Forum Thread

This economy is going down before Obama leaves office.

Reply to ThreadDisplaying 8 Posts
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
    Are you sure you want to delete this post?
        
    Not good, not good. Private households are running a deficit, not from additional borrowing (adding to gross financial liabilities), but by drawing down on savings (reducing gross financial assets). So they are adding to their net-financial liabilities, by losing financial assets. That's not sustainable.

    Add in expected government spending cuts in March, and additional tax revenues from the Fiscal Cliff deal in December 2012 (remember the regressive FICA tax holiday expiration will bring more revenue than the progressive tax increases on the wealty), and it's a reciepe for disaster (think 2000 and 2008). This economy is going down before Obama leaves office. We have idiots running the Big Show. The government's deficit is not high enough. Working people are overtaxed and underpaid.

    http://www.businessinsider.com/richard-koo-deleveraging-isnt-over-2013-1
  • Democrat
    Meridian, MS
    Are you sure you want to delete this post?
        
    Just think about the Clinton years in the 90s, taxes were very similar to what they are now and wages were certainly not higher than they are now, BUT the economy flourished and deficits became surpluses. Were those workers overtaxed and underpaid? It is very hard for me to understand the correlation, if any.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
    Are you sure you want to delete this post?
        
    In case you don't remember, the economy crashed in 2000, and those surpluses were erased by the time Bush took office, and the Clinton boom was propelled by lower oil prices at the begining and higher household leveraging.

    Net Sectoral Financial Balances (link).

    This one is updated for 2012 (link). 4th quarter needs to be revised based on today's info. I think it was made at the beginning of the 4th quarter of 2012.


    Koo's chart in the link I posted shows that households have moved into deficit during the last quarter of 2012, which hasn't been done since 2007.

    Here's a link to just the chart (link).
  • Democrat
    Lawrence, MA
    Are you sure you want to delete this post?
        
    It's not productive idea
    to equate Bill Clinton with boom times......A lot of what happened economically under his watch had litle or nothing to do with his policies. This is true of many Presidents. This Huckleberry Finn is also the one who gave us NAFTA and said at the time.....This is going to be great for the country. He also pulled off something the Republicans had been working on for decades......he ended welfare for single mothers and put them to work for minimim wages. .....If had had to deal with the Wall St. and banking fiasco of 2008 Huck would have been in the same boat as Jimmy Carter duiring the last concention.....nowhere to be seen. ......The dismantling of our industrial capacity and its shipment overseas has also notprogressed to the point it is at now. ......Give him his due however. He was a master of the " Aw Shucks " rountine.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
    Are you sure you want to delete this post?
        
    Clinton was a neoliberal democrat posing as a progressive.
  • Democrat
    Meridian, MS
    Are you sure you want to delete this post?
        
    Like you said Carlitos, The economy started it's tailspin just as Bush-1 was entering ('89-'90), and went downhill UNTIL Clinton took over and reversed the Bush failed economy. Deficits disappeared and our economy flourished until Bush-2 in 2001, then in the next 8 years, not only did the bottom fall out, but huge deficits began, and even the groundwork was laid for FUTURE deficits. These were the deficits that Obama inherited and is still working to erase. It seems obvious to me that the Republican Party has more fault in this than the Democrats. And now we have a chance to see again what the Democratic Party can accomplish in the next four years. This time, it took the Democrats and the un-cooperative Republicans more than 4 years to erase the damages. So time will tell.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
    Are you sure you want to delete this post?
        
    Clinton was president in 2000. The deficit is not a problem. Government surpluses are unsustainable. As I said, lower oil prices at the beginning of Clinton's term as president helped out a lot. But the boom was also fueled by unsustainable private sector leveraging allowed in part by a financial sector totally run amok. All of that blew up in 2000, which is what motivated the BUSH II tax cuts in 2001. Problem with those tax cuts were they relied on trickle down nonsense. If you give more money to those with the highest propensity to save, it necessitates a larger government deficit than otherwise. BUSH II expansion was fueled in small part by the tax cuts on the lower end, more government spending, and even more private sector leveraging by an even more bloated and fraudulent financial sector. 1/3 to 2/5 of American home loans issued in 2006 were what the industry termed behind close doors to be liar's loans. And it was the lenders, not the borrowers, who put the lies in liar's loans. All that additional lending helped fuel spending, which led to tax revenues that drove the government's deficit below 2% of GDP in 2007. Then you had massive increases in the price of oil, as well as the FED raising interest rates in 2006, the discovery of all the insanely bad junk mortgage securities on the books of banks and investors around the world, the massive collapse of Lehman brothers, and the economy total;y imploded in the worst recession since the Great Depression.

    From the 90s on regulators kept turning a blind eye to the deterioration of lending standards, and started judging bank capital requirements not by actual equity (paid-in assets), but by projections on the value of mortgages being issued. That's where mark-to-market accounting comes from. Bank regulators figured if banks could sell the mortgages they were making to investors, that everything must be fine, because the market knows all, blah, blah, blah.

    See my posts all over this website about government deficits, banking, and finance, or better yet read Warren Mosler's free book "The Seven Deadly Innocent Frauds of Economic Policy." It's easy to read for non-econ types.

    I was a die-hard Democrat and it took me several years to accept Warren's prophetic understanding of the monetary system. I met the man in June of 2012, as I invited him to speak with Occupy Dallas, and he obliged. Today, he remains my mentor and my hero.
  • Democrat
    Meridian, MS
    Are you sure you want to delete this post?
        
    Thanks so much for the intelligent response Carlitos, as a degreed chemist I will have to copy and paste it to a word document so I can read, re-read, and study it until it soaks in some. Economics is certainly not my forte', but I will attempt it. I might even try Mosler's book. Thanks again.