Roubini: “We Are in ‘Worse Situation Than in 2008”

[Allan from Fallbrook]

[quote=briansd1]Well, Veritas, people with no jobs are more likely to becoming a mob, I agree.

But there a policially angry right that feels like “their America” is slipping away from them. They don’t feel that America is the shining city on the hill anymore. They feel like only they “love America” enough and can restore our greatness.

In Europe that is manifesting itself in nationalistic xenophobia. Allan likes to point to Marine Le Pen of the National Front in France.

Do you thing that, in America, we are immune from such right-wing politics? It’s more subtle here, but I’m feeling some strong winds.[/quote]

Brian: You often accuse conservatives of wanting to “conserve back in time”, but Liberals/Democrats are guilty of the same thing.

Related to your above comment, Unions are attempting to reach back to the American manufacturing Golden Age (1945 – 1972) and re-negotiate those deals that ultimately destroyed US Steel and GM, along with American competitiveness. Aided by agencies like the NLRB, we’re now seeing job-killing on an epic scale.

My point? This isn’t going to be “Left versus Right”, this is going to be “Have versus Have Not”. I’m going to balance that by saying that we need more taxation (yup, I said it) and we need tax reform (close loopholes, end corporate welfare), a US Industrial Policy (and, PLEASE, let’s get rid of that green energy nonsense) and a shift back to sustaining American innovation through fully funded R&D programs.

You want to avoid mobs in the street, put meaningful and rational programs into place, lower the corporate tax rate, and shithammer any American business trying to offshore jobs (especially fucking GE, with Jeffrey Immelt now in the administration as a JOBS CZAR).

As Bill Clinton famously said, “It’s the economy, stupid” and it is. Unfortunately, Obama does not get this and, in trying to be all things to all people, he’ll satisfy no one. This country is capable of amazing things, but the more reactionary elements of BOTH parties are stifling that capability and strangling growth.

[SK in CV]

[quote=Allan from Fallbrook]
As Bill Clinton famously said, “It’s the economy, stupid” and it is. Unfortunately, Obama does not get this and, in trying to be all things to all people, he’ll satisfy no one. This country is capable of amazing things, but the more reactionary elements of BOTH parties are stifling that capability and strangling growth.[/quote]

Of course it’s the economy, and I think he does get it. But beyond his tactics (which I’ll get to), he faces two possibly insurmountable problems.

First, and probably foremost, I’m not sure there is a fix for the economy. There are tweaks and incentives and a little of this and a little of that, but there is no magic plan that will make it all better in the next 15 months. (At least not one that is politically feasible. The right stimulus would do it. Say .5 to 1 $trillion in infrastruce spending. That wad was already blown.) The right complains that he has no plan. But the truth is, neither does the right. As painful as it may be, doing absolutely nothing might be as effective as doing anything. (At least this was true before the debt limit debacle. Tax rates would have gone up the end of next year. Now it’s tax rates go up AND draconian budget cuts. That will surely NOT help.)

Second, as you mentioned, the intransigent opposition he’s dealing with. And it’s really worse than intransigent, because even if he (Obama) goes a different direction, they won’t support it, because it’s his idea. Nothing he suggests will ever be supported.

And his tactics further bind him. Armando Llorens, who writes at both TalkLeft and DailyKos wrote the following this morning, responding to John Cole and Jon Chait:
http://www.dailykos.com/story/2011/09/05/1013620/-Hows-That-Pragmatism-Working-Out-Politically-?via=siderec

Obama’s “theory of change” was aimed at offering the political opposition a choice between cooperation on progressive policy initiatives or self-isolation through obstruction and extremism. In other words, in a country unhappy with partisan gridlock, Republicans would either go along with key elements of a progressive agenda, or shrink themselves into an ever-more-extreme ideological rump that was irrelevant to the direction of the country.

(Emphasis supplied.) One GOP landslide in 2010 and an Obama approval rating of 40 later, it seems difficult to argue that the Theory of Change has worked politically. Will Obama stick to it through the 2012 election and will it be advisable for him to do so? I argue, and I think “liberals” argue, that no, that would be a political mistake. Jon Chait and John Cole seem to be arguing that Obama needs to “stay the course.”

Chait and Cole are idiots. I half jokingly suggested to Armando (who, in addition to being a keen political observer, may be the best the left has on SCOTUS issues and analysis) in 2006 that Obama would do well to hire him as a political consultant on both policy and tactics. (He ultimately became a Clinton supporter.) Obama’s pragmatism will be his downfall. It hasn’t worked. It won’t work.

