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    When the economy collapsed in 2009, America entered what has been called the Great Recession. It's not the first time the country has hit an economic downdraft on steroids - and we did have some things that kept it from being an all-out disaster: food stamps, unemployment benefits - the whole social safety net.

      But here we are in 2013 and the economy is still not working for all too many people. Unemployment is higher than it should be, and the recovery only seems to have reached the 1% - the rest of us are still treading water. Corporate earnings are up, the stock market is up, and the surviving big banks are bigger than ever. But Main Street is still looking pretty beat down. What's going on?

    Kevin Drum over at Mother Jones has put together a handy summary in reader-friendly form with charts, numbers and such, looking at the economic disaster we've inflicted on ourselves in the name of a really bad policy and how it unfolded.

      More below the Orange Omnilepticon.

          It's not like there weren't proven answers on how to turn the economy around. (Krugthulu is still being dismissed as shrill). Instead, America - and Europe - embarked on a deliberate policy of Austerity at a time when governments should have boosted spending to take up the slack in the economy. The results should have proved beyond question by now that Austerity has only made things worse.

        And indeed, it seems as though the Economics Profession for the most part has abandoned it. Unfortunately, the policy makers have not. Austerity and smaller government is still the order of the day, as first propounded by Saint Ronald "Government is not the solution to our problem, government is the problem" and ratified by the Big Dog - "The era of big government is over."

         And how has that worked out for us? Not so hot. It seems this bipartisan accord included a lot of collateral baggage that has worked out great for the 1% - and screwed the rest of us. (Meanwhile the 'quest' for bipartisanship is still sucking in those who should know better.)

        Kevin Drum has the Cover Story over at Mother Jones this week: It's the Austerity, Stupid: How We Were Sold an Economy-Killing Lie In it you can find numbers, charts and timelines showing how the embrace of a flawed doctrine has hurt us and continues to hold us back.

    Drum seizes on the unfortunate work of Reinhart and Rogoff as a kind of trigger - they attempted to show that high levels of debt (above 90%) would trigger economic disaster, and it became the center piece of the Austerian doctrine that prioritized debt reduction and slashing government spending as the way out of the collapse. Never mind that Keynesian economics called for a massive stimulus, or that the R&R paper would turn out to be badly flawed. It tied in with an anti-government ideology embraced by both sides, and fed the idea of the economic collapse as a kind of morality play in which redemption could only come through suffering. (Not that the 1% suffered for long.)

        Drum's story points out that Austerity has not only hurt us in the here and now - its effects will linger into the future. There are people whose economic lives have been set back, investments not made in infrastructure, lost production, and so on. Drum's assessment is not encouraging:

So have we learned our lesson from all this? Of course not. No further stimulus is even remotely on the table, either in the United States or in Europe, and Republicans are already promising another debt ceiling crisis unless Obama agrees to yet more spending cuts. The inmates took over the asylum three years ago, and they show no sign of leaving.

Austerity is working out fine for the 1 percent: Their jobs are safe, their investments are growing, and their taxes are low. But the rest of us are paying a high price in the form of slow growth, high unemployment, and stagnant wages for years to come. All things considered, we've been remarkably tolerant of our fate. The folks who run the world might do well to ponder how long that's going to last.

       Is there any sign of a backlash yet? If the Republicans force a shut down of the government, that might be a tipping point, the Chuck Todd apoligists of the press not withstanding. The "folks who run the world" were certainly terrified by Occupy Wall Street - and who knows what smoldering sparks OWS has left in its wake? Charles P. Pierce notes that Ronald Reagan's idolaters have lately been distressed by the disrespect that is starting to fester.
TEMECULA – A bronze statue and marble-tile monument in honor of President Ronald Reagan and his belief in American’s can-do spirit has been hit by vandals, who torched the tribute, which destroyed tiles touting Reagan’s words of wisdom and left the likeness of the president tarnished and defaced.
      Individual Americans are starting to realize the snake oil they've been fed for the last 30 odd years has failed them, and how badly they've been screwed by it. They really haven't been given a clear alternative though. One reason FDR was able to push through so many of his policies was because it was pretty obvious that capitalism had failed - and there were worse alternatives waiting to be taken up. FDR saved capitalism from itself. It remains to be seen if anyone today can pull off a similar feat in the face of an entrenched elite oligarchy with the legion of fanatical foot soldiers of the Tea Party cult to do their dirty work.

