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LA Times: Fixing the economy, We got it wrong
Los Angeles Times ^ | August 15, 2011 | by James K. Galbraith

Posted on 08/15/2011 5:59:41 AM PDT by Oldeconomybuyer

In early January 2009 two White House-bound economists — Christina Romer and Jared Bernstein — predicted that if the stimulus bill were passed, unemployment would peak at 8% by midyear and then start coming down. If there were no stimulus, they said, joblessness might hit 9% and not peak until 2010.

Well it's now obvious that the push didn't do the job. Even with it, unemployment is higher than the Romer-Bernstein worst case. The optimistic forecasts now look embarrassing.

Let's examine that epic failure.

(Excerpt) Read more at latimes.com ...


TOPICS: Business/Economy; News/Current Events; Politics/Elections; US: California
KEYWORDS: election2012; failure; obamanomics; socialism


1 posted on 08/15/2011 5:59:47 AM PDT by Oldeconomybuyer
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To: Oldeconomybuyer

In a related story: Pork wings spotted overhead...


2 posted on 08/15/2011 6:01:19 AM PDT by Mr. K (CAPSLOCK! -Unleash the fury! [Palin/Bachman 2012- unbeatable ticket])
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To: Mr. K
yikes~! I thought the LA Times had a sudden blinding flash of the obvious- but their 'solution' is stunningly even more stupid:

"The solution is not another "stimulus" — a term that stinks of needles and quick fixes. The solution has to be a long-term strategy: both a new direction for economic activity and new institutions to provide the money. The proposed national infrastructure bank — a permanent institution — is the right sort of thing and would be a good place to start.

To go further, let's admit that our problem is not budget deficits or public debt — not now and not later. Let's agree that cutting Social Security and Medicare — inflicting pointless pain on the elderly — will not help. Let's build a new financial system to serve public purpose and private business. And let's start to act on our actual needs and problems: jobs, foreclosures, public investments, energy security and climate change.

Time is short, but at least in recent days it's becoming clear: We're getting it wrong and we must change.

In other words, the solution is 'fundamental change NOW (I assume to communism, from their 'central' explanation)

So their solution to big government failure is even bigger government

3 posted on 08/15/2011 6:06:52 AM PDT by Mr. K (CAPSLOCK! -Unleash the fury! [Palin/Bachman 2012- unbeatable ticket])
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To: Oldeconomybuyer
To go further, let's admit that our problem is not budget deficits or public debt — not now and not later. Let's agree that cutting Social Security and Medicare — inflicting pointless pain on the elderly — will not help. Let's build a new financial system to serve public purpose and private business. And let's start to act on our actual needs and problems: jobs, foreclosures, public investments, energy security and climate change.

This guy is of the "stimulus didn't go far enough" school. He wants a massive national inftrastructure bank that basically makes stimulus permanent.

4 posted on 08/15/2011 6:09:18 AM PDT by Yardstick
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To: Oldeconomybuyer

Socialism doesn’t work so lets try communism instead.


5 posted on 08/15/2011 6:09:37 AM PDT by central_va ( I won't be reconstructed and I do not give a damn.)
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To: Oldeconomybuyer
, let's admit that our problem is not budget deficits or public debt — not now and not later

Oh brother. He calls it debt-deflation but it's not caused by debt. Good grief.

6 posted on 08/15/2011 6:10:51 AM PDT by MulberryDraw ( Where's the democrat budget? What's the plan?)
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To: Mr. K

Here it is — the Leftist media is now howling for a lasting transformation of the US economic system.

A permanent infrastructure bank? No thanks.


7 posted on 08/15/2011 6:11:08 AM PDT by AnglePark
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To: Oldeconomybuyer

Now obviously the stimulus wasn’t large enough /sarc


8 posted on 08/15/2011 6:11:13 AM PDT by algernonpj (He who pays the piper . . .)
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To: Oldeconomybuyer

in 2008, the private sector economy shrunk by 15%. Yet the GDP declined by only 300 billion?

The government stimulus painted over this little fact with spending that shifted the government’s portion of the GDP from around 35% to 43%.

This was an attempt to hide the fact that this was a depression level decent of our economy. Our financial wizards have said that they can regulate away economic depressions. It kind of worked, but we sold our children into slavery to buy time.

The only real solution is painful reduction of all government services to 5% of GDP, allowing us enough funds to pay off the debt. This will allow the entrepreneurs to re-ignite our economy. We don’t have the will or the politicians with the backbone to do it.


