Is it 1937 Again?

August 4th, 2011 at 2:59 pm David Frum | 106 Comments |

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Ezra Klein asks a good question:

Where will the recovery come from? The problem is that no one has an answer. And as one hopeful hypothesis after another is dashed, the markets are beginning to panic.

It won’t come from the United States. Our recovery has slowed, and updates to the Commerce Department’s growth figures have shown that the hole we’re in is significantly deeper than we realized. Thursday’s news only underscored that conclusion, as the early signs suggest that Friday’s job numbers report will be disappointing.

It won’t come from Europe or Japan. The debt crises in Greece, Spain, Portugal and Italy have quieted any conversation about recovery and raised the question of whether the Eurozone can survive. And Japan is still trying to rebuild after the horrific earthquake and tsunami that ripped across its coastline back in March.

For some time, the hope was that recovery could come from the world’s emerging economies, driven by China. But after years in which the Asian giant managed to defy global economic trends and post one incredible growth number after the other, the Chinese government is admitting that the economy has overheated and they need to begin tapping the brakes.

One obvious answer to Klein’s question: We have had a good – even dazzling! – corporate profits story in the 2nd quarter of 2011. Maybe the growth can be led by the corporate sector? Not so fast, answers a new study by Goldman Sachs, as reported in Canada’s Financial Post. Based on a study of 11 past recessions, Goldman Sachs determined that:

while past GDP growth helps explain profit growth, past growth in profits doesn’t often explain GDP growth, according to the report.

Analysts’ measure of future corporate earnings growth, on the other hand, was almost always significant, and the report found them to be an efficient way to employ profits for economic analysis.

So in other words, 2nd quarter corporate profits do not tell us much about 3d or 4th quarter GDP. Corporate profits look backwards, not forwards. The signal to listen to is early information on this quarter’s profits. Fingers crossed, because otherwise the world outlook looks very scary.

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106 Comments so far ↓

  • Smargalicious

    No, it’s not, thanks to massive entitlement programs enacted by Democrats (and one by the GOP).

    Birth-to-death, America’s got you covered. Come on over!

  • paul_gs

    No, markets are not beginning to panic. Today’s stock market movement is related to events in Europe.

    We aren’t facing a financial “Holocaust” or staring into a debt-crisis “abyss” or even an ordinary default “Armageddon”. And it certainly isn’t 1937.

    It’s August, a traditionally poor market for stocks. Time for everyone to take a breather, file away the overheated rhetoric, enjoy the sun and chill for awhile.

    • kuri3460

      No it’s the Marxist Kenyan’s fault. All of it. He is worse than Hitler, meaner than Mao, and uglier than Stalin. He is getting his dream of a one world government. Buy all the gold you can!

  • TAZ

    Add the European meltdown to the lack of effort to KEEP jobs at the FAA and then stir in the reality that this may be the way governing will be for the forceable future and stir…..

    What you get is days like today over and over!

    • sunroof

      At least the FAA situation appears headed for a patch-work compromise that will get the workers back on the job.

  • satrap

    What’s the problem? A few days where Wall Street has a booboo and it’s all “The WORLD IS ENDING!”? People have been unemployed for years here and the Wall Streeters can only think of funnier ways to urinate or defecate on them. Now, it’s “maybe I won’t ever get that third yacht” time and we’re supposed to be worried?

    • Primrose

      Try to remember SaTrap that many people have their money in the market. People scheduled to retire can’t if stocks crash, kids slated to go to college can’t if the funds crash, people who were saving up for a house down payment, can’t if funds crash and one doesn’t always recover, or recover quick enough. These are real people and real lives affected. Our economy needs as many workers to retire who can in order to create space for promotion, which creates new jobs. We need people to buy houses and we needs our workforce educated. This matters.

    • cporet

      $800,000,000 was lost today alone. All of the profits the S&P 500 made all of last year was wiped out today. This is no Boo-Boo. Real money evaporated today.

