TPS

As they say, you can never have enough "Corner(s)"....

NY magazine

BAck at you--the difference is that Bush pursued your S-Side policies--majority of tax cuts for the top brackets, which I would argue (probably) exacerbated the financial crisis becuase the "wealthy" now have even more funds with which to speculate--errr...invest, and since equities were going nowhere, dump it into real estate. 3% is the average real growth of the US economy since 1950--it's just a fact. Yes, I guess it would be asking too much to see how real gdp growth under bush2 compares to that? My theory? You Supply-siders claim that tax cuts for the top lead to higher than normal growth, more tax revenues, capital formation, blah, blah, blah...but the facts have never supported the religion. The most significant impacts of supply-side policies, in both cases it was tested, were larger deficits, no better than average growth, and increased inequality. I guess when the facts let you down, you can always claim a new target--oh...ummm...we need to compare the policy change to other developed countries...yeah, that's the ticket... Last I looked, the revenues as a % of GDP were 18.8%, which might seem close to 20%, but that "little difference" of 1.2% means we're losing $170 billion in revenue from a $14 trillion economy... Btw, it's "Bush policies bad," not Bush bad. And, for the umpteenth time, I am not criticizing tax cuts, I am criticizing the predicted impact S-Sers claimed the cuts would have--I'm criticizing YOUR theory, one which sounds good in the classroom or on conservative message boards, but the reality, that's another matter... Ps. My platform is still (temporarily) cut the social security tax to put money into the hands of those who buy goods&services.

Christ...you've disarmed me...no, you are not christ...it was an expression...

Oh boy, your response is "what would the other guys have done." Put the onus on me, because you can't explain it. Well...you and I have been debating the efficacy of "supply side" economics forever. You were touting how great things were for that one, maybe two, year(s). Given the 7+ years of Bush2's (SS) economic policies, please enlighten us on how "successful" they have been. Where has all the "capital formation" gone? You are so quick to criticize everything but your own beliefs. Please explain why the Bush2 tax cuts didn't create more than 1 year of above 3% real gdp growth. And 3% is the average, which means every other year was below average. All you other homers can chime in too....

I understand. It must be difficult when all you have room for is the "I'm arrogant prick chart."

That was the point of my original post, as the quote by Keynes indicated: "Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes a bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill done." Speculators are fine when they are the minority players in the market, but when they dominate markets, "the job is likely to be ill done." The futures markets were created to provide actual dealers with the ability to hedge price risk. When you allow "investors" to dominate these (relatively) thin markets, we get the kind of volatility we're currently experiencing, and the manipulation. This says it all:

Of course Pollyanna... There have always been financial innovations --or evolution of finance--which support the continued expansion of debt (Minsky wrote about this some 40+ years ago). There have always been bubbles, speculation, crashes, recessions, etc (I mentioned a book by Charles Kindleberger on the long history of finacial crises). His analysis (as well as those of Keynes and Minsky) focuses on the macro variables. There have been real estate bubbles before securitization. For someone who's predictions haven't been all that great, you're being a bit picayune. So all we need to do to end this is let banks carry their (mortgage) assets at historical values? And they are "superficial losses"? If someone (or a lot of somones) stops paying their mortgage, doesn't that also create a cash flow problem for banks? You believe the crisis is solely limited to housing too? Love the terminology--"wholesale mispricing and underestimation of risk." That's the definition of a speculative bubble, yes? 99% of the people are believers. Interested in hearing your take in retrospect. Was the the 1 out of 8 years of above average growth under Bush2 a supply-side success? Again, it's not the innovations that are the cause. Innovations from profit-driven institutions are a natural occurence in the market system. As Minsky (and Keynes) would argue, the "pricing issue" is an "expectations" issue. Pricing is based upon our expectations of future cash flows (or asset appreciation) and the future is uncertain. At the time, who is to say the "pricing" was wrong? It's easy in hindsight isn't it? As I argued elsewhere, China attacking us economically will be as a consequence of a political crisis between the two countries. And why would the US cut off its nose to spite its face? Purposely putting the economy into recession to take down the developing world? I think you've lost it here... You don't seem to understand what he's implying here. He's essentially saying that the bull sh-- macro theory, which believes markets are self-equilibrating, can't explain this crisis. Rather, people need to understand Minsky's "financial instability hypothesis," which explains how a modern capitalist economy is inherently unstable.

