Forget Econ Stats, Do Americans Feel Economic Exhuberance or Malaise?

[Dad2three]

Even better: the 50s-60s saw staggering economic growth while New Deal Liberalism was in full effect. These liberal policies created the highest paid middle class in world history.

Policies have a horrendously difficult time of actually producing economic results of significant effect. Washington policies really aren't effective levers which move the economy.

What does have an effect on the economy? Why that's simple - market forces.

What created the middle class boom? That's simple too - rising wages in relation to declining share of National Income which went to corporations. What is National Income? To simplify, when Labor + Capital are combined, we get an output, National Income. All the goods and services we produce. The wealth that is created has to be allocated between Capital and Labor. When Labor is strong, then Capital has a weaker hand. When Capital is strong, then Labor has the weaker hand.

Well, it just so happens that that period had Labor with a very strong hand and, as required by this economic law, Capital saw erosion in how much wealth it could capture to itself. Why did Labor have such a strong hand? That's easy to answer too - labor scarcity. Employers found that there weren't enough employees to hire at low wages so they kept bidding up wages and they had to sacrifice corporate profits in order to hire the needed labor.

What created that labor scarcity? This is what created it. We didn't import people into the US and inject them into the labor market. Any moron should be able to understand that if we allow immigrants into the US they must enter the labor market and as soon as they do so they add to the labor supply, thus cutting out the legs of any developing labor scarcity and, like a steam release valve, they vent the rising pressure for increased wages.

So immigrants didn't come over BECAUSE US Corps needed more labor?

Third World countries. One of the things they all had in common was a small, very rich elite, small middle class, and a large lower class. They also shared very low economic growth as a result. This has been known for at least 50 years. The US has been going in this direction for at least the last 30 years as we have gradually de-industrialized and government policies (such as trickle down economics, 'free trade', etc) have promoted the shift of wealth from the lower and middle classes to the economic elite



Andrew Mellon had a few distinctly progressive ideas. Of particular note, he suggested taxing "earned" income from wages and salaries more lightly that "unearned" income from investments. As he argued:


The fairness of taxing more lightly income from wages, salaries or from investments is beyond question. In the first case, the income is uncertain and limited in duration; sickness or death destroys it and old age diminishes it; in the other, the source of income continues; the income may be disposed of during a man's life and it descends to his heirs.

Surely we can afford to make a distinction between the people whose only capital is their mental and physical energy and the people whose income is derived from investments. Such a distinction would mean much to millions of American workers and would be an added inspiration to the man who must provide a competence during his few productive years to care for himself and his family when his earnings capacity is at an end.



Tax History Project -- The Republican Roots of New Deal Tax Policy

 

[NYcarbineer]

The latest Consumer Confidence number just came out:

CONSUMER CONFIDENCE SPIKES TO 7-YEAR HIGH



The Conference Board's index of consumer confidence jumped to 90.9 from 85.2 in June.

This smashed expectations for an increase to just 85.4.

“Consumer confidence increased for the third consecutive month and is now at its highest level since October 2007 (95.2)," said the Conference Board's Lynn Franco.

Read more: Consumer Confidence, July 2014 - Business Insider

 

[Jarhead]

No one pays attention to your dumbass, illogical, incongruent, small-minded, petty posts. But you ARE like the class clown that makes people laugh. You sure make me laugh. You remind me of an idiot savant, except your savant is in online shopping, not critical thinking.

No one? Really?

Here is a tip for you. Don't announce the fact that you are an expert in a field unless you are. You have not performed well here thus far.

You began this thread by telling everyone how you are too smart for us...so you wanted to have a dumbed-down discussion about why Americans feel so down on the US economy. You know....because if we started using charts and graphs and data.....you'd bury us all with knowledge.

While that was very thoughtful of you, you failed to establish the premise. You never proved that Americans feel down about the economy in comparison to just a few years ago. You asked us to accept that......to join you in your assumption.

I gave you some info about how I feel.....and how my local economy is fairing. You didn't accept it. You suggested that you were looking for nationwide feelings. In other words.....you asked for charts, graphs and data. I presented the consumer confidence index as proof that Americans are FEELING BETTER ABOUT THE ECONOMY. You responded with the GDP numbers. I gotta tell ya......you really blew my mind with that depth.