9 posted on 08/15/2011 6:11:14 AM PDT by listenhillary (Look your representatives in the eye and ask if they intend to pay off the debt. They will look away)
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To: Mr. K

On last nights 60 minutes Leslie Stahl (SP?) interviewed a bunch of CEOs who have moved their ops overseas for tax reasons. Leslie actually said we couldn’t reduce coprorate tax rates in the US to meet those in Ireland and Switzerland becuase we’d lose trillions of dollars and make the deficit worse.


10 posted on 08/15/2011 6:12:42 AM PDT by dblshot (Insanity: electing the same people over and over and expecting different results.)
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To: Oldeconomybuyer

These egghead economisseds have never, actually worked in the real world. That’s why they ALL fled back to their ivy covered ivory towers where it’s safe and warm. It’s too scary in the real world for them...................


11 posted on 08/15/2011 6:13:22 AM PDT by Red Badger ("Treason doth never prosper.... What's the reason? Why if it prosper, none dare call it treason.")
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To: Yardstick

Gee, wonder who this massive national bank will loan to and who it won’t loan to? Can you say unions?

Pray for America


12 posted on 08/15/2011 6:14:46 AM PDT by bray (Hey Country Club, your turn to hold your nose!)
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To: dblshot

“Leslie actually said we couldn’t reduce coprorate tax rates in the US”

Push the meme, push the meme, push the meme. Even if it makes you sound like an idiot, push the meme....


13 posted on 08/15/2011 6:17:33 AM PDT by tcrlaf (PREFRONTAL LOBOTOMISTS FOR OBAMA2012!)
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To: Oldeconomybuyer
The optimistic forecasts now look embarrassing.

failure,again

14 posted on 08/15/2011 6:18:24 AM PDT by Doogle ((USAF.68-73..8th TFW Ubon Thailand..never store a threat you should have eliminated))
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To: Oldeconomybuyer; ding_dong_daddy_from_dumas; stephenjohnbanker; DoughtyOne; calcowgirl; Gilbo_3; ...
FROM LINK :”In fact, stimulus alone was never going to bring recovery. This crisis was caused by financial collapse, rooted in massive banking fraud. The financial system is our economic motor and when it fails it cannot be revived simply by pouring money on it, any more than a wrecked reactor can be restarted just by adding fuel. Team Obama faced a situation not seen since the 1930s — a worldwide banking meltdown. The financial system needed to be rebuilt — and it still does. But Team Obama chose to overlook this. The result was debt-deflation. Falling asset prices tipped more and more households into insolvency, business stagnated, tax revenues dropped, states and localities cut their budgets and deficits widened. The situation is similar in Europe, with countries rather than households in the deepest trouble, and wild rumors attacking the shares of even the biggest banks...
The solution is not another “stimulus” — a term that stinks of needles and quick fixes. The solution has to be a long-term strategy: both a new direction for economic activity and new institutions to provide the money. The proposed national infrastructure bank — a permanent institution — is the right sort of thing and would be a good place to start. To go further, let's admit that our problem is not budget deficits or public debt — not now and not later. Let's agree that cutting Social Security and Medicare — inflicting pointless pain on the elderly — will not help. Let's build a new financial system to serve public purpose and private business. And let's start to act on our actual needs and problems: jobs, foreclosures, public investments, energy security and climate change

Fixing the economy: We got it wrong(pssst, he is still wrong)

Actually things are worse than he says. It's not just debt-deflation but it's debt-deflation-inflation-crunch, the result of Keysnian inflationary policy to fix the above. Economic Stimulus policy is just handouts to the voters for votes under the name of 'doing something'

debt-deflation-inflation-crunch is when food (and labor) cost the grocery stores more than customers are willing to pay for it, as they are unemployed, deep in debt and have worthless houses.

The real solution was a clearing of bad debt and a natural deflationary correction, something politically unacceptable.

15 posted on 08/15/2011 6:20:40 AM PDT by sickoflibs (If you pay zero Federal income taxes, don't say you are paying your 'fair share')
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To: dblshot

Yep, there she was, metaphorically staring at all those billions (rolls eyes) and the thought of reducing the corporate tax rates didn’t fire a synapse in her head that told her ‘then A LOT of that money would flow back into the US’ and instead, she thought about the dollars that wouldn’t come too if the rate was lower.

Hey, Leslie, here’s an apple pie. You can’t have half of it, like you want. You can have one third of it. But, if you get a third of it, will you only think about the sixth you didn’t get?

Because if all you want is half of it, you’re getting none.


16 posted on 08/15/2011 6:24:00 AM PDT by GreenAccord (Bacon Akbar)
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To: tcrlaf

Memes? CNN articles - The rich only account for 4% or 5%, lets tax the snot out of them to fix our economy.


