Monday, October 10, 2011

Greenspan Hearts Bush Tax Cuts, Perry's Policy Speech, Ms Warren Causes A Stir

Paul Krugman



According to a report released this morning, the recession is officially over. Feel any better? Most household incomes have not increased, many have actually shrunk. Also, over 50% of those who have applied for a refinanced mortgage have been denied by the banks...

The solid GOP facade on the economy is beginning to crack, with a freshman congressman complaining in public about Grover Nordquist and his peer pressure, making everyone sign a pledge against "no new taxes." By now everyone and their second cousin knows that tax breaks have nothing to do with creating jobs. Nordquist has formed an anti-tax mafia that has translated into blocking legislation for improved medical benefits for veterans who have lost a limb, and definitely against any new stimulus. Many states, including Texas, used the last stimulus to balance their budgets, then turn around and say how little good it did them. Unfortunately for them, this year and the next will be harder for them to balance their budgets, what will trickle down will be bad news for the local economies. Our city is planning on laying off 9 more police officers and more firemen, and not filling 37 vacant positions in city government. Oh, it looks even worse in Rick Perry's Texas, people may have no choice but to homeschool their kids, after the local school districts fold... The good news is that they can always turn the buildings into meth labs to help stimulate the local economies, like on Breaking Bad...

The current field of GOP candidates all have vague theories of policy while offering nothing concrete. Rick Perry maybe leaping to the forefront by announcing he will give a policy speech this coming Friday, with some ideas on solving the job problem. We have a week to guess whether he will deliver the goods, or relegate another attack on Mit Romney through a proxy. Lord knows he needs to generate some positive press, instead of the religious intolerant, racist, and bad debater images that have been plaguing him for the past two weeks. His handlers have been practicing debating with him, getting him to stick to the vague, scripted answers like the other candidates give. And, they are claiming that during the last debate, Rick suffered from lack of sleep, it certainly wasn't anything like muscle relaxers or anti-depressants that made him appear so out of it...

Back to the GOP economists, or, in Herman Cain's 9-9-9 plan, the lack of one... Even Alan Greenspan has made a public statement that he was wrong about the free market approach to the economy. Lately, he has even said that it is important to let the Bush tax cuts expire:
“If we do not get Simpson Bowles as a fallback,” Greenspan told CNBC, referring to a large-scale deficit reduction program proposed by the co-chairs of President Barack Obama’s fiscal commission, “I stand with allowing the Bush tax cuts to expire. You could do it gradually, whatever. But if we think we have this luxury of waiting for a couple of years with a little stimulus now and then later tightening up. I hope the bond markets are listening.”


“What’s driving the United States at the moment to a very large extent is Europe. You can’t understand the United States at all, I think, unless you know what’s going on in Europe.”
The Loneliest Woman in Europe, Angela Merkel, has announced that Germany and France are just about to sign a plan to rescue the rest of Europe, and hopefully, pull the economies of Greece, Spain, and Portugal out of the tank. In response, the stock market rose a few points. No telling what may happen if Europe no longer allows high speed trading by computer for large dollar amounts. A computer can issue over 1000 trade slips per second. Shady profiteers issue tens of thousands at a time, hoping to affect the price of certain stocks, then they cancel the most of the trades before they legally have to pay for them. This goes on all day, every day, and a lot of money can be made, or lost. Practices like this are what is being protested on Wall Street...

The last crack came in the form of a video, showing candidate Elizabeth Warren, that dreaded consumer advocate, making a common sense argument for rich folks to pay their taxes and stop their bitching, from EJ Dionne's column in the Washington Post: "The declaration heard ’round the Internet world came from Elizabeth Warren, the consumer champion running for the U.S. Senate in Massachusetts. Warren argued that “there is nobody in this country who got rich on his own,” that thriving entrepreneurs move their goods “on the roads the rest of us paid for” and hire workers “the rest of us paid to educate.” Police and firefighters, also paid for by “the rest of us,” protect the factory owner’s property. As a result, our “underlying social contract” requires this hardworking but fortunate soul to “take a hunk” of his profits “and pay forward for the next kid who comes along.”


Who knows what will happen this week, but it looks like the balance is tilting in favor of President Obama's modest proposals, and they might actually be passed by Congress. Again, government cannot create jobs in the private sector, all it can do is to hire federal employees or fund public projects that can be hired locally. The closest it gets to stimulating private businesses, is through the small business administration, but they used to have a $50,000 cap on their loans, so not much will be generated that way... Now I'm wondering if Rick Perry has decided that the best we can do is to pray away the depression...





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