UPDATE: Paul Krugman has a couple of blog posts that fit right in here. What It's All About Then is very explicit about the motives driving the majority of those who pushed austerity on us:

...Opponents of austerity in a depressed economy opposed it because they believed that this would worsen the depression — and they were right.

Proponents of austerity, however, were lying about their motives. Strong words, but if you look at their recent reactions it becomes clear that all the claims about expansionary austerity, 90 percent cliffs and all that were just excuses for an agenda of dismantling the welfare state. That in turn helps explain why the intellectual collapse of their supposed arguments has made no difference to their policy position.

emphasis added

     His post The Depressed Economy Is All About Austerity pulls no punches. As it concludes:

I don’t want to pretend to spurious precision here. Instead, I just want to make the point that given what we know and have learned about macro these past five years — and given the modest recovery that has taken place — we’re now at a point where, to repeat, to a first approximation the depressed state of the economy is entirely due to destructive fiscal policy.

The austerians have a lot to answer for.

emphasis added

    Not that the Austerians ever will pay a price for the folly they imposed on us - or those who believed in their sincerity. It all boils down to a simple trade off: more for the rich and less for everyone else.

         And if you want one more thing to really put icing on the cake, the Masters of the Universe who blew up the economy are as clueless as ever. Kevin Drum links to an Ezra Klein article spelling out just how offensively victimized they feel.

AIG CEO Robert Benmosche is in trouble for telling the Wall Street Journal that the fight to cut AIG bonuses after the company was bailed out by the federal government was basically the work of a lynch mob, "sort of like what we did in the Deep South [decades ago]."...

...Wall Street tycoons really do feel put upon. They simply don't feel any collective responsibility for either the housing bubble or the Wall Street fraud and financial manipulation that made it worse. Nor do they feel any responsibility to support government action that helps ordinary workers who were hurt by the massive recession that followed. Nor do they believe that any further regulation of their activities is warranted in any way. They are the engines of the economy, not rent-seeking mooches, and they're just damn tired of all the pipsqueaks who think otherwise.

It is truly mind boggling.

Originally posted to xaxnar on Mon Sep 23, 2013 at 05:03 PM PDT.

Also republished by Community Spotlight.


Kevin Drum's analysis of Austerity, how it came about, and where it's taking us...

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Comment Preferences

  •  Tip Jar (86+ / 0-)

    For all the Republican contempt for Hollywood and its fantasies, they're still in thrall to the celluloid version of Ronald Reagan and his legacy.

    They've forgotten the law of sequels - they nearly always suck. In this case, they definitely suck big time.

    "No special skill, no standard attitude, no technology, and no organization - no matter how valuable - can safely replace thought itself."

    by xaxnar on Mon Sep 23, 2013 at 04:54:43 PM PDT

  •  It Was an Easy Sell After the 1st Economy Killing (20+ / 0-)

    lie: Reaganomics.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Mon Sep 23, 2013 at 05:06:10 PM PDT

  •  2008, late in the year (9+ / 0-)

    Black Friday was in September. We're still stuck in the winter after that, economically. But it had slowed down in 2005, when th real-estate part of the market slowed.

    May St Ronny and all the economists he listened to spend some time in the lowest regions of Hell, where the traitors can excrete upon their heads, and where that's the only warmth they'll get. And the Rs who refuse to do anything about the economy, except making it worse for everyone else, can join them there.

    (Is it time for the pitchforks and torches yet?)

    by PJEvans on Mon Sep 23, 2013 at 05:12:33 PM PDT

    •  Things were bad in '05 (1+ / 0-)
      Recommended by:

      But we were told they were great. Now, when things go well, we're told "mixed signals," or "uncertainty."

      When gas topped $4 in August of '07 ($5 in parts of the country), we were told it was because the economy was booming. Now, accounting for inflation, it's hovering around $3 in '07 prices, and they're still inflated due to Wall Street, but any small uptick is accompanied by hand wringing and anti-Obama sentiment.

