November 9, 2009
IT'S THE INMATES' ASYLUM NOW.... Paul Krugman weighs the consequences of a Republican Party run "by the people it used to exploit."
[S]omething snapped last year. Conservatives had long believed that history was on their side, so the G.O.P. establishment could, in effect, urge hard-right activists to wait just a little longer: once the party consolidated its hold on power, they'd get what they wanted. After the Democratic sweep, however, extremists could no longer be fobbed off with promises of future glory.
Furthermore, the loss of both Congress and the White House left a power vacuum in a party accustomed to top-down management. At this point Newt Gingrich is what passes for a sober, reasonable elder statesman of the G.O.P. And he has no authority: Republican voters ignored his call to support a relatively moderate, electable candidate in New York's special Congressional election.
Real power in the party rests, instead, with the likes of Rush Limbaugh, Glenn Beck and Sarah Palin (who at this point is more a media figure than a conventional politician). Because these people aren't interested in actually governing, they feed the base's frenzy instead of trying to curb or channel it. So all the old restraints are gone.
Now, there are likely some on the left who find these developments encouraging. Republicans moved to the far-right cliff, and were punished by voters. Now the Tea Party crowd has pushed the GOP over the far-right cliff, which will make the party even less tolerable to the American mainstream. We saw it happen last week in New York's 23rd, which sent a Democrat to Congress for the first time since the 19th century, despite a highly motivated conservative base.
But there's a real gamble here, which comes with potentially dangerous consequences. If the electorate takes on a strong anti-incumbent attitude, and decides to punish the governing party for a struggling economy, the Limbaugh/Beck/Palin party may very well thrive in spite of itself.
That's the big fear about next year's midterms -- if, say, high unemployment produces big Republican gains, the right-wing base will think they've been rewarded for their tactics and far-right agenda.
Krugman concluded, "[T]he country could become effectively ungovernable in the midst of an ongoing economic disaster. The point is that the takeover of the Republican Party by the irrational right is no laughing matter. Something unprecedented is happening here -- and it's very bad for America."
—Steve Benen 10:10 AM
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Reminds me a bit of one of my favorite (heh) lines from an old kids tv show. Spoken by one of the villains when trying to convince one of the heroes to switch sides:
"Once you drink in the madness, all else will fade!"
Posted by: MNPundit on November 9, 2009 at 10:15 AM | PERMALINK
Well then, too goddamn bad the Democrats have told me in no uncertain terms that they don't want my vote. Maybe we NEED the right to bring this country completely to its knees before the average dumb fuck wakes the hell up.
Posted by: Steve LaBonne on November 9, 2009 at 10:15 AM | PERMALINK
The system in the senate has got to change. The country is ungovernable as long as it takes a supermajority to do anything.
Posted by: Kevin Ray on November 9, 2009 at 10:16 AM | PERMALINK
I've considered the U.S. right wing to be irrational for years. Further, I doubt that anything less than catastrophic losses in 2010 would deter the GOP from pushing an extremist agenda. And even that probably wouldn't stop them.
If the Republican right gets back into power, they will carry out incredibly destructive extremist policies. If they don't get back in power, they will devolve into the theocratic authoritarians that they are on the inside, and probably turn violent.
As Krugman notes, a very dangerous state of affairs. Personally, I find it something of a relief, though, that the right is taking off the mask and showing its true face. Even the Villagers, thick as they are, are starting to notice.
Posted by: jimBOB on November 9, 2009 at 10:20 AM | PERMALINK
At least Krugman has the balls to say it. One reason we've arrived at this frightening impasse is the unwillingness of the MSM to call this growing irrationalism by name. Instead, they revert to their SOP of the False Equivalency (MSBNC = Fox).
It probably is too late to save the remnants of a civic culture that preceded television and are now broken shards lying at our feet. The nihilists have won and the governmental function with the only legitimacy remaining is security.
