TCS Daily


The Death of Democratic Capitalism?

By Larry Kudlow - April 21, 2009 12:00 AM

How far will the Obama administration move to assert regulatory control over key sectors of the economy? Are we moving away from democratic capitalism, and toward some sort of corporatist state-directed economy? That could be the biggest stock market and economic-growth issue facing us today.

Stocks plunged almost 300 points on Monday over new fears of bank nationalization. On Tuesday shares recovered about 100 points after Treasury man Tim Geithner testified that repayment of TARP loans would be okay in some cases. But Geithner added that the decision to let banks repay the federal government will largely depend on the credit needs of the broader economy.

So while some investors believe Tim Geithner backed away from the prospect of government-controlled banks, it's really not clear that he did so.

The issue at hand is the possible conversion of the TARP money now held by banks in the form of non-voting preferred stock into common stock with full voting rights. White House and Treasury officials have spoken of this possibility in recent days, and it plainly raises the issue of government ownership and backdoor nationalization of the banks -- or at least the major banks.

To wit, Goldman Sachs and JPMorgan look to be recovering their health. They want to de-TARP, and perhaps Geithner will let them. But if he doesn't, these institutions might be forced to convert their preferred TARP shares into common stock, thereby giving Team Obama tremendous sway over their operations. As for the less-healthy big banks, one suspects the government will increase its 36 percent ownership in Citigroup and take a new ownership position in Bank of America.

The results of the government's economic "stress tests" -- due early next month -- will complicate these calculations. And at the end of the day I think Team Obama will interpret the stress tests in whatever manner serves its larger purpose, which I suspect is backdoor nationalization.

Just to confuse matters more, the congressional strings attached to TARP might not only apply to the banks, but could apply to participants in TALF and PPIP -- the new government-lending programs designed to detoxify bank balance sheets. I don't know this is the case, but it could well be the case.

This is why most private investors have stayed away from the two early TALF auctions. And JPMorgan CEO Jamie Dimon says his bank won't play in PPIP because "we've learned our lesson." He calls TARP a "scarlet letter." But what he's really saying as America's leading banker is that he doesn't want his bank or shareholders to be run by the government.

An old friend e-mailed me this week about how to characterize Obama's economic interventions into the banking and auto sectors (with health care next on the list). He says it's not really socialism. Nor is it fascism. He suggests its state capitalism. But I think of it more as corporate capitalism. Or even crony capitalism, as Cato's Dan Mitchell puts it.

It's not socialism because the government won't actually own the means of production. It's not fascism because America is a democracy, not a dictatorship, and Obama's program doesn't reach way down through all the sectors, but merely seeks to control certain troubled areas. And in the Obama model, it would appear there's virtually no room for business failure. So the state props up distressed segments of the economy in some sort of 21st-century copy-cat version of Western Europe's old social-market economy.

So call it corporate capitalism or state capitalism or government-directed capitalism. But it still represents a huge change from the American economic tradition. It's a far cry from the free-market principles that governed the three-decade-long Reagan expansion, which now seems in jeopardy. And with cap-and-trade looming, this corporate capitalism will only grow more intense.

This is all very disturbing. For three decades supply-siders like me and my dear friend Jack Kemp talked about democratic capitalism. This refers to the small business that grows into the large one. It means necessary after-tax incentives are being provided to reward Schumpeterian entrepreneurship, innovation, and risk-taking.

At the center of this model is the much-vaunted entrepreneur who must be supported by a thriving investor class that will provide the necessary capital to finance the new economy. But also necessary for the Schumpeterian model is a healthy banking and financial system that will provide the necessary lending credit to finance new ideas.

Do we truly believe that raising tax rates on investors and moving to some sort of government-controlled banking system will sufficiently fund the entrepreneur and sustain democratic capitalism? Do we really believe that a federal-government-directed economic system will generate a sufficient supply of capital and credit to produce a strong economy?

I doubt it.


This article first appeared on Kudlow's Money Politic$.
Categories:

77 Comments

I think “Democratic Capitalism” is an oxymoron. Capitalism is founded on Individual Rights while
what passes for democracy now is essentially mob rule.

Constitutional Authority
"To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures; "

Unless otherwise prohibited, I don't see where the Constitution prohibits the Federal Reserve which is a national banking system to regulate the value of money.

I just under what authority does the Federal government attach "un-enumerated powers" strings to money loaned or granted to private entities.

you wish, Kudlow
To sum:

"So while some investors believe Tim Geithner backed away from the prospect of government-controlled banks, it's really not clear that he did so."

