Re: Rural Versus Urban

Islander wrote:

Alan Lichtenstein wrote:

Islander wrote:

Alan Lichtenstein wrote:

Rita wrote:

On Mon, 10 Nov 2008 18:13:00 -0500, Alan Lichtenstein <arl@xxxxxxxxx>
wrote:


Thumper wrote:


On Mon, 10 Nov 2008 07:34:58 -0500, Alan Lichtenstein <arl@xxxxxxxxx>
wrote:



Thumper wrote:



On Sun, 09 Nov 2008 18:03:05 -0800, Rita <Rita@xxxxxxxxxxx> wrote:




Are you one of those people who find success disconcerting? I
ask that half seriously.:) With a Democrat about to enter the
White House and a huge Dem majority in both houses of Congress,
and you choose to worry?





I worry. 55 million people voted for McCain despite his bankrupt
ideas. The Republicans can do a great deal of damage to Obama. We
know that it'll take more than one term to bring about the change we
need but does the American public?
Thumper



You're very likely right that it will take more than one term. In fact, that is the very thing that I have been asserting for over a year in rationalizing why it would be better to have a Republican in the White House presiding over a continuing decline than a Democratic, who wants to put needed long-range policies into effect, but who will be punished by the electorate if he doesn't improve things for the short term.

If Obama doesn't do something and something relatively quickly, he's going to be in hot water. And Lord knows, there are a lot of problems festering, most of which were caused by Bush. But the public isn't going to care about that; it's Obama's headache now. I just hope he can come through, but given the problems plaguing the economy, I remain pessimistic.





If the republicans got back in they would use this crisis to further
enrich themselves and almost surely bring on a depression. We can't
wait 4 more years for a Democrat.
Thumper



I agree that the Republicans would continue to further enrich the already wealthy at the expense of the middle and bottom. And given that their policies really don't work, those in the middle and bottom will bear the brunt of the recession because they are unemployed, as opposed to those at the top who will simply cash in their stock options, or sell two or three vacation homes, if at all, that. Republicans will simply wait out the business cycle and then claim their policies 'rescued' the economy. But even still, that won't happen any time soon, so they will be punished by an electorate who has become used to living beyond its means and immediate gratification, making room for a Democrat who will be in the position when the economy clears.

My whole point is that this mess is going to take years to unwind, and the public isn't intelligent enough to understand that. Wanting immediate gratification, they will punish whomever is in office, and right now, that's Obama and the Democrats. Punishing them because they're hostage to the business cycle, as would be the Republicans if they were in office, and thus trashing the sorely needed long range policies on energy, health care and social security that Obama will begin to put in place, IMHO, is a poor trade-off for 4 more years of Republican rule, at least in the presidency.

As I said, I hope I'm wrong, but I'm pessimistic. Saying 'I told you so,' won't change the past, and its effect on the future.




The kind of money that is being thrown to AIG and other firms
complicit in the mess that caused the bailout to be passed could
be better spent on the kind of programs Obama wants to put in
place to create jobs and relieve the middle class. The Wall Street
firms will eventually reconstitute themselves because they always
do. Either socialize them or let them fail. I am afraid good money
is being thrown after bad with no guarantees at all. Helping people
restore purchasing power could not help but have a good effect on
the economy. I hope the Bush treasury doesn't spend all the bail out
money before Obama assumes office. That AIG crowd was particularly profligate with their junkets to resorts and such. I hope the
lame duck Congress can do something about all this.



Unfortunately, I happen to agree with Paulson's 'too big to fail' characterization of AIG. That company is so intertwined that letting it go down would further exacerbate the credit problems, and cause them to spread to the insurance industry, which as of now, has not been affected. Yes, the Wall Street firms will eventually reconstitute themselves, as they would given the normal business cycle, but in the interim of that 'reconstituting,' there's going to be even more massive unemployment, and guess who bears the brunt of that. I'll give you a hint: It ain't going to be the wealthy.

