Yesterday I learned that Republican Senate Majority Leader Mitch McConnell of Kentucky predicted that Ben Bernanke will win Senate approval for another term as chairman of the Federal Reserve System. (Technically the position has the title, "Chairman of the Board of Governors of the Federal Reserve System," but as that's a bureaucratic mouthful even for journalists, nobody uses the full title.) McConnell himself wouldn't say which way he would vote, and I suspect is waiting to see which way the political winds are blowing. While some critics on both right and left have criticized the job he's done harshly, many in the big business community like him--as well they might, since he spent tens of billions of dollars bailing them out of the financial mess his inflationary policies helped Fannie Mae and Freddy Mac cause.)
Republican Senator John McCain of Arizona, however, came out in opposition to the reappointment of Bernanke, whose policies destroyed McCain's presidential candidacy in the weeks after the Republican presidential convention in 2008. McCain came out of the convention leading Obama, but fell behind once Bernanke's 2007-2008 inflationary bubble burst as I warned my students it would as far back as fall of 2007.
Republican Senator John Cornyn has also come out against reappointing Bernanke, and according to the news report below, "Some Republicans have imposed a procedural block on Bernanke's confirmation, forcing Senate leaders to secure a super-majority of 60 votes in the 100-member chamber to advance the nomination." Requiring 60 votes can likely means that some Republicans have initiated a filibuster against Bernanke's reappointment. Republican Senator Orin Hatch of Utah, however, supports the nomination, and while two Democrats (Boxer of California and Feingold of Wisconsin) oppose it too, I suspect that President Obama won't have too much trouble rounding up enough Democrats to combine with Hatch and other pro-Bernanke Republicans to kill the filibuster. Still, I can't recall any nominee for Fed chairman to get this sort of opposition on both sides of the aisle in the Senate.
You can read a bit more about the story at http://www.newsmax.com/InsideCover/bernanke-mcconnell-confirmation-vote/2010/01/24/id/347821
Showing posts with label Bernanke. Show all posts
Showing posts with label Bernanke. Show all posts
Tuesday, January 26, 2010
Sunday, January 24, 2010
Is Bernanke In Trouble?
Two Democratic US Senators, Barbara Boxer of California and Russell Feingold of Wisconsin, signaled last week that they would not support the reappointment of Ben Bernanke as chairman of the Federal Reserve System. While most people regard Boxer and Feingold as belonging to the left wing of the Democratic Party, Bernanke has been unpopular with the right wing of the Republican Party as well for his inflationary policies. (Apparently Boxer and Feingold want MORE inflation, if you can believe that.) With critics on both right and left then, Bernanke might well be in trouble so far as his reappointment goes. If he didn't get reappointed he apparently would be the first presidential nominee for Fed chairman whom Congress did not appoint.
With Bernanke's position as Fed chairman (but not as a Fed board member, for which his separate 14-year term doesn't expire until 2020) in at least some doubt, it's worthwhile to review how he, his successor Alan Greenspan, presidents Bush and Obama, and Congress got the economy into the worst recession since 1946 and possibly since the Great Depression itself. Rather than reinventing the wheel, I'll quote from messages I sent previously.
Tuesday, August 25, 2009
"Greenspan actually started the mess by creating too much money which helped by Fannie Mae and Freddie Mac ended up going mostly into real estate, where it gave people the erroneous impression that it represented more wealth. If the new money had pushed up consumer prices instead of real estate prices, everyone would have recognized it for the inflation that it was. Bernanke tried to stop the inevitable bust that came from Greenspan's inflationary bubble--by creating another inflationary bubble. So instead of just suffering a recession we suffered recession AND inflation, with food and especially gasoline prices spiking sharply in 2008. The spike in fuel prices savaged both the auto makers and the airlines, ensuring an even deeper recession."
Saturday, January 9, 2010
"I've been saying for maybe a year now that the economy likely would get worse before it got better. The trouble started back in the middle of the decade when the Federal Reserve System, under Alan Greenspan, caused the money supply to grow substantially faster than the real economy was growing. Much of the excess money, driven by Fannie Mae and Freddie Mac housing subsidies, wound up in real estate, artificially inflating real estate prices, creating a bubble that eventually had to burst. It did burst, as you probably know, starting in 2006 with the weakest borrowers in the so-called sub-prime mortgage market. The collapse of the sub-prime market led the bubble to burst in the rest of the housing market, dragging down the economy.
"Starting in late 2007 the Federal Reserve System, then (and now) under Ben Bernanke, tried to stop what seemed like a likely recession caused by the first monetary bubble by--yes, that's right, by creating a second monetary bubble. It's a bit like trying to stop a cocaine addict from going through withdrawal by giving him more cocaine. I thought back in 2007 that we might have avoided a recession, but once Bernanke started inflating the money supply drastically faster than the real economy was growing, I predicted that we would have the very recession that he was trying to prevent.
"Bernanke (and surprisingly, Greenspan) are Keynesian economists. Keynesian theory teaches that government can wave a magic wand and create new "aggregate demand" out of thin air. (We'll have more on Keynesian economics for those of you in my macroeconomics class.) By inflating the money supply, the government can create the short-term appearance that aggregate demand has risen, but when people figure out that it's just more money chasing the same level of goods and services, the monetary bubble bursts and rather than having more aggregate demand we actually end up with less of it. So by pursuing the fatally-flawed Keynesian polices to try to prevent the recession, Bernanke actually caused (or helped cause) the very recession he wanted to prevent.
"Fiscal policy has the same effect as monetary policy: all the trillions of dollars of "TARP" and "stimulus" spending passed by the Democrats in Congress and supported by Republican President Bush and Democratic President Obama simply helps circulate all the new money that the Fed creates, making the bubble--and the bust--even bigger. You might recall those skyrocketing oil and gas (and food) prices in 2007, which hurt the auto and airline industries. The skyrocketing prices came directly from the Bernanke-Bush polices of inflate and spend. The stock market bubble of 2007, which alas for John McCain burst right after the Republican convention, also came directly as a result of the Bernanke monetary inflation. Obama and Bernanke have followed the same policies of inflation and government spending that led to the real estate and stock market bubbles, so it's not surprising that more than two years after Bernanke started them to try to stop the downward spiral caused by Greenspan's earlier inflation, we remained mired in recession.
