I appologize in advance for the tone of this post but, really, I wish you guys would ditch this fantasy of "smiling faces" south of the border.
I moved south of the border -- to Brazil -- and I have no regrets, but I don't plan on staying here for the rest of my life. The people don't smile more; there is not more opportunity; the women are not more beautiful, the alcoholic beverages are not more powerful...
Looking north, I see the biggest, most successful economy in the world, a standard of living that is the envy of most countries, and - importantly - an incomparable level of economic and personal freedom... and I see a lot of whiners who think a rough patch is a "secular decline" and that natural and inevitable phenomena such as "diminishing marginal returns" and "reversion to the mean" imply that the growth of other countries assumes the decline of ours. Rubbish. You should be ashamed of yourselves.
By ANY measure, Latin America is a worse place to live and thrive. This is so patently obvious that it's not worthy of further discussion --- just take the word of Lil.
So maybe we should all move to Scandinavia. Or maybe Iceland... I hear it's cheap, and they have a diet rich in fresh seafood. And it's sunny 24 hours a day for a month each year (and dark the rest of the time). Oh, and the women are blonde, beautiful and they hate their men. Yes... that's the ticket!
But seriously, I do think we in the USA went astray: Wealth has become too concentrated and allocated in a way that makes no sense, the people have lost power to corporate interests, the crisis weakened the foundations of the economy and hurt many, many people. But the game is not over. Our system works b/c it's flexible, b/c the pendulum swings both ways to correct excesses when they become apparent.
The Obama Admin is doing a great job. Will the spending be as efficient as it could or should be? No. Will the healthcare plan work? Who knows. But just think about the alternatives... Isn't it obvious that stimulus was required and may, to some degree, have worked? Isn't healthcare fcked-up and don't we need to address the issue before it sends us to the poorhouse (or the grave)?
8 years of laissez-faire republicanism allowed the system to get out of whack... The crisis hurt. But 3.5% GDP growth -- even if only for a quarter -- is good news. Maybe, just maybe, we've taken our fist steps on the road to recovery. Maybe we have not heard the last gasp from the USA.
Corporatism, as I meant, is defined as "the promotion of the interests of private business corporations in government over the interests of the public."
<Were the auto bailouts "corporatism" or not?>
No, corporatism is what the auto compnaies did to Preston Tucker. See the link: http://en.wikipedia.org/wiki/Preston_Tucker
He wanted to build a safer car, and the big auto companies put the government on him.
<What do you mean by "both sides of the aisle"?>
Republicans and Democrats.
Here is a very pro-Democratic piece of what happened with the bailout. See the link: http://money.cnn.com/2009/10/21/autos/auto_bailout_rattner.fortune/index.htm?postversion=2009102109
It's an excellent read, but the key sentence is "The Bush administration had decided in late December that GM and Chrysler were not going to go bankrupt on its watch and had shoveled $17.4 billion of TARP money into the companies to keep them afloat, but without any meaningful stab at restructuring them."
< Since you want to apply the "corporatism" tag to Republicans>
Nope, the Republican leadership under Gingrich and Reagan wanted to shrink government, but that changed with Delay and GW Bush. Those two clowns expanded government spending and showered money on pro-Republican corporations like Halliburton.
Halliburton used to be Brown and Root which infamously spread huge money around to LBJ, a Democrat.
Corporations are only interested in government funds, so they give money and support to the people in power in government who give them said money. They don't care which party they give money to.
Gingrich and Reagan wanted to cut taxes and cut spending. De Lay and GW Bush raised spending while cutting taxes, a policy that had to and did lead to devaluation of the dollar.
Billy Tauzin and Phil Gramm are two examples of Republicans whoring themselves out to corporate America.
And the kings of pork with regards to the Dems are John Murtha and Robert Byrd.
< If management asked for taxpayer funds, therefore the Republicans wanted taxpayer funds to GM and Chrysler. Therefore John Boehner wanted it, Eric Cantor wanted it, John McCain wanted it, Rush Limbaugh wanted it.>
Grow up, Ilap. No one wanted the auto bailout.
Thanks for a good post...