This recession is going to be bad enough without adding to it and causing it to become a depression, which is a good possibility if some of the larger firms go belly-up, which appears to be what you advocate. The last depression was caused essentially by credit woes which were unresolved for nearly a decade. We're not going to make the same mistake twice.

Obama has likely the best idea for a stimulus, if any is going to work; give the money to firms to fund research for energy and other needed technologies, which will in turn create jobs. Giving money to firms which will create jobs in construction that also addresses our infrastructure will also help. Will it be enough? I don't know. And given the credit woes, which is going to be the major factor determining when and the extent of the recovery, those things aren't going to address. All they will do is soften the recession by reducing potential unemployment. The business cycle is going to have to right itself, and that's going to take time. Time Obama doesn't have. And given my assessment of the attitudes of the 'gimme now' of the American public, they aren't going to be patient. And they're going to take it out on those in power. Which is why I've always said I'd rather that be a Republican. Because the long range policies that Obama suggests are needed, but unfortunately, if he's thrown out, so will be his policies, thus throwing out the baby with the bath water. Exactly like what happened when Carter was rejected for the arch reactionary Regean.

And can we afford to have another 8 years of Republicans following a failed Obama Administration, simply because he was a hostage to the business cycle? The obvious answer is no. I hope I'm wrong, but History is a strong pessimist also.



Your argument is strikingly close to the normally Republican argument that the President has little control over the economy - an economic cycle corollary. If this were true, then why are we pouring so much money into the financial sector in a desperate effort to salvage it?


Republicans, with their low-tax, pro-growth mantra seem to say that indeed government does have an effect over the economy. The President, with his role to both propose and veto legislation which would effect the economy has a role, albeit, with Congress, that affect and effect the economy to a degree. So the Republicans are both right and wrong.

As far as your other comment is concerned, I remind you that Congress was the entity which created the stimulus and rescue package, albeit with the obvious approval of the President. And we are rescuing them because failure to do so will exacerbate the problems and cause them to spread to other sectors which are as of now, little or not affected. In short, government has precluded the growing of the problem. That wasn't done during the last depression, which permitted the problem to grow, causing what would have been a severe recession to turn into a depression. Obviously there were other factors, and these concomitant factors did make the problem more severe.

On AIG, I'm afraid that I don't buy the too-big-to-fail argument. AIG, like Lehman and Merrill Lynch are conglomerates and the healthy components of the company can be sold off. Propping them up only seems to be perpetuating the problem - a good way to make tax money disappear with no observable benefit except for those who flee the scene. Break them up and they will no longer be too big to fail.


They won't bring in the needed money to avoid failure of the other parts. That is why the need for a government loan. Even now, AIG is putting up some of its parts for sale. Lehman and Bear Stearns had no exposure to other sectors of the economy, as does AIG, so they could indeed fail. Unfortunately, The Government chose not to allow Bear to fail, and the CEO of Lehman, in his righteous indignation before Congress questioned that, and got no good answer, if you recall. Saving Bear and not Lehman, or letting Lehman fail and not Bear( whichever way you want to state it ), was, IMHO, a mistake.

As far as your comment about breaking them up, AIG will effectively be broken up when it sells off its functioning businesses, which would NOT have been functioning, with all that entails, if AIG was allowed to fail. The marketplace has a funny way of taking entities which are too big, down to size, without any unneeded government intervention.

Despite your preference to leave the Republicans to deal with things getting worse before they get better, I cannot imagine how that would benefit anyone.


Obama has articulated long range plans, in the areas of energy, health care and social security, which IMHO, need to be addressed sooner, rather than later, and which will slowly take effect over the long term, precluding crises later. If he is thrown out, so will be his policies, with a successor Republican Administration, and thus delay needed reforms to a point when they become crises. Pretty much what happened after Carter was defeated. Are you willing to write off four to eight years of non-activity on energy, health care and social security reform to the point when they become crises? I'm not. Because you know damn well that the Republicans aren't going to do squat about those, because they don't care about them beyond the profits the 'free market' generates for itself.

