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Monday, September 19. 2011

Regarding the jobless American economy, the esteemed Prof Krugman wants to borrow more from China, and spend it.

Obama wants to raise taxes, and then spend that money on government jobs, union work, and crony businesses. Vote-buying, in short - illegal on the individual level but quite legal on a larger scale. As our reader says, taking water out of one end of the pool and, after taking your cut, pouring the rest back into another side of the pool. How does tax-and-spend benefit anything except the government industry?

Does any of that make any rational sense? Or am I stupid?

Since the recession, we have had a government doing everything it can to suppress, leash, and stifle the animal spirits of American enterprise. Why are the predictable results always "unexpected"? Where would we be, now, without China's loans?

We miss Reagan's common sense. The Dems are blinded to reality by ideological sentiment. Money doesn't grow on trees.

Posted by Bird Dog in Hot News & Misc. Short Subjects, Our Essays at 15:06 | Comments (18) | Trackbacks (0)

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We certainly miss him in this house, and I am sure that Nancy does. Once during his presidency he was being interviewed for a magazine article, and Nancy, thinking he was alone in the oval office, popped in with a question. When she had left, Reagan said to the interviewer, "You know, I miss her every time she leaves the room."

Lovely story, isn't it?

Marianne

#1 Marianne Matthews on 2011-09-19 15:36 (Reply)

This is a nice blog...

#1.1 Rahul Pandey (Link) on 2012-06-01 02:16 (Reply)

Very lovely, Marianne!

We surely miss him in my house, too. My daughter is a huge fan and loves to get anything from the Reagan Ranch gift shop.

Sadly, they don't make them like that any more.

#2 mudbug on 2011-09-19 15:49 (Reply)

Money grows in volume at the Federal Reserve tree.

Mudboy may do Us all a favor and not run for reelection.

He could run for his native Kenyan presidency.

#3 Leag on 2011-09-19 16:21 (Reply)

DemoReagan:

http://www.wtffinance.com/2011/03/ronald-reagan-hypocrisy-the-deficit-spending-anti-free-market-conservative/

#4 Leag on 2011-09-19 16:47 (Reply)

The problem, BD, is that China isn't purchasing our debt, and hasn't in some time. So Krugman may wish we could borrow from them, but he won't get a dime (or a yuan, or a renminbi).
So, to fund Krugman's 'stimulus' wishes, we have resorted to printing money. Lots of money.

And for as long as the dollar is a reserve currency, other nations will absorb massive amounts of the inflation we are creating. Krugman, of course, tries to explain extra-national inflation as "the effect of China's increased demand". Sure, that plays a limited role. But it's really because other nations have to increase their holdings of US dollars (thereby increasing their own currency print), which is fueling inflation elsewhere.

It will come home to the US, eventually. It takes time. Today, we're unlikely to have Smoot-Hawley tariffs. Why bother, when you can debase the currency and have a race to the bottom in the money markets?

#5 Rick on 2011-09-19 16:56 (Reply)

After reading the Krugman article (something I am usually loathe to do), I wish I could say I was surprised by what I read.

Krugman assumes that the effects of austerity are the riots and fiscal difficulty we are seeing. He is assuming that the reasons for austerity are to have immediate beneficial results.

Last I looked, when I was faced with a difficult financial situation, the austerity measures I implemented at home were not designed to have immediate beneficial results. I knew things would get tough. I knew money would be tight - but bills would somehow get paid and we'd make every effort to get past the difficult times because the austerity was meant to lead to a brighter future.

Borrowing to cover those bills was an option, and would have had wonderful immediate effects. I could have gone on vacations, eaten filet mignon every night, etc. Would've been great. But when the bill came due, it would be a problem.

And that's what Krugman always forgets. There is a bill that comes due. Sadly, it's due now - so he wants to borrow to pay the bill that's due now and we'll hope to deal with that next bill at a future time.

Kick the can, it's called. Only he fabricates his own language and rationale to support the fantasy land that he inhabits. Oh, and if you're not a resident of Krugman's fantasy land, he has some choice words for you. Terrorist, fiend, moron, idiot.
Thanks, Krugman, for sharing your view of me, because I think just as little of you. But then again, I live here, in real life, so my words have just a little more meaning.

Austerity works. Anyone who takes a look at the 1921/1922 Depression and sees how laissez-faire policies actually shortened the depression can understand why supporters of the policy would want to engage them.

