Conservative economic policies don't work!

As a result of Bush administration policies, America faces an era of unprecedented economic uncertainty featuring high unemployment, a falling dollar, soaring deficits and a widening chasm between the fortunes of the rich and the poor.

Conservative economic policies don't work!

Postby Josiah Bartlett » Sun Jun 29, 2003 9:34 am

The mantras are so familiar, Environmental regulations cripple development, lower taxes will stimulate the economy, over-regulation of business slows the economy. So bush* trashes the environment, slashes taxes and installs regulators that ignore regulations. Now look at where we are! Three million jobs lost to date, official unemployment at ten year peaks and unofficial unemployment at double that, the federal deficit expanding at record levels and still no prospects for recovery. What is it going to take for people to realize that these policies don't work?
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Never Did, Never Will

Postby Ferguson Foont » Sun Jun 29, 2003 10:02 am

Conservative economic policies have NEVER worked and, when followed to the exclusion of social equity, have invariably led to ruin. There is a very simple reason for this.

When business is allowed to operate unfettered by regulation, the inevitable outcome is a kind of extreme Darwinism wherein the most aggressive competitors (regardless of technical merit) devour their competitors until wealth consolidates into too few hands to sustain consumer markets.

Furthermore, you get into a situation well known to the Roman Empire in which absolute power corrupts absolutely. Corporate executives who may have started out with extreme competence and the best intentions eventually turn into robber barons, taking and keeping it all for themselves for the same reason why a dog licks his testicles -- because he can. In this way we have seen top-management compensation soar while rank-and-file workers see their standard of living steadily fall, we see massive layoffs undertaken in the name of "productivity," and we see the purchase of political influence exercised exclusively to benefit the wealthiest contributors whose wealth can be further increased by eliminating regulations and legislation that protects the interests of employees.

When free markets are not tempered by regulation in the interests of social equity, the result is economic ruin and feudalism at best, revolution and tyranny being the alternatives.
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Postby Josiah Bartlett » Sun Jun 29, 2003 3:45 pm

Well spoken FF. My point here is that they have put their policies in place and the economy is now going to hell in a handbasket. This has been their grand opportunity to show the wonders of deregulating, tax cutting and desupervising. The result is that it's fucked everything up. I know that for some, it is a big success that is allowing them to loot the treasury, it is a tragedy for everyone else. They are proving the failure of their policies by applying them.

Can this be the opportunity to discredit those policies for at least another 60 or 80 years?
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Postby D H » Sun Jun 29, 2003 8:48 pm

I would argue that 'conservatives' now aren't attempting to dismantle the New Deal and Great Society; they're looking to roll clear back past the enactment of Taft Hartley and the establishment of the Federal Reserve.

Their ideal is the re-establishment of the robber barons and the gilded age, while they conveniently ignore the economic panics and stagnations of that era.
<font size=-1>The whole nation is suffering from monkeypox; a monkey is in the White House, and it's a pox on us all.</font>
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Speaking of Economic Ruin....

Postby Kali » Fri Jul 04, 2003 11:32 pm

I was not sure exactly where to put this one. Talk about BIZARRO World!

Check this out. From the Dallas, TX. Federal Reserve Bank website, a paper found under the category of "HOT TOPICS." The "stamp tax" (remember your Revolutionary War history lessons?) is presented here as an "impractical" solution, but is nevertheless presented and not ruled out.

Besides the weirdness of this ENTIRE paper, you also get a sense of how one of our Federal Reserve Banks feels about the present (and possible future) economic situation, and it's much scarier than what we hear on the evening news cycle! Wow.

<font color="000555">May 2003

<a href="http://www.dallasfed.org/htm/research/hot/bd0503.html">Monetary Policy in a Zero-Interest-Rate Economy </a>
Evan F. Koenig
Jim Dolmas

Based on a presentation by Evan F. Koenig, vice president, and Jim Dolmas, senior economist, Research Department, Federal Reserve Bank of Dallas.

<b>If short-term interest rates fall toward zero, it may be necessary for the Fed to re-think how it conducts monetary policy. In this document, we examine why conventional policy loses its effectiveness at very low interest rates, and review some of the alternative policy tools that are available.</b> We’re hopeful that this entire discussion will prove to be academic—that our economy’s natural resilience, together with the easing the Fed has already undertaken, will be sufficient to get employment and output growing again. But it’s nice to know that if additional stimulus is required, there are still arrows left in the quiver.

