Los Angeles Times : The world still can learn from Keynesian economics

Los Angeles Times ^ | 11/23/2009 | Michael Hiltzik

[Uri’el-2012]

Los Angeles Times : The world still can learn from Keynesian economics

Yes, we can !
Keynesian economics can turn the recession of GW Bush
into the Great Depression of Barak Hussein Obama.

Much the same as Keynesian economics turned the Hoover
recession into the Great Depression of FDR.

mmmmm mmmmmmm mmmmmmm

[steveab]

“Is this guy frigging KIDDING me? The entire reason for the meltdown as risk wasn’t borne by the ones making the transactions - that risk was held by the federal GOVERNMENT! If companies couldn’t shift risk to the feds (e.g. Fannie Mae), they would have to weigh their risks more appropriately and conservatively. Isn’t the failure of the stimulus the ultimate proof that Keynesian economics is bullcrap?”
BINGO WE HAVE A WINNER.
Our elected Elite are doing it again in the health care and energy arena. Don't let them do it.

[OneWingedShark]

>Reagan-like faith in efficient markets set the stage for the financial meltdown.

Question: Do we even _HAVE_ a free-market? Did the government let the airlines fail after 11 Sep? Did the Government let Fannie Mae / Freddie Mac fail? How about GM / Chrysler?

Question: With this much meddling, how can the efficiency of markets be observed?

The claim is like claiming that “survival of the fittest” is efficient, then refusing to allow the unfit’ to die, and then looking at the result and ‘finding’ that the observations contradict the claim of the efficiency of “survival of the fittest.”

[AFPhys]

Keynesian economics involves how to effect the economy in short run, not long run. It is short sighted and ignores the way carrying out such policies influences the future prospects for real prosperity and creation of wealth.

[Hacklehead]

Read my tag line, this is a perfect example. Markets are efficient and responsive, govt is neither. Govt interference is the CAUSE not the solution to this crisis. University libtards have been teaching Keynesian ecomonics as dogma for decades. Its the only economic theory the leftists in the media are familiar with.

[Brilliant]

“Reagan-like faith in efficient markets set the stage for the financial meltdown.”

No. Actually it was housing subsidies that did that.

[READINABLUESTATE]

bookmark

[loveliberty2]

"750 people in Washington spending every last cent of disposable income of over 300 million people."

They now have spent the fruits of the labors of future generations, as well as printing dollars to cover their arrogant habits.

America's Constitution set limits and boundaries, checks and balances, on the powers of those "people in Washington." "Bind them down from mischief by the chains of the Constitution," declared Jefferson.

It is time for the Constitutioin's "only keepers" (We, the People), to do what the Founders intended. Bring them home, and set term limits for those who replace them, thereby building a fence between them and the nation's wealth creators.

[tommythev]

Reagan-like faith in efficient markets set the stage for the financial meltdown.

This is such a BS statements on many levels. What do you suppose the author means by "Reagan-like". It is clear that by linking the term to financial meltdown, the author means that "Reagan-like" faith in free markets is simple-minded and stems from ignorance and lack of understanding of the complex truths of Keynesian economics.

Nothing could be further from the truth. Reagan and his team understood that there were certain fundamentals that had to be in place to foster prosperity. One of the cornerstones is sound money. Sound money was abandoned to pump cash into the housing market to make home ownership cheaper for those who were not credit-worthy. This not surprisingly caused a housing bubble. With the Fed steadily expanding the money supply, lending to risky home-buyers made sense, as the values of the homes they were buying were bound to go up (supplies of commodities like real estate expand slowly so prices respond to increases of money supply). It is therefore expected that loan-to-equity ratios would improve as inflation raised the values of the collateral.

Fannie and Freddie were also distorting markets by taking on bad mortgages to the tune of trillions. Banks, seeing how much money was to be made in this environment looked for ways to get in on it. These marginal loans are very profitable short-term with lots of fees that go straight to the bottom line. By insuring themselves against losses, and by selling off risk as bonds they thought that they were in no danger. Bond rating agencies rated these bonds too highly, both in order to get the fees from the bond issues and because they seemed safe unless there was a total collapse in the market.

What could cause that.... Well, the huge amount of money in housing pumped up the supply of available housing as developers went into overdrive building upscale homes and homeowners traded up while selling there old homes to people who probably couldn't afford them. How could they get loans? No money down loans, encouraged by Congress.

When the Fed tightened due to fears of inflation and dollar collapse (foreign investors eventually tire of buying bonds that will be paid back with debased currency), the bubble burst. No one at the Fed or Treasury knew how dependent the whole housing market was on inflating the dollar.

To counter this collapse that was caused by interference in free markets the Treasury and Fed are further distorting real values by pumping tons of "dollars" into the system. Nothing particularly free market about any of this.

I could go on, but this sickens me. One sentence and my blood is boiling. Someone else will have to deconstruct the rest of the article.

[onedoug]

Capitalism, George Reisman

[Oldpuppymax]

The first sentence in this article was enough for me.

[CSM]

What these jokers fail to understand is that capitalism is NOT an economic system. It IS the natural state of an economy. Any attempt to bridle capitalism will cause UNnatural occurances. When hard work and innovation is punished, they no longer naturally occur at the rate that human ingenuity would naturally occur.

As proof, I would ask these leftists to name one innovation that has been forthcoming from any of their socialist utopias.

[Mase]

Ahh, Democrats and Keynesians. Is there a difference?

[RJL]

"His answer was that we don't know what the future will bring. He talked about the inherent precariousness of knowledge, that when we estimate the future we're only disguising our ignorance."

And then there is also the willful ignorance of the federal government forcing banks to make home loans to people who cannot repay them, thereby setting the country up for failure, recession and maybe worse to come.

[expat_panama]

Reagan-like faith in efficient markets set the stage for the financial meltdown....

Great topic but my reading stops when I hit mindless name-calling. The best kept secret here is that there actually are rational arguments in favor of Keynesian economics, but rational thinking seems to have gone out of fashion these days.

[ccmay]

The reason Keynesian economics is taken seriously by the elites is the same reason global warming is shoved down our throats. It’s a convenient excuse to raise our taxes and steal our freedoms.