Unfortunately for you.....and to my great pleasure......we have some members here who have a pretty good grasp on economics. You have been schooled by them. You sure can type the word "Keynes", though. Very impressive.

Thus far, you have claimed to be in the midst of your Doctoral thesis in Economics and you dropped a turd about serving in Iraq. How about a little detail regarding those two items?

Why are you so wrapped up in her/him?

No problem debating the issues, but to give your opponent a list of things that piss you off about her/him?

Do it if you want, but it sure seems like a waste of time to me.

 

[JakeStarkey]

Immigration from 1880 to 1910 was driven by labor opportunities in America.

Anybody who denies this is uneducated, mentally feeble, malignantly motivated, or a combination of any or all three.

 

[Londoner]

Policies have a horrendously difficult time of actually producing economic results of significant effect. Washington policies really aren't effective levers which move the economy.

I agree that labor scarcity definitely played a role, but you might want to look into the labor policies of the period as well. By the 50s and 60s there was vigorous support for unions. Americans had the highest labor rates in history. And, those high wages translated into massive purchasing power which in turn contributed to a main street boom, and gave an incentive to investors who added jobs and expanded capacity to capture those dollars. Regarding natural market forces, I can only add that during the period in question capital did not have anything close to complete control over labor costs nor the manifold regulations that affected it, nor the taxes that were recycled into things like affordable education (public universities) and transportation so the middle class could have even more purchasing power/opportunity. Large economies have always been managed by the state, so talk about natural market forces is a little misleading. Even post-Reagan/Thatcher - when we shifted toward a less regulated market - we still had a powerful patent system whereby big brother would protect investors from competition. That is, if you truly want market forces, you have to remove all of the help capitalist receives from the state sector. [Study lobbying and the money that capitalists extract from state. It will blow your mind. The state has always plated big brother to profit makers, who gladly suck it dry.]

But seriously, the Reagan Revolution was a response to the extreme government intervention of the postwar years. And, after a decade of Reaganomics, labor costs were aggressively lowered. Unions were busted and production was shifted to places like China where our capitalists benefited from the ultra cheap labor. Unfortunately, the unintended consequence of shifting production to more profitable labor markets was a huge loss in middle class purchasing power. Of course, rather than letting our capitalists fail for ignoring the logic of Fordism, we just expanded credit to American consumers so they could keep buying things from our best and brightest. Natural market forces? C'mon. They are as utopian as Marx's withering away of the state. They are a great model for criticizing the current system, but we've never had a free market. Capital has always sought and received loads of protection from big brother. Problem is, big brother has a flaw. He is also pressured to protect the consumer from monopolies and corruption, and he is asked to price externalities. These function are often called socialism or communism by folks who have never studied once sentence of Marx. There is a huge difference between the managed capitalism of the postwar years, which supported a vibrant private sector, and communism, which simply does not. To conflate the two is intellectually lazy.

[But you gotta love it. The masters of the system scare the sheeple over Communist China and Terrorist petrol-states. But where do you think our capitalists get their products? The American economy is built atop communist China's goods and terrorist crude. Study the relationship between our largest retailer, Walmart, and China. Study the relationship between big oil and the jihadist Saudi Royals. There is no free market, and the enemies you see on FOX News are our biggest trading partners. Turn off Talk Radio and study the world. We've been lied to]

 

[LoneLaugher]

No one? Really?

Here is a tip for you. Don't announce the fact that you are an expert in a field unless you are. You have not performed well here thus far.

You began this thread by telling everyone how you are too smart for us...so you wanted to have a dumbed-down discussion about why Americans feel so down on the US economy. You know....because if we started using charts and graphs and data.....you'd bury us all with knowledge.

While that was very thoughtful of you, you failed to establish the premise. You never proved that Americans feel down about the economy in comparison to just a few years ago. You asked us to accept that......to join you in your assumption.

I gave you some info about how I feel.....and how my local economy is fairing. You didn't accept it. You suggested that you were looking for nationwide feelings. In other words.....you asked for charts, graphs and data. I presented the consumer confidence index as proof that Americans are FEELING BETTER ABOUT THE ECONOMY. You responded with the GDP numbers. I gotta tell ya......you really blew my mind with that depth.

