Re: [Pen-l] Krugman: This is really, really bad

[Carl Dassbach <dassbach@xxxxxxx>]

I, for one, did not expect any dramatic action (real change) from O and I am not surprised at what is transpiring.  The elites (and admit it, O is part of the elite) only care about the masses when it serves the elites' purpose such as getting elected.  Once in office, elites are swayed by those who wield money and power and only pay lip service to the masses when the elites wish to be (re)elected. 

Dassbach"s Law of Leadership: It is not the cream that rises to the top - it is the scum.  We are destined have the leaders that we have because decent people are both unwilling and unable to engage in the treachery, hypocrisy and deceit needed to rise to leadership positions.

CHAD



Jim Devine wrote:

but was there a lot of political opposition to expansionary policy?
(is that why "afterwards fiscal policy was never expansion"? why
monetary policy was "very stop/start?") what forces prevented more
expansionary policy?

On Sun, Feb 8, 2009 at 8:57 PM, Craig Freedman
<Craig.Freedman@xxxxxxxxxxxxx> wrote:
  

Not really. The Ministry of Finance pushed fiscal consolidation for 1997
and afterwards fiscal policy was never expansive. Monetary policy until
the advent of a new head of the Bank of Japan in 2002 was very
stop/start. Expansionary policy would be followed by credit tightening,
ostensibly to prevent potential inflation. Only in the immediate
aftermath of the bubble collapsing was there anything like expansionary
policy. It wasn't a case of the policy elite's economists not having
political clout.

Craig Freedman
    

Jim Devine <jdevine03@xxxxxxxxx> 02/09/09 3:10 PM >>>
          

maybe this is what happened in Japan. The policy elite's economists
knew what to do when _their_ bubble economy popped, but they didn't
have the political clout to pull it off.

On Sun, Feb 8, 2009 at 6:22 AM, Louis Proyect <lnp3@xxxxxxxxx> wrote:
    

Paul Krugman - New York Times Blog
February 7, 2009, 5:36 pm
What the centrists have wrought

I'm still working on the numbers, but I've gotten a fair number of
      

requests
    

for comment on the Senate version of the stimulus.

The short answer: to appease the centrists, a plan that was already
      

too
    

small and too focused on ineffective tax cuts has been made
      

significantly
    

smaller, and even more focused on tax cuts.

According to the CBO's estimates, we're facing an output shortfall of
      

almost
    

14% of GDP over the next two years, or around $2 trillion. Others,
      

such as
    

Goldman Sachs, are even more pessimistic. So the original $800 billion
      

plan
    

was too small, especially because a substantial share consisted of tax
      

cuts
    

that probably would have added little to demand. The plan should have
      

been
    

at least 50% larger.

Now the centrists have shaved off $86 billion in spending — much of it
      

among
    

the most effective and most needed parts of the plan. In particular,
      

aid to
    

state governments, which are in desperate straits, is both fast —
      

because it
    

prevents spending cuts rather than having to start up new projects —
      

and
    

effective, because it would in fact be spent; plus state and local
governments are cutting back on essentials, so the social value of
      

this
    

spending would be high. But in the name of mighty centrism, $40
      

billion of
    

that aid has been cut out.

My first cut says that the changes to the Senate bill will ensure that
      

we
    

have at least 600,000 fewer Americans employed over the next two
      

years.
    

The real question now is whether Obama will be able to come back for
      

more
    

once it's clear that the plan is way inadequate. My guess is no. This
      

is
    

really, really bad.
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--
Jim Devine / "Disbelief in magic can force a poor soul into believing
in government and business."  -- Tom Robbins
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