Will history repeat itself?

[rrjackIII]

The last time a Democratic President took office the republicans greeted him with 0 votes when putting together the Budget. They said they could not support this kind of irresponsible spending - lots of talk about raising the debt - spending too much - gotta lower taxes - yadayadayada. Sound familiar? The Dems got it passed and Clinton signed it and then began the prosperity of the 90's. 23 million jobs created in the 90's during the Clinton years.

Will we follow the same pattern in 2009?

[diehard]

Sadly, I'm afraid, no. The economy had already recovered from a slight recession when Clinton took office and he had the advantage of a rising tide. He also had the advantage to the Contract with America taking hold in Washington in two years. Obama has been handed a crashing economy. Absolutely crashing. The Dow will drop another 2000 maybe 4000. A full recovery may take 10 to 20 years. Not just here, but worldwide. The effectiveness of the first half of the TARP Package (total failure) is going to greet this stimulus plan as well. And the next. And the next. We are in for a long hard haul and not Obama, not Clinton would be able to do anything about it. BTW this isn't the budget. Its a very poor attempt at economic stimulus. Politically it would be suicide for Obama to propose what is required for the fastest and complete recovery. It would just hurt too bad.

[Schnoodler]

Ugliness is afoot. sad but true. the best we can hope for is to soften the bottom, and of course Austrian guys would view that as delaying the recovery. Either way, it's not good.

[diehard]

More money for the bank robbers. We are attempting to treat the symptoms. No cure until we cut out the cancers and undergo chemotherapy. Attempting to recreate the failures, only bigger and badder. Fueling the cancers that were burning out. Extension of pain. Grow a Victory Garden.

[rrjackIII]

Sadly, I'm afraid, no. The Dow will drop another 2000 maybe 4000. A full recovery may take 10 to 20 years. Not just here, but worldwide.

Well, aren't you the cheery sort. :( The only person I have heard say the DOW will go to 4000 is the only person I know personally that I think actually knows what's going on with the economy. So this may not be a good sign. He is a bond investment consultant for small banks and has been predicting these economic woes two and three years ago. I am hoping that both he and you turn out to be wrong about our economic future.

I took a course in Economics in the 60's and what I took away from that is economists are pretty much like philosophers. They all spend time standing around trying to decide how many angels can dance on the head of a pin. But nobody comes up with a definitive answer. Economists are all entitled to their opinion - but mostly that is what it is - AN OPINION and not much else. At least that is what I am hoping for against the doom and gloom crowd.

My current economist/philosopher that I hold favor with is Keynes. I believe he thought FDR should have spent a lot more than he did coming out of the Great-D. WW2 forced us to spend what was actually needed to pull us all the way out. I am counting on the Keynsian multiplier to increase the benefit to our economy by multiplying the Spending part of Stimulus package by 1.5 - and much more spending on infrastructure - education - environment - housing - healthcare - transportation - yadayadayada will be needed along the way to improve our economic situation. Thats my pie in the sky and I'm sticking to it.

The economy and the world are so much different than they were in the 30's. So, I guess I am arguing against my question 'Will history repeat itself' in this instance. Actual government transparency and a more active, involved and informed citizenry will no longer accept the excesses of shameless self-promoting politicians tied to the corporate good ol' boy boardrooms of greed and thievery.

The old rules are Changing. And we now may have an opportunity to FIX a lot of the problems in our economy. Naomi Klein wrote about 'Disaster Capitalism' where the old 'Chicago boy' economists actually looked for and sometimes set up disasters (Chile in the 70's Iraq in the 2000's) in order to move into a so called clean slate to set up their idea for pure capitalism. Neither of those experiments worked too well.

I am hoping the new style of Obama 'Chicago Economists' can build a stronger economy for our own country and maybe as a result the rest of the world as well.

[bga1]

Well, aren't you the cheery sort. :( The only person I have heard say the DOW will go to 4000 is the only person I know personally that I think actually knows what's going on with the economy. So this may not be a good sign. He is a bond investment consultant for small banks and has been predicting these economic woes two and three years ago. I am hoping that both he and you turn out to be wrong about our economic future.