The Recovery May Be Stalling Despite Low Interest Rates

As shown in Figure 1, short-term interest rates are as close to zero as they’ve been at any time since 1958. Any further rate reduction will make life difficult for banks and money market funds, which will either have to start paying out less than a dollar for each dollar invested, or to begin charging explicit management fees.

As of August of last year, it certainly looked as though further interest-rate cuts would not be required. Important monthly indicators like industrial production and payroll employment were clearly on the upswing (Figure 2). Since August, however, the incipient recovery hasn’t unfolded according to plan. Employment has been particularly weak, hitting new cyclical lows for three months running.[1] We’re hopeful that positive trends will reemerge now that the Iraq situation has been more-or-less resolved. But if we’re wrong, or if another adverse shock hits the world economy, then new stimulus will be required.

The Conventional Response to a Weak Economy: Open-Market Operations

Usually, the Fed attacks weakness in the economy by conducting expansionary open market operations. In a typical open-market operation, the Fed purchases Treasury bills from bond traders in the New York securities market. The effect is to increase liquidity in the economy—cash and bank reserves rise while the number of Treasury bills held by the public falls—and to lower short-term interest rates. Lower interest rates encourage consumption and investment, and greater liquidity provides the means to finance the new expenditures.

Unfortunately, conventional open market operations lose their effectiveness as the yield on Treasury bills is driven to zero. At a zero interest rate, a Treasury bill is no different from vault cash or large-denomination currency. An open-market operation is like the Fed offering to exchange twenty $1 bills for one $20 bill: The increase in liquidity is negligible. Moreover, there is no way to achieve any further reduction in the interest rate. Why would anyone accept a negative return on Treasury bills when they have the option of holding cash, which offers a zero return? With no increase in liquidity and no reduction in the interest rate, there is no reason to expect an open-market operation to produce any increase in household or business spending.

The Zero-Interest-Rate Bound Can Lead to Serious Trouble if There is Deflation

Policymakers can find themselves in serious trouble if they come up against the zero interest rate bound during a period of falling prices—that is, during a period of deflation. That’s because what ultimately matters to households and firms is the real cost of borrowing—what economists call the real interest rate. The real interest rate is the difference between the market, or “nominal,” interest rate and the rate of inflation. It is the prospect of a low real interest rate that makes current consumption and investment spending attractive. The trouble is, even a zero nominal interest rate can produce an expected real interest rate that is too high if people expect a negative inflation rate.

For example, if prices fall at a 3 percent annual rate, then a zero nominal interest rate puts the real cost of borrowing at a positive 3 percent. The prospect of a 3 percent real interest rate might be just fine in a healthy, growing economy. It will be excessive, however, in an economy where the growth outlook is poor, or where fragile finances have led households and firms to become cautious about spending and banks to become cautious about lending.

Unpleasant Scenarios

The U.S. Great Depression is the textbook example of what can go wrong if policymakers are slow to respond to a deteriorating economy and falling inflation. As shown in Figure 3, the Federal Reserve cut the short-term nominal interest rate from 5 percent in 1929 to 0.5 percent in late 1932. However, inflation fell even faster. Consequently, the real interest rate—the difference between the nominal interest rate and the inflation rate—actually increased, rising from 3.5 percent in the spring of 1929 to a peak of 15 percent in late 1931 and early 1932. Monetary policy was, effectively, becoming tighter and tighter in the early 1930s, rather than easier and easier.

As a result, industrial output fell by a whopping 50 percent relative to trend. Recovery didn’t begin until 1933, when the Roosevelt administration suspended gold payments and allowed the dollar to depreciate. Inflation rose well above the nominal interest rate, turning the real interest rate sharply negative.

Japan in the 1990s provides a more recent example of the trouble that can be caused by the zero interest-rate bound. Like the Depression-era Federal Reserve, the Bank of Japan cut short-term nominal interest rates in response to a weak economy (Figure 4). By the second half of 1995, the 3-month government rate was essentially zero. Although the interest-rate decline was too slow to prevent inflation rate from turning into deflation, the real interest rate fell from 5 percent in late 1990, to 3 percent in 1993, to 1 percent or less in 1995, 1996 and 1997. Industrial output, which had nosedived in the early 90s, began to recover in 1996. But then the Asian economic crisis hit. Conventional monetary policy was powerless to respond, and Japan remains mired in depression to this day.

