Economics

Obama: "Only government can break the vicious cycles that are crippling our economy"

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Barack Obama speaketh on the troubles facing the republic:

We cannot depend on government alone to create jobs or long-term growth, but at this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe. Only government can break the vicious cycles that are crippling our economy—where a lack of spending leads to lost jobs which leads to even less spending; where an inability to lend and borrow stops growth and leads to even less credit.

Read more from the president-elect's remarks that will be aired later today. "If nothing is done, this recession could linger for years," he says. And yes, "the cost of this plan will be considerable."

But if people and businesses can't borrow and spend on terms disconnected from actual market forces, then how are we going to get into the next cycle where people and businesses borrow and spend too much?

You know, the very era that Obama declaimed in a speech late last year:

Politicians spent money they didn't have. Lenders tricked people into buying homes they couldn't afford and some folks knew they couldn't afford them and bought them anyway.

We've lived through an era of easy money, in which we were allowed and even encouraged to spend without limits; to borrow instead of save.

As always, the answer to the problems caused by easy money will be easier money. Now and forever, amen. The important thing is that we don't just stand, we do something. I'm about to enter a space pod timed to wake up in the year 2525 (if man is still alive). Tap on the container earlier when the government actually announces the crisis is done and public-sector spending can return to, I don't know, to the obscene levels pioneered by George W. Bush.

As you ponder the effect of Obama's "new New Deal," think about the effects of FDR's:

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  1. “Lenders tricked people into buying homes they couldn’t afford
    and some folks knew they couldn’t afford them”

    Senator Dodd said the same thing yesterday in an interview with Chris Matthews, who didn’t interrupt him once. Except Dodd left out the part about people buying things they couldn’t afford. He said the entire mess was due to “predatory lenders.” Evidently there were packs of these predatory lenders roaming the country and attacking renters, or something. I din’t really understand everything he said, but I’m sure Mr. Dodd, being a senator and all, is on top of it, and has the nation’s best interests in mind.

  2. Everybody knows the economy is sick and requires attention. The government is the only doctor that can fix it.

    Why deny it?

  3. The troll has lost a step.

  4. Keep your eye government payrolls under Obama. I sense an attempted explosion of governmental hiring. This man’s whole theme is to build support for himself at all turns, every waking moment of every day. His 2012 campaign started of Nov. 5th, 2008. Nothing builds support like doling out massive amounts of government jobs. That also kills two birds with stone: It builds support, and adds jobs to the BLS statistics. He may not be able to pull it off if watchdog groups act independently and do their job, but he sure as heck will try. Watch the numbers, don’t be swayed by the charisma.

  5. So let me get the process down here.

    1) Government creates a series of regulations, distorting normal market responses.

    2) Government doesn’t get the response they want from said regulations, and throws more money behind them.

    3) The predictable consequences of said interference come to roost, resulting in economic weakness of some form or other.

    4) Government officials tell us that the system as it is is hopelessly broken… and want our support to pass more market-distorting regulation “for the greater good”.

    Either I missed a step, or this whole process is simply a money-grabbing circle jerk by the government. What sort of fools do they take the American people for? (Pretty big fools, seems like… can’t argue that logic, sadly)

  6. The Right Wing Establishment is already trying to wall off Obama from the people. Have you seen the new limo? Must take a whole oil refinery to run that thing. They are cutting off all the roads into DC for the innaugration too. Talk about spoiling the day after MLK day.

  7. What sort of fools…

    Overweight, gullible, greedy, envious, troll-like ones?

  8. I saw an astounding article on CNNMoney yesterday explaining why Social Security isn’t a Ponzi scheme:

    1. Everybody knows how Social Security works, so therefore it isn’t a fraud.
    2. Its payouts are low enough and “investing” population large enough that it is more sustainable than most Ponzi schemes.

    In other words:
    1. Social security isn’t a Ponzi scheme because people are too stupid to recognize that it is.
    2. Social Security will last longer than private Ponzi schemes, so it’s totally different.

  9. Inaugration upside, public transportation will finally be used at near design capacity. Many more people will be able to see that the metrorail system is superior to their gas guzzler boxes.

