Remember near the end of 2008 when the economy began to tank and the US was experiencing the worst deficits ever, coincidentally under George W. Bush?
If not, here are two graphical representations of deficit by president. The first chart, created by the Congressional Budget Office, is from 1961 to 2005 with projections into 2006 from Republican v. Democratic budgets. Notice the difference here: Republican budget proposals projected to -$337 Billion vs Democratic proposal projected to -$428 Billion into fiscal year 2006.
Now take a look at a more recent chart created from data taken from the US Treasury Dept.
Notice how at the end of 2006, the Republican deficit in reality is -$574 Billion, before Democrats took back majority of congress. In Bush's defense, when Clinton took office, the growth, or perhaps more accurately the decreases in debt, were steadily decreasing over time. Even Clinton, had he been able to stay in office, probably would have been facing some of the same issues. Also in G. Dub's defense, the 2008 bailout worth some $700 Billion proposed by Bush and signed into office with bipartisan support, added to the annual deficit (but spread over the course of years). This in defense of Bush because any economist would agree that during a massive recession the most effective means to stimulate growth or create increased "demand" is to inject a shit ton of money into the economy.
Remember the Great Depression? Well the reason it turned into a great depression and not a relatively short-lived recession is that instead of injecting capital into the economy (ie. printing more money), everything was liquidated or sold off. We have learned from our mistakes which is why the Bush Emergency Economic Stabilization Act of 2008, however unfair to the average citizen, was necessary in order to stave off a horrible economic depression. Do you guys remember when all of the Republicans and Tea-Baggers were accusing Bush of socialism? I don't either because it didn't fucking happen: hypocrites.
Remember the Great Depression? Well the reason it turned into a great depression and not a relatively short-lived recession is that instead of injecting capital into the economy (ie. printing more money), everything was liquidated or sold off. We have learned from our mistakes which is why the Bush Emergency Economic Stabilization Act of 2008, however unfair to the average citizen, was necessary in order to stave off a horrible economic depression. Do you guys remember when all of the Republicans and Tea-Baggers were accusing Bush of socialism? I don't either because it didn't fucking happen: hypocrites.
Even with the $700 Billion Bush bailout, annual and projected deficits would not have been nearly that large had there been a Democratic congress between 2000 - 2006. Hypothetical yes, but Dems did not have cut taxes for the wealthy, Republicans did (Republicans will counter this citing that it helped the middle-class and the economy through the ever wonderful theory of trickle-down economics). Dems did not create the projected $724 Billion (through 2015) Medicare Part D with no way to pay for it, Republicans did. Dems did not create other unfunded mandates such as the irresponsibly operated No Child Left Behind, Republicans did (Props to Arne Duncan for initiating changes). Dems did not invade Iraq costing the US as of yet more than $3/4 Trillion, a Republican President with a Republican Majority did (amongst other Dem votes. Props to Obama for not voting for it). This also took the eye off the prize in Afghanistan which will end up costing us $billions, perhaps $trillions more, not to mention the loss of life.
Let me briefly touch on the subprime mortgage crisis. Conservatives will always jump the gun and blame the Community Reinvestment Act (CRA), which they say led to banks being forced to lend to uncreditworthy borrowers who would eventually default on loan payments. This is a complicated subject with multiple factors including predatory lending, repealing of the Glass-Steagall Act, etc. Regardless, let me give conservatives two statements to meditate on:
1) Randall Krosner, former economic adviser to G. Dub and Federal Reserve Governor, has stated that the CRA was not to blame for the crisis.
2) Nobel Prize-winning economist Paul Krugman said, "...the CRE bubble is highly significant; it gives the lie both to those who blame Fannie/Freddie/Community Reinvestment for the housing bubble, and those who blame predatory lending. This was a broad-based bubble."
Or for the layperson, bubbles in both markets graphically illustrated here, developed even though only the residential market was affected by the proposed causes. However, this is somewhat tangential to the point of my post.
Being confined to a dogma, whether in science, religion, politics or economics and resisting ideological alterations in order to fulfill an egotistical place in the universe, is dangerous. And arrogant. And ignorant. I'm not saying dogma as in following the scientific method, but dogma as in saying the single universe theory is correct no matter what even though the Large Hadron Collidor in Cern just revealed the Higgs-Boson particle that led to an understanding of dark matter that led to an understanding of dark energy that pointed to the validity of the multi-verse theory (did not happen). And I'm not talking dogma as in that saying all historical evidence points to capitalism as the most sustainable and prosperity-inducing economic system, but dogma as in Ayn Rand or Milton Freemon and FORMERLY Alan Greenspan's theory of Masturbate to Laissez-Faire Capitalism and Capitalism with investment banks regulating themselves.
It's important to note that in modern economies there are ebbs and flows of recessions and expansions. When a recession occurs, which is more often than not the result of too much supply and not enough demand (maybe people are scared to spend because there are no jobs out there so they put all their money in an account or under their bed all while supply is still up), the way to prevent a serious depression is to inject money into the economy, which stimulates spending. The problem is, if you inject too much money, inflation will occur. This is kind of what the Federal Reserve wrestles with on a daily basis.
Most economists today believe that Obama's stimulus package in 2009 was far too weak to spur the type of recovery that is needed for a recession of this magnitude. Unfortunately, due to the irrational hatred for our President and ever-increasing politicization, this is what we got. Ok so what were the reasons for the recessions. Too many to list. However, if you watch the video I have posted below, you can hear for yourself. You can hear Alan Greenspan, a truly brilliant mind with a formerly dogmatic view of capitalism, say how he was wrong. I give him credit for this admission, but he has not done enough (or anything) to educate the public on the benefits of government control within certain aspects of the economy.
I highly encourage you to watch and have translated the entire video, but here is the gist:
Mr. Greenspan: “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief."
So basically he's saying that he's surprised that profiteers took advantage of the system for financial gain.
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Rep. Henry Waxman: "It sounds to me like you are saying that those who trusted the market to regulate itself, yourself (Greenspan) included, made a serious mistake."
Greenspan: "Well I think that's true of some products, but not all."
Waxman: "Where do you think you made a mistake then."
Greenspan: "I made a mistake in presuming the self-interest or organization, specifically banks and others, were such that they were best capable of protecting their own shareholders."
HA. Let me repeat. So basically he's saying that he's surprised that profiteers took advantage of the system for financial gain.
----------------------------------------------THE KICKER (and quite funny):
Waxman: "The question I have for you. You had an ideology. You had a belief that free, competitive markets are by far the unrivaled way to organize economies. You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others. “Do you feel that your ideology pushed you to make decisions that you wish you had not made?”
Greenspan: "Well remember that what an ideology is is a conceptual framework with the way people deal with reality." HA! "Everyone has one. You have to.. to exist you need an ideology. The question is is it accurate or not? And what I'm saying to you is yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”
THE LESSON:
Greenspan: "I still do not fully understand why it happened and obviously to the extent that I figure it out where it happened and why, I will change my views. The facts change, I will change."
The damage has been done (It is Obama's fault). Alan Greenspan, per his parlanced retorts, did not do his job as Federal Reserve Chairman and was responsible for this economic recession that had international ramifications. The positive point to be made, however, is that he will (claims) to change his ideology based on new data that he has received.... unlike so many others.
Ah fuck it. It was Obama.
via Disclose TV
postS.. this was semi-stream of conscious so if it is a bit disjointed or full of non sequiturs, go jerk off to the Wall Street Journal op/ed section.