Whither the U.S. Economy?

It took the Bank of Japan six years to get short-term interest rates (briefly) down below the rate of inflation. As shown in Figure 5, the Fed has closed the interest-rate—inflation gap in less than half the time. This relatively quick action has prevented inflation from becoming outright deflation and avoided any significant damage to U.S. financial institutions.

As we saw earlier, however, recent declines in industrial output have raised concerns that the U.S. economy may be stalling out. With the nominal interest rate so close to zero that conventional open-market operations are of doubtful effectiveness, what policy options are available to the Fed, should further stimulus be required?

Strategies for Overcoming the Zero Bound

A number of strategies have been proposed for pulling the economy out of a zero-interest-rate trap, ranging from the radical to the mundane and from the practically difficult to the eminently practicable. In this part of the presentation we examine several such strategies. We first consider the boldest, though also the most difficult to implement—eliminating the zero bound altogether. Turning towards more workable strategies, we examine modifications to standard policy that avoid some of the problems alluded to in the first part of the presentation. Among these more workable approaches are strategies that require the coordination of Fed policy with that of other actors—either foreign central banks or domestic fiscal policy-makers—and strategies that the Fed can follow unilaterally.

Bold, but Impractical—Eliminating the Bound Altogether

The most daring suggestion for escaping the zero-interest-rate trap is one that eliminates the zero lower bound altogether. How can this be done? As noted in the first part of the presentation, the zero bound on interest rates exists because money pays a sure nominal interest rate of zero. <b>No one would be willing to hold any asset that pays a negative nominal rate, as long as zero-interest money is available as a store of value. The strategy for eliminating the zero bound, therefore, is to make money pay a negative nominal interest rate, by imposing some type of <u>"carry tax"</u> on currency and deposits.

It’s easy to envision such a system with regard to deposits at the Federal Reserve or transactions deposits at banks; for the most part, the technology to implement such a system is already in place. <u>A tax or fee on Reserve deposits of 1 percent per month, for example,</u> would mean that those deposits, in effect, pay a nominal interest rate of roughly minus 12 percent.</b>

<u><b>The technological difficulty lies mainly in imposing such a tax on currency. In the 1930s, Irving Fisher of Yale University, one of the greatest American economists, proposed such a system, in which currency had to be periodically ‘stamped’, for a fee, in order to retain its status as legal tender. The stamp fee could be calibrated to generate any negative nominal interest rate that the central bank desired.

While the technology available for implementing such a system is more sophisticated today than in Fisher’s time, enforcement still seems a mammoth problem, involving physical modifications to currency and some means of tracking the length of time each piece spends in circulation.

Given the technological hurdles involved in its implementation, a carry tax on money may not be feasible as a response to any events that might transpire in the next year, though it certainly merits study as a possible response to events that might transpire in the next decade. This is particularly the case if achieving and maintaining price stability makes bumping up against the zero interest rate bound a more frequent event.</u></b>

More Workable Modifications to Standard Policy

If the bound can’t be easily sidestepped—at least in the immediate future—what options does the Fed have? As implied in the first part of the presentation, one key is to conduct monetary policy in a way that doesn’t simply give the private sector “change for a twenty”—that is, monetary policy must take actions which expand the sum of zero-interest money and its zero-yielding substitutes, not simply swap one for the other. This can be done through purchases of assets that are not perfect substitutes for money. We will consider three possible candidates:

1. Foreign exchange

2. Real goods and services

3. Other domestic securities-such as longer-term Treasuries.

Strategies which target the first two candidates, as we’ll see, can only succeed if the Fed coordinates its policy actions with those of other actors—namely, foreign central banks or domestic fiscal policy-makers. A strategy targeting the third is something the Fed can do today, unilaterally, within the constraints imposed by the Federal Reserve Act.

The Foreign Exchange Escape Route

Foreign exchange intervention has been suggested by more than one prominent economist as a surefire strategy for getting out of a zero-interest rate trap.

