Re: U.S. Stock Market (not a pretty sight) (neither is this thread now)


"A" <aaaz@xxxxxxx> wrote in message
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"mazorj" <mazorj@xxxxxxxxxxx> wrote in message
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....
He was trying to jump-start a moribund economy.

Governments can't do that by increasing taxes, increasing
bureaucrats and bureaucracies and passing new laws against
businesses, and by re-inflation of the money suppy, all which the
Government did in the 1930s and early 1940s.

Increased government spending doesn't just evaporate into thin air. A
government dollar when spent gets passed along in a chain of spending
by each recipient just as well as a dollar earned and spent by a
factory worker. The only difference that the government dollar has to
originate from a tax taken from a worker or corporation instead of
from a worker's labor or from a business' profit. Either way, the
economy is stimulated to the extent of the multiplied effect of one
marginal dollar of spending.

In exchage for the one dollar taken from taxes, the taxpayer gets one
dollar's worth of some service. Whether a given service is helpful or
efficient or even necessary is a political question, but not everyone
would agree with you that the CCC, SEC and other agencies were a
waste.

Are you surprised his 'jump-start' (read: Government power
increased radically) to get the economy going failed miserably with
unemployment still over 14% in 1940?

Unemployment Rate

1920 1.3%
1921 11.2%
1922 6.8%
1923 1.7%
1924 4.6%
1925 1.8%
1926 1.0%
1927 3.5%
1928 3.9%
1929 0.9%
1930 7.8%
1931 16.3%
1932 24.9%
1933 25.1%
1934 20.2%
1935 18.4%
1936 14.5%
1937 12.0%
1938 18.8%
1939 16.7%

So... in the first five years of the New Deal, unemployment fell by
52% - that's an astonishing feat given magnitude and the conditions of
the time. It's clear proof of the success of FDR's policies, which
were aimed at providing relief for families. The stimulus ran out of
steam in 1938 but in 1939 it still was only two-thirds of the high
point in 1933. (In 1940 it was even lower but we were gearing up for
war then so it's hard to separate the causes.) At any rate, so much
for the "abysmal failure" of the New Deal.

We'll never know what would have happened if the war hadn't come along
after that, but your two choices are
A. Say that the recovery would have continued, in which case you
further concede the effectiveness of FDR's policies, or
B. Say that FDR had run out his string and couldn't make a recovery
stick - in which case you cannot deny the role of the war in
recovering from the Depression. That's because without the stimulus
effects of the war there would be no ongoing economic dynamo for the
elimination of war controls to unleash. (And before you repeat your
silly mantra that post-war deregulation was the driving force behind
the recovery, read further down here for my answer to what were the
real driving factors in the post-war boom.)

....
"2008 World Almanac & Book of Facts" p. 95

1940 14.6% [Employed: 47,520,000 Unemployed: 8,120,000]
1945 1.9% [Drafting 12+ millions for World War 2]


You don't do that by amassing surpluses in goverment coffers

It happened in the earlier 1921-1922 deep recession
when the Government *cut* tax rates, *cut* spending MORE, reduced
the Debt, and ran a surplus!
Sorry, you are historically inaccurate in your
un-knowing claim.

Sorry, but you weren't clear here. If you're saying that the 1921-22
recession occurred even as the government was cutting taxes, cutting
spending, reducing the debt and running a surplus - that's precisely
*my* point. To help counter a recession, government should *increase*
spending. (Unfortunately, that can add to debt, but everything comes
at a price.) That's what FDR did and he had more than a modicum of
success, as outlined above using the data you provided.

which BTW were collected during the period that the Depression was
brewing.

We're talking *during* the Depression years, not
previously when the 'boom' set-up was occuring.

My point - a minor one at best - was that the conservative fiscal
policies that brought the surpluses may have sowed some of the seeds
of the Depression.

And unlike our current incumbent, his deficits came from spending
with the goal of helping the working man

So, how come you don't blame him for his misguided
policies that caused the Depression to tragically linger on for many
years when all previous recessions in U.S. history were over in 1 to
2 years when the Government did nothing to interfere with the
workings of the marketplace?