      • Chris Balsz

        No. Commodities and stocks lost equity today. Only people who guaranteed their value on 8/5/11 are out real money.

    • valkayec

      Something else needs to be said. Wall St represents investors – you, me, the guy next door through our IRAs and 401ks, and the people with lots of money – who have lost confidence in governments both here and in Europe to solve their fiscal problems and unemployment. There is a growing sentiment that elected officials are not up to the challenge of solving their problems, let alone being able to govern well. When investors lose confidence in governments, they pull their money out to put it elsewhere or in safe havens. When that capital en masse leaves the market, there’s less money businesses to borrow. As a result, businesses must contract which means fewer capital improvements and fewer employees being hired.

      We need elected officials that are up to the challenge; people who are more interested in solving problems than in partisan politics. People who have the interest of all our people at heart, not just the few very wealthy or powerful or well-connected. And we need to demand of our elected officials that they explain their views and ideas rather than just blindly accept scripted talking points or slogans.

      When investors have the confidence that government is up to the challenges facing the country, the market will climb once again.

  • Solo4114

    The past may hold clues to the future, but only clues, not precise prognostication.

    That said, I do not see any fast way out of this scenario. Partially, our problems are not merely our own: they are global issues. It’s difficult for the U.S. economy to kick into gear when every three weeks or so you have some other international catastrophe that spooks investors across the globe, be it the Greek financial crisis, Arab spring, Japanese earthquakes, a tsunami, etc., etc., etc. The downside of globalization is that when that butterfly flaps its wings in Madagascar, we feel it here.

    Part of our problems are internal. The GOP is hell-bent on tanking the economy at every turn, it seems. The Tea Party knuckleheads’ solution to all problems is (1) blame Obama, and then (2) destroy the Federal government. Not exactly a dynamite plan for economic recovery, unless, I suppose, I missed the part where the leprechauns and pots o’ gold come in. QE# is merely staunching the bloodflow, as are payroll tax holidays. Hiking taxes on the rich would help our deficit, but at this point, the deficit isn’t the immediate problem. We’re busy telling a guy who’s bleeding out from a gut wound that he should really cut down on cigarettes and beer. Not bad advice, but not exactly relevant in the immediate timeframe.

    The Dems, on the other hand, are feckless and lack any ability to effectively change the public’s mind on the GOP’s bad policies. Moreover, they can only respond with “If it wasn’t for us, it’d be worse” or “Bush started it.” True, perhaps, but again, irrelevant. What the hell are you going to do to fix it NOW? And, it seems, the Dems lack the backbone to say “Stimulus.”

    I suspect we will, in this country at least, have to rely on the “invisible hand” to save our collective bacon (or at least not cook it), until 2012 when we will have a shot at getting back to functional government instead of the freak show we’ve had for the past few years.

    • paul_gs

      The large stimulus continues. The planned reductions in deficit spending are modest for the first several years. Hard as it is to do, it is time to begin letting the economy find its own legs.

      Businesses are not paranoid about their prospects, only cautious. It is time government quit being so paranoid and invoking apocalyptic scenarios every week.

    • Smargalicious

      Weeeeellll, solo, so how’s that “hopey changey” thing workin’ for ya?? Haw!!

      That’s what you and the lamestream media get for electing a reparationist! Har!! :D

      • anniemargret

        Is that you, Sarah???

        • Primrose

          Annie Margaret, he’ll take that as a compliment. Let’s not feed him he’s gotten a bit excitable lately. You know the trolls are feeling their oats when they start throwing around the reparations word.

        • anniemargret

          You’re right, Primrose. But he does sound like Mad Sarah, doesn’t he?

  • armstp

    No reason to panic. There is just a fear trade on and not a real fundamental trade. We are just in a slow recovery. Growing 2% a year or close to the average growth over the last 50 years. Unemployment and housing are the only two issues. They will just take some time to clear.

    • Churl

      I suppose if your were Captain Edward Smith you’d be calming the passengers by telling them you’re just stopping to replenish the bars’ ice supplies.

    • paul_gs

      Exactly armstp.

