World is Falling Apart Thread (Locked forever)

[prfsnl_gmr]

Well, specifically, it's where it was in 1978, the worst of the Carter years. That was a terrible economy at that point. If memory serves, things didn't start really turning around until 1983-ish.

The economy was pretty terrible then for a variety of reasons, but you wouldn't know it from the labor force participation rate. Carter's administration saw the sharpest increase in labor force participation in U.S. history (likely due to women entering the work force en masse). The labor force participation rate now is also drastically higher than it was during the post-war era,

That growth rate is still rather terrible compared with where it should be. Since January 2015, we've seen growth rates of 2, 2.6, 2, 0.9, 0.8, and 1.4. That's pretty awful.

Where should it be? By this measure, we are absolutely crushing other developed nations, and as I stated earlier comparisons with countries like Bangladesh, China, India, Ethiopia, etc. don't really provide us with much information. Likewise, historical comparisons don't provide us much meaningful information either. (That our GDP growth rate topped 15% and approached -10% in the mid-1980s doesn't tell us much about what it should be today.) The important trend is that variance is decreasing over time, and a stable growth rate is better for long-term economic development.

But this recovery feels extremely fragile. That even a 0.25% increase in interest rates has everyone spooked seems to indicate something's not quite right. (Of course, the markets these days seem to get spooked about everything, so take that for what you will.)

All recoveries are fragile, but this recovery "feels" much more solid than the recovery following the "dot com" bubble. (Basically, we skipped from one speculative bubble to the next.) Not counting vintage video games, I also don't see any sort of domestic speculative bubble right now that has the potential to threaten the U.S. economy.

I agree that something is not quite right, however, and I think that it is too much "cash" sloshing around in corporate and government coffers right now. Here is a Slate article by Daniel Gross referencing a speech by Ben Bernanke, and IMO, it makes a very strong case for encouraging both government and private spending.

I still find it fascinating that all of our economic issues are still attributed to Pres. Bush. While I certainly wouldn't argue that his response was the best, the policies that led to the housing crisis were in place well before he was President, and he even warned about it. I'm pretty sure he didn't have a whole lot of political capital by that point, though, what with the Iraq war and all that.

I think that this is largely correct. IMO, deregulation during the 1980s and 1990s (i.e., the Reagan, Bush I, and, particularly, Clinton presidencies) laid the foundations for the dot com and the financial crisis.

[Sarge]

I believe consistently at or above 3% is a reasonable target. While it's certainly fair to compare to the rest of the world, it should also be noted that most of the global economy is also in a malaise. And as you acknowledge, we do have the world's strongest economy, even with our issues, but this also means we have an outsize effect on the overall global economy. When we do well, we tend to pull folks up. When we aren't doing so hot, the rest of the world tends to follow along.

I don't think it's a stretch when folks say this is the weakest recovery we've had since the Depression. And I would argue even that has been significantly propped up by funneling money into Wall Street, which is why the stock market is doing great.

As for government spending, I don't think I'd surprise anyone that I feel like we haven't budgeted properly in quite some time. The continuing resolution battles are just a sign that we can't get our financial house in order. I'd like to see some fiscal responsibility, something neither side seems to have a firm grasp on in our current government. The lack of private spending is likely still tied to perception of the economy. You can either take that as irrational, or as an indicator that the economy still has something wrong with it; either way, it seems like we live in an age where perception is reality, so if the fundamentals actually are strong, the job is to convince folks as such.

[J T]

The "disingenuous" part is a general reference to many liberals that I clearly remember defending Pres. Clinton for his actions, and yet are expressing moral outrage now at Trump. It's political theater, all in the pursuit of power. I wish we could get to a point where we showed any sort of moral consistency on these matters, but unfortunately, it always seems to boil down to the (R) or (D) by the name.

I see the disengenuousness in the other direction: People who wanted Clinton impeached after Monica Lewinsky and Paula Jones who are now wanting to elect Trump despite his bragging about how he gropes women without their consent.

Bill Clinton and Trump are also two different decisions. Bill Clinton was a decision of do we remove an active president over this, and Trump is a decision of should we elect this guy in the first place. Trump should be the easier decision to make. Let's not forget, Bill Clinton was impeached; that is a major part of the reason why Democrats are harping on this issue now. It doesn't make sense that so many people supporting Trump would condemn Clinton, but not hold their candidate to the same moral standard.

