Will the GOP Ever Learn From the Experiences of Other Countries?

If the Republicans in Congress had had their way, we would have seen extreme austerity measures and huge decreases in federal government spending.  In short, exactly what politicians in Europe pushed through.  And the results of such austerity in Europe?  As the chart above indicates, unemployment has soared in Europe while declining in America.  The same holds true for GNP growth as shown by the chart below where America is out preforming austerity stunted Europe.  But real world experience means nothing to GOP ideologues not to mention their totally untethered from reality Christofacsist base. 

A piece in The Economist looks at what Republicans should have learned from Europe, which largely made the same mistakes that were made in the 1930's in the midst of the Great Depression.  Here are highlights:

Five years later, only America has surpassed its pre-recession output. For now, it appears to be on a steady, if disappointing, growth trajectory. Japan had the worst recession of the bunch but rebounded quickly. It has since struggled amid seismic disasters and various China troubles. Britain and the euro area have until recently followed very similar trajectories, but British output turned up nicely in the third quarter while the euro area officially re-entered recession.

The really distressing thing is to try and project these lines forward a bit. Japan is in recession. Britain may be out of it, but on the other hand may not. The euro zone has not grown for over a year, is almost certainly contracting faster in the fourth quarter than it did in the third and may well continue shrinking into 2013.

And then there is America, trudging steadily upward to the beat of its own drummer. How long can the divergence between America and the rest persist? And on what terms will these lines cross again? One thing seems reasonably clear: America will not be able to rely on demand from the rest of this bunch to keep its line going up. Most of all, it will have to count on the durability of domestic demand.

And how does one prime the pump of domestic demand?  Through government spending which provides buying power to consumers who in turn purchase products that further prime the economic pump.  The Germans and British rejected this reality (and Germany forced the rejection on to other European Union nations).  Yes, the U.S. government deficit needs to be reined in.  But when and how it is done is critical.  A  heavy handed approach as has been the case in Europe kills economies as opposec to strengthen them.  Will the GOP learn from any of this?  Sadly, I'd say that chance is doubtful.

Quote of the Day: Refuting the GOP Claim that Obama's First Term Has Been a "Failure"

I - like most of us I suspect - love immediate gratification.  It's an aspect of human nature I suspect.  But sometimes our desires for immediate gratification simply cannot be met given all of the attendant circumstances.  A case in point is the nation's economy.  Having launched my law firm with the intent to focus heavily on real estate as it turns out right before the real estate market collapsed I know first had the financial cost the economic collapse shepherded in by Bush?Cheney and the GOP controlled Congress.  As a result, I had high hopes for Obama and recall sitting with a group of gays and straights in the Bourbon Street Pub in Key West on Inauguration  Day 2009.  Many people were in tears that day.  Have all of our hopes been realized?  Certainly not, but compared to where the nation was we have come a long way.  Yes, we might have gone even further toward full recovery, but we had a major obstacle: the GOP controlled House of Representatives which obstructed virtually everything Obama sought to do from Inauguration Day onward. But did Obama fail us?  Andrew Sullivan sums up the reality of what Obama has accomplished - in spite of the Republicans.  Here are the principal highlights:

I have no idea what standard people are using to declare Obama's first term a failure. To save us from a Great Depression, rescue the auto industry, re-regulate Wall Street, decimate al Qaeda, kill bin Laden and Qaddafi and provide universal healthcare? That's failure? 

Unemployment is lower now than it was when he took office, and moving downward. Next year's IMF-predicted US growth is higher than any other developed country. Compared with austerity-ridden Europe, where unemployment is still climbing, Obama's, Geithner's and Bernanke's leadership has been stellar. The US has never exported as much as now as a percentage of GDP ever. Given the catastrophe Obama walked into, and the froth-flecked obstructionism of his opposition, he's had a remarkably successful, historic first term. His long game also makes much of the progress promised durable only if he gets a second term.

He told us it would take two terms; he predicted obstruction and setbacks; yet he has persisted - and succeeded. But take his second term away? Back to ballooning, rather than shrinking deficits, millions left without access to private health insurance, a guaranteed war against Iran, climate change policy handed over to the oil and coal companies, and massive spending on defense we don't need. Not to mention torture.

And a highlight from Chait's case against Romney:

[T]he reality remains that a vote for Romney is a vote for his party — a party that, by almost universal acclimation, utterly failed when last entrusted with governing. Romney may be brainier, more competent, and more mentally nimble than George W. Bush. But his party has, unbelievably, grown far more extreme in the years since Bush departed.  .  .  .  .  The party has almost no capacity to respond to the conditions and problems that actually exist in the world.

And Andrew doesn't even factor the contrast so far between Obama's response to Hurricane Sandy compared to the failed GOP response after Hurricane Katrina.  Oh, and did I mention that Romney has surrounded him with countless former Bus/Cheney advisers? 

The GOP's Misplaced Priorities

Once again, Tom Toles hits pay dirt in describing the utter ass backwards priorities of today's Republican Party.