  • wileedog

    “And, it seems, the Dems lack the backbone to say “Stimulus.”

    Not to take an ounce of blame away from the GOP on this, but the Dems performance the past year has been appalling. They have been so hammered with the “tax and spend” label they are utterly gunshy about sticking up for anything to avoid it coming back at them, when in the meantime the irony is its probably what we need most right now – tax and spend (or tax reform & spend if you prefer).

  • sinz54

    Klein: “Where will the recovery come from? The problem is that no one has an answer.”

    I do,
    and I’ve been posting that answer on a regular basis here.

    The recovery comes when the huge debt overhang is reduced to manageable levels–and when the dollar falls to a more realistic level against foreign currencies.

    And this is happening already.

    Housing prices continue to fall, now approaching the long-term historical trend line. Housing prices had been bid way above that trend line during the real estate bubble. Now that bubble is finally–finally!–ending.

    It’s getting to the point that you can buy a nice house for a rock-bottom price. That’s a boon to young families just starting out. In some parts of the country like Detroit and Nevada, housing prices have fallen to the point that you can buy a house with just cash, no mortgage even needed. That frees up lots of income that would otherwise go to mortgage payments–and that’s enormously stimulative.

    And the decline of the dollar continues. This makes American exports more competitive, and makes foreign labor LESS competitive.

    The American economy got way out of balance with the real estate bubble. Now it’s getting back in balance. And once it does, business will find new ways to expand.

    • TerryF98

      You mean it’s not the Kenyan, Marxist reparations loving Socialist black guy’s fault?

    • Frumplestiltskin

      oh my God, what did you do to Sinz? Well, keep him locked up and post in his place.
      Honestly dude, half the time you are a whackjob and the other half post spot on analysis. Very strange.

      I was actually looking to buy a house now but decided to wait until January and the new year. Housing prices in my area of the states have come way down and there are some great bargains.

    • Oldskool

      So those trillions of dollars in equity that vanished overnight was a good thing? Who knew.

    • Solo4114

      Interesting points. Some of what I think we’re seeing is also structural within how the U.S. economy is transitioning. I think part of what we’re seeing is a shifting in what workers in the U.S. economy actually DO, and there is a lag between what the economy actually needs, and what workers are trained to do. Until there’s some sort of meeting between that, you’ll see unemployment remain low. How that turns around, though, I’m not sure. Stimulating demand is a great idea, but demand for what? Are we going to tell legions of unemployed college kids with $160,000 in debt that, thanks to increased demand, they can work the line at the local Ford factory? Do we tell them that they have a bright future in landscaping? What exactly should Americans be doing these days as far as economic activity is concerned? I have no idea what the answer to this question is, but that’s the multi-trillion dollar question, it seems.

      • ram6968

        China’s inflation rate hit 5.5 percent in May, well ahead of the United States’ 3.6 percent headline rate. With Chinese wages rising at 15 to 20 percent per year, the labor costs of manufacturing in the two countries could pull even by 2015, a Boston Consulting Group study predicted in May.
        Rising oil prices, which drive up the cost of shipping goods by boat or plane, are also eating into China’s edge

    • JohnMcC

      Ah, Mr Sinz, so wonderful to hear from an optimist!!! Now if you could just demonstrate that this mythical ‘young couple just starting out’ actually has sufficient income and trust in their economic future to actually think a house is a good investment. Which of course you cannot. But keep smiling!!

  • TerryF98

    Looks like the teabagger hostage “crisis” broke the run Wall street had been on for 18 months. Down 500 points today. How’s that austerity working out for you?

    Funny how a bit of uncertainty can spook the markets.

    • Smargalicious

      But of course. It’s all Bush’s fault.

      • anniemargret

        Well, gosh golly, thanks for finally admitting it.

        • paul_gs

          Darn those buck toothed, inbred Creationist Tea Baggers for holding the Democratic Party hostage!!

    • Chris Balsz

      Pretty good, my IRA wasn’t that substantial, and I see oil fell below $90 so gas should stay below $4. You?

