Understanding the economy and the ramifications of doing nothing.

[AllieB]

Poll question: Understanding the economy and the ramifications of doing nothing.

Many people who are for and against some kind of bailout admit that they don't understand basic economics. They view the economy through partisan glasses, and I admit that I do also. I tend to listen to Robert Reich, Naomi Klein, and Paul Krugman before the asshats on CNBC or other corporate media outlets. That being said, there is a need for some kind of a bailout, just not the one that the administration put forth.

The issue is credit. We're not talking personal credit, and I've seen some pretty harsh attitudes toward those DUers who buy into the economy through the use of credit cards. IMO this purist attitude shows a lack of compassion and a lack of understanding of how everything we consume-food, clothes, etc.-is connected to a credit line. In full disclosure I use cash and a debit card for everything, and have a credit card in case of an emergency.

Your average mom-and-pop corner store has a credit line that allows it to keep goods in stock. When that credit line is frozen or denied, they cannot stock those goods and therefore can't meet the demand of the local shoppers. Those local shoppers then go elsewhere to purchase the goods, and mom-and-pop go out of business. Now, multiply that by dozens, hundreds, or thousands of small businesses, and we have a problem. Then the credit crunch starts hitting big retail, and we have shortages. This is very simplistic, but you get the picture.

On a larger level, most states borrow money to make its routine quarterly local aid payments to cities and towns. They also borrow money to make payroll and pay for services like snow removal, infrastructure repair, and social services. If the line of credit is frozen, or those funds fall through, the taxpayer absorbs the burden through increased taxes. Or those much-needed services go away, or worse, they are privatized (see 'The Shock Doctrine').

Some businesses-usually the small ones-will feel the credit crunch faster than the large ones. Small businesses and entrepreneurship are important to the health of our economy. Yes, the sky didn't fall, but this is going to be a long, slow crawl downwards if something isn't done.

So I have a poll about economics and I'm curious to see the responses.

[leftofthedial]

1. what do we mean by "some kind of bailout"?

I oppose the supply-side approach that all the flavors of "plan" have espoused so far.


We need to nationalize the banks (and the oil companies and the "defense" industry). We need a New New Deal. Anything else is just perpetuating the problems.

[PVnRT]

3. You think you'll get that overnight?

FDR had 75% Democrats in Congress when the New Deal went through. Failing that kind of majority, the best we are going to get is a slow move towards that. I will take what I can get in the hopes of it happening someday, but to demand all or nothing is just naive.

[leftofthedial]

8. I don't think I'll get that EVER.

until the current system fails utterly.

[AllieB]

13. Except when that system fails utterly, Main Street goes down with it.

If you want the whole system to crash and burn, many innocent people will be taken down with it.

[leftofthedial]

21. we are in the early stages of a long, deep recession.

Bailout or no bailout, nothing will change that short of radical restructuring of our economy, which won't happen.

Main Street and Wall Street are both going down. Not as in Great Depression, but as in deep recession. Capitalism takes innocent people down with it daily and has done so forever. It just hasn't been the lead story until now. Fearmongering requires propaganda. This bailout is not intended to fix anything or to save anything. It's intended to do two things:

1. Delay the worst of the collapse until after the ruling cabal leaves town and the new president takes office.

2. Give the neocon crooks one last shot at pocketing another trillion of your grandkids' bucks before they are run out of the country on a rail.

It is a scam.

[TBF]

22. But if we always start in the middle we don't get very far left either now do we?

Why don't we start on the far left, just as they start on the far right, and see if we can come to a compromise that makes sense rather than always giving in.

[TahitiNut]

23. Close ... but no cigar.

FDR didn't have that party majority until several years after the Great Depression began. First off, the Depression began with the market crash in 1929. FDR wasn't elected until 1932 and took office in 1933 ... along with 12 additional Democratic Senators (from 49 to 57) and 97 additional Democratic Representatives (from 216 to 313). FDR's win in 1932 was indicated by the 1930 midterms when 53 additional Democratic Representatives were elected and 8 additional Democratic Senators.

Democrats were in the minority in both the Senate and House until 1933.

So, the 1930 midterm elections 'punished' the GOP and 61 Congressional seats (53+8) switched from GOP to Dem.
Then, the 1932 Presidential election included another 109 (97+12) Congressional seats.
But it wasn't until the 1936 election (FDR's second term) that the Senate and Hose reached their peak Democratic seats.

That's seven years it took for the public to learn its lesson.

[AllieB]

5. A bailout that will take care of the average citizen.

Bankruptcy protection, mortgage relief, and availability of credit for small businesses.

[Marie26]

11. Did this bill have mortgage relief?

It's my understanding that the bill didn't allow bankruptcy protection, & didn't allow bankruptcy judges to modify the mortgage rates.

[AllieB]

16. Yes, that was a huge problem with this bill.

Which is why I hope the next one will include it.

[TBF]

24. Check out the plans of Dennis Kucinich and Bernie Sanders. Both

are very good alternatives to stimulate the economy with normal people in mind as opposed to bailing out billionaires.

[RoyGBiv]

2. Nice post ... but ...

I really wish we could stop calling "it" a "bailout." This use of the term is one reason many people didn't know a difference existed between Paulson's original absurdity and the Congressional plan that failed yesterday.