Posted by: walt on November 9, 2009 at 10:20 AM | PERMALINK
Well I don't know for sure . Here in Florida the wingnuts are backing Marco Rubio against Charlie Christ and the only thing I see that doing is giving the seat to Kendick Meeks , who has been polling great agains Rubio but not against Christ..
This will be a good test
Posted by: John R on November 9, 2009 at 10:21 AM | PERMALINK
Dr. Nobel T. Shrillone is exactly right on this (as is Walt, above) IMHO.
It's the complicity of the corporate-owned Dim Party that is the only ingredient necessary for the 20% crazy-Repugnant caucus to monkeywrench this country into a seemingly dark endless night.
And guess what, my friends? It ain't like we aren't seeing it happening right now...we're already in the twilight zone and it's getting darker by the moment...
Posted by: neill on November 9, 2009 at 10:31 AM | PERMALINK
Several things:
-- a Democracy can't thrive with one party rule, so having a viable opposition party with actual ideas is a good thing
-- the Republicans stopped being interested in governing the day Reagan pronounced from on high that the govt was the problem, they've "governed" ever since to make this a self-fulfilling prophecy
-- Obama owns the unemployment numbers because he failed -- and continues to fail -- in righting the economy; it's all very well to say he avoided another Great Depression, but all he really did was reward those who destroyed the economy with a whole lotta money & power, regular people are getting shafted left right & center: there are few jobs, there is no money to be borrowed, their mortgages are crippling & their choices become narrower every passing day, but hey, at least the folks on Wall Street can have their big bonuses and H1N1 shots
Posted by: zhak on November 9, 2009 at 10:32 AM | PERMALINK
"Why won't we go for broke?” - Michele Bachmann (R-Minn.) 11/4/09
Posted by: mr. irony on November 9, 2009 at 10:32 AM | PERMALINK
zhak is so right ........and then add to this 'mandating' people buy health insurance that they can not afford, and, if they don't they get fined, and if they don't pay the fine they can go to jail. Only in America could this evil occur. And then call it 'universal' health care.
Posted by: stormskies on November 9, 2009 at 10:39 AM | PERMALINK
a Democracy can't thrive with one party rule, so having a viable opposition party with actual ideas is a good thing
I've long agreed with this. However I don't think the Republican party is salvageable. If we want to see an actual two-party system again in the U.S., the GOP probably has to either go, or at least be reduced to an irrelevancy, so that a new party can rise.
Sometimes I see talk about the Palinites leaving the GOP and forming a new wingnut party. I doubt they'd ever do this; the Republican brand is the only thing making them seem like an actual opposition and not just a collection of kooks.
Posted by: jimBOB on November 9, 2009 at 10:44 AM | PERMALINK
Washington, DC: A series of out-takes from a Mad Max movie. . .
Posted by: DAY on November 9, 2009 at 10:45 AM | PERMALINK
"But there's a real gamble here, which comes with potentially dangerous consequences"
Don't disagree with the latter but WHAT GAMBLE?
The Republicans will do what they will do and there is nothing you or I can do about that one way or the other
Glenn Beck tells me Mao said something similar
Posted by: John C Mccutchen on November 9, 2009 at 10:50 AM | PERMALINK
This is how societies go down the drain.
The Repub;licans have been, for the last hundred years or so, the party of the selfishh that got elected by lying about their real policies and exploiting the worst of human nature. The only difference between this R partry and your grandad's R party is that, as Krugman said, the exsploited have taken over. I don't see a way back from that.
Given our fellow citizens' proclivity for elelcted plausible smooties, all the R party needs is good liars and they can still win elections.
Especially if the Dems enable by passing watered down, overly compromosed legislation.
Combine that with our indebtedness to China, our increasingly impoverished population, our inability to deal effectively with real problems like global warming and our society's fundamental misconceptions about itself...well, this is how the how a our world ends, not with a bang, but with a whimper.
