Economist: Another Great Depression A Bigger Risk Than Budget Deficits (YouTube)

[w¡n9Nµ7 §£@¥€r 123]

[peejay 327]

Yeah...and the various camps of economists and politicians are still rehashing the last depression without coming to any definitive conclusion. Any surprise that there is no definitive consensus to our present dilemma either?

[w¡n9Nµ7 §£@¥€r 123]

Yeah...and the various camps of economists and politicians are still rehashing the last depression without coming to any definitive conclusion. Any surprise that there is no definitive consensus to our present dilemma either?

Re GD1, there is consensus on one point: that it took a public works project of the size of WWII to pull us out.

[peejay 327]

Yeah...and the various camps of economists and politicians are still rehashing the last depression without coming to any definitive conclusion. Any surprise that there is no definitive consensus to our present dilemma either?

Re GD1, there is consensus on one point: that it took a public works project of the size of WWII to pull us out.

America today is not the same America of those days. Here are some nuggets of wisdom from Pat to chew on:

Socialist Republic

by Patrick J. Buchanan

Posted 11/27/2008 ET

Updated 11/27/2008 ET

Barack Obama and George W. Bush seem to have come away from their study of the Great Depression with similar conclusions:

To wit: After the Crash of 1929, the Federal Reserve did not move fast enough to save the banks and inject cash into the economy. Second, the New Deal, far from being wastrel deficit spending, was not bold enough. So it was that America wallowed in depression for a decade until the unbridled spending and mammoth deficits of World War II pulled us out.

Bush and Obama seem determined not to make the same mistake.

We are all Keynesians now.

Thus, we have the $700 billion Bush bank bailout, the $700 billion "stimulus package" Obama wants by inauguration to "jolt this economy back into shape" and the $800 billion fund Hank Paulson created to get consumers borrowing and buying again.

These come on top of Bush $455 billion deficit, the $29 billion bailout of Bear Stearns, the $105 billion in pork to grease the $700 billion bailout, the $100 billion to $200 billion to keep Fannie and Freddie afloat, the $140-billion-and-counting for AIG, the $25 billion for the greening of GM, Ford and Chrysler, the $25 billion more to save the Big Three and the $20 billion for CitiGroup.

Now much of this overlaps, and some will be retrieved. But we are still staring at a deficit that could approach $2 trillion.

How would this stack up historically?

A deficit of $1.4 trillion would be 10 percent of gross domestic product, dwarfing the postwar record 6 percent run by Ronald Reagan in the Jimmy Carter recession.

Bewailing the "Reagan deficits" has been a staple of Democratic oratory. This will stop. But the politics of this is not the point, the policy is.

Consider what we are about to do. Bush in 2008 spent 21 percent of GDP. States, counties and cities spent another 12 percent. Thus, one third of GDP is spent by government at all levels. Obama and Co. propose to raise that by another 10 percent of GDP. We may soon be north of 40 percent of gross domestic product controlled and spent by government.

That is Eurosocialism.

And where, exactly, are we going to get the money?

Americans save nothing. We spend more than we earn. Thus the levels of consumer debt, credit card debt, auto debt and mortgage debt. U.S. foreign-exchange reserves amount to a piddling $73 billion.

The only nation with the kind of cash on hand we need now -- if we don't print the money and invite another gigantic bubble -- is China, with its $2 trillion in foreign-exchange reserves.

Will Beijing lend back the dollars it has piled up by selling to us?

China certainly has an incentive to keep Americans spending. For our purchases of Chinese-made goods have often been responsible for 100 percent of China's growth. China does not want to kill the American goose that lays those golden eggs -- until the goose can't lay any more eggs. Then they won't need the goose.

But should China decide to lend us the money, what will Beijing demand in interest rates and assurances that we will not default. After all, the U.S. debt is 70 percent of GDP, our savings rate is near zero, and our merchandise trade deficit is still running at 5 percent to 6 percent of GDP.

Unlike the 1950s, we are today dependent on foreigners for two-thirds of our oil and for much of our manufactured goods -- toys, TVs, radios, cameras, cars, shoes, clothes, bikes, motorcycles -- and for the $700 billion to $800 billion we borrow each year to pay for these imports.

With U.S. homeowners, consumers, companies and banks now going bust, why must the nation borrow trillions more to bail them out? So we can maintain our status and standard of living as the last superpower.