      I'm living in America, and in America you're on your own. America's not a country. It's just a business.

      by CFAmick on Tue Sep 24, 2013 at 10:05:47 AM PDT

      [ Parent ]

  •  Trickle Down; Deregulation; Privatization; (21+ / 0-)

    Free Trade.

    30 years of it and all we have for it is this stinking economy. Who can afford a new t-shirt?

    And which of these have we seen Democratic Leadership pouncing on as a proof that Republican ideas fail, and fail, and fail?

    If anything, pretty much everything done today builds on the Republican lies as if Saint Ronnie were someone to emulate rather than to repudiate.

    Actual Democrats: the surest, quickest, route to More Democrats. And actually addressing our various emergencies.

    by Jim P on Mon Sep 23, 2013 at 05:18:36 PM PDT

  •  Daily Bruin ad August 30 (14+ / 0-)

    UCLA has got a lot of gall to name a hospital after Ronald Reagan, a president who tried to abolish the Department of Education, and actively thwarted AIDS prevention policy. What's next, the Mitt Romney Institute for Charity? Money trumps integrity around here.

  •  Best supporting misactor award... (5+ / 0-)

    ...goes to Grover and his bathtub drowning proclamation.

    I'm not always political, but when I am I vote Democratic. Stay Democratic, my friends. -The Most Interesting Man in the World

    by boran2 on Mon Sep 23, 2013 at 05:40:30 PM PDT

  •  Again, Congress = FAIL (15+ / 0-)

    apparently most in congress are graduates of the Herbert Hoover School of Economics...

    There's only two ways to get us out of the ditch here: the private sector- a total joke, corporations are sitting on billions in cash, doing more or less nothing with it, except paying their CEO's record high salaries.

    The public sector: a recent report indicated we have 65,000 structurally deficient bridges in our nation. that is just the tip of the $3.6 Trillion projected (by the American Society of Civil Engineers) infrastructure investment needed by 2020.

    Every billion dollars invested in infrastructure gets us 50,000 good paying, good benefits jobs. do the math.

    "The 1% don't want SOLUTIONS; they've worked very hard the last four decades to get conditions the way they are now".

    by Superpole on Mon Sep 23, 2013 at 05:49:09 PM PDT

  •  It would be kind of interesting IF (22+ / 0-)

    Obama would start defending the ACA by noting that the private sector has had decades to find a way to provide all Americans with health coverage - and failed. Sometimes the profit motive is not enough. It takes a government to "go that last mile".

    There are some things only government can do, and plenty of things government should do. The Erie Canal. The Transcontinental Railroad. The Panama Canal. The Apollo Program. The Internet.

    Government can lead the way; government can make it possible for the private sector to succeed where it will fail by itself.

    And there are some things too important to be left to mere calculations of profit and loss.

    "No special skill, no standard attitude, no technology, and no organization - no matter how valuable - can safely replace thought itself."

    by xaxnar on Mon Sep 23, 2013 at 06:00:03 PM PDT

    •  Each of those goverment programs (2+ / 0-)
      Recommended by:
      sillycarrot, xaxnar

      has minted millionaires and created trillions in wealth, but we're still told about how government is a waste and a fraud (by wasters and fraudsters).

      I'm living in America, and in America you're on your own. America's not a country. It's just a business.

      by CFAmick on Tue Sep 24, 2013 at 10:07:24 AM PDT

      [ Parent ]

  •  I think we should take a moment... (2+ / 0-)
    Recommended by:
    xaxnar, lostinamerica remember that every single person who said "No, follow Obama, pass something now and get more later" was wrong. We would have done better to demand more in the face of a collapsing economy.

  •  Every time I pass the Ronald Reagan GIPPER (3+ / 0-)
    Recommended by:
    Vetwife, Josiah Bartlett, xaxnar

    Bldg. on 14th St., I remark on the statue of "Wisdom" outside (dunno what the statue is actually supposed to be.) This blog may be the first time I'm seen "Reagan" and "words of wisdom" in the same sentence.