"And at the end of the day I think Team Obama will interpret the stress tests in whatever manner serves its larger purpose, which I suspect is backdoor nationalization."

"I don't know this is the case, but it could well be the case."


See, supply siders must rely on fear in their arguments because of the failure of supply side economics. How did we ever survive prior to the messiah Reagan? Thirty years of Reagan growth, what happened during the thirty years prior to Reagan?

America is a mixed economy, THAT is the strength and history of this country's economy. Supply side has proven to benefit the wealthy greatly with very little benefit to the population overall in wealth creation. Most people don't have gobs of money to put in markets and savings. What supply side creates are bubbles- periods of high growth followed periods of low recession, made more extreme because of actions taken in the goal of supply side economics. If all you care about is the growth of the economy overall then you ignore the foundation and cogs that make this economy possible. We may as well have a feudal social system because supply side only cares about the barons, and hopes the barons become so wealthy the peasants will be treated well and provided for by their infinite greed. How many times does a theory need to fail before its adherents see the reality?

Supply side has not failed. Government has failed.
"Name: marjon
Subject: "Products are always bought ultimately with products."["
Date/Time: 19 Apr 2009, 7:39 AM

"Say’s Law not only provides a foundation for the "equilibrium in most economic models and a source of the stability of capitalism," as supply-sider George Gilder has noted, but also explains how economic growth occurs.[4] Gilder observed: "As the driving force of economic growth, Say’s law exalts the creativity of suppliers over the wants and needs of demanders or consumers. As entrepreneurs invent new things and learn how to make them more efficiently, unit costs and prices drop and goods become more attractive. As goods become more affordable to a wider public, more people work to acquire them by creating goods to exchange. These new suppliers both provide and acquire new wealth at ever lower expense."[5] That is, supply-work, investment, entrepreneurship, and risk-taking—drives economic growth. "

"Supply-side economics returns the entrepreneur’s role to the center of economic theory. After all, if, as Ture asserts, "changes in output occur only as a result of changes in the amount of production inputs or in the intensity or efficiency of their use," then the entrepreneur must take center stage as he is the agent of innovation and creativity that increases inputs and/or efficiency. "

"This focus on entrepreneurship perhaps best illustrates the difference between supply-side economists and industrial policy economists. A free-market economy leaves most economic decisions to individuals operating in the private sector, rather than government bureaucrats and/or elected officials, as is the case with industrial policy and its more extreme cousin, socialism. While both supply-side and industrial policy economists largely concern themselves with supply-related issues (e.g., investment, production, etc.), the supply-side school of economic thought operates within the wider intellectual framework of free-market economics, knowing that production for the sake of production is fruitless. Production must meet Current or create new demands. Value must be created. And supply-side economists recognize that the government lacks the requisite experience, knowledge, and incentives to make resource allocation decisions or to create value. "

http://www.thefreemanonline.org/featured/a-walk-on-the-supply-side/

I don't know what you 'supply-side', but in free markets, supply-side is what drives economic growth."

supply side?
My eyes might be bad but I didn't even see the term supply side once in the article.
The author ponders whether the government wants to control EVEN more of the economy, now honing in on the banks; and the answer seems to be yes.

If you wonder how we survived, how do you think we did not only in the few decades before Reagen, but let's say the previous 100 years or more. Was there growth? Did people get richer? Did all those immigrants come from Europe in order to get poorer and less free?

Dem. Capitalism
I think the author is right about this banking move being a back door into controling EVEN more of the economy.
And if they do it this way instead of actual nationalization they will be able to shelter, or camoflage themselves from charges of direct control, thus insulating themselves a lot from the disaster they will cause.

In a similar manner they already did this with the FED, which they can claim are actually private banks and not an organ of government fiat currency policy. In this manner common people will blame the FED and associated agencies like Freddie/fannie instead of the government and politicians directly. It was a brilliant Machiavellian manoever that has prove successful so far, and probably will be now too.

What the banks want
The banks are like your teenager, living it up in college away from the folks. He runs through all his cash and phones home for more. But Pop, the jerk, gives him a lecture on how he ought to be spending it.

As if! He can spend it any way he damn wants. Right?

So the moral is, Pop can bail junior out of trouble.. in fact he has a moral duty to do so. But to demand voting rights, just on the flimsy grounds that it's HIS money? Who does he think he is? An investor?