[Allan from Fallbrook]

[quote=SK in CV]And his tactics further bind him…

One GOP landslide in 2010 and an Obama approval rating of 40 later, it seems difficult to argue that the Theory of Change has worked politically. Will Obama stick to it through the 2012 election and will it be advisable for him to do so? I argue, and I think “liberals” argue, that no, that would be a political mistake…

Obama’s pragmatism will be his downfall. It hasn’t worked. It won’t work.[/quote]

SK: My apologies for the hack job on your post, and I supplied ellipses to show where I truncated your various points, but I wanted to make a few points of my own here.

Relative to Obama’s “pragmatism”: I truly don’t think he’s being pragmatic, I think he’s genuinely trying to make everyone happy and has completely underestimated the hard ideological line that the GOP would take and HOLD. The GOP has NOT budged and this is where Obama’s inexperience has wrong-footed him, again and again, and where an experienced street fighter like Hillary would (probably) have done a better job.

As regards the stimulus, I’m not one of those that feel that the stimulus failed. I don’t think it did, but I also don’t think it succeeded, either, not to the extent that was promised. Why? Because, like Obamacare, the stimulus was “outsourced” to Congress, which bungled it. The stimulus that was proposed was NOT the stimulus that was delivered and, as a result, the various multiplier effects were never realized.

More to the point, the bulk of the stimulus spending on infrastructure (which I wholly support) has not landed yet, but is due to hit in the next federal spending cycle (the government budget year on public works runs from 1Oct to 30Sep). This is the sort of spending that Obama needs to focus on and he should re-task those ARRA dollars that are now in non- and under-performing programs and put them into serious WPA-type programs, i.e. those focusing on bridges, roads, etc. And NOT in the proposed Infrastructure Bank, which would be hugely inefficient and tie up the money even longer.

I completely agree that there is no magical silver bullet that will fix everything. To a certain extent, both the Dems and GOP are fighting the last war, and not recognizing that, with China, the Eurozone and other rising powers (like the BRIC countries), the world’s economic landscape has changed. Continuing to pay fealty to Big Labor (the Dems) and Big Money (the GOP) is exacerbating fairly deep structural imbalances and inequities in the American system. The problem is that no politician who wants to get re-elected is willing to bell that particular cat and explain to the American people that “short-termism” (trying to solve big problems within short election cycles) is bound to fail and that until we get serious, we’ll remain stuck right where we are.

[Veritas]

Allan,

That is exactly what I was trying to say to Brian. Hungry, jobless, hopeless people will begin to take what they need or feel they need under a perfect storm set of circumstances. It does not have to be the scary right wingers and if I were Brian I would stay out of the way of some of the flash mobs because I do not think his political belief system will save him from the mob. Demonizing the right might make him feel safe and smug, but it is just his inability to see the big picture.

SK and Econ. Thanks for the econ. review. You all make my head hurt in a good way. I think you are both brilliant, but the voters will not care. They will vote based on perception, and if they think they need a strong man to get them through these times, then that is what they will look for. Whoever creates the image that they will be better off than they are now will probably get their vote. It really does not boil down to who started the big pump priming give away and I know there is a poll out that still has a high margin blaming Bush for our woes. (Mix up woes and you get owes). Anyway, for voters whether it is chickens in the pot or a flat screen they will go with the guy (not sure about the gal) that “creates” the impression they will be better, safer, etc.

If Obama cannot undue his weak leader and lack of ability to turn around the economy image, he will be done. His brilliant oratory, his Harvard law school, his good looking suits, and his nice looking family notwithstanding; people want to feel better and to be in a better position than they are now. For those in the highest tax categories, most of them will be able to evade paying as much as the middle class does. So I am expecting one of the candidates to propose some serious tax reform. Not sure who, but I am expecting it.

Not that I want this interesting thread to end, but I have to say the H. word. Hitler made a lot of promises to Germany and the perception by the people that he was going to make them a strong country and the fact that he delivered on those promises helped get him elected. I am not saying Obama has anything to do with Hitler. What I am saying is he made a lot of promises and he has not delivered, blaming Bush (whether true or not), the weather and tsunamis in Japan, still does not take the onus from him. He is the bus driver at this time and he will be blamed if the economy continues to deteriorate. Not anything political, it is similar to what happened to Hoover and Carter. Bottom line most voters are not that well informed of underlying issues or facts, they vote with their feelings not with logic.

One more thing to Brian, you need to give up using
Alinsky’s rule about the right: “Go after people and not institutions; people hurt faster than institutions.” You need some new material.

