Time to panic? You Betcha.

By Stephanie Kelton

Earlier this week, President Obama talked about the weakening state of the economy, telling us that he’s not worried about a double-dip recession and that the nation should “not panic.” It’s hard to imagine a more alarming assessment at this juncture.

The recovery is faltering. Our economy is growing at annual rate of just 1.8 percent. Manufacturing just grew at its slowest pace in 20 months. More than 44 million Americans – one in seven – rely on food stamps. Employers hired only 54,000 new workers in May, the lowest number in eight months. Jobless claims increased to 427,000 in the week ended June 4. The unemployment rate rose to 9.1 percent. Nearly half of all unemployed Americans have been without work for more than 6 months. About 25% of all teenagers who are looking for work are unemployed. Eight-and-a-half million Americans are underemployed – i.e. working part-time because their hours have been cut or because they can’t find full-time work. There are, on average, 4.6 unemployed people for every 1 job opening. And even if all the open positions were filled, there would still be 10.7 million people looking for work.

The Case-Shiller index shows that the housing market has already double-dipped.

And, because of the huge shadow inventory of yet-to-be-foreclosed homes, Robert Shiller, a co-creator of the index, thinks home prices could easily fall another 15-25% before bottoming out. If he’s right – and I suspect he is – this spells the end of the recovery. As prices continue to decline they create hidden losses elsewhere in the economy, hurting not just homeowners but the financial institutions that hold their mortgages. The list goes on and on.

These are not, as Obama said, “headwinds” that will slow the pace of our recovery. They are gale force winds that will push millions of families into poverty and thousands of business into bankruptcy.

There is a way out, but it seems unlikely that Congress and the White House will work together to do what’s necessary to turn things around.  Why?  Because a recent poll shows that 59 percent of the public disapproves of the president’s handling of the economy.  And Republicans smell blood.  They know that since WWII no president has been re-elected with unemployment above 7.2 percent, so they see Harry Hard Luck and Sally Sob Story as their best chance at reclaiming the White House in 2012.  It’s a victory the Republicans have been masterfully engineering since February 2009, when they succeeded in restricting the size and scope of the American Recovery and Reinvestment Act (ARRA).
Some of us saw this coming.  For example, Jamie Galbraith and Robert Reich warned, on a panel I organized in January 2009, that the stimulus package needed to be at least $1.3 trillion in order to create the conditions for a sustainable recovery.  Anything shy of that, they worried, would fail to sufficiently improve the economy, making Keynesian economics the subject of ridicule and scorn.
But it’s easy to see why the $787 billion package we ended up with didn’t do the trick.  Remember that the stimulus didn’t take effect all at once – it was spread out over a three-year period.  And while the left hand of the federal government was trying to rev up the economy with increased spending, the right hand of the private sector (together with state and local governments) was dutifully stomping on the breaks.  Just consider the fact that bank lending declined by $587 billion in 2009 alone – the biggest one-year drop since the 1940s.  That’s a $587 billion hole that businesses and households created just as the stimulus was rolling out the first $200 billion or so.  ARRA was the right medicine, but it was administered in the wrong dosage, and this became clear within months of its passage.

In July 2009, I wrote a post entitled, “Gift-Wrapping the White House for the GOP.” In it, I said:

“If President Obama wants a second term, he must join the growing chorus of voices calling for another stimulus and press forward with an ambitious program to create jobs and halt the foreclosure crisis.”

