Obama assigns centrists to make radical economic moves

Discussion in 'Politics' started by KenH, Nov 25, 2008.

  1. KenH

    KenH
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    Obama assigns centrists to make radical economic moves

    The team led by Lawrence Summers, Timothy Geithner and Christina Romer will have to strike a balance between extraordinary government intervention and the nation's commitment to free markets.

    By Peter G. Gosselin

    November 25, 2008

    Reporting from Washington — The economic team that President-elect Barack Obama unveiled Monday, led by Lawrence Summers, Timothy F. Geithner and Christina D. Romer, comprises widely respected, centrist economists who until recently advocated cautious, sensible-shoe policies to do such things as boost savings, reduce deficits and allow markets maximum feasible rein.

    But the assignment that Obama has given them is anything but cautious and sensible-shoe.

    It is to make Washington the consumer of last resort in an economy in which consumption is plunging. It is to devise industrial-policy-like programs to salvage a collapsing auto industry and turn green an energy industry almost wholly focused on fossil fuels. It is to dip more deeply into the lives of ordinary Americans -- especially those with housing troubles -- than the government has done in generations.

    But so much has gone so wrong during the last 15 months that what would have been beyond the political pale as recently as a few years ago is quickly becoming the consensus.

    ...

    The idea of a big new fiscal stimulus -- gargantuan by historical standards -- is the first and least controversial step the new administration may take.

    With President Bush's $168-billion stimulus of earlier this year having worn off and the financial crisis having stalled both U.S. and world growth, there is essentially no other actor but Washington that can get the economy going again, many experts and lawmakers believe.

    As a result, calls for an extra $500 billion to $1 trillion in government spending over the next few years are coming from across the political spectrum.

    "I'm a fiscal conservative who dislikes increased government spending and increased deficits," Harvard economist and former Reagan chief economic advisor Martin Feldstein said in an e-mail. "But this is a time when we need both, and they need to be really big."

    Economists of diverse political opinion also believe that bailouts of once-highflying financial firms must continue and that a much more aggressive rescue program must be mounted for millions of troubled homeowners. This is despite the fact that such efforts help many financiers dodge the consequences of their own bad decisions.

    Letting companies collapse and homeowners go bust would cause too much damage to the economy, even if some of those saved are undeserving, economists agree.

    It is the challenges beyond enacting a huge new stimulus package and continued bailouts that are really complicated, both for the country and for Obama's new team.

    - rest at www.latimes.com/news/nationworld/washingtondc/la-fi-econ25-2008nov25,0,7551776,print.story
     
  2. Mexdeaf

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    The idea that the government of the US can pull the world out of it's doldrums is as foolish as the statement made at the recent meeting in Peru that the so-called 'world leaders' will end the recession within 18 months.

    The fool hath said, "No God."
     
  3. carpro

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    Paul Volker? :laugh: :laugh:

    Aren't his Federal Reserve policies largely credited for being a major contributing cause of the worst recession we've been through in the last 50 years?
     
  4. TomVols

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    Yes. One and the same. Although, when compared to a Kenyesian like Greenspan, old Paul didn't look so bad after all :tonofbricks:
     
  5. LeBuick

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    I don't understand, what exactly did he do to contribute to this situation?
     
  6. Dragoon68

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    He raised interest rates to stop inflation - a by product of former government meddling - but that thereby choked investment causing another problem. Government meddling just doesn't work long term. There's nothing new under the sun.
     
  7. LeBuick

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    So I understand, raising interest rates caused this global economic meltdown? If it were that simple couldn't we just lower them?

    Unregulated free enterprise doesn't appear to be working all that well either. I also don't see the normal conservative philosophy of "do nothing" and "stay the course" getting us out of this situation. I'm not saying Government is the solution but it is nice to see someone trying to do something to help and if they can get one person back to work it would be an improvement over the "lets ride it out" theory.

    I am sorry to disagree but I see doing something as better than doing nothing. Then we just need to hope that something is the right something.
     
  8. LeBuick

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    Looks like part of his reign of terror was under the great conservative hero President Ronald Reagan... If he was good enough for Reagan then he should be good enough for an Obama administration... :thumbs:

    And dont overlook this little fact...

    http://www.washingtonpost.com/wp-dyn/content/article/2008/11/26/AR2008112603957.html?hpid=topnews

     
    #8 LeBuick, Nov 26, 2008
    Last edited by a moderator: Nov 26, 2008
  9. TomVols

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    Well, let's look at the history. Volcker was appointed by Carter in 1979. True, Reagan did reappoint him, but even Bob Woodward noted that this was over Reagan's concerns and even Greenspan's. Jettisoning Volcker, Reagan believed, would be too risky given the eocnomic tumult he had inherited. Woodward also notes that Voclker did much of what was "credited" to him under White House pressure. Remember, too, that James Baker's appointment as Treasury sec was credited as a stablizing force for the economy. An interesting aside is that some believe Greenspan was lobbying for the position behind the scenes.
     