"Bernanke has testified before Congress because he's up for re-appointment and apparently he wants the job again very much. And has he learned his lesson, the lesson for which we paid so dearly in the 1970s and early 1980s, that government can't spend and inflate the economy into real growth? No. He sees his fatally-flawed policies, on the contrary, as having saved the economy from even worse. So more than two years after he started the current mess to try to clean up the mess caused by his predecessor, I'm still saying that I wouldn't be surprised if things get even worse before they get better."
So it sounds like reappointing Ben Bernanke would be a very bad idea indeed, and that if President Obama does reappoint him we could expect a continuation of the current ruinous Keynesian inflationary policy. The catch, however, is that if President Obama doesn't reappoint Bernanke, Barbara Boxer and Russell Feingold want the president to appoint someone even WORSE.
I suspect, when push comes to shove, that Boxer and Feingold, and perhaps a couple of conservative Senate Republicans, will ask Bernanke some embarrassing questions, and he’ll pat himself on the back and claim again he saved us from another Great Depression, and that a majority in the Senate will end up approving his reappointment. Did I mention that I expect the economy to get worse before it gets better?
You can read the full story in The New York Times at http://www.nytimes.com/2010/01/23/business/economy/23fed.html?th&emc=th.
With Bernanke's position as Fed chairman (but not as a Fed board member, for which his separate 14-year term doesn't expire until 2020) in at least some doubt, it's worthwhile to review how he, his successor Alan Greenspan, presidents Bush and Obama, and Congress got the economy into the worst recession since 1946 and possibly since the Great Depression itself. Rather than reinventing the wheel, I'll quote from messages I sent previously.
Tuesday, August 25, 2009
"Greenspan actually started the mess by creating too much money which helped by Fannie Mae and Freddie Mac ended up going mostly into real estate, where it gave people the erroneous impression that it represented more wealth. If the new money had pushed up consumer prices instead of real estate prices, everyone would have recognized it for the inflation that it was. Bernanke tried to stop the inevitable bust that came from Greenspan's inflationary bubble--by creating another inflationary bubble. So instead of just suffering a recession we suffered recession AND inflation, with food and especially gasoline prices spiking sharply in 2008. The spike in fuel prices savaged both the auto makers and the airlines, ensuring an even deeper recession."
Saturday, January 9, 2010
"I've been saying for maybe a year now that the economy likely would get worse before it got better. The trouble started back in the middle of the decade when the Federal Reserve System, under Alan Greenspan, caused the money supply to grow substantially faster than the real economy was growing. Much of the excess money, driven by Fannie Mae and Freddie Mac housing subsidies, wound up in real estate, artificially inflating real estate prices, creating a bubble that eventually had to burst. It did burst, as you probably know, starting in 2006 with the weakest borrowers in the so-called sub-prime mortgage market. The collapse of the sub-prime market led the bubble to burst in the rest of the housing market, dragging down the economy.
"Starting in late 2007 the Federal Reserve System, then (and now) under Ben Bernanke, tried to stop what seemed like a likely recession caused by the first monetary bubble by--yes, that's right, by creating a second monetary bubble. It's a bit like trying to stop a cocaine addict from going through withdrawal by giving him more cocaine. I thought back in 2007 that we might have avoided a recession, but once Bernanke started inflating the money supply drastically faster than the real economy was growing, I predicted that we would have the very recession that he was trying to prevent.
"Bernanke (and surprisingly, Greenspan) are Keynesian economists. Keynesian theory teaches that government can wave a magic wand and create new "aggregate demand" out of thin air. (We'll have more on Keynesian economics for those of you in my macroeconomics class.) By inflating the money supply, the government can create the short-term appearance that aggregate demand has risen, but when people figure out that it's just more money chasing the same level of goods and services, the monetary bubble bursts and rather than having more aggregate demand we actually end up with less of it. So by pursuing the fatally-flawed Keynesian polices to try to prevent the recession, Bernanke actually caused (or helped cause) the very recession he wanted to prevent.
"Fiscal policy has the same effect as monetary policy: all the trillions of dollars of "TARP" and "stimulus" spending passed by the Democrats in Congress and supported by Republican President Bush and Democratic President Obama simply helps circulate all the new money that the Fed creates, making the bubble--and the bust--even bigger. You might recall those skyrocketing oil and gas (and food) prices in 2007, which hurt the auto and airline industries. The skyrocketing prices came directly from the Bernanke-Bush polices of inflate and spend. The stock market bubble of 2007, which alas for John McCain burst right after the Republican convention, also came directly as a result of the Bernanke monetary inflation. Obama and Bernanke have followed the same policies of inflation and government spending that led to the real estate and stock market bubbles, so it's not surprising that more than two years after Bernanke started them to try to stop the downward spiral caused by Greenspan's earlier inflation, we remained mired in recession.
"Bernanke has testified before Congress because he's up for re-appointment and apparently he wants the job again very much. And has he learned his lesson, the lesson for which we paid so dearly in the 1970s and early 1980s, that government can't spend and inflate the economy into real growth? No. He sees his fatally-flawed policies, on the contrary, as having saved the economy from even worse. So more than two years after he started the current mess to try to clean up the mess caused by his predecessor, I'm still saying that I wouldn't be surprised if things get even worse before they get better."
So it sounds like reappointing Ben Bernanke would be a very bad idea indeed, and that if President Obama does reappoint him we could expect a continuation of the current ruinous Keynesian inflationary policy. The catch, however, is that if President Obama doesn't reappoint Bernanke, Barbara Boxer and Russell Feingold want the president to appoint someone even WORSE.
I suspect, when push comes to shove, that Boxer and Feingold, and perhaps a couple of conservative Senate Republicans, will ask Bernanke some embarrassing questions, and he’ll pat himself on the back and claim again he saved us from another Great Depression, and that a majority in the Senate will end up approving his reappointment. Did I mention that I expect the economy to get worse before it gets better?
You can read the full story in The New York Times at http://www.nytimes.com/2010/01/23/business/economy/23fed.html?th&emc=th.
New Jobless Claims Rise Instead of Falling
News organizations often report on the economic expectations of a "consensus" of economists. I'm never quite sure which economists the news organizations regard as forming the consensus, but the reports almost always illustrate that the consensus gets their economic forecast substantially wrong. I suspect that right now news organizations which support President Obama report on the consensus of pro-Obama economists who keep forecasting a recovery in hopes that simply by forecasting it they can make it happen, and then they can give the credit to Obama.
According to the liberal Associated Press, the consensus (in this case of "Wall Street economists" whomever they might be) expected initial claims for unemployment insurance to drop slightly. Instead of dropping, however, initial claims for unemployment insurance rose 36,000 to a seasonally-adjusted total of 482,000. Nearly half a million workers, in other words, lost their jobs last week--up 36,000 from the nearly half a million workers who lost their jobs the previous week.
