The unending (and infuriating) irony of this election will be that the Democrats won this election by first tanking the economy and then (with the aid of the MSM) blaming the hapless Republicans for it. Tom Blumer explains:
The recession, once it becomes official, will thus richly deserve designation as the POR (Pelosi-Obama-Reid) recession. Further, Obama's and the Democratic Party's performance on the economy must be benchmarked from June 1, 2008 -- not Election Day, not Inauguration Day, and not, as traditionally has been the case, from October 1 of the new president's first year in office.
Evidence of the POR triumvirate's virtually unilateral damage to the economy began appearing as early as the fourth quarter of 2007, the first quarter of negative growth in six years. The POR recession itself began in June. The historically steep downward revision in second-quarter gross domestic product (GDP) growth from an annualized 3.3% to 2.8% in the government's final September announcement was more than likely due to deterioration that occurred in the final month of the quarter.It's not at all a coincidence that June was the month in which it became crystal clear that despite sky-high oil prices, Pelosi, Obama, and Reid were hostile to the idea of drilling for more oil -- offshore or anywhere else. Pelosi insisted that "we can't drill our way out of our problems." In the speaker's world, this means that you don't drill at all. Reid declared that we have to stop using oil and coal because "it's making us sick." Obama seemed pleased that gas prices were so high, saying only that "I think that I would have preferred a gradual adjustment" instead of the sharp spike. What a guy.As would be expected, the country's businesses, investors, and consumers, never having witnessed a political party dedicate itself so completely to starving its own national economy, reacted very negatively to all of this. I said at the time that "businesses and investors are responding to their total lack of seriousness by battening down the hatches and preparing for the worst." Subsequent events have validated that observation.
As commenter Carl Pham pointed out recently, the American people bought fire insurance from an arsonist.
It really is a protection racket writ large.
I think one needs to be careful who is blamed and why. Extending oil drilling in the US would have a beneficial effect, but it is insignificant compared to the real problems in the US economy. As I see it, there is a combination of many well known and long standing problems (labor/environmental regulation, various other political factors driving up labor costs, unsupported pension liabilities, high debt burden) with new ones that cropped up either in the Clinton administration or in the response to September 11 and the burst of the dotcom bubble (easy credit, security theater). The real problems generally have bipartisan support and do not seem to be addressed by the generous bailout that's occuring now. My suspicion is that in the absence of significant culling of inefficiencies in the commercial world, we'll see yet more crises as other parts of the economy weaken.
what makes Tom Blumer an expert on anything?
He says the economy has issues due to Pelosi and Reid.
Okay, what are his credentials, what data does he have?
What makes him right on anything?
Paul Krugman is a college professor in economics and
won the Nobel Prize on trade theory.
Oil is a lot smaller part of the economy than houses. We have also had a naturally occurring economics experiment: oil prices are down and hence oil is plentiful for those who still want it. And yet there isn't much optimism that we will have a short-lived recession (if indeed the economy did not grow which is a pretty tricky calculation especially considering the dollar appreciated 30% in the last couple of months so even if it shrank a couple of percent, we can buy 30% more of the rest of the world's goods with our money). I think Greenspan and others have already accepted the surprising cause: there are improper incentives for banks to promote their own solvency especially given moral hazard.
"Paul Krugman won a nobel prize..."
So too did Yasser Arafat and Al Gore III. Which suggests that the "experts" in Stockholm know very little about their subject matter. It's called an "argument from authority," and since the authorities have shown themselves to be SO exemplary of commanding markets in the past, please pardon my skepticism now.
How about instead we play a little game. How about somebody tell me why I should be happy about more of my hard-earned money going to entities-not-myself. Explain to me how and why bankrupting my unborn grandchildren to keep people now living - who're generally not working to their full potential - in their current state of luxury, is a good idea. Tell me why I should want to bail out financiers, who not only took risky bets on loans (albeit at government insistance), but also decided that they could market their over-risking by putting all the loans, good and bad, into a financial blender and hit "puree," then sell those toxic results like so many fast-food-joint milkshakes. Tell me why I should want to bail out people who took on more debt than they could possibly afford in ten lifetimes, in order to keep up with the fictional Joneses they saw on TV. While you're at it, tell me why my money should be taken from me and spent by my spendthrift Uncle Sam on various forms of public dole that amount to nothing more than buying votes to keep morons in power, while they shirk their constitutionally-mandated duties and defer maintenance on what little public infrastructure my forebears entrusted to them.
Good luck with all that.
"Paul Krugman is a college professor in economics and won the Nobel Prize on trade theory."
And yet look at the the utter bilge he puts out at the NYT.
Thank you for playing the "Appeal to Authority" fallacy game and demonstrating once again how to not win an arguemnt.
R Anderson:
"Good points, really, frankly, the New York Banking community
screwed the pooch utterly and should be bankrupt.
Why Bush and Paulsen think they need bailing out is mind boggling.
If you can get an explanation out of them, please, do so"
As for Mr Puckett, please tell me who Tom Blumer is and what
makes him an authority to speak on anything?
As for Krugman, he is an economist, he is a PhD in trade theory and he
is qualified to argue on economics. You may disagree with him, but,
he is quite well read on this.
What makes Tom Blumer qualified on anything?
Jack, since this comment thread is no longer part of Mr. S's site since the break from MT, I don't suppose you'll ever see this. On the off chance you do, please allow the rest of us to clue you in. It is not Mr. Blumer that is the authority to whom you are appealing - it is Dr. Krugman. Whose missives in the paper and economic thories are so full of utter crap that they're often laughable - stuff of the sort that only the NYTimes and gullible rubes (such as the Nobel committee) would put any faith in them.
The whole point of the "argument from authority" fallacy is, that in the case of manmade-policy debates, there IS NO AUTHORITY. Period. Bar none. End of story. In the actual physical sciences there is experimentation - Mother Nature, God, Flying Spaghetti Monster, what have you, is the final arbiter. The ONLY authority. Do not bother us with the tripe that the "social sciences" are in fact sciences, please - when you can postulate a theory of future results using them, and quantitatively prove it, then come back with that argument. To date the only attempts to do so in economics have left a trail of broken men and shattered stock companies - see the 1997 Asian Crisis for more detail. In matters of human policy (which is all the "social sciences" amount to) there is free will, and the offhand chance that those you deem your lessers will raise their black flag and tell you to go pound sand. Which is what a lot of people are doing with respect to the news outlets - all news outlets - if circulation numbers are anything to go by.