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The Death of Reaganomics

C

ChrisFromNJ

Member
http://www.truthdig.com/report..._death_of_reaganomics/

The biggest political story of 2008 is getting little coverage. It involves the collapse of assumptions that have dominated our economic debate for three decades.

Since the Reagan years, free-market clichés have passed for sophisticated economic analysis. But in the current crisis, these ideas are falling, one by one, as even conservatives recognize that capitalism is ailing.

You know the talking points: Regulation is the problem and deregulation is the solution. The distribution of income and wealth doesn?t matter. Providing incentives for the investors of capital to ?grow the pie? is the only policy that counts. Free trade produces well-distributed economic growth, and any dissent from this orthodoxy is ?protectionism.?

The old script is in rewrite. ?We are in a worldwide crisis now because of excessive deregulation,? Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee, said in an interview.

He notes that in 1999 when Congress replaced the New Deal-era Glass-Steagall Act with a looser set of banking rules, ?we let investment banks get into a much wider range of activities without regulation.? This helped create the subprime mortgage mess and the cascading calamity in banking.

While Frank is a liberal, the same cannot be said of Ben Bernanke, the chairman of the Federal Reserve. Yet in a speech on Tuesday, Bernanke sounded like a born-again New Dealer in calling for ?a more robust framework for the prudential supervision of investment banks and other large securities dealers.?

Bernanke said the Fed needed more authority to get inside ?the structure and workings of financial markets? because ?recent experience has clearly illustrated the importance, for the purpose of promoting financial stability, of having detailed information about money markets and the activities of borrowers and lenders in those markets.? Sure sounds like Big Government to me.

This is the third time in 100 years that support for taken-for-granted economic ideas has crumbled. The Great Depression discredited the radical laissez-faire doctrines of the Coolidge era. Stagflation in the 1970s and early ?80s undermined New Deal ideas and called forth a rebirth of radical free-market notions. What?s becoming the Panic of 2008 will mean an end to the latest Capital Rules era.
Click to expand...

The present mess that we are finding ourselves in is a good example of why Reaganomics are BS.

1. Large deficits cause by irresponsible tax cuts for the rich, combined with out of control spending.

2. Problems in the finance industry - although the repeal of the Glass-Steagal Act didn't occur until 1999, it has caused much damage in such a short time.
 
Economics is a complex field with complex problems. And like all such fields, the golden rule is to make solutions as simple as possible...BUT NOT SIMPLER. The fault with Reaganomics isn't the degree to which it leaned to the right, just like the fault with communism isn't that it's a lefty idea. The problem with Reaganomics is that it is less a fully developed economic policy and more a handwaving idea more suited to a bumper sticker than serious economic problems.

The free market is great, but it's not magic. And it's worth remembering that even in the economics classroom, the free market doesn't optimize what people seem to think it does.
 
Originally posted by: ChrisFromNJ
http://www.truthdig.com/report..._death_of_reaganomics/

The biggest political story of 2008 is getting little coverage. It involves the collapse of assumptions that have dominated our economic debate for three decades.

Since the Reagan years, free-market clichés have passed for sophisticated economic analysis. But in the current crisis, these ideas are falling, one by one, as even conservatives recognize that capitalism is ailing.

You know the talking points: Regulation is the problem and deregulation is the solution. The distribution of income and wealth doesn?t matter. Providing incentives for the investors of capital to ?grow the pie? is the only policy that counts. Free trade produces well-distributed economic growth, and any dissent from this orthodoxy is ?protectionism.?

The old script is in rewrite. ?We are in a worldwide crisis now because of excessive deregulation,? Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee, said in an interview.

He notes that in 1999 when Congress replaced the New Deal-era Glass-Steagall Act with a looser set of banking rules, ?we let investment banks get into a much wider range of activities without regulation.? This helped create the subprime mortgage mess and the cascading calamity in banking.

While Frank is a liberal, the same cannot be said of Ben Bernanke, the chairman of the Federal Reserve. Yet in a speech on Tuesday, Bernanke sounded like a born-again New Dealer in calling for ?a more robust framework for the prudential supervision of investment banks and other large securities dealers.?

Bernanke said the Fed needed more authority to get inside ?the structure and workings of financial markets? because ?recent experience has clearly illustrated the importance, for the purpose of promoting financial stability, of having detailed information about money markets and the activities of borrowers and lenders in those markets.? Sure sounds like Big Government to me.

This is the third time in 100 years that support for taken-for-granted economic ideas has crumbled. The Great Depression discredited the radical laissez-faire doctrines of the Coolidge era. Stagflation in the 1970s and early ?80s undermined New Deal ideas and called forth a rebirth of radical free-market notions. What?s becoming the Panic of 2008 will mean an end to the latest Capital Rules era.
Click to expand...