So you think that Hoover's policies would have worked? Yah, sure...
look how well they've worked over 8 years for the current
administration. By the 1932 election, your 1-2 year "normal"
recession span already was long gone and we were well in the grips of
a depression. So either Hoover's policies exacerbated a simple 1-2
ear recession into an ongoing Great Depression, or the Depression
inherently was a Level 5 economic Katrina and not your garden variety
Level 1 or 2 tropical storm.

....
Are you accusing oly of being an admirer of Stalin? That tells us
a lot about your thinking. "If you aren't a supporter of
laissez-faire, you must be a commie."

Based on your failure to respond and your other comments, it looks
like that was an accurate observation.

....
True on your last sentence, but my point was there was
*no* consumer good times in the war years; despite the persistent
Government and Media political propaganda that the War "ended the
Depression."

No one takes that to mean "ended the Depression *during* the war".

EVERYBODY takes that to mean 'ended the Depression'
precisely because of the War

I was responding to your statement that was framed during the war, not
before or after it. So
"ended the Depression *during* the war" is not the same as "ended the
Depression as a result of the war." However, as I keep saying, that's
not accurate either.

since civilian unemployment was instantly decreased to less than 2%
because the Government forced (by the draft) 12+ million workers out
of the civilian work force.
You don't recognize that after that hoary myth has been
told thousands of times by the mass media and Government officials
themselves since 1945?

But as I've already noted, both of you are only partly right and
mostly wrong on this.

Where was I wrong?

I thought you'd never ask.

Okay, so what did happen between 1940 and 1946 to take the economy
from
limping on life support, to a power-house that chafed at the
restraints?

Neither of the two theories about WW2 and the end of the Depression
is complete. WW2 did stimulate the economy, but it was artificial and
temporary. It did need "deregulation" of price controls, rationing,
etc.
These rules were an unnecessry drag after the war but their revocation
doesn't come close to explaining the 20+ years of sustained average
growth.
There were a *lot* of other factors at work to kick-start and sustain
a
long-term post-WW2 rise.

First among these other factors was America's emergence as the leading
world economic power as a result of it becoming the dominant military
power. Regardless of the state of our production capabilities in
1945,
both the domestic and the international markets were our oyster
because
no one else could come close to competing on a comparible level.

Partly because of all that, the dollar became the "gold standard"
of money even though it was no longer backed by gold. (We still had
the New Deal agencies keeping Wall Street and banks and other
financial institutions from running amok as they have today. We knew
the value of a sound dollar then.) And until other countries began
producing exports in volume and we got addicted to cheap imports, we
bought almost everything from American companies, so we didn't run
massive trade deficits, the dollar stayed sound, and so did our
industries.

There also was Cold War spending to keep a stream of government money
going to private industry after they turned off the WW2 taps.
Meanwhile,
the other producers turned to the rebounding market for consumer goods
as a way of staying solvent. (Madison Avenue came into its own then
because in a few years we were producing more goods in more variety
than we needed, hence, we had to be "sold" on the need for skin creams
and deodorants and New! Improved! detergents and status symbols like
cars with fins and chrome port holes. And we had all those New Deal
agencies still working to keep our food and drugs pure - no melamine
contaminants to scare off domestic or world market consumers for our
goods, or screw up our financial industries.) Then there was the G.I.
Bill
(socialized higher education, in case it escaped your notice) opening
doors to advancement for millions of wage earners, and the revival of
unions to ensure that the middle class got it's share of the newfound
wealth. The return of the G.I. also meant that we had abundant labor
to
work in the factories that were trying to rev up production.

Take away any one or two of those and the post-war post-war recovery
bounce likely would not have continued beyond a year or two.
You can deregulate all you want but if the economy doesn't
have solid underpinnings, it won't do much good. And it certainly
wouldn't turn a limp pre-war economy into a powerhouse. It took all
the factors I've outlined, plus some that I've undoubtedly overlooked,
to do that.

(Contrast all that with post-war Europe, where shortages and
destruction knocked them out as serious economic competition.
America's determination not to let European powers resume the
colonial exploitation that had propped up their economies was
genuinely
based on democratic principles, but it also played right into our own
economic agenda by ensuring that Europe and the rest of the world
would defer our superior economic, political, military, and diplomatic
power. When you're the 800-pound gorilla, life is good regardless of
whether or not you've deregulated butter and sugar and rubber.)

