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Paul Pless
10-10-2018, 07:13 AM
i know your a hands off guy

i'd be curious as to what effect the bush/obama bailouts had on the economy, short and long term

and specifically what your thoughts are on what would the american auto industry look like today if there had been no bailouts

i guess i'd also like to know what you think the short and long term economic prospects would have been without the wall street bailouts as well


See, the "winning" story President Trump tells isn't quite as it appears at his rallies or on Fox News (same thing). We've basically been on one path since the end of the recession. And if we looked at other industrialized countries, their growth, tax receipts and spending trends look almost exactly the same as ours. It's the market that's driving this, not Trump, not Obama, not the Queen of England. Trump is just along for the ride, along with every other President and Prime Minister.

Norman Bernstein
10-10-2018, 07:37 AM
I'd be curious to hear his answer, as well.

C. Ross
10-10-2018, 08:39 AM
I think you picked the spots where Obama and Bush did exactly what they needed to make sure those parts of the economy didn’t collapse. I’d also add in the real success story of the Great Recession, which was masterful management of the credit market by the Fed.

My main point is that the best research says governments cannot affect business cycles. The most foundational work was done by Nobel Laureates Prescott and Kydland.

I don’t mean government are completely irrelevant, far from it, but this quarter or this year’s GDP change has almost nothing to do with whoever is in the Oval Office. Over decades, a consistent policy can make a difference. (In some cases not - Japan has been underperforming for almost 30 years, mostly because Japanese people would rather save than spend and companies are still happier in joint keretsu protected market agreements than acting more entrepreneurially. Every Japanese government has tried to change that, without much effect.)

Do I think Obama and Bush and the Fed should have sat on their hands in 2008-2009? Absolutely not.

Do I think we would have emerged out of the recession without a big stimulus bill? Sure, look at the countries that deficit spent more (like us) and less (like Germany). We all got out, and it’s hard to prove correlation between stimulus and recovery rate.

Do I think we have functioning auto and credit industries because of “cash for clunkers” and coordinated action on finance management between two White Houses and the Fed, and receivership of Freddie Mac and Freddie Mae? Absolutely. There was some brilliance there.

Short term industry or market-specific crisis? Governments should act effectively and quickly.

Short term economic downturn? Act with caution, almost exclusively to protect those hurt, and not to turn the economy around. (This us the German model - unemployment hurts less there than here.) Have very low expectations that interventions will actually do things like restore employment. Mainly let the markets heal themselves. Monetary policy has proven more effective in the last few decades than fiscal policy.

Long-term stimulus? A fools errand. Invest in education, healthy communities, infrastructure, science and technology, and promote a culture of entrepreneurshi. Congress and Presidents didn’t create Silicon Valley, but investments in university research, research grants and a hands off regulatory environment made it possible. But don’t expect that a governmental intervention can change the next quarter’s or next year’s GDP or jobs number.

This is the RINO / Deep State playbook. It’s what really happens by default while politicians dicker. I’d sure like to see more investment in social capital though. We’re falling behind.

Norman Bernstein
10-10-2018, 08:54 AM
I think you picked the spots where Obama and Bush did exactly what they needed to make sure those parts of the economy didn’t collapse. I’d also add in the real success story of the Great Recession, which was masterful management of the credit market by the Fed....

I'm not sure if you'd agree... but I think that the power of the Presidency, with respect to economic cycles, is mostly limited to the ways in which a President could do some significant damage.

I'm not arguing that actions by Bush and Obama didn't help somewhat; I believe they did, to a small degree. I also believe that sudden recessions owe their existence to bad economic policies... in the case of the dot com bubble burst, as well as the mortgage bubble burst, it's clear to me that irresponsible and lax regulation were big contributing factors.

I would definitely agree that a 'stimulus' is generally a bad idea... up to the point where government has no other choice. In that case, it's a bit like a purgative: you know it's going to be unpleasant, but it will be over soon, and you'll eventually feel better.

C. Ross
10-10-2018, 09:27 AM
I agree Norm. I was getting wordy enough but would have said that.

I think President Bush’s invasion of Iraq will have negative effects on America for generations, including lingering economic drain.

I think the Obama stimulus debt (not counting the recession debt, which was the market’s doing and not his) is a problem.

I think President Trump’s disastrous isolationist and mercantilist policies will really drag down the economy. Fortunately a successor can undo much of the damage quickly, though it’ll take a long time to be trusted again in any multinational, non-transactional settings.

Canoez
10-10-2018, 09:40 AM
I agree Norm. I was getting wordy enough but would have said that.

I think President Bushís invasion of Iraq will have negative effects on America for generations, including lingering economic drain.

I think the Obama stimulus debt (not counting the recession debt, which was the marketís doing and not his) is a problem.

I think President Trumpís disastrous isolationist and mercantilist policies will really drag down the economy. Fortunately a successor can undo much of the damage quickly, though itíll take a long time to be trusted again in any multinational, non-transactional settings.

...along with the Bush tax cuts, Obama continuing those cuts, Trump instituting a new set of tax cuts...

We've repeatedly been shown that trickle-down economic theory is one of the biggest lies made by a political party and repeatedly pushed upon the nation in the face of evidence to the contrary.

Also, we continue to deficit spend at an unsustainable rate - even with our large GDP. At some point, the bill comes due.

From the perspective that I'm a fiscal conservative - you need to pay for what you spend - our government spends like drunken sailors.

C. Ross
10-10-2018, 10:00 AM
I think we spend way too much on defense, and we have no coherent health care policy which would improve Cust if health care.

If we addressed those issues the tax cuts would have been fiscally conservative and prudent.

Trickle down fails to generate more benefit than the cost of tax cutting. An equally untenable position from the left is stimulus spending. Neither are more than a temporary sugar rush. Better to have a regular balanced diet of spending to meet needs not to stimulate the economy (I’d favor more social capital investments), taxes sufficient to pay our bills not to stimulate the economy.

So boring. So RINO / Deep State. Buddha tells us to take the Middle Way. Bring it on.

Canoez
10-10-2018, 10:01 AM
Buddha tells us to take the Middle Way. Bring it on.

...

Paul Pless
10-10-2018, 10:02 AM
right there with you cris
the only big thing that i would add is it would be nice to have a saner approach to energy policy


I think we spend way too much on defense, and we have no coherent health care policy which would improve Cust if health care.

If we addressed those issues the tax cuts would have been fiscally conservative and prudent.

Trickle down fails to generate more benefit than the cost of tax cutting. An equally untenable position from the left is stimulus spending. Neither are more than a temporary sugar rush. Better to have a regular balanced diet of spending to meet needs not to stimulate the economy (Iíd favor more social capital investments), taxes sufficient to pay our bills not to stimulate the economy.

So boring. So RINO / Deep State. Buddha tells us to take the Middle Way. Bring it on.

C. Ross
10-10-2018, 12:05 PM
Energy policy? Global climate change policy?

Those are years away.

Ill just settle for fewer wars and keeping the wheels on the wagon.