  10. “Bold, persistant experimentation”

    I think this needs to be said every time Obama proposes a new program to add a new government job factory.

  11. Watt,

    It is not a Pinzi scheme, but people like you sure are Patseys of the Corporatists.

  12. Translation,

    Are you going to get rid of the roads too?

  13. This isn’t the kind of thing I need to read first thing in the morning. Very, very depressing. Maybe that’s why they call this a “new depression”.

  14. Embrace the suck folks. We’re in for 8 more years (probably) of painful ignorance.

  15. Tim,

    It is the same old depression that the Right Wing War Machine wants us to stay in. That is why they are resisting Obama.

  16. LurkerBold-

    Thank you for your early morning humor. However, I want you to stop and think for a minute. If you think that folks like Nigel Watt and Fluffy are corporatist patsies, how would you describe all of the congressional democrats who voted for the bailouts?

  17. LurkerBold’s fake trollery did hit one odd move by Obama–the new car. I’m sure that’s intended to send a message to us that we should support American automakers by also buying a new car, but one wonders about the other message being sent about spending money that doesn’t need to be spent.

  18. LurkerBold’s fake trollery did hit one odd move by Obama . .

    The news reports I’ve seen imply the Secret Service created this monster on their own.

  19. LurkerBold-

    Right wing war machine? Is your boy going to slash defense spending? Is he going to start closing military installations in Europe? Central Asia? The Pacific? Every penny that is devoted to empire is a penny that cannot go to, say, improving mass transit including the wonderful DC metro system of which you extol.

  20. We cannot depend on government alone to create jobs or long-term growth,

    Dunno about you, but that “alone” made me shudder. It certainly implies that he believes governmenet is the primary driver of job creation and long-term growth. As reinforced by:

    only government can provide the short-term boost necessary to lift us from a recession this deep and severe

    Apparently, Obama believes recessions are permanent unless government intervenes, that the business cycle has no upswings not driven by the state.

  21. The news reports I’ve seen imply the Secret Service created this monster on their own.

    I am not a monster, I am a human being! With no association with the SS.

  22. Libertymike,

    We will finally get smart defense spending. When the dialogue with the people we have been misunderstanding all these years begins, then we will see real lasting peace and equality.

  23. Well, then, maybe it’s a gift from the departing administration. Still a boneheaded move.

  24. Oh, and I see the racism begins before coffee, calling Obama a “boy”. You need a program.

  25. how would you describe all of the congressional democrats who voted for the bailouts?

    Misguided patriots who are trying to do the right thing but just doing it the wrong way. If they had voted for nationalization of these corrupt industries then they would be unqualified patriots.

  26. $1.2 TRILLION
    Who the fuck is buying all this debt?

  27. LurkerBold-

    I see that you did not answer my question but chose to play the race card. I thought Obama frowned upon that. He would not approve-neither would your boy Biden.

    Wait-didn’t your boy Biden make racist comments on the 29th or 30th of January, 2007?
    You know, remarks about somebody being “clean”?

  28. Libertymike, I answered at 9:25, the part before the first period.

  29. LurkerBold-

    I’m sorry, you answered while I was responding.

    Next question: What would you call the congressional republicans who voted for the bailouts?

  30. Libertymike, I guess people like you do not know that Black people can be clean. I know some. Want to meet them?

  31. Either I missed a step, or this whole process is simply a money-grabbing circle jerk by the government.

    Indeed, you have missed a step, probably the most important step in any economic plan. Well, maybe two steps…

    5) ?????
    6) PROFIT!!!

    See, once you get to profit the entire circle jerk is so totally worth it. and pleasurable too!

  32. Libertymike, I answered your question before my alleged “race card” post.

    I suppose some Republicans can actually hear the people who are hurting and take the correct path sometimes.

  33. I am not a monster, I am a human being! With no association with the SS.

    I meant the car. Trolls are not the product of the Secret Service. The NSA is responsible for producing trolls.

  34. Libertymike, do you know what a troll is?

    You are arguing with someone who doesn’t believe what he is writing, but rather, is deliberately arguing a side he doesn’t believe in as poorly as he can, in an effort to discredit it.