I`m tired of all the crap put out by the rightwingers about how this country is going socialist/communist/national socialist/ etc, etc...
government and politics swing from right to left and back again... just a quick glance at American history proves that over and over again... right now we are swinging back from the far right --- still right sided and no where near center yet...
we are already more socialist than you are willing to think or see or admit. Socialism thrives in only limited circumstances, and therefore for limited amounts of time. For example - look at Chavez - the only way a country can "succeed" under his rule (take good companies away from the founders and replace the founders with govt employees)is as long as the country has oil wealth. Make no mistake., that oil WILL run out - sooner than any of us wish to open our eyes to. Another situation is a fairly "rich" country like the US where massive social and military programs can be funded only two ways - via massive taxes on the "rich" and borrowed money from abroad. SO... you can only take money from the rich for so long.. then they send their jobs overseas and their incomes too (Anyone heard of any "outsourcing" lately -like the last 30 years!!- or rich people "hiding their money overseas"? SO... secondly, you can only play the largest ponzi scheme in history (US govt degbt) with the US dollar by borrowing to pay the debt. this will end - again sooner than any one of us would like to envision - as soon as these countries (read China) get their shitakes together and turf us and their loans to us. We will be left as the poorest nation in the history of man. Furthermore, because of all of the ingrained laws favoring labor and slovenliness in the workforce, and paying people relatively (in the world sense) good pay for doing NOTHING, we will be left with a populace with incredibly poor work ethic to do what? Build things that haven't been built here for decades? This country is in for some Baaaaaaaad times, man. I mean dead people in the streets... no shit. Buy food, guns.. energy. or die....
Good post Musk - as a spanish-speaking Texan with a fondness for many things Mexican, I've never been terribly confused about which culture was one to live in and which was only for visiting.
I agree, the pendulum is swinging back from a period in which corporate interests and the ultra-wealthy got away with shifting a huge amount of wealth and power their way. All this while the rest of America was pre-occupied with getting rich by flipping stocks or houses or cards in online poker games.
It would seem many of us bought into the idea that if we just speculated on something, lived off borrowed money and got that pesky government out of our lives, we'd all get rich. That whole business about getting educated, working hard, postponing gratification, etc... was too old fashioned.
Ironically (and painfully, for me at least) when the bubble popped and the music stopped, the government poured money on the banksters and rushed out programs to aid the imprudent. Not being a home-equity-spending, over-indebted fool or a Goldman partner has not paid well.
While it is a little galling to see recklessness rewarded, I'm old enough to have perspective on what really constitutes tragedy in life, and I kept enough of my battered fortune to play this rebound to good effect. That doesn't mean I'm not angry, embarrassed and disappointed to see the US screw up this badly and flounder around so in trying to recover.
I do think we'll right ourselves in time. The country has basic strengths of infa-structure, education and rule of law that some other nations can only envy. Does this mean we'll dial back to the heady stupidity-is-rewarded days of early 2007? Doubtful. But I'll take my chances that this will remain a preferable place to live whatever happens.
I always enjoy the dialogue between you and doc. On a board that sees too many pumpers and fools, you two are worth reading.
Petro: Thanks for your post and for the compliment.
Doc: Apparently we disagree rather profoundly on these issues, especially wrt DEBT...
You say debt was the cause of the crisis and that the countries with the least debt will be more productive in future. Yet your policy prescription is to give loans to individuals, many of whom could not afford to be in debt in the first place. Correctly applied, debt ADDS to productivity and is an important source of wealth (if you've had a mortgage anytime between between 1960 and 2007, or invested on margin in an up market, you know what I mean.) But debt comes with risks, too, and we have all experienced the consequences of debt/risk mis-applied and out of control. My point: Debt is not in itself a bad thing.
I think giving out loans to individuals during the worst of the crisis would have been like fighting a forest fire with garden hoses rather than airborne tankers full of fire retardant chemicals -- an exercise in futility. Saving the banks was essential because without them the financial system and the economy cease to function. Obama's prescription differs little from Bush's b/c it's the right policy, the right medicine. The banks have been saved, capital is formed and allocated and, yes, there is more healing to be done. But would you really rather we'd messed around with alternative medicine while the patient lay prostrate?
Regarding cash for clunkers and the new home tax credit: Yes, these are temporary, imperfect and, maybe, long-term-ineffective fixes -- lipstick on the pig. But I doubt you could find one UAW worker, one auto exec, or one starving real estate agent that thinks they were a bad idea. Sometimes you just need to make the pig look a bit prettier, even if for a day.
Good to hear from you PG. Even though Musk and I disagree somewhat on this topic, I do enjoy reading him.
I can understand how my views confuse people. On the one hand, I think the USD is way undervalued, and I defend the U.S. when it comes to its currency against those buying gold, oil, or other currencies.
OTOH, I am trashing the U.S. economy, and it's possible to do both. My model is Japan post 1990. Since the Nikkei hit 40,000 in 1989, the yen is at or near an all time high versus the dollar while the Japanese economy and stock market have been in a twenty year funk.
As for the U.S. versus Latin American, I again go to the Japan example and compare Japan to China. Japan is safer, wealthier, has a better rule of law and is not as oppressive as China is. OTOH, China is growing, dynamic, and much more alive than the aged Japan.