  •  Backlash? (3+ / 0-)
    Recommended by:
    Smoh, ChemBob, Orinoco

    There will be no stinking backlash.  The Republicans have turned politics into a sport competition. And nobody ever abandons their "team".  My neighbors will still vote for low profile Gerlach who aids and abets the GOP Destructocon quietly even though he is 100% on board with everything they do.  Even the ones who see that the GOP in general is full of the crazy will vote for him because it is always someone else's crazy Rep.  They don't view their vote for their guy as a vote for the Ted Cruz's, Michele Bachman's and the like.

    "You have attributed conditions to villainy that simply result from stupidity"

    by newfie on Tue Sep 24, 2013 at 05:16:29 AM PDT

  •  A small caveat, the implosion began in December, (2+ / 0-)
    Recommended by:
    Vetwife, xaxnar

    2007, and reached crisis proportions by August, 2008.  Thanks for the great diary.

    Patriotism may be the last refuge of scoundrels, but religion is assuredly the first.

    by StrayCat on Tue Sep 24, 2013 at 07:01:23 AM PDT

  •  And Reinhart & Rogoff 90% Debt Rule Is Debunked (7+ / 0-)

    They wrote a book about how there is a magic tripwire for national debt, but it was based on a single small spreadsheet that turned out to be full of rookie Excel mistakes and sloppiness.

    Men are so necessarily mad, that not to be mad would amount to another form of madness. -Pascal

    by bernardpliers on Tue Sep 24, 2013 at 07:02:49 AM PDT

  •  The Love Story of Michael Moore's epic (3+ / 0-)

    film is on a second honeymoon here at my house.

    We the People have to make a difference and the Change.....Just do it ! Be part of helping us build a veteran community online. United Veterans of America

    by Vetwife on Tue Sep 24, 2013 at 07:11:00 AM PDT

  •  Straight Party Stupid Voting Rethugs (3+ / 0-)
    Recommended by:
    Josiah Bartlett, xaxnar, prfb

    "I don't care how corrupt the Republicans are, I'd never vote for a Democrat."

    Those were the last words of his that I was willing to listen to from a former teabagger friend of mine.

    He doesn't need to research issues or candidates -- just look for the letter "R".

    He blindly supports the Party of Stupid like the political ideologue he is even when it is clearly against his own interests and those of his kids and grandchildren.

    He proudly and publicly proclaims that Fox Noise is the only place on tv that he gets his news.

    He loves listening to Rush Limbaugh and Glenn Beck.

    He carries his own Bible to church every Sunday (but I doubt that he has ever read anything in it).

  •  It's quasi-funny to see two right wing (0+ / 0-)

    memes in a diary here.  The bailouts began in late 2008 and so I would say that the economy was collapsing in 2008, not 2009, the year Obama took the presidency.

    Second, the right wingers often forget the relative practicality of Ronnie.  They forget that he actually worked with Democrats at times and that he actually raised taxes at times.  He also said "In this present crisis, government is not the solution to our problems, it is the problem."  That is so far from the dogmatic, reactionary fundamentalism of today's GOP that I can understand why conservatives want to "misremember" their hero but it's interesting for a Kossack to also eliminate the "in the present crisis" part.

    Not to knock or impugn either the content or the intent of the diary but I did find the framing of these two points interesting.

    We cannot solve our problems with the same thinking we used when we created them. Albert Einstein

    by theotherside on Tue Sep 24, 2013 at 11:40:06 AM PDT

    •  Good points (1+ / 0-)
      Recommended by:

      The Great Depression started in the last years of the George W. Bush Presidency, so 2007-2008 would be a better date for when it started. The roots of it go back farther, of course - deregulation in the years preceding it, the economic 'magic' of Alan Greenspan, Voodoo economics... take your pick.

      2009 is important though, because it should have been a time when a new administration came into power and resolved to break with the disastrous policies that had gotten us into that mess. Instead we got raging moderation and looking forward, not back. And then the R&R paper arrived on the scene, and as Kevin Drum notes, it was like dropping a seed crystal into a supersaturated solution. All of a sudden deficit hawkery and austerity were the ruling passions of the Very Serious People and the media.

