Economists -- all of them -- are in agreement that taking aggressive action to simulate the economy is fraught with risks, great risks. But those risks are small when compared to the risk of doing nothing, or relying only on aggressive tax cuts. The risk of catastrophic failure from following that narrow strategy is just too great.

There is, of course, controversy about this or that provision in the TARP, as there should be. But efforts by some to discredit the whole program is just crumby politics, pure and simple, and does not serve the public interest.

Hi Haus Proud,

But those risks are small when compared to the risk of doing nothing, or relying only on aggressive tax cuts.

Oh puhLEAZE.... in all reality and historical observation, there is ZERO ultimate risk at "doing nothing." We can KNOW the path of unwinding if we let the cycles take their course. In fact, the consequences are far more manageable and knowable if we keep the wild-card hail-mary screwball manipulations (and this is an equal-opportunity anti-idiot politician rant!) out of the game.

When we start screwing around with the variables and throwing failing bailout efforts into the mix on a "hope it works" bases, we're consistently worsening the consequences and extending the misery...

AND IT OUGHT TO BE NO SURPRISE!!! Anyone with a knowledge of economic history knows that this has virtually always been the case with governmental economic intervention (versus non-intervention and natural cyclical patience.)

The "Great Depression" was exacerbated and lengthened by the creation of the Federal Reserve, and its subsequent market interventions... (hmmm... anyone seeing something familiar unfolding now with FHFA? Hope Now? Hope For Homeowner's ACT? Etc. ad nausuem???)

There is, of course, controversy about this or that provision in the TARP, as there should be. But efforts by some to discredit the whole program is just crumby politics, pure and simple, and does not serve the public interest.

WHERE have the current efforts earned *ANY* respect AT ALL so far?

Seriously? Its *ALL* a complete joke... our elected officials are shooting arrows randomly in the dark, telling us they're going to kill the monster for sure.

Its silly!

Dave

(BUT WAIT... THERE'S MORE COMING!! THIS TIME IT WILL BE DIFFERENT!!!! ;~D

This period in our history is in no way comparable in it's entirely to the relative 'simplicity' of the Great Depression.

Of course, in economics we cannot do a controlled experiment. We can only infer from historical events that were similar or dissimilar. I am not an economist, but I am amazed and sometimes amused by how the Right Wing has re-written the history of the Great Depression.

Enough said.

I'm endlessly amused at how non-partisan straightforward economics is broadbrushed by collectivists as "right wing" and suddenly swept into a political position it doesn't assume...

Its as though somehow only the so-called "right wing" operates from common, basic economics (which, judging from the past 8 years, evidently can't be further from the facts.)

Both extremes are nuttier than fruitcakes.
Dave

I am not an economist, but I am amazed and sometimes amused by how the Right Wing has re-written the history of the Great Depression.

Maybe we should see what those who actually ARE economists have to say about it :

FDR's policies prolonged Depression by 7 years, UCLA economists calculate

In case you don't want to read the whole thing, I'll give you the money shot:

"The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes," Cole said. "Ironically, our work shows that the recovery would have been very rapid had the government not intervened."

... but I guess those guys from UCLA are just right wing nutjobs, though.

".... in all reality and historical observation, there is ZERO ultimate risk at "doing nothing."

So the situation we are in does not count as a risk? If it is true, I cannot wait for the upcoming fun time that leads us to the "Zero ultimate risk".

"AND IT OUGHT TO BE NO SURPRISE!!! Anyone with a knowledge of economic history knows that this has virtually always been the case with governmental economic intervention (versus non-intervention and natural cyclical patience.) "

I thought one of the causes of the mess we are facing is exactly the lacking of governmental economic intervention, such as proper regulations, supervisions and oversights.

"WHERE have the current efforts earned *ANY* respect AT ALL so far?"

It is obvious lots of people have been putting in tremendous effort trying to find the solution. May be not from you, but surely they have earned respect from me and many others. I surely feel so far we have been getting his compensationÂs worth from the new president. What he has achieved in 4 weeks surpasses the previous one in 4 months. May be 8 months since the previous one spent big chunk of the term on vacation.

I am a believer of classical liberalism but with check and balance. When Adam Smith promoted invisible hand, he had never ditched the needs of state; nor had he ignored the potential of abuse from these who gained power. In addition, from history, we also learned that there are plenty of adjustments made to his theory. Do you honestly believe that Adam Smith would not alter his 200 years plus old ideology if he IS among us?

