Tag Archives: Depression

News

Top academic warns of collapse of European economy

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From the SA Times Live web site – top academic warns of economic collapse in Europe. (H/T Mary)

Excerpt:

Dennis Lachman, a professor in economics at Georgetown University and a resident fellow at the American Enterprise Institute for Public Policy Research, said at a conference on monetary policy and financial stability at the Reserve Bank on Thursday he has little doubt about this.

“The only question is how long the governments in the northern part of Europe can keep kicking the can forward by financing a trillion dollars here and a trillion dollars there to keep the party going for a little bit longer.

“We are talking about a currency arrangement that was flawed from the start.”

Lachman said the default of Greece or Ireland by the end of next year was another certainty.

“The important thing is that we are not talking about problems only in Europe’s periphery; we are talking about problems in the European banking system.

“Their inter-linkages with the European banking system makes this of concern. It is not only for the European economy, but what we have learned from the Lehman (Brothers) debacle and the sub-prime debacle is that these kinds of crises have a habit of being global in scope.”

Lachman said at the end of 2009 the exposure of French banks to the so-called PIIGS countries (Portugal, Ireland, Italy, Greece and Spain,) was around 37% of France’s gross domestic product. For Germany the exposure is 21% of GDP.

A write down of the debt of these countries would thus result in a shock for economies that haven’t fully adjusted to the Lehman shock, he said.

A euro crisis would coincide with the US economy either double-dipping or flirting with a double-dip, Lachman said.

I found two related videos on Verum Serum.

Austerity measures:

Rioting in Ireland:

The good news is that Americans have voted to avoid this dismal fate by electing Republicans. But we’re not out of the woods yet. But it’s definitely a good time to reduce your spending and start saving for a rainy day, and making a plan.

I’m struggling right now, because this is all happening too fast and my plan requires at least 3 years to execute… GAH! I didn’t expect this would happen so fast. I hope the House Republicans can put the brakes on the spending.

Commentary

John Hawkins of Right Wing News interviews Tom Sowell

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Thomas Sowell

Right Wing News has a great interview with my favorite economist, Tom Sowell.

Excerpt:

Paul Krugman is one of the best known and highest regarded economists on the Left. He says the problem we have right now is the government simply is not spending enough money and the fears we have about the debt causing all these major problems are extremely overblown. What do you say to that argument that is very prevalent on the Left?

Well, it’s a heads I win, tails you lose argument because if we spend twice as much for the next ten years and things don’t get any better – you can still say, “We didn’t spend enough.” We should have spent four times as much. And if we spend four times as much, you can say we should spend 10 times as much. It’s an impossible argument to refute.

It just so happens I’ve been reading a statement by Henry Morganfeld, the Secretary of Treasury under FDR, and he made the statement in 1939 — he said, “We have tried spending money. We are spending more than we have ever spent before and it does not work.” Now this is FDR’s closest confidant, the man who has been in charge of the spending — and after six years of it at this point, they have nothing to show for it and in point of fact, unemployment had gotten back up above 20 percent about a month before he made the statement.

Look at this – the man is branching out from fiscal conservatism into social conservatism. He’s not a Christian, so this is pretty awesome.

Excerpt:

Now, you talked a lot about cultural issues in the book. That’s something you’ve gotten more into in your columns lately. In the book you wrote about gay marriage and the comparison between gay marriage and interracial marriage. Why do you think that’s a bad comparison and what do you say to the argument that gay Americans have a right, perhaps even a constitutional right to get married?

Well, my Constitution must be out of date because I haven’t seen it there. It’s one of many things, such as the separation of church and state, that I’ve never seen there.

Marriage is not a right. Marriage is an imposition of a government’s interest in certain unions. Probably because those unions produce children, but for other reasons, too. Otherwise people could marry or not marry utterly independently of the government.

But what we’re talking about is not gay marriage. We’re talking about redefining marriage through the convenience of leaders who speak for the gays. And I don’t see any more reason for doing that than for allowing bigamists to redefine marriage to suit their convenience.

And you can read Tom Sowell’s latest column on FDR and the Great Depression here. He talks about how the policies of President Roosevely failed to lower unemployment and how they mirror the policies of Obama and the Democrats today.

News

Democrat Barney Frank admits his role in causing the recession

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First, watch this video of Barney Frank obstructing regulators and defending Fannie Mae and Freddie Mac. (H/T Verum Serum)

Now look at this Boston Globe article.

Excerpt:

When US Representative Barney Frank spoke in a packed hearing room on Capitol Hill seven years ago, he did not imagine that his words would eventually haunt a reelection bid.

The issue that day in 2003 was whether mortgage backers Fannie Mae and Freddie Mac were fiscally strong. Frank declared with his trademark confidence that they were, accusing critics and regulators of exaggerating threats to Fannie’s and Freddie’s financial integrity. And, the Massachusetts Democrat maintained, “even if there were problems, the federal government doesn’t bail them out.’’

Now, it’s clear he was wrong on both points — and that his words have become a political liability as he fights a determined challenger to win a 16th term representing the Fourth Congressional District. Fannie and Freddie collapsed in 2008, forcing the federal government to buy $150 billion worth of stock in the enterprises and $1.36 trillion worth of mortgage-backed securities.

Frank, in his most detailed explanation to date about his actions, said in an interview he missed the warning signs because he was wearing ideological blinders. He said he had worried that Republican lawmakers and the Bush administration were going after Fannie and Freddie for their own ideological reasons and would curtail the lenders’ mission of providing affordable housing.

“I was late in seeing it, no question,’’ Frank said about the lenders’ descent into insolvency.

Republican Sean Bielat, who is trying to unseat Frank, has been hammering away at him with a website titled “Retire Barney’’ that features clips of Frank at the 2003 hearing and elsewhere. During debates this week, he called Frank “one of the leaders of the economic disaster’’ because he supported Fannie and Freddie when they were taking the risks that led to their collapse.

You can watch Barney Frank debate Sean Bielat. Bielat is 35 years old, while Frank is 70 years old and looks sleepy.

I think Barney Frank is the most responsible for the recession

Here he is in 2005 claiming that fears of a housing bubble are unfounded.

Here’s the timeline showing who wanted to regulate Fannie and Freddie, and who blocked regulation.

Here’s video from a hearing showing Democrats opposing regulations:

That’s right – Republicans wanted to regulate Fannie Mae and Freddie Mac, and Democrats said Fannie Mae and Freddie Mac are “doing a tremendous job”.

Fannie Mae and Freddie Mac had paid the Democrats off handsomely during multiple election cycles, but I’m sure that the Democrats’ opposition to regulations had nothing to do with those political contributions.

Here’s Barney Frank endorsing Obamacare’s public option as a way to reach single-payer health care.