      As to those words omitted from the Reagan quotes, that's what I meant when I referred to the Celluloid Version of the Reagan Presidency. Everybody remembers it the way they want to - conservatives and establishment Democrats alike. A pragmatic Reagan who compromised and raised taxes? Inconceivable!

      And the fact that Bill Clinton triangulated his way into ratifying the Reagan mythology by adapting its language, well...

      "No special skill, no standard attitude, no technology, and no organization - no matter how valuable - can safely replace thought itself."

      by xaxnar on Tue Sep 24, 2013 at 02:10:22 PM PDT

      [ Parent ]

  •  I don't see how this falls on Reagan. (1+ / 0-)
    Recommended by:

    I suppose he's not blameless, but this is a different generation doing this.  The austerity we're going through has less to do with Reagan survivors and more to do with "moderates" from corporate America that have influenced the Democratic Whitehouse.  Blaming Reagan is just a ploy to relieve us of responsibility for what we have done.

    Reagan's dead.  And, truth be told, I'm not sure that Reagan would have done things exactly like Obama did.  Nor Bush Jr.  They might have imposed a solution on us that was worse for the poorest of America, but I think they would have still tried to do something effective and more radical.  Even if it was worse in the end, it would have still been more active.

    But what we have seen during this administration is that Obama has given the patient just enough antibiotic to relieve the worst of the fever, but never enough to kill the bug.  This is moderation.  It all seems very mature and wise to people who don't know what they're really doing and depend on people who smoke pipes and wear bow ties to have the answers.

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

      1) The Republican base has been typified as aging white people,  mostly male - in other words, I'm guessing people who've been voting straight Republican since Reagan. (Remember the famous 'Reagan Democrats'? )And the mythic version of Reagan is still the face a lot of them put on the party.

      2) Reagan's Revolution is still with us, and a lot of it is now Democratic talking points - deregulation, smaller government, lower taxes, etc. etc. Reagan convinced a lot of Democrats they had to coddle Republican tastes to win elections - the bipartisan schtick, punching the hippies, kind of DC mainstream Democrats. Oh, and business friendly to a fault.

      3) Let's not forget the darker side of Reagan's Presidency - pretty much ignoring AIDS, making a joke of environmentalism, energy policies that rejected conservation and alternatives. Not to mention foreign policy either - playing fast and loose with the whole Iran-Contra deal, and similar ops.

      There may be a new generation now - but a lot of them grew up thinking Ronald Reagan was everything a president should be. He may be dead, but his toxic legacy lives on.

      "No special skill, no standard attitude, no technology, and no organization - no matter how valuable - can safely replace thought itself."

      by xaxnar on Tue Sep 24, 2013 at 06:52:31 PM PDT

      [ Parent ]

      •  It's still a non sequitir. (1+ / 0-)
        Recommended by:

        Arguing that Reagan was a bad guy for this or that doesn't have a direct enough bearing for the emphasis placed on it in a diary about our current economic woes.  In fact, it smacks of shifting the blame.

      •  Also, it still ignores my other point (1+ / 0-)
        Recommended by:

        that Reagan was not a moderate, and it is doubtful that he would have pursued what has been effectively a "safe" "compromise" "bipartisan" beltway conventional wisdom course.  You forget how radical he was.  Our current problems do not come from radical leadership.  Our current problems and ineffectiveness at solving them come from meekness.

        •  I think we're going to have to disagree on this (1+ / 0-)
          Recommended by:

          Reagan's presidency was all about destroying the legacy of FDR and the idea that government could and should play role in solving the nation's problems.

          Reagan's firing of the air traffic controllers was a pivotal event in the destruction of organized labor. Reagan's ideas about taxation and Social Security set the stage for the cuts to the social safety net. Reagan's invoking of the Welfare Queen in her Cadillac, his dog whistle racism, and so many other things set us up for where we are today.

          So many of the trends that have destroyed the middle class and created rising inequality got started under Reagan. So much of what he stood for has become the default for 'centrists' today as the Overton Window has been shoved farther and farther to the right.