[SK in CV]

[quote=Allan from Fallbrook]
Relative to Obama’s “pragmatism”: I truly don’t think he’s being pragmatic, I think he’s genuinely trying to make everyone happy and has completely underestimated the hard ideological line that the GOP would take and HOLD. The GOP has NOT budged and this is where Obama’s inexperience has wrong-footed him, again and again, and where an experienced street fighter like Hillary would (probably) have done a better job.

[/quote]

We’re seeing the same thing, just maybe saying it differently. Truthfully, I don’t know where his ideals lay. He’s no left winger. Never has been. Centrist, Corportatist Democrat is more likely, but I fear we will never know. The deal is more important to him than the outcome, whether it furthers his ideals or not. (ACA, the disasterous tax deal he made the end of last year, this year’s debt limit deal, I could go on.) He routinely bends over to real politic, rather than staking a claim and letting real politic act. He starts where he should end, and ends up somewhere neither he, nor any of his supporters want him. (quite a bit of speculation there. At this point, I have no clue where he wants to end up. He always seems so happy with the deals he’s made. Maybe it IS where he wanted to end up.) He’s the mediator in chief. You think maybe Hillary would have done a better job? I can’t disagree. But maybe the biggest problem that I have with Obama is that I think he thinks he’s done what he set out to do. Make compromises. How charming. (there, i said it 6 different ways.)

[briansd1]

[quote=SK in CV]
But I have to add here. Top marginal income tax rates for those making over $20,000 a year (I’m guessing pretty decent money at that time) almost doubled to 55% after US engagement. For the very wealthy, it rose to 89%, and then to over 90% where it stayed for the duration of that war and the next. And the economy exploded (in a good way) with those high tax rates. JM would have approved.[/quote]

Excellent point by SK.

Also WWII was a huge borrow-and-spend work program with debt to GDP at an all time high. As Paul Krugman said, why does it have to be war and not something else?

Incidentally, we’ve been at war for 10 years.

http://www.washingtonpost.com/world/national-security/a-decade-after-the-911-attacks-americans-live-in-an-era-of-endless-war/2011/09/01/gIQARUXD2J_story.html

I think that it’s different this time and war is not generating the innovation that WWII did.

[fun4vnay2]

Didn’t get time to go through the whole thread but here are few thoughts to ponder::

All the middle class jobs are being shipped-out/outsourced to countries like India.
This is first hand experience coming from me and my friends all over USA working as knowledge worker ( engineering, IT, Medical etc ) in companies across different verticals.

Innovation and education won’t help this country from my perspective. Take example of innovative company like Apple or Google: They can come up with superb ideas ideated by small number of individuals in USA but when it comes to implement the ideas for masses, it is all done in India and China leaving no middle class jobs for here.

In essence, US needs to stop this middle class job flight.

Recently, large companies have shown record profits but no job growth..

[Veritas]

It is generating new and more efficient ways of killing people, but maybe that is not what you had in mind.

[Allan from Fallbrook]

SK: Believe it or not, but I grew up in a Democratic Party household (okay, “Chicago” Democrat on my dad’s side, which is slightly to the right of Attila the Hun). My mom’s family hailed from Detroit and all of them worked for Ford Motor for their entire careers. My was dad a defense aerospace engineer and my uncle worked for Merrill Lynch, but they were strong and ardent supporters of a “fair” system, meaning balanced between GOP and Dems in terms of how much leash you allowed Big Business and Big Labor.

My uncle, who was a stockbroker and wheeler-dealer type, was a huge fan of LBJ’s (and not because of Vietnam). He was a huge fan because, to him, LBJ was the consummate politician and knew how to make a deal. As my uncle said, LBJ understood when to cajole and when to bust heads. LBJ also came up in the rough-and-tumble Texas political machine and thus knew the “true” nature of politics.

My point is that Obama has none of that experience (in spite of coming out of the Chicago political machine) and thus none of that grit. Instead of making the stimulus and ACA his own, he foisted it off on Congress, with predictable results. I do agree with your assessment, especially the assertion that he thinks he’s accomplished his goals. A persistent complaint about Obama and his administration is that they are living in a bubble and failing to see what is going on outside the beltway. While this is generally true of DC, I think its probably markedly more true of Obama and due to his somewhat insular approach (i.e. holding himself above the fray, as it were).

All of this, to me, makes him vulnerable in the coming election, especially with a fire-breathing populist like Perry coming to the fore for the GOP. I realize that comparisons are odious, but there are definite parallels to the 1980 Carter – Reagan showdown, including the Dem’s dismissal in 1980 of Reagan as a “lightweight”. Whoops.