How would such a strategy work? In this approach, the Fed would pursue a targeted, substantial depreciation of the U.S. dollar, by purchasing foreign currency using newly minted dollars. The dollar depreciation would increase current demand by stimulating net exports—that is, by increasing sales of U.S. goods abroad and reducing purchases of foreign goods in the U.S. If the Fed committed to maintain the depreciated dollar for some length of time, inflationary expectations could also increase. Higher expected inflation, in turn, would result in a lower prospective real interest rate, even if nominal rates do not change.

The big problem with this strategy is that, in a roundabout way, it amounts to conducting a monetary contraction in our trading partners’ economies. In buying up another country’s currency—and assuming the Fed simply holds, rather than spends, that foreign currency—the Fed would, in effect, be reducing the foreign economy’s supply of money and, likely, raising interest rates there as well. If the foreign central bank was attempting to pursue a neutral or expansionary policy, the Fed’s action might generate some consternation or even a policy response. If the Fed purchased Euros, for example, the European Central Bank might respond by simply printing more of them, thus neutralizing the Fed’s action.

To be successful, this strategy requires cooperation, or at least acquiescence, on the part of our trading partners. Given growth prospects elsewhere around the globe, such acquiescence, while not impossible, seems unlikely.

The Goods & Services Solution

Why not have the Fed just conduct an open market purchase of real goods and services? Even more so than exchange rate intervention, this strategy would represent a direct stimulus to aggregate demand.

As posed, though, the strategy has a major drawback: it violates the Federal Reserve Act. The Fed isn’t authorized to purchase goods and services, apart from those needed for the operation of the Federal Reserve System.

The strategy can be implemented, however, by coordination with fiscal policy-makers. The Federal government, for example, could purchase goods and services and finance the purchases with new debt, which the Fed in turn would buy—in technical terminology, the Fed would "monetize" the resulting debt.

By coordinating with fiscal policy, the Fed could even implement what is essentially the classic textbook policy of dropping freshly printed money from a helicopter. In this case, the Fed would monetize government debt that had been issued to finance a tax cut.

The scale of operations entailed by this approach would be large—to monetize government spending equal to 1 percent of GDP, for example, could mean increasing the monetary base (the sum of currency and bank reserves) by as much as 15-20 percent. Though trite to say, it is nonetheless true that extreme times could require extreme measures.

The Simplest Strategy: Buying Other Domestic Securities

We finally turn to the simplest strategy: buying other domestic securities. Even if the short riskless rate is equal to zero, other interest rates on other securities will generally be positive, and those securities could be targets for open market operations. This is a course of action that the Fed can follow today, without coordinating its action with other policy-makers, or running afoul of the Federal Reserve Act.

The Federal Reserve Act does impose restrictions on what type of domestic securities the Fed may or may not buy through open market operations. These are detailed in Figure 6.

Some of the securities in the “allowed” column may be less-than-familiar. “Debt guaranteed by the U.S. government” refers to the debt of government-backed enterprises such as Ginnie Mae. A “bill of exchange” is essentially a draft order which specifies a future date on which the order is to be executed. “Bankers acceptances” are bills of exchange in which the bank on which the draft order is made guarantees payment.

For all practical purposes, the legal constraints limit open market operations to U.S. government debt or the debt guaranteed by the U.S. government. The markets for bills of exchange and bankers’ acceptances are simply too small to be of any use.

What if the assets in the “not allowed” column were “allowed”, though? This point is not moot, since aggressive use of the discount window—under certain emergency provisions in the Federal Reserve Act—can allow the Fed to sidestep, to some extent, the restrictions which apply to open market operations.

Even if the legal constraints were not present, however, it’s not necessarily desirable to have the Fed acting in markets for corporate debt or mortgages. Whatever benefits there might be from such actions would have to be weighed against the cost of putting the Fed in the business of allocating private sector credit—a task for which the Fed has no particular expertise, and which would likely subject the Fed to unwelcome political pressures.

In what follows, we concentrate on purchases of government debt, though one should bear in mind that while more is possible, it is not necessarily desirable.

How, then, would this strategy work? Following this avenue, the Fed could purchase any government debt with positive yields—for example, longer-term Treasuries. In broad terms, reducing the supply of these securities forces the private sector to re-balance its portfolio. The yields on the securities whose supply has shrunk must fall, in order to make people content with holding less of them. The prices of these assets, which move in the opposite direction from yields, must rise.