So war does temporarily stimulate an economy. The lost lives and
materiel are wasted elsewhere but we do get the short-term bump in
output, and unemployment is artificially held down. The problem is
that once the fighting stops, there's hell to pay on the home front in
terms of debt and the human costs, and the economy gets a post-binge
hangover like a junkie missing his fix. There are better ways to grow
an economy. Deregulation is not the cure-all, either. Neither are
massive tax cuts that produce whopping budget deficits. It takes a
lot more sophisticated approach (i.e., harder and taking longer) than
you will find on bumper stickers or in campaign slogans.

Cronyism is an inevitable aspect of human nature, so we can't say
that lack of regulatory oversight and limits is the direct cause of
it. But it flourishes most and at its worst when controls are lax
or non-existent.

So the excessive forms of cronyism to which you refer are
indirectly the product of lax regulation.

You have it exactly bass-ackwards!
Cronyism can only come from *using Government* to help
special interests, usually the Big Businesses that can afford to
incessently lobby, pay favors to Congressmen (campaign finances),
and almost write the laws themselves, while small businesses can't
afford to do any of those things.

Oh, GMAFB. You're blaming the victims for the crimes. Cronyism can -
and does - occur as easily in the back room of the local coin shop as
it can in the board room of a megacorporation. The only difference is
that the economies of scale allow the big companies to inflict
proportionately more damage on their victims.

But it must have slipped your notice that you just made the argument
for more good regulatory oversight. We apparently do not have enough
oversight and rules if the "big boys" can violate the spirit and even
the letter of the law. QED. (Note that calls for more regulation
presume that it must also be good, i.e., effective, not overkill, and
not unfairly hamper competition.)

That is why true Free Markets are hated by Big
Businesses, because they know a Free Market is something they can't
afford if other start-up and mid-sized competitors can grab a huge
percentage of their established business if they offer a better deal
to consumers, and Free Markets have put previous Big Businesses
out-of-business completely.

As I just said, any rule or law that precludes fair, open competition
is not "good".

The only way to prevent that is tighter regulation. We wouldn't
need any laws or rules if everyone always did the right thing.
They don't, so we do.

Or would you also like to abolish the SEC, FDA, FAA, and all those
other agencies that encroach on our liberty? After all, it's
undeniable that they are a real drag on industries and
entrepreneurs out to make a buck.

Yes of course, *all of them* only help established BIG
BUSINESSES at the expense of competition from SMALLER BUSINESSES
that can't afford the huge legal costs of fighting some far-away
bureaucrats in DC.

The answer to your complaint boils down to "If you can't afford to
play, you shouldn't be in the game." If you can't afford all those
pesky and expensive FAA rules and standards, well, you shouldn't be
operating an airline. If you can't afford to meet the reserve rules
and other requirements of the SEC, you shouldn't be trading stocks on
the floor. If you can't afford all the hygeine requirements of the
health department and FDA and Agriculture, you shouldn't be in the
food industry. All those rules - and some are indeed expensive - are
there because we, the people demanded that our government protect our
safety and security.

I know that the big boys can and do rig the rules so that they also
can have an anti-competitive effect over and above the normal
deterrents of the added costs of doing business under legitimate
rules. But you make it sound like the megacorps have locked up all
their industries as tight as a drum and that's nonsense.
Nevertheless, I'll amend my statement to read "We need to put more
good financial regulatory oversight and rules in place, and modify or
eliminate those that are ineffective or have an unfair
anti-competitive effect." Got it now?

Gabriel Kolko, a Socialist himself, established that was the reason
for The Progressive Era (1900-1916) in the previous incarnation of
Socialism before FDRs additional depts-agencies imposed as disguise
for Government regulating Big Business, in his book, "Triumph of
Conservatism" (1963). Big Business capture the Government in those
"Progressive" years and the same thing in the 1930s Depression to
stop competitors.