Unfortunately for you.....and to my great pleasure......we have some members here who have a pretty good grasp on economics. You have been schooled by them. You sure can type the word "Keynes", though. Very impressive.

Thus far, you have claimed to be in the midst of your Doctoral thesis in Economics and you dropped a turd about serving in Iraq. How about a little detail regarding those two items?

Why are you so wrapped up in her/him?

No problem debating the issues, but to give your opponent a list of things that piss you off about her/him?

Do it if you want, but it sure seems like a waste of time to me.

Read the thread. She is getting what she asked for.

 

[JakeStarkey]

There are no "natural market forces" in America today and have been none after 1910.

Ignoring the fact that the consumer class drives a robust American economy has injured the American middle class.

 

[bendog]

Econ chick. Stop. Just stop.

In 2011 we were hit by terrorists who did a lot of damage to the economy. Here's an area where you'll see liberals show what consummate know-nothings they are. Bush had to enact a number of things to bring us back from that hit, much like the way we had to recover after Pearl Harbor was hit.

 

[Dad2three]

Econ chick. Stop. Just stop.

In 2011 we were hit by terrorists who did a lot of damage to the economy. Here's an area where you'll see liberals show what consummate know-nothings they are. Bush had to enact a number of things to bring us back from that hit, much like the way we had to recover after Pearl Harbor was hit.

"Bush had to enact a number of things to bring us back from that hit, much like the way we had to recover after Pearl Harbor was hit."

Such as?

Comparing US mobilizing for WW2 versus Dubya's ignoring 40+ high level warnings on 9/11? lol

David Stockman, Ex-Reagan Budget Director: George W. Bush's Policies Bankrupt The Country

“(Reagan’s deficit policies) allowed George W. Bush to dive into the deep end, bankrupting the nation through two misbegotten and unfinanced wars, a giant expansion of Medicare and a tax-cutting spree for the wealthy that turned K Street lobbyists into the de facto office of national tax policy,” Stockman wrote.

David Stockman, Ex-Reagan Budget Director: George W. Bush's Policies Bankrupt The Country



The Economists' statement opposing the Bush tax cuts was a statement signed by roughly 450 economists, including ten of the twenty-four American Nobel Prize laureates alive at the time, in February 2003 who urged the U.S. President George W. Bush not to enact the 2003 tax cuts; seeking and sought to gather public support for the position. The statement was printed as a full-page ad in The New York Times and released to the public through the Economic Policy Institute. According to the statement, the 450 plus economists who signed the statement believe that the 2003 Bush tax cuts will increase inequality and the budget deficit, decreasing the ability of the U.S. government to fund essential services, while failing to produce economic growth.

In rebuttal, 250 plus economists who supported the tax plan wrote that the new plan would "create more employment, economic growth, and opportunities for all Americans."


WHICH SIDE WAS CORRECT?,lol

 

[bendog]

Dad,

"Was it easy money or easy regulation that caused the housing bubble?"

Who says its an either or question? Moreover, the fed not only has a banking regulatory power, if it chooses to use it, but it also can obviously affect liquidity. And Bushii's policies had an effect on no regulation and the demand for credit default swaps.

 

[JakeStarkey]

The GOP Congress with complaint presidents after 1994 could have altered the emerging problem anytime before 2006.

It did not even try.

 

[EconChick]

Opinions? Bubbette, you are as bad as Ed B. Just A RIGHT WINGER PRETENDING TO UNDERSTAND ECONOMICS. lol

Yeah, guess what dumbshit. I started my economic doctoral thesis years ago. The only one pretending to understand economics is you. I've seen 12 year olds argue economics better than you.

Sure, I believe you, sure

Wow, look.....you LIVE here. One can look at this site at any time and you're here. Whose payroll are you on?

Won't your DNC masters be upset you haven't posted 20 more graphs with the faulty assumptions since I saw you last??

And hint to the uninformed. Never take a graph at face value. Always, always, first ask the author what assumptions the graph was built on.