I also think your memory of those liberals' defense might be a bit hazy. The Lewinsky part of the scandal was adultery. It was bad, but between consenting adults, thus harder to use as grounds for impeachment. This is where the majority of the liberal defense of Clinton was focused. The Paula Jones thing was less defensible and was ultimately the lynch pin in the argument that got him impeached.

And to be clear, this recent "locker room talk" scandal is just one of MANY problems with Trump. I could write a dozen books on the concerns I have about him as a presidential candidate.

[prfsnl_gmr]

I don't think it's a stretch when folks say this is the weakest recovery we've had since the Depression..

This is a true statement, but it ignores the fact that previous recoveries were bolstered by drastic increases in government spending. Now, we are growing despite fairly severe austerity measures, which is a significant credit to the strength of our economy.

As for government spending, I don't think I'd surprise anyone that I feel like we haven't budgeted properly in quite some time.

Why should we budget now? Sovereign deficits matter only to the extent that they result in higher interest rates that impede private investment. That certainly isn't the case now, and other governments are borrowing money at negative interest rates. When governments can borrow money at rates like that, they should do so, ideally to finance the infrastructure investment. (BTW, I am not arguing in favor of wasteful government spending or government spending that promotes inefficient behavior, and there are many valid arguments regarding how the government should spend its money. I am merely arguing against austerity in the current circumstances.)

[Sarge]

If government were spending money wisely, I'd certainly agree; I'm not against targeted government spending. But as it looks like we both think, there are places where our money is being very poorly invested, and we need to find a way to get a handle on that.

[prfsnl_gmr]

If government were spending money wisely, I'd certainly agree; I'm not against targeted government spending. But as it looks like we both think, there are places where our money is being very poorly invested, and we need to find a way to get a handle on that.

Reaching across the aisle on more than just platformers!

(Great discussion, BTW, Sarge. I appreciate your civility and perspective immensely.)

[Sarge]

Likewise!

[jp1]

Since I made a point with no source...

http://www.forbes.com/sites/lorenthomps ... eab8847a16

Check out those numbers. It's hard to argue the fact that Bush Jr. deserves some criticism. I don't think you'll ever see Obama getting the credit he deserves either. He took much of the blame for the garbage GB Jr. left behind.

[Sarge]

Not sure Pres. Obama's track record is exactly pristine at this point, either. Given the way we left Iraq and the rise of ISIS, I don't think it's a stretch to say either President handled things very well.

I'm at least somewhat willing to give a mulligan on pre-9/11 awareness. Neither Pres. Clinton nor Pres. Bush seemed to be very focused on the threat of terrorism. There were certainly mistakes during and after the Iraq war, and those are rather easy to see in hindsight. For a good while there, I did think Obama was doing a solid job keeping things on an even keel, keeping what worked from the Bush administration. However (and again, in hindsight), the pullout from Iraq was not handled how it should have been, leaving the vacuum that ISIS promptly filled.

I will completely agree that the article's statement about nation-building being too ambitious. Certainly, had it worked, it would have benefited the nation in the long run by providing a stabilizing influence in the region. But for that to work, there would have had to be a sizable absorption of Western values, and I don't believe that was in the cards. Sadly, even more secular states like Turkey have drifted towards more extreme Islamism in recent years. I don't know if we will ever see peace in the Middle East in our lifetimes.

[Ack]

I still find it fascinating that all of our economic issues are still attributed to Pres. Bush. While I certainly wouldn't argue that his response was the best, the policies that led to the housing crisis were in place well before he was President, and he even warned about it. I'm pretty sure he didn't have a whole lot of political capital by that point, though, what with the Iraq war and all that.

What of the astronomical amount of military spending he did though? The housing bubble isn't the sole cause of the economic crisis.

Conversely what about the private sector or public sector jobs that were created as a result of increased military spending over the relatively short term? Many of the people I know benefit directly from government contract and defense spending. Would making sure they weren't employed help everyone else? Some of that money ended up in research, leading to our advances in drone technology in recent years(just one of many advances military spending has led to). During a terrible recession, hundreds of thousands found employment and job training in the military or benefited from that spending in universities.

Conversely, we could cut military spending and let the private sector take over defense. I'm sure Blackwater would be happy to take up the job.