The take-away from Obama’s presser is that budget hawks can take a long vacation because they won’t be relevant for a while. I expect most Republicans and Blue Dog Democrats to huff and puff about this, but there is a wide ideological consensus in favor of a major stimulus package that comes without offsetting increases in revenues. Basically, we are going to ask foreign banks to flood the zone with cash and we’ll pay it back later. This is one more reason for our children and grandchildren to hate us. Yet, we’ve arrived at this moment and what can we do?
I feel much better about deficit spending that is aimed at creating jobs than in deficit spending that is aimed at killing Arabs. But we need to raise marginal tax rates at the top to help offset some of this insane borrowing. It’s a matter of generational equity.
I guess Matt Stoller jumped ship today. Frankly at this point I don’t blame him. I can’t even imagine 7.4 Trillion. Bush, Cheney and the rest needs to be stripped of all their wealth.
He was on the ship?
I recall him knocking doors for Hillary in South Carolina and raising the alarm bells that she had no ground game.
What I don’t get is Obama’s apparent message that he’s not even going to implement the inadequate upper-bracket tax hike he himself proposed. There will never be a better time to justify a tax restructuring that brings the brackets close to Eisenhower-era levels. Tax policy is the very heart of government, but Obama doesn’t seem to want to want to touch it. I can only hope he’ll make up for that once he’s president.
My guess is that it is seen as working at cross-purposes in the current emergency environment. They want to spur as much consumption as possible, even of high-end goods.
He stuck to his commitment to at least let them sunset in his presser.
Considering the real problem now is deflation, yes, massive spending is about the only choice we have. The Fed rate is effectively zero. The housing collapse continues unabated, October numbers out today were dismal.
Unless Obama can stabilize housing prices and stop the deflationary spiral the housing depression is creating, we have no chance whatsoever.
C’mon. Some Goldman/AIG/Merril ass paying a few million more in taxes so that he only as a few hundred million left is not going to change his consumption habits an iota. Even morons like the ones who control the nation’s fate can only drive so many rollses and fly so many miles on their private jets.
I think the great uncertainty is whether Obama sees the outrageous wealth gap, which has never shown as vividly in real life as it does now, as a basic problem. If he doesn’t, or if he thinks he’ll fix it with a “high time lifts all boats” scam, it’s hard to see how he’ll end up being much more than just another Clinton. Which will be a breathtaking dive from the expectations he raised.
There’s no problem in taxing high marginal rates. But it’s a matter of timing. They want consumption stimulation until things level out. The sunset is still there and it’s only, what?, one fiscal year difference? Or is it two?
Most of the people who would have been affected by his tax hike do not that money to sustain their consumption.
“This is one more reason for our children and grandchildren to hate us. Yet, we’ve arrived at this moment and what can we do?”
but the bailout is working, you said so!
I’ll tell you something we can do: put conditions on the money (as we should have from DAY FUCKING ONE) to make sure it’s used for lending and not bonuses, salaries, bank acquisitions, and parties for executives.
And you know i saw this and predicted this from day one. what kind of dumbass motherfucker gives away free money with no conditions and then acts surprised when it wasn’t used as the dumbass motherfucker intended? That’s all I’m hearing from people who should have known better, the whole “who could have predicted” line.
Working?
You understand that the magnitude of the problem was not exaggerated now, don’t you?
We’ll be lucky if anyone can get anything to ‘work’.
But the fact that Obama needs more money than Paulson asked for is not an indication that Paulson didn’t need the money. The bill came due, Brendan. A finger in the dike is the best we can do until saner public figures take over.
I think people like Alexander were well aware of the magnitude of the problem. I have been well aware of impeding doom for over a year now. I knew about the credit market spikes and watched them closely–not just the one in September.