The present mess that we are finding ourselves in is a good example of why Reaganomics are BS.

1. Large deficits cause by irresponsible tax cuts for the rich, combined with out of control spending.

2. Problems in the finance industry - although the repeal of the Glass-Steagal Act didn't occur until 1999, it has caused much damage in such a short time.
Click to expand...

The delusion that the budget can be wholly balanced or sustained solely on the taxes of the rich, never seems to make me laugh. When spending is higher than income you lose period.
 
Reaganomics or better put spend and borrow was bullshit in 1980 and its greater bullshit now under GWB. I have been saying exactly that for years, but its nice to see even Republicans finally wake up to the facts.
 
The panic of 2008???


What the hell is wrong with these idiots. The economy is a mild slow down right now not even a full blown recession.

The 2000/2001 had three non-consecutive quarters with negative economic growth. We have yet to have one quarter of economic growth.

And the 1981-82 recession makes what we are going throw now look like a mild set back. In December of 1982 unemployment hit 10.8% more than double our current rate. And at the same time we had the S&L crisis and a bank crisis during which the 7th largest bank in the country failed (though it didn't fail until 1984)

Instead of referring to the death of Reaganomics we should be talking about the death of history since no one seems to remember what a real recession is like.
 
Originally posted by: ProfJohn
The panic of 2008???


What the hell is wrong with these idiots. The economy is a mild slow down right now not even a full blown recession.

The 2000/2001 had three non-consecutive quarters with negative economic growth. We have yet to have one quarter of economic growth.

And the 1981-82 recession makes what we are going throw now look like a mild set back. In December of 1982 unemployment hit 10.8% more than double our current rate. And at the same time we had the S&L crisis and a bank crisis during which the 7th largest bank in the country failed (though it didn't fail until 1984)

Instead of referring to the death of Reaganomics we should be talking about the death of history since no one seems to remember what a real recession is like.
Click to expand...

The public must believe it needs saving in order for the public to elect the savior. Viva La New Deal 2!!
 
Originally posted by: ProfJohn
The panic of 2008???


What the hell is wrong with these idiots. The economy is a mild slow down right now not even a full blown recession.

The 2000/2001 had three non-consecutive quarters with negative economic growth. We have yet to have one quarter of economic growth.

And the 1981-82 recession makes what we are going throw now look like a mild set back. In December of 1982 unemployment hit 10.8% more than double our current rate. And at the same time we had the S&L crisis and a bank crisis during which the 7th largest bank in the country failed (though it didn't fail until 1984)

Instead of referring to the death of Reaganomics we should be talking about the death of history since no one seems to remember what a real recession is like.
Click to expand...

I don't know PJ, we just had the 2nd largest bank failure EVER with IndyMac not to mention the incredible inflationary prices in the commodities market, coupled with the housing meltdown and mortgages that are impossible to obtain unless you're a Congressman. You never know you're in a recession until after it's over...
 
Originally posted by: DealMonkey
Originally posted by: ProfJohn
The panic of 2008???


What the hell is wrong with these idiots. The economy is a mild slow down right now not even a full blown recession.

The 2000/2001 had three non-consecutive quarters with negative economic growth. We have yet to have one quarter of economic growth.

And the 1981-82 recession makes what we are going throw now look like a mild set back. In December of 1982 unemployment hit 10.8% more than double our current rate. And at the same time we had the S&L crisis and a bank crisis during which the 7th largest bank in the country failed (though it didn't fail until 1984)

Instead of referring to the death of Reaganomics we should be talking about the death of history since no one seems to remember what a real recession is like.
Click to expand...

I don't know PJ, we just had the 2nd largest bank failure EVER with IndyMac not to mention the incredible inflationary prices in the commodities market, coupled with the housing meltdown and mortgages that are impossible to obtain unless you're a Congressman. You never know you're in a recession until after it's over...
Click to expand...

inflation in commodities has litle to do with regulation, even commodities like iron which has no futures trading is significantly. WOrld demand for these resources is just pushing the price for most commodities upward.

We are past the peak mortgage resets, so the worst is behind us.
 
Originally posted by: ChrisFromNJ
The present mess that we are finding ourselves in is a good example of why Reaganomics are BS.
Click to expand...
"Trickle down economics" strikes me as something R Kelly would come up with, rather than a prominant US politician...
 
Originally posted by: charrison
We are past the peak mortgage resets, so the worst is behind us.
Click to expand...

I would hope so but we've heard that for the last two quarters and it's still going downhill....
 
Reaganomics SHOULD have died with Raygun when Hinkley shot him in 81...but NOOO, the moron had to miss...and we had to endure almost 8 more years of Ronnie Rayguns and Mommy, governing with their astrologer, and trickle-down economics...more Republican Fuzzy Math.
 