For consumers, the lower yields reduce saving and spur consumption. For businesses, the lower yields can mean a lower cost of funds, while the rise in the assets’ prices can improve businesses’ balance sheets or give them more valuable collateral with which to secure financing.

This strategy, while indeed the simplest to implement, is not without problems: First of all: No one, we believe, has a good quantitative sense of the mechanics of this strategy—that is, what size operations are needed to secure a given stimulus? While the Fed has managed longer-term yields at various times in the 1940s, ‘50 and ‘60s, the last time such a strategy was implemented was nearly 40 years ago.

Second, if the short riskless rate is zero, but other rates are positive, those rates must be positive for reasons—to compensate the holders of those assets for some form of illiquidity or risk. Under this strategy, the Fed takes those risks onto its balance sheet.

This leads us to a third point: the Fed is almost guaranteed to take a capital loss on its portfolio. If the strategy works, the economy picks up, interest rates go up, bond prices go down, and the value of the Fed’s holdings of longer-term Treasuries falls. Finally, narrowing the yield spread between assets of long and short maturity can stress institutions, such as banks, that profit from that spread. On the other hand, it must be noted, a wave of deflation-induced loan defaults would no doubt also be stressful for banks.

In Conclusion…

We’ve seen that open-market purchases of Treasury bills—the Fed’s standard method for stimulating the economy over the past 40 years—become ineffective as short-term interest rates approach zero.

With Treasury bill rates so near zero, the Fed will need to be open to alternatives to standard policy and stand ready to vigorously pursue them if the economy remains weak.

In the event it must act alone, the Fed’s best policy option is probably open-market purchases of longer-term government bonds. Efforts to influence longer-term Treasuries are not unprecedented: they were fairly common in the 1940s and early 1950s. But that’s not to say that reorienting Fed policy would be problem-free: there are good reasons why the Fed usually aims its efforts on the short end of the yield curve.

If standard policy options are exhausted, the Fed’s quiver is by no means empty. But the arrows that remain are less familiar and, perhaps, not quite as straight as the ones that have already been fired.

Notes

1 The year-to-year change in private payrolls has been negative for 22 straight months—the longest uninterrupted stretch of job losses since 1944–6. </font>
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PS:

Postby Kali » Fri Jul 04, 2003 11:53 pm

By the way, if you want to view the graphs referenced in that Dallas Reserve Bank paper, you can go here to the PDF version of the report:

http://www.dallasfed.org/htm/research/pdfs/bd0503.pdf
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Possibly the Stupidest Thing I've Ever Read in My Life

Postby Ferguson Foont » Sat Jul 05, 2003 12:08 am

Republicans are such total assholes. They contrive such cockamamie crap as the thing from the Dallas FRB that Kali posted above (Read it! It is really amazingly contorted in its reasoning) because it is absolutely against their religion to stimulate the economy by implementing government programs that actually HELP PEOPLE, through public works that improve infrastructure and create jobs, by subsidies to the less fortunate to stimulate purchasing directly, and through various other programs that make the American people feel prosperous and secure enough actually to spend their money.

They are such UNBELIEVABLE ASSHOLES! And that piece also betrays something else that's more than a little bit disconcerting: It indicates the total absence of confidence they actually have that an economic recovery is pending in our future.

Read between the lines of the following passage from the FRB piece:
As of August of last year, it certainly looked as though further interest-rate cuts would not be required. Important monthly indicators like industrial production and payroll employment were clearly on the upswing (Figure 2). Since August, however, the incipient recovery hasn’t unfolded according to plan. Employment has been particularly weak, hitting new cyclical lows for three months running.[1] We’re hopeful that positive trends will reemerge now that the Iraq situation has been more-or-less resolved. But if we’re wrong, or if another adverse shock hits the world economy, then new stimulus will be required.

This doesn't have what I'd call the ring of confidence to it.

The cure for our current problems is very, very simple and straightforward, and we've known how to do it at least since Franklin Roosevelt took office. If you need to create jobs, then create jobs. If you need to stimulate retail sales, get money to people who spend it hand-to-mouth. Is that too tough to figure out?