It’s moderate Dems like Obama and you that ignored the warning signs and did not bring enough attention to these matters until it was too late. You let Bush and Paulsonn and McCain and the GOP run around blowing smoke up our asses about how great the economy was. Then, you fell for the gimmick of him reversing course, holding a gun to our heads, and demanding free money for their banking buddies. It was armed robbery and you fell for it and now you are blaming the people that showed far more foresight than you? Unbelievable.
It was people like Alexander that warned of the foolishness of giving Bush and Paulson a blank check to “fix” our economy. They couldn’t fix a little league baseball game let alone something as huge as our economy. Only a fool would have trusted Bush and Paulson.
Alexander=Brendan
at least someone acknowledges that I was right.
you were right to SFHawkguy.
not that that does us any good, other than to call up the thickwits and pinheads that represent us and annoy their staff by reminding them again and again of their bosses’ foolishness.
I’ve stopped trying to convince people. I enjoy the debate though.
I focus my attention on my own personal life. I have been able to protect myself financially and actually make money this last year because “I was right”. I guess that’s the benefit of being an independent thinker that seeks out the most knowledgeable sources on a topic (which is why I like Booman–and hope he doesn’t become an Obama partisan and instead retains his intellectual integrity).
Any way. The dye is cast and I’m not going to spend time beating Obama up over it. This is who he is and he didn’t try to hide it during the election. He just represents were our country has gone the last 25 years–especially the Democratic party.
I’m on to the next step–how this Depression will play out. And I’m trying to make my moves with that in mind.
I’m glad you were able to make money! I wish I did.
I chose about the best time to do that–last fall.
So the little I did speculate in the market I knew that it was indeed speculation. I just was nimble enough to be almost entirely short and therefore make money.
But the thing I am proudest of is how I reduced my living expenses and debt and stopped living beyond my means and didn’t buy into the speculative behavior that so many did (going long U.S. equities and real estate).
Just by avoiding those two assets was a HUGE advantage.
Since I’m relatively young my next move will be waiting to see when to go back in to stocks to buy and hold for a longer time frame. I need to watch going back in too early. It’s awfully tempting but I’m sitting pat for the time being.
expand. expound.
once I’m done with the 3-month probationary period at my new job, i can start investing again. I’m thinking of putting some money into a vice-fund: tobacco, booze, gambling, and defense contractors.
I was about 90% short. Of my long stocks I was in the typical recessionary stocks, like tobacco (Reynolds) and Waste Management, etc. These haven’t done as well as I thought. I made my money going short. For e.g. I was short Citi at about $30 but got out around $20 because I knew the government would get involved. Google has been kind to me as well as the homebuilders. I didn’t follow any secret strategy and it’s pretty much what one would have found any bear following. Oh, my big winner, and an easy way to go short, was EEV.
But it was hard making money going short and it was nerve racking.
I’m actually just going to force myself to stay in safety and avoid the stock market until I can reverse course and start buying again for the medium to long term.
Then it’s value. Lean and mean companies that make things we need. I’ve been hot on Sanderson Farms, a chicken stock. Just bought some at $23 (but forcing myself only to go in a little at a time). I’m actually looking at Japan or an Asian market to go long in before I go long U.S. equities. To much risk.
Safety. Safety. Safety is the key. I don’t have enough money to speculate I just need to focus on earning money the old fashioned way and living simply and within my means.
From what i’ve seen the “price of doing nothing” has been far outweighed by what it’s cost to do something, cus the end result seems to be the same.
what i’m seeing is not a credible response. we were told that if we didn’t “do something” the market would crash and we’d all be selling apples. so we did something: the market’s still crashing and life is going on.
also, i don’t oppose the bailout in theory: I oppose THIS bailout, because (as i have said from day fucking one) IT DOES NOT WORK.
It does not work to give giant banks free money with no conditions and expect them to use it “the way it was intended”.” try it yourself, see what happens. Gimme some of your money to spend with no strings attached, and see how many useful home repairs i take care of compared to how much weed I buy.