It's frightening how quickly the failed Keynesian policies of the Bush and Obama administrations and the Democratic Party majority in Congress have caused the US economy to shed jobs. Instead of cutting marginal tax rates and reducing government spending to ease the deadweight losses government imposes on the economy, government has imposed Keynesian policies which have increased the deadweight losses and dragged the economy into what's now clearly the worst recession since 1946, and arguably since the Great Depression itself.
Ben Bernanke, chairman of the Federal Reserve System, has led the charge to try to trick the economy into real growth by inflating the money supply. Increasing the money supply at a rate faster than the rate at which the economy is growing causes inflation, which is a tax on every dollar that you hold. I predicted in the fall of 2007 that if he imposed inflationary Keynesian policies to try to avert a recession that he would cause the very recession he wanted to avert, and that's exactly what happened. Because Bernanke, Obama and the Democratic Congress have continued the policies that Bernanke (and his predecessor, Alan Greenspan) and Bush started, I've predicted that things will continue to get worse before they get better.
I see no sign that Obama, congressional Democrats, or Bernanke have learned their economic lessons, so alas I have to renew my prediction that things will continue to get worse before they get better. I think right now that the best hope for the economy lies in big Republican gains in the 2010 congressional elections, forcing Congress to make cut marginal income tax rates and reign in the federal government's vast multi-trillion-dollar spending binge that started when Bush and congressional Democrats got together in late 2008 to pass the so-called TARP bailout of Fannie Mae, Freddie Mac, and the private financial intuitions that they'd subsidized into making home loans to people who couldn't afford home loans. A big Republican congressional victory too might persuade Bernanke (or whoever replaces him as he's up for reappointment) to stop inflating the money supply too. Unfortunately the officials at Fannie Mae and Freddie Mac are using some of the TARP bailout (that came from your tax dollars) to pay themselves millions of dollars in bonuses. So expect things to continue to get worse before they get better.
There's not much to it, but you can read the original Associated Press (AP) story at http://www.foxnews.com/politics/2010/01/21/new-jobless-claims-rise-expected/. I'd like to point out to those who still think it's Fox News that's the biased network that here we have another example of Fox balance, as it carries the liberal AP story. Fox in fact regularly carries liberal AP stories. I'll also point out that while Fox carried the full speeches of both Republican Scott Brown, and Democrat Martha Coakley, PMSNBC and the Commie News Network carried substantially more of loser Coakley's speech than of winner Brown's. Fox too was the only network to give Hillary Clinton a fair shake against Obama during the 2008 Democrat presidential primaries.
According to the liberal Associated Press, the consensus (in this case of "Wall Street economists" whomever they might be) expected initial claims for unemployment insurance to drop slightly. Instead of dropping, however, initial claims for unemployment insurance rose 36,000 to a seasonally-adjusted total of 482,000. Nearly half a million workers, in other words, lost their jobs last week--up 36,000 from the nearly half a million workers who lost their jobs the previous week.
It's frightening how quickly the failed Keynesian policies of the Bush and Obama administrations and the Democratic Party majority in Congress have caused the US economy to shed jobs. Instead of cutting marginal tax rates and reducing government spending to ease the deadweight losses government imposes on the economy, government has imposed Keynesian policies which have increased the deadweight losses and dragged the economy into what's now clearly the worst recession since 1946, and arguably since the Great Depression itself.
Ben Bernanke, chairman of the Federal Reserve System, has led the charge to try to trick the economy into real growth by inflating the money supply. Increasing the money supply at a rate faster than the rate at which the economy is growing causes inflation, which is a tax on every dollar that you hold. I predicted in the fall of 2007 that if he imposed inflationary Keynesian policies to try to avert a recession that he would cause the very recession he wanted to avert, and that's exactly what happened. Because Bernanke, Obama and the Democratic Congress have continued the policies that Bernanke (and his predecessor, Alan Greenspan) and Bush started, I've predicted that things will continue to get worse before they get better.
I see no sign that Obama, congressional Democrats, or Bernanke have learned their economic lessons, so alas I have to renew my prediction that things will continue to get worse before they get better. I think right now that the best hope for the economy lies in big Republican gains in the 2010 congressional elections, forcing Congress to make cut marginal income tax rates and reign in the federal government's vast multi-trillion-dollar spending binge that started when Bush and congressional Democrats got together in late 2008 to pass the so-called TARP bailout of Fannie Mae, Freddie Mac, and the private financial intuitions that they'd subsidized into making home loans to people who couldn't afford home loans. A big Republican congressional victory too might persuade Bernanke (or whoever replaces him as he's up for reappointment) to stop inflating the money supply too. Unfortunately the officials at Fannie Mae and Freddie Mac are using some of the TARP bailout (that came from your tax dollars) to pay themselves millions of dollars in bonuses. So expect things to continue to get worse before they get better.
There's not much to it, but you can read the original Associated Press (AP) story at http://www.foxnews.com/politics/2010/01/21/new-jobless-claims-rise-expected/. I'd like to point out to those who still think it's Fox News that's the biased network that here we have another example of Fox balance, as it carries the liberal AP story. Fox in fact regularly carries liberal AP stories. I'll also point out that while Fox carried the full speeches of both Republican Scott Brown, and Democrat Martha Coakley, PMSNBC and the Commie News Network carried substantially more of loser Coakley's speech than of winner Brown's. Fox too was the only network to give Hillary Clinton a fair shake against Obama during the 2008 Democrat presidential primaries.
Saturday, January 9, 2010
US Loses 85,000 More Jobs in December 2009
I've been saying for maybe a year now that the economy likely would get worse before it got better. The trouble started back in the middle of the decade when the Federal Reserve System, under Alan Greenspan, caused the money supply to grow substantially faster than the real economy was growing. Much of the excess money, driven by Fannie Mae and Freddie Mac housing subsidies, wound up in real estate, artificially inflating real estate prices, creating a bubble that eventually had to burst. It did burst, as you probably know, starting in 2006 with the weakest borrowers in the so-called sub-prime mortgage market. The collapse of the sub-prime market led the bubble to burst in the rest of the housing market, dragging down the economy.
