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How the Leaders following the Great Recession of 2008 Gave Us the World We Live in Today

Discussion in 'Current Events' started by Sunstone, May 16, 2020.

  1. Sunstone

    Sunstone De Diablo Del Fora
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    PLEASE NOTE: This is a discussion thread, not a debate thread. State your views. Provide your reasons for them. Ask respectful questions of other posters. Discuss your views with them. Even compare and contrast your views with other positions purely for the sake of clarification. BUT DO NOT ATTEMPT TO PROVE OTHER POSITIONS FALSE OR WRONG! Moreover, please report to the Mods any posts that engage in debate, or attempt to.​


    Twelve years ago, the Great Recession of 2008 -- and especially the political response to it -- went far towards destining us to live in the world we have today. The fact that today ordinary people in most nations around the world are experiencing declining prospects for their future (fewer well-paying jobs, lower standards of living, stagnant wages, etc.), can by and large be traced straight back to how the leaders in power during the Great Recession and immediately afterwards handled the Recession.

    The facts that Donald Trump rose to power in the United States, that Europe's leftist parties are almost everywhere suffering defeats, and that neofascism is on the rise worldwide -- from India to Brazil and from Brazil to Hungary -- are largely attributable to how such people as Barack Obama dealt with the Great Recession twenty years ago. Mr. Obama was and is a remarkably good man, but he put his faith and confidence in the wrong economic policies -- as did leader after leader around the world.

    Here is a relatively short excerpt from a New York Review of Books article that is very much relevant today:

    [Source]

    Comments?



     
    #1 Sunstone, May 16, 2020
    Last edited: May 16, 2020
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  2. PureX

    PureX Veteran Member

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    Unfortunately, there is no way of making these facts known to the American people, or to the people of Europe. The facts are there, and available, but they are floating in a sea of lies and misinformation sponsored by the wealthy elites that now own and control a vast array of media production. Such that people can now simply pick and choose what they want to believe from among the many depictions of reality being offered to them. And it's in this rising tide of lies and misinformation that the nationalistic seeds of blame, animosity, and violence find their purchase, and sustenance.
     
    #2 PureX, May 16, 2020
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  3. Secret Chief

    Secret Chief Meghalayan Ape

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    Naively I believe there is a genuine left wing alternative available now in the UK, but we may yet have to suffer 4+ years of neoliberal policies from the incumbant tories. We also have the coming nightmare of brexit. All but the rich will be affected but how many will be willingly led by the nose to the scapegoats?

    In the meantime we can all enjoy an excellent film explaining the 2008 crash >

     
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  4. icehorse

    icehorse Well-Known Member
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    Oligarchs and Plutocrats have been undermining our economy - off and on - for decades. FDR was able to undo much of their corruption, and through the Eisenhower administration the middle class was truly flourishing, unions were strong, our infrastructure was sound and expanding and so on. But the Os and Ps were chipping away at this progress and I'd say that they got their biggest boost from Reagan. Wealth and income inequality since Reagan has grown substantially. I would say that Obama inherited a mess, and had few options when helping the country recover from 2008. (Which BTW seems more like 12 years ago, not 20 years ago as the OP suggests?)

    But really, I think "we the people" need to rise above partisanship here. My opinion is that virtually all of our leaders in DC have been severely corrupted by the Os and Ps. Our real fight (we the people), shouldn't be Dems against the GOP, it should be against ALL of our so-called "leaders" who are selling us out to the Os and Ps.
     
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  5. Sunstone

    Sunstone De Diablo Del Fora
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    The first time I watched The Big Short was with one of my brothers on Christmas eve the year it came out. He happened to know a couple of the people depicted in the movie, and it was fun and informative afterwards to hear his take on it. Excellent movie! I'd recommend it to anyone.
     
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  6. Revoltingest

    Revoltingest High Intellajence Kwoshunt.
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    It was a fun movie, but it explored only a tiny aspect of the recession's origins.
    Many other factors created a perfect storm of instability.
    === Warning! This will be long, tedious, & contentious. ===
    === So it'll be divided into 2 posts. ===

    The trigger:
    9/11 wasn't the underlying cause, but it set things in motion for economaic collapse.
    I saw something different.

    First, a fluid mechanics analogy....
    Consider a pipe system with fast flow, small diameters, & smooth innards.
    It has low resistance & laminar flow. Tap one of the pipes with a hammer,
    Now there's turbulence, high resistance, & ruined system performance.
    It'll remain that way til the system is re-started.

