U.S. Politics

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Anonymous

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henryg said:
The biggest danger to the US economy will arrive at the end of the year when the automatic spending cuts of the Budget Control Act kick in. This will provide enough of a sudden fiscal shock to GDP to push us back into recession no matter who is in office.

If the Democrats take charge post-election there is the slim chance that they will grow a pair and at least do something to reduce the size of the fiscal shock. If the Republicans get in, dogma will trump reality and they are sure to do everything they can to make the size of the cuts even bigger and combine them with even larger tax cuts. If that happens the party that brought you the two largest financial crashes of the last century may manage to put us in a deflationary spiral that could end up in great Depression II only months after taking power.
I'm curious.... What do you think was the largest single contributing factor to the 2008 meltdown?
 
Jul 18, 2010
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Scott SoCal said:
I'm curious.... What do you think was the largest single contributing factor to the 2008 meltdown?
The credit bubble brought on by the unregulated shadow banking system which introduced a tsunami of leverage into the global markets. Credit Default Swaps were financial fraud, insurance policies without the capital to pay off the insured should things go south. It was just a matter of time until a downturn in some sector of the market (it happened to be housing) awoke the markets to the true nature of the risks involved. Once that happened the whole house of cards collapsed.

The collapse in the US was made worse by the fact that during the boom when we should have been building our reserves for the down part of the cycle (as Clinton did) we were looting the treasury for the benefit of multi-nationals and millionaires.
 
Sep 10, 2009
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Scott SoCal said:
Meanwhile, 1.9% GDP growth in the 1st quarter.

Fourth quarter in 2011 was 3.0%.

The economy continues to struggle. I wonder why?
Dunno. Could it be that it takes quite a bit of time to pull an economy like the US's back from the Republican-caused brink of disaster? Could it be that it might take some time before the auto industry gets back on its feet? Could it be because, thanks to R policies of increased spending and tax cuts, that we no longer have the money from the Clinton surplus to play/invest with? That, because of said R-created deficits, we now have to lay off teachers and policemen and firefighters and other public workers to try and cut spending? That, in short, stop whining when Obama's had to spend his first three years in office cleaning up your ****ing mess? That even now, even after the absurdity of their policies has resulted in the economy tanking, the R response to anything to do with the economy/jobs is "cut taxes! cut taxes!" and absolutely nothing else? (Well, except to slash social programs and add a whole bunch more folks to the unemployment lines, which then increases the demand for unemployment benefits, etc, and then they complain about that, too.) That the Rs want to play more political games with the debt ceiling and our global credit rating, scaring off potential international investors? That for whatever reason, Rs have stupidly and selfishly conflated "compromise" with "surrender" and refuse to work with Obama/Dems on anything? And that's not to mention the international factors, that Europe is in turmoil, Japan (and possibly even China) is in recession, etc etc.

But apparently we live in a vacuum where none of those things matter, Obama should just snap his fingers and the economy will start humming but that he doesn't proves that he's a Kenyan Marxist.

Don't look at our side of the aisle, Dems and Obama have been more than willing to work with Rs and to compromise. They've been doing it the entire time Obama's been in office, and it usually ends up with them getting kicked in the balls by Boehner and Cantor and the TP'ers and their ilk, who seem to think this is all a game to be won and that compromise is surrender. Our side's willing to work with yours. Your side is not willing to work with ours. So stop complaining about Obama and the Ds when it's your guys that are the primary obstruction for anything constructive getting done.

Speaking of which, whattya make of Mitt using the exact same argument that he's blasting Obama for in defending his MA job creation record?

http://www.washingtonpost.com/blogs/plum-line/post/the-romney-campaigns-surreal-arguments-about-the-economy/2012/05/30/gJQAPyI01U_blog.html

All this is more than just a gotcha. It goes directly to the heart of Romney’s entire case against Obama. The claim that “net” jobs were lost on Obama’s watch is absolutely central to Romney’s whole argument, and the Romney team has repeated it for months and months in every conceivable forum. But the new standard the Romney campaign wants applied to him — i.e., that the focus should be on jobs added after jobs losses were reversed — would seem to completely undercut this entire case.
Imagine, blaming the conditions he inherited from his predecessor for the slow growth in job creation! Disgraceful, I tell you!
 