Starting in late 2007 the Federal Reserve System, then (and now) under Ben Bernanke, tried to stop what seemed like a likely recession caused by the first monetary bubble by--yes, that's right, by creating a second monetary bubble. It's a bit like trying to stop a cocaine addict from going through withdrawal by giving him more cocaine. I thought back in 2007 that we might have avoided a recession, but once Bernanke started inflating the money supply drastically faster than the real economy was growing, I predicted that we would have the very recession that he was trying to prevent.
Bernanke (and surprisingly, Greenspan) are Keynesian economists. Keynesian theory teaches that government can wave a magic wand and create new "aggregate demand" out of thin air. (We'll have more on Keynesian economics for those of you in my macroeconomics class.) By inflating the money supply, the government can create the short-term appearance that aggregate demand has risen, but when people figure out that it's just more money chasing the same level of goods and services, the monetary bubble bursts and rather than having more aggregate demand we actually end up with less of it. So by pursuing the fatally-flawed Keynesian polices to try to prevent the recession, Bernanke actually caused (or helped cause) the very recession he wanted to prevent.
Fiscal policy has the same effect as monetary policy: all the trillions of dollars of "TARP" and "stimulus" spending passed by the Democrats in Congress and supported by Republican President Bush and Democratic President Obama simply helps circulate all the new money that the Fed creates, making the bubble--and the bust--even bigger. You might recall those skyrocketing oil and gas (and food) prices in 2007, which hurt the auto and airline industries. The skyrocketing prices came directly from the Bernanke-Bush polices of inflate and spend. The stock market bubble of 2007, which alas for John McCain burst right after the Republican convention, also came directly as a result of the Bernanke monetary inflation. Obama and Bernanke have followed the same policies of inflation and government spending that led to the real estate and stock market bubbles, so it's not surprising that more than two years after Bernanke started them to try to stop the downward spiral caused by Greenspan's earlier inflation, we remained mired in recession.
Bernanke has testified before Congress because he's up for re-appointment and apparently he wants the job again very much. And has he learned his lesson, the lesson for which we paid so dearly in the 1970s and early 1980s, that government can't spend and inflate the economy into real growth? No. He sees his fatally-flawed policies, on the contrary, as having saved the economy from even worse. So more than two years after he started the current mess to try to clean up the mess caused by his predecessor, I'm still saying that I wouldn't be surprised if things get even worse before they get better.
You can read more about the bad employment news at
http://www.nytimes.com/2010/01/09/business/economy/09jobs.html?th&emc=th
Starting in late 2007 the Federal Reserve System, then (and now) under Ben Bernanke, tried to stop what seemed like a likely recession caused by the first monetary bubble by--yes, that's right, by creating a second monetary bubble. It's a bit like trying to stop a cocaine addict from going through withdrawal by giving him more cocaine. I thought back in 2007 that we might have avoided a recession, but once Bernanke started inflating the money supply drastically faster than the real economy was growing, I predicted that we would have the very recession that he was trying to prevent.
Bernanke (and surprisingly, Greenspan) are Keynesian economists. Keynesian theory teaches that government can wave a magic wand and create new "aggregate demand" out of thin air. (We'll have more on Keynesian economics for those of you in my macroeconomics class.) By inflating the money supply, the government can create the short-term appearance that aggregate demand has risen, but when people figure out that it's just more money chasing the same level of goods and services, the monetary bubble bursts and rather than having more aggregate demand we actually end up with less of it. So by pursuing the fatally-flawed Keynesian polices to try to prevent the recession, Bernanke actually caused (or helped cause) the very recession he wanted to prevent.
Fiscal policy has the same effect as monetary policy: all the trillions of dollars of "TARP" and "stimulus" spending passed by the Democrats in Congress and supported by Republican President Bush and Democratic President Obama simply helps circulate all the new money that the Fed creates, making the bubble--and the bust--even bigger. You might recall those skyrocketing oil and gas (and food) prices in 2007, which hurt the auto and airline industries. The skyrocketing prices came directly from the Bernanke-Bush polices of inflate and spend. The stock market bubble of 2007, which alas for John McCain burst right after the Republican convention, also came directly as a result of the Bernanke monetary inflation. Obama and Bernanke have followed the same policies of inflation and government spending that led to the real estate and stock market bubbles, so it's not surprising that more than two years after Bernanke started them to try to stop the downward spiral caused by Greenspan's earlier inflation, we remained mired in recession.
Bernanke has testified before Congress because he's up for re-appointment and apparently he wants the job again very much. And has he learned his lesson, the lesson for which we paid so dearly in the 1970s and early 1980s, that government can't spend and inflate the economy into real growth? No. He sees his fatally-flawed policies, on the contrary, as having saved the economy from even worse. So more than two years after he started the current mess to try to clean up the mess caused by his predecessor, I'm still saying that I wouldn't be surprised if things get even worse before they get better.
You can read more about the bad employment news at
http://www.nytimes.com/2010/01/09/business/economy/09jobs.html?th&emc=th
Monday, September 7, 2009
Unemployment rate surged to 9.7 percent in August
Toward the end of the Bush administration, President Bush and Congress started spending billions to bail out financial institutions and auto companies in a vain Keynesian attempt to "stimulate" the economy by taxing away more of your income and then giving some of it back to you. President Obama and Congress have continued the vain Keynesian stimulus efforts. Ben Bernanke, chairman of the Federal Reserve Board, has cooperated in the Bush-Obama Keynesian efforts by printing new money like it's going out of style (which it often does, in the form of inflation, when the Fed creates too much of it). Yet we see that despite all of these Keynesian efforts to trick the economy into real growth--or perhaps because of these Keynesian efforts--the economy remains mired in the worst recession since the early 1980s, and, by some measures, since the Great Depression. While the economy isn't suffering anywhere near the contraction in the number of jobs or real incomes per person as it did during the Great Depression--and people shouldn't get hysterical that it will, either--we do have plenty of economic pain to go around.
We could, as both President Kennedy and President Reagan did, get Congress to slash marginal federal income tax rates, increasing the incentive to work, save and invest, thereby stimulating real economic growth as we saw in both the 1960s and 1980s. Obama and Congress, however, seem determined to hold on to as much of your hard earned income as possible, so it seems unlikely we will see cuts in marginal tax rates, much less large cuts. So the near-term prospect for the economy remains bleak.
http://www.nytimes.com/2009/09/05/business/economy/05jobs.html?th&emc=th
We could, as both President Kennedy and President Reagan did, get Congress to slash marginal federal income tax rates, increasing the incentive to work, save and invest, thereby stimulating real economic growth as we saw in both the 1960s and 1980s. Obama and Congress, however, seem determined to hold on to as much of your hard earned income as possible, so it seems unlikely we will see cuts in marginal tax rates, much less large cuts. So the near-term prospect for the economy remains bleak.
http://www.nytimes.com/2009/09/05/business/economy/05jobs.html?th&emc=th
Wednesday, August 26, 2009
Has Ben Bernanke learned his lesson?
