some legal loophole, or the government, or more likely a combination. Luck, obsession, and ruthlessness. Maybe you should go research the meaning of “wealth” and learn how societies actually create it. ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [June 9, 2009, 2:18am UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/76 "2009-06-09T02:18:37Z")
> [@msmith537](#): > > Maybe you should go research the meaning of “wealth” and learn how societies actually create it. Mainly, by people building and inventing and creating and working while the wealthy feed off of them. It’s seldom the people who actually contribute who get the monetary reward. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [June 11, 2009, 3:35pm UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/77 "2009-06-11T15:35:30Z")
50 years ago the strength of America was that we manufactured and built things. Along with that was innovation and invention. They are part of the package. You train engineers, computer pros and management to feed and develop the creation of industrial and consumer goods. The international corporations moved everything off shore. Our strength became someone else’s strength. China and India need manufacturing engineers and computer pros. They need people to work in their factories. We so not. It was our strength. The financial pros stepped up to the rescue. We dropped fed rates low and lending became easy. China needed us to buy their products. We were the biggest consumer of goods on the planet. So China was nice to us. We bought and bought. But when the financial sector collapsed, we had nothing. Our purchasing power in on the wane. We do not built nearly as much. To drop our wages to compete ,diminished our buying power. Layoffs and bankruptcies roared. What do we have to offer the world? There will be a point where the world does not need us. It is coming soon. The international business men acted in an un-American way. They removed the jobs and diminished our importance to the world. They knew what they were doing. But, damn they got rich. That part is American. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [June 12, 2009, 6:54pm UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/78 "2009-06-12T18:54:39Z")
> [@gonzomax](#): > > The international business men acted in an un-American way. They removed the jobs and diminished our importance to the world. They knew what they were doing. But, damn they got rich. That part is American. Um yeah. INTERNATIONAL business. Businesses with facilities and infrastructure and employees from all over the world. They are under no obligation to take your Americentric view of the world. ---
**Author:** ![The\_Tao\_s\_Revenge](https://avatars.discourse-cdn.com/v4/letter/t/73ab20/32.png) [@The\_Tao\_s\_Revenge](https://boards.straightdope.com/u/The_Tao_s_Revenge)\ **Post date:** [June 12, 2009, 8:10pm UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/79 "2009-06-12T20:10:59Z")
> [@Ruminator](#): > > Yes your current living situation is “modest” but that’s irrelevant in comparison with the rest of the world. > > You say you drive a 13-year-old used car? Several millions in Asia, Africa, Latin America are driving used _bicycles_. Or _walking_ several miles to fetch their daily water needs. Are you “entitled” to a new car or even a used one? Not really. You need to compete for that car (and also compete for the petroleum resources to fuel that car) against the millions of poor people in the global economy that want to raise _their_ standard-of-living and trade up from bicycles to cars. > > Your sense of not being able to “accept” a lower standard-of-living is of no concern to the citizens of developing countries. No need to punch **msmith537** in the mouth… you need to redirect your hate out on the millions of Chinese, Aficans, Latinos. What’s your proposal? Wanna nuke em? So if us Americans want to have nothing but used bicycles, and multimile walks for drinking water we should follow your theory? What exactly is your point? Yes the world is shitty, but American workers have fought hard to get livable pay at safe factories with nonabusive work schedules. You just want us to give those up? We’re “entitled” for wanting to keep the high standard of living our country has worked hard for most of it’s existence to get and maintain? Fuck that, and the subhuman trash who advocate it. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [June 13, 2009, 2:33am UTC](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427/80 "2009-06-13T02:33:07Z")
> [@msmith537](#): > > Um yeah. INTERNATIONAL business. Businesses with facilities and infrastructure and employees from all over the world. They are under no obligation to take your Americentric view of the world. I know they are not, but they did not come up with a new anything. Our companies moved everything,lock,stock and intellectual property to countries that had cheap labor, no pollution laws and the employees had no rights. The companies made huge short term profits. That is what they do. The bosses get huge profits by cutting American labor and moving factories. The old idea of competition has gone away. It is about keeping a lid on workers and escaping laws to make a bunch of money short term. Long term, America becomes a second class country with no means of production and huge unemployment. The upper class owners get even richer and more powerful. The rest just suffer. [Previous page](https://boards.straightdope.com/t/the-myth-of-recovery-is-it/498427.md?page=3)