Category Archives: Recession
When the video, from his Countdown appearance tonight,(alert, its at the bottom of this post) is available I will post it…until then, here is RR’s post from his blog today on the topic of Bush’s tax cuts for the rich and how full of shit the rightwing nutters are on this issue:
The economy is slouching backward because consumers can’t and won’t spend enough to revive it. Congress is about to recess for the summer without doing anything to fill the gap. And it looks like the only issue it will be debating when it returns is who, if anyone, should pay more taxes next year – just the very rich, everyone, or no one? The cuts enacted by George W. Bush will expire in January, and with midterm election pending in November we’re about to be treated to months of tax demagoguery.
Here’s a guide to the perplexed.
From a strictly economic standpoint – as if economics had anything to do with this – it makes sense to preserve the Bush tax cuts at least through 2011 for the middle class. There’s no way consumers – who comprise 70 percent of the economy – will start buying again if their federal income taxes rise while they’re still struggling to repay their debts, they can’t borrow more, can no longer use their homes as ATMs, and they’re worried about keeping their jobs.
But the same logic doesn’t apply to people at the top, earning over $250K, who represent roughly 2 percent of tax filers. Restoring their marginal tax rates to what they were during the Clinton administration (36 and 39 percent) won’t inhibit their spending. That’s because they already save a large portion of what they earn, and already spend what they want to spend. (During the Clinton years the economy created 22 million net new jobs and unemployment dropped to 4 percent.)
But restoring those top marginal tax rates will help bring down the long-term debt, pulling in almost a trillion dollars of revenues over next ten years. That’s not nearly enough to make a major dent in the nation’s projected deficits, but it’s not chicken feed either. It would at least signal to financial markets we’re serious about cutting that long-term deficit – and the rest of us will chip in when the economy strengthens.
So-called supply-side economists don’t like raising taxes on anyone, of course, and argue that raising them on the well-off will slow economic growth. They say people at the top will have less incentive to work hard, invest, and invent.
Unfortunately for supply-siders, history has proven them wrong again and again. During almost three decades spanning 1951 to 1980, when America’s top marginal tax rate was between 70 and 92 percent, the nation’s average annual growth was 3.7 percent. But between 1983 and start of the Great Recession, when the top rate was far lower – ranging between 35 and 39 percent – the economy grew an average of just 3 percent per year. Supply-siders are fond of claiming that Ronald Reagan’s 1981 cuts caused the 1980s economic boom. In fact, that boom followed Reagan’s 1982 tax increase. The 1990s boom likewise was not the result of a tax cut; it came in the wake of Bill Clinton’s 1993 tax increase.
A final reason for allowing the Bush tax cut to expire for people at the top is the most basic of all. Although Wall Street’s excesses were the proximate cause of the Great Recession, its fundamental cause lay in the nation’s widening inequality. For many years, most of the gains of economic growth in America have been going to the top – leaving the nation’s vast middle class with a shrinking portion of total income. (In the 1970s, the top 1 percent received 8 to 9 percent of total income, but thereafter income concentrated so rapidly that by 2007 the top received 23.5 percent of the total.) The only way most Americans could continue to buy most of what they produced was by borrowing. But now that the debt bubble has burst – as it inevitably would – the underlying problem has reemerged.
Why make it worse? George W. Bush’s 2001 tax cut was a huge windfall for the wealthy. About 40 percent of its benefits went to the tiny sliver of Americans earning over $500,000. So rather than debate whether to end the Bush tax cuts for the top and restore the top marginal tax rates to where they were under Bill Clinton, we should be debating whether to raise the highest marginal tax rate higher than it was under Bill Clinton and use the proceeds to give the middle class a permanent tax cut.
I’m not suggesting this, mind you, but just to get the debate started: How about restoring the top rate to where it was under John F. Kennedy (76 percent), or under Dwight Eisenhower (91 percent)?
I really never re-post someone else’s entire work. But Reich makes so much sense, I hope to hell he doesn’t get pissed at me. We have conversed, via email, in the past and he gave me permission to re-post his writings…so I am using that for this specific issue. I love that man, he breaks it down for yahoo’s like moi to understand.
Beloww is Ezra Klein’ pov on the same fuckery:
How dumb is the general voting population on this horseshit? Only time will tell…
See all those happy faces in the photo above? They will all be unemployed sooner than later. From the BBC:
The world’s largest carmaker will stop production at the Fremont, California-based New United Motor Manufacturing plant in March 2010.
GM announced earlier this year that it would withdraw from the venture.
Toyota said: “Over the mid to long-term, it just would not be economically viable to continue production.”
The firm will move production to its other plants in the US and in Japan.
There are also reports circulating that Toyota is closing down a plant in Europe as well as one in Japan for at least a year.
The recession might be shrinking according to Obama and his go-to guy Bernanke, but you couldn’t tell it by looking at Toyota or Nissan’s plans they are making for plant closings this year and in 2010 and 2011.
The ‘too big to fail’ banks know the government will give them what they need to stay afloat. After all, according to Dick Durbin they run Congress. But..what if they are wrong on that? From the NYT:
But that does not necessarily mean the banks will get that money from the government. The findings, to be released Thursday by the Obama administration, suggest that the rescue money that Congress has already approved will be enough to fill the gaps. If so, the big bailouts for the banks may be over.