That goes to motive. Rather than fight inevitable reform, business
co-opted it because they saw its advantages and just as importantly,
only by cooperating would they have any influence in the resulting
regulatory changes. All interest groups do that. So what? We, the
people, still demanded it for very good reasons having to do with our
own welfare. If a by-product of regulation is that it becomes
marginally more difficult for new entrants to compete against
better-financed corporations, then so be it. We can live with that,
whereas we literally were dying without a regulatory structure against
unscrupulous business practices (horrendous workplace conditions,
tainted foods, etc.) not to mention the unfettered stock market
manipulations that eventually culminated in the 1929 crash absent an
SEC.

That's not the American way, if you still believe in open
competition and naturally lower prices instead of pseudo-free
markets and pretending all the ABC regulatory agencies and
Departments somehow don't exist just because there is a nominal
Republican Pres., in name only!

So if Bush were a "true conservative" he would have tried to dismantle
the entire regulatory agency structure?

Bush's nick is 'Lyndon Baines Bush', because he is the
biggest Socialist in his actions as president since LBJ left office
in Jan. '69.

Horse manure. Well, except when it comes to corporate welfare, where
I might agree with you.

By your standards Nixon was a crypto-commie too. So what do you make
of that Flaming Librul, Bill Clinton? He managed to balance
progressive social policies against a fairly rigorous fiscal outlook
that grew the economy, incubated the 1990s boom, and produced large
surpluses.

Just ask the milk producers in China.

What do they have to do with what is going on here in
the U.S.?
China had plenty of regulations on food/drink, and it
didn't stop that disaster.

What rock have you had your head under? Every time they have another
scandal, we observe - and the Chinese admit - that their regulatory
oversight infrastructure is woefully inadequate. The rules on the
books don't matter a whit if the regulators don't have anywhere near
the resources to enforce them and there isn't enough political will to
make it happen. Except, that is, when a massive national scandal
finally breaks out from the attempts to keep it quiet and the public
outcry over tragedies like dead and maimed babies temporarily stiffens
the backbone of the leadership.

and too much 'deregulation' was the cause of the economic
problems!

Strictly speaking, deregulation didn't "cause" these problems. It
established conditions under which they were allowed to happen.

Not true. What 'deregulating' happened?

For openers, the bills that loosened the rules and restrictions on
various aspects of banking and finance and related activities.
They've already been cited here.

Which Government Departments and/or Agencies were
abolished?

They weren't abolished, just hamstrung.

How many pages of the Federal Register were ripped up
(or burned)?

You really have an uncontrollable penchant for jumping the shark,
don't you?

Suppose that we hadn't deregulated large parts of the finance
industry

Nothing of the sort was done using your twisted
language of 'deregulated'.

Horse manure. Now you're being even sillier than usual. Only someone
with your extremist view that regulatory controls in any form only
serve to protect big business could deny that large portions of
banking and finance and related activities were partially deregulated
in prior years. It's a move that even most of its supporters have
come to regret. Except Gramm, who thinks that we're just wimpy
whiners.

, and instead had gone the next step to impose effective
regulation over mortgage lending and debt collateralizing
practices.

Fanny Mae and Freddie Mac were *not* Free Market
entities.
They were GSEs (Government Sponsored Enterprises).
Therefore, nothing remotely against the 'Free Market'
can be blamed for what happened.

Just because they were chartered by Uncle Sam means nothing. For the
past 15-20 years they've been operating almost like private
buccaneers, doing things that never were envisioned in their charter
and successfully resisting all attempts at oversight (as in "tighter
regulatory controls", the opposite of deregulation). So they
effectively acted in your "Free Markets" by creating a free market for
tradable mortgage-backed securities without stifling any competition.
Banks and other lenders still are free to compete by making loans and
holding them or selling them elsewhere. But their excesses led to
their failure, and that i turn played a pivotal role in expanding the
economic fall-out from a housing market problem to a credit and
finance problem.

Are you arguing that we'd still have all this mess? Because that
is the inevitable conclusion from your arguments.

You twist the GSEs into some sort of Free Market
function when nothing of them had any definition of a true Free
Market in housing or financing the housing industry.

1. My criticisms go way, way beyond Fannie and Freddie - a point that
you conveniently ignore because you can't refute them.
2. As to GSEs, see previous comment.


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