[Cloud9]

It always intrigues me that the students of the great depression focus on the Keynesian spending of the New Deal as the vehicle that got us out of the depression. They simply overlook the War. World War II created a unique set of circumstances that benefitted the United States.

1. It rapidly expanded the industrial base of the United States.
2. It decimated the industrial base of Europe and Asia.
3. It forced austerity on American consumers at a time of near full employment vastly expanding personal savings and fueling pent up demand.

As a result of the proceeding three factors, the United States became a hyper power in the last half of the twentieth century. Absent these three factors, money printing simply feeds the beast and destroys the middle class. By debasing the currency you devalue savings and pension plans. You get no expansion of the industrial base. You get no forced savings. What you get is hoarding as individuals rush to exchange their dollars for commodities. The resulting scarcities fuel more printing.

Government has no solution but will foist upon us all more government. The greatest enemy we will all face in the coming decades is the tax man as all levels of government scramble for the few remaining pockets of wealth. Get ready to lose the farm in a tax sale.

[Cid_Yama]

We are here because Wall street ran a massive mortgage derivitive Ponzi scheme with the blessing and assistance of the Bush Administration that fleeced the entire world, including our own people. When it blew up, the entire world economy seized up and crashed. Cargo ships sat idle in ports and were scrapped by the thousands. Global trade fell off a cliff.

President Obama pulled us back from total default. And as I said, It was a minor miracle. And as I said, the Republican immediately started bashing holes in the boat, because having President Obama fail was more important than saving the country.

This is all about who pays for what Wall Street did. This isn't debts the American people racked up. This is the devastation left in the wake of the mortgage derivitive Ponzi scheme.

The problem is, the Republican's have been placing the blame for where we are on the working American, when the blame squarely falls on Goldman Sachs.

[Sixstrings]

It always intrigues me that the students of the great depression focus on the Keynesian spending of the New Deal as the vehicle that got us out of the depression. They simply overlook the War. World War II created a unique set of circumstances that benefitted the United States.

The war set us up for boom times in the 50's, that's correct. All your industrial competitors reduced to rubble does wonders for the economy.

But Cloud, isn't it correct the Depression was already turning around before the war? I know that at one point FDR listened to Republicans and cut back a bit and that actually caused a "mini recession," erasing some gains made by his previous policies.

[nobodypanic]

It always intrigues me that the students of the great depression focus on the Keynesian spending of the New Deal as the vehicle that got us out of the depression. They simply overlook the War. World War II created a unique set of circumstances that benefitted the United States.

1. It rapidly expanded the industrial base of the United States.
2. It decimated the industrial base of Europe and Asia.
3. It forced austerity on American consumers at a time of near full employment vastly expanding personal savings and fueling pent up demand.

As a result of the proceeding three factors, the United States became a hyper power in the last half of the twentieth century. Absent these three factors, money printing simply feeds the beast and destroys the middle class. By debasing the currency you devalue savings and pension plans. You get no expansion of the industrial base. You get no forced savings. What you get is hoarding as individuals rush to exchange their dollars for commodities. The resulting scarcities fuel more printing.

Government has no solution but will foist upon us all more government. The greatest enemy we will all face in the coming decades is the tax man as all levels of government scramble for the few remaining pockets of wealth. Get ready to lose the farm in a tax sale.

far be it from me to defend a capitalist economist. however, i can't think of a better example of keynesianism in action than the massive deficit spending the US government undertook in order to fight the second world war.

it seems to me that what many people are really doing is arguing about what specific keynesian stimulus they wish to undertake, with one segment of those arguing insisting that only the others' methods are keynesian while theirs aren't.

[eXpat]

S&P says: behave yourself or you will be downgraded again !
S&P warns of a second downgrade

One day after lowering the nation’s platinum triple-A credit rating, Standard & Poor’s analysts warned Saturday that the U.S. government could face a second downgrade if the economy continues to struggle and the government fails to make the cuts outlined in the debt ceiling agreement.

The ratings agency on Friday downgraded the nation to AA+ for the first time in history, saying partisanship in Washington is preventing dramatic deficit reduction.
S&P managing director John Chambers told reporters on a Saturday conference call that the toxic mix of a listless economy and political infighting will cause government debt to grow.

“Compared to some other highly rated governments, the U.S. government does not have the proactive ability to put public finances on a firm footing,” Chambers said.

His colleague David Beers said the partisan discord increases the risk that Washington will not achieve effective policy remedies.