More Real Estate Distress Looms

While the residential real estate market continues to languish and there is little activity outside of lower priced first time buyer homes, a new disaster is in the offing: the collapse of the commercial real estate market. This next round of economic pain arises from a combination of overbuilding in some areas and the failure of banks to make loans even to credit worthy borrowers. As I have been arguing for over two years, unless and until real estate recovers, there will be no overall recovery of the economy. And a key to a recover is that the banks who have been bailed out, dolled out bonuses for themselves, and ceased lending start making loans again. Businesses cannot expand or take on new facilities when they are forced to operate solely out of cash flow and cannot secure financing for capital improvements - something I've had to do for years now. Otherwise, the downward spiral of values and foreclosures will continue. The Washington Post has a story that looks at this coming disaster. Here are some highlights:

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A mortgage crisis like the one that has devastated homeowners is enveloping the nation's office and retail buildings, and few places are likely to be hit as hard as Washington. The foreclosure wave is likely to swamp many smaller community banks across the country, and many well-known properties, including Washington's Mayflower Hotel and the Boulevard at the Capital Centre in Largo, are at risk, industry analysts say.
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The new round of financial pain, which some had anticipated but hoped to avoid, now seems all but certain. "There's been an enormous bubble in commercial real estate, and it has to come down," said Elizabeth Warren, chairman of the Congressional Oversight Panel, the watchdog created by Congress to monitor the financial bailout. "There will be significant bankruptcies among developers and significant failures among community banks."
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Unlike the largest banks, such as Citigroup and Wachovia, that got into so much trouble early on, the community banks in general fared better in the residential mortgage crisis. But their turn is coming: Not only did community banks issue a higher proportion of commercial loans, but they also have held on to them rather than sell them to other investors.

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Nearly 3,000 community banks -- 40 percent of the banking system -- have a high proportion of commercial real estate loans relative to their capital, said Warren, whose committee issued a report on commercial real estate last week. "Every dollar they lose in commercial real estate is a dollar they can't use for small businesses," she said.
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The threat is especially acute in the District, the firm said, where the catalogue of troubled commercial real estate properties has grown tenfold since April. Moreover, the region has $7.3 billion in commercial properties that are underwater -- worth less than the mortgages on them -- according to CoStar.
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Nationwide, at least $1.4 trillion in commercial real estate debt is expected to roll over during the next three years. Warren said that half of commercial real estate mortgages will be underwater by the beginning of 2011. A fifth of residential mortgages are underwater now, she said.
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Things do not bode well and meanwhile we have a Congress that cannot get anything done. The GOP obstructs everything and the Democrats lack the spine to act. It's not a cheerful picture.

Bush/Cheney Legacy: A Lost Decade for Workers

As various reviews of the first decade of the 21st century come in, one analysis speaks volumes about the failure of the Bush/Cheney regime. Not only does the country remain involved in what I believe to be ultimately wars that cannot be won, but domestically, most Americans - other than the wealthy and insurance companies and drug manufacturers - are worse off than when the decade began. Yet some continue to fall for the Republican Party's toxic approach to economics which have proven to be disastrous. Equally disturbing, President Obama continues to yield to those who have ravaged the country's economy through de-regulation, granting tax breaks to the rich, piling up huge deficits, and refusing to invest in America's most crucial assets: its citizens and its infrastructure base. Despite this abysmal record, Emperor Palpatine Cheney has the nerve to run his mouth about the misdirection of the Obama administration which has the task of attempting to fix the wide ranging damage inflicted by the Chimperator and himself. The Washington Post has an article that looks at the failed economy brought to the nation by this toxic pair of politicians. Here are some highlights:

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For most of the past 70 years, the U.S. economy has grown at a steady clip, generating perpetually higher incomes and wealth for American households. But since 2000, the story is starkly different. The past decade was the worst for the U.S. economy in modern times, a sharp reversal from a long period of prosperity that is leading economists and policymakers to fundamentally rethink the underpinnings of the nation's growth. It was, according to a wide range of data, a lost decade for American workers.

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There has been zero net job creation since December 1999. No previous decade going back to the 1940s had job growth of less than 20 percent. Economic output rose at its slowest rate of any decade since the 1930s as well. Middle-income households made less in 2008, when adjusted for inflation, than they did in 1999 -- and the number is sure to have declined further during a difficult 2009.
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And the net worth of American households -- the value of their houses, retirement funds and other assets minus debts -- has also declined when adjusted for inflation, compared with sharp gains in every previous decade since data were initially collected in the 1950s. "This was the first business cycle where a working-age household ended up worse at the end of it than the beginning, and this in spite of substantial growth in productivity, which should have been able to improve everyone's well-being," said Lawrence Mishel, president of the Economic Policy Institute, .
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[B]eyond these dramatic ups and downs lies an even more sobering reality: long-term economic stagnation. The trillions of dollars that poured into housing investment and consumer spending in the first part of the decade distorted economic activity. Capital was funneled to build mini-mansions in Sun Belt suburbs, many of which now sit empty, rather than toward industrial machines or other business investment that might generate economic output and jobs for years to come.
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The impact of the real estate crash has been broad. Among middle-income families, 69 percent owned a home in 2007, more than four times the proportion owning stocks. And as the housing meltdown cascaded through credit markets, the banking system was buffeted, rocking the whole financial system on which the world's economy rests.
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The financial crisis is, for all practical purposes, over, and forecasters are now generally expecting the job market to turn around early in 2010 and begin creating jobs. The task ahead for the next generation of economists is to figure out how, in a decade that began with such economic promise, things went so wrong.