 

[EconChick]

The many posters and Americans that are so busy badmouthing this president and all other presidents are laughable...
I find the crowd that says the president won't fix my economy and get me a job are as pathetic as the welfare bums, they are waiting for someone else to do their thinking for them..
I had the pleasure of being raised around people that lived through WWI, The Great Depression and WWII...These people did not wait around for someone to hand them a job or give them a hand out. These people had to live through harder times than what today's Americans have never experienced(except the very elderly)...They lost more than the majority of Americans have ever had to lose, but they NEVER gave up.....

I had to start working at 13 to help support my family, by 14 I was filing tax forms and have ever since..at 17 I dropped out of high school and entered college, I was tired of low info education and wanted to learn all I could. I joined the US Army at 21 and was a Missile technician, during the basic electronics course they crammed down our throat in 6 weeks, my Dad's old Army buddy who was the instructor, always told the class, "If a man was able to figure this out, you can do it also". I still carry those words today to remind me I can do whatever I put my mind to task..I also smoke pot and have since I was 16. It has never stopped me from obtaining an education, a family with great kids that are veterans also and employed.
I appreciate your service and thank you for standing in harms way for our nation. My cousin just retired from the Marines, she was a firefighter at airports in Iraq and Afghanistan. I hope you met her cause she is a great person and I am sure you are also....

Thanks, Moonglow. And like I said, you're self-sufficient and a rugged individual. That's the kind of Americans that started this country.

 

[bendog]

Yeah, guess what dumbshit. I started my economic doctoral thesis years ago. The only one pretending to understand economics is you. I've seen 12 year olds argue economics better than you.

Sure, I believe you, sure

Wow, look.....you LIVE here. One can look at this site at any time and you're here. Whose payroll are you on?

Won't your DNC masters be upset you haven't posted 20 more graphs with the faulty assumptions since I saw you last??

And hint to the uninformed. Never take a graph at face value. Always, always, first ask the author what assumptions the graph was built on.

I would agree with you on the point of neither party addressing the underlying problems. It's identifying the problems where I'm not sure about what you're saying. Basically, we lack demand because workers wages are at best flat while the amount of capital continues to grow.

I know you'd eschew numbers because, on the surface, it looks like we're doing better, when in fact we continue onward to default on social programs, and the progress we make is painfully slow, and doomed unless progress accelerates. But numbers actually tell the tale. Of course, stats are easy to manipulate.

 

[EconChick]

"Dude, look at the fricken polls!!!!!!!!!!!!!

Laugh my fucking ass off. Your delusion has me rolling in the floor. His approval on the economy and jobs is in the 30s!!!!!!!!!!!!!!"



lol

I think his polls in the 30s is fricken hilarious too.

These polls are not a true reflection of the populace at large. Asking 1,100 people out of 300 million and trying to assert a consensus is illogical and a fallacy...
If you want to know the true feelings and have an accurate idea, then all adult Americans have to be polled to make it accurate and concise.....the poles are eschewed to bias and misrepresentation...and are not true in a mathematical representation....

I like this post because it shows you're thinking for yourself and not regurgitating someone else's ideas.

I will say that if you ever get forced to take a stats class, you'll see that indeed you can extrapolate from a small sampling to predict sentiments within a larger group. That's useful because it's not realistic to canvass all 350 million people. Can't be done.

Of course the sample can't be too small, but it can be relatively small and be 97-99% predictive.

If you toss a coin x number of times, at some point you can predict with 99.97%probability what the results are.

That part of statistics is like science. But your instincts are right that it's only half the equation. The other part is how the survey is worded. Here is where bias slips in. You have to pay really close attention to that potential bias and correct for it.

That's why I've said in other threads that I don't get excited about one poll. But you use them to start to look for patterns. And they can be used to augment info you already have.

 

[g5000]

The GOP Congress with complaint presidents after 1994 could have altered the emerging problem anytime before 2006.

It did not even try.

The Democrats were just as complicit. Clinton was all for leaving financial derivatives completely unregulated and signed legislation making it so.

After the crash, he admitted he fucked up.

 

[EconChick]

Londoner, you make some good points (esp about credit) but you also make some statements that undermine you somewhat. When you say "postwar Keynesianism that worked so effectively from 1945-73," it didn't work so effectively at all. The 70s were the most stagnant in decades....because of Keynsian policies.