“For that reason, there’s a lot of uncertainty about the future debt burden,” Beers said.

http://www.politico.com/news/stories/0811/60803.html

[prajeshbhat]

It always intrigues me that the students of the great depression focus on the Keynesian spending of the New Deal as the vehicle that got us out of the depression. They simply overlook the War. World War II created a unique set of circumstances that benefitted the United States.
1. It rapidly expanded the industrial base of the United States.
2. It decimated the industrial base of Europe and Asia.
3. It forced austerity on American consumers at a time of near full employment vastly expanding personal savings and fueling pent up demand.

You are missing something. Oil. There was a lot of oil just lying around in USA. Production skyrocketed during the war. No wonder after the war USA and USSR emerged as the two major superpowers.

[bluekachina]

We are here because Wall street ran a massive mortgage derivitive Ponzi scheme with the blessing and assistance of the Bush Administration that fleeced the entire world, including our own people. ...
This is all about who pays for what Wall Street did. This isn't debts the American people racked up. This is the devastation left in the wake of the mortgage derivitive Ponzi scheme.
The problem is, the Republican's have been placing the blame for where we are on the working American, when the blame squarely falls on Goldman Sachs

They may have been bamboozled in the US, but the rest of the world hasn't forgotten who is responsible.

[AgentR11]

This is all about who pays for what Wall Street did. This isn't debts the American people racked up. This is the devastation left in the wake of the mortgage derivitive Ponzi scheme.

Cid, in your partisan desperation to blame only Republicans, you are missing the picture. We are *ALL* to blame for that Ponzi scheme, you couldn't go ten minutes without hearing stories of how great it was to take out home equity loans and go on a luxury vacation; real estate shows were everywhere describing some of the most obscure and specialized forms of mortgages, and how to take advantage of them and flip houses. Everyone was living in a fantasy world where houses appreciated at many times the rate of inflation. Maybe none in your extended family played, I can't say, but many did. Many people who had no business whatsoever owning a home or qualifying for a mortgage of any sort were getting highly complex mortgages with adjustable rates, and annual balloon pmts, on very short renewal and reset periods... It was nuts. We all share some blame, those that didn't play, should have screamed louder, I know the most I did was mutter quietly around close family; I could have made a call to one of those radio shows and ranted, they would have mocked me, but at least I could say I made the effort, or I could have made impassioned pleas to relatives who were about to play, but I didn't.

Bush is to blame. Clinton is to blame.
The democratic congresses are to blame.
The republican congresses are to blame.
Wall street is to blame.
Main street is to blame.
We all got greedy. We all got spanked.

Everyone played the slots while they were hot, and lost their shirts when they went cold.

[bluekachina]

The people that created the derivitives and the complicit rating agencies are to blame.

As well as the Bush Administration that turned a blind eye to it all.

The house flipping was an ecouraged by-product to ensure a steady supply of mortgages to bundle.

You're not fooling anyone. Don't be pointing at the victims or the minor accomplices, It was a fraudulent enterprise conducted by Goldman Sachs and other Wall Street investment banks.

House flippers had nothing to do with selling this garbage to the rest of the world.

Also, don't give us that bit about everybody played. The average working person could barely afford a house to live in. If I'm not mistaken, most in the US rent.

The very people you are heaping the burden of paying on, didn't play at all, or were victims of the adjustable rate refinancing scam.

US investment bankers are criminals of the highest order. Where are the prosecutions?

[AgentR11]

So Bob the Burger Flipper taking a vacation in Tahiti remains completely blameless.
right.

[bluekachina]

I just looked up the US minimum wage. $7.25 an Hour. X 40 hrs = $290.00 a week. Maybe $1000.00 a month take home.

Utilities maybe $400.00, Food maybe $200.00, rent or house payment would take the rest. Bob the burger flipper was not vacationing in Tahiti nor participating in the fraud perpetrated by Wall Street.

EDIT: A miscalculation. At the time of the Fraud minimum wage was $5.15 an hour. that's $206.00 a week maybe $750 take home a month. How did these people survive? The US mistreats it's people and doesn't deserve a place at the table with the rest of us.

[Ibon]

It has been interesting reading through the last several pages of debate over who is to blame.
Beyond the positions taken there is a fundamental truth we all have to recognize and that is that we are still stuck collectively at the blame stage. Nothing constructive happens when there is no pulling together to confront the issue. This is a very generic comment on my part but is worth mentioning since in this regard this thread resembles the mainstream more than many of us care to admit since most of us are on this website in the first place because we apparently believe we are ahead of the curve in our intellectual grasp of economic events.

You might all want to ponder that thought for a minute.

[AgentR11]

Let me do the math for you then.

Burger flipper finds suitable house, valued 150k.
Burger flipper goes to his agent. Agent smiles.
Agent hooks Burger Bob up with a subprime guy that cooks an interest only + bubble pmt 3 yr arm, so Bob has 6 months before he has to pay anything at all.
Bob immediately starts looking to sell the house.
3 months pass, the house is valued now at 180k, Bob takes equity line.
withdraws 20k, pays a bit on the arm, pushes his drop dead date to 12 months out
uses remaining 15k to party
8 months later, Bob sells house for 210k (to another flipper likely), pays off crazy mortgage, and then goes house hunting.

rinse repeat.