Posted by: wonkie on November 9, 2009 at 10:53 AM | PERMALINK
What's worse still, Steve, is that quite a few Dems are going to be complicit in this anti-government teabagger mood, hoping to win reelection through it. We've already seen it. So we may well end up with a rather small group that wants to govern, and a larger group that only wants to either fill their pockets, or dismantle the apparatus of governing.
Actually, the latter sounds a lot like the Reagan and Dubya administrations in some respects, but those were really finesses to move government over from social programs to defense ones. the GOP may want to consider what will happen if the teabaggers get in control and decide they don't like defense spending. That could provide one bright note of hilarity in a generally darkening sky.
Posted by: Balakirev on November 9, 2009 at 10:54 AM | PERMALINK
MNPundit: Ronin Warriors... the originator of the "drink in the madness quote" is Dais, Master of Illusion.
http://en.wikiquote.org/wiki/Ronin_Warriors
And, for the record, it is not old. Old is Howdy Doody or Space Ghost.
Posted by: inkadu on November 9, 2009 at 10:54 AM | PERMALINK
I'm surprised Prof.Paul didn't point out they are funded by some deep pocket American Fascists.
Posted by: par4 on November 9, 2009 at 10:54 AM | PERMALINK
But there's a real gamble here, which comes with potentially dangerous consequences
Exactly. We should hope for good opponents, not wacky ones.
Posted by: Chris__ on November 9, 2009 at 10:55 AM | PERMALINK
There is "a viable opposition party with actual ideas." As Wall St., the corporations and the remaining relatively sane Republicans attempt to remake the Democratic Party in their remembered image of old-style Republicanism, the opposition becomes all the Democrats and Progressive independents used and ignored by Obama and Emanuel, what Howard Dean and his increasingly activist brother Jim call "the Democratic wing of the Democratic Party."
It's always been a two-front war.
Posted by: ericfree on November 9, 2009 at 10:57 AM | PERMALINK
Actually, we have been this route before, in my lifetime. In the early 70's it was the Democratic party that was hijacked by its extreme wing -- and it galls me to say that, because I was a staunch McGovern supporter, even though I knew he was headed for a massive loss in a crushing landslide. That was pretty much the end of the far left wing's power in the Democratic party, which spent the next three decades remaking itself as a moderate, centrist party.
What worries me more than Republican victories at the polls is bombs and guns. We saw enough of those in the early 70's too, from the extreme fringe groups, but this time there's a difference. To quote someone or other, these are not the kids who paid attention in Social Studies, but the kids who paid attention in Shop class. They build better bombs than lefties.
Posted by: T-Rex on November 9, 2009 at 11:01 AM | PERMALINK
Without the Republican party to hide behind, we will finally see that the true "opposition" is big bidness; the massive, too big to fail, multinational corporations, that supply the money that gums up the works of our government.
They are the ones behind the fear mongering about so-called big government taking over our lives.
The average American has been fooled into believing that their government, consisting of duly elected representatives, working for the people is more dangerous than big corporations whose admitted primary motivation is profit above all else.
As I always say fool; me once, shame on you; fool me twice, shame on me; fool me thrice, I must be a Republican voter.
Posted by: Winkandanod on November 9, 2009 at 11:03 AM | PERMALINK
Isn't it just possible that there was nothing Obama could have done, other than what he did, to try and repair the economic damage? I mean, I didn't hear any other big ideas. Well, yes, a tax cut and a spending freeze, but you'd only call those ideas out of courtesy. People who actually studied economics and who now practice economics for a living say dumping money into the economy was the only way to go. Dumping money directly into the pockets of consumers would have been a mistake, according to this thinking, because consumers were terrified of an economic collapse and would only save it against the possibility of job loss, or some other catastrophe.