As regards the Bush League, evidently the answer is "Yes."
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3-tiered American currency?

Postby Rosemary » Sat Jul 05, 2003 4:52 am

A couple of months or so ago I was reading bits and pieces predicting that the banks would very soon begin requiring customers to choose one of 3 options to convert their liquid bank accounts (presumably checking, savings and money market) and currency into. I frankly did not understand what it was all about. I had the feeling it would be smart to convert some personal funds into foreign currencies. I expected to hear a lot more about this and began reading some financial sites on the Web, but I saw NOTHING more about it. I attempted to talk to my small branch bank manager about this, but she seemed completely unaware.

Anybody know anything else about this? I am sure the Fed Reserve data Kali found has a connection to what I saw. Maybe both are bullshit to continue to keep people off stride and on edge, maybe not. I would sure like to know what's going on.

Zan started a thread at TAPA on the subject "My kingdom for a Euro" or something like that. I do not remember much information turning up on it though. I should go back and re-read it.
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Investment Advice

Postby Ferguson Foont » Sat Jul 05, 2003 10:57 am

I am virtually destitute, a condition that is constantly quite uncomfortable but which gives me a certain pristine objectivity when giving investment advice. I was recently asked by someone with $100K to invest where she should put it.

We went around to all the financial institutions in the area to see the terms of their short-term certificates of deposit. Everyone who was advertising a rate above 2% had a gimmick attached to it that made it disadvantageous to utilize its short-term features. This usually consisted of a rollover requirement combined with a higher initial rate, with draconian penalties for withdrawal during the earlier years. One only had the higher rate for the first $10,000, with a rate that dropped into the basement by increments to the point at which it was no deal at all for $100K.

I advised this person to buy gold ingots or coins. I personally prefer English sovereigns, because they're real coins and when you get rolls of these you sometimes find a few with enhanced numismatic value that can wind up giving you a very tasty profit. I also like Canadian Maple Leafs, because although they're just coin-shaped ingots with no potential extrinsic numismatic value, there is something to be said for perfect purity, and at .9999 pure they are the best for that.

And gold also has the rather cool advantage that you can actually see it and touch it. It's really real.

Needless to say, she didn't take my advice and instead put it into a three-month CD at 1.3% apr. One-point-three percent!

But Bush's insane tax cut on dividends, perhaps the most counterproductive thing he could have done if the goal is economic stimulus, was largely sold on the salutary effect it would have on pensions and retirement funds. This, of course, ignores the fact that the most prudent retirees have always relied more on interest than dividends, and Bush policies have driven interest rates down to the most dismal levels ever, impoverishing many people's retirement and penalizing them for investing conservatively.
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Its 1981 all over again...

Postby Whosyer » Thu Jul 10, 2003 10:01 am

None of this worked in 1981 and isn't working any better 20 years later. In 2000 I had assets of over 1 million owned my own business with 6 employees all of which had full medical and dental benifits along with a nice profit sharing program. My goal was to have good employees who enjoyed working for me because I allowed them to share in our success. I was making money, my employees were making money and we all payed our taxes under Clinton. I don't remember anyone ever complaining about the taxes we were paying because we were making money. However business began to slow down even before the 2000 election, people who understood were beginning to pull back because Bush was leading in the polls and we understood what the result was going to be if Bush got in and enacted his tax cut.

My business was a service to other businesses, we offered them something they wanted but didn't have to have. As the Bush years began businesses were cutting away things they didn't have to have right now. I had 6 very good and happy employees and yesterday I had to tell the last one that I had no way to employee him anymore.

You guys all know why what Bush did didn't work, he is no friend of the person who starts from nothing, he is only the friend of the person who was born into wealth and is tired of the long lines at the country club and doesn't want to be burdoned by the guy with the better idea that was eating his lunch during the Clinton years.

I'm now living off the good times of the Clinton years waiting for the Bush years to pass me by.
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An Interesting Statistic

Postby Ferguson Foont » Thu Jul 10, 2003 10:12 am

At the end of the long piece about that ridiculous "stamp tax" that Kali posted a few posts back is a footnote, to wit:
The year-to-year change in private payrolls has been negative for 22 straight months—the longest uninterrupted stretch of job losses since 1944–6.