Deleveraging is necessary. There are two ways to do it. Neither is painless. But one will cause alot of pain immediately and have longer term benefits since wealth won't be redistributed. The other will seem to cause less immediate pain because it will lead to an inflation which will destroy and redistribute much more wealth than any austerity package would.

Krugman wants to keep the illusion of wealth alive. Last I checked, that illusory steak on my plate tasted just as good as nothing at all.

#6 Rick on 2011-09-19 17:13 (Reply)

Thanks, Rick. Well said.

#6.1 Archer2010 on 2011-09-19 18:57 (Reply)

Common sense, indeed. If it wasn't for their 'tax the rich' mantra, and their utter loathing of capitalism, the Progressive Left would have nothing.

All the while, Nero pays his same 'ol song (even today, in the Rose Garden), while psuedo-(modern) Rome burns.

At least Ron could channel the American passion, know what it was like to travel to, and know how we got here, and not play lip service to it. I fear the rebuttal to The One will be epic this voting cycle... and that scares the Leftists to no end....

#7 Fred Zeppelin on 2011-09-19 18:58 (Reply)

I wish I could share your hopes.
I fear something different. While Obama is losing some adherents, he's also cultivating a powerful message. That message is "the Republicans are blocking my good deeds".

Class warfare doesn't play, but Obama is carefully constructing his message. That message is this - even the rich want to pay more (Buffett), and I want them to pay more, and you want them to pay more. But the Republicans are stopping me!

It's class warfare by any other name, but to Obamaniacs, it's 'common sense'. I can't tell you how many people here in NYC ask me "why don't you want the rich to pay more?"

My standard (if misleading) reply is "it's not about what I want, it's about what's going to work. Taxing the rich may increase the amount of money the government has coming in, but only by a very small amount. So, OK, maybe I'm fine with that. Then what? Obama is so intent on increasing his 'revenues' by such a small amount, he's not paying attention to the big picture. That big picture is saying that we have a massive train wreck occurring, and Obama is spending his time trying to determine how to pay one member of an entire crew that's about to get obliterated."

There is no easy answer, and there is no 'correct' answer in the sense that there is only one good solution. But there are plenty of 'incorrect' solutions, and that is all that Obama seems capable of coming up with.

How many times have we heard the "raise taxes on the rich" mantra? How many times are we going to be told the Republicans blocked it? This is a carefully planned message. Don't be fooled, but there is complicit activity taking place between Obama and the media.

Not in the sense that they are conspiring together. Just in the sense that these 'reporters' are really just collecting White House press releases and issuing rewritten versions of them as their 'stories'. Because reporters are stupid and lazy, and are overwhelmingly Democrats who would love nothing more than to see Big O win again, against all odds.

Wouldn't that cement several memes?
1. The US is really the land of opportunity if he won again!
2. Just shows the Republicans are the ones out of touch and it really was racism.
3. Obama's message is accepted by more people than originally thought, so he has a mandate.

I worry. I expect the Republicans should win. That almost certainly means if they lose, it's going to be an ugly 4 years.

#7.1 Rick on 2011-09-19 19:12 (Reply)

The pool analogy doesn't work if resources are idle, is the theory.

The government will take money that the private economy keeps idle against a rainy day and put it in active circulation.

The problem is that it does this by misallocating resources, and so may well decrease national wealth rather than increasing it, and, what is the same thing, generate jobs that are not economically self-sustaining.

So it just generates jobs that need continued government spending.

#8 rhhardin (Link) on 2011-09-19 19:31 (Reply)

Agreed. You may have missed this post last week:

http://maggiesfarm.anotherdotcom.com/archives/18004-Rhetorical-question.html

#8.1 Rick on 2011-09-19 19:50 (Reply)

And to top it off, China will go down with us, which will make Greece look like a walk in the park.

China has built an entire economy on exporting relatively junky products to the rest of the world, mostly the US and Europe. Both of which are in serious trouble and are going to be buying less and less stuff from China. Walmart, for example, which buys everything from China, is having trouble keeping its sales up in the US becuase its customers can't afford Walmart products (this is what Walmart has said).

China, being run by Communists, cannot and will not build a strong domestic economy. Also, its books are totally cooked. which leads to very rapid collapse when things go wrong.

Is anybody besides me absolutely terrified? I feel like it isn't just a recession/depression, it may be like the end of the Roman empire. Am I nuts?

