"Bold" action by the politicians and the central banks created much of the current mess.
The problem is a lack of boldness. Bold regulation on banks and insurance companies is necessary. If we're going to do bailouts, we had better make sure the same misbehaviors can't happen again.
In the U.S., we're fucking up my trying to fix failing institutions in-place. No management changes. No meaningful regulations. Often the laws are written by the industry they're intended to police (cf. health insurance). That's a horrible strategy. We need to become outright liberal again and double down on boldness, not play around with this compromising corporate-friendly chickenshit nonsense.
If we'd just cleared the pipes by letting the banks fail, recapitalizing new banks, and basically rebooting the financial system, we'd be much further along.
This sounds like a quote by Herbert Hoover. Contrary to history's view of him (which is intensely negative) he was a very intelligent and probably a good-hearted man. He, however, believed that there was absolutely nothing government could do to save the economy, and that letting the beginnings of the Great Depression go unchecked was the least evil action. He was wrong.
Instead, we got bailouts and crony capitalism and ad hoc intervention, and today the global system is in many ways in worse shape now than in 2008.
That is true. The bailouts were a necessary evil, but the way they were handled was ridiculous. Top management at the bailed-out banks should have been fired, and real regulation should have been put in place to prevent the behaviors that made the bailouts necessary.
What ultimately is destroying the U.S. is not the conduct around our banking system. That's bad, I'll give you that. It's the two astronomically expensive wars we are fighting that are unlikely to end any time soon.
> Bold regulation on banks and insurance companies is necessary.
What about bold regulation on the regulators and the politicians? You remember them - they thought that subprime mortgages were a good idea, that everyone should own a house, so any bank that wouldn't play ball didn't get to play.
You remember Fannie and Freddie - they lied about the fraction of the market that was subprime, so everyone's risk calculations were wrong.
> Often the laws are written by the industry they're intended to police (cf. health insurance).
Actually, they're always written by the relevant industry.
> That's a horrible strategy.
However, like gravity, it's how things are. Any plan that assumes otherwise is doomed.
> This sounds like a quote by Herbert Hoover. Contrary to history's view of him (which is intensely negative) he was a very intelligent and probably a good-hearted man. He, however, believed that there was absolutely nothing government could do to save the economy, and that letting the beginnings of the Great Depression go unchecked was the least evil action. He was wrong.
And, you're completely wrong. Hoover tried stimulus after stimulus; he dramatically increased spending. FDR actually campaigned against the spending and changed course upon taking office.
Both Hoover and FDR believed that the great depression was caused by excess production, so they both tried to restrict it. FDR didn't give up until it became apparent that an "arsenal of democracy" had to actually produce lots of stuff.
This "war on production" is now credited with putting the "Great" in "Great Depression", that is, with making it last as long as it did.
You're right that Hoover ran a deficit. There's a common misconception that he was all for austerity when he in fact increased spending with a variety of stimulus programs.
However, his stimulus programs were tiny compared to the size of the hole. FDR's programs got progressively bigger over time, until he blinked in 1937, but were still quite small compared to what was required. When WWII came along is when things got serious.
That's the basic Keynesian view as I understand it. I find it credible, but the fact is that I don't actually know that much about economics. One thing that I am quite sure of, however, is that nearly no one else talking does either. Or if they do then they usually have got several axes to grind and are selective in their data, disingenuous in their arguments, or too emotional to be trusted.
Wow, I'm getting pretty cynical about the whole thing.
If we're going to do bailouts, we had better make sure the same misbehaviors can't happen again.
We've been bailing out too-big-to(should)-fail, crony corporations ever since Chrysler in 1979. And they die slow deaths regardless of how many taxpayer dollars line their executives' "golden parachutes". Let the strongest survive and the weakest find new careers. That's how you get "management changes".
[Hoover] believed that there was absolutely nothing government could do to save the economy, and that letting the beginnings of the Great Depression go unchecked was the least evil action. He was wrong.
The current approach by Ben Bernanke of printing money is a reaction to the Great Depression, in which the money supply contracted. There seems to be little attention paid to the Hoover phase before it, in which many institutions failed. This purged many of the weak institution, and probably more than a few not-so-weak ones.
Purging weak institutions before making cheap money available to the banks would have been a helluva lot more sensible than the Great Giveaway that occurred.
Herbert Hoover is a bit more complicated than even your more nuanced take on him. He did come to a somewhat activist government in the second half of his term. Of course, his real but somewhat muted response to the Great Depression led FDR to attack him. But from the Right, using populist rhetoric about government debt and wasteful bureaucrats.
Hoover wasn't evil as you point out, but nor was he an ideologue who refused to choose the best policy because of prior beliefs. Believing that story line makes us blind to learning from his failings to better ourselves. To wit, his great vice wasn't lack of compassion or intellectual arrogance; it was simply a... lack of boldness.
Barely. People like to quote a statistic about how federal spending as a % of GDP went up in the second half of his term, but the GDP was shrinking then.
The problem is a lack of boldness. Bold regulation on banks and insurance companies is necessary. If we're going to do bailouts, we had better make sure the same misbehaviors can't happen again.
In the U.S., we're fucking up my trying to fix failing institutions in-place. No management changes. No meaningful regulations. Often the laws are written by the industry they're intended to police (cf. health insurance). That's a horrible strategy. We need to become outright liberal again and double down on boldness, not play around with this compromising corporate-friendly chickenshit nonsense.
If we'd just cleared the pipes by letting the banks fail, recapitalizing new banks, and basically rebooting the financial system, we'd be much further along.
This sounds like a quote by Herbert Hoover. Contrary to history's view of him (which is intensely negative) he was a very intelligent and probably a good-hearted man. He, however, believed that there was absolutely nothing government could do to save the economy, and that letting the beginnings of the Great Depression go unchecked was the least evil action. He was wrong.
Instead, we got bailouts and crony capitalism and ad hoc intervention, and today the global system is in many ways in worse shape now than in 2008.
That is true. The bailouts were a necessary evil, but the way they were handled was ridiculous. Top management at the bailed-out banks should have been fired, and real regulation should have been put in place to prevent the behaviors that made the bailouts necessary.
What ultimately is destroying the U.S. is not the conduct around our banking system. That's bad, I'll give you that. It's the two astronomically expensive wars we are fighting that are unlikely to end any time soon.