    And what’s worse, you’re losing.

  35. Is your boy going to slash defense spending?

    Phraseology FAIL.

  36. Yes, is there a difference between a fake troll and a real troll?

  37. Yes, is there a difference between a fake troll and a real troll?

    Theoretically possible: a fake troll dresses up real commentary in trollish disguise. I think Juanita may count.

  38. You could argue that a real troll has no purpose other than annoyance, while a fake troll believes his/her annoyance to be somehow a subtle commentary. Neither accomplishes anything outside of the wrestling-with-a-pig sense.

  39. Well you can put lipstick on pig, but you better no wrestle it while wearing white?

    Xeones, is that what you were trying to say?

  40. R C,

    Yes, I’ll grant that. Several of the fake trolls have done it, but it is an art. Improperly executed, the fake troll makes the troll-feeders among us flail about trying to respond to what appears to be a real troll statement.

    Xeones,

    Ah, but trolling is in the eye of the beholder. The black box that is the fake troller/troller doesn’t matter to me, the trolling victim. Only God can damn the real troll for his black heart.

  41. I don’t know. I think a real troll is a real person who is expressing their actual opinion, but is overdoing it, knows they’re really annoying (because they’ve been told so), and is hysterical in their ignorance and style.

    A fake troll is somebody pretending to be a real troll, expressing opinions that are not theirs, knows they’re really annoying, and tries to be similarly hysterical

  42. Yeah, Reinmoose, but in regards to your fake-trolling the other day, the question still stands.

    You wanna see my dad’s gun?

  43. Obama thinks more government solves everything?

    Yeah, that’s a surprise. Most of the idiots who supported his shit don’t have a clue as to what he’s talking about, but the rest of us will be paying the price for their willful ignorance.

  44. How has every thread turned into a debate on trolls lately? Is it a saturation problem?

  45. the rest of us will be paying the price for their willful ignorance

    Double-plus untrue.

    I firmly believe that in periods of severe governmental largesse those who are educated and have foresight of whatever policies may rise (for fail or win) are uniquely prepared to take advantage. Though the nation may suffer or succeed as a whole, anticpation of said success or failure can lead to personal win.

    ’cause KNOWLEDGE IS POWER!

  46. I meant the car. Trolls are not the product of the Secret Service. The NSA is responsible for producing trolls.

    The NSA is in charge of watching all of us and sending the FBI goons to silence the ones not saying what they like.

  47. We cannot depend on government alone to create jobs or long-term growth, but at this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe.

    Obama is correct regarding the first portion of this statement. Outside of things like general ground rules and a few other things (think minarchist things) government isn’t going to do much for long term growth.

    As for the second, that is the heart of much of what Keynesian economics claims that it can do. While I do think that government spending, etc. can provide such a boost, I think that it will be far too short lived and small in effect to justify the sorts of figures I’ve seen bandied about various figures over the past few months.

  48. You are arguing with someone who doesn’t believe what he is writing, but rather, is deliberately arguing a side he doesn’t believe in as poorly as he can, in an effort to discredit it.

    Don’t worry joe, I am not working your side of the street. I am for freedom.

  49. How has every thread turned into a debate on trolls lately? Is it a saturation problem?

    I’ve noticed a trend over the last several years. In the past, heated discussions devolved into a bunch of arrogant pricks flinging insults at each other. In recent times, snipers pop into the discussion very early on, then things devolve into a bunch of spoofers trashing the snipers.

    So in the past, the first half of a contentious thread would be interesting. Now, contentious issues result in useless threads almost immediately.

  50. Joe-

    I have lost before.

    You may think that one loses just by taking the time to engage him. Sure, part of me suspects that he is deliberately arguing a position in order to discredit it. OTOH, I like to give people the benefit of the doubt.

    Yesterday, I had fun with him on another thread. I quoted Stalin and asked him how many free market fundamentalists and Paultards cited Stalin. He replied that he wasn’t fooled by my “trojan horse words”.

  51. Nigel –
    I read the article you linked and it is astounding how he tries to defend Social Security. If you read what he’s actually saying toward the end, he’s basically saying that Social Security is not a Ponzi Scheme because
    1. It’s investors are coerced, and include the entire working population
    2. It doesn’t actually have to pay out to its “investors.”