It does not work when the taxpayer whose money is on the line is kept in the dark as we have, because when the free money isn’t used “as intended” the people doling it out lose credibility. Does anyone except for a handful of dc assholes really think Paulson knows what he’s doing? Even paulson seems to doubt this, he said himself his bailout failed.
Citbank just got a handful of cash handed over courtesy of our children’s future, I mean the taxpayer and they have no plans to stop spending millions on fucking baseball sponsorships. AIG’s stil giving out the bonuses and throwing parties. The big banks are buying up smaller banks, and all of them have said lending is not a priority. How is that going to stimulate lending??
If as you say “We’ll be lucky if anyone can get anything to ‘work'”, well then maybe it’s time to stop throwing good money after bad? Doing the same thing over and over again while expecting different results is the definition of insanity. And that’s what this bailout is: insanity.
“A finger in the dike is the best we can do until saner public figures take over.” Like, who, Bob fucking Rubin and the Clinton team President Change is appointing? gimme a freakin’ break!
the money is being spent more wisely than was intended. That’s a good thing.
as my english professor used to exhort me wjhen i made a questionable claim “Expand. Expound.”
the original Paulson Plan has been almost entirely scrapped.
there’s still no transparency though. Bernanke refuses to say who’s getting the money and what’s the government has bought. That’s hardly a recipe for trust.
Wake me when Philly gets a bailout. we only need $1 billion.
And Philly would probably spend it more wisely than Paulson’s buddies.
OT, but I lied your letter to Nutter about collecting what the deadbeat Eagles owe the city and using it to pay for the libraries. Makes sense to me, and the city has a PR department that I’m sure could help shame the Eagles into doing the right thing…
Erm, I liked your letter…
“Makes sense to me, and the city has a PR department that I’m sure could help shame the Eagles into doing the right thing… “
problem is our mayor shares a critical trait with george W. Bush: he doesn’t listen. he’s holding community meetings to TELL us what he’s doing and doesn’t expect to change his strategy.
That’s why he’s going to be a one-term mayor.
There were conditions in the law. They are being ignored, as is the habit of the Bush administration. The Dems have serially backed down from engaging with the administration in one constitutional crisis after another. It would be irrational to expect them to change their modus operandus during an economic meltdown. IOW, we are still fucked, business as usual.
The “should know better” timeline goes back way before the present problems, however. It started decades or more ago when Americans decided to empower “leaders” whose prime goal was to make the milititary/financial complex the de facto rulers of their country.
CEO of CitiGroup got up on TV this morning and assured everyone that the company was in great shape. Went at length about how well managed the company was. Spouse looked at me and said, “Well, then. They don’t need $320 billion from the taxpayers, do they?”
with fiscal conservatism.
If National Income=Output=Total Spending
Total Spending =Consumption + Investment + Net Government Spending + Net Exports
National Income=Consumption + Investment + Net Government Spending + Net Exports
We are experiencing a decline of Consumption and Investment and with farther declines in foreign income and spending we cannot increase net exports. This leaves only one entity capable of spending and that is government. Increasing taxes simply decreases the net of government spending. The danger right now is not deficit spending but that we will not allow the deficit to expand enough.
At the point the economy returns to something close to full employment would be the time re-evaluate the fiscal situation and determine what we need to do reduce the deficit.
I believe 20 Trillion is too big a hole to climb out of.
Obama and the centrist Dems have already ensured that the deficit spending will not be going to help average Americans. Rather, trillions of dollars has already been given to the criminals that caused this problem in the first place. It’s too late. You’re a couple of months behind the times. As you wanted. You and Obama were willing to let Bush and Paulson rob the treasury because you didn’t want any political troubles for the election. The politics of the bailout was a huge gift to Obama–but his actions screwed this country for a long time and ensured that the deficit spending would be done at the behest and for the benefit of Wall Street. You are a certifiable sucker if you say otherwise.