Much has been made of the way Sweden, faced with problems very similar to the ones our banks have now, bought them out of insolvency and nursed them back to health. Then Sweden sold those revivified banks back onto the private market.. at a PROFIT!

But what do they know? They're just a government.

Uncle Sam keeps paying the bill.
Eliminate FDIC and the Federal Reserve.

Let them compete in a free market.

BobJones is blabbing with words he doesn't even know
He likes picking some term that isn't even related to the topic at hand, then he misuses it to bombast his diatribes.

If you point out what the word really means, he waves it away as some asinine technicality.

One time, I set him up over the word 'filibuster'. Boy did he look like a fool.

And here he is misrepresenting 'supply side economics', as you have pointed out.

"Welcome to Sesame Street Kids! Today's word is expiation." - Ollie in 'The Mist'...or Bob Jones railing against conservatives when the topic is 'bubble bath'.

What the Swedes know how to do
...is actually DOING socialism semi-competently.

While all our government knows how to do is screw up most of the basic tasks it sets itself to do that do not involve pork spending for the sake of pork spending.

Case in point: Swedish government run hospitals vs the VA hospitals here. Swedish voucher school programs vs NEA fiefdoms over here. Swedish homeland security procedures at the airport vs...the list goes on.

And Americans know this. That is why the usual bitching from the Left "Why can't we be more like Sweden? You'll be better off!" around election time falls on deaf ears with most of the American electorate. They KNOW that all we'll get for the high taxes is crappy public 'goods' in return.

good question, what is supply side really?
Your eyes are still good colonel. The term supply side was used only once, that I can find, in the article.

Its not that the government WANTS to control more of the economy, its that it HAS to do this to save these giant banks from bringing a second Great Depression on us. And that said, I don't agree with how the bailout is being done anway. But if Obama is going to do it this way, I hope he takes control in a meaningful way, I hope he cuts executive pay and changes the pay structure to reward performance. I hope he dismantles the banks, as they would experience through bankruptcy, and they get absorbed or reassembled as smaller institutions. And I hope the fraudsters are charged and taken to court.


"If you wonder how we survived, how do you think we did not only in the few decades before Reagen, but let's say the previous 100 years or more. Was there growth? Did people get richer? Did all those immigrants come from Europe in order to get poorer and less free?"

Exactly! America wasn't built by an investor class, it was built by workers and the opportunity to build and advance. Entrepeneurs, the opportunity to start a small business and run it successfully, and to potentially grow that business if so desired. It was people with modest means who grew, with their sweat and blood, their own little empire of commerce. The investor class was there too, increasing their wealth as well, they did well even without extra government support. Why do they need it now?


These 3 paragraphs are the gold nuggets of the article, but it goes off track at the end.

"This is all very disturbing. For three decades supply-siders like me and my dear friend Jack Kemp talked about democratic capitalism. This refers to the small business that grows into the large one. It means necessary after-tax incentives are being provided to reward Schumpeterian entrepreneurship, innovation, and risk-taking."

Yes!

"At the center of this model is the much-vaunted entrepreneur who must be supported by a thriving investor class that will provide the necessary capital to finance the new economy. But also necessary for the Schumpeterian model is a healthy banking and financial system that will provide the necessary lending credit to finance new ideas."

Yes. The investor class is already thriving by its nature of being the investor class.

"Do we truly believe that raising tax rates on investors and moving to some sort of government-controlled banking system will sufficiently fund the entrepreneur and sustain democratic capitalism? Do we really believe that a federal-government-directed economic system will generate a sufficient supply of capital and credit to produce a strong economy?"

Wrong. Raising taxes on the investor class won't make a lick of difference to democratic capitalism. Two, the growth of government control of our economic system is a necesary, short term evil to keep us from going into a Great Depression.

Supply side economics as its been deployed has not supported entrepeneurs and growth of small business. It focused benefits on the ultra rich, corporate executives and large business owners, folks of the ilk who get their income from capital gains, or company profits in the few cases of large privately owned businesses. The majority of small businesses are privately owned and the owners don't make more than $250,000. Cuts in capital gains taxes don't help those folks.

look whats happened
You Zyndryl have become stupider than marjon. Marjon is a useful idiot, you're just an idiot.

ps. You still don't know what a filibuster is, do you? Its easy dude, do a search on the word and read. You have no excuse to remain uneducated.

