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The economy in Iowa was awful in the 80's, but most other areas in the US were recovering as the 80's progressed. What Reagan did by cutting taxes, running up the deficit for military spending, and cutting social programs.......sounds like insanity, but it worked very well. I don't think it was wise of him to remove the solar panels from the white house, or to trade arms for hostages, or give amnesty to illegal aliens, but when you look at modern history, it's hard to get a good second term out of a president. IMO, you have to go all the way back to Eisenhower for a good second term.
Nixon, Ford and Carter did manage to do a few things right. Nixon started the 55 MPH speed limit to cut energy consumption, it was hated but effective in cutting energy consumption, and it saved lives. Ford managed to get all the oil producing nations to agree that oil would be sold in US dollars, helping the strength of the dollar in years to come, and Carter did the most of any president before Obama, to try and push us twards alternative energy, putting solar panels on the white house, launching a TV ad campaign to encourage people to save energy. Remember Fifty Five's a friend, and save a gallon of gas a week commercials. At least with Carter you had the feeling the white house was not owned, but it didn't put bread on your table.
With the current recession, I'm not so sure stimulus deficit spending and tax cuts are going to do the trick anymore. The federal deficit and healthcare costs are the major obstacles for economic recovery and future growth, different problems than what we had to deal with in the 70's - 80's recession. The first thing congress should have done under Obama was fix the banking system and put wall street under the pre Bush/Clinton regulation with no more derivatives trading. Those job creators almost took down JP Morgan last month, that should have never happened, and been fixed by now. We need a different tax system for the high income crowd that can discern between a job creator and the take the money and run types (AIG bonus boys, derivative dan, freddy the house flipper ect) that create economic mischief, the former with a 25% bracket, the latter with a 70% rate. I don't think your tax bill should always be settled at the end of each year, but perhaps within a few years down the road to see if you're really a job creator or just a looter of the economy.
As for Obamacare, I hope it continues to inflate the costs of our wonderful private healthcare system, just as the system has always managed to inflate every year since the 1980's, at double or triple the rate of normal inflation for everything else on any given year. The sooner everyone is paying half their income for health insurance, the sooner we can get the political will to split the system and have expensive private care for the rich, and affordable european style care for everyone else. The government has to regulate healthcare to control costs, sometimes a break with pure capitalism is necessary, not to destroy the profit motive in healtcare, but to limit the profit margin on things that are now considered dated technology and proceedures. The new groundbreaking medical advances and research still needs a high profit motive to get off the ground. Let those that can afford it, pay for it via a private system that medicare is not involved in. Shift medicare into a UHC system that everyone pays into and gets value for what they pay for, not ripped off by insurance companies, hospital administrators, people that mark up products and services 1000% because they can get away with it in our monopoly healthcare system.
Oh, and that governor of Wisconsin has the right idea about public union workers, but in the future, to avoid another mess like they have in California, why not write into their contracts that if the state budget takes a 10% hit, so does their paycheck. Then they dont have to be fired, public services and education will not suffer because of it. If they don't like it they can look for another job, but they won't, because they know they won't fine one.
Thanks. I think one of the heartening things that many people don't realize is that American corporations have done two very smart things over the past four years. First, as a general rule, they wiped out corporate debt, leaving them with very strong balance sheets and high capital reserves. Second, they have achieved very strong productivity increases (Well, until recently. You can only flog an overworked labor pool so hard), the result of which is the glimmer of a manufacturing renaissance--at least in states where industrial policy is favorable. To me, this signals the foundation of a strong recovery when the conditions are finally favorable.
And what are those conditions? Without getting all political on your butts, when there is a less Keynesian approach to government in control. I consult for a lot of businesses, and all of them are hoarding cash and afraid to spend it chiefly because they have no idea what the future taxation levels will be like. They have no good idea what impact national health care will have. And they feel the current administration's increase in regulations is mercurial at best. So rather than hire more workers, they just keep putting money back for a rainy day. So when they finally feel secure enough that the rug won't be pulled out beneath them, that there is a stable economic picture, they'll spend the money and the unemployment rate will begin to drop.