#9 Park Slope Pubby on 2011-09-19 20:34 (Reply)

I'm right with you on this one.
Inflation is everywhere. Just not really evident here in the US yet.

#9.1 Rick on 2011-09-19 20:50 (Reply)

Inflation is more insidious than it used to be. The granola bars I put in my son's lunch are noticeably smaller than just months ago. This is happening across the board. Underlying prices for commodities are rapidly rising against a weakened (printed up) dollar. The damage that the current spending spree has done to the entire world economy is immeasurable.

Collapse would mean chaos. It is a scary thought, but we must have confidence that America is more resilient than even this contrived crisis. And that we can return to our role as a source of stability in the world and continue to be the beacon of freedom our founders envisioned.

#10 ScottJ on 2011-09-19 22:36 (Reply)

The Communist Chinese would like a strong domestic economy and strong foreign trade. They are working in third world countries building infra structure in those countries and extracting a small percentage of the raw materials that those countries export. It is actually a good plan and immulates what the US of A did years ago before we just started funneling money to the ruling class of the country we were trying to help.

Inflation is world wide right now. In China pork went up 40% in June. That was a huge jump for a Chinese food staple. The small Chinese middle class is in the same boat that we are in.

Park Slope should remember that the US books are cooked also and actual inflation, unemployement and such are not reported at their actual values.

Also some extremely nice products are made in China; that is if you consider iPads a nice product.

#11 Dave on 2011-09-20 02:54 (Reply)

This president of ours seems to have a penchant for pulling straw men out of his hat. Like a carny magician, he always has someone or something handy to draw attention to while drawing attention away from his real actions (or lack of a real plan) - the "rich", the "Wall Streeters", the "insurance companies", the GOP, we could go on.

Some people see him as disingenuous but, having lived my entire life in the (Once Upon A Time) Great State of Illinois - in a suburb of Chicago - I will tell you quite frankly that this is simply standard operating procedure in Chicago Democratic politics - and this is all Obama knows. This is the same act he has shown us since he was elected.

This is his move. This is all he has. This is what he was taught.

In Illinois, you really don't need anything else.

Since the majority of people here are either employees of the state and local governments or are members of a trade union or the teacher's union - not to mention the sizeable group of people on public aid in one form or another or the minorities whose leaders seem intent on keeping them on "victimized" status - and let us not forget those who are simply "on the take" (as Mike Royko would say), the magic act works well.

Remember that the biggest part of any successful magic act is in the beholders "belief" that what he sees or hears is true. Rest assured that the aforementioned groups all have bought into the act or have a vested interest in the act and they all have a deep need to have a straw man to blame or to be protected from. They all want the rest of us to buy into the act too and they believe so strongly about it that they like to get loud and threatening about it... just like our pres.

The type and scope of mindless prattle coming from the mouth of our chief executive is heard here in Illinois regularly - in fact - if Youtube has any video of our most current embarrassment - Governor Blago - while campaigning (and when trying to save his job during the impeachment proceedings), you will see and hear the same comments coming from him - big business is bad, "they" don't pay their fair share - "they" (the GOP) want to raise your taxes, "they" want you to pay more for your medical insurance.... and on and on.

Moreover, when Obama asked the crowd the other day to help him pass this bill - if they "loved him", while supremely unprofessional and outlandish a comment coming from the leader of the free world and technically the most powerful man on the planet, it was also eerily familiar to a Blago and Mayor Daley mantra of recent years.

So, BD, we can only hope that more people are paying attention and checking facts and seeing the results of the administration's jack ass moves and strict adherence to party politics over discussion and compromise.

We are truly headed in the wrong direction and we desperately need leadership in the White House.

I am now going to report myself to Attack-Watch.

#12 Mike P. on 2011-09-20 06:42 (Reply)

One of the more demoralizing aspects of the current mess is that there's nothing being learned at such great cost that wasn't already freely available in no uncertain terms throughout the world knowledge base of the discipline called 'economics'.

#13 buddy larsen on 2011-09-20 10:08 (Reply)

Vote-buying, eh?

In the days before the secret ballot:

"Gentlemen, a quart of ale and a shilling to every man here who puts up his hand for me!"

Today:

"Vote for me and I'll take money from those rich SOBs and give you all a $1000 tax rebate!"

How times have changed.

#14 JJM on 2011-09-20 11:36 (Reply)

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Monday, September 19. 2011

Reagan did it right