Conservative Austerity Idea Is Failing: David G. Blanchflower
By David Blanchflower - Jan 27, 2011
Sorry, fiscal austerity doesn’t work. For evidence, look no further than the U.K.
This can’t be good news for the U.S. political right, whose mantra has been: cut spending, put a lid on deficits, and growth will improve.
All sorts of good things, it is claimed, will spring from a turn to austerity that stops all this stimulus nonsense and prevents the Federal Reserve from doing more quantitative easing. Reductions in spending, according to a theory known as Ricardian equivalence, will do no harm because lower borrowing will automatically lead to higher private spending. Plus, of course, there is the notion of crowding out, meaning that reining in the public sector leaves room for the private industry to step in and all will be well.
This is dangerous hogwash.
There is little historical precedent in the real world, though lots of fantasizing in the made-up world of economic theorists, to suggest that fiscal austerity works. The best example of austerity’s failure is the double-dip that occurred in the late 1930s in the U.S., when spending was reduced too soon in a nascent recovery. In contrast, the U.K. didn’t have a double-dip because it was engaging in classic Keynesian spending as it began re- arming.
Claims are often made that there are examples where fiscal austerity has worked. But it turns out that this is generally due to the monetary stimulus that accompanied it, as in the U.K. under Margaret Thatcher in the 1980s. The most frequently cited example is Canada, but it was able to cut interest rates while at the same time benefiting from the Clinton boom of the 1990s.
Back in Recession
Fiscal austerity has already been started in Greece, Ireland, Spain and Portugal, and this seems to be pushing all of them back into recession. Over the last four quarters, growth in Greece was negative and falling, and bond investors are once more demanding sky-high returns to compensate their risk. The excuse in these countries was that they have little choice because they are stuck in the European monetary union and don’t have the ability to depreciate their exchange rate.
The U.K. may be a purer case of the harm austerity at the wrong time can inflict. Britain now looks as if it is headed back into recession on fear about the damage that will be done by massive spending cuts and tax increases, which haven’t even gone into effect yet. Government ministers with their talk of austerity have already smashed confidence. moreThe problem is that the ideas necessary to fight back against the banksters and their minions have vanished from the public debate. Here Ms. Maddow points out how once even Republican presidents 'got it.'
Rachel Maddow: In America Today, Republican President Dwight D. Eisenhower Would Be Bernie Sanders in the U.S. Senate
The huge ever rapid shift rightward makes Dwight Eisenhower and Richard Nixon look like lefty radicals today.
January 28, 2011
The following is a shortened version of Rachel Maddow's opening monologue from her show on Wednesday on MSNBC:
For the next hour, we begin with the president of the United States addressing the nation and calling for a massive investment in this country's infrastructure, rebuffing the idea of giant tax breaks for the richest Americans, and warning anyone who would dare touch Social Security to keep their hands off.
You want to talk about red meat for the base? Listen to some of the language the president used. "Workers have a right to organize into unions and to bargain collectively with their employers. And a strong, free labor movement is an invigorating and necessary part of our industrial society." Wow.
How about this one? "Only a fool would try to deprive working men and women of their right to join the union of their choice."
Listen to the way he goes after the right here. "Should any political party attempt to abolish Social Security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things, but their number is negligible and"--and the president says--"their number is negligible and they are stupid."
That is not what Barack Obama said last night. That is way to the left of any national Democrat at this point. That was all Republican President Dwight David Eisenhower. That was all the stuff he said when he was president.
Republican President Dwight Eisenhower, president when the top tax bracket for the richest people in this country was 92 percent. President Eisenhower defended that tax bracket. He said we cannot afford to reduce taxes until, quote, "the factors of income and outgo will be balanced." Eisenhower insisting there must be a balanced budget and that taxes on the rich are the way to balance it. Dwight Eisenhower, you know, noted leftist.
The Republican Party platform of Eisenhower's 1956 called for expansion of Social Security, broadened unemployment insurance, better health protection for all of our people. It called for voting rights--full voting civil rights for D.C. It called for expanding the minimum wage to cover more workers. It called for improved job safety for workers, equal pay for workers regardless of sex.