Two years later, both crises are still with us, and the election is just around the corner.
Meanwhile, a new Washington Post-ABC News poll shows former Massachusetts Governor Mitt Romney with a slight edge in a hypothetical race against President Obama, and Howard Dean is warning that without a marked improvement in the economy, even Sarah Palin could clobber Obama in 2012.
To avoid this, President Obama must get his economics right.  Unfortunately, he’s too busy fanning the flames of the phony debt crisis and complaining that the discouraging data is hampering the recovery because it “affects consumer confidence, and it affects business confidence.” But here’s the thing – the recovery isn’t going to be driven by a change in our mentality.  It’s going to be driven by a change in our reality.
So here’s what he needs to do – stop talking about the deficit.  It has always been his Achilles’ heel.  The US is not broke and cannot go bankrupt.  Let go of that myth, and deliver one of those jaw-dropping, awe-inspiring speeches of yesteryear.  Tell the American people that he’s calling on the Republicans to help him enact the most sweeping tax relief since Ronald Reagan was in office — a full payroll tax holiday for every employee and every employer in the nation.  Tell us that you understand that sales create jobs, and income creates sales.  Tell us that families and small businesses don’t have enough income to dig us out of the ditch we’re still in.  Tell us that you will not withhold a dime from our paychecks until cash registers across the nation are chiming and unemployment has fallen below 5 percent.  Tell us before it’s too late.

33 Responses to Time to panic? You Betcha.

  1. Then send this and your other articles by FedEx to the First Lady.

  2. There is some evidence that the President has at least begun to see the lurch his economic "team" has literally left him in. The last of his economists, Austen Goolsbee, having now decamped, in the wake of Larry Summers and Christina Rhomer. Even Jared Bernstein has left the administration, going from the Vice President's staff to some think tank. The bankers now have the White House to themselves, and we needn't doubt what their advice will be.Still, the President himself has rather shamelessly dusted off portions of the old Rhomer plan and floats the occasional trial balloon. He knows more than he lets on how badly the economy is hurting his poll numbers. And he has a right to feel betrayed – by Summers and Geithner in particular. They promised the boss that their Republican-friendly mini-stimulus would ignite a solid, self-sustaining recovery by now, and the President assumed he would coast to an easy victory in 2012 on the strength of it. So he focused his attention on his own future legacy and "did" health care.I think we all need to prepare for the next round of Republican one-party rule in Washington. The Democrats are so feckless and factionalized they can't get anything worthwhile done anyway. My personal opinion is that there is much more useful work to be done at the state level now. But then, I live in Wisconsin.

  3. Tax cuts? Tell me, what's the tax break on a $0 paycheck? The American public is literally tapped out, and so you call for tax cuts in hopes of reinflating the debt bubble. Priceless!Obama was little more than a GOP stooge in the first place, meant only as a placeholder to absorb public angst in the wake of 8 years of the Shrub. Job well done! Now bring back the GOP in earnest. I like my poison straight up with no chaser.

  4. It would not be a big surprise if President Obama were to change his official political affiliation from Democrat to Republican. He appears to depend greatly on input from his Treasury Secretary Geithner and his TBTF-bankster backers and to only very rarely depend upon input from non-Republican sympathizers whether one considers derficit= 'defense' spending priorities, individual privacy/liberty, 'homeland' security, presidential prerogatives, etc. My guess is that such consideration may have played an important role in Goolseby's (sic) decision to jump ship. Additionally, Obama does not seem to face any significant opposition from members of the Democrat Party and he should have no problem raising lots of formerly-taxpayers funds which were given to his natural bankster-constituency.

  5. The day he announced Larry Summers would be running the economic policy I knew we were screwed. Obama is toast. I'm seriously concerned that if he won reelection he'd think it was something wonderful that he did rather than the fact that the Republicans are trying to finish off the Government for good and the people be damned.Obama is nothing but Bush lite: now with 10% less regulatory capture! My question is: where is the serious primary challenger? There can be no other plan.

  6. Obama is hewing to his principles (forget the rhetoric, that's for chumps), the first and foremost of which is to ensure the rich get wealthy, even at the expense of his re-election. What a man, a true profile in courage.

  7. "The US is not broke and cannot go bankrupt."As a CPA who actually reads the GAO's annual report (found here: http://www.gao.gov/press/financial_report_2010dec21.html — Note the GAO "cannot render an opinion on the 2010 consolidated financial statements of the federal government, because of widespread material internal control weaknesses, significant uncertainties, and other limitations"), you could not be more incorrect.A deflationary debt crunch cannot be solved with more debt. The solution? Defaults and major bank failures need to occur to rid the system of poor investments that are continuing to sour balance sheets. An economic system that does not allow failure is not a free-market.