Yes, it is a debate procedure, not a vote
Look up the Senate rules.

You kept equating the Republicans' penchant for voting down attempts at invoking cloture as 'filibustering' when they were doing no such thing.

You further stated that they are responsible for the filibusters, too. Whereas, I pointed out that since Senate rules allow for anonymous holds to start a filibuster, unless a Republican 'outed himself' that you could not prove who it is -- Republican or Democrat.

You're own example, Senate bill S.22, failed to prove either claim. You couldn't show me what senator(s) did file the hold when I asked for proof of the senator(s) in question so we could match him/her/them to the relevant party affiliation. If the filibustering senator(s) in question don't want it known, then you and I can't find out. So, if we can't find out, then how can you claim it was Republicans? You can't. But you still did it by substituting 'unproven assumptions' for 'proof' and insisted on that being good enough.

All you could do was prove that Republicans voted against invoking closure. That isn't filibustering.

So, yes...I know what filibustering is in the context of our discussion. It is YOU who do not...and all you could do to answer for that was whine about 'technicalities'.

And now, you just sink to ad hominems because you are afraid to challenge me on 'technicalities' even now. At least you can learn. That is good.

From Obama's buttocks...
...to Bob Jones' lips...to our beloved TCS Forums:

"Its not that the government WANTS to control more of the economy, its that it HAS to do this to save these giant banks from bringing a second Great Depression on us."

"America wasn't built by an investor class, it was built by workers and the opportunity to build and advance."

Ok, Doc Brown. Hop into your time DeLorean and go back to the middle 1800s. Then arrange things so that all the tons of British investment that poured into the US after the Civil War just isn't there instead. See how well the workers do at building the Transcontinental Railroad (and most of the other railroads, actually) with out it.

No wonder you don't have a clue what you say. You have zero knowledge of actual history.

"Supply side economics as its been deployed has not supported entrepeneurs and growth of small business. It focused benefits on the ultra rich, corporate executives and large business owners, folks of the ilk who get their income from capital gains, or company profits in the few cases of large privately owned businesses. The majority of small businesses are privately owned and the owners don't make more than $250,000."

Most of the Bush tax breaks for business helped smaller firms than larger ones.

"Cuts in capital gains taxes don't help those folks."

No, it just helped all the workers that got hired from business expansion that suddenly made sense after the cap gains was cut. It helped 'those folks' to since many of them had larger businesses for clients.

But you continue to believe your BS. Just like you do regarding everything else.

Democracy does not prevent fascism.
The proper term for what Obama is creating is fascism.

you wish bob
socialists must rely on both ignorance and fear to advance their objectives.

Supply side hasn't failed, it was never fully tried.
In the years since it's very partial implementation, it has been completely rolled back by later governments.

It's no surprise that the three most heavily regulated sections of the economy, banking, insurance, and medicine are the sections that are in the most trouble.

America is a mixed economy, that's reality, but it is no strength. History has shown that the more govt intrudes into the economy, the worse the economy does.

Always remember, FDR caused the great depression, he didn't rescue us from it.

Nothing unusual there
I haven't seen any evidence that he has ever known anything about the subjects on which he pontificates.

typical
Don't defend yourself. (At least he's smart enough to know an impossible task when he see's it)

Instead throw insults at everyone who isn't cool enough to agree with him in the first place.

So much ignorance bob
The banks did not cause the great depression, FDR did.

The govt wants to control the economy, because that's the nature of the political animal.

Both investors and workers built this country. Without investors, the workers would have been limited to using sticks and stones.

I'm not surprised that you allow the dialectic to do your thinking for you. That's what over educated people do these days.

It's not just banks
Recently Obama ordered GM to fire it's CEO and most of the board of directors.

as usual, roy invents a fairy tale to avoid dealing with reality
The reason the banks are in trouble is because the govt forced them to make loans to people who weren't credit worthy. (Look up the Community Re-investment Act)

Last week, Geittner came close to ordering TARP banks to forgive all of GM's debt.
The reason they won't let the banks repay the TARP funds is that they want to keep the control that it gives them.

Let's not forget that many banks were strong-armed into accepting the funds in the first place.

Spengler sums it all up
No, not THAT Spengler. This Spengler:

http://atimes.com/atimes/China/KD21Ad01.html

Americans have been living in La-La Land for a long time now. Instead of using their fortunate excess of investment capital toward practical ends (like building products the world wants to buy) we've decided to just idly gamble with them. The result is that we've created the world's largest unproductive casino, based on always having an endless supply of money, to replace the stuff we've squandered.

