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Blames Republicans, Banks for State of Economy

Letters to the Editor | Mon, 09/26/2011 - 11:21 am | Updated 3 years 29 weeks ago | Read 1264 | Commented 2 | Emailed 0

By Robert Post

To The Editor: Art Hall's assertion that Keynesian economics is responsible for the economic morass we have been mired in since 2007 seems to be based on a very selective memory and choice of facts. His analysis of the Obama administration completely ignores the dilution of the stimulus by the obstructionism of the Republican Party whose only goal was to make Obama "fail" regardless of consequences for the nation as a whole. As a direct result of the Great Depression, there was reasonable regulatory regime of the financial system in place for the next 50 years or so. During that time, while we had recessions, they were mild. The collapse of the economy that started in 2007 is a completely different animal and the Bush administration’s response to it was completely inadequate. For those, like our esteemed publisher, who seems to suffer from what I call RA (Republican amnesia) allow me to refresh memories. In the early years of the last decade, the banks of America took what were good ideas and perverted them into a monster that turned on them and ate the economy. Historically, mortgages had been among the safest loans a bank could make. Of course, as is with any investment (loan), there is a direct positive relationship between risk and reward, the greater the risk, the greater the reward. Specifically, The banks decided that making loans to people and not verifying or even bothering to ask if they had a prayer of repaying the loan was a sound business practice. They then would pretend that it was a traditional mortgage and bundle a group of these POSs (that's the bank’s description, not mine) and prepare them for sale to unsuspecting investors. Then they hit upon the pièce de résistance, we'll sell insurance (credit default swaps) in case (when) they go bad. They pocketed the fees and made no provisions for payouts. Then they traded them back and forth amongst themselves to run the prices up on these POSs. When the POSs went bad (as they were designed to do) they ran to the government and cried. This behavior and attitude of entitlement is what you get when you practice laissez-faire economics. Adam Smith is often misrepresented as prescribing a liassez-faire attitude towards economic thought, but this is a distortion of his ideas in the same way that social Darwinism is a misuse of evolutionary ideas. Concerning the stimulus that “failed,”one should remember that a substantial part of it was made up of tax cuts which flowed overwhelmingly to those he regards as “the deserving rich.” Had the rich instead spent their windfall on goods and services instead of making investments to further enrich themselves, they would have made the stimulus more successful and made more money to boot. Like the banks, they took the money they got and held on to it trying to make sure Obama, and by extension, the stimulus and the country would fail. Although it is a cold comfort to those who are suffering, most economists agree that absent the stimulus, the economy would be even worse off than it is now. It does not follow that when the doctor removes the meds, the patient gets better. Greed and avarice were the cancer that infected the economy; while we will never be free of this scourge it can be ameliorated for the benefit of all. ROBERT POST Villas

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Wed, 09/28/2011 - 12:02pm - Posted by: john

Mr. Post . Nice analysis . I wonder if you read the "eminent" Mr. Hall's recent editorial praising Warren G. Harding . Talk about a POS ? Even Faux Spews wouldn't be dumb enough to try to make that case .

I finally figured out Al Campbell's main function at the vaunted Herald . He is the person assigned to wipe the drool off the "eminent" Mr. Hall's chin and change his adult diaper .

Wed, 09/28/2011 - 11:25am - Posted by: whitespider

Indeed, when a medical doctor does remove allopathic meds, the underlying symptoms actually worsen. The law of cause and effect. When a particular miasmic dis-ease is suppressed for a long time, the allowance of its natural manifestation will result in a "flare up" of not only its original symptoms but also more systemic developments of the same dis-ease which have suppurated on much deeper levels. These will be visibly and upsettingly apparent.

Miss Joe Zelnick, don't we?

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