All is fine, unless that last line fails.
When it failed. The whole Ponzi scheme from top to bottom went splat.

Bob is not the only one at fault here, everyone in that chain is; from the agent, to the legislators who force subprime lenders into existence and then them accepting fraudulent apps, to Bush and Clinton for failing to demand oversight on such a large market, to the bankers who were too hesitant to unwrap and audit those derivatives; to the traders who put them together in the first place knowingly concealing worthless assets.

Don't say it didn't happen, because I *WATCHED IT HAPPEN*.
It was trendy and cool even.
What is the point in denying that it happened?

edit: bobbled 3 vs 30

[EnergyUnlimited]

I just looked up the US minimum wage. $7.25 an Hour. X 40 hrs = $290.00 a week. Maybe $1000.00 a month take home.
Utilities maybe $400.00, Food maybe $200.00, rent or house payment would take the rest. Bob the burger flipper was not vacationing in Tahiti nor participating in the fraud perpetrated by Wall Street.
EDIT: A miscalculation. At the time of the Fraud minimum wage was $5.15 an hour. that's $206.00 a week maybe $750 take home a month. How did these people survive? The US mistreats it's people and doesn't deserve a place at the table with the rest of us.

Add some defrauded benefits (burger flipping jobs are usually cash-to-hand) and he will surely manage.
Anyway you cannot use Social Security cash cards in Las Vegas casinos or on luxury cruises any more...

[ItalyRules]

This is all about who pays for what Wall Street did. This isn't debts the American people racked up. This is the devastation left in the wake of the mortgage derivitive Ponzi scheme.
The problem is, the Republican's have been placing the blame for where we are on the working American, when the blame squarely falls on Goldman Sachs.

They may have been bamboozled in the US, but the rest of the world hasn't forgotten who is responsible.

+2

US investment bankers are criminals of the highest order. Where are the prosecutions?

I agree. Maybe there is something we can do internationally. After all, they are responsible for the collapse worldwide.

You would think our own bankers and governments would want some retribution. Maybe they are handling it themselves behind the scenes.

[prajeshbhat]

Bob is not the only one at fault here, everyone in that chain is; from the agent, to the legislators who force subprime lenders into existence and then them accepting fraudulent apps, to Bush and Clinton for failing to demand oversight on such a large market, to the bankers who were too hesitant to unwrap and audit those derivatives; to the traders who put them together in the first place knowingly concealing worthless assets.
Don't say it didn't happen, because I *WATCHED IT HAPPEN*.
It was trendy and cool even. What is the point in denying that it happened?

Property bubbles are nothing new. It is almost inevitable in a country that has not seen serious economic hardships in 65 yrs and where the general trend has been upward mobility. Real Estate ponzi was the last frontier of exponential growth. It was fun while it lasted.

But the problem is that developing countries that are just beginning to get a taste of modern industrial economy, now have property bubbles of their own. India and China both have serious real estate bubbles. In India, the property prices is largely controlled by real estate mafia. China is an even greater basket case. The Communist party needs no help from bankers or mafias. They build entire empty cities on their own hoping that village hicks migrating to the cities will buy those houses.

[ItalyRules]

Beyond the positions taken there is a fundamental truth we all have to recognize and that is that we are still stuck collectively at the blame stage.

We know who's responsible. This is about who is going to pay for the damages.

[Cog]

Both the lender and the person who signed up for these subprime loans, with no reasonable way to pay off the loan, deserve to get burned on them. Unfortunately, we seemed to have let the lender off the hook on the risk with the TARP bailout.

[Fishman]

We will argue all day who is to blame. The consequences are much clearer. This is a disaster of biblical proportion for the left. The right may have to suck it up and pay higher taxes, but this is the end of the credit line for the left. Without ever increasing amounts of money the left shrivels, "I'm sorry, I can't buy your vote anymore". The left will scream, "you did this on purpose" the right will laugh back, "you knew this was coming, they warned you numerous times, but you payed no attention" The grasshopper and the ant all over again. The winter is coming.

Right now in Europe, Obama is getting his a$$ chewed out by the Europeans and the Chinese.

[Shar_Lamagne]

Ad hom deleted. What you just posted is just blathering, devoid of content.

I feel sorry for the average working family in the US. You will now find yourself in the same position as the Russian people at the cusp of the Russian revolution.

When your children are starving, and they refuse to give you food, but guard it on the way to ships, taking it to countries that can pay, you will be faced with the ultimate decision.