I'd thought that if there were any lesson that Federal Reserve policy makers had learned from the stagflation the Fed caused during the 1970s (weak growth in GDP coupled with high unemployment and high inflation) it's that the Fed can'...t fool people into creating real economic growth over the long term by creating an excessive growth rate in the money supply. As the monetary bubbles caused by Greenspan and Bernnanke this decade show, however, neither one seems to have learned the lesson. I'm not as optimistic as the Wall Street Journal editors that somehow Bernanke has learned his lesson between 2007 and now.
http://online.wsj.com/article/SB10001424052970203706604574372384193773524.html?mod=djemEditorialPage
http://online.wsj.com/article/SB10001424052970203706604574372384193773524.html?mod=djemEditorialPage
Tuesday, August 25, 2009
Embracing Bushonomics, Obama Re-appoints Bernanke
The failed Bush-Obama Keynesian inflationary policies continue. Greenspan actually started the mess by creating too much money which helped by Fannie Mae and Freddie Mac ended up going mostly into real estate, where it gave people the erroneous impression that it represented more wealth. If the new money had pushed up consumer prices instead of real estate prices, everyone would have recognized it for the inflation that it was. Bernanke tried to stop the inevitable bust that came from Greenspan's inflationary bubble--by creating another inflationary bubble. So instead of just suffering a recession we suffered recession AND inflation, with food and especially gasoline prices spiking sharply in 2008. The spike in fuel prices savaged both the auto makers and the airlines, ensuring an even deeper recession. There's no surprise here that Obama wants to continue these failed policies, as the worse he makes things, the more he thinks he can scare Americans into accepting more government control.
http://www.cato-at-liberty.org/2009/08/25/embracing-bushonomics-obama-re-appoints-bernanke/
http://www.cato-at-liberty.org/2009/08/25/embracing-bushonomics-obama-re-appoints-bernanke/
Friday, April 3, 2009
US Loses 663k Jobs in March; Unemployment 8.5%
I'm afraid that the month of March brought more bad economic news: the US economy suffered a net loss of 663,000 jobs. The 663,000-job loss is a net loss, meaning that employers cut 663,000 more jobs than they created, and that actually more than 663,000 people lost their jobs. The new net job loss brought the US unemployment rate up to 8.5%, the highest since 1983, during the last great recession.
While 8.5% unemployed means 91.5% still or newly employed, the increased rate and the net job losses--5.1 million since December of 2007--gives the 91.5% reason to fear, even though most of them will never lose their jobs. Militating against the fear I see only three small pieces of good news at the moment. Consumer spending has risen now for two months in a row; US factory orders rose for the first time after six months of steady declines; construction and housing sales beat the forecasts of most economists, as housing prices have finally started to fall substantially (encouraging more sales and thus more construction), as they need to after the bursting of the Fed's horrible real estate bubble. I can't say though that the economy won't shed more jobs on net and that the unemployment rate won't rise further before the economy hits bottom and starts to improve again.
I can say what caused the recession--at least primarily what caused it. Earlier in the decade, Alan Greenspan, then Chairman of the Federal Reserve Board, caused the Fed to inflate the money supply at a rate well in excess of the growth rate of the real economy. Thanks to the massive and political loan guarantees by Fannie Mae and Freddie Mac to buy votes from poor people who couldn't afford to pay back the loans, much of the money went into the real estate market, driving up home prices, and making homeowners feel wealthier.
Since most of the money went in to real estate purchases, most of it did not go into buying consumer goods, and thus the inflation caused by the Fed's excessive expansion of the money supply did not show up in the Consumer Price Index (CPI), so most people did not realize at first that we were experiencing covert inflation. Since most of the money went into purchasing existing homes, the sales of which do not go into computing Gross Domestic Product (GDP), the most common measure of goods and services produced by the economy, the covert inflation did not show up even in a broader measure of inflation like the GDP Implicit Price Deflator.
A few people tried to warn about the inflation, but most of us did not listen. I freely confess that I fall into the category of those who looked at the CPI and the GDP Deflator and saw no inflation. The major news media publish the CPI regularly, and I didn't take the time to look at the growth rate of M1 or M2, the most common measures of the money supply. The people yelling about inflation were right, and I was wrong back in 2006. I will say that I did tell my economics students about the warnings I heard, and that by 2007 I had started to heed the warnings. The real estate bubble had clearly started to burst by 2007, which in turn started to drag down or at least slow down other parts of the economy, especially home construction and related industries.
By 2007 Greenspan had finished his second term as Fed Chairman, and President W. Bush had appointed Bernanke to replace Greenspan. People were saying of Bernanke--like they had of Greenspan--that he was a monetarist (meaning that supposedly he understood that growth of the money supply at a rate in excess of the rate of growth of the real economy produces inflation). I looked at Bernanke's textbook, which you can read free online, and found out that it has an even stronger Keynesian bias than the textbook I'm required to use for the economics classes I teach. I don't know where anyone ever got the idea that Bernanke is a monetarist, but as the real estate bubble continued imploding before our very eyes in 2007, Bernanke began to run the worst sort of Keynesian inflationary policy, buying tens and even hundreds of billions of new dollars worth of US Treasury bills (short term debt) and US treasury bonds (long term debt) to try to drive down nominal interest rates, injecting tens and eventually hundreds of billions of dollars of excess money into the economy. (I also started to read Greenspan's autobiography at the time, and discovered within the first two chapters that contrary to common belief, Greenspan is a Keynesian expansionist too, despite once having been in the anti-Keynesian inner circle of Ayn Rand many decades ago.)
In case you're not familiar, Keynesian economic theory believes that government can cure a recession through inflating the money supply with deficit spending--that is, by government spending more than it collects in taxes. Government, according to Keynesian theory, can wave a magic wand and create out of thin air new "aggregate demand" to push up GDP. Keynesians do not understand that everything government spends, it must take from someone else, either through taxation or borrowing. Borrowing from the Fed (meaning that the Fed buys Treasury debt) just means more dollars chasing the same volume of goods and services, driving up the average level of prices--in other words, causing inflation. Inflation, which drives down the value of your dollar, is just a covert tax on every dollar you own.
