The Great Recession: It could have been far worse

Conservatives can say what they want, and we will continue to haggle over what the real unemployment rate is (9.5% or at high as 16.5%), but the consensus among leading economists and financial experts continues to support the actions taken by both the Bush and Obama Administrations to prevent Great Depression 2.0.

In a report released on Wednesday, July 27, 2010, Mark Zandi (Chief Economist for Moody's Analytics) and  Alan Blinder (Gordon S. Rentschler Memorial Professor of Economics at Princeton University) state that while there are good questions about the need for TARP, extending Unemployment Insurance, the Stimulus Package, Cash for Clunkers, Home Buyer Tax Credit, etc..., "it is clear that laissez faire was not an option; policymakers had to act."  Zandi and Blinder go on further to conclude: 

"When all is said and done, the financial and fiscal policies will have cost taxpayers a substantial sum, but not nearly as much as most had feared and not nearly as much as if policymakers had not acted at all. If the comprehensive policy responses saved the economy from another depression, as we estimate, they were well worth their cost."

Which brings me to another point.  Why haven't some of these Bankers and Hedge Fund Managers gone to jail?!!!  Why hasn't there been universal, bi-partisan support for Wall Street Reform like there was back in 1934? 

I think we all know the reason why.  Just in case you don't here is a great article in Vanity Fair about the (Ferdinand) Pecora Commission and how it lead to the formation of the Securities and Exchange Commission and passage of the Glass-Steagall Act (strict separation of Commercial & Investment Banks).  

When you totally repeal the laws that were suppose to prevent our economy from coming close to another Great Depression, and you weaken the SEC's enforcement powers, you shouldn't be surprised that we are in the shape we are in right now.  So, when did all this happen?  The total repeal of the Glass-Steagall Act happened in 1999 and the SEC saw it's enforcement powers steadily stripped from 2001 - 2007.  In case you are wondering who was in control of Congress during those times, Republicans. 

As the 2010 Mid-Term Elections get closer, you need look no further than the full-court press that Conservatives are putting on K Street donors in anticipation of the GOP taking back control of either the House or the Senate, or both.  No wonder Senate Republicans refused to lift the filibuster on the most recent revision of Campaign Finance Reform. 

If the GOP can overcome the Tea Party takeover and they do win control of Congress back from the Democrats, does this mean that K Street Lobbyist will be writing their legislation (again)?  Does an elephant have a trunk? 

Image found at:  http://riverdaughter.files.wordpress.com/2009/08/great-depression-unemployment-line.jpg 

Wall Street Reform: Is the GOP really that out of touch with reality?

There's more evidence that the 2010 Campaign Season is in full swing.  Invoking the mantra of "Repeal" used as a call-to-arms for Health Care Reform and reason to turn the keys to the Federal Government back over to them, the GOP is now using this same campaign theme on Wall Street Reforms.  Seizing on the broad dissatisfaction with President Obama's first major legislative victory with Health Care Reform, with most Americans feeling the reforms didn't go far enough, House Minority Leader John Boehner and Senate Minority Leader Mitch McConnell are calling for the repeal of Wall Street Reform, the second major legislative victory for the Obama Administration this year.  The problem with this move, Americans across the board support these reforms. 

The question now is how disconnected from reality are the GOP with regard to Wall Street Reform that includes the strongest consumer protections against predatory financial products, ever?  Also, massive Government bailouts will never happen again (at least as long as this legislation stays intact). 

Just like with Health Care Reform, the Wall Street Reform legislation is not prefect by any means but it does put the Federal Government in a position to implement corrective measures and fixes to make it better over time. 

As far as claims that this legislation will kill jobs, stifle economic growth, raise interest rates, and make it harder for people to borrow money, we are already there because of Republican/neo-con/deregulation economic philosophy that lead the American Capitalist System to financial ruin and almost drove us off a cliff. 

As for the chances of the GOP repealing anything, Health Care Reform or Wall Street Reform, the 2010 Mid-term Elections would have to produce such a massive repudiation of Democratic Party governance that upwards of 70 House seats or more would be needed, as well as more than 20 Senate seats, to give the GOP the legislative muscle to override any Presidential Veto.  The best estimates right now indicate that the GOP have a shot, at shot, at winning back control of the House and in the Senate, the Democrats will have a much smaller majority but still retain control. 

When I was a teenager, my family had a 1977 Honda Civic that survived my two sister's and college at Radford University before I got a turn at the wheel.  When I got my chance, I made sure that I had a lot of fun in that car.  I gunned the engine and made donuts in the gravel parking lot of my High School with a good friend of mine, among some of the more noteable activites.  It was my chance to have control and freedom to go places without parental oversight. 

Then I blew the head gasket.  No big deal, dad will fix it.  I had no idea what that entailed.  In order to save money, my dad took the engine apart and replaced the head gasket.  Then I went out and did much of the same, not changing my behavior or the way I drove the 12-13 year old car by then.   Blew another head gasket.  My dad looked at me and asked what I was doing (but he knew).  I played dumb and said I don't know why its blowing head gaskets because I was driving responsibly and not reeving the engine, too much. 

The second time my dad took that engine apart to replace the head gasket, I could tell that he was pissed.  But, he didn't take the keys away from me and continued to let me drive.  It wasn't unit I was a father and had kids have I realized the time and money I cost my father because I acted irresponsibly and didn't change my behavior.  But as I look back on those events, my father should have also taken the keys away from me when he knew what was going on.  You don't just blow two head gaskets because of responsible driving behavior. 

As we look back on where our nation was, heading into 2008 and 2009, with millions of jobs lost, people loosing their homes, people declaring Bankruptcy because our nations finances were mismanaged, we will have no one else to blame but ourselves if we give the keys back to the people that brought us to the brink of another Great Depression, and that is still not totally out of the realm of possibility. 

Since the Democrats have been in charge, they have taken our financial engine apart to fix the damage cause by conservative/neo-con economic deregulation practices that blew our economy apart.  The GOP have learned nothing from their mistakes and we will pay the price, again, if they get the keys back to the nation's economy.