I’m still startled to read mainstream articles that openly admit the depth of the economic disaster – and to read them still nearly four years after all the stimulus plans were underway and following four years of “green shoots” puff pieces in the press about how recovery is right around the corner:
The United States has a confidence problem: a nation long defined by irrational exuberance has turned gloomy about tomorrow. Consumers are holding back, businesses are suffering and the economy is barely growing.
There are good reasons for gloom — incomes have declined, many people cannot find jobs, few trust the government to make things better — but as Federal Reserve chairman, Ben S. Bernanke, noted earlier this year, those problems are not sufficient to explain the depth of the funk…. Americans have lost a vast amount of wealth, and they have lost faith in housing as an investment. They lack money, and they lack the confidence that they will have more money tomorrow.
Many say they believe that the bust has permanently changed their financial trajectory.
And the theory as to why this is happening? It’s the same as in the 1930s: conventional thinking say it is that prices are too low. “That has led a growing number of economists to argue that the collapse of housing prices, a defining feature of this downturn, is also a critical and underappreciated impediment to recovery.”
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Where is this quoted from?
NYT:
http://finance.yahoo.com/news/Gloom-Grips-Consumers-and-It-nytimes-579965009.html?x=0
Prices are too low? I wonder what world these “conventional thinkers” live in. Do they really think that raising prices will help people who are barely getting by now suddenly start buying more?
A ‘nation defined by irrational exuberance,’ and “consumers are holding back”. Just another Keynesian piece that fails to understand its own fallacies. When a theory doesn’t work, aren’t you supposed to look for a new theory?
It’s more that the theory isn’t even satisfactory from an explanatory point of view. “Irrational exuberance”, “animal spirits” etc etc. are the equivalent of a deus ex machina.
Our country could have been spared a lot of unnecessary debt and hardship if our leaders had simply gone back 70 years and looked at what others have done and what worked. When the recession hit in 1921, Harding pulled back on federal spending and cut taxes, but left the economy alone to recover by itself, which it did within a year. He did not try to artificially raise prices through legislation or create jobs by spending more federal money.
After the 1929 Stock Market Crash, however, Hoover and Congress fought to keep wages high and raised tariffs on imported products (Smoot–Hawley Tariff Act of 1930) which destroyed our foreign trade when other countries, such as Italy, raised their tariffs for American-imported goods like the automobile. Aside from repealing Prohibition, Roosevelt did nothing except push for unconstitutional legislation (later overturned by the Supreme Court) and tinker with the economy for over 10 years.
All government ever does in those situations is pick at a scab trying to heal.
“Our country could have been spared a lot of unnecessary debt and hardship if our leaders had simply gone back 70 years…” You assume the gov’t actually *wants* there to be a recovery. Rhetoric and action are not the same. Destroy capitalism. Destroy freedom. Capitalist become rich by creating value for people. Politicians and the State become rich by destroying people. We are living through a hostile takeover by forces of evil who talk recovery (from the calamity they created) but that is a deception. They seek our destruction. They want to be rich by impoverishing everyone rather than have to do what they have no talent to do… create real value for people. They are supreme failures diseased with envy and who act out with violence. They are evil and they are winning.
Parker: You make a good point. Silly me. I keep forgetting. I have to keep reminding myself who we’re dealing with here.
“I’m still startled to read mainstream articles that openly admit the depth of the economic disaster – and to read them still nearly four years after all the stimulus plans were underway and following four years of “green shoots” puff pieces in the press about how recovery is right around the corner:”
I think Pravda and Izvestia used to do the same thing in the the old Soviet Union. They used to blame the failure on the Czar, kulaks, subversives and other counter-revolutionaries. They has Marxism with a batting average of zero instead of Keynesianiam with a batting average of zero.
There was one thing, however, that was different – after a while, people started not believing anything they read in the paper or heard from the government.
In the US, there are still to many people who don’t get the joke.
Their strategy worked perfectly – for them. Why would they turn back the clock 70 years or more to a time when politicians were relatively poor and had relatively little power over the business of the country and relatively little chance to enrich their family and friends?
It beats me why anyone would think that they can give tremendous power to a certain, small group of people, but these people will use the power not for their own benefit but for the benefit of millions of strangers whom they will never meet. That goes against all human nature.
I agree 100%. The title of this article is severely flawed. It should read, “The greatest success of the state in living memory.”
As you said, “Their strategy worked perfectly – for them.”
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