Bush and Obama are competing to shovel out trillions of dollars, so we can return to the good times of yesterday.

But wasn't yesterday the root cause of today? Didn't saving nothing and spending more than we earn, purchasing what we cannot afford in cars, consumer goods and houses, buying far more from abroad than we sell abroad -- didn't that cause this crisis and crash?

A family man in America's condition, awash in debt, spending more than he makes, would cut back consumption, find a second job and get out of debt. Or declare bankruptcy, accept the shame and humiliation, change his wastrel ways and start anew.

Is it different for a nation?

Yet we seem to believe we can borrow and spend our way out of a swamp of unpayable debt into which borrowing and spending have plunged us.

We are headed either for default on our debts and bankruptcy as a nation, or something less honorable: a quiet cheapening of the debts we have incurred by inflating and destroying the dollar, robbing our creditors of what we owe them and robbing our own people of the value of what they have earned. And so it has come to this.

What would the Founding Fathers think of us now?

http://www.humanevents.com/article.php?pri...es&id=29681

[w¡n9Nµ7 §£@¥€r 123]

Buchanan? Then it must be true.

[peejay 327]

Buchanan? Then it must be true.

No more truer than all the other clowns with the impressive credentials that have gotten us into this mess up to this point or the clowns that claim the true answer to get us out of it.

Edited November 29, 2008 by peejay

[*Robert* 2]

Be nice A.J.!

[w¡n9Nµ7 §£@¥€r 123]

Buchanan? Then it must be true.

No more truer than all the other clowns with the impressive credentials that have gotten us into this mess up to this point.

Right.

Buchanan. Got it.

[Scott & Lai 12]

What would the Founding Fathers think of us now?

"We gave our lives, our fortunes, and our sacred honor for this???"

[Ban Hammer 13,346]

Yeah...and the various camps of economists and politicians are still rehashing the last depression without coming to any definitive conclusion. Any surprise that there is no definitive consensus to our present dilemma either?

Re GD1, there is consensus on one point: that it took a public works project of the size of WWII to pull us out.

so war is the answer?

[w¡n9Nµ7 §£@¥€r 123]

Yeah...and the various camps of economists and politicians are still rehashing the last depression without coming to any definitive conclusion. Any surprise that there is no definitive consensus to our present dilemma either?

Re GD1, there is consensus on one point: that it took a public works project of the size of WWII to pull us out.

so war is the answer?

A war is an answer, not the answer.

A war could be a great answer if the war involves public works projects in the US (like WW2 did) and if it ends up acquiring assets and allies and contracts for American companies and/or the Federal government (like WW2 did).

Edited November 29, 2008 by A.J.

[rebeccajo 14]

You'll note in the clip the reference to thirty years of prosperity after WWII and how that was largely due to American industrialization and investments in science.

This is what troubles me in comparing the recovery from the Great Depression to any potential recovery today. I don't see American business poised to reinvest domestically. At least not under the present tax structure.

I think it's a noisy gong conservative pundits clang when it has been their tax policies which have helped drive American investments from our shores.

[*Robert* 2]

Yeah...and the various camps of economists and politicians are still rehashing the last depression without coming to any definitive conclusion. Any surprise that there is no definitive consensus to our present dilemma either?

Re GD1, there is consensus on one point: that it took a public works project of the size of WWII to pull us out.

so war is the answer?

A war is an answer, not the answer.

A war could be a great answer if the war involves public works projects in the US (like WW2 did) and if it ends up acquiring assets and allies and contracts for American companies and/or the Federal government (like WW2 did).

Well said.

[mRx 16]

The Great Depression, as well as any other crisis, downturn, and recession is caused by primarily one thing: inflationary banking.

So what have our clever statist economists come up with to fight this inflation?

More inflation...

Buchanan makes an interesting note about Americans living out of their means. This is not the problem, only a symptom. Inflation rewards debtors, and punishes savers.

[w¡n9Nµ7 §£@¥€r 123]

Inflation rewards debtors, and punishes savers.

Depends on how you save your money. If you save it as cash, yes. But there are other - better - ways to 'save' money. Over the long term, real estate is a great hedge against inflation. And it's a real asset, not phantom ####### like stocks. Over a period of 30 years, RE in the NYC metro area has outpaced inflation by about 4-5%.