I took a course in Economics in the 60's and what I took away from that is economists are pretty much like philosophers. They all spend time standing around trying to decide how many angels can dance on the head of a pin. But nobody comes up with a definitive answer. Economists are all entitled to their opinion - but mostly that is what it is - AN OPINION and not much else. At least that is what I am hoping for against the doom and gloom crowd.

My current economist/philosopher that I hold favor with is Keynes. I believe he thought FDR should have spent a lot more than he did coming out of the Great-D. WW2 forced us to spend what was actually needed to pull us all the way out. I am counting on the Keynsian multiplier to increase the benefit to our economy by multiplying the Spending part of Stimulus package by 1.5 - and much more spending on infrastructure - education - environment - housing - healthcare - transportation - yadayadayada will be needed along the way to improve our economic situation. Thats my pie in the sky and I'm sticking to it.

The economy and the world are so much different than they were in the 30's. So, I guess I am arguing against my question 'Will history repeat itself' in this instance. Actual government transparency and a more active, involved and informed citizenry will no longer accept the excesses of shameless self-promoting politicians tied to the corporate good ol' boy boardrooms of greed and thievery.

The old rules are Changing. And we now may have an opportunity to FIX a lot of the problems in our economy. Naomi Klein wrote about 'Disaster Capitalism' where the old 'Chicago boy' economists actually looked for and sometimes set up disasters (Chile in the 70's Iraq in the 2000's) in order to move into a so called clean slate to set up their idea for pure capitalism. Neither of those experiments worked too well.

I am hoping the new style of Obama 'Chicago Economists' can build a stronger economy for our own country and maybe as a result the rest of the world as well.


RR- We need to hope that history does not repeat itself. The big programs of the thirties didn't work quickly at all and you are right - it was the war that popped us out of it.

If history repeats itself the spendulus dooms us to a long painful drought.

Here's an even greater problem. Unlike in the thirties our companies now must compete globally. If we come out of this with staggering debt and higher taxes the climate for doing business in America will be terrible. Other nations will beat us in the marketplace. If you look closely at the stimulus, it endorses uncompetitive union labor and rewards the most poorly performing states. That's the opposite of encouraging a future that is more competitve in the world marketplace.

[Schnoodler]

Luckily the multiplier effect has grown considerably. There is some thought that is what actually brought us out of the 70's recession. So there is that hope that stimulus will have a greater impact than it did in the 30's. We'll see.

[UpnorthGo4]

Excerpts from a national news magazine:

... Whether we like it or not—or even whether many people have thought much about it or not—the numbers clearly suggest that we are headed in a more European direction. A decade ago U.S. government spending was 34.3 percent of GDP, compared with 48.2 percent in the euro zone—a roughly 14-point gap, according to the Organization for Economic Cooperation and Development. In 2010 U.S. spending is expected to be 39.9 percent of GDP, compared with 47.1 percent in the euro zone—a gap of less than 8 points. As entitlement spending rises over the next decade, we will become even more French....

...Bush brought the Age of Reagan to a close; now Obama has gone further, reversing Bill Clinton's end of big government. The story, as always, is complicated. Polls show that Americans don't trust government and still don't want big government. They do, however, want what government delivers, like health care and national defense and, now, protections from banking and housing failure. During the roughly three decades since Reagan made big government the enemy and "liberal" an epithet, government did not shrink. It grew. But the economy grew just as fast, so government as a percentage of GDP remained about the same. Much of that economic growth was real, but for the past five years or so, it has borne a suspicious resemblance to Bernie Madoff's stock fund. Americans have been living high on borrowed money (the savings rate dropped from 7.6 percent in 1992 to less than zero in 2005) while financiers built castles in the air....

...Now comes the reckoning. The answer may indeed be more government. In the short run, since neither consumers nor business is likely to do it, the government will have to stimulate the economy.

And in the long run, an aging population and global warming and higher energy costs will demand more government taxing and spending....

[Schnoodler]

Numbers are a funny thing. Increase spending at the the same time as falling GDP and it can make the numbers look goofy. But it gave newsweek a nice headline didn't it?

[UpnorthGo4]

I should have known that you are a Newsweek reader.