    What's the problem? The tap or the system design?
    Design, of course.
    It should've been designed to perform well even with an infinite number of
    monkeys typing tapping away with hammers. A system is "hardened" if it's
    designed to endure all the vicissitudes possibly inflicted upon it.

    Our country wasn't hardened against the watershed event of a major domestic attack.
    Some shortcomings....
    - We were emotionally unprepared for the firey losses.
    This led to ill considered reactions & over-reactions.
    - We were financially unprepared for any economic hiccup,
    eg, too many had borrowed to the hilt, & had no rainy day reserves.
    - We hadn't paid much attention to domestic security, despite warnings,
    eg, airlines had inadequate security to prevent takeover of planes.

    Our unpreparedness, ie, the lack of system hardening, was a problem
    spanning many administrations & decades. I blame no person or party.
     
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  7. Sunstone

    Sunstone De Diablo Del Fora
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    Thanks for the correction.
     
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  8. Valjean

    Valjean Veteran Member
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    Nothing surprising here. Organized money and power in the US has been has been clawing its way back to dominance ever since FDR. After the neoliberal Reagan Revolution of the '80s there was little further democratic impediment to big business taking the reins of power from the people.

    Power to the Plutocrats!
     
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  9. Secret Chief

    Secret Chief Meghalayan Ape

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    Who did he know?
     
  10. Sunstone

    Sunstone De Diablo Del Fora
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    Nothing really revelatory or scandalous. Mostly he just confirmed the overall accuracy of the film and pointed out some things it was leaving out. Too long ago for me to recall many details.
     
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  11. atanu

    atanu Member
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    I think this article may be relevant to the discussion.

    Chomsky: Ventilator Shortage Exposes the Cruelty of Neoliberal Capitalism
     
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  12. Revoltingest

    Revoltingest High Intellajence Kwoshunt.
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    Part 2 of my tirade

    Back in 2001, long before the recession officially started.....
    Immediately after 9/11, I watched my commercial tenants & many other businesses
    began contracting. Those depending upon venture capital lost that source, & closed.
    I saw vacancy rates increase, business incomes drop, employees lose jobs or see
    reductions in pay & hours. The recession wasn't upon us, but these were leading
    indicators.

    As income fell for those with debt, we got in trouble with both business & home loans.
    Government policy exacerbated this turn of events.
    Over many decades, it created the real estate bubble by incentivizing treating home
    ownership as a hedge against inflation, a tax reduction mechanism, & a nest egg.
    It made sense to borrow as much as possible to buy the spendiest home possible.
    That yielded the greatest financial return....if all went as planned.
    How?
    - Regulatory requirements to make highly leveraged loans,
    eg, Community Reinvestment Act.
    - Federal bank auditor requirements to make such loans.
    - Banning red lining.
    - Heavy tax subsidies for home ownership.
    - Government run lenders (Fannie Mae, Freddie Mac) enabling
    zero equity home ownership.
    - Institutionalized inflation (currency devaluation due to expanding
    the money supply faster than the economy), which made homes a
    speculative hedge against inflation.

    When homeowners began to fail,lenders like Countrywide (the canary
    in the coal mine) became insolvent. Unlike the scenario in the movie,
    these problems were also because of regulation, not just inadequate
    regulation.
    Moreover, when homes became underwater (debt > value), the fed
    (Fannie Mae & Freddie Mac, the largest residential lenders in the world)
    refused to allow them to renegotiate their loans, instead sending many
    into foreclosure.
    Government reacted by bailing out most of the lenders instead of the
    borrowers. I'd have preferred helping the latter, which would still
    benefit the former. It would help more people more effectively.

    Commercial loans suffer federal meddling too....
    The fed required commercial lenders to foreclose on loans which were
    troubled, instead of working with borrowers, eg, Citizens Bank, RBS.
    This made loans with some possibility of default become 100%
    probability of default. All to what end? I haven't figured that out.


    I'm not trying to make anyone be wrong.
    This is just my perspective.
    I was (am still) both a lender & a borrower.
    I invest in & manage real estate & development.
    I knew bankers, & dealt with many banks, eg, Citizens, RBS, TCF,
    United Bank & Trust, Chase.
    Btw, the worst lender I ever encountered was RBS (Royal Bank Of
    Scotland), which is owned (over 80%) by the British government.
    Nasty people they are.
     
    #12 Revoltingest, May 16, 2020
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  13. BSM1

    BSM1 What? Me worry?

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    Sorry for the cattiness...symptom of excessive quarantine, you know....
     
