Barack Obama accused of making 'Depression' mistakes
Barack Obama is committing the same mistakes made by policymakers during the Great Depression, according to a new study endorsed by Nobel laureate James Buchanan.
His policies even have the potential to consign the US to a similar fate as Argentina, which suffered a painful and humiliating slide from first to Third World status last century, the paper says.
There are "troubling similarities" between the US President's actions since taking office and those which in the 1930s sent the US and much of the world spiralling into the worst economic collapse in recorded history, says the new pamphlet, published by the Institute of Economic Affairs.
In particular, the authors, economists Charles Rowley of George Mason University and Nathanael Smith of the Locke Institute, claim that the White House's plans to pour hundreds of billions of dollars of cash into the economy will undermine it in the long run. They say that by employing deficit spending and increased state intervention President Obama will ultimately hamper the long-term growth potential of the US economy and may risk delaying full economic recovery by several years.
The study represents a challenge to the widely held view that Keynesian fiscal policies helped the US recover from the Depression which started in the early 1930s. The authors say: "[Franklin D Roosevelt's] interventionist policies and draconian tax increases delayed full economic recovery by several years by exacerbating a climate of pessimistic expectations that drove down private capital formation and household consumption to unprecedented lows."
Although the authors support the Federal Reserve's moves to slash interest rates to just above zero and embark on quantitative easing, pumping cash directly into the system, they warn that greater intervention could set the US back further. Rowley says: "It is also not impossible that the US will experience the kind of economic collapse from first to Third World status experienced by Argentina under the national-socialist governance of Juan Peron."
The paper, which recommends that the US return to a more laissez-faire economic system rather than intervening further in activity, has been endorsed by Nobel laureate James Buchanan, who said: "We have learned some things from comparable experiences of the 1930s' Great Depression, perhaps enough to reduce the severity of the current contraction. But we have made no progress toward putting limits on political leaders, who act out their natural proclivities without any basic understanding of what makes capitalism work."
Barack Obama accused of making 'Depression' mistakes - Telegraph
Certainly interesting things to think about. Economics is highly complex, though I'm happy with the rebounds over the last three months in the stocks, unemployment, cars and housing numbers. The real test is the next few months. September is going to be big.
Wingnuts, help me out here:
When Reagan faced a depressed economy during the first years of his term, it was Jimmy Carter's fault for setting the stage for the collapse.
When Bush dropped the ball on 9/11 in his first year of his term, it was Clinton's fault for setting the stage for the failures.
...how, then, is it President Obama's "fault" that we aren't all happily sipping chardonnay in our hovercrafts a few months removed from a global financial meltdown? Shouldn't we be at least be consistent, and blame the guy before him?
:applause Yep we should, or should I say the media should.
But just because the majority of our economic problems were not caused by Obama, doesn't mean that his actions or solution are immune from critique.
Many of our economic problems can be traced far back to the Regan era. Every congress and president since then shares blame. But Obama's answers to the problems don't look like they will solve anything.
There is no hypocrisy here. The terror attacks on 9/11 may have been partially enabled by the inaction of the Clinton administration, but no one in their right minds can blame Clinton for Bush's botching of the Iraq threat, the ridiculous Patriot Act (which by the way had a majority of Democratic support as well), overspending on war efforts, or his administration's own failure to apprehend Bin Laden.
In the same way, how can anyone blame Bush for Obama's apparent plan to continue increasing our national debt and centralize control of more and more social services into the federal government, with no clear evidence that anything will actually work better?
As a matter of fact, I'd like to know of ONE piece of federal legislation in the last 30 years that can be shown to have been deficit neutral or better. I can't think of a single one. Yet we're supposed to buy into Obama's horsecrap? I think not. I wouldn't believe it from Bush, and I won't believe it from Barak.
BUT, I am glad your happy.
Fiasco? Have you seen the sales numbers?
Also, all the sub-prime lending in 2005 has gone through the 2 year arms, 3 year arms, but has yet to reach the 5 year arms coming in 2010. Fears are that there will be another big set back in the economy.
Obama's biggest problem is spending. He's doing too much of it, as did Bush. I blame both of them, but Obama has taken it to another level. What this country should do is tighten our belts, suck it up and weather the storm. Unfortunately that doesn't please anybody, everyone thinks we should do "something".
BTW, for Obama to say that health care will be our biggest concern regarding the national debt and then want to expand the governments' role in it makes absolutely no sense. If Medicare is forecast to suck more money than projected as it has for decades, what makes him think that his "reform" will reduce that when his co-op, public option, or whatever they decide to call it will create an even bigger liability? It really doesn't make sense.
I'm not as concerned about the used car market when I consider the wider embrace of the new car market, concerning parts and production, and all that entails. Not that the used car market isn't a concern, it's just not at as high a priority.
Beyond that, advanced word is that there seems to be happiness on the Senate Finance Committee's version of the bill, which is what I have my eye on.
As far as weathering the storm, Herbert Hoover did that during the Great Depression, things didn't improve, and he got trounced out of Washington. I'm pretty sure Obama doesn't want to appear as another president who did nothing.
I don't think Obama's cabinet has been faultless in dealing with the bust, but people who think the mess was just going to go away don't know much about economics, IMO.
Both Bush and Obama threw money at the problem because there was no time to formulate a thoughtful policy -- if the major employers had lost their credit lines, every independent insurance broker and most banks (along with people's businesses and credit streams) would have gone under... all of which would have sent shockwaves across the entire American economy. It's true that retail is down, but that's only because savings are up, which probably means the American public doesn't trust the consumer climate right now.
While I feel that TARP was the only solution at the time, the fact that we haven't seen any substantial reform worries me greatly. Wall Street needs to be held accountable to their unwilling stockholders (us).
I should say I agree with the TARP conceptually, but think the implementation was so misguided and unaccounted that it is easy to suspect foul play... which puts this less in either president's court than in the fact that we belong to corporations regardless of our political bent.
If Obama let the financial sector as wild as it has been then nothing will change. As long as the decorrelation between the real world and the market will continue, problems will only get worse.
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