This, of course, was during the transition from the big ramp-up for WWII's final push to victory into a peacetime economy which became one of the greatest tales of prosperity. It was not a "natural" set of economic circumstances.

But Bush has waged open war on our prosperity, particularly our job markets, in what I can only presume is a deliberate effort to drive down overall labor costs and push more and more Americans down into the lower tiers of the service economy. This, I presume, is becuse the robber barons who are Bush's constituency no longer want good domestic help to be so hard to find.

The last time we ever saw job loss on this scale over an extended period was the Great Depression (if even then). Our government was more ethical back, however, and reported statistics honestly.

That is not a mistake that Bush will make.
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Postby harper pine » Thu Jul 31, 2003 3:57 am

Bush actually sent an economic team on a bus tour to Minnesota and Wisconsin to promote the tax cuts! Guess it didn't work too well.

However, the president's traveling team stirred up skepticism along the way, from factory workers who have seen more than 2 million manufacturing jobs disappear over the past three years and from other critics who contend that Bush's tax cuts mainly have helped the wealthy while creating soaring budget deficits.

But as they tried to talk up the economy, the administration team had to contend with another dose of bad economic news: A drop in consumer confidence.

Treasury Secretary John Snow, Commerce Secretary Don Evans and Labor Secretary Elaine Chao dismissed the decline, saying the survey was taken before American workers and families started to see the benefits from the latest round of Bush tax cuts.

The two-day bus tour in Wisconsin and Minnesota, both of which Bush narrowly lost in the 2000 election, was timed to coincide with the lower payroll tax withholding, which took effect this month, and with the mailing of child-tax credits of up to $400 per child. Both are elements of the $330 billion tax-cut package Congress passed in May.


I haven't seen my tax cut yet. Have you? They can't even time their trips right.

"We think (the tax cut) is going to increase demand, and the end product will be lots of new jobs," Snow told small-business owners at the tour's second stop, in a suburb of Green Bay.

Questions at the motorcycle plant focused on the huge loss of manufacturing jobs and the soaring U.S. trade deficit, especially the trade imbalance with China.

Michael Retzer, a consultant for Ram Tool, told the Bush officials of his worry that the first $200 billion of tax cuts scheduled for the next couple of years would be dwarfed by a merchandise trade deficit running over $500 billion annually.

Small groups of demonstrators - holding signs that said: "Read Bush's Lips ... No New Jobs" - showed up at the tour's suburban Green Bay stop.

Later, in Wausau, Wis., about 40-people stood in 85-degree sunshine across the street from a fast-food restaurant where the Bush team spoke to invited guests. The protesters chanted, "What jobs? What growth? Bush or progress, can't have both."


House Democratic leader Nancy Pelosi of California said the Bush team was trying to mask that the economy has lost roughly 3 million jobs since Bush took office, while the federal budget has gone from surpluses to record deficits.

"It's difficult to understand why the Bush administration is promoting the president's mishandling of the economy," Pelosi said.

Rep. John Spratt of South Carolina, ranking Democrat on the House Budget Committee, said, "Unemployed workers and their families cannot wait much longer for the long-awaited economic recovery that the administration keeps promising."

Reacting to the criticism, Snow said: "Rather than a feel-good trip, this is a dialogue trip" to allow administration officials to listen to the concerns of American workers.


Oh sure. What will they do differently after hearing their concerns?

http://www.commondreams.org/headlines03/0729-08.htm
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Increasing Demand

Postby Kali » Thu Jul 31, 2003 10:17 am

<i>We think (the tax cut) is going to increase demand</i>

They're right ... the tax cut WILL increase demand ... for a NON-REPUBLICAN PRESIDENT.
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Postby Kali » Sun Sep 07, 2003 7:34 pm

Paul Krugman is on Tim Russert's CNBC show (whatever it's called) with ONLY Tim Russert. It's FANTASTIC! Not only is there no one on to scream over him, even Russert is being quite polite and reasoned. Wow.

He's pushing his new book, "The Great Unravelling" and I bet he agreed to do this only by his own terms (no screamers).
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Postby harper pine » Sun Sep 07, 2003 9:09 pm

Oh shoot. I missed it.
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Postby Kali » Sun Jul 03, 2005 8:31 pm

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