Sep 10, 2009
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The Hitch said:
He was just saying idiotic and offensive things and as a president who is supposedly the cleverest one america has ever had and gets endless praise for being percieved that way, he deserves a LOT of pie in his face when he makes statements like this.

If Obama is as intelligent as is claimed he would not make dumb mistakes just because a speech writer wrote it.
Why the different standard for Obama? Are you saying that we're so used to dumb presidents that now that we have a smart one he should be held to a higher standard?

Get a grip, he's a human being, he gives a thousand speeches a day on a thousand different topics, he's not going to know everything about everything, and some of those speeches are going to contain dumb and inane things from time to time. If he was just making **** up like Reagan did (and Romney is now), then yeah, that'd be different, but he wasn't. And even then, it was just an awkwardly phrased sentence, ie "Polish concentration camps" instead of "concentration camps in Poland".
 
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Anonymous

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henryg said:
The credit bubble brought on by the unregulated shadow banking system which introduced a tsunami of leverage into the global markets. Credit Default Swaps were financial fraud, insurance policies without the capital to pay off the insured should things go south. It was just a matter of time until a downturn in some sector of the market (it happened to be housing) awoke the markets to the true nature of the risks involved. Once that happened the whole house of cards collapsed.

The collapse in the US was made worse by the fact that during the boom when we should have been building our reserves for the down part of the cycle (as Clinton did) we were looting the treasury for the benefit of multi-nationals and millionaires.
What lead to the credit and housing bubble, in your opinion?
 
Jul 18, 2010
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Scott SoCal said:
What lead to the credit and housing bubble, in your opinion?
Deregulation and the dismantling of the New Deal financial safeguards. It was not just here. That was a global trend with countries like UK, Iceland, Poland, Spain and others following the trend begun by Reagan/Thatcher. This made unregulated undercapitalized exotic credit instruments and huge amounts of leverage possible.

And all those excesses still exist. In fact the financial institutions that were to big to fail are bigger and more politically powerful then ever. As the recent billions in loses at JP Morgan and the insider shenanigans in the Facebook IPO illustrate, nothing really has changed.
 
henryg said:
Deregulation and the dismantling of the New Deal financial safeguards. It was not just here. That was a global trend with countries like UK, Iceland, Poland, Spain and others following the trend begun by Reagan/Thatcher. This made unregulated undercapitalized exotic credit instruments and huge amounts of leverage possible.

And all those excesses still exist. In fact the financial institutions that were to big to fail are bigger and more politically powerful then ever. As the recent billions in loses at JP Morgan and the insider shenanigans in the Facebook IPO illustrate, nothing really has changed.
Which means, of course, that Bush and the Republicans were not responsible for the crash--even if it happened on his watch. He may have delayed and deferred the situation by four or five years, but the Democratic party--its politicians and adherents--are as deeply enmeshed in the trajectory that you're outlining as are the Republicans. That the latter have recently begun to evince a more accelerated and rapacious approach to resources and the environment--not to mention basic civil tenets--does not excuse Democratic participation in this entire process.
 
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Anonymous

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VeloCity said:
Dunno. Could it be that it takes quite a bit of time to pull an economy like the US's back from the Republican-caused brink of disaster? Could it be that it might take some time before the auto industry gets back on its feet? Could it be because, thanks to R policies of increased spending and tax cuts, that we no longer have the money from the Clinton surplus to play/invest with? That, because of said R-created deficits, we now have to lay off teachers and policemen and firefighters and other public workers to try and cut spending? That, in short, stop whining when Obama's had to spend his first three years in office cleaning up your ****ing mess? That even now, even after the absurdity of their policies has resulted in the economy tanking, the R response to anything to do with the economy/jobs is "cut taxes! cut taxes!" and absolutely nothing else? (Well, except to slash social programs and add a whole bunch more folks to the unemployment lines, which then increases the demand for unemployment benefits, etc, and then they complain about that, too.) That the Rs want to play more political games with the debt ceiling and our global credit rating, scaring off potential international investors? That for whatever reason, Rs have stupidly and selfishly conflated "compromise" with "surrender" and refuse to work with Obama/Dems on anything? And that's not to mention the international factors, that Europe is in turmoil, Japan (and possibly even China) is in recession, etc etc.