  10. Dragoon68

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    You asked what he did and I told you. I didn't say he was responsible for the current economic situation.

    The trigger point for the present situation was the government's meddling in the home loan business forcing banks to loan money people couldn't pay back, creating a new artificial business opportunity for greedy bankers, creating a free ride for consumers to buy something they couldn't afford, and fulfilling yet another dream of social re-design.

    Raising interest rates tightens the money supply, can help against inflation, but can lead to recession. Lowering interest rates loosens the money supply, can lead to towards inflation, but works for growth. Some believe he went too far with raising interest rates in order to correct the inflation of the times and that lead to recession.

    It's also not a valid conclusion to say that "unregulated free enterprise doesn't appear to be working" when, in fact, we don't have unregulated free enterprise. We have too many regulations that meddle with good business decisions instead of just providing a framework for justice - fair business practices. The things we need we don't have and thing we don't need we have an abundance.

    The only reason the nation doesn't fall flat on it's face is because of the sheer strength of free enterprise - the determination of its participants to make a buck despite the government. That's what's always kept of going.

    We've been so strong that we can tolerate the waste, the skimming, the corruption, etc. of both private and government interests. However, our competitive edge is not nearly as great as it once was. But the ones getting a nice ride don't want to give up the gravy.

    Yes, he served in both the Carter and Regan administrations because he was, supposedly, a non-partisan administrator. Perhaps he was and perhaps not. Maybe he did what seemed best at the time within the framework we have and maybe not.
     
  11. LeBuick

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    You got me, the big 3 CEO's go to DC in private jets with no financial plan to beg for a bridge loan. And you insist these guys are great financial minds and need less regulation. AIG took their loan to an expensive retreat in NV, expanded executive office spaces and gave bonuses to 121 of it's most needy employee's (all top executives) on top of retainer checks to a bunch of managers in an industry that ain't hiring. And these are the great minds in which we trust the success of free enterprise and the financial stability of this country. The same guys who gave us stated income loans and 125% financing...

    Interesting...

    I agree with one point, unregulated free enterprise would be nice to have but it unfortunately depends on greedy executives to make good and correct decisions with other peoples money. I would like to see unregulated free enterprise but I would also love to see a world with no homeless or people going to be hungry. Both seem unrealistic at this point in time.
     
  12. LeBuick

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    I forgot to add, the only reason we don't fall flat on our faces is because the government stepped in with deficit spending. Now I admit, this is like trying to hold up the world with a wet spaghetti noodle but it's unfortunately the only things holding us up so we should probably all pray that God blesses and gives strength to that spaghetti noodle.

    I'm trying to picture our current state if we'd have stayed with the conservative philosophy of "do nothing". Where we were heading with failing banks and falling markets was certainly no picnic for the common man who had nothing to do with the decline...
     
  13. Dragoon68

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    Nope, you're still missing the point. If we do not give these people a handout then the free market will see to it that they fail in business. That's all the incentive the rest need to do the right things. But if we give them a special deal then all the others would rightly want it as well and the free market would be devoid of the penalties of poor management. Government's only role should be the maintenance of justice - no cheating, lying, stealing, etc., etc. People should be able to get just as rich as they can so long as the do it honestly. They're also free to make one stupid decision after another and end up with a large dinosaur corporation headed to bankruptcy.

    By the way, in this case, these bulbous red nosed asses were no better or worse than the ones asking all the questions. They deserve one another. I'd never consider letting Congress run my business nor invest my money. It's only because of the force of law that they get to do what they can now.
     
  14. Dragoon68

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    You actually believe it's the government that makes our economy go don't you?

    Have you been to the Post Office lately, gotten a driver's license, been called to jury duty, watched the endless drone in Congress, checked the number of administrative staff at your nearest schoolhouse, etc.? With some exceptions these people are typically not wonderful examples of how to run a business, make money, be efficient, or work hard. They sure can generate the rules though! Private businesses that operate like this eventually go under unless, of course, government rewards them with a subsidy or bailout for their failures.

    It is people like you and me that have ideas or skills, want to make a buck or do something good, convince someone to loan us some money or give us a job, and then work hard at competing with our idea or skill against all the others. That energy is want drives the economy. It's not all the do-gooders in Washington that want to tell everyone else what to do and not to do with their money that don't add value by any real goods or services. Get rid of of the waste!
     