That is, in select portions of the country. I am fascinated how the economic landscape is changing before our eyes in many parts of the country. The heartland continues to grow, portions of the Southeast continue to accrue larger and larger shares of total manufacturing, and places such as California are committing economic suicide. California alone has suffered a net loss 4,000,000 professionals since 1990, because high real estate costs, punitive taxes, and draconian regulations are making it far more difficult to start businesses. A wise interpreter of economic events should be prepared to move where the jobs will be in the near and far future. Yeah, there's a paucity of sushi bars and coffee shops in places such as Nebraska or Alabama or even Texas, but places like that are where the jobs are going to be over the next 20-30 years. That's not a guess, my friends, but a historical trend, one that people will be writing about on this forum or its successor fifty years from now.
cpg-
Your second paragraph is nothing but a bunch of pro-big-business conservative propaganda. The reason why businesses are hoarding cash is because consumer demand has declined and nobody is buying their products. Their sales are down since 2008 and to compensate they are laying off workers to boost their balance sheets. These large companies are paying historically low taxes, so there is no incentive for them to invest money back into their business by hiring workers or building new facilities. The incentive is to hoard cash for a rainy day in a Cayman Islands bank account to avoid taxes so that the CEO can take large annual bonuses and so that the stock holders can get large dividend payouts. Demand for their products and services remains in decline due to the average American worker having less and less disposable income to spend. Companies have no control over consumer demand, so it is really just a numbers game within these companies to make themselves look good by working the numbers on their individual balance sheets.
For small businesses, their problems are different because they are being over taxed and their profit margins are declining. Their prices are being undercut by large corporations who are beating them in a race to the bottom. Everyone wants cheap prices at Walmart, but they don't understand the destruction that's being done to the retail sector and to small businesses when they shop there.
From a broader perspective, the pro-big-business world wants you to believe that companies are afraid to invest or hire because of uncertainty. This is a total myth because there is always uncertainty in the markets. Are you telling me that during George Bush's term companies were going full steam ahead? I don't think so. There was plenty of uncertainty during the early 1900's, but Henry Ford chose to invest in his company by hiring workers, paying them good salaries, and building plants. I'm just not buying your theory that uncertainty is to blame. It seems to be more of an anti-Obama message than anything else. There is no way these companies can predict the future 5-10 years down the road, so saying they aren't investing or hiring because of uncertainty is silly. Their problems are mainly due to the lack of demand due to declining spending ability of Americans.
[quote=mofford;25186541]Nixon, Ford and Carter did manage to do a few things right. Nixon started the 55 MPH speed limit to cut energy consumption, it was hated but effective in cutting energy consumption, and it saved lives. quote]
No it did not. Energy consumption continued to increase.
The traffic fatality rate in the US decreased when the 55 limit was abolished in the mid-1990s and has continued to decline. So much for the "speed kills" nonsense.
Forget the recession of the 80's, I can't even remember when this thread first started (2008).
But anyways to address the thread - out economy goes through recessions about every 8 or 9 years. It's part of the economic cycle. They last about 14 months and then the economy recovers. The one from 2008 is nothing new in that trend, and I don't think it was any worse then the previous ones. Spans of short term double digit employment are nothing new.
BUT...this tread was started when we were really in a recession. Now it's 2012. This, 4 years later, is not that recession boys and girls. Technically, the recession is over, it ended in 2009. The bad debts flushed out and the capital and cash shortages have ended. The economy recovered all it will recover. But here we are still with very poor growth in the economy and bad unemployment. It's time to face an ugly truth - This isn't part of the recesionarry trend, this is the new America. Regardless of what the politicians say, what we have today is not from the recession from 2008. The difference between the 1980's and now? Well one is that we don't have a Reagan in office, a true leader to lead this country.
BUT...this tread was started when we were really in a recession. Now it's 2012. This, 4 years later, is not that recession boys and girls. Technically, the recession is over, it ended in 2009. The bad debts flushed out and the capital and cash shortages have ended. The economy recovered all it will recover. But here we are still with very poor growth in the economy and bad unemployment. It's time to face an ugly truth - This isn't part of the recesionarry trend, this is the new America. Regardless of what the politicians say, what we have today is not from the recession from 2008. The difference between the 1980's and now? Well one is that we don't have a Reagan in office.
No you are incorrect, it was not Reagan that made the difference, back in the early 80's we still had a manufacturing base so when demand started to increase people went back to work. Today when our demand started to increase people went to work in China, South Korea, etc. Because there were very few domestic jobs created since 2008 the demand has stalled as the average consumer just does not have the ability to generate cash as they did in the 80's.