But apparently we live in a vacuum where none of those things matter, Obama should just snap his fingers and the economy will start humming but that he doesn't proves that he's a Kenyan Marxist.

Don't look at our side of the aisle, Dems and Obama have been more than willing to work with Rs and to compromise. They've been doing it the entire time Obama's been in office, and it usually ends up with them getting kicked in the balls by Boehner and Cantor and the TP'ers and their ilk, who seem to think this is all a game to be won and that compromise is surrender. Our side's willing to work with yours. Your side is not willing to work with ours. So stop complaining about Obama and the Ds when it's your guys that are the primary obstruction for anything constructive getting done.

Speaking of which, whattya make of Mitt using the exact same argument that he's blasting Obama for in defending his MA job creation record?

http://www.washingtonpost.com/blogs/plum-line/post/the-romney-campaigns-surreal-arguments-about-the-economy/2012/05/30/gJQAPyI01U_blog.html



Imagine, blaming the conditions he inherited from his predecessor for the slow growth in job creation! Disgraceful, I tell you!
Could it be that it might take some time before the auto industry gets back on its feet?
Record profits last year. Doing very well this year. That's not it.

Could it be because, thanks to R policies of increased spending and tax cuts, that we no longer have the money from the Clinton surplus to play/invest with?
Obama himself stated more than once that you don't raise taxes in a recession. You have argued for a larger stimulus. So this isn't it.

That, because of said R-created deficits, we now have to lay off teachers and policemen and firefighters and other public workers to try and cut spending?
In Cali we were running with big budget problems in the boom times. Public funding comes from the private marketplace. When the private marketplace suffers so does public funding. So this ain't it.

That the Rs want to play more political games with the debt ceiling and our global credit rating, scaring off potential international investors?
Credit rating came down under Obama's watch. Which party makes life for business more difficult in the US? If you are the head of some non-American multinational will you be inclined to put investments into the USA with the rhetoric coming from the left? I wouldn't. So this ain't it.

That for whatever reason, Rs have stupidly and selfishly conflated "compromise" with "surrender" and refuse to work with Obama/Dems on anything?
Oh yes, the "tax 'em now and we'll cut spending later" arguments. It's like Charlie Brown lining up to kick a field goal with Lucy spotting the football.

If it's as bad as you say (which it's not) then you guys just need to look in the mirror.

And that's not to mention the international factors, that Europe is in turmoil, Japan (and possibly even China) is in recession, etc etc.
This is certainly part of it.

Don't look at our side of the aisle, Dems and Obama have been more than willing to work with Rs and to compromise.
You mean like on Obamacare? Not so much.

Our side's willing to work with yours. Your side is not willing to work with ours. So stop complaining about Obama and the Ds when it's your guys that are the primary obstruction for anything constructive getting done.
Rubbish. Both side work ok together until it gets to principal stuff and then they both dig in. Much of it is just pure politics from both sides.

Don't forget, the first two years the D's had the House, Senate and the Preezy.



You're upset because Mitt is behaving like a politician? :)
 
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Anonymous

Guest
aphronesis said:
Which means, of course, that Bush and the Republicans were not responsible for the crash--even if it happened on his watch. He may have delayed and deferred the situation by four or five years, but the Democratic party--its politicians and adherents--are as deeply enmeshed in the trajectory that you're outlining as are the Republicans. That the latter have recently begun to evince a more accelerated and rapacious approach to resources and the environment--not to mention basic civil tenets--does not excuse Democratic participation in this entire process.
Other than this, it's all Bush's fault.
 