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  14. Revoltingest

    Revoltingest High Intellajence Kwoshunt.
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    You damn hippies....so sanctimonious.

    I'm back in the saddle again with short posts that people actually read.
     
    #14 Revoltingest, May 16, 2020
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  15. PureX

    PureX Veteran Member

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    The capitalists love to blame it all on the government, because that way they can hide from their own responsibility. But the fact is that for many decades, now, our government has been totally controlled by the wealthy capitalists that pay for their political campaigns, for their political perks, for their family member's do-nothing, high paying jobs, and their big-dollar speaking tours once they retire from "public service". All forms of legalized bribery that ensure that they act on behalf of those paying them the bribes, instead of on behalf of the people they are supposed to be representing.

    So all this whining and complaining about how the government regulates the wrong things, or regulates too much, or regulates too little, is just blowing smoke up our butts. Because the goverment regulates whatever those bribe-payers tell them to regulate. And they deregulate whatever those bribe-payers tell them to de-regulate. The crash in '08 was caused by the systematic bribery of our legislators by big investment conglomerates to remove the laws placed in effect after the crash of '29 and the subsequent great depression. Namely, the big banks bribed the legislature to eliminate the Glass-Stegall Act that was put in place to stop banks from becoming investment speculators with other people's money. And once they got that impediment removed, they went wild creating and packaging "loan products" in every confusing and dishonest way possible to exploit and gouge anyone and everyone for huge profits, including other banks and their own clients. They basically generated an elaborate pyramid scheme of bundled loans that created an illusion of value that they didn't actually have. An illusion that could be cashed in on so long as more 'suckers' could be found to buy them, looking to then cash in for themselves.

    So we can blame the government all we want to, and surely it is partly to blame. But the real culprits are criminal-minded capitalist investors who successfully bribed our government representatives to let them cheat the system, and thereby steal as much money from it (and from all of us, ultimately) as they could get away with. And even when it all blew up, our bribed up politicians bailed them out, and prosecuted NONE OF THEM for what they'd done. And yet WE KEEP ELECTING AND RE-ELECTING THESE CORRUPT POLITICIANS because we are ignorant, stupid, selfish, greedy, bigots that would rather blame each other, and elect known criminals, than admit to and take responsibility for our own complicity in the disastrous mess all this bribery and corruption has caused.
     
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  16. sun rise

    sun rise "Let there be peace and love among all"
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    The short term people have been discussing in this thread is real and relevant. And part of the OP.

    I'm going to take a different view and try to fit the OP timeframe into a longer term perspective.

    Personally I've been thinking longer term a bit as in centuries not decades. The current system of capitalism has been flourishing more or less for centuries with periods of prosperity and periods of panic/recession/depression.

    The major recent competitor was I would call state ownership of the means of production. We learned through that experiment that command and control economies don't work. They're too rigid and inflexible.

    We've seen that capitalism works when something new is developed and we have a lot of competitors enter a field all producing something better. Personal computers and cellphones are classic examples.

    But over time, the market matures, consolidation happens and the industries grow sclerotic and oligarchs and plutocrats emerge to dominate and control. The big companies become bureaucratic and increasingly rigid.

    I personally experienced this rigidity where a production change required a long form to be filled out and nitpicked by form checkers in India. Then when the form as correct, it was reviewed by senior middle management who had no idea about the implications of the change nor the risk. So we had to do a song & dance to simplify the request to meaningless bullet points on one page for them.

    Looping back to the OP, I see how the OP thesis is part of this picture. The policies that have been put in place don't really change the long term trend but merely prop it up. The analogy I'd use is a drug addict getting another dose of drug to keep withdrawal symptoms away.
     
  17. icehorse

    icehorse Well-Known Member
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    I think a common mistake is to try to find economic systems that don't require monitoring and tweaking. Economic systems are like all other complex, man-made machines... they need monitoring and tweaking :)

    So I think it's fair to say things like "left unchecked, system X heads in direction Y", but that shouldn't really be considered an argument against system X, because once again, we should be monitoring and tweaking WHATEVER economic system we implement.
     
  18. Revoltingest

    Revoltingest High Intellajence Kwoshunt.
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    The big difference in economic philosophies appears to be the extent
    to which the players tweaking it vs central command doing it. The
    best mix....finding that is where the fighting happens.
     
  19. icehorse

    icehorse Well-Known Member
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    It seems pretty clear to me that the players cannot do a good job of it. But that still leaves a LOT of variation in how invasive "central command" can be / needs to be. I don't think "central command" was all that invasive in the 50s.
     
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