It does hurt to see the big lending giants propped up when they were on the ropes entirely due to their own greed, and nobody can say they weren't warned. However, some of the mess at least is due to market forces exerted by other rising economies. China and India enjoyed double-digit economic growth throughout the Bush years. A real economist, or at least somebody who would LISTEN to a real economist, might have been able to slow those juggernauts or turn their strengths against each other. Bush failed at that in spite of repeated warnings, and continued down the path the economists said would lead to disaster. I simply don't see how Obama "owns these numbers" just because he hasn't been able to right eight years of unregulated tomfoolery in a few months. Don't forget, his efforts are against a wind of lockstep opposition.
I can't imagine Americans are so foolish that they would put Republicans back in the driver's seat in any capacity, simply to spite Obama for not being able to work miracles. Maybe he did lead you to believe he could during his campaign, but it's possible he might have if he was getting any help at all.
Republicans across the board have provided a daily preview of how they would govern, and if you want them in charge again, better start printing more money. Oh, and get ready to pay $10.00 for a loaf of bread.
Posted by: Mark on November 9, 2009 at 11:09 AM | PERMALINK
"Limbaugh/Beck/Palin party"
They have certainly studied the 20's and 30's rise of the Nazi Party well, have they not?
Posted by: IntelVet on November 9, 2009 at 11:09 AM | PERMALINK
We are ALL inmates now
Krugman needs to widen his viewfinder.
The Nobel Laureate is not thinking big enough:
What is happening to the republican party is happening to America in general. We are suffering the natural disintegration that comes out of any ongoing endless internal conflict. We are all its prisoners of the Culture War now. Liberals hate conservatives with equal passion. And there is no discernible exit from this battle.
Neither side can win. And so the country AS A WHOLE is trapped in an amber of self-loathing the "other America." Here are some questions to help you think on these things:
1) In your lifetime has the culture war grown worse or better?
2) In your lifetime has the country moved one inch closer to compromising on abortion? And putting it behind? Or has the rift grown more posionous?
3) Do you have any reason to believe things will get more salubrious in your lifetime?
I only see one solution to getting out of the hole we are in: Stop digging. But there is too much Media money in the digging and in the throwing of dirt. Who will stop Murdoch's big Earth Movers?
No one. We are trapped.
And the air in this hate-filled coffin is getting stuffier every day...
Posted by: koreyel on November 9, 2009 at 11:23 AM | PERMALINK
"If" is not a difficult word to define. What I'm saying is what "if" the economy and employment start to turn positive, what would happen to the lunatic fringe. Lets not be askeared like the lunatics or lets not allow them to scare us. I may be a democrat, but I do own a gun. My glass is half full.
Posted by: Dave on November 9, 2009 at 11:33 AM | PERMALINK
"the takeover of the Republican Party by the irrational right is no laughing matter. Something unprecedented is happening here -- and it's very bad for America."
By comparison with what exactly? Statements like these presuppose that a RATIONAL Republican party would be "better for America". HOW?
The WORST possible outcome would be to enable Democrats desperate bi-partisan longing for compromise with the "sensible middle", because taking HALF a dose of poison is not going to make things marginally better! It will make them much worse, because then there's nobody saying "poison is bad. We propose an ANTIDOTE, not more poison!"
If Republicans had a grain of sense they could have "compromised" with Democrats desperate for "bi-partisan political cover" to make the health care bill even more useless than it is.
Example: a "bipartisan" health care bill without a public option and WITH all kinds of regressive policies that would actually make things WORSE would already be law!
And then the right-wing would have "proven" that "government can't solve anything" and we need another dose of Reaganomics, tax cuts and deregulation!
In fact this is EXACTLY the program McCain would be enacting RIGHT NOW with full Democratic "bipartisan" support-- if only he'd won the election. Massive cuts in social spending. More militarism, and further regressive tax cuts for the rich. And the result would be to convince millions more people that government is only their enemy and that their problems are hopeless with no solution!
Whatever small chance that the right wing won't succeed in getting another chance to further destroy America is due to the fact that they WON'T COMPROMISE, which forces Democrats to take the lead. And it forces them to enact policies that MIGHT make things better -- if only to protect themselves. They hate it like the plague, but Republicans leave them no choice.