I voted "basic understanding" and support some kind of intervention.

[AllieB]

6. I think 'intervention' is a better word.

I'll see if I can edit it.

[RoyGBiv]

32. Cool ...

And we will certainly be needing lots and *lots* of therapy afterward.

[Marrah_G]

4. This has been quite a curious couple days on DU

My response:

I have a basic understanding of economics (college classes), and I'm FOR some kind of bailout (just not this one)

Of course if that makes me a paulson propagandist to some...but I figure I am in good company. I just do not think we can stand by and do nothing.

[AllieB]

7. Thanks for responding.

Frankly I've been horrified by the responses of 'let the economy crash and burn'. These folks don't realize how many will get hurt all because of some ideological purity.

[PVnRT]

12. Could be worse

I clearly have millions in the stock market, which is the only reason I wanted a bailout. Since true leftists are always right, that must be the case.

[Marrah_G]

15. Stop making me giggle

Every time I laugh, I cough.....and I have no voice left !

:hi:

[Marie26]

9. Last choice

Avoided economics classes like the plague, & for SOME kind of bailout. But one that actually helps homeowners keep their house, reins in credit derivatives, regulates how the money is spent, gives Paulson less discretion & acts as something more than a temporary Band-Aid.

[ProfessorGAC]

10. Well, I Understand Economics Well, And I'm Against This Action

I have several points on GD as to why. Would prefer not to rehash all of them here. But, you'll find them if you're interested.
The Professor

Edited for typo.

[AllieB]

14. I'll look for them.

Thanks.

[TahitiNut]

26. Long time no see, paisan ... welcome back!

:pals:

[ProfessorGAC]

28. Had Bronchitis

Hated it. Thanks, Nut.
GAC

[Ichingcarpenter]

17. Fairest poll so far without false analogies and being a push poll

Yes, we have problems and need to fix them,
but the solutions are not what Paulson suggests.

[AllieB]

18. Thanks, I try to be fair, but sometimes on DU that's difficult.

x(

We need something, but I don't want it to come from the assholes who got us into this mess in the first place!

[DemoRabbit]

19. x OTHER - I have a simple understanding and we need some kind of bailout

but we don't have 2 months to come up with the perfect plan.

[AllieB]

20. My poll didn't capture the urgency, I agree.

But I think that the Dems can come up with something that will help Main Street and ram it through Congress.

[Naturyl]

25. "College classes" are not required...

To have a "basic understanding" of economics.

I really resent academic elitism.

[AllieB]

27. Most people don't just pick up a book on macroeconomics for some light weekend reading.

You couldn't pay me to read that crap outside of a college class.

[tama]

29. When in a hole, stop digging.

When there is a problem, don't try to fix it, a fix will cause just new problems. Stop doing what caused the problem in the first place.

[AllieB]

30. That's a cryptic answer. Please explain.

Thanks.

[tama]

31. I cannot explain it better than this dude:

"24 "No one can serve two masters; for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and mammon. 25 "Therefore I tell you, do not be anxious about your life, what you shall eat or what you shall drink, nor about your body, what you shall put on. Is not life more than food, and the body more than clothing? 26 Look at the birds of the air: they neither sow nor reap nor gather into barns, and yet your heavenly Father feeds them. Are you not of more value than they? 27 And which of you by being anxious can add one cubit to his span of life? 28 And why are you anxious about clothing? Consider the lilies of the field, how they grow; they neither toil nor spin; 29 yet I tell you, even Solomon in all his glory was not arrayed like one of these. 30 But if God so clothes the grass of the field, which today is alive and tomorrow is thrown into the oven, will he not much more clothe you, O men of little faith? 31 Therefore do not be anxious, saying, `What shall we eat?' or `What shall we drink?' or `What shall we wear?' 32 For the Gentiles seek all these things; and your heavenly Father knows that you need them all. 33 But seek first his kingdom and his righteousness, and all these things shall be yours as well. 34 "Therefore do not be anxious about tomorrow, for tomorrow will be anxious for itself. Let the day's own trouble be sufficient for the day."


Or Masanobu Fukuoka who developed natural farming or what he called "do-nothing-farming":

""If we throw mother nature out the window, she comes back in the door with a pitchfork."

"When a decision is made to cope with the symptoms of a problem, it is generally assumed that the corrective measures will solve the problem itself. They seldom do. Engineers cannot seem to get this through their heads. These countermeasures are all based on too narrow a definition of what is wrong. Human measures and countermeasures proceed from limited scientific truth and judgment. A true solution can never come about in this way."

"Natural farming is not just for growing crops, it is for the cultivation and perfection of human beings."

http://en.wikipedia.org/wiki/Masanobu_Fukuoka

[AllieB]

33. how about a straight answer for us mere mortals?

I am not looking for some deep parable where I'm supposed to draw my own conclusion. I'm looking for your opinion. In plain terms. I'm a finance person and an atheist so this kind of new agey stuff is really lost on me.

[tama]

34. No promises

but I'll try my best:

To live sustainably - and not in debt to future generations - nature provides sustainable livelihood through what we call photosynthesis. We don't grow food, nature does. Attempts to control nature, putting ourselves outside and above nature instead seeing ourselves as organic parts of nature, is behavious analogous to the way cancer behaves inside human bodies, and are allways doomed in the long run.