  • Stewardship

    The recovery is going to come from corporate America. As of March 2011, US corporations were sitting on a record amount of cash…$1.9 trillion. Let’s assume it is $2 trillion today. If they could be enticed to spend half of that on infrastructure, capital goods, and labor, the money multiplier effect would be near the value of our GNP.

    Corporate CEO’s report that they aren’t spending due to uncertainty. Let’s give them some:
    1. Lifetime tax exemptions on all revenue generated by new investment in the US over the next 24 months.,
    2. Level the playing field in the energy sector (eliminate all subsidies, tax preferences, etc), and implement a revenue neutral carbon tax.
    3. A five year moratorium on employer payroll taxes for all new hires during the next six months.

    Of course, if either party takes this and runs with it, the other party will surely oppose on the grounds that it harms their electoral plans for next November. If only country came first….

    • Smargalicious

      Corporations are waiting for a business-friendly administration and congress to begin spending. The current one wants to re-distribute their holdings by fiat.

    • JohnMcC

      This is not an unheard of situation. It’s a phenomenon called a ‘liquidity trap’ in which a decision that is wise for you personally, or for a corporation, makes an over-all societal condition worse. It is a wise thing for each of us to expect bad economic times to come and to prepare for them by paying off our loans early and amassing savings. Ditto for GE or Apple. This has the effect of removing start-ups and hiring and consumer demand. So the bad economic forecast has become an economic self-fulfilling fact. To which we save even more furiously and scrimp even harder and voila! even worse economic times appear!

      I’m in the medical line. We call this a ‘positive feedback loop’. It’s fatal, usually.

    • think4yourself

      Hey Stewarship – so please flesh it out a little for me. Just some of the challenges I see:

      “1. Lifetime tax exemptions on all revenue generated by new investment in the US over the next 24 months.,
      2. Level the playing field in the energy sector (eliminate all subsidies, tax preferences, etc), and implement a revenue neutral carbon tax.
      3. A five year moratorium on employer payroll taxes for all new hires during the next six months.”

      1. How do you determine a lifetime tax exemption on revenue generated by investment. Say I purchase a new piece of equipment for my company. What’s to stop me from saying that equipment generated 50% of my revenues whether it did or not?
      2. Eliminate all energy subsidies. Given the entrenched lobbying interests, that’s a tough one to do quickly – but a good idea.
      3. 5 year moratorium on all payroll taxes for new hires. It would be interesting to see how many new hires stuck. As a business owner, I wouldn’t make a hiring decision simply because I save 7.65% of the wages. Second, as with the last payroll tax moratorium, I’m concerned that you hurt Social Security. I haven’t seen the numbers but for those employees, we don’t collect the full amount we need for benefits.

      • Stewardship

        Good questions. I work in economic development. We grant tax waivers for almost every new piece of equipment or new building in our state. The major requirement for those waivers is job creation, but our state never goes back to check on it. Drilling down to an individual piece of equipment, you are right, would be tough. Perhaps this incentive is granted only for entirely new plants built here, or perhaps tax experts can pose a formula.

        The five year moratorium. Agreed, I had the same thoughts about the impact on social security. My thought is that if we can put more people to work, for a five year period, that should get us over the hump, and we’d have an economy where people could more readily find suitable employment. Presumably (ok, more like assumably) Congress is going to have to raise or eliminate altogether the income ceiling on social security taxes at some point in the future.

  • MBunge

    “Corporate CEO’s report that they aren’t spending due to uncertainty. Let’s give them some”

    People really need to get over the feudalistic concept of economic activity. Jobs are not created because rich people just happen to feel like creating them. You do not improve the economy by desperately enticing so-called “job creators”. You get it by increasing demand for goods and services from the general public.