[briansd1]

[quote=Veritas]
Not that I want this interesting thread to end, but I have to say the H. word. Hitler made a lot of promises to Germany and the perception by the people that he was going to make them a strong country and the fact that he delivered on those promises helped get him elected. I am not saying Obama has anything to do with Hitler. What I am saying is he made a lot of promises and he has not delivered.[/quote]

The fact that so many on the right like to compare Obama to Hitler is interesting. You hear that over and over again on right-wing talk radio.

As Allan said, Obama is anything but Hitler. He’s trying to mediate and be all things to all people.

I beleive that the issue of race is very much alive but unspoken. As the first Black president, Obama has no choice but to equivocate so at to seem reasonable to all parties.

SK and well-educated Americans don’t have problems with race, but this country is very diverse…

Going big on a jobs program will get Obama labeled a communist real quick. Obama pretty much adopted a Republian health care plan, and he was maligned by the right.

I don’t blame Obama’s pragmatism. He’s doing what he must.

[Allan from Fallbrook]

[quote=dd123]Didn’t get time to go through the whole thread but here are few thoughts to ponder::

All the middle class jobs are being shipped-out/outsourced to countries like India.
This is first hand experience coming from me and my friends all over USA working as knowledge worker ( engineering, IT, Medical etc ) in companies across different verticals.

Innovation and education won’t help this country from my perspective. Take example of innovative company like Apple or Google: They can come up with superb ideas ideated by small number of individuals in USA but when it comes to implement the ideas for masses, it is all done in India and China leaving no middle class jobs for here.

In essence, US needs to stop this middle class job flight.

Recently, large companies have shown record profits but no job growth..[/quote]

DD: Which was my point. There is no single policy that will reverse this trend, but it will take serious policies, focusing on tax reform, US Industrial policy, R&D and a strong “Build American” program that includes actual teeth when companies like GE try to offshore jobs.

If we’re being truly honest, countries like China have painted a target on our backs and are willing to engage in “beggar-thy-neighbor” industrial policies that adversely affect US companies and jobs. I personally have no issue with engaging in restrictive industrial policies with China, including tariffs and taxes on Chinese goods. With rising labor rates and shipping costs growing ever more expensive, the argument that “Made in China” is always cheaper is being rapidly eroded.

Relative to your argument about creativity and innovation: The US, through DOE, DoD, DARPA and other similar programs, funded a huge boom in technology and electronics that ran from roughly the early 1950s through the end of the Cold War. While I don’t feel the government should be in the business of picking winners and losers (Solyndra, anyone?), I DO believe they should be in the business of aggressively funding R&D on both a small (SBIR/STTR programs) and a large scale (industry initiatives through public-private partnerships).

My dad started his career with Jet Propulsion Labs (JPL) in Pasadena, and used to tell me about Bell Labs, Lockheed’s “Skunk Works” program, PARC (Palo Alto Research Center) and others. There is absolutely no reason why we cannot spur innovation like this again.

As Brian said, there is no reason why we cannot treat this as a war and engage the appropriate resources.

[Allan from Fallbrook]

[quote=briansd1][quote=Veritas]
Not that I want this interesting thread to end, but I have to say the H. word. Hitler made a lot of promises to Germany and the perception by the people that he was going to make them a strong country and the fact that he delivered on those promises helped get him elected. I am not saying Obama has anything to do with Hitler. What I am saying is he made a lot of promises and he has not delivered.[/quote]

The fact that so many on the right like to compare Obama to Hitler is interesting. You hear that over and over again on right-wing talk radio.

As Allan said, Obama is anything but Hitler. He’s trying to mediate and be all things to all people.

I beleive that the issue of race is very much alive but unspoken. As the first Black president, Obama has no choice but to equivocate so at to seem reasonable to all parties.

SK and well-educated Americans don’t have problems with race, but this country is very diverse…

Going big on a jobs program will get Obama labeled a communist real quick. Obama pretty much adopted a Republian health care plan, and he was maligned by the right.

I don’t blame Obama’s pragmatism. He’s doing what he must.[/quote]

Brian: Are you being intentionally obtuse or what? Veritas CLEARLY stated he was NOT comparing Obama to Hitler. Rather, he was drawing a historical parallel to Hitler’s promise of strengthening Germany through his jobs program and re-industrialization.

Using Obama’s race as an explanation for his constant retreating and appeasement of the Republicans is categorically ridiculous. Please offer ONE fact that supports that assertion. Just ONE. Obama’s policies have NOTHING to do with race and the Left in this country seems pathologically unable to quit playing the race card (which also ties in nicely to the “class warfare” meme). Uh, Brian, the 1960s ended over two generations ago. Move on and let it go, man.

