In need of fiscal clarity

“To place before mankind the common sense of the subject, in terms so plain and firm as to command their assent.”

- Thomas Jefferson, on the purpose of the Declaration of Independence, 1776.


“A not-so-funny thing happened on the way to economic recovery. Over the last two weeks, what should have been a deadly serious debate about how to save an economy in desperate straits turned, instead, into hackneyed political theater, with Republicans spouting all the old clichés about wasteful government spending and the wonders of tax cuts.

“It’s as if the dismal economic failure of the last eight years never happened — yet Democrats have, incredibly, been on the defensive. Even if a major stimulus bill does pass the Senate, there’s a real risk that important parts of the original plan, especially aid to state and local governments, will have been emasculated.”

So wrote Paul Krugman in his New York Times column Friday, 6 February 2009 (LINK).

He was right. In the interim, aid to local and state governments was slashed by $40 billion. I’ve been reading Krugman for eight years, and his predictions about the U.S. economy have always been right.

Most of you know Krugman is a professor of economics and international affairs at Princton and was this year’s recipient of the Nobel Prize for Economics.


We need answers.

Where has all the money gone?

And, how in the hell did this country begin the slippery slope to abysmal financial failure?

Krugman’s good. He really is. But, a few days ago I found a blog post which gives us the answers with such clarity, I want you to pack up right now and take a short trip over to Papamoka Straight Talk.

Michael Boh, who blogs on Our Rants and Raves! is Papamoka Straight Talk’s “left coast contributor,” and in one of his so-called “rants,” he has answered any questions you might have about where we find ourselves – economically – today.

Michael has a tendency to characterize those who don’t bother to stay informed, those who fall for “the Party line,” in vivid terms, but you will come away from this post – complete with graphs – more informed.

Read Michael’s facts about “fiscal responsibility,” so you won’t be fooled by pathetic partisan propaganda: LINK

I’m sure glad I did!


The “recovery plan” – H.R. 1 - regardless of its final content will certainly pass Senate muster today. A House and Senate compromise will be reached in time for President Obama’s signature before the President’s Day recess.


Frodo Investus Diminishus said...

1. Credit was available to potential borrowers who didn't have any money;
2. Money was lent to those people;
3. The "promise to pay" that they made was not worth the paper on which it was printed;
4. Their "promise to pay" was put together with other "promises to pay," and sold to investment banks;
5. The borrowers were not able to pay their bills;
6. The banks were forced to foreclose;
7. The investment banks did not receive payments on the "promises to pay" they had already purchased from the banks;
8. The banks were not able to sell any more "promises to pay;"
9. The banks had to hold the "promises to pay" that they could not sell, leaving them without any money to lend; and
10.The borrower had no house, the bank ran out of money to lend, and the investment bank held "promises to pay" that didn't.

The "investment bank" in Frodo's "Wha Hoppen? List" above weren't simply the Lehman Brothers of the world. Rather, the "investment bank" is the People's Republic of China, the California State Teacher's Fund, Dartmouth College, your 401(k), dear reader, and all such organizations that invest money, seeking strong and safe returns. There is a big circle herein, and the little guy who bought a house he could not afford is, indeed, a part, but so is the hodad who loaned him money.
It was people such as these that a carpenter's son tossed out of the Temple 2000 years ago. You know what? "They-re-re-re Back!"

airth10 said...

It is hard to know how the economy is going to go because of the stimulus. The big problem is that fundamentally the economy is screwed-up and may take some time to correct. One of the main problems is too much inventory and capacity. There has been too much of everything; too many stores, too many car manufactures, too many house and office building, and so on. It will take time for the excess to go away, before things will come back. Perhaps there has been too much capitalism. And there is little trust and confidence around, two pillars of healthy economic activity.

B.J. said...

Frodo and Airth: you make good points here.

I remind my readers that the point of this post is a reference to an excellent post by Michael Boh over at Papamoka Straight Talk. There is a direct link to Michel’s post with my post. You would do well to listen to what Michael so aptly says!

I don’t think Tiny would mind: here’s her comment on Michael’s post:

Tiny has left a new comment on the post "GOP Lies About Fiscal Responsibility":

I'm in the AMEN corner. Hear me shouting,"Amen,brother! You preach brother! Lay it on the line and tell the Repungents to prove you wrong."

Let's send this man on the road as a spokesman for the national debt remedy. He can attract attention and let the world know who runs up our debt and who works so hard to bring it down.

If Ross Perot can tote graphs all over the USA, Michael Boh can certainnly do the same. Pictures are worth a thousand words we are told. These pictures don't lie! Nor do the words.

Three cheers for Papamoka and his "brotha from anotha motha!"

Posted by Tiny to Papamoka Straight Talk at 3:10 PM

Thanks, Tiny. You are so good about clicking on source links. You and I are so much alike. We know we still have a lot to learn!


Gregg Sutton said...

The DNC would do well to print Michael Boh’s article, complete with graphs, in pamphlet form and distriubute it to every voter in America. I would donate time and money to that project.

Falzone for America said...

Agreeing with Tiny and Gregg and all others. The charts tell the story and the message drives it home. I am on the protectionist side of the isle. Opponents site the Smoote-Hawley Tarrif Act

Saying it started the Depression. It wasn't passed until afer the Depression had started.

Please Mr. President, Re-write the trade agreements.

Tiny said...

Tiny is indebted to BJ for her excellent post and for sending her to papamoka's blog via the links she put in her post.

She still contends Michael should be traveling with the Obama team to bring attention to what President Obama inherited and what he is doing to try to rectify the
gawd-awful squandering our resources and trashing our historic Constitution and Rule of Law.

Thanks BJ and her friends who keep us up to date on important issues essential to our welfare and well being. Keep up your good works, lady. WE love you.