Wanting a Re-Do on the 2008 Primary?

A recent CNN.com article (yes, for people paying attention, I went there from our own sidebar, “All News in Moderation”) article speculates that, knowing what they know now, Democrats might opt for Hillary over Obama, and in essence attributes Obama’s primary victory to his camp’s ability to game the system, as it were:

With the nation’s economy — and arguably its politics — in shambles, it is not very surprising to find in a recent Bloomberg poll that 34% of respondents think it would have been better for the country if Hillary Clinton hadn’t lost the battle for the Democratic nomination to Barack Obama. A CNN poll released last week put Clinton’s favorability rating at a tremendous 69%.

Perhaps no one is questioning the 2008 results more than Democratic politicians who must face the voters next year. Right now, it looks like President Obama, rather than offering coattails to those below him on the ticket, may instead be serving up an anchor. This is ironic, when you look back at what actually happened during the Democrats’ 2008 primary, and at who made Obama the party’s nominee.

We Are So Screwed

There were already lots of economic discussions today but I couldn’t resist this over-view for non-economists. I found a conservative economist I mostly agree with but don’t panic, it hardly ever happens.

This is seriously an interesting and informative piece from a conservative economist who helped develop Reaganomics. Of course he has since tried to re-formulate the plan and was also a huge critic of Bush, the Iraq War and Bush’s economic policies. I’m pretty sure I’ve quoted him before and gotten an onslaught of criticism for doing so from conservatives, but I’m just going to go ahead and do it again. I understand that he is no longer a revered voice in conservative circles and that some of his criticism of Bush was beyond the pale, but this is still a good read and gives an historical reference that some of us non-economists crave in order to understand the larger view of the mess that 2008 has wrought on the world. BTW, he is a critic of both Republican and Democratic economic policies and seems to place a high value on a thriving middle class, me too. I may be missing some essential economic reality or other so feel free to point it out, but most of what he says sounds about right to me. I placed just a few quotes below so read the entire piece if you’re interested. I’ve been accused, lightheartedly, of linking to rather esoteric economic journalism, so I imagine this is another one in that vein. I can’t seem to help myself.

Paul Craig Roberts (born April 3, 1939) is an American economist and a columnist for Creators Syndicate. He served as an Assistant Secretary of the Treasury in the Reagan Administration earning fame as a co-founder of Reaganomics.”[1] He is a former editor and columnist for the Wall Street Journal, Business Week, and Scripps Howard News Service. Roberts has been a critic of both Democratic and Republican administrations.

More of his bio from Wikipedia

Quotes from a piece in CounterPunch today:

Economic policy in the United States and Europe has failed, and people are suffering.

Economic policy failed for three reasons: (1) policymakers focused on enabling offshoring corporations to move middle class jobs, and the consumer demand, tax base, GDP, and careers associated with the jobs, to foreign countries, such as China and India, where labor is inexpensive; (2) policymakers permitted financial deregulation that unleashed fraud and debt leverage on a scale previously unimaginable; (3) policymakers responded to the resulting financial crisis by imposing austerity on the population and running the printing press in order to bail out banks and prevent any losses to the banks regardless of the cost to national economies and innocent parties.

To deal with the adverse impact on the economy from the loss of jobs and consumer demand from offshoring, Federal Reserve chairman Alan Greenspan lowered interest rates in order to create a real estate boom. Lower interest rates pushed up real estate prices. People refinanced their houses and spent the equity. Construction, furniture and appliance sales boomed. But unlike previous expansions based on rising real income, this one was based on an increase in consumer indebtedness.

There is a limit to how much debt can increase in relation to income, and when this limit was reached, the bubble popped.

The Paulson Bailout (TARP) was large but insignificant compared to the $16.1 trillion (a sum larger than US GDP or national debt) that the Federal Reserve lent to private financial institutions in the US and Europe.

In making these loans, the Federal Reserve violated its own rules. At this point, capitalism ceased to function. The financial institutions were “too big to fail,” and thus taxpayer subsidies took the place of bankruptcy and reorganization. In a word, the US financial system was socialized as the losses of the American financial institutions were transferred to taxpayers.

He goes on to talk about Greece, the IMF and our very own Fed and QE3 and then concludes with this:

For four years interest rates, when properly measured, have been negative. Americans are getting by, maintaining living standards, by consuming their capital. Even those with a cushion are eating their seed corn. The path that the US economy is on means that the number of Americans without resources to sustain them will be rising. Considering the extraordinary political incompetence of the Democratic Party, the right wing of the Republican Party, which is committed to eliminating income support programs, could find itself in power. If the right-wing Republicans implement their program, the US will be beset with political and social instability. As Gerald Celente says, “when people have have nothing left to lose, they lose it.”

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