I warned my economics students in 2007 that if Bernanke tried a Keynesian inflation of the money supply, he would just cause inflation, and not stop the bursting of the real estate bubble--and that's just what happened. While the news media were quick to blame cartels and "oligopolies" for the surge in food and gasoline prices that followed the Fed's inflation of the money supply, the growth in money supply caused the surge in prices as predicted. For a long while the Bernanke inflation also pushed up stock prices, which do not go into either the CPI or the GDP Deflator, so while both indexes rose, they still understated the true amount of inflation Bernanke was causing. You might recall, however, that the rising food and gas prices caused a great deal of pain to consumers and producers alike. Airlines and auto manufacturers suffered greatly, as people cut back drastically on both traveling by air and buying gas-guzzling SUVs.
Just as Greenspan's inflationary real estate bubble eventually had to burst, so too did Bernanke's inflationary food, gas and stock bubbles. The food and gas bubbles burst first, and gas prices fell by half in a very short period--in a shorter time than it had taken them to rise that amount in the first place. By the time the gas bubble burst though it was too late for the airlines and auto companies to avoid severe contraction, as they'd already had a recessionary year. When the stock market finally caught on, it too collapsed virtually overnight. By "collapsed" I mean that the Dow Jones Industrial Average fell back at first to 2003 levels. Not until 2009 did it fall all the way back to 1997 levels. In 2008 the stock market reached artificially inflated levels, but most people didn't realize it, and felt wealthier, so that when the bubble burst, they felt poorer, even though the value of their stocks, on average, still equaled what it had reached been back in 2003, when people felt wealthy because their stocks had climbed so much since, say, 1997.
Late in 2008 President Bush and the Democratic majority in Congress responded to the stock market crash by trying yet more Keynesian deficit spending. The Fed under Bernanke, without any legal authority, assisted by bailing out AIG directly itself, and then indirectly (and legally) by buying all the Treasury debt needed to allow the Bush-Democrat trillion-dollar bailout for the financial industry and the smaller auto bailout, both done in 2008. In 2009 President Obama and an even larger Democratic majority in Congress have continued and expanded the Bush-Democrat Keynesian policies with first a $410 billion Keynesian "stimulus" bill passed a few weeks ago, and now with a budget that calls for a $2 trillion dollar federal budget deficit for 2010 alone, and $10 trillion dollars of deficits in the near future.
Obviously the Obama-Bush-Democrat Keynesian policies are not stopping the recession. By taking income out of productive hands and putting it into the hands of politicians and politically-connected executives and labor unions, the fatally-flawed Keynesian inflationary policies actual worsen the recession. So as the Keynesian policies remove the incentives for productive people to save, invest, work and create jobs, I expect the economy to get worse before it gets better. I am just hoping that the Keynesian polices aren't bad enough to prolong this recession for years. Even a deep recession like the one in the early 1980s didn't last for years. Real (inflation-adjusted) GDP fell from 1981 to 1982, but by 1983 had already risen above its 1981 level. Because of large cuts in our marginal income tax rates that President Reagan got Congress to pass starting in 1981, disposable income, perhaps the best measure of economic well-being (and certainly better than GDP), actually rose in 1982 over 1981, so that for those who had jobs, economic conditions actually improved during 1982, deep recession notwithstanding. Unlike Reagan, however, Obama and many congressional Democrats would like to raise tax rates, sadly, so I would expect disposable income to decline along with GDP during the Bush-Obama recession.
Currently the unemployment rate stands at 8.5%, the highest since 1983, when it averaged 9.4% for the year as a whole. In 1982 the unemployment rate averaged 9.7%, and for a time in 1982 even exceeded 10%. In fairness to the earlier recession, however, I have to note that unemployment stood at 7.6% already in 1981 before the 1982-1983 recession even started, but had fallen to nearly 4% prior to the current Bush-Obama recession. So while the unemployment rate hasn't risen as high this time (yet), it has risen much more than it did during the 1982-1983 recession. There is no doubt that we're currently suffering through a bad recession.
Government could really help the economy if government would stop increasing spending and regulations, and cut marginal tax rates, which would increase the incentive to work, save, invest and create new jobs. Restraining the growth of government spending and regulations, combined with large cuts in marginal tax rates, allowed the worst recession since the Great Depression, 1982-1983, to turn into what became the longest peacetime expansion in US history, 1983-1990 (and is still the second-longest peacetime expansion in US history). With the anti-growth policies of Greenspan, Bernanke, Bush, Obama and the Democratic Congress, however, I think we're more likely to see the longest downturn since the Great Depression instead.
You can read more about the bad news at http://www.foxnews.com/politics/2009/04/03/jobless-rate-jumps-percent-k-jobs-lost/.
While 8.5% unemployed means 91.5% still or newly employed, the increased rate and the net job losses--5.1 million since December of 2007--gives the 91.5% reason to fear, even though most of them will never lose their jobs. Militating against the fear I see only three small pieces of good news at the moment. Consumer spending has risen now for two months in a row; US factory orders rose for the first time after six months of steady declines; construction and housing sales beat the forecasts of most economists, as housing prices have finally started to fall substantially (encouraging more sales and thus more construction), as they need to after the bursting of the Fed's horrible real estate bubble. I can't say though that the economy won't shed more jobs on net and that the unemployment rate won't rise further before the economy hits bottom and starts to improve again.
I can say what caused the recession--at least primarily what caused it. Earlier in the decade, Alan Greenspan, then Chairman of the Federal Reserve Board, caused the Fed to inflate the money supply at a rate well in excess of the growth rate of the real economy. Thanks to the massive and political loan guarantees by Fannie Mae and Freddie Mac to buy votes from poor people who couldn't afford to pay back the loans, much of the money went into the real estate market, driving up home prices, and making homeowners feel wealthier.
Since most of the money went in to real estate purchases, most of it did not go into buying consumer goods, and thus the inflation caused by the Fed's excessive expansion of the money supply did not show up in the Consumer Price Index (CPI), so most people did not realize at first that we were experiencing covert inflation. Since most of the money went into purchasing existing homes, the sales of which do not go into computing Gross Domestic Product (GDP), the most common measure of goods and services produced by the economy, the covert inflation did not show up even in a broader measure of inflation like the GDP Implicit Price Deflator.
