As much as Obama and Biden have been telling us this is the WORST crisis since October, 1929... this ISN'T the Great Depression. Ryan is right.
This is NOT the failing of our national stock and commodities markets. In fact, even with last week's losses, they are STILL pretty strong. 48% stronger than they were in 1929, with adjusted dollars.
Unemployment is very nearly a NON factor. No figures point to a rate higher than 6.5%... and by 1930, we were looking at 22% of America out-of-work. It was twice it's current level in 1979, and that wasn't a "depression" at all.
This is a crisis based in imaginary money. With at least 1 out of every ten mortgages in this nation on the verge of default, and more than 75% of America holding more than the accepted 25% debt-to-income ratio (I think the average now is more than 50%)... no one WANTS to lend money... PERIOD!
Since 1969, credit availability in this country has been based on "future income" rather than actual savings. This is the same process by which the Federal Reserve calls on the Treasury Dept to simply print more bills if the economy strengthens, and take more out of circulation if it slows down... all based on the "future" strength of our economy. No actual "wealth" is EVER a factor in either topic.
With so much DEBT outstanding in this nation, the ability to continue to LEND money is stretching beyond reasonable limits... and the system is cracking. Local or regional banks are not able to get the "loans" they depend on from other banks, because other banks don't want to prop up bad mortgages... but the small banks NEED the loans to conduct ALL their business, not just the bad or risky mortgages. This is the money that is loaned to small businesses to make payroll, or to make SECURED, low-risk loans to parents so their kids can go to college, or to buy a new car (technically, ALSO a secured loan).
If it were simply a matter of putting people to work, then I'd probably be more inclined to agree with James. However, unemployment isn't the issue, credit is. If 10 to 18% of all credit in this nation is BAD credit... what is the bail-out really going to accomplish other than putting the burden of SWALLOWING the bad credit on the backs of tax payers rather than banks and lending companies?
The problem goes deeper, though...
Let's look at Jambo's example of FDR in the '30s. With the New Deal, FDR made the Federal Government the LARGEST borrower in the nation (and that percentage of credit extended nearly tripled by the end of WWII). From government bonds to T-bills, the Feds borrowed money (the easy-to-read version of history, here) to build Hoover Dam, the TVA, the "New Navy", the Golden Gate, the Tri-Borough, the WPA, the CCC... the list goes on and on. Confidence that the Government would PAY BACK the loans was high... thus, the economy came back (albeit, slowly) so that the Depression ENDED by 1937 (I'm NOT starting another fight... simply stating facts, here). This is the ROOT of the policy behind deficit spending and its impact on an economy... lots of people working, lots of the PEOPLE'S money safely tied up in very LOW RISK-low return investments. If, worst-case scenario, the Feds COULDN'T pay back the loans based on federal revenue... with the institution of the Federal Reserve, they could simply PRINT MORE MONEY, which would (obviously) impact the economy adversely, at least to a small degree, but the influx of cash TO THE PUBLIC SECTOR has always proven to be a short-term problem, not a long-term one.
Since 1984, when the Feds (meaning Reagan) de-regulated the stock market to a point where ANYONE could be a player, the economy has been almost a reflection of Wall Street ups and downs. Like it or not, more than 60% of Americans have money tied up in the stock market (401k, IRA, corporate retirement, Federal retirement, etc). The REALLY shocking fact is that less than 11% of ALL US banking assets are tied to the markets! By my math, that means that 89% of the REST of America's "banked" money is invested in LOANS. And as many as 1 in 5 of those same loans may now be BAD.
Then we see the $700 BILLION bail out... making the Federal Government the largest LENDER and CREDITOR in the nation! 180 degrees from the situation that Jambo advocates with "New Deal" politics, because the Feds will have nothing to show for the bad loans.
THAT is the root of this crisis. Banks have always been in the "loan" business... just watch "It's a wonderful life!" if you doubt me... but if the cash reserves aren't enough to cover the amount out in loans, then the bank is at risk, and loose lending laws (mostly stemming from the Carter years) have PUSHED banks to make more and more risky loans since 1980. THIS is the reason why "Farm Aid" was a factor in our culture... and a contributor to the Reagan-legacy of "government equals BAD". Risky farm and small business loans made during the last years of the Carter Administration went default... and did Reagan bail them out? No, he watched the banks foreclose and tapped his feet as the music world wasted 12 hours of our lives putting on a shitty concert that did next to NOTHING to solve the problem.
This brings me to my last point... ANOTHER area where Ryan is (surprisingly enough) right on the mark... Reagan was the ONLY conservative President since Hoover.
Not the only Republican, but the only CONSERVATIVE President, as it is defined today. This is a big part of the reason why I hate the term "Reagan-conservative"... he was the ONLY one! Anything more is simply gratuitous redundancy... sheesh.
I hear you now...
"But WAIT!" you say. "What about Ike? Nixon? Ford? Bush Sr.? THEY were conservatives!"
My response?
Bullshit. Pure, uncut, unadulterated bovine fecal matter.
Ike spent more, and BORROWED more, than Truman did in TWO TERMS! Nixon was the FIRST President to advocate National Health Care! Doubt me? Proof is HERE.
Facts are facts, and Bush Jr. is damn-near as "New Deal" as Nixon or Ford were. If you define "conservative" in a way that conjures images of Reagan (and the talk-radio crowd does JUST that... every one of them), then he stands alone as the ONE and ONLY in US history.
The more I see and TRY to understand the problems the nation is facing right now, the more I am inclined to think that the FIX for the problem lies with the true "conservatives" and NOT with the more moderate Republican crowd... and we won't even discuss the liberal's plans.
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2 comments:
I guess I'm not being clear. I was pointing out a better way the money could be spent, not that it SHOULD be spent that way. Like an alternative. Oh well.
No, I understand you were simply giving an example as to a better way the money could be spent, and I'm saying that's a bad example because SPENDING MONEY AT ALL doesn't address the current problem. That's all. But rather a move to the tax and deregulation (in the specific peice of legislation I named) is what is needed in terms of leadership from the feds.
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