<I agree, the pendulum is swinging back from a period in which corporate interests and the ultra-wealthy got away with shifting a huge amount of wealth and power their way. All this while the rest of America was pre-occupied with getting rich by flipping stocks or houses or cards in online poker games.>
Just like Japan, right? Propped up by government debt, there are zombie banks and corporations that were shells of what they used to be which sounds quite familiar to what we have in the U.S. today. Per Bill Gross, the wealthiest Americans were not the most productive, intelligent, or hardest working, they were the ones best able to get money from banks.
< The country has basic strengths of infa-structure, education and rule of law that some other nations can only envy.>
And again just like Japan.
<Does this mean we'll dial back to the heady stupidity-is-rewarded days of early 2007? Doubtful. But I'll take my chances that this will remain a preferable place to live whatever happens.>
We'll see on that score, PG. I've been disappointed with what Obama. The Dems and Obama do seem to be willing to stick it to the big companies in health care. We'll see how that plays out once the final health care law gets signed into being.
However, Obama has done zip with regards to financial reform. And now we find out that the person who authorized that $13 billion to Goldman Sachs via the AIG bailout was (drum roll please) our beloved Secretary of the Treasury, Timothy Geithner. See the link: http://www.bloomberg.com/apps/news?pid=20601039&sid=aLllpEiqrgpQ#
So we now know that Goldman Sachs not only had the previous SOT Hank Paulson looking out for them, they have the current one as well.
And Geithner is already busy drawing up another plot to give him even more power and money. See the link: http://www.youtube.com/watch?v=pIuwVJ-WqnY
Everybody who is so enamored with Obama has to answer the following question. When it comes to the stock market, commodities market, and the way the bailout has been handled to date, how has Obama differed in any way from Bush?
<Looking north, I see the biggest, most successful economy in the world, a standard of living that is the envy of most countries.>
No one denies that, Musk. If I had to start a business or work somewhere, I would want to be in El Paso. If I want to have fun, I'd go to Juarez.
<I see a lot of whiners who think a rough patch is a "secular decline">
Whatever expansion the U.S. has enjoyed over the last decade has been debt based. Borrowing, building, and then defaulting does not make for a strong economy.
<"reversion to the mean" imply that the growth of other countries assumes the decline of ours.>
Musk, you are missing the point. Any country like Iceland or much of Europe or Japan that has relied upon debt to expand their economy is in trouble. This is a worldwide recession because the world produced too much money/debt. The pockets of the world that will be the most productive will be the ones with the least amount of debt, and one of the regions of the world with the least amount of debt is Latin America.
<By ANY measure, Latin America is a worse place to live and thrive.>
That isn't true. Living expenses are much lower in Latin America than the U.S. I agree that the U.S. is a better place to earn a living.
And International Living has done a quality of life survey. See the link: http://www.il-ireland.com/il/qofl2009/
I read this and was stunned. The U.S. getting a 100 in freedom given the percentage of our population locked up is a joke as is the safety rating. The climate in the U.S. is so variable it is meaningless.
But my focus was predominantly on leisure, and we are nowhere near #4 anymore.
<Wealth has become too concentrated and allocated in a way that makes no sense, the people have lost power to corporate interests, the crisis weakened the foundations of the economy and hurt many, many people. But the game is not over.>
And what exactly has changed with Obama? You just don't get it. The banks, who have had their bacon saved by the taxpayer, are screwing them like never before. Credit card debt now carries 30+% interest rates. ATM fees, bad check fees, overdraw fees have never been higher. Last I checked Wells Fargo was collecting $2 billion in fees.
Every major religion is against usury, and in this country, we have a government supporting this despicable practice. This practice has expanded with Obama not lessened.
He made a huge mistake in giving money to banks instead of providing low cost loans to people. He thought that by giving $1 billion to the banks, they would lend out $10 billion, and they have not.
The only programs that have worked were the cash for clunkers and tax credit for new home buyers. The others have been a joke. Giving Goldman Sachs $30 billion in federally backed low interest rates has assured us of $80 oil again. Phooey!!
<But 3.5% GDP growth -- even if only for a quarter -- is good news.>
Oh, please. From this report, http://www.bea.gov/newsreleases/national/gdp/2009/txt/gdp3q09_adv.txt,
"Motor vehicle output added 1.66 percentage points to the third-quarter change in real GDP."
This was the cash for clunkers BS. And the only real thing one needs to know about the recovery comes with the next two sentences.
"Current-dollar personal income decreased $15.5 billion (0.5 percent) in the third quarter."
"Real federal government consumption expenditures and gross investment increased 7.9 percent
in the third quarter."
This 3.5% GDP growth was the equivalent of lip stick on a pig.