  • Banty

    “We have had a good – even dazzling! – corporate profits story in the 2nd quarter of 2011. Maybe the growth can be led by the corporate sector? ”

    It’s not the look-back, look-forward factor. It’s that corporate profits means, or used to mean, funds available to increase wages and invest. Neither has happened. If the sit on huge reserves, and don’t even deign to compensate their employees any more than they consider absolutely necessary (those job-creators they!), the next step in that virtuous cycle we hear so much about, doesn’t happen.

    • John Q

      “…corporate profits means, or used to mean, funds available to increase wages …”

      Yes, that’s what it used to mean when unions were strong enough to pressure corporations to share profits from productivity increases with their employees.

      There is no such pressure now. Expect wages to remain stagnant while profits rise.

  • zaybu

    People don’t want to believe that the double-dip in 1937 was due to Roosevelt giving in to the popular outcry of balancing the budget,.

    People don’t want to believe that the Great Depression ended when Roosevelt had deficits during the war years that were ten times the levels before the war.

    People don’t want to believe that a stimulus package can either create jobs or save jobs.

    People don’t want to believe that in 1946, the national debt had accumulated to 120% of GDP, and we still survived.

    People don’t want to believe in Keynesian economics because no one has ever explained stagflation of the 70′s.

    People don’t want to believe that Reagan raised taxes, and the economy fared better.

    People don’t want to believe that Clinton raised taxes, and the economy also fared well.

    It’s obvious what the problem is… people.

  • JohnMcC

    The pry bar that gets our Galtian overlords to spending instead of hoarding the wealth that our labor produced is not magical confidence fairy dust. It’s simple cold fear on their part that if they hid trillions of dollars away in some huge safety-deposit-box somewhere it will shrink. It is inflation that will release it.

    No one except Glenn Beck expects inflation however. The Fed has interest rates pegged at ZERO percent. And no one’s taking them up on it. Why would the Masters of the Universe turn down free money? Because if we have deflation — which they do expect — the money they pay back will be worth more, dollar for dollar, than the money they borrowed. Deflation causes a hidden inflation on borrowed money and yields a hidden interest payment on hoarded money.

    We should tax the crap out of cash reserves, lacking inflation.

    • valkayec

      Perfect! +1^

      Even raising interest rates a point or two might help to move some of that stored money out of the Fed and into the market.

  • nwahs

    And the value shoppers will be out in force on Monday.

  • the buckaroo

    …suspecting that most of the negative comments are from individuals not trained in economics nor manners, I would suggest getting up to date on both.

    While at it try globalization, free trade agreements, tariffs & sourcing new markets to exploit as a focus of self-education. Neo-mercantilism reins & free markets do not exist except in theory.

    The half empty outlook appears to be the mantra of the Treasury Emptying Anarchist Party. As the Nation stood watching their grave digging approach, whom among could resist the urge to shout…jump in.

  • Diomedes

    “Jobs are not created because rich people just happen to feel like creating them. You do not improve the economy by desperately enticing so-called “job creators”. You get it by increasing demand for goods and services from the general public”

    Ding ding ding ding!! We have a winner!

    The situation now is based sorely on a lack of demand. That lack of demand stems from various factors, but uncertainty is the predominant one.

    Right now, we no longer have liquidity issues. Thanks the the printing press running 24/7 and the massive layoffs that occurred during the recession, the actual amount of capital companies have on hand is substantial. But they are unwilling to spend it. Whether that be through acquisitions, investments or increased wages for talent, there is no incentive. To compound the situation, consumers who were stretched thin during the bust are only now beginning to shore up their reserves and pay down debt. And with the continued uncertainty, they are hesitant to spend. Which further exacerbates the cycle.

    And of course, in previous times, the government could stimulate demand through publics works projects. Now that the Tea Bag congress is running the show, that is not going to occur.

    Bottom line: Double Dip!

  • Graychin

    The American economy suffers from a lack of demand. Too many people are unemployed or under-employed, or have taken huge pay cuts to keep what employment they have. Fuel is expensive. So is food, thanks to diversion of food crops for fuel.

    The recent huge corporate profits won’t help the economy while those profits are sitting in corporate treasuries. There’s no point in business expansion if no one is buying what you are selling.