17 posted on 08/15/2011 6:24:00 AM PDT by listenhillary (Look your representatives in the eye and ask if they intend to pay off the debt. They will look away)
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To: Oldeconomybuyer

They still don’t get it. They just don’t realize that high corporate taxes, excessive regulation and uncertainty is preventing businesses from hiring. They recommend the “infrastructure bank” as a solution...yet another black hole in which to dump tapayer dollars.


18 posted on 08/15/2011 6:28:42 AM PDT by 6ppc (It's torch and pitchfork time)
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To: GreenAccord

Yup, and there the incredibly brilliant Leslie (with her lipstick painted a good 1/4” beyond her lip line, looking like some sad, deranged old hag..unaware that the fad of big lips has passed) failed to ask,

“If the USA lowered our corporate tax rates, and all these corporations then decided to stay in the US (like the CEO of Cisco said he wanted to do), wouldn’t the US take in far more taxes than it would by keeping the high rates?????”

DUH!


19 posted on 08/15/2011 6:34:27 AM PDT by Arlis (- Virginia loghome/woods-dweller/Jesus lovin'/Bible-totin'/"gun-clinger")
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To: listenhillary
in 2008, the private sector economy shrunk by 15%. Yet the GDP declined by only 300 billion?

The government stimulus painted over this little fact with spending that shifted the government’s portion of the GDP from around 35% to 43%.

This was an attempt to hide the fact that this was a depression level decent of our economy. Our financial wizards have said that they can regulate away economic depressions. It kind of worked, but we sold our children into slavery to buy time.

The only real solution is painful reduction of all government services to 5% of GDP, allowing us enough funds to pay off the debt. This will allow the entrepreneurs to re-ignite our economy. We don’t have the will or the politicians with the backbone to do it.


Now add in the fact that the CPI which is used to deflate the GDP and create 'real' GDP has been corrupted with soft metrics (such as quality adjustments, hedonics, geometric weighting) that suppress inflation!
20 posted on 08/15/2011 6:38:34 AM PDT by algernonpj (He who pays the piper . . .)
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To: Oldeconomybuyer

If I had the opportunity to ask Bernanke just one question, it would be:

“Mr. Bernanke, is there a set of circumstances under which you would say ‘holy crap, we completely screwed this up’”?


21 posted on 08/15/2011 6:42:53 AM PDT by Attention Surplus Disorder (Both sides need to put aside the partisan bickering, & work out how much free stuff I get)
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To: central_va

yes!

so fashionable.

especially on el collegio campi.


22 posted on 08/15/2011 6:46:14 AM PDT by ken21 (ruling class dem + rino progressives -- destroying america for 150 years.)
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To: Mr. K

Agree, the Infrastructure Bank is just another deal for the left to toss our tax money out the window into the laps of the left’s buddies and politicians. If the present nuts occupying our White House do nothing and stop using nonsense regulations to hobble our industries, we will see the economy self-heal through the magic of capitalism.


23 posted on 08/15/2011 6:59:04 AM PDT by RicocheT (Eat the rich only if you're certain it's your last meal)
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To: Mr. K
Nope, not Communism, and it's not capitalism.

It's the “THIRD WAY”, half way between the two.

Govt and business working together.

Let's give this “NEW” idea a catchy name.

How about, let me see.

OH! I've got a catchy name.

How about we call it National Socialism, or Nazism for short.

Yea buddy, Nazism is the answer. Why didn't somebody think of this before.

24 posted on 08/15/2011 7:02:14 AM PDT by IMR 4350
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To: listenhillary
in 2008, the private sector economy shrunk by 15%. Yet the GDP declined by only 300 billion?

Boy, that's the key statistic, isn't it.

Mainstream economics in this country has sunk as low as the mainstream media. It is now commonly accepted and taught in our universities that consumer and government spending -- no matter their source -- are the true indicators of a healthy and growing economy.

Business-to-business spending is completely ignored (it's larger than consumer spending) and the drawing down of savings which is the consumption of our capital isn't anything to worry about. If more capital is needed, so the thinking goes, the Federal Reserve will print it.

To overcome this nonsense will take an incredibly sharp-witted and strong-willed president aided by a similarly courageous congress. I hope we manage to find them.

25 posted on 08/15/2011 7:03:16 AM PDT by BfloGuy (Workers and consumers are, of course, identical.)
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To: dblshot

Missed that last night. Thanks for the heads up.

http://www.youtube.com/watch?v=MxgezC4KhXQ


26 posted on 08/15/2011 7:08:42 AM PDT by Herbster
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To: sickoflibs; stephenjohnbanker
the fun part is deciding who really wants to 'fix' the country...

economists can wrangle over the details and the long range pro vs cons...but they aint runnin for office, so they dont count...