There have been some who have suggested that we will see a recovery start in the fall.

1. With peak driving season over the price of gas should drop.
2. Eventually the drop in house prices will get people back into the housing market.
3. Back to school followed by Christmas should jump start retail spending.

Of course people have been talking about a recovery for a bit now so this may be enough false hope. But eventually the housing market will hit bottom and start to recover and then the rest of the economy should slowly follow.
 
Originally posted by: ProfJohn
There have been some who have suggested that we will see a recovery start in the fall.

1. With peak driving season over the price of gas should drop.
2. Eventually the drop in house prices will get people back into the housing market.
3. Back to school followed by Christmas should jump start retail spending.

Of course people have been talking about a recovery for a bit now so this may be enough false hope. But eventually the housing market will hit bottom and start to recover and then the rest of the economy should slowly follow.
Click to expand...

1. Peak driving season has already passed with the US using less fuel and driving fewer miles than it did 5 years ago (Per CNBC): No gas drop.
2. Don't know when. It's been estimated that it would be over for a year now and it's still roaring down with no end in sight.
3. Back to school sales, per CNBC today, are expected to be lower than usual, especially as the borrowed stimulus money has now already been spent.

We may well recover, but I don't think the above items are a sure bet by any means. A good rally (20%) in the stock market might get the "wealth effect" going and prop up the economy....time will tell.
 
Originally posted by: Engineer
Originally posted by: charrison
We are past the peak mortgage resets, so the worst is behind us.
Click to expand...

I would hope so but we've heard that for the last two quarters and it's still going downhill....
Click to expand...

This is referring to the volume of resets, not housing market conditions. JUne had a total of 50billion in resets, and from here out the volume of reset goes down.
 
Originally posted by: charrison
Originally posted by: Engineer
Originally posted by: charrison
We are past the peak mortgage resets, so the worst is behind us.
Click to expand...

I would hope so but we've heard that for the last two quarters and it's still going downhill....
Click to expand...

This is referring to the volume of resets, not housing market conditions. JUne had a total of 50billion in resets, and from here out the volume of reset goes down.
Click to expand...

Ah, ok. Misunderstanding on my part.
 
Originally posted by: ProfJohn
The panic of 2008???


What the hell is wrong with these idiots. The economy is a mild slow down right now not even a full blown recession.

The 2000/2001 had three non-consecutive quarters with negative economic growth. We have yet to have one quarter of economic growth.

And the 1981-82 recession makes what we are going throw now look like a mild set back. In December of 1982 unemployment hit 10.8% more than double our current rate. And at the same time we had the S&L crisis and a bank crisis during which the 7th largest bank in the country failed (though it didn't fail until 1984)

Instead of referring to the death of Reaganomics we should be talking about the death of history since no one seems to remember what a real recession is like.
Click to expand...

a financial panic is different than a recession, however a financial panic can cause a recession (see 1929, 1907, etc)

the financial panic of 2008 is the worst of my lifetime certainly, however i don't know if we will actually see a technical recession.
 
This is the third time in 100 years that support for taken-for-granted economic ideas has crumbled. The Great Depression discredited the radical laissez-faire doctrines of the Coolidge era. Stagflation in the 1970s and early ?80s undermined New Deal ideas and called forth a rebirth of radical free-market notions. What?s becoming the Panic of 2008 will mean an end to the latest Capital Rules era.
Click to expand...

The main article is right, but it looks like it's trying to hard to be 'balanced' when it claims New Deal ideas were found lacking in the 80's.

That was simply a political victory of the right implementing its long-standing agenda of helping the most wealthy, not any reason to challenge the New Deal economics.

It was a great marketing campaign - basically, "give the most wealthy a lot bigger share of the money and it'll be an investment for everyone" - not a repudiation of the New Deal.

The economics that were challenged then involved the recent history of the 70's hyper-inflation and other effects largely linked to the oil embargo, not New Deal problems.
 
The Great Depression discredited the radical laissez-faire doctrines of the Coolidge era.
Click to expand...

Incorrectly, of course, as it was later proven that the central bank, a SOCIALIST POLICY which did not exist prior to 1913 caused inflation in the twenties and deliberately contracted the money supply in the 30s to cause a hyperdeflationary depression. Then Roosevelt came in and prolonged it with failed government program after failed government program, absolved the banks, issued an unconstitutional executive order confiscating the people's gold, allowed Pearl Harbor to be a massacre, created the unsustainable ponzi scheme known as Social Security, etc, etc. People were completely hopeless and confused and went along with all of it. In reality, free markets never failed. They did exactly what they were supposed to with the interest rates that they were given. You can't blame them for getting manipulated signals to invest in the 20s any more than you can today. This time, the Fed inflates all through the 90s, creating the tech bubble, inflates the real estate bubble after the tech bubble with artificially low teaser rates, until finally it implodes. It implodes at the worst time, with America bogged down in a costly and unnecessary war, and congress proceeds to bail out financials with taxpayer money. I mean this is just total misattribution of the problem, a complete replay of the 30s, it makes me fucking sick to watch it happen and to see people coming up with pro-socialist bullshit under either camp. Reaganomics? Spontaneous evolution of man becoming more greedy in the year 2000 needing more oversight? This is just pathetic. Save your merry-go-round Democrat/Republican mud wrestling for pay-per-view.
 