    It’s “mission accomplished” for the economic policies of Congressional Republicans.

    • Chris Balsz

      You’re hoping to recover the White House and Senate from the House Republicans next year?

  • JimBob

    It is long past time to put to death the cancer known as Keynesian economics. Bernanke has pumped 5 trillion into the economy. Pelosi, Reid and Obama went on the biggest spending binge in our history and the economy is on the brink!!

    If we want the economy to recover we have to let the recession do its job. Clear out all the underbrush. Raise interest rates, slash spending and reform taxes. Lower rates and get rid of loopholes.

    • D Furlano


    • think4yourself

      I NEVER agree with JimBob. And won’t about the cause (it wasn’t Pelosi, Reid and Obama that caused this, much too simplistic).

      But, the point about the recession doing it’s job has merit. And, I’m okay with eliminating loopholes and reducing basic tax rates. Pre-recession we had 5-7 years of unrestrained spending fueled by debt. We’re now paying the price.

      Should you raise interest rates? Maybe. I’ll bet a lot of people waiting to buy that next house until prices bottom out, might change their mind if the cost of the mortgage goes higher. One of the reasons banks are not lending is they make as much at current rates by investing in treasuries. If rates go up, it might induce them to lend more (but no guarantees).

      One argument against just letting the recession work and us taking our lumps is the end game. Places like Allentown, PA never recovered from the end of the steel industry. 30 years of recession. Perhaps they would have been better off if big money had come to town and invested in creating high tech jobs and retraining the labor force. Expensive in the short run but good for the economy in the long run by creating a stable, tax producing area. That’s what the Asian car manufacturers did in places like Smyrna, GA.

      • JimBob

        In eight years Bush added 4.9 trillion to the debt. The last two years Pelosi was speaker. The House controls the purse strings.

        Greenspan and Bernake created the bubble and when it burst people that had no business owning a home in the first place went belly up.

        Obama brought in an All Star Team of Keynesian economist that recommended the disastrous stimulus nonsense. Obama is making all the mistakes Japan made in the 90s. The lost decade.

        Unions ruined the steel industry in northern states. In the southern right to work states the steel industry is doing fine.

    • zaybu

      “If we want the economy to recover we have to let the recession do its job. Clear out all the underbrush. Raise interest rates, slash spending and reform taxes. Lower rates and get rid of loopholes.”

      Perfect recipe to plunge the economy into the 30% unemployment rate. And no doubt in those circumstances, the underbrush will clear out. Now, if only the tea baggers were that honest with the American people!

      • D Furlano

        Here is a fact you can Google. Japan has had 20 years of stagnation because they thought they could just let the economy work itself out. Now they are working on 25 years.

        Unemployment was fine until the financial crisis. Once demand dropped off unemployment took off.

        If the opposite of what happened after the financial crisis would fix the economy then the question is how do we increase demand?

        The answer isn’t waiting for a rebound, I can prove that using Google.

        • paul_gs

          Which Japan are you talking about? After the housing bubble popped and stock market crashed, years of massive govt stimulus failed to lift GDP significantly. Why would the results be different in the US?

      • Banty

        I hear this “reset” idea about a plunging economy as a fix. Even the word “purification” gets used. But I never hear the mechanism explained, as to how that works. Can someone who believes in that, tell me, *exactly*, how that works? It strikes me as an almost mystical idea – put the economy in a kiva circle and sweat the illness out its pores, and it will get better. Or something.

        What we’re really talking about is deflation. That’s a vicious circle where money isn’t spent, because tomorrow prices will be cheaper, which means there is no demand, which means there is no reason to create an item or advertise to provide a service, etc. etc. I really don’t think these half-educated folks really understand a working economy as an organism. You don’t just stop pieces of it and fix it, no more than a surgeon can remove the heart and put it on the table, for better access to the liver.

  • D Furlano

    From Jared Bernstein

    “If you elect people who believe the government does not work, they will prove to you that they are right. ”

    “If you elect people who do not understand how the economy works, and the role of government in recession, you will get intractable recession with no way out.”