  8. You were right on target until the last paragraph especially "the recovery isn’t going to be driven by a change in our mentality. It’s going to be driven by a change in our reality." But the last paragraph is like Ronald Regan's line to Carter "wheres the beef?" Payroll tax holidays are fine but they are a drop in the bucket to helping grow income because for a majority of persons these saving will go to paying down their debt and not going back into the economy. It is going to take real political will on both the Presidents part and congress to develop policies that are going to create jobs. This does not mean another stimulus package where only very few benefit. It is going to take spending on training programs for workers to become qualified for the jobs that are being unfilled. It is going to take a change in tax policy that favors companies to produce their goods outside of the US. It is going to have to come up with a plan to reduce the burden of debt on the consumer and stop favoring the creditors whose reckless behavior helped create the financial bubble. It is going to take the President to actually have a spine to do the right thing for the everyday people of this country instead of catering to those persons who are going to fund his reelection campaign. His recent comments on the economy are scary and are the same mumbo jumbo that Presidents and other politicians have been saying for years. Deny deny deny..the economy isn't too bad…we are working diligently to get it turned around…blah blah blah.. I guess maybe you are right the first step towards fixing the problem is taking accountability and until the President does this our economy will be in the same sorry state where we now are starting to hear the rhetoric where the current employment levels are now the "new normal". Hogwash. This is just another attempt to redirect the blame from the politicians and the financial elite to the unemployed. Its their fault for not having the skills that are now needed in the 21st century. It has nothing to do with the economic policies that have been enacted over the years beginning with Regan that helped the "FIRE" industries become such a wealth generator for the top 5% of Americans while a majority of everyone else has seen their actual wages remain the same or decline. On no it has nothing to with bailing out the TBTF banks but are unwilling to help provide the funding for infrastructure to help grow jobs. It is all the fault of us. The problem with President going out and giving another speech is that he doesn't have any credibility left. Like you said the recovery is going to happen because of talk it is going to be driven by a change in our reality

  9. I'm seeing a good bit of blowback on the tax cut suggestion as very right wing. Perhaps it would help to note that many MMTers consider the FICA tax (both sides!) to be an absolutely terrible tax at ANY time, not just during a recession. Personally, I'd forget the "holiday" aspect with regards to FICA. Just get rid of it entirely (and shoot the first Republican that asked how we'd replace the "funding". 🙂

  10. How about we really resolve the crisis: hang every Bankster from the neares lamppost. Stop the looting and start prosecuting, so to speak.This post fails to address in any way the real root causes of the present crisis: fraud. Perpertrated by the nation's finest "Investment Banksters" and other black holes of criminality like AIG etc.Not to menton 30 years of failed policies, aka neo-Keynesianism, where at the first sign of any troubles, "Stimulus" is applied.The solution to this problem is to round up every financial terrorist on Wall St, seize their assets under the RICO Act, wind up TBTF black-holes of shadow financial bankruptcy, and re-instate laws that would have prevented it, like Glass-Steagall. And execute all the "liberal economists" who think "stimulus" will work, when the problems are so much larger and deeply embedded structurally.But instead we get the clueless calling for more "stimulus", which always stimulates Banksters but does nothing for Main St. And when it inevitably fails to do anything for the real economy, calling for more, more, more.But I suppose you are OK with your nation being run by oligarchic kleptocrats, the finest Government lobbyist bribe money can buy. Since you didn't even mention these obvious structural deficiencies.And despite your rather vacuous assertions like "The US is not broke and cannot go bankrupt." Debt does matter, and when it get's too massive, you become Greece, in short order.Let's tell it like it is: Obama is spineless, a political worm prostrate before his financier masters. The only "Change" he deliverd was in the choice of where he plays golf several times a week. Reps & Dems are just 2 sides of the same clipped corruption coin.The plain fact is that deficit financing has run it's course, and Budgets must be brought into line with revenue. That means that the 12%-25% (depending on how you calculate it) of present GDP that flows from Government deficit financing (aka charging up the VISA card) cannot be sustained any longer, and there is only 1 way to balance a Budget that is out of control: raise taxes and cut spending.I'd say fron the comments here your readers can recognize the real problems, while you just avoid mentioning them.