"Seriously? Its *ALL* a complete joke... our elected officials are shooting arrows randomly in the dark, telling us they're going to kill the monster for sure. ".

When a person is gravely ill, we would not suggest doing nothing and letting the illness run through the course. Then why with current sickening economy, we resist of doing something? If you do not have a job, no savings, no access to credit and medical insurance, but with a family to raise and a home to keep, would you still suggest the best way is doing nothing?

I view the bailout plan as seed money for future prosperity. For the need, I view it as a temporary loan tying them over until they can get back on their feet.How do you know for sure the plan will not work? No one ever said that the plan will never be modified.

Things happen; life can play a cruel joke, I honest believe most people in need would rather not be in the situation of getting handout. I am curious as why it is wrong with the plan that designed to help.

In 1932 a disporportionate number of people who had telephones voted Republican. In those days, most people who had phones were rich. So phone surveys of "potential voters" predicted that Roosevelt would lose the presidential election that he won with a large margin.

It is perhaps a big leap from the 1932 example to the present one, but I suspect that individuals most strenuously opposed to the TARP are the ones fortunate enough to have an AGI that exceeds $250K, and who are essentially unaffected by the recent turn of events. They of course also believe that nothing government does can possibly be any good. Some even believe that the Food and Drug Administration should be abolished, so that the market can determine which foods and drugs are safe and beneficial.

About the 1932 election, it was interesting that large numbers of servants of the wealthy voted Republican, even though it was not in their best interest to do so. The reason: they were essentially insulated from the hardships of most individuals in their social position and identified with their employers.

I believe that many people vote against their own best interest today, because they look up to and admire the wealthy and, especially if they have recently acquired a measure of wealth, imagine themselves in a position to benefit more from the policies promoted by the CLUB FOR GROWTH than from a more egalitarian policy that benefits the broader public interest. Of course, the CLUB FOR GROWTH types have spent a good deal of money promoting their views and convincing and misguiding people of relatively modest means that their policies benefit everyone.

Hi Azmom,

".... in all reality and historical observation, there is ZERO ultimate risk at "doing nothing."

So the situation we are in does not count as a risk?

... *PLEASE* read what is actually written... not just what you are imagining. I didn't say the current situation isn't risky or painful... but rather that "doing nothing" does not INCREASE the risks at hand IN THE END (which is what "ultimately" means.)

In contrast, blind stabs in the dark DO increase risks, significantly.

"Doing something" merely for the purpose of "doing ANYthing" is bad medicine.

I thought one of the causes of the mess we are facing is exactly the lacking of governmental economic intervention, such as proper regulations, supervisions and oversights.

Only if you refuse to look below the surface symptoms to see the actual causes. Virtually *ALL* of the "free market problems" occured because government had ELIMINATED certain natural risks from the markets, and all players in the markets recognized that and loaded up the skew.

You can't fix a cause with more cause.

It is obvious lots of people have been putting in tremendous effort trying to find the solution. May be not from you, but surely they have earned respect from me and many others.

Efforts get very little respect... results get respect.

I surely feel so far we have been getting his compensationÂs worth from the new president.

A) FIRST OFF, I'm not at all unhappy with Barack Obama, and I suspect he'll do well if he can get beyond the idjets surrounding him.

B) "His compensation's worth" (that made me chuckle... the most UNDER-compensated pressure-cooker position on the planet, if we only count the dollars directly paid. ;~)

When a person is gravely ill, we would not suggest doing nothing and letting the illness run through the course.

You're clearly not familiar with the facts of life, and the facts of medicine. BUT MORE IMPORTANTLY... you're not using our language appropriately.

"Gravely ill" implies that death is imminent. Our economy will naturally right itself from its cycles... if we let it alone, we are not going to disappear from the planet.

Then why with current sickening economy, we resist of doing something?

Because "doing something" (if the WRONG something, when unknown) will make the patient WORSE.

The primary health care commitment is "ABOVE ALL ELSE, DO NO HARM!!!"

If you do not have a job, no savings, no access to credit and medical insurance, but with a family to raise and a home to keep, would you still suggest the best way is doing nothing?

As an INDIVIDUAL, no. As the GOVERNMENT, "it depends" (on what we actually know and understand.)

It is not arguable that the most recent year's worth of intervention (and that lays 90% of the blame on the previous monkeys) has been a complete waste of everyone's time, effort and our dearly needed tax money.

Think we'll learn how to leave the scab...