I saw both Keynesian policies and Reaganomics as being effective in the beginning but ultimately overcooked as they became entrenched fixtures in Washington, each with zombie-eyed followers, special interest groups, think tanks and intellectuals who had a financial incentive to keep the system going even after it started to fail. Regarding Keynesian stimulus: it was intended to maintain full employment during the downturn of the business cycles. The criticism was that it lead to inflation, which destroyed the very gains of the poor workers it was intended to serve, not only by raising their cost of living but by putting them in a higher tax bracket (i.e., uncle Milty > law of unintended consequences, etc., etc.,). But it should be noted that the left was always willing to accept modest inflation in exchange for full employment. However, in 1973 the Keynesian system fell apart. We had high inflation and high unemployment. This, FYI, was predicted by Milton Friedman, who said there was no long term tradeoff between inflation and unemployment. He and Edmund Phelps wrote a very influential paper claiming that Keynesian stimulus could only sustain employment in the short run but not the long run. When they turned out to be right, the consensus for Keynes was replaced by the 2nd coming of classical liberalism > neoliberalism, which advocated low taxes, deregulation and a "let failures fail" approach to downturns so as not to clog free market incentives with moral hazards. Even worse: it became clear the government was incapable of applying Keynesian policies with competence or honesty. Rather than merely priming the pump during severe downturns, our presidents turned to easy-money-stimulus for political reasons, i.e., whenever they needed a bump in the polls. Presidents like George Bush, in order to prevent a deeper recession, advocated a Fed rate policy that basically dumped liquid on asset markets, including housing. This created a mini-boom which got him past Kerry, but it ultimately did what over-extended credit always does: blow up.

The world benefited greatly because thinkers like Hayek and Friedman helped us see the limitations of government intervention in the economy. Our problem is that the neoliberals have become so powerful and entrenched that they lack a similar counterbalance. Nobody has gained any traction in explaining the conflict between capitalism's desire for ultra cheap labor and its need for robust purchasing power. That conflict was solved by a high wage system from '45-'80, and buffeted by any number of programs which targeted middle-class cost-of-living, especially financial support for public universities. And then... starting in 1980, we started to save our dying middle class with credit cards. Each solution to the conflict has severe limitations that certain special interest groups were/are paid to obscure. The challenge for the neoliberals is to explain why the economic growth from '45-'73 was greater than any other period in our history. This was they heyday of the New Deal and state managed capitalism. They Left has to explain why this system all the sudden stopped working in 1973. What is odd about this stuff is that there actually is an interesting debate here, though you wouldn't know it from how angry people get when they deliver their POV.

Good post. This is the kind of discussion I was hoping for instead of the graph attack coming out of a freshman Keynesian economics seminar.

Let me get back when I have more time. Good discussion.

 

[EconChick]

Londoner, you make some good points (esp about credit) but you also make some statements that undermine you somewhat. When you say "postwar Keynesianism that worked so effectively from 1945-73," it didn't work so effectively at all. The 70s were the most stagnant in decades....because of Keynsian policies.

I saw both Keynesian policies and Reaganomics as being effective in the beginning but ultimately overcooked as they became entrenched fixtures in Washington, each with zombie-eyed followers, special interest groups, think tanks and intellectuals who had a financial incentive to keep the system going even after it started to fail. Regarding Keynesian stimulus: it was intended to maintain full employment during the downturn of the business cycles. The criticism was that it lead to inflation, which destroyed the very gains of the poor workers it was intended to serve, not only by raising their cost of living but by putting them in a higher tax bracket (i.e., uncle Milty > law of unintended consequences, etc., etc.,). But it should be noted that the left was always willing to accept modest inflation in exchange for full employment. However, in 1973 the Keynesian system fell apart. We had high inflation and high unemployment. This, FYI, was predicted by Milton Friedman, who said there was no long term tradeoff between inflation and unemployment. He and Edmund Phelps wrote a very influential paper claiming that Keynesian stimulus could only sustain employment in the short run but not the long run. When they turned out to be right, the consensus for Keynes was replaced by the 2nd coming of classical liberalism > neoliberalism, which advocated low taxes, deregulation and a "let failures fail" approach to downturns so as not to clog free market incentives with moral hazards. Even worse: it became clear the government was incapable of applying Keynesian policies with competence or honesty. Rather than merely priming the pump during severe downturns, our presidents turned to easy-money-stimulus for political reasons, i.e., whenever they needed a bump in the polls. Presidents like George Bush, in order to prevent a deeper recession, advocated a Fed rate policy that basically dumped liquid on asset markets, including housing. This created a mini-boom which got him past Kerry, but it ultimately did what over-extended credit always does: blow up.