For a number of reasons, the rest of the world has been indulgent. But their patience has an end. Once the patient has been bled dry they're likely to go out and find a new market to service. No sense trying to resuscitate a corpse.

Then we'll have to learn some new tricks. One might be to try to sell the world more stuff than you buy from it. That's the usual way in which viable economies sustain themselves.

The Single-Cause Theory
I suppose a case can be made that the CRA was by itself the sole cause of everything that just went wrong. But it would be a very ignorant, ill-informed case.

Reality is multicausational and complex. You might gain more insight into our situation in all its dimensions if you were to devote a little more of your time to exploring all the other factors.. not in comforting yourself that it was all a plot foisted on us by Clinton Democrats.

Here's a good insight. It was leverage that promoted the essential instability that started all the dominos to toppling:

"In the past, 10-to-1 leverage would have been about par for a bank. More recently,... many large financial institutions ... reached for 30-to-1 leverage, sometimes even more. ... [I]t is leverage that turns large banks and financial institutions into ninepins that cannot fall without knocking down others that cannot fall without knocking down still others. That seems to be the key to the potential instability of an unregulated financial system. It happens without any of the private actors violating the canons of self-interested rationality. ..." etc.

http://economistsview.typepad.com/economistsview/2009/04/solow-how-to-understand-the-disaster.html

Before you resort to the standard knee jerk response-- that the writer is a liberal-- you might look at the original source, Richard Posner. I think he's one of you in spirit, but willing to look at the actual evidence.

Still at it, I see
You're still doing what you were doing a month ago, splitting hairs on the definition of "filibuster".

No one has the need to actually filibuster. The mere threat of it is enough to close off debate. It's like the definition of "checkmate". The king does not actually have to be captured. The game is over when he has no options left.

Do you really gain a sense of satisfaction when you posit something like this that's essentially stupid and misleading, and adds nothing to the debate? Yes, the threat of a filibuster is what stops legislation in today's Congress. Thus it shapes the course of our national debate.. even though it is rarely if ever necessary that it be actually exercised, as in MOCs reading the telephone book while keeping a pee bottle under the podium.

Give it a break, Z. You're dancing around like crazy, hoping your adversary will trip over his shoelaces. But you can't really throw a good punch.

Words have meaning.

Maybe it is about time a few senators show they really care enough about an issue to read out of the phone book for a few days.

How much of that 'leverage' was federally guaranteed?

As governor of NY?
How did FDR cause the Great Depression when he didn't become president until 1933? The depression began roughly around the stock market crash in 1929.

The banks weren't alone in causing the Great Depression, in fact, I'd say they were less of a factor then, then they are in our current morasse.


"Both investors and workers built this country. Without investors, the workers would have been limited to using sticks and stones."

And the beauty of that fact is that the government didn't clamor to provide more benefits to those investors to get them to invest. Those wise investors saw the potential and did what they do without the government's crutch. Why should it be different today? Investors pay very low tax rates today compared to 50 years ago, and 50 years ago we didn't have a problem with expansion.

so much ignorance, so little bob
A recession started in 1929, a short one that the US was quickly out of. The Depression didn't start until after FDR was in office.

Banks had zero roll in causing the depression.


While tax rates were higher 50 years ago, nobody paid the top rate.
1) The kick in rates were much, much higer than today.
2) The deductions available back then were much, much more generous than available today.

Like I said, for once, you should try to learn something about a topic before you pontificate on it.

all of it
...

See? You go at it again
1) Conversation isn't going Bob's way.

2) Bob uses words incorrectly to steer things away.

3) Bob is an Obama.

And you just proved it again:

"No one has the need to actually filibuster. The mere threat of it is enough to close off debate."

Ummmm....filibusters are EXTENDED DEBATES. Filibusters do not close off debate. First you accuse the Reps (which you still can't prove) of extending debate and now you accuse them of filibustering or when in fact your main beef is that they don't vote to cut off debate or just executing 'the mere threat of closing off debate'.

But that is 'splitting hairs' to you. Otherwise known as "Bob yet again gets caught trying to fool people with BS he himself can't understand and/or accurately talk about and someone else calls him out on it."

Nice, Bob.

Mussolini was respected for making the trains run on time.
How likely will BHO be able to make AMTRAK work?

He's already said that he wants high speed trains to make our commutes easier
...