Originally posted by: DealMonkey
Originally posted by: ProfJohn
The panic of 2008???


What the hell is wrong with these idiots. The economy is a mild slow down right now not even a full blown recession.

The 2000/2001 had three non-consecutive quarters with negative economic growth. We have yet to have one quarter of economic growth.

And the 1981-82 recession makes what we are going throw now look like a mild set back. In December of 1982 unemployment hit 10.8% more than double our current rate. And at the same time we had the S&L crisis and a bank crisis during which the 7th largest bank in the country failed (though it didn't fail until 1984)

Instead of referring to the death of Reaganomics we should be talking about the death of history since no one seems to remember what a real recession is like.
Click to expand...

I don't know PJ, we just had the 2nd largest bank failure EVER with IndyMac not to mention the incredible inflationary prices in the commodities market, coupled with the housing meltdown and mortgages that are impossible to obtain unless you're a Congressman. You never know you're in a recession until after it's over...
Click to expand...

I just got a mortgage a couple of months ago and my last name isn't Obama.
 
Coolidge was corrupt, not laissez faire. Stagflation occurred when Peak Oil in the US imbalanced the country's trade, devaluing the currency. Reaganomics was the economics of irresponsible borrowing. Today's situation is what happens when a nation exceeds its credit limit. The economic salvation of the useful idiots is not at hand, the Fed's buying at the receivership fire sale.
 
What the hell is wrong with these idiots. The economy is a mild slow down right now not even a full blown recession.

The 2000/2001 had three non-consecutive quarters with negative economic growth. We have yet to have one quarter of economic growth.

And the 1981-82 recession makes what we are going throw now look like a mild set back. In December of 1982 unemployment hit 10.8% more than double our current rate. And at the same time we had the S&L crisis and a bank crisis during which the 7th largest bank in the country failed (though it didn't fail until 1984)
Click to expand...


Keep in mind that the government changes the way these figures are measured over time, so referencing older, more honest figures and comparing them to today's is nonsensical. Taking unemployment for example: if you're selling stuff on ebay from your attic while in the process of finding a new job, you're considered self-employed according to the government. If you are discouraged and stopped looking for a new job, you're not counted as unemployed.

http://www.shadowstats.com/article/54

They did the same thing with inflation when they added Substitution, Geometric Weighting, and Hedonics Adjustments. That's why you think we're not in a recession despite reality. You're basing it on a flawed government statistic that intentionally understates inflation. If inflation is understated by even 2%, we're in a recession. And it's probably understated by more like 6%. And most of this stuff was done during the Clinton years. So it's not exactly a Bush pinata party for all the braindead sheep looking for one. Politicians cannot resist the temptation to tax, inflate, and spend, spend, spend. That's why they do this shit. It isn't about being more accurate for you. It's about getting you to go on a forum like a clueless dweeb and say "You dummies, we're doing fine, look at how bad unemployment was in 19XX. It was Y%!" And unless someone like me comes along and discredits it, your uninformed response convinces hundreds on behalf of the government that's fucking you over.
 
Originally posted by: BansheeX
The Great Depression discredited the radical laissez-faire doctrines of the Coolidge era.
Click to expand...

Then Roosevelt... created the unsustainable ponzi scheme known as Social Security....
Click to expand...

Great, the... what name do you want to go by for your ideology?... crowd.

I pciked one of your points. Social Security is so frickein sustainable, that you're calling it unsustainable *75 frick years* after it's been sustained; after it's seen the life expectancy of the population frickin skyrocket up greatly increasing the number who receive the benefits; where the only thing impacting its sustainability at all is the one-time event of the baby boomers, where even that's pretty easy to fix with adjustments; where it runs efficiently and it's estimated a privatized version would cost at least 3x as much; and where it's reversed the rate of elder poverty from the norm of 90% before it was passed to 10% today.

That's about as frickin' sustainable as you can get, and the sheer perversity and attack on truth of your post has led me to use the word frickin more than in any post ever here.

But hey, what do you care about the truth? Kool-aid drinkers only need a cool word like 'unsustainable' to nourish their ideological views. So hey, it's unsustainable!
 
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