Sep 30, 2010
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henryg said some of this I fixed the rest.
"I wish I had an alternative to Obama"'s cabinet, the Congress and Senate. "It says how far the Republican party has fallen that they could motivate me to vote for Obama", after he kept the previous crooks who lead us down this hole that we are in. "He has been less then I would have hoped for but he has at least moved us in a positive direction, the Republicans would be a complete disaster".
Agreed
 
Sep 10, 2009
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Scott SoCal said:
Record profits last year. Doing very well this year. That's not it.
Taken three years to get there, hasn't it. Three years that Obama could've been focusing elsewhere, instead of cleaning up the mess.

Obama himself stated more than once that you don't raise taxes in a recession.
On the lower and middle classes. On the wealthy, who are doing just fine, yes, he has proposed raising taxes.

You have argued for a larger stimulus.
So has Obama. So has nearly every economist, including many on the right. Odd that you don't hear too many Rs criticizing the stimulus or the auto bailout these days.

Credit rating came down under Obama's watch. Which party makes life for business more difficult in the US? If you are the head of some non-American multinational will you be inclined to put investments into the USA with the rhetoric coming from the left? I wouldn't. So this ain't it.
LOL.

Business has never been easier in the US under Obama. I know your ideological stereotyping doesn't allow you to comprehend that, but it's true. What does make international investors anxious is Rs playing around with our ability to meet our obligations, which drags down our credit rating.

Oh yes, the "tax 'em now and we'll cut spending later" arguments. It's like Charlie Brown lining up to kick a field goal with Lucy spotting the football.
Better than "cut taxes now and we'll pay for it later". How d'ya think Bush and the Rs turned Clinton's surplus into massive deficits in 8 years? That is what you keep complaining about, isn't it, the deficit? Maybe you should take a good look at how we went from a surplus to a deficit, cause those are the policies that Romney and Ryan want to reinstate.

You mean like on Obamacare? Not so much.
Public option ring a bell?

Rubbish. Both side work ok together until it gets to principal stuff and then they both dig in. Much of it is just pure politics from both sides.
Rubbish. When the Senate minority leader publicly states that their "top priority" is making the president a one-termer after less than a year of his being in office, I don't think they have cooperation in mind, nor does it exactly invoke confidence that they're interested in the issues (nor does it show much respect for democracy or the American voter - Obama was elected by a pretty sizeable majority, but clearly McConnell doesn't care about that. Party first, country second).

Don't forget, the first two years the D's had the House, Senate and the Preezy.
Yep, and he got burned thinking that he could work with the we-will-do-nothing-to-help-Obama Rs. What he could've done is what the Rs would've done, claimed a mandate and then did what he wanted without even looking across the aisle. But Obama's a bit more grown up than that.

You're upset because Mitt is behaving like a politician? :)
Isn't this what you keep criticizing Obama for doing?
 
Jul 18, 2010
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Scott SoCal said:
Other than this, it's all Bush's fault.
Bill Clinton and the New Democrats aided and abetted the Republican drive for deregulation -but the drive to dismantle the New Deal regulatory structure has always and continues to be at the center of modern Republican ideology with only Democrats offering any opposition. Bush came in promising a kinder gentler SEC and he gave a free pass, way beyond anything that Clinton had done, to Wall Street bad behavior. Plus -Bush squandered the surplus Clinton left him. The Bush tax cuts will account for close to 3 Trillion by the end of this year. Bushes war another Trillion. In the end it's really not about Bush, Obama or Romney. It's about 2 opposing approachs.

Sadly, Obama has not made anything like a clean break with the policies of Bush. Neither has he really addressed the problem of the to big to fail, over leveraged, under-regulated financial industry.
The real power lies with big finance and the big multi-nationals, not with the Washington politicians that they bankroll - thats why you and I pay tax, but Bank Of America and Exxon Mobil don't.
 
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Anonymous

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VeloCity said:
Taken three years to get there, hasn't it. Three years that Obama could've been focusing elsewhere, instead of cleaning up the mess.

On the lower and middle classes. On the wealthy, who are doing just fine, yes, he has proposed raising taxes.

So has Obama. So has nearly every economist, including many on the right. Odd that you don't hear too many Rs criticizing the stimulus or the auto bailout these days.

LOL.

Business has never been easier in the US under Obama. I know your ideological stereotyping doesn't allow you to comprehend that, but it's true. What does make international investors anxious is Rs playing around with our ability to meet our obligations, which drags down our credit rating.