GM Close to Bankruptcy Filing

While General Motors and the other big three automakers have made plenty of insanely stupid decisions over the years and in some ways deserve to fail as a result, the impact on the larger economy will be severe if GM goes under. But what will be a bad recession for the larger economy will be a down right depression for many areas that rely on auto plants for their livelihood. The Washington Post has a story on one such area of Ohio and what could happen is terrifying to the local populace. Never in my life time do I remember economic matters so dire, and I was born when Truman was still president. GOP senators either do not get the picture or, more likely, do not care - after all, many of these folks are evil union members. Here are some highlights:

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LORDSTOWN, Ohio -- Elsewhere in the country, the question of whether the government should bail out U.S. automakers unfolds as a debate over political principles of free-market ideas and corporate responsibility. But here in the Mahoning Valley, people wonder: If General Motors goes down how will we get by?

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The GM plant in Lordstown is one of the few pillars propping up the sagging Rust Belt economy in the small towns and cities in this area of northeastern Ohio. In Lordstown, the plant accounts for more than 70 percent of the tax base. It employs 4,250, paying people some of the best wages around, and sustains an additional 10,000 or so jobs in the companies that supply the GM plant. And as in other places where an auto plant is an economic engine, it's not just auto workers who are worried, but restaurateurs, bar owners, grocers and nearly every merchant in town.

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"Not having GM here would be catastrophic," said Herb Washington, a former star base-stealer in Major League Baseball, who owns 21 McDonalds in the area. "You take that out of here, and what do we have to survive?" . . . We talk about leaving," said Bruce Thomas, 40, who puts in windshields at the Lordstown plant, "but everything I ever had came from GM." His wife works at the plant. So did his dad and her dad. So did two of her brothers. Her oldest brother worked at a supplier.

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The other issue: Who would buy the homes of retreating employees if the plant goes down? "My wife talks about picking up and moving," said Russ Pinkard, 41, a team leader in the trim department. "But no one can sell a house as it is. It will only get worse if the plant closes -- a lot worse."

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This week, Forbes magazine ranked Austintown, the Youngstown suburb that is home to the largest share of GM employees, as the fifth-fastest-dying town in America. In neighboring Warren, home to the second-largest contingent of plant employees, Mayor Michael J. O'Brien said 4,000 of 21,000 houses in the city are vacant.

81% in Poll Say USA Is Headed on Wrong Track

It is a least conforting to see that by a huge percentage Americans are finally realizing that the policies of the Chimperator and his GOP enablers have done serious, serious harm to the nation. Moreover, they seem to understand that a change in direction is desperately needed. How this will translate in the upcoming November elections will be interesting. Unfortunately, I will not hold my breath waiting for the out come since I do not have an overriding confidence in the American public being able to see the real picture. The fact that the Chimperator was re-elected in 2004 is a case in point. Here are highlights from the New York Times (http://www.nytimes.com/2008/04/04/us/04poll.html?_r=1&hp&oref=slogin):

Americans are more dissatisfied with the country’s direction than at any time since the New York Times/CBS News poll began asking about the subject in the early 1990s, according to the latest poll. In the poll, 81 percent of respondents said they believed “things have pretty seriously gotten off on the wrong track,” up from 69 percent a year ago and 35 percent in early 2002.

A majority of nearly every demographic and political group — Democrats and Republicans, men and women, residents of cities and rural areas, college graduates and those who finished only high school — say the United States is headed in the wrong direction. Seventy-eight percent of respondents said the country was worse off than five years ago; just 4 percent said it was better off.

Only 21 percent of respondents said the overall economy was in good condition, the lowest such number since late 1992, when the recession that began in the summer of 1990 had already been over for more than a year. In the latest poll, two in three people said they believed the economy was in recession today. The unhappiness presents clear risks for Republicans in this year’s elections, given the continued unpopularity of President Bush. Twenty-eight percent of respondents said they approved of the job he was doing, a number that has barely changed since last summer.

In assessing possible responses to the mortgage crisis, Americans displayed a populist streak, favoring help for individuals but not for financial institutions. A clear majority said they did not want the government to lend a hand to banks, even if the measures would help limit the depth of a recession. Fifty-eight percent of respondents said they would support raising taxes on households making more than $250,000 to pay for tax cuts or government programs for people making less than that amount. Only 38 percent called it a bad idea.