014's GDP Final Revisions: -2.9%, Looks Like Another Recession
06-29-2014, 04:17 PM
Quote: (06-29-2014 10:56 AM)The Father Wrote:
"Is headed" is a very conclusory statement. If you change it to "could be headed", I would agree with you: The factors you name below COULD lead to a very nasty outcome. However, they pale in comparison to the factors that COULD have spelled doom for the U.S. in the 1970's and 80's and early 1990's, but didn't. In fact, we went on to our richest economy ever (2007). Some of those factors were:
Nothing is absolutely certain when it comes to economics of course. I addressed the whole probability issue in another post. Maybe a president or reformer will come along who will enact serious policies that will stem the hemorrhaging going on. However, I wouldn't hold my breath for some economic Jesus to come along and wave his mission statement around to lead everyone to salvation.
Also, that booming gdp you are talking about was mostly due to the effects of the golden age from 1949 (after the post-ww2 mini recession) up until around 1970. The 70's onward was when the real benefits of GDP prosperity was largely being lost on the middle/lower class.
The GDP and stock market increased from 80-90's and this was also the period when:
Traditional families were being dismantled in favor of the dual income approach.
Massive amounts of outsourcing that bled a large portion of the blue collar middle class dry. The stock market increase was representative of large value stocks (big corp.) doing well but a non impact on your average American citizen.
The start of mass deregulation of the financial markets. First in the 80's then in the 90's with the repeal of the Glass-Steagall Act which opened up the doors to the subprime crisis of 2008 and the increasing role of private sector banking on U.S. economic policy.
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- The Cold War: This may seem quant to most people on this page, but schoolkids in the 1970s and 80s went to school every day wondering if this would be the day the soviets would nuke us. Start at 2:02 of this clip, that all school kids were shown.
The cold war is an example of a
potential exogenous event that was always in the minds of policymakers and the U.S. public but actually had little real impact on the actual economy. The economy didn't even receive a significant bump through the usual Keynesian type spending that actual wartime build up gets either. It was more or less a non-event for the economy (until after the Soviet collapse) but a significant event for history.
This is quite different from the
actual wasteful spending we are seeing being poured into our current expensive foreign policy "obligations" everywhere.
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- An over-reliance on oil at a time when a cartel (OPEC) explicitly stated it would seek to deny us that oil.
The OPEC embargo was the equivalent of children throwing a tantrum. It was never going to have long term traction even though the short term impact was serious. OPEC actually shot itself in the foot because the resulting policy changes did not benefit them in the least. OPEC nations were highly reliant on the U.S. even then so it was a situation that was inevitably going to end.
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- An economic boom in Japan that resulted in much of the prime real estate in New York, Los Angeles, and Hawaii being acquired by the Japanese and the general consensus, as expressed on the floor of the House of Representatives by Majority Leader Dick Gephardt that in the 1990's the U.S. would "not be a factor" in the global economy (this seems to be wishful thinking on the part of some Democrats in every generation).
Most of the alarmists were wealthy founders and CEOs of large American corporations who didn't like the increased competition and used their media clout to express that. The idea of Japan overtaking the U.S. was never a serious concern with people who knew what they were talking about it. It was just media fodder for the masses and to stoke nationalist feelings and various favorable trade policies. It was also used as a convenient scapegoat to dismantle the domestic automobile industry and ship it abroad.
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You would do well to learn more about derivatives. How, exactly, are they "theft"?
It's not derivatives that were the problem and I never implied as such. A "method" is not a cause. The primary issue was and still is the pattern of
deregulation which allowed derivatives to be used as instruments to defraud the public.
Do you really feel that missrepresenting credit worthiness and stuffing billions of dollars in derivatives full of complex junk (without real oversight) is how the financial markets should operate?