and wait for some serious pain…

Posted on Wednesday 3 November 2010

I have a lingering question that was born during the debate about the Stimulus in early 2009. I think I first thought it on January 15, 2009 when John Boehner said:
"There was no Republican input at all involved in what House Democrats outlined today," Boehner, R-Ohio, said at a news conference at the Capitol. "I just took a moment to look over the draft from Chairman [David] Obey and the draft or outline from Chairman [Charlie] Rangel. Oh, my God. I just can’t tell you how shocked I am at what we’re seeing. You know it’s clear that they’re moving on this path along the flawed notion that we can borrow and spend our way back to prosperity."
I had spent several months boning up on things I never wanted to understand – financial bubbles, John Maynard Keynes, Derivatives, the New Deal, the history of regulation and deregulation, etc. I knew that an economic stimulus was a good idea. I hoped for a WPA, a sweeping financial reform, etc. But I never expected "Oh, my God."

Back to my lingering question. The 1929 Stock Market Crash happened a mere 7 months into the Presidency of Republican Herbert Hoover, after years of prosperity under "Silent Cal," Republican Calvin Coolidge. Over the ensuing three plus years, unemployment rose to 25%, banks failed, people lived in shacks and tents, and ate at soup kitchens. The suffering was palpable and felt by almost everyone. FDR had pain on his side.

When it happened in September 2008, it was a softer, gentler fall. Even the Republican Administration was quick to act [TARP]. It seemed for a time that we were going to pre-empt a repeat of history and short-circuit the Second Great Depression – and we actually did. But I wondered if it would be possible to do everything that we needed to do up front. My logic was simple. We didn’t hurt enough – at least not enough to anticipate the need for radical changes in lots of areas – a big Stimulus, government takeover of failing Institutions, some kind of job core program to make up for the unemployment that was coming. Those things are counter-intuitive. And plus, we had the accumulated debt from the Reagan/Bush/Bush years leaving us with no real buffer.

I was disappointed when Krugman and the other economists said that the response wasn’t enough – pissed at them because I wanted it to be enough, but they were right, it wasn’t. But I think I was right that we didn’t hurt enough – yet. We still don’t. Not enough for people to tolerate radical measures. So, I’m guessing that it’s going to have to play out in real time. Boehner’s "Oh, my God" may have been the death knell to a preemptive strike.  They’ve used Obama’s only possible solution  [spending] to brand him and gotten themselves elected on some very wrong premises. So it’s our turn to say, " Oh, my God" and wait for some serious pain [ask the Japanese]…
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    November 4, 2010 | 7:49 AM
     

    […] with our economic crisis. It’s only about regaining power [recall that John Boehner’s "Oh My God!" came a week after this […]

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