Democrats really, desperately want to sell us out, but they can't get political cover to do it! Whatever success they are forced to achieve is due to Republican intransigence, NOT Democrats sticking to their convictions!
If we had to endure more Bush-economics it would be horrible, but we've already survived 8 years of it. What would be WORST is "bipartisanship" because then there is no opposition party at all and everybody's compromised! Iraq and torture are perfect examples of what happens with "bipartisanship".
Posted by: Cugel on November 9, 2009 at 11:35 AM | PERMALINK
Here's who the Tea Baggers are courting now:
http://theworldofhowey.wordpress.com/2009/11/09/the-tea-baggers-new-hero/
Posted by: Howey on November 9, 2009 at 12:09 PM | PERMALINK
You are so right that we should be very afraid the electorate will punish incumbents next year. And if Democratic incumbents keep throwing their base under the bus, an energized right will get all the benefit of rising popular anger. But the Villagers don't seem to have noticed that they "fired up" a lot of people who want action on progressive reform, not to be cooled off.
Posted by: janinsanfran on November 9, 2009 at 12:14 PM | PERMALINK
Dumping money directly into the pockets of consumers would have been a mistake...because consumers were terrified of an economic collapse and would only save it against the possibility of job loss, or some other catastrophe.
Bullshit. So what we have instead is all the money flowing to the banksters that started the whole thing and who are using it to do the same thing all over again. The U.S. currency dropped against 12 of its 16 major counterparts as the International Monetary Fund said traders are probably using the dollar to fund so-called carry trades around the world and it may still be overvalued.
I hope everyone here in The United States takes a moment to understand what this means. Let me lay it out for you:
When the global economy truly recovers oil will skyrocket up to or beyond the $150 where it was in late 2008. If the dollar is indeed still "overvalued" and going to 40 as many technicians predict, oil will likely reach $300 a barrel. This will in turn drive gasoline prices north of $6, heating oil will reach $7-8/gallon, and diesel will be commensurate with heating oil.
This will in turn decimate the trucking industry. Now you know why Buffett bought BNI. Many things he may be, but dumb isn't one of them. Trucks will of course remain for terminal-to-door deliveries but for long-haul they will simply be uneconomic. Those who currently are employed in this business will lose their jobs. All of them.
The middle class will be decimated. Those who live in suburbia, who are primarily middle-class Americans, will find themselves faced with commute costs that are double or more what they pay now. Those in the middle class who live in the Northeast where heating oil is the primary fuel for winter, where natural gas infrastructure does not exist to replace heating oil, will find themselves choosing between heat and food in large numbers.
What's far worse is that all carry trades eventually unwind and in the history of the markets I have never seen it happen in an "orderly" fashion. Japan witnessed the destruction of the Yen Carry last year and it was horrific. We will see it in the future - exactly when cannot be predicted with certainty, but that it will happen in an uncontrolled fashion will be. While this "unwind" will bring relief from sky-high commodity prices it will do so at the expense of asset prices, which will collapse.
Our government has, quite simply, refused to take the steps necessary to stem this ridiculous and self-destructive course of action. Part of the problem does indeed lie with the yuan and China's mercantilist policies, but this is similar to blaming the drug dealer in the entirety for one's addiction. Without the user the dealer has no customer and makes no money. We have become addicted to cheap Chinese crap, even when it is poisonous (e.g. lead-painted toys or adulterated toothpaste) while refusing to address our own debt imbalances by either government or private interests.
The rest of the issue is ours, and ours alone - Bernanke could end this tomorrow by draining the liquidity necessary to cause short term interest rates to rise to 2% - still a very "accommodative" rate, yet one that would make carry trades unprofitable. He and the rest of the FOMC have refused, even though they're aware of the extreme distortions this creates in the foreign exchange markets and the draining of productive capital from the "funding" currency source nation that always accompanies carry trades.
