Who is Paul Krugman? A shill? A hardcore Democrat? A Nobel Prize winner for economics? Opposition to Obama? The answer to all these things is; Yes.
Why does this matter? Because however raised in opposition to Bush Krugman was, he is even more so of Obama. Why is this important? Because Krugman needs to be tapped as a resource in this current economy. This guy is one of the great economic thinkers of our time, and we [Obama] has written him off as a radical, just like Clinton did in 1992.
All politicians are looking for a 'yes man'. Clinton wanted one in 1992 when he asked Krugman the question, can you have a balanced budget AND health care reform? Clinton wanted his cake and to eat it too [see also: Monika]. Krugman answered no. Laura Tyson went on to answer the same question as a yes. Clinton liked that answer, dubbed it the right answer, so he tapped her [might have been an intended pun] to be Chairman of Clinton's Council of Economic advisers. So was Tyson right or was Krugman right?
Well Clinton had his balanced budget, but did nothing in the way of health care reform. Why? Because once you start putting money into health care reform, your budget sheets get a bit skewed. Once again the Dems gave the American people political blue balls. They had an opportunity to make a change and they stopped short. Clinton also did this in Somalia, Carter did this in Iran, and hopefully Obama doesn't mess up this pirate situation. The Republicans are not without blame either. See also Reagan in Nicaragua, and H.W. Bush in Iraq. With that being said, was Krugman right? Yes he was. Although his view was looked at with disdain from Clinton, you have to admit, he was right. You can't have both.
With that being said, what was more important during Bush's term? Health care reform. Bush passed the biggest reform package of the Medicare system ever, but his budget was completely messed up. Many would blame Bush for the current state of affairs for the American economy. I would say this downward spiral started long before Bush took office.
In the 90's the economy was all about growth. Businesses were judged on growth as the only metric of success. Sustainability was not even an issue. What did we get? The DOT-com bust. We saw huge growth, and companies like yahoo, and other big Internet businesses had no model to sustain their growth. What did we get? A bunch of companies that went under very very quickly. Flashes of greatness, but they missed their mark. This could have counted as warning #1 for the bursting bubble. Clinton also wanted to give more opportunity to the American people to own their own home. He relaxed standards that were already relaxed from H. W. Bush. Clinton gave more opportunity to lower income families to get into houses. What happened? America saw it's housing prices soar as more and more people were buying houses that were previously unattainable to most. This is what happens when we put our faith into the low to middle class. So what happened? In 2006 our housing market peaked. The average American home was valued at over 200,000. That is amazing, but what happens? The model for sustainability is not there, and the market recesses.
Enron was warning #2. They created false profits to show they were growing. If their earnings flattened out, they would have lost millions and the economy would have been forced into a recession. Many economists would like to think it would have been a 'correction'. With Enron going bankrupt at the end of Clinton/beginning of Bush, the slight recession that occurs has nothing to do with Bush at all. The model for growth that Clinton set out, created the situation that allowed Enron to do what it did. Corporate greed started before Bush took office. Clinton didn't combat corporate greed at all.
So here we are. The auto industry is failing because they didn't have a model for sustainability, because under Clinton, growth was the key. They put their eggs into the SUV basket and profits were huge, until that bubble burst with the housing market. Banks were lending more and more money and trading mortgages on the open market like kids trade baseball cards until that bubble burst when the slack adjustable rate mortgages came do [ARM] and all those interest only mortgages, and maybe just maybe those no document loans that only made you show your bank account balance that were created under the Clinton Administration. This is like the perfect storm. Everything is tied in together and once 1 piece of the pie crumbles, it all goes down. We had a house built on sand. Never had a solid foundation.
Now Obama is in office and he is trying to prop up what is falling down, instead of letting it go. Like any political party, they gained power on the 'failings' of another. Now Obama is over reaching to correct a problem that just needs to fail the old fashion way. This is a political strategy. Let everyone know that the current problem is the Republican problem, and we are 'trying' to fix it. Well all Obama is going to do is create some sort of stability [it will be short] to get re-elected, but that is when his 'reforms' will stop. The best predictor of current behavior is past behavior. Every president before Obama has done the same thing. Why would Obama be different?
So now that we are here, what do the Republicans need to do? They need to create a strategy that doesn't involve blaming the Democrats for anything. They need to create a better way. They need to let the auto industry fail, the banking industry eat their bad loans. Krugman says the only way to let that happen is to restructure the banks [read: nationalize] which might be true, but it needs to be done quickly.
We are reading of a banking bail out that was actually planned while Bush was in office. If Bush did such a bad job, why is Obama using his policies? Again this is propping up the status-quo. He came to power of the back of Bush's 'failed' policies, but now that he is there, he is just dumping more of Bush's shortcomings into the fire and saying that he can't fight it, because Bush screwed up so bad. Well if Obama doesn't make changes quickly he will be just as much to blame as Bush might be.
The Dems have to be regretting this. Obama has the ability to get anything he wants through congress and he is just reusing Bush's policies as his own and getting them through congress. Who is the wolf on sheep's clothing?
We have a President that has never finished a term in office and never had to get re-elected on a big scale. Finally the American people are starting to realize the er in their ways. Let's hope that Obama has the ability to make lasting changes. So far he is no different than a lame duck president. He has not passed anything worth while. He is closing GITMO, but has said how. He wants to give the banks a bail out [that means giving them more money] although he said they are all greedy. To give them more money is to assume the know what they are doing. How does that make sense. Their system is failing. His stimulus bill calls for spending more money while we have a huge deficit in the budget. How does that make sense?
Yarn and... teeth.
2 years ago