Obama’s instincts were to support Bush, Paulson and the Wall Street financiers and now the money is spent–of course they are engaging in accounting gimmicks so that we don’t know how much they have already spent until way after the fact.
I was telling you way back before this banker’s bailout boondoggle was passed that the bank welfare the centrist Dems and the Republicans wanted to give Wall Street was far more than stated $700 billion and you were buying the sucker’s line that the taxpayer was going to make money on the deal!!!!! (in your defense you were just repeating the garbage Obama was spouting) One would have to be a economic rube to buy the argument that the U.S. taxpayer is going to come out ahead after all this bank bailing.
It’s not hard to understand. Like a family budget the American budget is limited before we blow up with too much debt. It very well could be too late already. The original Paulson plan (both official legislation and letting Bair and Bernake act and ask for forgiveness later) was to give him and Bernake and Bair the keys to the treasury and let them give the money to banks and financial crooks so that the Banks could be compensated for their disasterously wrong bets and so that they would then have enough on their balance sheets to lend to us regular people again (at interest of course). It’s the whole supply-side Republican belief system–which is also Obama’s belief system. Give money to the richest of the rich and let it trickle down to us little people. Forget that crimes were committed and forget that these rich people earned huge profits from the deregulated markets.
Forget that all of this is unsustainable and is what got us in this predicament in the first place. Give to the rich and borrow from the average American.
And guess what. The new spending bill is going to be just like the Sring 08 stimulus bill. Remember that?
We’re fucked. Thanks to the centrist Dems the last remaining money will go to the bankers and criminals. Instead of receiving indictments they are receiving invitations to sit at the table with Obama.
based on these statements l presume that there will be, by default, no tax cuts for the middle and lower classes…the real consumers…either. or did l miss something?
this coming friday is the traditional black friday shopping day that establishes the mind set and consumption trends for the holiday season. l suspect it’s going to be worse, much worse, than expectations suggest…and they’re not particularly cheerful and upbeat.
one more gamble on trickle down?. “voodoo economics” anyone?
good luck.
an aside re; this :
this little AFP news nugget slipped by with hardly a whimper of acknowledgement by the msm, or anyone else…chimpy calls in some chits:
the plutocracy is still running the game.
Amazing article. They really think these states are going to turn over a quarter of their savings to deadbeats. And, apparently they aren’t aware that everybody else is in trouble too and don’t have the cash they need.
I hope Team Obama has a Plan B in mind when they try to finance their programs through deficit financing and no one is buying anymore. There’s no way they can borrow their way out of this mess. For instance, the Chinese appear to be planning on financing their own stimulus program by tapping into their stash of dollars, meaning they’ll be selling, not buying.
Good point. And this post by Yves Smith ( http://www.nakedcapitalism.com/2008/11/government-lending-support-pledges-and.html ) notes that China is in a similar position to the U.S. just before the Great Depression–as a creditor to the world.
The post also discusses the recent Bloomberg report that the government has already put $7.4 Trillion up in bailout monies. I would also add the stimulus bill from the spring and the $140 Billion stimulus added to the recent bailout bill and of course the new stimulus the Democrats are planning.
So not only is the price tag for these one-off payments now rising . . . we look to be running massive deficits for years. Bush took over with less than $5 Trillion in debt and now it’s well over $10 Trillion. Who knows where we really sit with all these unknown liabilities and unknown collateral and unfunded wars and unfunded obligations; Bush and Paulson et al. are making sure we don’t know how bad it is,
isn’t it though. seems a lot of people are denial about what it’s going to take to resolve this mess, and begging with one hand and throwing money at the people who got us into it, aren’t part of the solution, imo.
booman asks:
YouWe gotta problem?l dunno…do we?
that opinion piece would appear to put lie to this, from obama’s speech prior to the presser:
not a lot of “sound judgement and fresh thinking” to be found on that team, and as for the “bold new ideas”…l haven’t seen any yet, but it’s still early. and like he said in closing:
it’s going to be an interesting ride wherever it leads.