All of this assumes that the economy does not take another turn for the worse, which would result in even more losses at the banks — and the need for even more money to prop them up. But hopes that the tests will be a turning point in this financial crisis electrified Wall Street on Wednesday and some overseas markets the next day. Financial shares soared, lifting the broader American stock market to its highest level in four months. The Dow Jones industrial average rose 101.63, or 1.2 percent, to close at 8,512.28 Wednesday, while Japan’s Nikkei index rose more than 4 percent by midday Thursday.
Now, I could give a rat’s ass how the ‘markets’ reacted. I am really friggin tired of seeing the Dow Jones on the bottom of the screen on MSNBC all fucking day. If you have any stocks at this point in time..you can afford to wait for the upswing. It will come you know..but it might be awhile.
Did you read Timmy Geithner’s OpEd? No? Oh well, just step right up and click that linky folks!
What? You don’t give a shit how Timmy sells us another boatload of bullshit? Even if this time it’s the stress test and his version of recent history. Ok, you are forcing me to post some of his fuckery here:
The president came into office facing a deep recession and a damaged financial system. Credit had dried up, forcing businesses to lay off workers and defer investment. Families were finding it difficult to borrow to finance a new house, buy a car or pay college tuition. Without action to restore lending, we faced the prospect of a much deeper and longer recession.
President Obama confronted these problems with dramatic action to address the housing crisis and to restart credit markets that are responsible for roughly half of all business and consumer lending. The administration also initiated a program to provide a market for legacy loans and securities to help cleanse bank balance sheets. These programs are helping to repair lending channels that do not rely on banks, and will contribute to fixing the banking system itself.
However, the banking system has also needed a more direct and forceful response. Actions by Congress and the Bush administration last fall helped bring tentative stability. But when President Obama was sworn into office in January, confidence in America’s banking system remained low.
Because of concern about future losses, and the limited transparency of bank balance sheets, banks were unable to raise equity and found it difficult to borrow without government guarantees. And they were pulling back on lending to protect themselves against the possibility of a worsening recession. As a result, the economy was deprived of credit, and this caused severe damage to confidence and slowed economic activity.
It seems to me that Timmy explains things like he is talking to a ten year old. I am not ten years old. I do not need for Timmy to tell me a ‘story’.
I know what happened and when thanks to PublicIntegrity.org and ProPublica.org. I know how crappy things were when Obama took over the oval office Jan 21, 2009. I know that the Obama administration is just as good as Bush’s was..when it comes to explaining how they spend our money.
Don’t condescend to me buddy. It pisses me the hell off, and frankly, doesn’t make you look very good either.
Curtis Forrester moved into a brand-new house in Victorville last week, but there was little time to enjoy the Jacuzzi and designer kitchen. He was there only to see it destroyed.
Just a few days after his arrival, the two-story residence and three other luxurious model homes were crushed and hauled off for scrap, the latest fallout from Southern California’s real estate crash.
The homes were part of a planned 16-unit project in this community 100 miles north of Los Angeles. The Texas bank that owns the failed development decided to demolish the houses, a cheaper alternative to completing and selling them.
Forrester was hired to keep thieves away and help sell off the fixtures. “All my life I’ve been building things,” said the 59-year-old construction worker. “It’s kind of fun tearing them down.”
The Victorville demolition is one of the most dramatic ends to a bad bet made during the housing boom, but abandoned developments have become an all-too-common sight in California. Nearly 250 residential developments totaling 9,389 homes have been halted across the state, according to one research firm.
I have seen the abandoned projects all up and down Cali, both commercial and residential. San Diego seemed to have the most, or the most obvious ones. Like huge skeletons, they stand in decrepit condition, half finished or almost finished. They just walk away and take the loss I guess. Sad state of affairs in our country. Kern county is overwhelmed by this housing market bitchslap to our economy.
Let me start by saying I watch every Presidential news conference. Sorry folks but I am calling bullshit on the Presidents newest declaration. He is publicly feigning outrage at AIG because he already knows there is nothing that can be done to stop the millions being handed out to the assholes that helped make this economic mess.
It’s simply populous rhetoric on his part, designed to show that he feels our pain.
He is, after all, a politician.
I have nothing against Obama, I just think his presser was theater at its finest. A Time magazine article says it best for me:
Obama’s AIG Outrage: All Talk, No Action
In the middle of decrying the misdeeds of the financial firm AIG, President Obama cracked a joke. “Excuse me,” he said Monday, after coughing into the microphone. “I am choked up with anger here.” There were laughs all around the gilded East Room of the White House, because he didn’t sound angry at all.
The laughter, of course, did not fit the occasion, the latest in a seemingly endless stream of public events at which Washington’s political leaders work themselves into high dudgeon over the sins of financial wizards who, we are told over and over again, have messed up the world for everyone else. But then, you can only act outraged about the same thing so many times before it all starts to sound stale. These spectacles, the public rhetorical floggings, have become teleplays, as predictable as a daytime soap opera, as comforting as a wet rock. (See pictures of the top 10 scared traders.)
Obama had promised weeks ago to stop the excessive bonuses on Wall Street, at a time when the existence of the coming AIG bonuses had already been disclosed by the excellent reporting of Bloomberg News. Obama’s staff had vowed more recently that the further infusion of taxpayer money into AIG, which the federal government now controls 80% of, was appropriate and necessary. And now he was faced with the fact that his new executive compensation policy, which only applied to a narrow subset of executives at a few institutions, had been powerless to stop the worst violators at AIG from getting their undeserved payday. (See the worst business deals of 2008.)
I realize that this mess wasn’t created by Obama. I realize he is doing what he can, but damn dude, don’t play me…I ain’t stupid.