Better than "cut taxes now and we'll pay for it later". How d'ya think Bush and the Rs turned Clinton's surplus into massive deficits in 8 years? That is what you keep complaining about, isn't it, the deficit? Maybe you should take a good look at how we went from a surplus to a deficit, cause those are the policies that Romney and Ryan want to reinstate.

Public option ring a bell?

Rubbish. When the Senate minority leader publicly states that their "top priority" is making the president a one-termer after less than a year of his being in office, I don't think they have cooperation in mind, nor does it exactly invoke confidence that they're interested in the issues (nor does it show much respect for democracy or the American voter - Obama was elected by a pretty sizeable majority, but clearly McConnell doesn't care about that. Party first, country second).

Yep, and he got burned thinking that he could work with the we-will-do-nothing-to-help-Obama Rs. What he could've done is what the Rs would've done, claimed a mandate and then did what he wanted without even looking across the aisle. But Obama's a bit more grown up than that.

Isn't this what you keep criticizing Obama for doing?
Taken three years to get there, hasn't it. Three years that Obama could've been focusing elsewhere, instead of cleaning up the mess.
Only three?? The construction industry would have been thrilled to only have three years down.

On the lower and middle classes. On the wealthy, who are doing just fine, yes, he has proposed raising taxes.
That's not what they did in Canada.

So has Obama. So has nearly every economist, including many on the right. Odd that you don't hear too many Rs criticizing the stimulus or the auto bailout these days.
Wait... nearly ever economist and many on the right? :) Did you mean nearly every leftist economist and many on the right?

I'm critical of both the stimulus and the auto bailout. Nobody listens to me tho...

Business has never been easier in the US under Obama.
I'm sure you meant Big Business has never been easier.

What does make international investors anxious is Rs playing around with our ability to meet our obligations, which drags down our credit rating.
Not just R's playing around. Plus, you are talking about bond purchasers. I'm talking about foreign HQ'd business that move affiliates here and employs people... provides goods and services. Not convinced they are worried about our credit rating just yet.

Public option ring a bell?
How many R's voted for Obamacare?

Rubbish. When the Senate minority leader publicly states that their "top priority" is making the president a one-termer after less than a year of his being in office, I don't think they have cooperation in mind, nor does it exactly invoke confidence that they're interested in the issues (nor does it show much respect for democracy or the American voter - Obama was elected by a pretty sizeable majority, but clearly McConnell doesn't care about that. Party first, country second).
Mild in comparison to Reid and Pelosi during the Bush years. Again, Oama came in promising cooperation, being the post partisan president, blah, blah, blah... He's failed miserably mostly because of the Chicago way. He never intended to work with congress... even his own. Much of the running of the country has been left to executive orders... he does not need to pass cap and trade, just assign an energy czar and a rev'd up EPA. No need to propose, debate and pass laws when you can accomplish whatever you want with the stroke of a pen.

Better than "cut taxes now and we'll pay for it later". How d'ya think Bush and the Rs turned Clinton's surplus into massive deficits in 8 years?
Much of it was 9/11. Some of it was idiotic spending on asinine new entitlements. Much of it was war spending which has turned out to have been a huge mistake. Much of it was a return to big government which was headed in the right direction under Clinton. Most of the issue was spending related and not income related. Same as it always is.

Yep, and he got burned thinking that he could work with the we-will-do-nothing-to-help-Obama Rs. What he could've done is what the Rs would've done, claimed a mandate and then did what he wanted without even looking across the aisle. But Obama's a bit more grown up than that.
So that explains the heavy use of executive orders. So far it's something like 122 and counting... an even quicker pace than Clinton's 306 (8 years) which I think is the record.

Obama is doing lots of stuff without looking across the isle.

Isn't this what you keep criticizing Obama for doing?
Yeah. They all seem a bit shady don't they?
 
VeloCity said:
Why the different standard for Obama? Are you saying that we're so used to dumb presidents that now that we have a smart one he should be held to a higher standard?