  11. First, "tax cuts?" Yes. The House isn't going to support additional spending. No way, no how. Would it help? You betcha! But it ain't in the cards. Politically, tax cuts are the only policy the Republicans could, potentially, support — of course they want the Pawlenty kind, not the kind that help the middle-class. A full payroll tax holiday will allow Americans to: deleverage (paying down debt is a good thing), save a bit of money, have some extra cash to spend. Families that were putting off the purchase of a big-ticket item might take the plunge. Families who are struggling to make their mortgage payment might just avoid foreclosure. Look, the payroll tax holiday will allow a person making $50,000/yr to keep an extra $250 or so every month. And it will improve the bottom line of employers too — the Small Business Association and the US Chamber should mobilize their lobbyists post haste! As private sector balance sheets begin to improve and spending rises, hiring will bounce back in earnest. But the spending has to take place first. And that's where the extra income becomes important.Finally, to the accountant. You are just wrong. The US government is the ISSUER of its currency. It spends — as Chairman Bernanke explained — by crediting bank accounts. Greece, Ireland, Spain, etc. are USERS of their currency. They can (and are) go(ing) bankrupt. They cannot make payments unless they can acquire euros FIRST. The US government can ALWAYS meet any dollar-denominated obligation on time and in full. It cannot be forced into bankruptcy. It does not need a "cash flow" in order to spend. If you read this blog, you will find hundreds of posts that explain why this is so.

  12. It is not the size of the stimulus plan but rather the contents that would be important. Furthermore we can not tax cut our way out of this crisis even if that tax cut is to the most vulnerable earners in our society. We are not going to get anywhere else if we follow the same pathway that we followed to get us here in the first place. We need an investment plan that makes this country more energy, water, and resource efficient, rolling out clean/renewable technologies that have been demonstrated to work, while supporting those that have not. This healthcare crisis needs to be handled and we need to seriously curb speculation in the markets. Medicare buy-in, bulk pharmaceutical bargaining, increasing capital gains to historic rates, tobin tax, closing loopholes, and higher rates on top earners would be a good step. No one has incentive to invest in their business if they can throw it in the market and make money at a lower tax rate there. We need to get out of these two damn wars and decriminalize, curbing military and prison spending significantly, while returning money to social safety nets, science, and education programs where it should be. Expand the corps programs and integrate univeral specialized service corps for students that want real federal student loan debt relief in exchange for work in healthcare, education, engineering, and international development. A carbon tax whose revenues would be recycled into green programs nationwide and support for community investment financial institutions, home energy efficiency programs, would also be beneficial. There you go that is the framework for a stimulus plan. But, before all that we seriously need political reform in this country reducing corporate, lobbyist, PAC influence, and the revolving door/golden parachute.

  13. Paul Harvey [in one of his last broadcasts before he died] laid out the size of the cash injection necessary to a recovery.4 trillion was stolen by the banksters.. thats 4 TRILLIONgone! … in the pockets of the international bankers.Where is Robespierre? When and where do the Jacobins meet?American is yearning for a hangin judge… which ever party produces the new Robespierre… complete with speedy trials and executions… that's the party that will prevail.Washington insiders don't get it.WE WANT BLOOD