  • nwahs

    This is an opportunity, not a 2008 problem. People over seas can’t sell their stuff over seas so they’re selling where they can sell- America. Its not 2008. This has more to do with the poor economy across the pond.

    Want in? Now is the time.

  • D Furlano

    Its the demand stupid.

    All the lies from the likes of von mises, Cato, Heritage, Heartland, and other right wing nutbags will be obvious.

    • JimBob

      Look loser, people are paying off their debt and saving money. That’s what happens in hard times. That’s called clearing out the under brush. Recessions should be welcomed because they correct all the mistakes of the Federal Reserve. Bernanke and Obama have been trying to fight what needs to happen. And the results are obvious. Stagnation. We should have taken our medicine in 2009. It would have been very rough, but the economy would be recovering. Now we’re heading into a double dip and about to lose our AAA credit.

      • Posting From Fake America

        If uncertainty over the American debt situation were the cause of the stagnation over the past two years, why are our borrowing costs at record lows? Investors have been flocking to buy the debt that teabaggers think we’ll never pay back. The debt problem is serious but it is more of a long-term entitlement problem that contrary to the fear-mongering of the far-right, can be corrected in the future. Federal Government debt was not the cause of the crisis and is not the reason for the potential double dip.

      • D Furlano

        @ jimbob

        Lies, stupid lies.

        • paul_gs

          Enough with implying someone is a liar for posting his opinion.

          If you can’t offer a counterpoint, don’t bother posting.

        • D Furlano

          Who are you the forum ombudsman?

          Here’s a counterpoint; when I am walking down the street and see a pile of crap I just need to point it out and everyone knows to avoid it. No explanations are needed its easily recognized for what it is, crap.

    • helbent93

      I know how to fix the economy. The Fed can give us serfs money at ZERO interest that we can then invest in Treauries and get a 3% return. It worked for the banksters, right?

  • NCScientist

    Today was the beginning of the Bagger Gotterdamerung!!

    • D Furlano

      von mises Gotterdamerung

      “…we now live in a purely fiat world and not the gold standard model in which Mises and many of the great Austrian economists generated their finest work. Therein lies the weakness of the Austrian model. It is based on a monetary system that is no longer applicable to modern fiat monetary systems such as the one that the USA exists in.”

      Cullen Roach at the Pragmatic Capitalist

    • helbent93

      love that term.

  • the buckaroo

    …the year 1937 will be remembered as the one in which the world, steadily & insistently, appeared to be going to hell in a hanging basket. It was a twelvemonth of gloom, uncertainty & apprehension. Many things happened to disturb the even surface flow of events-strikes, wars, and so on. But what actually did happen? Was there any substantial and measurable gain in the upward struggle of the human race? In all the pulling and hauling, the conflicts and the bickering, was there any tangible victory, over any broad front, for the nobler aspirations of mankind? We presume to doubt it. The assaults upon the ideals of democracy surely became stronger. The increase in bitterness, between peoples and factions and individuals, appears too obvious for comment. Are there still men of good will? Perhaps, but they are hard to find…NY Herald -Tribune, January 1, 1938

    That was the worst depression in the history of the world…until…

  • planetirving

    Sorry to recycle part of this from another posting I just did but has anyone noticed how the recent downturn and uncertainty in our fragile economy seems to have coincided with the ascendancy of the new Republican House majority?

    • paul_gs

      Those hillbilly Tea Baggers sure are powerful, frustrating that mighty Democratic Party and all. Got all those Dems running scared, imagine that.

      • Smargalicious

        Go back to your planet, irving, and get a brain.

        The 2008 housing bubble burst/investor collapse was the fault of greed enabled by Democrats. The Great Recession we’re in now is the result. And, the fact we have a reparationist/community organizer/teleprompter reader in the WH is absolutely NO help.

        We have to get a business-friendly GOP Senate and WH next year; just hope it isn’t too late.