Haven't I been around here long enough for you to know that was an "iTPS" post? Inebriation makes me post silly things... Burp!

Go back to the part where I said the right skills don't get taught at 90% of k-12 institutions. People like you, I"M assuming, can learn most things on your own. Distance ed works for people who are self-motivated. However, the majority of students that attend college need their "hands held." My experience is that most students don't know how to write a research paper; they lack critical assessment skills; etc. So, maybe YOU don't need to attend college to learn how to think critically, but a hell of a lot of people in this country do. Until we fix education at the k-12 level, the majority of college kids will need to attend this old fashion institution to learn the skills necessary for them to compete...

Sorry wrong site. Should've mentioned that Obama sucks or something...or all is well...or Bush is great...or Liberals suck...or...republicans cut spending...or ....whatever you dopes believe in...oh, yeah, liberals are the cause of all evil...good thing you have something to focus on, otherwise you might have to face up to the truth that the republicons are worse than dumbocrats. You dopes make sure that we keep divided enough so that we don't throw both m...f..ing parties out.

N. Roubini Anyone se this in the NYT mag on economist Nouriel Roubini who called the current financial crisis? Note that he says two economists that have influenced him significantly are Keynes and Minsky.

First, my bias up front, I teach in HE at a state college. Your post is much like most of what is posted here--it starts with the bias of the presenter. Yes, higher ed needs to change, but the criticism that the right-wing mr murray levels misses the point on what a college education is about. It's not about providing a technical skill that can be "mastered" by some test. If you want that, go to Bryant & Stratton. A college education, a LIBERAL ARTS college education, is about teaching critical thinking skills that, for the most part, don't get taught at 90% of K-12 institutions in America. Yes, HE is over-burdened with "core requirements", and much of that has to do with the poor education that happens in K-12--we have become remedial teachers for HS to large extent. My belief is that we need to minimize the GenEd core courses, and then allow students to do more things that do matter to their future. Corporate America doesn't want (or need) people who have a degree in some specialized technical skill (ok, they need accountants), but they do want people who know how to research topics, critically assess issues, communicate, collaborate, and continually try to learn (a short list). What specific degree teaches that? None. An overall LIBERAL ARTS education should focus on these skills, and for the most part does. If I were king, I would minimize the core requirements to about 6-8 courses (out of the total of 40 requred), then stongly suggest students do double majors, minors, create their own second majors from multi-disciplines, spend a semester abroad, etc. I am in the lion's den. Yes, there are a lot of people who are afraid of change, and are in this because they are protected, but there are just as many, if not more, people who continually try to keep up with the latest in their disciplines, technology, etc., who try to provide students with the skills--not some techinical job--necessary to compete in the 21st C. You have to be able to quickly adapt to a radically changing economic environment, and teaching a "competency" doesn't teach you the skills necessary to adapt and succeed in this environment. So yes, we need to change; but, we we should continue to teach the "skills" that are permanent, not some bull sh-- that you memorize to pass some bull sh-- test. And majors like history, english, philosophy, etc. teach these skills. How many CEOs do you think got thier undergraduate degree in business?