Personally, I don't want to see more people reduced to

living in the streets.


Well that's what you're going to get if hs flops because of an issue which he can't really control. The whole issue, and the only issue, IMHO, is how much slack is the American public going to cut him? Given the need for immediate gratification and living beyond its means, I don't see him getting much. If he doesn't produce this year, you can kiss your gifted leader, AND his crucially needed policies good-bye. And THAT would be the most unfortunate this.

The time is now and we have a gifted leader who

can motivate people.


I think you overestimate his gifts. As I've said many times, Obama is no FDR.

We need to do whatever we can to help him dig us

out of this hole. So far, I am very pleased with the people that he is recruiting.


Be as pleased as you want. No individual, no matter how gifted has ever produced any plan to control the business cycle. And this one seems to be a deeper and longer one. IMHO, I don't see any recovery before the end of next year at the earliest, and possibly longer. Do you believe the American public is going to wait that long? Perhaps they did in the 1930's, but this is not the 1930's.


Sorry, Alan, but your belief in the power of business cycles over our ability to control them seems to me to be as much an article of faith as the silent hand of Adam Smith.

No, Islander, it happens to be a matter of fact. No one to this day has proposed any theory or practice which would effectively control the business cycle and mitigate its negative effects. I would suggest that it is your position which is the article of faith.

This economic crisis was the direct result of government actions which evolved over the past 70 years. Most recently, they are the consequence of the elimination of specific regulation by Phil Gramm in 1999 and 2000, by the changes in HUD made by Alphonso Jackson - a Bush appointee from Texas, by the removal of authority of the courts in Chapter 13 Bankruptcy relating to primary residence in the Bankruptcy Act of 2005, by artificially low interest rates in 2003-4 followed by an increase just as ARM terms were kicking in, and a host of other government actions.

Actually, no, Islander. There was no singular act which led to this crisis. It was a combination of actions which produced it. One, was the outsourcing of our manufacturing, next was the financial industry replacing the income from those lost loans with consumer debt due to easy credit, and third, the creation of esoteric investment instruments that invaded the economy on a systemic level. In fact, government regulations which evolved over the last 70 years proved to soften the blow, as events which transpired during the last depression did not occur now, due to that government intervention.

On the other hand, I have seen the positive effect of a number of other government actions. The GI Bill after WWII had an enormous effect in strengthening our middle class. Ike's interstate highway system revolutionized delivery of goods and services across the nation. Government spending in semiconductor technology in the '60s produced an industry with broad impact across the entire economy. The personal computer on your desk is the direct result of specific government investment in the early '80s. The Internet which has brought about enormous benefits in commerce was produced and nurtured by government investment in the '70s and '80s.

You are justifiably concerned as to whether or not the public will have the patience for similar long range programs. It seem pretty clear to me that the public has no patience for the ad hoc attempts now underway in the Bush administration's desperate attempts to salvage the financial sector. Yes, I am disappointed that the Congress including Obama went along so easily with the bailout. But, I will be watching carefully as we move forward with the expectation that we finally have an adult in charge. That was certainly not the case for the past 7+ years.

Bush is old news, and the focus is now on Obama. He will need to produce, and his own rhetoric will come back to bite him in the ass if he isn't. His rhetoric raised hopes and aspirations to such a level that they have become expectations. If he doesn't achieve those expectations, he will be trashed as badly as Bush, because the public will feel they have been sold a bill of goods. No, Islander, Obama has a year, possibly a bit more, and if he doesn't produce, he's history. Because unlike, perhaps you and Rita, the scales will fall from the eyes of the public a bit faster. And that would be a travesty, because he has articulated long range policies and programs which,IMHO, are necessary. But it will all be for naught if he doesn't produce very tangible results that John Q. Public recognizes has made his life better, and if the Republicans return to office, ala Jimmy Carter.
.

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