For the economists from the CATO Institute read this.. out there who think we aren't even close to the 1930's Depression. I decided to post this chart from dshort.com again.
I happen to think our current crisis is worse, in three ways:
1) housing booms have consistently brought us out of depression/recessions in the past. That tool is over, unless of course the government decides, and I think they might, to bulldoze whole abandoned housing communities so we could start over;
2) lowering interest rates have always helped by enabling consumers to get cheaper mortgages to buy those homes being built in the housing boom that is taking us out of a recession. How much lower than ZERO can we go?; and
3) how many americans want to go through World War III just to prove a point? Incidentally, turns out WWII may not have brought us out of The Great Depression after all, according to author Amity Shales, who argues that the recent crisis lies at FDR's feet for his failed New Deal (not something I subscribe to mind you, but it is out there and getting alot of press).
But just one look at these charts should give one pause! What do you think?
I happen to think our current crisis is worse, in three ways:
ReplyDelete1) housing booms have consistently brought us out of depression/recessions in the past. That tool is over, unless of course the government decides, and I think they might, to bulldoze whole abandoned housing communities so we could start over;
Economist Michael Hudson thinks there might be other plans to re-inflate the bubble.
One thing Wall Street knows is that in order to make money, asset prices not only need to rise, they have to go down again. Without going down, after all, how can they rise up? Without a crucifixion for the economy, how can there be a resurrection? The more frenetic the price fibrillation, the easier it is for computerized buy-and-sell programs to make money on options and derivatives.
So here’s the situation as I see it. The first objective is to preserve the wealth of the creditor class – Wall Street, the banks and the other financial vehicles that enrich the wealthiest 1 per cent and, to be fair within America’s emerging new financial oligarchy, the richest 10 per cent of the population. Stage One involves buying out their bad loans at a price that saves them from taking a loss. The money will be depicted to voters as a “loan,” to be repaid by banks extracting enough new debt charges in the new rigged game the Treasury is setting up. The current loss will be shifted the onto “taxpayers” and made up by new debtors – in both cases labor, onto whose shoulders the tax burden has been shifted steadily, step by step since 1980.
http://www.counterpunch.org/hudson02122009.html
Hudson goes on to discuss how this re-inflation might occur. Given the headlock Wall Street has on the government - Congress and the President - it doesn't seem far fetched.
Thanks for the site. I will check it out.
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