*job* security says that anybody countin votes aint interested in fixing squat beyond their next election cycle...

gilbo says rope manufacturing is the next boom/bust cycle that must happen if we are to avoid going back to animal/manual labor as a society...

27 posted on 08/15/2011 7:27:47 AM PDT by Gilbo_3 (Gov is not reason; not eloquent; its force.Like fire,a dangerous servant & master. George Washington)
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To: Oldeconomybuyer

We had to pass the Stimulus to find out what was in it...MORE ACCUMULATED DEBT!!!

The Obama jobs tour: A new RNC campaign dubs it “the debt-end bus tour”

http://hotair.com/archives/2011/08/15/the-obama-jobs-tour-a-new-rnc-campaign-dubs-it-the-debt-end-bus-tour/


28 posted on 08/15/2011 7:35:45 AM PDT by Hotlanta Mike (TeaNami)
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To: Oldeconomybuyer
The article made some excellent points about the previous models being out of date.

Bush 41’s comments about a new world order were extremely accurate. Everything withion our recent political history (post 1947) dealt with a bipolar world. The bipolar world disappeared in the 1990’s.

Our political experience pre-1947 was that of a secondary player not the primary player status we achieved after 1947. Again, no relevant political history to draw upon.

The only period of history that I can come up with is Europe 1820 - 1880. And there the best option available would be Victorian England. Even then, that model has several very serious flaws for Americans. It worked because there was a single political figure for the entire time period - Queen Victoria. It also worked for England, like it or not, still has serious feudal overtones - something that didn't quite fully established in America even though there are factions that would dearly love to have inherited political power.

29 posted on 08/15/2011 7:40:59 AM PDT by Nip (TANSTAAFL and BOHICA)
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To: Oldeconomybuyer
These pro-Keynesian articles are popping up everywhere. I do not think this is a coincidence. I think this is either an organized campaign out of the White House, an organized campaign from somewhere else (Soros?), or a "Revenge of the Keynesians" pile-on.

The reality the Keynesians refuse to realize is ObamaCare put a glass ceiling on the economic recovery (by striking fear into all business), and Dodd Frank reinforced that glass ceiling (by killing lending to small business, even those too small to be impacted by ObamaCare).

The author is right, the stimulus did not work, we need to do something new, the something new needs to target business. But there is not data or evidence his proposals would move the needle at all.

What we need to do is the following:

Repeal ObamaCare.

Repeal Sarbanes-Oxley.

Repeal Dodd-Frank.

Immediately cut the corporate income tax rate and implement a moratorium on repatriation of overseas corporate profits. Longer-term, implement the FairTax.

Neuter the EPA.

End all bans on energy exploration.

30 posted on 08/15/2011 7:57:33 AM PDT by magellan
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To: Nip

The one fatal flaw in this article is that JKG believes that Obama intended the Porkulus to actually be a stimulus bill. Obviously, we know that it was written months before the economy tanked, by a group headed up by Tom Daschle.

It was written IMHO to solidify Obama’s support heading into the DNC convention, heading off any last-minute floor challenge by Hillary’s people.

And because it was well-known in Dem circles back in June, the Congress didn’t need to read it when they passed the thing in a few days’ time in February 2009.


31 posted on 08/15/2011 7:58:20 AM PDT by TWohlford
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To: magellan

The Obama administration is not planning to fix the economy. They are going right ahead with the spending. They went ahead and announced this month that they were proceeding with grants that for rail projects that had been already cut twice by the Congress. Ray LaHood, secretary of transportation already announced the grants, the first week in August. The WA state grant was already allocated earlier this year.

I don’t understand why we never heard about it.


32 posted on 08/15/2011 8:06:46 AM PDT by Eva
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To: Oldeconomybuyer

I would never have thought that Van Jones would assume such a Caucasian sounding pen name; James K. Galbraith.


33 posted on 08/15/2011 8:15:55 AM PDT by liberalh8ter
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To: sickoflibs

Good post


34 posted on 08/15/2011 9:17:58 AM PDT by stephenjohnbanker (God, family, country, mom, apple pie, the girl next door and a Ford F250 to pull my boat.)
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To: sickoflibs
RE: "The real solution was a clearing of bad debt and a natural deflationary correction, something politically unacceptable."
Yep. Notice how the LAT would like readers to agree we need "bank restructuring" among other things.
35 posted on 08/15/2011 12:26:58 PM PDT by Marine_Uncle (Honor must be earned....Duncan Hunter Sr. for POTUS.)
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