[quote=Refugee56;5501154]The news people are saying that the economy is currently worse than at any time since the great depression of the 1930s. This is hard to believe.
I graduated from college in 1981, which was the start of the Reagan Recession. Unemployment in my hometown was three times what it is today. Some cities were basically closed down due to unemployment rates that were close to 25%. A single job was advertised and hundreds would apply. Social services were overwhelmed. Over a thousand banks closed.
Historians: How does the current economy compare in your opinion to the recession of the early 1980s?[/quote
To be consistent it would NOT be the Reagan Recession but the Carter Recession. Compare it to the Bush Recession versus the Obama Recession. The big difference the Bush Recession will last as long as Obama is in office and Reagan ended his recession within two years. It is all semantics.
GL2
No you are incorrect, it was not Reagan that made the difference, back in the early 80's we still had a manufacturing base so when demand started to increase people went back to work. Today when our demand started to increase people went to work in China, South Korea, etc. Because there were very few domestic jobs created since 2008 the demand has stalled as the average consumer just does not have the ability to generate cash as they did in the 80's.
What you are refering to is globalization. Sure that impacts the economy. So does the impact of Europe and it's dismal economic problems right now. But I am not incorrect in my conclusions - Reagan had his own issues - Iran, the cold war, runaway inflation inherited from the previous administration. He handled them, he was a leader, he didn't blame outside factors or the previous administration on these problems. Instead, he addressed the problems. Without getting too political - we do not have a leader in the white house right now.
The issue is also not cash - During 2008-09 cash was king and credit was limited. Companies were hoarding cash. That is not an issue anymore. Interest rates are low, banks are willing to loan. But companies are still not spending (i.e. - hiring, buying inventory, investing in plants and equipment). That is not all consumer demand driven. Sooner or later you want to replace equipment, become more efficient, expand into other markets. Companies are not doing that, they are still uncertain, and business uncertaintly will destroy an economy. Again - it all amounts to lack of leadership in the white house.
I think it was worse than now, especially with the high loan rates, but after Reagan came into office people started to feel
good about themselves and the country.
What you are refering to is globalization. Sure that impacts the economy. So does the impact of Europe and it's dismal economic problems right now. But I am not incorrect in my conclusions - Reagan had his own issues - Iran, the cold war, runaway inflation inherited from the previous administration. He handled them, he was a leader, he didn't blame outside factors or the previous administration on these problems. Instead, he addressed the problems. Without getting too political - we do not have a leader in the white house right now.
The issue is also not cash - During 2008-09 cash was king and credit was limited. Companies were hoarding cash. That is not an issue anymore. Interest rates are low, banks are willing to loan. But companies are still not spending (i.e. - hiring, buying inventory, investing in plants and equipment). That is not all consumer demand driven. Sooner or later you want to replace equipment, become more efficient, expand into other markets. Companies are not doing that, they are still uncertain, and business uncertaintly will destroy an economy. Again - it all amounts to lack of leadership in the white house.
You are confusing cash reserves held by companies vs. cash held by consumers. Companies have all-time highs in cash reserves because they are given gigantic tax breaks or in some cases paying no taxes at all. And this mainly only applies to large corporations, not little Johnny's corner store. The last poster was referring to the average American consumer who has record low amounts of cash. Demand amongst consumers has dropped way off because during the Bush years half of peoples' wealth was wiped out in the stock market and housing bubble. Also, manufacturing jobs that used to pay good wages were shipped overseas. Now average Americans have much less disposable income to spend on goods and services than the 80's. The lack of available credit has only compounded the problems for average people.
You say our economy is not all consumer demand driven. You couldn't be more wrong. It is all consumer demand driven. It makes zero sense for companies to invest in plants and equipment if there is no demand for their products.
Again, you are using the "uncertainty" excuse. Are you telling me there was certainty when Bush was in charge? Did things suddenly change when Obama took over? The uncertainty has been around forever. What if Henry Ford did not invest in his Ford plants because there was market uncertainty? That has got to be the worst excuse I've heard. The root cause of the problem is lack of consumer demand due to lack of good wages for average people due to years of declining wages since Reagan was president.
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