The Economy, Stupid

[TheVictors]

More than two-thirds of Americans?including half of Republicans?still blame former President George W. Bush for the country's economic ills, according to a new Gallup poll released on Thursday, hours before President Barack Obama was to deliver a high-stakes speech defending his handling of the weak economy.

What one might call the blame gap has narrowed considerably: When Gallup first asked Americans in July 2009 whom they blamed for the poor economy, 80 percent laid a great deal or a moderate amount of blame on Bush, and only 32 percent blamed Obama. The current numbers show 68 percent of the public blames the former president while 52 percent say Obama deserves the blame. (The numbers total more than 100 percent because the question was not "which one do you blame more," but how much blame each president deserves individually.)

The Democratic president has crisscrossed the country in recent months pleading for patience from voters still struggling in the anemic recovery and grappling with stubbornly high unemployment above 8 percent. In his speeches, Obama makes a point of blaming Bush and Republicans in general for the 2007-2008 meltdown and warns that Mitt Romney's economic program resembles the Bush approach "on steroids."

Among independents, who often play a role in deciding elections, 51 percent assign Obama a great deal or a moderate amount of blame, while 47 percent say he deserves not much or no blame at all. Meanwhile, 67 percent of independents say Bush bears a great deal or a moderate amount of the fault. Only 32 percent exonerate him in whole or in part.




.....that's odd. I thought all economic issues were created and resolved within 4yr presidential administrations. And what do you know, the almighty "Independent" isn't as stupid as FoxNews would like them to be, after all.

 

[lionsFTW]

In a true free enterprise capitalist system, (i.e. a system that does not bail out failed enterprises and try to prevent further erosion by debasing the currency through massive debt creation), the normal course with all "bubbles" is to let them pop. Prices collapse as all the excess is cleaned out - and all the speculators get wiped out - but eventually the market corrects and prices return to a sustainable level. Eventually employment levels, stock prices, and economic activity, (after initially suffering substantial losses), return to more normal (and more sustainable) levels. This naturally self-correcting process is what occurs under a truly free enterprise "capitalist" system.

What we have now is crony capitalism where failure (and the normal self-correcting process) is not allowed to work. The Government instead bails out the losers and tries to prevent or forestall the normal self-correcting process. Apparently there is a conviction among the political class and individuals like Ben Bernanke that the country might slip into social anarchy if the housing bubble had been allowed to pop and all the Wall Street banks had not been bailed out. (In a public forum with a group of Kansas City residents shortly after the 2008 financial crisis, broadcast on PBS and moderated by Jim Lehrer, Chairman Bernanke was asked exactly what his job was or how he viewed his role? Mr. Bernanke responded, and I'm paraphrasing slightly, "My job is to prevent Great Depression 2!" Mr. Bernanke seems to believe that all this Government intervention in the free market is justified since the alternative (a Depression) is so much worse.

So what we get instead is financial repression and a prolonged (ten year ish?) period of artificially low interest rates that punish savers, capital requirements that force banks to buy the Government's debt, artificially induced inflation, and persistent high unemployment. (Look up "Financial Repression" on Wikipedia.) Nobody in power will admit this, but financial repression is now the de facto economic policy of the United States. Financial repression is not new - it has been tried before by nations that find themselves in a debt-induced quagmire precipitated by a financial crisis. We're between a third and half way through a long period of stagnation that is going to see everybody's standard of living suffer. The powers that be, including former Fed Chairman Greenspan, Chairman Bernanke - and many others - have arrived at the conclusion that financial repression is preferable to a repeat of the Great Depression.

What the 2008 financial crisis has really shown is that the United States is the world's number one economic hypocrite. We say that we believe in "free enterprise" and rugged individualism. The only problem is that we don't practice it.

 

[TheVictors]

Or to summarize ... We love to Privatize gains but Socialize losses.

 

[lionsFTW]

Or to summarize... All of this bickering back and forth about who's to blame is an irrelevant distraction from the actual issue.

https://www.youtube.com/watch?v=jMnLHmTXjgU

 

[TheVictors]

oh I don't know about that. Isn't it always about complaining and blaming and summarizing multi-decade economic cycles into soundbites?

 

[cheeno]

In a true free enterprise capitalist system, (i.e. a system that does not bail out failed enterprises and try to prevent further erosion by debasing the currency through massive debt creation), the normal course with all "bubbles" is to let them pop. Prices collapse as all the excess is cleaned out - and all the speculators get wiped out - but eventually the market corrects and prices return to a sustainable level. Eventually employment levels, stock prices, and economic activity, (after initially suffering substantial losses), return to more normal (and more sustainable) levels. This naturally self-correcting process is what occurs under a truly free enterprise "capitalist" system.

What we have now is crony capitalism where failure (and the normal self-correcting process) is not allowed to work. The Government instead bails out the losers and tries to prevent or forestall the normal self-correcting process. Apparently there is a conviction among the political class and individuals like Ben Bernanke that the country might slip into social anarchy if the housing bubble had been allowed to pop and all the Wall Street banks had not been bailed out. (In a public forum with a group of Kansas City residents shortly after the 2008 financial crisis, broadcast on PBS and moderated by Jim Lehrer, Chairman Bernanke was asked exactly what his job was or how he viewed his role? Mr. Bernanke responded, and I'm paraphrasing slightly, "My job is to prevent Great Depression 2!" Mr. Bernanke seems to believe that all this Government intervention in the free market is justified since the alternative (a Depression) is so much worse.

So what we get instead is financial repression and a prolonged (ten year ish?) period of artificially low interest rates that punish savers, capital requirements that force banks to buy the Government's debt, artificially induced inflation, and persistent high unemployment. (Look up "Financial Repression" on Wikipedia.) Nobody in power will admit this, but financial repression is now the de facto economic policy of the United States. Financial repression is not new - it has been tried before by nations that find themselves in a debt-induced quagmire precipitated by a financial crisis. We're between a third and half way through a long period of stagnation that is going to see everybody's standard of living suffer. The powers that be, including former Fed Chairman Greenspan, Chairman Bernanke - and many others - have arrived at the conclusion that financial repression is preferable to a repeat of the Great Depression.

What the 2008 financial crisis has really shown is that the United States is the world's number one economic hypocrite. We say that we believe in "free enterprise" and rugged individualism. The only problem is that we don't practice it.

Thank you Hayek.