Posted by: Karl on November 9, 2009 at 12:22 PM | PERMALINK
The suggestion that oil prices will shoot to the levels you suggest might well be true, provided the U.S. Dollar remains the world's benchmark currency. If the Euro takes its place, as some coalitions have been trying to bring about, the U.S. dollar will become just another ruble. I can't imagine the rest of the world would continue to base the global economy on a currency that had lost more than half its value. But then, I'm not an economist, as were those who suggested simply giving the consumers their money back would have been an unwise choice. Perhaps you're right. You're certainly right that quality is worth paying for, and that the American consumer has become addicted to the Great Deal.
However, lead-painted toys and adulterated toothpaste are exceptions to the general rule. Quite a lot of things made in China are nearly as good as a comparable U.S.-made product, and much cheaper. The difference is in the working wage, and I don't know how the U.S. could compete there. U.S. workers will simply not accept a working wage that Chinese workers will, and if you can make it cheaper, you can sell it cheaper.
I remember when American consumers used to turn up their noses at anything made in Japan. Japan broke the perceived-quality barrier and. given time, China will too. the answer doesn't lie in threatening China about currency manipulation, or in going head-to-head with them. Certainly not now that America has basically abdicated the business of manufacturing, because it doesn't make sufficient profit.
Posted by: Mark on November 9, 2009 at 1:01 PM | PERMALINK
Uh huh. Can we finally stop the shortsighted, entertainment-obsessed high-fiving about the level of Republican viciousness and insanity -- and how it spells sure success for Democrats and sure disintegration for the GOP?
Posted by: shortstop on November 9, 2009 at 1:03 PM | PERMALINK
"Something unprecedented is happening here -- and it's very bad for America."
I absolutely agree. It makes me sick when Dims crow about the rabble of hate taking over the Republican party. It’s all a control game to them and the Repugs. They are the type who cheer when the opposing quarter lies unconscious from a blow to the head.
The welfare of the citizens is far from their minds. (It has to be said Sarah's bunch of Brown Shirts would withhold their cheers until they knew the quarterback had died.)
The freedom that the far right wants is the absolute freedom to take away everybody else’s freedom.
By targeting one candidate at a time Dim or Repub they can start, as they already have with the local and state school boards, city councils and build a very viable party.
On this anniversary of Kristallnacht let's not forget what a small band of thugs can do to a country that is in economic turmoil.
Posted by: Marnie on November 9, 2009 at 1:14 PM | PERMALINK
Dumping money directly into the pockets of consumers would have been a mistake...because consumers were terrified of an economic collapse and would only save it against the possibility of job loss, or some other catastrophe.
Dumping money directly into the pockets of bankers would have been a mistake...because bankers were terrified of an economic collapse and would only save it against the possibility of profit loss, or some other catastrophe.
There, fixed it.
Posted by: Winkandanod on November 9, 2009 at 1:20 PM | PERMALINK
To quote someone or other, these are not the kids who paid attention in Social Studies, but the kids who paid attention in Shop class. They build better bombs than lefties.
Posted by: T-Rex
They also have assault weapons and so much more.
The rabble of the 60's and 70's of whom I was - sort of - one, were for the most part the shootees, anot the shooters.
Alaksans go to machinegun shoots, for fun. I'm sure others do as well. They could make what Major Hasan did look like child's play.
Posted by: Marnie on November 9, 2009 at 1:28 PM | PERMALINK
"The WORST possible outcome would be to enable Democrats desperate bi-partisan longing for compromise with the "sensible middle", because taking HALF a dose of poison is not going to make things marginally better! It will make them much worse, because then there's nobody saying "poison is bad. We propose an ANTIDOTE, not more poison!"
If Republicans had a grain of sense they could have "compromised" with Democrats desperate for "bi-partisan political cover" to make the health care bill even more useless than it is."
Actually, it looks like what happened was we "pre-compromised" on so much stuff, and then asked them to negotiate AFTER we'd already thrown in the kitchen sink.