  14. I was expecting something shallow that I would disagree with and instead I find that I would recommend EXACTLY the same thing, but on a permanent basis. Eliminate the (regressive, hate-the-poor) payroll tax. Pay it out of general revenues since we aren't treating it as a trust fund, but spending the FICA proceeds (and replacing them with IOUs that will need some other tax to repay later). I would eliminate all taxes on WAGES for individuals on the first $30k-$50k or more – one HUGE standard deduction plus huge credits for dependents (and expand the definition of dependent) – it hasn't been adjusted for inflation for decades. Make student loan and credit card interest deductible (anything that can't be discharged in standard bankruptcy).I would do something similar for corporations – a large "standard deduction", but let them put money back into their plant – but only deduct costs paid in the USA.Also make any losses in IRAs or 401ks – as well as any capital losses completely deductable, not just $3000/yr.But this will not happen.Politicians want to be there at the ribbon cutting in front of the new total-tax-break building and announce they "created" 500 jobs, while the taxes in the county or state go up and kill 1000 jobs, but the lost jobs dispersed and the new ones are concentrated. This is what "stimulus" always ends up as. More corporate welfare to the connected cronies. Give stimulus to individuals, particularly workers and small employers. Let the government pay the costs of their own regulations – that might be enough to encourage small business. But then the boom will be healthy but dispersed so no ribbon cutting ceremonies and speeches about how it was ME who was responsible.

  15. The payroll tax holiday is a 2nd, 3rd, maybe not even the 4th best option, but it is the only viable option (with the Republicans in control of the House). In July 2009 — when the Democrats had the power to push through a more ambitious agenda, I posted a Twelve-Step Plan for Economic Recovery at http://neweconomicperspectives.blogspot.com/2009/07/twelve-step-program-for-economic.htmlIt said:1. Admit that the real economy is powerless against a de-regulated and de-supervised financial system2. Recognize that the fiscal powers of the federal government can restore stability3. Ignore the debt-to-GDP ratio; allow it to drift to whatever value is consistent with an economic recovery and a return to high employment4. Enact a full payroll tax holiday by setting employer and employee FICA contributions to zero5. Provide $1,000 per resident to state governments to help them stabilize projected budget shortfalls6. Commit $2.5 trillion to restore our nation’s crumbling infrastructure and build a modern energy superhighway to facilitate expanded use of renewable energy, reduce greenhouse gas emissions and lessen our dependence on fossil fuels7. Downsize the financial system; reduce the size of banks to the point that they no longer pose systemic risk8. Ban the securitization of non-prime loans9. Determine the real worth of bank assets; instruct the U.S. Treasury to conduct a survey of the underlying loan tapes and require banks to aggressively mark-to-market10. Stabilize the housing market by creating a Home Owners’ Loan Corporation and bestow upon it a full range of powers, including renegotiation and rental-conversions, as deemed appropriate in each case11. Announce a job guarantee program (like the WPA) to provide employment and income to the millions of Americans who will not find jobs in the private sector even after the economy recovers12. Carry these messages to elected officials and urge them to practice these principles in all our affairsIt’s too late for all of this. The crisis has been “wasted”. The payroll-tax holiday remains the most viable option on the list.

  16. Obama has taken action like a very famous Republican, Herbert Hoover. It's time we call a Republican a Republican. He can call himself a Democrat, just as I can call my self a cat. Meeow. Meeow. See, I even sound like a cat. I must be a cat. Hear that dog barking in the background? He says I'm a cat too.Obama is the best false-flag operation ever undertaken. Google "CIA, Obama and BIC" Geitner is the final nail in the coffin.

  17. Obama does not have unilateral power to implement policies. He can submit proposals, but they have to be approved by Congress, a majority of which is against deficit spending. Congress was installed by the voting public. This is what the voters have elected, and for whatever reason, continue to support candidates who oppose Obama's attempts at reform. Americans are getting what they wished for.