        Best to arm yourself and get ready.

        • planetirving

          All righty now, this must be my rite of passage on this forum by receiving a snarky remark from the Forum Outcast. Enough with the name calling and invective. By the way, America; love it or leave it.

        • PeedNUrGenePool

          So Smarg, two off budget wars, a giant tax cut for the rich, and a new prescription entitlement program….they had nothing to do with the recession right?

          Then the worst economy since the depression is dumped in Obama’s lap, and he’s blamed for not working miracles?

          Oh, and let’s not forget the Republican strategy to make Obama fail at whatever he does. Just so they can get re-elected…no matter how bad it is for the Country.

  • valkayec

    Has anyone noticed that the economy began to stall out exactly when the new Congressional members came into office? Hmmm….

    • paul_gs

      Tea Baggers rule the world, didn’t you know? Those rednecks are omnipotent.

      • Smargalicious

        paul, the hillbilly/redneck folks you are talking about don’t enjoy an anti-White, anti-American President who has no clue whatsoever how to govern.

        So, go back and join the fatherless welfare garbage/illegal/anchor baby crowd you seem to identify with. Kapeesh?

  • TerryF98

    Sure looks as though the new congress started a sharp decline in job numbers and now the stock market.

    I guess all that “Confidence ™” they brought to the economy is working!

    Teabagenomics, the fruit of the nut.

    • Chris Balsz

      As if cutting $300 million dollars from the budget this spring and another $22 billion in this debt ceiling deal has greater effect than the implosion of Eurozone.

  • Stewardship

    One more suggestion. I spent 20 years in banking. Changing jobs every couple years when my employer was merged into another, larger organization. Most rural counties and small towns don’t have locally owned banks anymore. That has had a huge negative impact on our economy.

    First, the loss of a dozen or more backroom jobs, a handful of middle management jobs, is huge in small communities. Second, removing those people from the local economy removes talent to serve on charitable boards and in service clubs. Third, and most important, lending decreases because larger banks lean on impersonal data and forget personal history and character.

    I’ve seen hundreds of people and businesses who used to borrow routinely from community banks, shut out from credit by new banks with remote decision making.

    We need to provide a incentive to repopulate rural areas with community banks. Whether it is totally tax free “banking” zones or some other attraction, we need to put banks AND bankers back into our communities.

    One of the tenets of my Republican Party is that the best government is that closest to the people. I think the same is true of banks.

    • helbent93

      Our urban/suburban area near Chicago HAD a community bank that invested heavily in both middle-class and poor areas. They were allowed to fail in late 2008. Apparently the bank was not quite too big to fail, so bye-bye. The bank is sorely missed.

  • Sinan

    Now that we have learned a lesson from the perils of cheap credit cascading from top to bottom throughout the economy, perhaps we also need to have a national teaching moment on the concept of Aggregate Demand. I am astounded that our national leaders including our economists are not harping on this simple formula to determine where business comes from in any economy. You can have all the tax cuts you want but unless you have customers and they have money, all you have is cash. The last 30 year love affair with the rantings of Milton Friedman has created what some call “The Shock Doctrine”. Well the only shocking thing that matters is the lack of awareness of the truth and the facts when our national media covers the economy. The bottom line is that unless we bring back credit demand or increase exports or increase consumer demand, businesses will not hire in the numbers needed. And since we already learned our lesson about cheap money, we can’t borrow our way out of this at the personal level. Since we do not want to tax ourselves to help create fiscal policy demand creation, all we have left is exports. And what do we export the best? War.

    • Curiosity

      Viewing our military and the men and women who serve in it as a commodity that we export the best is an incredibly depressing POV.

  • TSE

    Public much more heavily blames the GOP for the debt ceiling fiasco, and believes in growing numbers that the GOP is too heavily influenced by the tea party. The view of Obama’s handling of it is basically split down the middle and his approval is steady at 47%.

    Economically and practically, I’m convinced that the president did not do the right thing by giving in. Politically, he’s beating up on the GOP … again.