    So take that you anti-social security purists! It’s… worse than a Ponzi Scheme? Oh no wait! It’s better because… it’s done with good intentions. That’s the gist of it, right?

  52. Phalkor,

    What i meant was: never wrestle with a pig, ’cause you’ll both get filthy but the pig will enjoy it. Unless the ‘you’ in that sentence is Lefiti. That’s right, Edward fucks pigs.

    Pro L,

    True, to the person/persons being trolled, the troll’s motivations don’t matter all that much. The distinction is pretty much academic.

    I like Reinmoose’s explication better than mine.

  53. Kinnath-

    You’re right about the troll talk. However, there are many threads where contentious, though intelligent, discourse carries the day.

  54. That troll term has about as much meaning here as irregardless does anyplace else.

  55. only government can provide the short-term boost necessary to lift us from a recession this deep and severe

    Ok, that’s enough of this bullsahit. To date, this recession is, hold on to your hats boys and girls, just a recession and nothing special.

    How many times have you heard self-serving, power seeking politicians and lazy dumbass sycophant pundits refer to this as “the worst economic crisis since the great depression”? Hundreds, right?

    Inflation 1975 – 9%
    Unemployment 1975 – 8.475% (average for year)
    Inflation 2008 – 1.1%
    Unemployment 2008 – 6.7% (November figure)

    Doom and gloomers, please STFU. You make yourself look like ingnorant fools.

  56. We would have full employment if the Corporate Establishment were as efficient as good government.

  57. Talk now in my business is that this may only be a normal recession after all, with a few scary hobgoblins to make the government feel the need to “do something”. We’re generally more concerned about the government helping to prolong the problem than in the economic factors themselves.

    The people saying this (besides me) are not, incidentally, libertarians. If anything, this is a left-leaning outfit.

  58. Lenders tricked people into buying homes they couldn’t afford and some folks knew they couldn’t afford them and bought them anyway.

    Why would lenders do this? It is illogical. They are deliberately making a bad investment. The odds of getting their investment back are small. In a free market, they wouldn’t take that kind of risk. If they did, they would be stupid and fail. The free market would let them fail and lenders that were less stupid would pick up their business. No problem.

  59. Since the government is rapidly sliding to socialism/empire/collapse, and I have no hope, I thought of a fun game to do to pass the time until the revolution: vandalize your money!

    $1 Write at the bottom margin on the face side: “I am spinning in my grave”.
    $5 Write on Lincoln’s massive forehead: “I am a tyrant.”
    $10 Write in the bottom margin on the backside: “The Fed is evil.” Bonus: think of something bad to say about Hamilton on the face side. That should be easy, but the hard part is to make it pithy.
    $20 Write in the bottom margin on the backside: “Criminals live here.”

  60. J Sub D.

    Starting in 1982, the way unemployment and inflation were calculated were changed, and have been changed again and again in subsequent years, always to paint a rosier picture.

    According to Shadow Stats, a website where they publish figures using the same methods that were used in the 1970’s, the results are:

    Inflation 2008, ~10%
    Unemployment, 2008 ~12%.

  61. I can’t go to shadow stats here at work, but can anyone testify to that? What’s the effin’ point of keeping records then? I’m feeling fucked with more than usual.

  62. troll,

    The big driver for understating inflation is to allow the government to reduce social security cost of living raises without facing a backlash from old people.

    Unemployment, I believe, is fiddled with primarily for the purpose of making incumbent presidents look better since they are judged on the amount of official unemployment out there.

  63. Obama’s about to make a “major policy speech” on his stimulus plan. I expect he’ll attempt to answer a lot of people’s questions about the potential of igniting inflation, etc., but $5 says he doesn’t mention anything about the potential of government investment crowding out private investors. …and not just their expertise, but the ongoing viability of whole classes of investment, from white knights and hostile raiders to angels and vultures.

    I bet the idea that there’s a danger or downside to that hasn’t even occurred to him.

  64. Obama, you don’t need to save America. While it will take some time, we are doing just fine saving ourselves without you.