  18. You're repeating the same error as virtually all have — solving a solvency problem with more liquidity. The old saying is: "Give a man a fish and you feed him for a day. But teach how to fish and you feed him for a lifetime". What does you tax holiday do besides pass out more fish. Robert Reich has the proper analysis. The middle class has been decimated because incomes have drastically shrunk. Passing out fish will not help change that. I have no objection to helping those in need, but this is about fixing the economy. One of two things has to happen and it is only because it is a pick your poison dilemma that we have reached analysis paralysis. A leader (I doubt it can be Obama but that's another matter) must say what most people know. The middle class must be allowed to earn more. (Which will certainly mean inflation.) Or prices of virtually everything must fall. (Which will certainly mean deflation.) No matter what the student of the Great Depression, Ben Bernanke, thinks, there are no other choices. If he continues to be fixated on avoiding depression, events will eventually overwhelm us and it will happen on its own. The problem that most do not understand is that when you get to the "pick your poison" stage, inflation is the better choice for the middle class as long as their incomes rise disproportionally, and, as Reich correctly points out, that is what must happen. He talks about the period from 1970 to today as the time when income gains were transferred from the middle class to the most wealthy (disproportionately in their favor).The answer is to turn that around. The problem is that over the short run it will involve the wealthiest group to be subjected to diminished buying power and they just aren't going to allow that to happen. Here's how it works: We stop buying stuff from the Chinese. We gear up to make own stuff. (That's going to take a lot of cash but we can print up all we need) This will cause inflation but peoples incomes will rise to offset it. The machine will again eventually reach equilibrium. And the best part is that, if policies are carefully designed and monitored, at the end of the day, even if nothing else happens, we will have a ton of good American made stuff to pass on the those that follow. The path we are on is going to lead to most of us doing each others laundry. The bottom line is that you can pooh pooh my ideas but, the fact remains, we will be engaged in analysis paralysis forever until we admit to ourselves the cold hard truth. Inflation or deflation, pick your poison. The faster we do, the faster we get on the other side of this. My vote is we must re-direct incomes back to the middle class disproportionately and that will cause inflation. So get over it!

  19. Bizarre. How is allowing people to keep the money they're earning from WORKING, giving away fish? They've already learned how to fish. They're fishing. They just can't afford the trout.

  20. "The US is not broke and cannot go bankrupt. Let go of that myth,…"what planet is she from? ms. kelton has learned nothing in the last three years. there is only one balance sheet in the US. its the household balance sheet. all spending (and the liability for it) eventually settles there. please stop pretending that government spending offsets anything. its doesn't, it simply confounds the household healing process by adding future debt to households via implied tax increases. it will only make things worse, prolonging the agony down the road. ask the japanese for crying out loud.

  21. Quick comment on so many different people posting as "Anonymous" – it makes the thread a little hard to follow. Could folks please pick a handle and stick to it?Just pick "Name/URL as a type and put in any name. You can leave the URL box blank.

  22. Can someone rebut this, I know it's BS but being picked up by many on the right and I don't see anything sane on a Google Blog search,pretty funny isn't it as China has been propping up the dollar for years:http://ca.news.yahoo.com/china-ratings-house-says-us-defaulting-report-054309883.html"Washington had[has] already defaulted on its loans by allowing the dollar to weaken against other currencies — eroding the wealth of creditors including China, Guan said."

  23. I think too many MMT'ers are calling for payroll tax cuts versus a federal jobs program or even a helicopter drop of money. The unemployed and retired don't pay payroll tax and so you're missing 2 groups that need help.

