Year Two of the New Depression

[El Pinko]

http://www.smirkingchimp.com/thread/17079


Year Two of the New Depression
Economic Policy
by Michael Fox | September 11, 2008 - 1:25pm


Anyone who doubts that we are a year into a Depression, remember, these things do not hit you like a punch in the face; rather, they are more like an untreated boil that slowly festers until body parts have to be amputated from infection. Good morning to you, too, and welcome back to my column after my summer off.

In October 1929, the stock Market crashed, yet there wasn’t a run on the banks until 1933. In March 1933, the day after assuming the Presidency, Franklin D. Roosevelt declared a bank holiday to stop the bleeding and institute regulations – which were fast tracked and passed within months. That legislation included the establishment of the FDIC.

Last year, in this column, I identified the start of the New Depression as November 7, 2007. That was the day that China announced they’d be unloading about $400 billion in US currency they were holding in the form of treasury notes. It was a check in the global economic chess game, and the checkmate came from bad playing on the part of the United States.

Without the Chinese largesse, Treasury Secretary Paulson and Fed Chairman Bernanke – aided by both congress and Bush, went right ahead and started fixing every problem by printing more money. Between stimulus packages, bank bailouts and, most recently (and most egregiously) the underwriting of Fannie Mae and Freddie Mac, nearly $7 trillion has been added to the existing $10 trillion of national debt. Your dollar is worthless, and the banks that are holding the entrails of your assets are insolvent.

[SammyWinstonJack]

1. Damn!

x(

[dixiegrrrrl]

2. A financial hurricane, which will be met with denial

until the wreckage cannot be ignored.

[BanTheGOP]

3. Republicans are 100% responsible, Democrats 0% responsible...

This is DEFINITELY an indictment on republican party economics (an oxymoron if I ever heard one). We need to regulate our economy so that this crap would not occur.

[El Pinko]

4. That's a pretty hopelessly partisan statement...

...at the best, the democrats have been in denial and neutered about the problems leading up to the financial shitstorm we are facing. And some, like Frank and Schumer, are willing enact policies that will only make things worse, so long as it will prop up real estate prices.


The primary fault is trickle-down-style borrow-and-spend economic policy (along with predatory lending and an economy that encourages people to borrow excessively and speculate on real estate because there are too few decent-paying jobs) - that is true enough, but there are so many democrats who have helped keep trickle-down the law of the land, it's not even funny.


Your screenname is BantTheGOP. How about banning the 60% of democratic elected officials whose policies are essentially the same as those of the GOP's?

[Hawkowl]

8. Not true.

The Glass-Steagal Act, which prohibited banks from owning brokerage houses, was repealed under Clinton. This alone is greatly responsible for the nonsensical "derivative" mortgage markets which is directly responsible for the current banking crisis.

Deregulation is proving, once again, to be economic suicide. More greed does not cure anything.

[magellan]

9. I'm sorry to tell you this

...but the Democrats DO bear some responsibility. It was Clinton who signed off on the repeal of Glass-Steagall.

[El Pinko]

5. Sad...

...that my post about the stupid Obama waffle box has generated so many responses when it doesn't amount to a hill of beans worth of meaning, but this affects all of us, and nobody could give a shit.

A poster in that thread said I was at the wrong forum. Seems they may be right.

[nadinbrzezinski]

12. Realize most folks haven't been able

to connect those dots yet

Lehamn is going down this weekend... that is what a third major bank?

[Liberal_in_LA]

6. NPR did a piece on how bad unemployment and underemployment is in Ohio.

THe piece ran today. It's scary how bad things are getting.

[conflictgirl]

7. That is absolutely horrifying

I am worried about how indebted we are to China and how insolvent our economy is - and am particularly scared of what could happen in the future as a result. I just don't know what I can do about it and I honestly feel doubtful that any current politician would be able to get us out of it. :(

[the_realist]

10. McCain Adviser Writes Editorial: The Economy is Fine -- Supports Mental Recession Idea

Donald Luskin, a McCain adviser (he says so in the column), would disagree as he writes these jewels in a long op/ed piece in Sunday's Washington Post:

"Things today just aren't that bad. Sure, there are trouble spots in the economy, as the government takeover of mortgage giants Fannie Mae and Freddie Mac, and jitters about Wall Street firm Lehman Brothers, amply demonstrate. And unemployment figures are up a bit, too."


"Patient zero in this epidemic is the Democratic candidate for president. As it would be for any challenger, it's in his interest to portray the incumbent party's economic performance in the grimmest possible terms."


"McCain campaign adviser and former U.S. senator Phil Gramm was right in July when he said that our current state "is a mental recession." Maybe he was out of line when he added that the United States has become "a nation of whiners." But when it comes to the economy, we have surely become a nation of exaggerators."

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/12/AR2008091202415.html

[El Pinko]

11. If only that were the case.

I don't think the democratic leadership grasps (or will admit?) just how profoundly bad things are. Even if Obama wins, this will proibably be way beyond his capacity to fix in four years.

[MrsCorleone]

13. It will be hugely important that the average American

understand how and why we got here. The economy will continue to worsen and the media, as we all know, will lie and put the blame on a Democratic administration. J6P has a very short memory.

First, let's win the election. Second, we need to educate the peeps (& the media) on the economy.

I don't know if it's beyond Obama capacity to fix the mess. It will be incredibly difficult, that's for sure, especially if the media influences public sentiment against him.

I have been following Dr. Robert Shiller's work for many years now. He has been sounding the alarm bells on the housing/mortgage crisis since '04. No one seemed to listen to him and he was discounted on MSM over and over again.

I just started reading Shiller's new book "The Subprime Solution: How Today's Global Financial Crisis Happened, and What to Do about It". I am in no way endorsing this book yet, as I am naturally cynical and suspicious of underlying motivations, but it would be great to have others read along with me so that we discuss his proposals.