Get a grip, he's a human being, he gives a thousand speeches a day on a thousand different topics, he's not going to know everything about everything, and some of those speeches are going to contain dumb and inane things from time to time. If he was just making **** up like Reagan did (and Romney is now), then yeah, that'd be different, but he wasn't. And even then, it was just an awkwardly phrased sentence, ie "Polish concentration camps" instead of "concentration camps in Poland".
Its not a different standard. When Bush said the queen was like his mother, or when he walked into the closed door, well, they are still making fun of it here.

But it should be a different standard because Obama is praised for his intellgience.

Just like if Romney makes an gaffe on the economy - which he is running on, it is worse than if he makes a gaffe on foreign policy, - which is a secondary issue of his campaign.

It was also that he was touted as someone who would not make the same idiotic gaffes as bush. As such if he does make gaffes like that, it is natural that he should get more criticism for it.

Here for example, on innauguration day, 1 newspaper "speculated" as to what note Obama would give bush and vice versa. The obama note was full of elequent phrases and great use of language. The Bush one full of spelling mistakes, gramatical errors and gaffes.

Message, obama wont make the same mistakes that bush did.

And if he does he should get flamed for it.
 
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Anonymous

Guest
henryg said:
Bill Clinton and the New Democrats aided and abetted the Republican drive for deregulation -but the drive to dismantle the New Deal regulatory structure has always and continues to be at the center of modern Republican ideology with only Democrats offering any opposition. Bush came in promising a kinder gentler SEC and he gave a free pass, way beyond anything that Clinton had done, to Wall Street bad behavior. Plus -Bush squandered the surplus Clinton left him. The Bush tax cuts will account for close to 3 Trillion by the end of this year. Bushes war another Trillion. In the end it's really not about Bush, Obama or Romney. It's about 2 opposing approachs.

Sadly, Obama has not made anything like a clean break with the policies of Bush. Neither has he really addressed the problem of the to big to fail, over leveraged, under-regulated financial industry.
The real power lies with big finance and the big multi-nationals, not with the Washington politicians that they bankroll - thats why you and I pay tax, but Bank Of America and Exxon Mobil don't.
Bill Clinton and the New Democrats aided and abetted the Republican drive for deregulation -but the drive to dismantle the New Deal regulatory structure has always and continues to be at the center of modern Republican ideology with only Democrats offering any opposition.
Glass -Steagall was done away with by Clinton's signature. A good move I think for many reasons.

Part of the problem with the 2008 crisis was caused not by regulations or lack thereof but by regulators failing to enforce the regulations. Pass all the laws you want, if they are not adhered to then what's the point??

Bush came in promising a kinder gentler SEC and he gave a free pass, way beyond anything that Clinton had done, to Wall Street bad behavior.
No. Chris Cox, a Republican, was derelict in his duty and should be in prison, imo. Not much to do with Bush actually.

Plus -Bush squandered the surplus Clinton left him.
Not that simple. 9/11 actually happened. There were economic consequences.

http://en.wikipedia.org/wiki/Economic_effects_arising_from_the_September_11_attacks

But Bush made some big, big mistakes. No doubt about that.

The Bush tax cuts will account for close to 3 Trillion by the end of this year.
So, in your opinion, what should the tax rate be? You do realize the Bush years produced more income from the "rich" (in real dollars and as a percentage of "rich" persons total income) than did Clinton, even though the rate was higher under Clinton. Suffice it to say it was/is a spending problem.

Bushes war
I'm assuming you are referring to Iraq where 39% of Dems in the house voted to go to war and 58% of Senate Democrats did the same including Hillary Clinton.

D's have their share of whatever blame you wish to assign.

It's about 2 opposing approachs.
Yep. And economic malaise is not the way forward, which is what we now have.

The real power lies with big finance and the big multi-nationals, not with the Washington politicians that they bankroll - thats why you and I pay tax, but Bank Of America and Exxon Mobil don't
Wrong again. The real power lies in the tax code and the legal talent that exploits a horrendously convoluted tax system. Now, attorneys are pretty powerful in their own right. Many are in fact politicians.