Hi Haus Proud,

Question for you about this sttatement;
I believe that many people vote against their own best interest today, because they look up to and admire the wealthy and, especially if they have recently acquired a measure of wealth, imagine themselves in a position to benefit more from the policies promoted by the CLUB FOR GROWTH than from a more egalitarian policy that benefits the broader public interest.

So then... for the industrious and productive among us (especially those hoping to escape cultural traps and gain true economic equality) with intentions and aspirations of financial independence and freedom of lifestyle... those of us willing to "do what the majority are unwilling to do"...

What IS the better policy that serves our best interests?

Curious for your response.
Dave

If your AGI is a measly $100K, you have no business complaining about taxes and parroting the mantra of the superwealthy most of whom have nothing better to do than complain about the IRS and figure out how best to avoid, or even dodge taxes.

Of course, nothing is perfect, and there is as much corruption in government as there is in corporate boardrooms, but government can (if competently managed and monitored, not like the last 8 years) provide the resources and create the climate that enables everyone, even the most disadvantaged among us, to lead productive lives. It may be true that "in the long run" the markets will right themselves without intervention, with just the intervention that the CLUB FOR GROWTH and similar thinking people advocate. But, "in the long run" we're all dead. I would hate to see a whole generation lost to that purist market philosophy. In other words, some people cannot wait for the market to correct and start growing again.

Ultimately, we need to ask ourselves, what kind of society do we want? I believe that Krugman and Soros are right -- the stimulus package is in the right direction, but it is not big enough. That will create the conditions that will enable us all to grow.

Haus Proud,

You seemed to have avoided, or even dodged, my question (and what is the significant difference between those verbs anyway?)

Shall I copy & re-paste, or can you scroll up & re-read?

Cheers,
Dave

HP,

By the way.... about this;
In other words, some people cannot wait for the market to correct and start growing again.

That's like a child who "can't wait for a bone to heal inside the cast, and therefore tears the cast off."

A) You can wait for the markets to heal, OR,

B) You can interfere and delay the healing (and very likely create further scarring.)

Mucking with the natural process can't accelerate the fastest mending that the systems can provide. You can ELIMINATE risks with the cast (i.e. keep intervention OUT of the market's ways,) or you can let the broken bone flop around, do rain dances to appease the gods, and sacrifice chickens.

The choice is ours.
Dave

PS being uncomfortable with reality doesn't mean that interfering with it will make it better... and historical economics shows the contrary is far more often the case.

Dave, I was not trying to evade your question. I found it loaded with sweeping, unsubstantiated assumption and confusing. What does this mean?

for the industrious and productive among us (especially those hoping to escape cultural traps and gain true economic equality) with intentions and aspirations of financial independence and freedom of lifestyle... those of us willing to "do what the majority are unwilling to do"...

There are, of course, differences between people in their capacity and "willingness to do" And they generally are rewarded in terms of their efforts, except of course those in the privileged position to manipulate the financial system or other powerful corporate enterprises to their personal advantage. And in the present instance -- capitalism run amok -- it's the little guy who suffers because the system is broken and he or she cannot find reward commensurate with effort expended. So it is the government's job to stabilize the economy to restore conditions that will enable all of us to achieve maximum benefit from our afforts and ambitions. Right now that's become increasingly difficult and in some cases impossible.

It's nice for AAA bond holders who are financially secure to spout economic theory to support policy that advantages themselves at the expense of the public interest. How about the rest of society?

Dave, Please define what "IN THE END" means? When does your END occur - in a rough approximation of years?

... *PLEASE* read what is actually written... not just what you are imagining. I didn't say the current situation isn't risky or painful... but rather that "doing nothing" does not INCREASE the risks at hand IN THE END (which is what "ultimately" means.)

Hi haus proud,

So it is the government's job to stabilize the economy to restore conditions that will enable all of us to achieve maximum benefit from our afforts and ambitions.

That's all fine, in theory... but in reality, when has the government removed itself when it is the cause of the problems?

Government is no longer a servant, but has become its own living beast... it never wants to reduce, but rather if ti acknowledges any problems it blames teh "previous drivers" and then tries to GROW itself further.

Its become a parasite, and its symbiosis is declining rapidly.

Dave

======================================

Hi kec,

Dave, Please define what "IN THE END" means? When does your END occur - in a rough approximation of years?

In the context of this thread, "in the end" would refer to the reversal of a cyclical trend. We can roughly observe that historically economic boom & bust trends TEND to run between 3-15 years... the longer of both (booms and busts) have been due to central government interference.

Cheers,
Dave