  15. LeBuick

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    It is you who is missing the big picture, as these companies fail, the CEO's and other captains at the help are leaving with huge bonuses. They have already achieved financial freedom from the Millions they earned sinking the ship. It is the investors and workers who loose in this deal. The ones who haven't earned financial freedom and depended on the market for a 401K. We are the losers, the Executives are set for life...

    Some of the regulation I would like to see.

    For one, no one I don't care how god you are deserves more than 100% of they pay as a bonus. These bonuses have gotten out of hand and they are awarded at the expense of the investors and workers. We see 1K people get laid off then the CEO gets a $10 Million bonus. Something ain't right with that picture.

    Secondly, I don't think the CEO should also be chairman of the board. I think there is a conflict of interest and no check in balance which is the purpose of the board. I also think the board should only be paid with stocks which must vest for a period of time before they can cash them in. This would encourage the board to not turn a blind eye to bad business practices and ridiculous executive compensation packages since their compensation is based entirely on the companies success...

    I don't believe we need a lot of regulation but I do believe we need a system in place that only reward success and has the executives sharing in failure. Example is when AIG took the first bailout check and gave bonuses they claimed was earned earlier in the year. How did workers of a failing company earn a bonus? It seems the criteria was all wrong and they were rewarded for failure and not success.
     
  16. LeBuick

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    No, how did you derive this from anything I said? I will be more clear with what I'm saying, the CEO's and top executives are being abundantly compensated for failure. At whose expense, the investors and the workers.

    I don't want to see regulation but it is clear the CEO's and top Executives won't do right unless we put rules on them. That is why I mentioned AIG and the Big 3 auto companies. Those are clear examples where the top executives just don't get it. How did you earn a bonus when the company is failing? What business ever got a loan with no business plan? These are basic business practices and these guys get millions for ignoring them.

    Because they don't get it, the losers are the investors and the workers. I want the government to protect the investors and the workers with regulation. The best way to do this is to make sure the board isn't paid if the investors aren't getting dividends... This will make the board do their job.
     
  17. carpro

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    So how will we pay for the several trillion dollars in "bailouts"?

    Print more money?

    I smell double digit inflation coming down the pike.
     
  18. carpro

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    Uh huh.

    One of the defining traits of a liberal.

    Are you surprised?
     
  19. Dragoon68

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    I think the money some athletes, entertainers, news anchors, politicians, businessmen, etc. make is way more than the tangible value of what they actually do. I also think the money some workers at McDonald's make is way more than the tangible value of what they actually do especially if service is the measure. Maybe you make too much for what you do? Maybe I do as well? Who should decide?

    But "No one deserves ..." or "Everyone deserves ..." AND "there should be a law ..." are elements of classical liberal thinking. You're looking to wrong place - government - to solve the problem. Stop buying the goods and services these people offer you and demand they give you more for your money. Stop investing in their stock if you're not happy with the return on investment. Go the annual stockholder meetings and raise the issues! But then, on the other hand, it's the investor's demands for quick capital gains and high dividends that's driven the salaries and bonuses of executives up so high. This is the system that rewards success: I give someone my money to make me more money. The more money they can make me and the faster they can do the more of a cut I'm willing to give them.

    Perhaps everyone is too greedy? Guess what, your new friends in Washington are just as greedy. They can't want to get control of all this money especially without having to take the risks. The taste of power is on their palates. Their motives may sound pure but the results will do nothing good for you and me in the cost of the goods and services we procure.
     
    #19 Dragoon68, Nov 28, 2008
    Last edited by a moderator: Nov 28, 2008
  20. Dragoon68

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    It's clear Congress won't do right unless we get them out of our business and leave us alone. Congress is not a friend of the owner nor the investor nor the worker. Congress is a friend of Congress.

    Businesses have a "government" through their owners. If the owners are stockholders - investors - they can attend the annual meetings, make their case, and force a vote to limit executive compensation. The fact is people - not everyone but the one's whose money is on the line - like the results these "greedy" executives have typically gotten for them. It's just like paying millions for one quarterback because you really want to win the championship and you like the attention it gets your organization. You don't have to do it but you decide to do it.

    Workers DO NOT own the jobs. The employer DOES own the jobs. They are free to eliminate the jobs if they decide they don't need them any more. They don't owe someone a living. The workers DO own the skills. The employer DOES NOT own the skills. They are free to take their skills elsewhere. If you have a job for someone to do then you work out the terms with them by which they'll do it. If there's agreement then it's a go and justice should honor the terms and enforce them if necessary. But if the terms don't include a job for life then that's not in the package.

    Wealth envy is such a terrible sin for the less rich. Power is such a temptation.
     
    #20 Dragoon68, Nov 28, 2008
    Last edited by a moderator: Nov 28, 2008

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