  24. The tax cuts will be wasted buying Chinese shit and will do nothing to help our economy except kick the can down the road. We need incentives to invest in America and create good jobs for people to make things that last. (Roads, bridges, high speed transportation, factories, etc.) Our businesses have an incentive to invest anywhere but in the U.S. I am a CPA and I know what businesses really do instead of theories about what they do. When the effective corporate tax rates were at their highest, employees were hired and trained as an investment because their cost was deductible and it proved to be a good investment over and over. (Don't any of you amateurs tell me I don't know what I'm talking about because the nominal corporate tax rate has very little bearing on the effective tax rate) There has been a huge — I say again huge — decrease in the effective corporate tax rate and the information that the public gets is pure BS. If a corporation has a marginal effective tax rate of 50%, that means that every employee comes at an automatic 50% discount. I saw this every day in the real world, and all of the academics and amateurs that write on blogs like this, are serving as unpaid lobbyists for the corps. We need a huge effective tax rate for corporations and to close their offshore shenanigans. Then reinstate incentives to those who invest in America and create good paying jobs. (A good paying job is one where the employee can afford to live reasonably well, like our parents, without resorting to speculation and crime.) This policy was tried and worked until the 1980's and that is no theory. The only theory involved is from those who want to defend the status quo and claim that things are somehow different today (you know, "this time its different). As R. Regan said, "an economist is someone who sees something work in real life and sets out to prove that it is theoretically impossible". Higher effective corporate rates on all corporate income, with incentives for investing in the U.S. and creating good paying jobs has worked in the real world, and that is not a theory.

  25. CPA — give me a break. I happen to OWN a small business, so drop the amateur bit. I don't need customers "in theory," I need them in practice. And you can dangle all the useless carrots you want — lower tax rates, accelerated depreciation, etc. — because until I feel it at the cash register, I'm not going to invest in new equipment or add a single person to my workforce.

  26. If employment is driven by sales, how is employer-side payroll tax holiday going to help? There is a logical fallacy here. Already business profits are quite high and that does not encourage more hiring. Unless higher profits would drive up wages.

  27. PZ, You're talking about the profits of a a relatively small number of large corporations. The coffers of small businesses — the engines of growth — are not "quite high".

  28. Franke811,If the U.S. government had ever announced a currency peg (or any other fixed-exchange-rate promise), then letting the dollar depreciate in terms of the yuan could be considered a form of "default". When FDR voided the gold clause in all contracts in 1933, it constituted this kind of default. In fact, however, the U.S. repudiated the last vestiges of the Bretton Woods fixed-exchange-rate system in 1973.It is a symptom of how unhinged the right has become that they deliberately dangle the prospect of an unforced default on U.S. debt before the cameras. But we all know the difference between not pying one's bills and being *unable* to pay one's bills.

  29. Stephanie, nice article, but why give the GOP credit for undermining ARRA, when Larry Summers reportedly never let Obama see Romer’s most forceful proposal (the one that most economists with half a clue felt was the minimum deficit required for a sustainable recovery)? Let’s not forget that the ‘New Democrats’ who’ve been running the party’s policies for twenty years are still neo-liberals, like most GOP economists, only with a slightly-less-malformed social conscience (and an almost magical ability to not see the harm they do). If Obama winds up a single-term president, which seems very possible, then the Clinton re-treads he hired and the Bob Rubin legacy he embraced out of ignorance will have been his undoing, not the GOP (which, if we're honest, is not presently capable of putting up a candidate who could beat him otherwise). Apart from the lack of a compelling opponent, there are some eerie echoes of Carter, who finally (sort of) saw the light and cut some taxes, which seemed to help the economy, but too late to help his reelection bid. Obama will have to go pretty maverick (as opposed to rogue? Or rouge??) to convince the electorate he's serious about getting people back to work. Not exactly his style, and it would mean back-tracking from all the sensible-sounding but stupid comparisons of households and the federal govt.

  30. Frankie811 there is some intelligent commentary on that piece (including mine 🙂 ) here. You give reason yourself why this is a comically ridiculous statement. A speculator props something up, and then is surprised that it falls when he removes the props, and claims he is a victim of default. The Hunt Brothers should have sued everyone who owned silver for not keeping it as pricey as it was at the top of their attempted market cornering! Not international currency exchange rates but low domestic inflation (maintaining convertibility levels of the currency into real assets) is a reasonable international duty the US owes China. And because depressions are contagious, the US owes China the amount of dollar-printing necessary to offset the deflationary effect of Chinese hoarding of US currency. The exact reverse of complaints about stimulus.

  31. I fear that the cure for this deep recession will be depression. Welcome to 1937.

  32. you are right… you can also find jobs opening details online.

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