Monday, April 1, 2013

Post cards from the tour bus to Armageddon

It looks like large bank depositors on Cyprus will pay a 60% penalty. If this only applied to the Russian mafia that were laundering money there, this would be great. It won't, and the locals are screwed.

Egypt is being dragged to the chopping block by the IMF who is demanding austerity and tax increases in return for some quick cash. The government of Egypt is choosing to hold out so far. Rumors of fuel and grain shortages are causing those who hold commodities to hoard them expecting the Egyption Pound to become worthless under the IMF assault. Their only hope is that they can get control of things by using electronic debt cards to track the flow of subsidized goods that are being diverted.

David Stockman who as budget director under Reagan presided over his 'Morning in America' trickle down economics scam, and later denounced the same, has penned a NY Times piece titled 'Sundown in America'. His contention is that the U.S. economy, fueled by “phony money” from the Federal Reserve’s quantitative easing policies, is headed for an inevitable crash, likely “within a few years”. He says a lot of things like that in the piece that I agree with, but his solutions are all attached to poison pills that leave Reagan's cronies still in charge.

Like for example, “When it bursts [the current banking bubble], there will be no new round of bailouts like the ones the banks got in 2008,” so says Stockman. But he also says there should not have been any 2008 bailout and the market left alone to burn itself out. Yeah, don't put out the stove fire at the orphanage, just let it burn itself out. He rails against Keynesian economics for being an utter failure as if we actually doing that. The Fed passing out money is not Keynesian economics. He complains about what a small percentage of Obama's stimulus that went to people who were actually hurt by the collapse as if that was proof Keynes was wrong. It's proof that Obama wasn't doing what Keynes proscribed and the opposite of what FDR did in the 30s.

Stockman goes on to blame all our real problems on FDR taking us off the gold standard in 1933. Huh? The 50 years of fantastic growth we had between FDR and when Reagan/Stockman dismantled the New Deal was what exactly? His answer is the rightwing talking point of 'it was WWII that ended the Depression', and Eisenhower's fiscal conservancy that produced the boom.

A small problem with that, the numbers and the facts have a liberal bias. The War effort was the New Deal tripled, with an overlay of 'central planning', government regulation, price controls and Keynes on steroids. The economy faltered after the War with the Republicans having a two year stranglehold on Congress, but Ike was a big fan of Keynes and spent on on roads, schools, hospitals and the GI bill in huge way. The government debt was far greater then compared to now, but high taxes on the rich stimulated the real economy by putting everybody to work.

Stockman takes a slap at LBJ's spending for 'guns and butter' on the way to accusing Nixon of something akin to treason for ending the international convertibility of the USD into gold in 1971. That was one of the few things Nixon did that he had little choice about, there would have been a run a US gold reserves with the price fixed so low compared to the number of dollars in circulation.

His article goes on and on with stuff like this, a lot of it's true, but most of his solutions are hog snot. It's mostly the libertarian view of things that government shouldn't do anything, laced with good ideas like public campaign financing and no revolving door from government to business. What's the point of 'good government' if it doesn't do anything? I guess I'll need to spend the next week tearing this apart line by line. Oh well, it's something to do.


Anonymous said...

The "Obama Stimulis" was riddeled with tax cuts about 65 cents on the dollar to get enough blue dog dems on board. These tax cuts did not help untill a year or two after the law took effect. Then the gain was less than extended unemployment benefits and other like stimulis components.

With the Dow and S&P up over record levels today it is the first profit for savings and investments in 10 years.

Dave said...

If your social-order and economic system don't allow members of the general population to live decently, then what are those things for? There is no implicit obligation to any particular inequality of wealth. If the distribution we have now doesn't keep us all well, then we need to change it.

A good way to start is by removing the legislators who don't understand that they work for us. Their efforts are supposed to benefit everyone, not just the uber-rich.