Wrong guy
BTW, not Bob. Roy.

I can't say how it was that BOB had a conversation with you in which he referred to the technique of the filibuster. But ROY did. And this is the sense in which ROY used the word:

"WASHINGTON — Senate Republicans this year are threatening filibusters to block more legislation than ever, a pattern that's rooted in — and could increase — the pettiness and dysfunction in Congress.

"The trend has been evolving for 30 years. The reasons behind it are too complex to pin on one party. But it has been especially pronounced since the Democrats' razor-thin win in last year's election, giving them effectively a 51-49 Senate majority, and the Republicans' exile to the minority.

"Seven months into the current two-year term, the Senate has held 42 "cloture" votes aimed at shutting off extended debate — filibusters, or sometimes only the threat of one — and moving to up-or-down votes on contested legislation. Under Senate rules that protect a minority's right to debate, these votes require a 60-vote supermajority in the 100-member Senate."
http://seattletimes.nwsource.com/html/nationworld/2003800474_filibuster22.html

Split some hairs with that. Show us where McClatchy's reporter has described it incorrectly.

Supply side economics
You make three assertions, but then fail to go on and prove them:

1) Conversation isn't going Bob's way.

2) Bob uses words incorrectly to steer things away.

3) Bob is an Obama.

As for (2) I've read Bob's initial comment again ("you wish, Kudlow") and think he's saying something very apt about "supply side" economics. Referring, very broadly, to the practise of government's initiating policies that allow the rich to become even richer, on the assumption that they will then create jobs and plenty, which will lift the poor.

It sounded beguiling, and the country fell for it. We've conducted the experiment for the past 28 years, and the results are now in.

What has happened instead is that investment money has turned away from policies that promote a healthy balance of trade, and we've become a nation of debtors. Job numbers have kept pace with population increase, all right. But the quality of, and compensation from, those jobs has deteriorated. We now spend only because we are able to borrow; we no longer EARN.

The money that has been displaced from the "real" economy has instead followed the chimera of greater returns in the financial sphere. And in a no-holds-barred regulatory atmosphere, exotic and opaque derivatives have become the order of the day.

But they have been found to be essentially hollow, and the house of cards has collapsed. Leaving us with no option but to print more money.. as the money we were using had been used to buy, in the Biblical phrase, a mess of pottage.

The best critiques of supply-side thinking are those made by ex-supply siders. Try reading some Kevin Phillips, who can wax eloquent on this subject.

Fascism here we come.

BHO is targeting 'right wing extremists'.
Just as the Fascists needed scapegoats to blame to distract their minions.

Your extended analogy
You obviously know a thing or two about fishing for snappers. I wouldn't presume to knock your analysis. But I think you take on why we nationalized the banks we did is a wee bit off:

"My gut feeling is that the government wanted to nationalize some of the banks and other major corporations from the get-go. Some of the players were so desperate that it took no time at all to get them on the hook."

Recall if you will this past fall, when all the largest investment houses in the world (not just the nation) were falling like dominos. Could you describe the scenario that would have ensued if we'd decided to do nothing? They'd have hit bottom and stayed there, like dead ducks.

Recall that at that time, "we" meant what was left of the Bush administration. Intercession was widely, all but universally, seen as being both required and urgent.

At the same time, opinion was universal within both political parties that the government itself was unsuited to the task of running commercial banks. This was a political hot potato, one no one wanted to take on.

So the task was then redefined as being to first take control of the steering wheel from the idiots who mismanaged things so badly. And then to inject sufficient funds to nurse the system back to health. And finally, to resell the repaired banks on the private market.. to break even or hopefully even make a profit on the deal. As was done by Sweden when THEY did it, not so long ago.

But I would agree, the plan has gotten off the tracks from the start. Because the charge, led by T. Geithner, never decided to actually run the banks they funded! He did NOT take over. He left the same bad management in place. So our public money is now being poorly spent by the same varmints who so badly misspent all the private money they were playing with before.

"As for being able to tell companies what to do. Unless the stock has been converted to voting shares, you're not supposed to be able to tell them how to run the business. And if they convert the shares, it just hurts the value of the stock; because most people don't want to be involved with a government run corporation."

They should be running like crazy from the banks being run by the same people who just finished running them into the ground! ANY new management would be better. And I say this as someone with bank shares in my retirement package.

Supply Side economics has not been applied towards small businesses
..except in some tax breaks Bush managed to get through.