Obama is a weak and ineffectual leader and has proved nearly Republican in terms of policies and programs. As SK astutely points out, he was NEVER a Democrat (in the grand sense of the word) and even his most starry-eyed supporters (save you) have tumbled to this reality.

[SK in CV]

[quote=Veritas]
SK and Econ. Thanks for the econ. review. You all make my head hurt in a good way. I think you are both brilliant, but the voters will not care. [/quote]

I gotta jump in here and argue this point. At least one of them. You’re right, the voters will not care. They won’t care because absolutely absurd ideas get thrown around as if they have merit.

Creationism is not science. It is fairytale. Global warming is a hoax is not science, it is propaganda advanced by those with financial interest making people believe it is a hoax. Gay marriage is a threat to conventional marriage is hogwash, put forward by bigots. The birther thing never deserved a glimpse of sunlight. And supply-side economics, as promoted by EconProf and others is as empty as any of these. Lowering taxes on the rich, irrespective of the current tax rate on the rich, will not always create jobs, nor be good for the economy. Increasing taxes on the rich, irrespective of the current tax rates on the rich, will not always decrease investment nor cost jobs, nor be bad for the economy.

We can’t have serious discussions when rediculous theories, without basis in fact, are advanced as reasonable talking points. They’re not. I am not supporting censorship, I’m supporting marginalization of stupid ideas. Stupid ideas are too often placed at the table for discussion as rational and supportable options. They’re not. There is no path to progression unless teh stupid is eliminated as an option.

/rant

[Allan from Fallbrook]

[quote=SK in CV]
I gotta jump in here and argue this point. At least one of them. You’re right, the voters will not care. They won’t care because absolutely absurd ideas get thrown around as if they have merit…

We can’t have serious discussions when rediculous theories, without basis in fact, are advanced as reasonable talking points. They’re not. I am not supporting censorship, I’m supporting marginalization of stupid ideas. Stupid ideas are too often placed at the table for discussion as rational and supportable options. They’re not. There is no path to progression unless teh stupid is eliminated as an option.

/rant[/quote]

SK: Can we include wrong-headed in here as well? I have no issue with marginalizing stupid in order to support rational, but, all too often, simply questioning “settled science” (empirically speaking, there is NO such thing), whether its economics or AGW/Climate Change, is treated as heretical or blasphemous.

I read Krugman’s article on the need for additional stimulus. I don’t take any issue with the assertion, what I do take issue with is Krugman’s insistent and persistent abuse of anyone who disagrees with him and his continued use of strawman arguments to attempt to pro-actively submarine his opponents. Since when did asking questions become such a big deal? If we’re truly committed to a rational, well thought approach, I’d think that empiricism would hold pride of place.

I’ve also watched those whose fervent belief in AGW has caused them to lose all objectivity on the subject, frothing at the mouth over the temerity of those who are proffering the newest NASA and CERN findings on climate change for review and comment.

I strongly agree with you, SK, but I’d also offer the observation that that blade cuts both ways.

[SK in CV]

[quote=Allan from Fallbrook]SK: Can we include wrong-headed in here as well? I have no issue with marginalizing stupid in order to support rational, but, all too often, simply questioning “settled science” (empirically speaking, there is NO such thing), whether its economics or AGW/Climate Change, is treated as heretical or blasphemous.

I read Krugman’s article on the need for additional stimulus. I don’t take any issue with the assertion, what I do take issue with is Krugman’s insistent and persistent abuse of anyone who disagrees with him and his continued use of strawman arguments to attempt to pro-actively submarine his opponents. Since when did asking questions become such a big deal? If we’re truly committed to a rational, well thought approach, I’d think that empiricism would hold pride of place.

I’ve also watched those whose fervent belief in AGW has caused them to lose all objectivity on the subject, frothing at the mouth over the temerity of those who are proffering the newest NASA and CERN findings on climate change for review and comment.

I strongly agree with you, SK, but I’d also offer the observation that that blade cuts both ways.[/quote]

I agree with you. It goes both ways. Krugman, who at one time I suppose, was a real economist. Now he’s an advocate. And has to be taken with a grain of salt.

Unlike him, I don’t “know” that there is some sort of stimulus that will work. I’m willing to listen to anything within reason. (returning to the gold standard is NOT among them.) But I take no exception to his style. Any more than I take exception to Ben Stein’s style. (I use him as an example because, like Krugman, he’s been brilliant at times. And at other times, he’s simply a clown. And also because I recently saw him tell Bill O’Reilly that he didn’t know WTF he was talking about. And that makes me happy.)

Strawmen, ad hominem attacks and outright lies don’t get us anywhere. No matter where they come from. But apparently they make good ratings. McLuhan was unfortunately right. Even before the internets.

[Author]

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