The world benefited greatly because thinkers like Hayek and Friedman helped us see the limitations of government intervention in the economy. Our problem is that the neoliberals have become so powerful and entrenched that they lack a similar counterbalance. Nobody has gained any traction in explaining the conflict between capitalism's desire for ultra cheap labor and its need for robust purchasing power. That conflict was solved by a high wage system from '45-'80, and buffeted by any number of programs which targeted middle-class cost-of-living, especially financial support for public universities. And then... starting in 1980, we started to save our dying middle class with credit cards. Each solution to the conflict has severe limitations that certain special interest groups were/are paid to obscure. The challenge for the neoliberals is to explain why the economic growth from '45-'73 was greater than any other period in our history. This was they heyday of the New Deal and state managed capitalism. They Left has to explain why this system all the sudden stopped working in 1973. What is odd about this stuff is that there actually is an interesting debate here, though you wouldn't know it from how angry people get when they deliver their POV.

"which advocated low taxes, deregulation and a "let failures fail" approach to downturns so as not to clog free market incentives with moral hazards."

Yeah, because THAT always works *shaking head*

As you pointed out, 1946-1980?

Since 'Classical economics' has been in vogue, we've rescued the Banksters with Reagan's S&L crisis, Clinton's Latim America/Asian debt crisis then Dubya's subprime

Where is the corresponding 'growth' from lowest sustained tax burden on the 'job creators' in 90 years?

Non-Partisan Congressional Tax Report Debunks Core Conservative Economic Theory

The conclusion?

Lowering the tax rates on the wealthy and top earners in America do not appear to have any impact on the nation’s economic growth.

Non-Partisan Congressional Tax Report Debunks Core Conservative Economic Theory-GOP Suppresses Study - Forbes


DUBYA HAD A REGULATOR FAILURE, NOT A MONEY POLICY FAILURE, BTW

NOT THE FED


I noted earlier that the most important source of lower initial monthly payments, which allowed more people to enter the housing market and bid for properties, was not the general level of short-term interest rates, but the increasing use of more exotic types of mortgages and the associated decline of underwriting standards. That conclusion suggests that the best response to the housing bubble would have been regulatory, not monetary. Stronger regulation and supervision aimed at problems with underwriting practices and lenders' risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates. Moreover, regulators, supervisors, and the private sector could have more effectively addressed building risk concentrations and inadequate risk-management practices without necessarily having had to make a judgment about the sustainability of house price increases.


FRB: Speech--Bernanke, Monetary Policy and the Housing Bubble--January 3, 2010




Did the Fed Cause the housing Bubble?

According to research by Ambrogio Cesa-Bianchi and Alessandro Rebucci, the housing bubble was caused by "regulatory rather than monetary-policy failures":

Economist's View: Did the Fed Cause the housing Bubble?




Was it easy money or easy regulation that caused the housing bubble?


… after the Fed started to tighten its monetary-policy stance and the prime segment of the mortgage market promptly turned around, the subprime segment of the mortgage market continued to boom, with increased perceived risk of loans portfolios and declining lending standards. Despite this evidence, the first regulatory action to rein in those financial excesses was undertaken only in late 2006, after almost two years of steady increases in the federal funds rate. …

When regulators finally decided to act, it was too late:

Was it easy money or easy regulation that caused the housing bubble? | AEIdeas

Instead of constantly regurgitating someone else's view, why don't you try having a conversation based on what YOU think, and what you've internalized, like Londoner.

People like you can't do a debate without constantly quoting from questionable sources making overly simplistic pronouncements.

It makes you look like you're just passing on something else someone gave to you to pass on.

