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View Diary: Austerity cost U.S. up to 2.2 million jobs in weakest recovery since WWII (64 comments)

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  •  Balance sheet recession (2+ / 0-)
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    shrike, satrap

    Can we please get this right. This is not a normal recession. As such comparisons with past US recessions are wrong - like comparing apples with oranges.

    This is a balance sheet recession (as opposed to a business cycle recession). It is a recession caused by too much debt in the system. As such the cures and the length of time til a real recovery comes are very very different - by definition.

    It does not matter what alternative would have been tried, there was no easy way out of this type of recession (except maybe by a debt jubilee). Current policy has been to try to reflate the bubble. So far it is holding its own ... but unfortunately there is no exit strategy. There is no way back. Eventually it will fail, or there will be hyperinflation.

    Just for a bit of sense to the unbelievable lengths the Fed is going to and how little impact they are having think of this - The Fed is printing $85 billion a month [Note: by comparison WalMart sales are about $25 billion a month] and generating about 150,000 jobs a month for a cost of $500,000 per job. I can think of more effective and less costly solutions, and I am sure you can too.

    There's room at the top they're telling you still But first you must learn how to smile as you kill If you want to be like the folks on the hill

    by taonow on Sat May 04, 2013 at 07:18:57 PM PDT

    •  It truly is a b/s recession as opposed to an (1+ / 0-)
      Recommended by:
      satrap

      inventory workoff as in the past.

      As Warren Buffett says " Only when the tide goes out do you discover who's been swimming naked" and the tide is out more than ever.

      Anyone upside down in their balance sheet has been decimated.

      I disagree about the Fed though.  They are the last resort in lending.

      "The way to see by faith is to shut the eye of reason." - Thomas Paine

      by shrike on Sat May 04, 2013 at 07:25:04 PM PDT

      [ Parent ]

      •  fed (0+ / 0-)

        I would argue that what the fed is doing is very ineffective at helping the real economy, though it is doing wonders for the 1%.

        Here is an off the wall alternative to what the fed is doing (buying mortgage debt and gov't debt) ... lend to anyone with credit card debt (probably at about 30% interest) or student debt at 3% interest - with the stipulation that 1/2 of the interest savings had to be sued to pay down principal .. while the rest could be spent if desired. This would be a fast way to reduce private debt, and may provide some direct stimulus too. It may not sound fair (rewarding the spendthrifts) but it is more fair than bailing out the banks that caused the mess in the first place.

        There's room at the top they're telling you still But first you must learn how to smile as you kill If you want to be like the folks on the hill

        by taonow on Sat May 04, 2013 at 07:47:09 PM PDT

        [ Parent ]

    •  Meh. (1+ / 0-)
      Recommended by:
      satrap

      Debt as a percentage of GDP is supposedly not actually at record highs iirc.  Of course, while Republicans can do nothing but shriek 'debt, debt'!, I'd like to see them vote to reinfuse the money into the system that was taken out through over a decade of tax cuts and Republican wars.  They can feel free to pay the country back the trillions they've cost us that have driven the debt so high.

      •  the federal balance sheet is not the topic (2+ / 0-)
        Recommended by:
        taonow, satrap

        taonow raised.

        He/she certainly meant individual/corporate balance sheets.

        I read a great article I can find that cited credit drawdowns as pulling $6-8 trillion dollars out of the economy.

        "The way to see by faith is to shut the eye of reason." - Thomas Paine

        by shrike on Sat May 04, 2013 at 07:39:42 PM PDT

        [ Parent ]

        •  Corporations are raking in the money. (0+ / 0-)

          They're having record quarter after quarter, and, in large part, paying little to nothing in taxes.  Why are individuals in debt?  Poor pay and unemployment.  Why are small businesses hurting?  Low demand because the people who used to buy their products are unemployed or underemployed.

          Our 'debt' problem is entirely created by lack of well-paying jobs.  Well-paid, employed people buy the goods and services companies offer.

          Henry Ford knew this, and paid his employees highly, and his business boomed.  The current 'cut employees' and 'cut pay' mentaility is the creator of the problem, not its solution.

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