Had we initially gone for a single-payer, covers EVERYTHING, etc, we could have backed it out to a mandate+subsidies+no denial, and most everyone would win, people get insured, insurance cos and healthcare cos get paid.
Posted by: Jason on November 9, 2009 at 1:34 PM | PERMALINK
Koreyel asks: In your lifetime has the culture war grown worse or better?
I was a high school student in Birmingham when the public schools were integrated. People were killed. The day of the Kent State shootings, I was at an antiwar demonstration at another campus. No one was killed at my university, but students were savagely beaten.
Posted by: Colin Laney on November 9, 2009 at 2:00 PM | PERMALINK
Jason: The same can be said for the stimulus package -- half the size that the President's own advisors said was necessary and half of that was in the least stimulative method, tax cuts. All of that BEFORE presenting it to the Republicans, who then laughed at him.
So we are going to muddle into the 2010 elections with a troubled economy (at least what the voters can see) and unemployment (a seriously lagging indicator) in high single or double digits (and REAL un-/under-employment much higher).
Posted by: GEM_in_Orange on November 9, 2009 at 2:19 PM | PERMALINK
Karl, lets assume your every fear is realized and gasoline goes north of $7/8 dollars. The trucking industry is destroyed. Heating oil is precious and folks in the northeast freeze.
Know what else is adversely affected? How about shipping costs. Low cost shipping is the big reason the Chinese are able to completely dominate American and European markets. Without cheap oil shipping costs go through the roof. A lot of cheap Chinese goods become too expensive for Americans and Europeans to purchase. Asian export industries collapse.
Of course, that causes a world wide depression. The Internationals are banking a lot on a continuation of cheap shipping. folks we are already living peak oil. Nobody will admit it.
Posted by: Ron Byers on November 9, 2009 at 2:49 PM | PERMALINK
An excess of stupidity and ignorance always trumps intelligence, always has.
Posted by: rbe1 on November 9, 2009 at 3:25 PM | PERMALINK
Add to Krugman's astute analysis the fact that gun and ammunition sales have soared in the past year...
Posted by: BroD on November 9, 2009 at 4:01 PM | PERMALINK
To bail out the banks' poor bets on Dot-Com companies and Latin America in 2001-2002, Greenspan purposely ignited a credit bubble that led to the mother of all housing crashes.
In response to the housing bust, the Fed refused to let failed banks go out of business and is attempting to force another credit bubble. However, banks aren't lending (except in China where a suggestion to lend is not taken lightly).
All the Fed (central bankers in general) and Congress have done is create yet another asset bubble bailing out the wealthy. Meanwhile consumer debt still acts as a drag, unemployment is high and rising because sloshing money around at banks cannot possibly create any jobs (and it hasn't), and the pool of real savings that it does take to create jobs has been exhausted. Meanwhile taxes are soaring which puts still more pressure on job losses, foreclosures and defaults.
Bernanke, Obama, Congress, the Fed, and Central Bankers worldwide have all failed to learn anything from:
1) The Great Depression
2) Two Lost Decades In Japan
3) The Dot-Com Bubble
4) The Housing Bubble
Instead they follow unwise and disproved Keynesian and Monetarist tactics that have failed to accomplish anything but create bigger bubbles. However, this is the end of the line. Housing was the bubble of last resort, nothing can come close to the number of jobs created by the global housing bubble.
Further attempts to reflate will do nothing but create a currency crisis, crash the economy, and add to future liabilities that cannot be paid back. A global economic crisis is coming. When and how it manifests itself is all that remains to be seen.
Posted by: Mike Shedlock on November 9, 2009 at 4:20 PM | PERMALINK
Chinese premier Wen Jiabao is urging the U.S. to keep its deficit to an "appropriate size," a clear message to the leader of the world's largest debtor nation from its largest creditor.
Posted by: Heesun Wee on November 9, 2009 at 4:59 PM | PERMALINK