A few people tried to warn about the inflation, but most of us did not listen. I freely confess that I fall into the category of those who looked at the CPI and the GDP Deflator and saw no inflation. The major news media publish the CPI regularly, and I didn't take the time to look at the growth rate of M1 or M2, the most common measures of the money supply. The people yelling about inflation were right, and I was wrong back in 2006. I will say that I did tell my economics students about the warnings I heard, and that by 2007 I had started to heed the warnings. The real estate bubble had clearly started to burst by 2007, which in turn started to drag down or at least slow down other parts of the economy, especially home construction and related industries.
By 2007 Greenspan had finished his second term as Fed Chairman, and President W. Bush had appointed Bernanke to replace Greenspan. People were saying of Bernanke--like they had of Greenspan--that he was a monetarist (meaning that supposedly he understood that growth of the money supply at a rate in excess of the rate of growth of the real economy produces inflation). I looked at Bernanke's textbook, which you can read free online, and found out that it has an even stronger Keynesian bias than the textbook I'm required to use for the economics classes I teach. I don't know where anyone ever got the idea that Bernanke is a monetarist, but as the real estate bubble continued imploding before our very eyes in 2007, Bernanke began to run the worst sort of Keynesian inflationary policy, buying tens and even hundreds of billions of new dollars worth of US Treasury bills (short term debt) and US treasury bonds (long term debt) to try to drive down nominal interest rates, injecting tens and eventually hundreds of billions of dollars of excess money into the economy. (I also started to read Greenspan's autobiography at the time, and discovered within the first two chapters that contrary to common belief, Greenspan is a Keynesian expansionist too, despite once having been in the anti-Keynesian inner circle of Ayn Rand many decades ago.)
In case you're not familiar, Keynesian economic theory believes that government can cure a recession through inflating the money supply with deficit spending--that is, by government spending more than it collects in taxes. Government, according to Keynesian theory, can wave a magic wand and create out of thin air new "aggregate demand" to push up GDP. Keynesians do not understand that everything government spends, it must take from someone else, either through taxation or borrowing. Borrowing from the Fed (meaning that the Fed buys Treasury debt) just means more dollars chasing the same volume of goods and services, driving up the average level of prices--in other words, causing inflation. Inflation, which drives down the value of your dollar, is just a covert tax on every dollar you own.
I warned my economics students in 2007 that if Bernanke tried a Keynesian inflation of the money supply, he would just cause inflation, and not stop the bursting of the real estate bubble--and that's just what happened. While the news media were quick to blame cartels and "oligopolies" for the surge in food and gasoline prices that followed the Fed's inflation of the money supply, the growth in money supply caused the surge in prices as predicted. For a long while the Bernanke inflation also pushed up stock prices, which do not go into either the CPI or the GDP Deflator, so while both indexes rose, they still understated the true amount of inflation Bernanke was causing. You might recall, however, that the rising food and gas prices caused a great deal of pain to consumers and producers alike. Airlines and auto manufacturers suffered greatly, as people cut back drastically on both traveling by air and buying gas-guzzling SUVs.
Just as Greenspan's inflationary real estate bubble eventually had to burst, so too did Bernanke's inflationary food, gas and stock bubbles. The food and gas bubbles burst first, and gas prices fell by half in a very short period--in a shorter time than it had taken them to rise that amount in the first place. By the time the gas bubble burst though it was too late for the airlines and auto companies to avoid severe contraction, as they'd already had a recessionary year. When the stock market finally caught on, it too collapsed virtually overnight. By "collapsed" I mean that the Dow Jones Industrial Average fell back at first to 2003 levels. Not until 2009 did it fall all the way back to 1997 levels. In 2008 the stock market reached artificially inflated levels, but most people didn't realize it, and felt wealthier, so that when the bubble burst, they felt poorer, even though the value of their stocks, on average, still equaled what it had reached been back in 2003, when people felt wealthy because their stocks had climbed so much since, say, 1997.
Late in 2008 President Bush and the Democratic majority in Congress responded to the stock market crash by trying yet more Keynesian deficit spending. The Fed under Bernanke, without any legal authority, assisted by bailing out AIG directly itself, and then indirectly (and legally) by buying all the Treasury debt needed to allow the Bush-Democrat trillion-dollar bailout for the financial industry and the smaller auto bailout, both done in 2008. In 2009 President Obama and an even larger Democratic majority in Congress have continued and expanded the Bush-Democrat Keynesian policies with first a $410 billion Keynesian "stimulus" bill passed a few weeks ago, and now with a budget that calls for a $2 trillion dollar federal budget deficit for 2010 alone, and $10 trillion dollars of deficits in the near future.
Obviously the Obama-Bush-Democrat Keynesian policies are not stopping the recession. By taking income out of productive hands and putting it into the hands of politicians and politically-connected executives and labor unions, the fatally-flawed Keynesian inflationary policies actual worsen the recession. So as the Keynesian policies remove the incentives for productive people to save, invest, work and create jobs, I expect the economy to get worse before it gets better. I am just hoping that the Keynesian polices aren't bad enough to prolong this recession for years. Even a deep recession like the one in the early 1980s didn't last for years. Real (inflation-adjusted) GDP fell from 1981 to 1982, but by 1983 had already risen above its 1981 level. Because of large cuts in our marginal income tax rates that President Reagan got Congress to pass starting in 1981, disposable income, perhaps the best measure of economic well-being (and certainly better than GDP), actually rose in 1982 over 1981, so that for those who had jobs, economic conditions actually improved during 1982, deep recession notwithstanding. Unlike Reagan, however, Obama and many congressional Democrats would like to raise tax rates, sadly, so I would expect disposable income to decline along with GDP during the Bush-Obama recession.
Currently the unemployment rate stands at 8.5%, the highest since 1983, when it averaged 9.4% for the year as a whole. In 1982 the unemployment rate averaged 9.7%, and for a time in 1982 even exceeded 10%. In fairness to the earlier recession, however, I have to note that unemployment stood at 7.6% already in 1981 before the 1982-1983 recession even started, but had fallen to nearly 4% prior to the current Bush-Obama recession. So while the unemployment rate hasn't risen as high this time (yet), it has risen much more than it did during the 1982-1983 recession. There is no doubt that we're currently suffering through a bad recession.
Government could really help the economy if government would stop increasing spending and regulations, and cut marginal tax rates, which would increase the incentive to work, save, invest and create new jobs. Restraining the growth of government spending and regulations, combined with large cuts in marginal tax rates, allowed the worst recession since the Great Depression, 1982-1983, to turn into what became the longest peacetime expansion in US history, 1983-1990 (and is still the second-longest peacetime expansion in US history). With the anti-growth policies of Greenspan, Bernanke, Bush, Obama and the Democratic Congress, however, I think we're more likely to see the longest downturn since the Great Depression instead.