Ever wonder why the tax code is as crazy as it is... or why tort reform is never, ever discussed in related to the cost of healthcare (and was not discussed or addressed with Obamacare)?

Please don't come into this discussion thinking the Dems hands to be clean.
 
Jul 18, 2010
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Scott SoCal said:
Please don't come into this discussion thinking the Dems hands to be clean.
I don't know how you can take that from my posts. The problem is Dems have supported many of the disastrous policies of Republicans. I could understand that 30 years ago when they might have seemed like fresh ideas worth testing after decades of Democratic rule.

Now back when deregulation started and Glass-Steagall was repealed I thought it was a good idea. Back then I was much closer to the Republicans of the day then the old school New Deal Democrats on the economy. But the results have been disastrous. We have not gotten financial innovation, real sustainable growth or a better economy. When you test a solution and find it a failure you adjust your thinking to the real world results.

The unregulated shadow banking system worldwide totaled about $60 trillion as of late 2011. That is equal to the size of annual global GDP and far in excess of US GDP. That is a disaster waiting to happen to the global economy.
 
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Anonymous

Guest
I wonder what Krugman the Rocket Scientist will have to say about this....

Time Bomb? Banks Pressured to Buy Government Debt

US and European regulators are essentially forcing banks to buy up their own government's debt—a move that could end up making the debt crisis even worse, a Citigroup analysis says.
Regulators are allowing banks to escape counting their country's debt against capital requirements and loosening other rules to create a steady market for government bonds, the study says.

While that helps governments issue more and more debt, the strategy could ultimately explode if the governments are unable to make the bond payments, leaving the banks with billions of toxic debt, says Citigroup strategist Hans Lorenzen.

"Captive bank demand can buy time and can help keep domestic yields low," Lorenzen wrote in an analysis for clients. "However, the distortions that build up over time can sow the seeds of an even bigger crisis, if the time bought isn't used very prudently."

"Specifically," Lorenzen adds, "having banks loaded up with domestic sovereign debt will only increase the domestic fallout if the sovereign ultimately reneges on its obligations."

The banks, though, are caught in a "great repression" trap from which they cannot escape.

"When subjected to the mix of carrot and stick by policymakers...then everything else equal, we believe banks will keep buying," Lorenzen said.
"Ask the simple question: Why are banks buying sovereign debt when yields are either near record lows, or perhaps more interestingly, when foreign investors are pulling out?" Lorenzen wrote.
http://www.cnbc.com/id/47633576

House of cards. But clearly what we should have done is QEIII, force the banks to buy the printed money then provide more stimulus to entice States to continue behaving badly so Teachers, Cops and Firemen can still keep their gigs.
 
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Anonymous

Guest
henryg said:
I don't know how you can take that from my posts. The problem is Dems have supported many of the disastrous policies of Republicans. I could understand that 30 years ago when they might have seemed like fresh ideas worth testing after decades of Democratic rule.

Now back when deregulation started and Glass-Steagall was repealed I thought it was a good idea. Back then I was much closer to the Republicans of the day then the old school New Deal Democrats on the economy. But the results have been disastrous. We have not gotten financial innovation, real sustainable growth or a better economy. When you test a solution and find it a failure you adjust your thinking to the real world results.

The unregulated shadow banking system worldwide totaled about $60 trillion as of late 2011. That is equal to the size of annual global GDP and far in excess of US GDP. That is a disaster waiting to happen to the global economy.
I don't know how you can take that from my posts.
Pretty easy when you write stuff like "Bush's war."

But the results have been disastrous.
I disagree. On the largest of scales you may have a point. But on smaller scales it is absolutely in the individuals interest not to pit the banker against the insurer against the adviser. Which Glass-Steagal did.

The unregulated shadow banking system worldwide totaled about $60 trillion as of late 2011. That is equal to the size of annual global GDP and far in excess of US GDP. That is a disaster waiting to happen to the global economy.
I agree that these are enormous numbers. Scary even.

But this is how it is. The $60 Trillion number is interesting because it is about the same value as the un-funded liabilities (just) the US govt has to it's citizens not counting Obamacare.

But there are those on this thread that argue that not to be a big deal.
 

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