 

[g5000]

There was too much unemployed money looking for work, and too few good borrowers to lend it to. It is as simple as that.

The financial sector found a way to get more money into the hands of borrowers who had no business borrowing that much money. When they ran out of low risk borrowers to throw money at, they had barely put a dent in the pile of cash they wanted to put to work. So they found a way to get that cash working in the hands of high risk borrowers.

If you have a college trained financial professional banker on one side of the table, and a department store clerk who wants a new home for his family on the other side of the table, which one is more culpable for the bad loan being given?

During the recession of 2001, the only business sector that was performing well was the housing sector, and so the big money flowed like a tsunami into housing. Financial derivatives did the heavy lifting.

This was a global phenomena. Spain, Ireland, Iceland, Britain, et al. experienced an explosion of financial speculation in housing. So the idiots who blame the CRA are clueless. I like to ask them to explain how the negroes of Iceland brought down the house.

Just write down all the financial institutions around the planet and the country that failed, and you won't hardly find a single one that was subject to the CRA. Hell, Lehman Brothers bought up several mortgage brokers so they would have an unbroken chain for their CDO assembly line. Lehman was not subject to the CRA.

You won't find a single CEO blaming the CRA. It is a right wing partisan hack media invention that the CRA had anything to do with the global derivatives bubble.

Risk was sold to unsuspecting investors who were assured by the bankers and the ratings agencies that everything was on the up and up. The rubes (you the investor by way of your 401k manager) had no way of knowing the ratings agencies had whored themselves out for fees. Bad ratings meant no fees. Good ratings meant more fees. They murdered their integrity for money.

But they weren't the only ones. Your 401k manager was provided all the hookers and blow he could handle, along with box seats to ball games, in exchange for buying all this toxic shit Wall Street was shoveling at him. As was your city manager. As was your local college endowment fund manager. As was your insurance company.

Your 401k plummet? Your local taxes skyrocket? College tuition skyrocket? Insurance rates skyrocket? Yeah...the common man is being robbed blind.

One of the greatest and sweetest ironies of all time was that after being instrumental in Bill Clinton's administration at getting derivatives deregulated, Larry Summers went on to manage Harvard's endowment fund, where he lost them $2 billion by investing in those same derivatives! BWA-HA-HA-HA!

More people got into houses, and the politicians were more than happy to line up at the microphones to take the credit. And thanks for the campaign cash, by the way!

Just get out of Wall Street's way, they believed, and everyone will have a two car garage and a unicorn in every pot.

In the beginning, derivatives functioned exactly the way they were intended. But then the bankers got greedy. It was all about the service fees they earned as middle men. If the music stopped, the fees stopped, and so for God's sake keep the music going even if it means throwing the underwriting laws of the Universe learned over centuries right out the window.

When AIG FP finally realized they were insuring toxic CDOs that were going to blow up, they announced they were shutting off the credit default swap music.

Oh, hells noes, sez Wall Street. Wall Street then started up the CDS music again, and then the defrauding of investors really took off.

I can give you a list of names and their crimes. No problem.

 

[EconChick]

Why did it work from '45-'73? We had the advantage of industrial power and world markets that were lost by the world during WWII.

Bzz, 90% of the world was back and running by 1955, and 100% by 1960....

Even better: the 50s-60s saw staggering economic growth while New Deal Liberalism was in full effect. These liberal policies created the highest paid middle class in world history. And guess what happens when the middle class has huge amounts of disposable income? Answer: the capitalist has an incentive to re-invest and add jobs so as to capture those dollars. This in turn adds even more workers to the labor force, which in turn puts more consumers on main street, which leads to even more investment/jobs. . . a la virtuous cycle. Or, you can do like we did starting in the 80s. Ship jobs to Chinese sweatshops, and replace high wages with high interest credit cards. This turned out to be great for the capitalist, who benefited from cheap labor, but it ended the American middle class.

Londoner, you've failed to account for a number of things that growth can be attributed to other than big spending policies.

For one, the US was one of the few remaining strong economies standing. Many of our allies AND our enemies were decimated. Most economies were in shambles around the world. There wasn't a lot of global competition at our level.

There are so many variables here that it would take awhile to debate them. I'll get back on this one too.