Don't take it from me, but from an actual entrepreneur:

Corporate Taxes, and Their Real Impact On Small Business

http://www.realclearmarkets.com/printpage/?url=http://www.realclearmarkets.com/articles/2009/04/corporate_taxes_and_their_real.html

Yes...was wrong guy...but you BOTH don't know what a filibuster is
"Seven months into the current two-year term, the Senate has held 42 "cloture" votes aimed at shutting off extended debate — filibusters, or sometimes only the threat of one — and moving to up-or-down votes on contested legislation. Under Senate rules that protect a minority's right to debate, these votes require a 60-vote supermajority in the 100-member Senate."

That is not filibustering. A filibuster for one thing, is not a vote. The filibustering senator goes to some Senate lackey and says, "Place a hold on this bill" and that is that. There's no vote. No vote to amend. In fact, the hold doesn't even take place in the Senate chambers (and in front of the C-Span cams) at all.
But it does take a vote to END (invoke cloture) a filibuster.

So again, prove that Republicans are filibustering. I'd like to see Senate documentation officially showing who placed the hold on what legislation and then we can look up said senator(s) party affiliation.

All I ask is that you and Bob provide PROOF of who filibusters what in the Senate, as the term applies to the Senate rules you keep mentioning inaccurately and providing article content by authors who are just as ignorant as you are.

And while you are at it, also throw in how any of this is different from what the Dems did under Bush, eh?


That's because you are reading the wrong postings
I responded to http://tcsdaily.com/discussionForum.aspx?fldIdTopic=9717&fldIdMsg=101623, which was in context to 'you wish, Kudlow' entry.

"It sounded beguiling, and the country fell for it. We've conducted the experiment for the past 28 years, and the results are now in."

No we didn't. We dabbled in SOME supply-side policies. Reagan did more than dabble, but Bush I and Clinton reversed most of it before Bush II ever was a household name.

So, you are full of it, as usual.

"What has happened instead is that investment money has turned away from policies that promote a healthy balance of trade"

Supply-side policies had nothing to do with that nor did supply-side economist ever claim it would.

"But the quality of, and compensation from, those jobs has deteriorated."

Outright lies. We've been over this before. And supply side policies have nothing to do with that, either....because supply side economics never promised those outcomes in the first place.

"The best critiques of supply-side thinking are those made by ex-supply siders. Try reading some Kevin Phillips, who can wax eloquent on this subject."

Kevin Phillips obviously didn't understand supply-side economics when he supposedly was a supply-sider. Just like you don't bother to (but insinuate you do when you say 'supply-side failed to do this or that').


actually a myth
Mussolini was not successful in making Italian trains run on time. But the story behind the myth paints a picture that should be looking very familiar right now!
http://www.snopes.com/history/govern/trains.asp

root cause?
Let me start off by clearing the air. I think that the Senate and the House are full of self-absorbed, power crazed hack lawyers. Few, if any of these poltroons could survive at a real job. So you may judge my comments in the future by that standard.
"All Congresses and Parliaments have a kindly feeling for idiots, and a compassion for them, on account of personal experience and heredity."
- Mark Twain's Autobiography; also in Mark Twain in Eruption
If you want what caused this disaster and all of the others, specifically the Great depression, then look no further than the Congress. For the GD one of the major factors was the Smoot-Hawley tariffs that set off a trade war. In the most recent case it was bank deregulation under Bush and Barney Frank threatening banks if they didn't lend to unqualified borrowers. Of course it helped that he promised the government would back the loans.
As a Parent I look at this like a spoiled child. Of course the banks ran amok, hell, they had permission! The people who were supposed to protect us, here's a surprise, only looked out for themselves. Oh, and the great fourth estate, well they helped by ignoring this travesty because it fell in line with their desired world view. Last but not least the disinterested voters who troop in lockstep and re-elect these cartoon characters. I am so disgusted by all this. Of course this government wants to run everything, their egos make them believe they can do it better.
I will state categorically at this time that they will fail. Government run economies always fail and always for the same reasons. The government and the press will try very hard to cover it up but people will eventually figure it out. However, God only knows how long it will take.
Mussolini did not make the trains run on time, he just repeatedly claimed to until everybody believed it. sound familiar?

Just remember
I hate these examples because they are so hackneyed but they are true and serve as a warning for those who care.
Both Benito Mussolini and Adolf Hitler came to power under a democracy.
Democracy can only survive with an educated, informed and involved electorate.
We are in trouble.