You can read more about the bad news at http://www.foxnews.com/politics/2009/04/03/jobless-rate-jumps-percent-k-jobs-lost/.
Sunday, March 15, 2009
AIG Execs Get Millions in Bonuses From Taxpayer Bailout
Late in 2008, Ben Bernanke, chair of the Federal Reserve Board, without any legal authority, bailed out ailing insurance giant, AIG. Bush and Congress approved of the extralegal bailout so much they started bailing out other failing financial giants, and wrote into the law a provision authorizing Bernanke to do what he'd already done. A majority of Republicans in both houses of Congress, however, opposed the bailouts, urging the government to let financial giants suffer from their own foolish policies.
In some sense you can't blame Bernanke, as it was the Keynesian inflationary polices of his predecessor, Alan Greenspan, that encouraged these financial giants, along with a little help from Fannie Mae and Freddie Mac (which "guaranteed" the loans) to make hundreds of billions of dollars in foolish loans to people who couldn't afford to borrow in the first place. Bernanke, Bush and congressional Democrats bailing out the financial giants that government policies encouraged to lend foolishly demonstrates how one government intervention leads inevitably to another. As Yoda said, once you turn to the Dark Side, forever will it dominate your destiny. Keeping in mind Yoda's advice--and the entire history of federal government regulation, starting with the Interstate Commerce Act of 1887, which Congress passed allegedly to lower railroad rates but which actually raised the rates, just like the Cable Reregulation Act of 1992 raised rather than lowered cable rates--it comes as no surprise that Fed inflation and Freddie Mae and Fannie Mae "loan guarantees" would lead to multi-trillion dollar federal bailouts.
Obama and the new, more-Democrat Congress have done a great job of continuing the failed policies of Bush, Bernanke, and the slightly-less-Democrat Congress of 2008. So it should come as no big surprise either that the executives at AIG are taking some of the $170 billion that the Fed and Congress spent to bail out AIG and paying $121 million in bonuses to corporate executives (themselves) and other employees. I mean, what's $121 million anyway, when Obama and Congress plan to spend about $8 TRILLION of your money this year? I mean, heck, that $121 million isn't even 10% of the $170 billion bailout. Why not skim 7% right off the top of the bailout to pay themselves for their good job in securing the $170 billion in the first place? I mean, if they hadn't gotten Bernanke, Bush and Democrats to bail them out, why, they would have had to have declared bankruptcy, and gone into receivership. The bankruptcy judge would have appointed a trustee to run the company, and the trustee surely would have fired all of the executives as part of cutting out the deadwood at the company and slimming it down for continued operations as an actual for-profit business. Those executives worked hard to save their jobs at the taxpayers' expense. They actually had to call Bernanke on the phone and ask for a bailout! That's tough work, no doubt, and worth every penny of the $121 million of your money that they stole from the taxpayer bailout of AIG to bail themselves out.
It's funny--or at least ironic, albeit sad--that liberals routinely rail against "the rich" and "Big Business" and then use taxpayer money to bail out both the rich and Big Business. Obama has already said that he thinks Congress should spend another $1 trillion or so on additional bailouts of the financial institutions wrecked by disastrous government policies, so don't be surprised if on Wall Street, the year 2009, while a horrible year for the stock market (which has, since Obama took office, fallen some 25%, from above its 2003 level all the way down to its 1997 level), shapes up to be the Year of the Big Bonus for executives of failed financial institutions. Ain't socialism grand?
http://www.nytimes.com/2009/03/15/business/15AIG.html?th&emc=th
In some sense you can't blame Bernanke, as it was the Keynesian inflationary polices of his predecessor, Alan Greenspan, that encouraged these financial giants, along with a little help from Fannie Mae and Freddie Mac (which "guaranteed" the loans) to make hundreds of billions of dollars in foolish loans to people who couldn't afford to borrow in the first place. Bernanke, Bush and congressional Democrats bailing out the financial giants that government policies encouraged to lend foolishly demonstrates how one government intervention leads inevitably to another. As Yoda said, once you turn to the Dark Side, forever will it dominate your destiny. Keeping in mind Yoda's advice--and the entire history of federal government regulation, starting with the Interstate Commerce Act of 1887, which Congress passed allegedly to lower railroad rates but which actually raised the rates, just like the Cable Reregulation Act of 1992 raised rather than lowered cable rates--it comes as no surprise that Fed inflation and Freddie Mae and Fannie Mae "loan guarantees" would lead to multi-trillion dollar federal bailouts.
Obama and the new, more-Democrat Congress have done a great job of continuing the failed policies of Bush, Bernanke, and the slightly-less-Democrat Congress of 2008. So it should come as no big surprise either that the executives at AIG are taking some of the $170 billion that the Fed and Congress spent to bail out AIG and paying $121 million in bonuses to corporate executives (themselves) and other employees. I mean, what's $121 million anyway, when Obama and Congress plan to spend about $8 TRILLION of your money this year? I mean, heck, that $121 million isn't even 10% of the $170 billion bailout. Why not skim 7% right off the top of the bailout to pay themselves for their good job in securing the $170 billion in the first place? I mean, if they hadn't gotten Bernanke, Bush and Democrats to bail them out, why, they would have had to have declared bankruptcy, and gone into receivership. The bankruptcy judge would have appointed a trustee to run the company, and the trustee surely would have fired all of the executives as part of cutting out the deadwood at the company and slimming it down for continued operations as an actual for-profit business. Those executives worked hard to save their jobs at the taxpayers' expense. They actually had to call Bernanke on the phone and ask for a bailout! That's tough work, no doubt, and worth every penny of the $121 million of your money that they stole from the taxpayer bailout of AIG to bail themselves out.
It's funny--or at least ironic, albeit sad--that liberals routinely rail against "the rich" and "Big Business" and then use taxpayer money to bail out both the rich and Big Business. Obama has already said that he thinks Congress should spend another $1 trillion or so on additional bailouts of the financial institutions wrecked by disastrous government policies, so don't be surprised if on Wall Street, the year 2009, while a horrible year for the stock market (which has, since Obama took office, fallen some 25%, from above its 2003 level all the way down to its 1997 level), shapes up to be the Year of the Big Bonus for executives of failed financial institutions. Ain't socialism grand?
http://www.nytimes.com/2009/03/15/business/15AIG.html?th&emc=th
Subscribe to:
Posts (Atom)