What crap! YOu don't say a thing about the Pats, and how they will suck because of how they looked last night. How can anyone believe your crap analysis? And, where's your gossip about Peters? I can't believe you're a TE whore as well? If this is the crap that passes for tbd analysis, then I'm going to stop posting here... You should stick to American Idol Simon....hehehe

I'll have to find that passage and see the context again. So I'm not sure where you stand now? You support regulation or not? NOt sure where you get this? The S&Ls were deregulated starting in 1980. It's one of the reasons always cited for the crisis. I disagree a bit on the "biggest problem with the models." You've got the industry creating models to estimate risk based upon past behavior. Two inherent problems: one, the industry is profit driven, so there's always a bias to under estimate risk; two, past data (which models are typically built upon) can't estimate the risk of the new types of securitized "assets." I do agree for a different reason about your "borne out of nonexistent regulation" point. The history of financial innovation is related to regulation. Once you create a regulation, finance finds a way around it in order to generate more profits. Securitzation, as Wray pointed out, was a way to circumvent regulation (capital requirements). Make the loans, generate fees from said loans, then "securitize and sell." Over the past 20-30 years, banks have been focusing on generating more "fee income" than interest income. Don't necessarily disagree with the first part. The second, I'd say that finance always creates instability (that's the main point in minsky). There will always be another "fad" where "finance" underestimates the risk because of the desire for greater profits. Thanks for the response. I wasn't trying to generate any discussion with this, just thought some might find it interesting. Minsky was one of the few "practical theoreticians" of his time, and I'd certainly recommend picking up his book "Can IT Happen Again?" A collection of his articles, which are still relevant today.

I've mentioned several times that my economic views were heavily influenced by the late Hyman Minsky. Attached is an article (somewhat lengthy) by one of his former students on the current financial crisis from a "Minskyian perspective." It may be a bit daunting for those who aren't as familiar with finance. A Minsky(ian) analysis

Not denying the severity of the situation. The point I made previously is that we are testing the limits of policy, both monetary and fiscal. Hale is saying essentially what I said, that fiscal policy needs to take a greater role to stabilize homeowners and defaults which are the root cause of the financial crisis. Yes, there is a perfect storm, but if policy makers remain aggressive, I believe they can limit the impact. I fully expect another round of tax cuts for the lower and middle classes. In times of crisis, policy makers revert to demand side policies.

Someone else who understands you have to solve the root of the financial crisis: David hale

Someone needs to organize a TBD outing (coordinated to the home opener) so we can find out who counts all of their strokes and who doesn't... :-)

Unless you own your own business and can directly use savings to expand, there is no direct connection between the "savings of the rich" and investment by corporations; it's indirect. The rich "financially invest" in stocks, bonds, real estate, art, precious metals, and various liquid accounts. increased stock prices make it more attractive to raise new equity, and increased bond prices lower interest rates, but the investment decision by corporations is driven by profit expectations (being able to sell the increase in products or services). Then, even if they do decide to "invest," there's the question you raise about "where" they locate...

I don't think Dems have ever said that lower taxes don't impact the economy (if so, please find me a quote). You allude to the difference, and it's pretty straight-forward. The top 20% of income earners spend about 75-80% of their income (20-25% savings rate); the bottom 60% spend more than their incomes; and the other 20% spend all of their income (0 savings rate). If your philosophy is that demand drives the economy, then you need to cut taxes on those who spend the most--it makes perfect sense. If you believe in supply-side stimulus, then cutting taxes for the top makes more sense. That's why I've always argued for cutting the payroll (SS) tax.

Right. This would be like JFK having LBJ as his vp--don't turn your back Barack!

You'll find him/them at one of these places: steely dan

How far back do you want to go with that "key line?" Why is it that we subsidize industries that rely on oil (trucking, airlines, highway system, etc.) but let Amtrak starve? Why do we subsidize oil extraction, but tax it at the pump? Maybe congress isn't "do nothing," maybe they do it for the interests that support them most? Isn't that a novel thought...

Something to support the "Drane view." Phase 2 This will test the limits of modern fiscal and monetary policies. In my view, the problem is that the focus has been too concentrated on bailing out the financial sector, when the the "bail out" needs to go to the "source," households/consumers. The housing market has to be stabilized, and there needs to be a more permanent tax cut for those who spend--I'd suggest a significant cut in SS taxes until this is over. And of course some incentives for business investment... While the Fed is selling off assets to fund its bail outs, as long as the government's deficit continues to increase, guess who'll be buying...