I am not surprised. Thanks.
I heard a US soldier on the radio, who, while in Iraq, saw school books with the Iraqi flag on the moon.

The challenge and opportunity propagandist face is the internet. With millions of eyes and ears watching, even Dan Rather couldn't create his own facts.

One additional ingredient for democracy, morality.
For 'democracy' to succeed, certain standards can never be overturned by the mob.

Dems to bypass filibuster rules, pass Socialized Medicine w/o Rep votes
So much for Roy & Bob's bogus GOP 'threat' of a filibuster to keep Dems from seeking their neo-communist glory. What's your next excuse to spread more propaganda BS about how the Senate works?

Democrats plan to avoid filibuster on healthcare bill

Reporting from Washington -- Senior Democrats have reached broad agreement on a plan to prevent Republicans from blocking President Obama's sweeping healthcare proposals, congressional officials said Friday.

The plan, which would use special provisions of the budget process to prevent a Senate filibuster, threatens to sow outrage among Republican lawmakers and could complicate Democrats' efforts to push through the rest of their agenda. But Obama and his allies believe their decision to use the "budget reconciliation" process will allow passage of the kind of health system overhaul that has eluded Washington.

The president reiterated that position Thursday night in a meeting with congressional leaders, according to officials in the White House and on Capitol Hill.

Adding healthcare to the list of measures that will be treated as part of the budget resolution process would allow Democrats to pass the legislation with 51 votes in the Senate instead of the 60-vote supermajority normally required to avoid a filibuster.

With a big Democratic majority in the House and Democrats controlling at least 58 seats in the Senate, the move would all but guarantee that a single GOP vote would not be needed.

Full article: http://www.latimes.com/news/nationworld/nation/la-na-healthcare25-2009apr25,0,2883760.story

Historical revisionism
"We dabbled in SOME supply-side policies. Reagan did more than dabble, but Bush I and Clinton reversed most of it before Bush II ever was a household name."

Not as I recall the period. Supply side was something radically new and different from anything that had gone before. And everyone in the country but you would say that Reagan jumped on board with both feet.

The movement toward greater deregulation continued under Bush One and Clinton. Which can be abundantly demonstrated. There was no great rollback of Reagan-era policies.

But naturally, the point to be made here is that no matter what the point, you will dispute me just to be contentious. I should accept your word that Kevin Phillips doesn't know what he's talking about? But you do? You wish.

All Barney Frank's fault?
So you say it was Barney Frank who started it all, "..threatening banks if they didn't lend to unqualified borrowers"? Really?

Then how come we had a Republican Congress during 1995-2006, when the problem first appeared?

Look at the time line. The CRA, widely blamed for being the sole cause of the subprime meltdown, was first written into law back in 1978. Yet roughly between that year and 2002 there were no serious disparities between delinquency rates on subprimes and on prime mortgages. They were a little higher, sure.. but not greatly higher. Both stayed steady at around four percent, as I recall.

Suddenly the delinquency rate shoots up around 2004, and becomes a big problem. These were the loans that were originated 2-3 years before, or around 2001. So what changed?

It doesn't look like it was Barney Frank behind it.. he wielded little clout in the R-controlled House Financial Services Committee. Nor does it look like Bill Clinton. Whoever it was, things looked like they changed rather suddenly in 2001.

If you doubt, that's very healthy. Look up the foreclosure rates for subprime loans during the years in question, 1978-present. See what you think.

Hmmm

A clarification
Sorry, I don't think I fully spelled out my message. It was that the sudden upsurge in subprime foreclosures occurred around 2004, with loans that had originated around 2001-2002. But during the years 1995-2006, the House of Reps, and specifically the Financial Services Committee, having jurisdiction over this area, were run by the Republicans.

Barney Frank is not a Republican. Ergo, he didn't have much clout in those years.

Here's an example: in 2005 Frank, Mel Watt and Brad Miller (all Ds) introduced the Prohibit Predatory Lending Act. Summarized as follows:

"The bill would amend the Truth in Lending Act to impose restrictions on high-cost mortgages, limit permissible fees and charges on those loans, prohibit unfair or deceptive lending practices, and provide for borrower education and counseling about predatory lending practices."

And here's what happened to it:

"No action taken on bill by Financial Services Committee or House of Representatives" That is, it was closed down in committee.

The source page makes interesting reading:

http://www.barneyfrank.net/node/218

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