This is the Republican Party circa 1956. The Republican Party. moreOur 'Socialist' president (yeah, right) is one of those guys so far to the political right that he makes old Ike look like a political lefty.
Barack Obama -- Out of the Closet
Michael BrennerSenior Fellow, the Center for Transatlantic Relations; Professor of International Affairs, University of PittsburghPosted: January 24, 2011 11:17 AM
Wall Street's takeover of the Obama administration is now complete. The mega-banks and their corporate allies control every economic policy position of consequence. Mr. Obama has moved rapidly since the November debacle to install business people where it counts most. Mr.William Daley from JP Morgan Chase as White House Chief of Staff. Mr. Gene Sperling from the Goldman Sachs payroll to be director of the National Economic Council. Eileen Rominger from Goldman Sachs named director of the SEC's Investment Management division. Even the National Security Advisor, Thomas Donilon, was executive vice president for law and policy at the disgraced Fannie Mae after serving as a corporate lobbyist with O'Melveny & Roberts. The keystone of the business friendly team was put in place on Friday. General Electric Chairman and CEO Jeffrey Immelt will serve as chair of the president's Council on Jobs and Competitiveness. That is the spot, under a different council name, previously held by Paul Volcker. Both he and his post now will be airbrushed out of Obama administration history to align the past with the inglorious future.
Mr. Obama last week obediently recited the Chamber of Commerce's liturgy about governmental regulation being the cause of what ails the American economy in the pages of the Wall Street Journal. This public oath of allegiance signaled his now admitted complicity with those who supposedly had been his opponents. The one example of alleged bad regulation he cites in the WSJ op-ed is something about saccharin and the environment. The prospect of our corporate moguls being released from the bonds of saccharin regulation doubtless has China's President Hu and his colleagues quaking in their well-tailored suits. moreOne of the things the Wall Street criminals can do (since they obviously cannot bring about a generalized prosperity) is mess with the food supply.
The Era Of Cheap Food Is Coming To An End. Blame Wall Street Hedge Funds.
By Susie Madrak January 31, 2011 03:00 PM
Yet another stick in the spokes of the geopolitical world wheel! And of course, climate change has nothing to do with the extreme weather affecting crops around the world -- and neither does the fact that Wall Street hedge funds have allegedly been locking up the commodities market, driving up the costs of food. That's because we live in America, where reporters never ask rude questions!
U.S. grain prices should stay unrelentingly high this year, according to a Reuters poll, the latest sign that the era of cheap food has come to an end.
U.S. corn, soybeans and wheat prices -- which surged by as much has 50 percent last year and hit their highest levels since mid-2008 -- will dip by at most 5 percent by the end of 2011, according to the poll of 16 analysts.
The forecasts suggest no quick relief for nations bedeviled by record high food costs that have stoked civil unrest. It means any extreme weather event in a grains-producing part of the world could send prices soaring further.
[...] "Even if we have a good year, we are not going to have the inventories we've seen before.I really do think the time of cheap food prices is over, and that's just it," said analyst Chris Mann of Traders Group Inc in Chicago.
"Everything is set to the point where supply equals demand right now. But if you pull one thing out of it, or if you disrupt the equation in some little way or tweak it, I think, with inventories as tight as they are, it will really have an impact on prices. A drought, a flood, anything," said Mann.
You'll notice he doesn't mention a thing about hedge funds pouring massive amounts of money into the commodities market after the housing market collapsed, and instead driving up food prices -- which in turn, promote global economic and political unrest: moreAnd here we have a discussion of how the speculators are screwing with the global food supply. Apparently, they don't believe that riots and political instability are among their worries.
One way to demonstrate how fed up the world has become with banksters is to note the appearance of jokes. At this link from the Guardian, you may find quite a few jokes about the evil moneychangers. Most are pretty lame--recycled lawyers jokes, mostly. Some are damn funny. For example.
A man is stuck in traffic. He asks a police officer about the hold-up and he replies: "The head of the Bank Of England is so depressed about the economy he's stopped his car and is threatening to douse himself with petrol and set himself on fire. So we're taking up a collection for him." The man asks: "How much have you got so far?" The policeman replies: "About 40 gallons, but a lot of people are still siphoning." more