          You can no more dismiss Ronald Reagan's impact on America than you can dismiss that of FDR. We're still living with consequences of both today.

          "No special skill, no standard attitude, no technology, and no organization - no matter how valuable - can safely replace thought itself."

          by xaxnar on Wed Sep 25, 2013 at 04:19:59 AM PDT

          [ Parent ]

  •  Problem With Krugman's Analysis... (0+ / 0-)

    ...much as I admire him, is that he's ignoring the role of oil price in this ongoing, global recession.  Nearly every economic downturn in the US since the middle of the 20th century is correlated to a spike in oil prices, and the crash of 2008 is no different.

    What is different is that the price of oil has stayed high.  Normally, oil prices would spike, the economy would take a nosedive, demand for oil would plummet, prices for oil would plummet likewise, and a new round of economic growth would then begin.

    But this time around, the price of oil didn't plummet far--from about $140/bbl to only about $75/bbl, when $20 or $30/bbl would have better.  Why not?  Because there's not enough oil--the supply is restricted.  We can't pull it out of the ground quickly enough.  And as Asian economies like India and China continue growing, and their demand for oil likewise grows, the supply of oil has not grown.  Therefore prices have risen, and the severe recession in the US, Europe and elsewhere isn't going away, because we're stuck paying close to unaffordable prices.

    Not only for oil products like heating oil and gasoline, but all the products which depend on it, like food (mechanized cultivation, petrochemical fertilizer and pesticides, refrigeration and transport).  There is no aspect of the economy unaffected by the price of oil.  And we're in the era of peak oil--we are at or very close to peak supply--so long-term economic growth is now a thing of the past.  The bravest bout of Keynsianism can't change this.

    •  You oversimplify (0+ / 0-)

      Oil prices are a factor, but do you really think the housing crisis and the collapse of the Wall Street bubble would have had a much smaller effect if energy prices had been lower?

      To some extent yes, but not to the degree you seem to be suggesting. If anything, oil prices have been held down by a depressed global economy.

      "No special skill, no standard attitude, no technology, and no organization - no matter how valuable - can safely replace thought itself."

      by xaxnar on Wed Sep 25, 2013 at 04:23:11 AM PDT

      [ Parent ]

      •  Derivatives and fuzzy math (1+ / 0-)
        Recommended by:

        xaxnar, you mention the Wall Street bubble. The bubble was created ON PURPOSE by the folks at Bear Stearns and Goldman Sachs with the concepts being "sold" to the rest of the big banks. Worse, Goldman's operatives are primarily responsible for selling the flawed products to European and Asian governments and their hedge fund equivelants which is how the rest of the world got dragged down into this.
        I read Drum's article from my subscription of Mother Jones just yesterday and he also points to the selling of austerity to those governemnts as another failed outcome of the Austerians grab onto the R&R paper.
        In the end, it is all about ideology rather than policy.

        Those who make peaceful revolution impossible make violent revolution inevitable-John F. Kennedy

        by TexasTwister on Wed Sep 25, 2013 at 12:21:07 PM PDT

        [ Parent ]

      •  The Crash (0+ / 0-)

        ...was at least partly, and perhaps largely, the result of oil prices going sky-high, particularly in 2007-2008.  Ford discontinued the Excursion in 2005 as prices were steadily building.  People were running out of discretionary money due to gas prices, and ultimately both people and businesses were having trouble meeting their basic expenses.  Did folks just stop paying their mortgages because they felt, "Meh, I can't be bothered to write a check this month?"  Oil is the most important commodity on earth.

        •  Well... (0+ / 0-)
          Oil is the most important commodity on earth.
          After money, that is.

          People don't got none - and it seems to be intentional.

          "No special skill, no standard attitude, no technology, and no organization - no matter how valuable - can safely replace thought itself."

          by xaxnar on Thu Sep 26, 2013 at 04:59:35 PM PDT

          [ Parent ]

  •  Great Recession began in 2007, not '09 (1+ / 0-)
    Recommended by:
    When the economy collapsed in 2009, America entered what has been called the Great Recession.
    The Great Recession.

    The ensuing global recession is said to have begun in 2009, though.

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