  65. Obama’s playing the we’re-all-gonna-die card, too. Real original, and following the frantic mess of the Bush administration with his own frantic mess is, again, unimpressive. And, frankly, his (and Bush’s) “fright” scares me more than anything in the economy itself.

    In other words, the only thing I have to fear is fear itself. Other people’s fear.

  66. J sub D and PL

    I thought I was the only one wanting to throw my radio out the window when I hear this “worst economic crisis since the great depression” nonsense.

    I think if we’re lucky we’ll get a modest Highway Bill* some extended unemployment insurance and maybe some relocation money to help foreclosees get into rentals.

    I know, it’s not the libertarian solution but it is, I think, the politically possible one. The people want to see someone “doing something” and it would be best if that someting did something useful or provided some needed relief without being so massive that it prevents the economy from recovering on its own.

    Unfortunately, I’m not seeing any sign that that’s how the obomatrons will handle it.

    *hopefully with the bulk of the money going to urban infrastructure rehabilitation and bridge replacement rather than new “bridges to nowhere” handouts to property developers.

  67. tarran, your comment re Shadow Stats was posted while I was typing my comment.

    While I’m open to arguments about statistics (and damn lies) I still go into nearly apoplectic rage when I hearthis “worst economic crisis since the great depression” nonsense.

    There’s just no comparison.

  68. Mind you, I suppose, given time, they are quite capable of making it come true.

  69. Isaac,

    The late 70s was a whole lot scarier, too, so we’re not even close to the Depression. I’m sure the government will try to make a go at the record, though.

    Change you can pay for!

  70. The economy cannot and will not recover on it’s own. It’s like everyone on this site thinks this is some kind of game called “capitalism” and people aren’t losing jobs, houses, and suffering greatly. You are a fool if you don’t know in your heart of hearts that this is the worst economic crisis since the great depression. In fact, if Obama listened to the likes of you, we would likely be headed into the worst economic crisis ever.

    Chew on that.

  71. Obama is correct regarding the first portion of this statement.

    I don’t think so, Seward. Obama saying “We cannot depend on government alone to create jobs or long-term growth” means that it can, to some extent, create jobs and longterm growth (it can’t)*, and in context means that he obviously believes that government spending is the primary driver of job creation and growth.

    Which is totally batshit nuts.

    *beyond providing the infrastructure for doing so via a night watchman state that protects and enforces contract and property rights, that is

  72. Isaac,

    I am convinced that the Great Depression was actually made worse by the reaction of the government. Nobody remembers the depression of 1921, because the government allowed bankrupt firms to go out of business, some rich guys bought up assets in fire sales (and bailed out a few big firms with their personal wealth) prices adjusted, and the depression was over within a few months.

    It was Hoover’s desperate attempts to prop up agricultural prices and wages that really hindered the recover, although the Fed’s childish interventions didn’t really help matters either. In other words, the harder the government tried to “end” the Depression, the more they prolonged it.

    The more Obama talks, the worse my expectations of the future become.

  73. You are a fool if you don’t know in your heart of hearts that this is the worst economic crisis since the great depression.

    Err, no Caasi. You are a fool with no historic perspective whatsoever if you believe that this is the worst economic crisis since the great depression. I’m sure, if we work at it, we can make it the worst one, etc., but right now, not even close.

  74. Seriously, those of you who think President Bush was awful because he scared the American people into doing something that was against their interests and who were hoping for something better from Obama, you should be really disappointed right about now.

  75. Stop responding to the trolls people. Mouse over Caasi’s name…

  76. R.C. Dean,

    You are right. I didn’t read that statement as closely as I should have.

  77. tarran @ 12:03pm

    That’s sort of where I was going with my 11:41 comment.

  78. tarran- Your comments re: the Great Depression I guess is true if you were one of the rich in society…my grandmother lived during that time and was at the very bottom of the economy. She would certainly disagree that Depression was ended in “just a few months” and it was the government that prolonged it. It seems looking back at an era from your privileged level has put rose colored glasses on…

  79. tarran is talking about a phenomenon known as “Pollyanna Creep.” Here’s a good article about its history.

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