How Are Economic Bubbles Not Economic Growth? (unemployment, wages, Clinton)
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They give a great portion of the population buying power. Believe it or not. The real estate bubble of the mid 2000s was economic growth. Construction went up. Unemployment decreased. What more does there need to be to indicate economic growth?
Anyways, what viable alternative is there to spur economic growth without easy credit?
Getting the government out of the way and not engaging in social engineering trying to make it easier for people to become homeowners. All those subprime mortgages were certain to cause trouble later on, even if they contributed to something that was temporarily a good thing. That would be one example.
Lower taxes to spur more investment, close loopholes in the tax codes (at least for corporate taxes) to put everyone on an even playing field and to let the free market work, end corporate welfare to put small businesses on an even playing field, etc. These are all good ways to spur economic growth.
Getting the government out of the way and not engaging in social engineering trying to make it easier for people to become homeowners. All those subprime mortgages were certain to cause trouble later on, even if they contributed to something that was temporarily a good thing. That would be one example.
Lower taxes to spur more investment, close loopholes in the tax codes (at least for corporate taxes) to put everyone on an even playing field and to let the free market work, end corporate welfare to put small businesses on an even playing field, etc. These are all good ways to spur economic growth.
We already have lower taxes. Taxes have little to do with economic behavior. Taxes were higher under Clinton, yet there wwas economic growth.
Construction/trades/mortgage banking/realtor employment went up with the housing bubble, people switched careers or chose professions based on an artificial and unsustainable market demand.
Many of those same people have gone on to collect unemployment insurance, lost homes and families, suffered financial hardship in general, all due to centrally planned schemes that benefitted the top tier and politically connected cronies.
Construction/trades/mortgage banking/realtor employment went up with the housing bubble, people switched careers or chose professions based on an artificial and unsustainable market demand.
Many of those same people have gone on to collect unemployment insurance, lost homes and families, suffered financial hardship in general, all due to centrally planned schemes that benefitted the top tier and politically connected cronies.
have you no conscience?
Blame the private banking institutions who gave out bad mortgages. Don't blame the federal reserve or politicians.
Blame the private banking institutions who gave out bad mortgages. Don't blame the federal reserve or politicians.
I prefer to use the symptoms to find the root cause.In this case it would be a federal reserve policy of loose money and a federal government that eliminated risk of failure by bailing out the banksters after strong arming them to lend to anyone who could fog a mirror.
I prefer to use the symptoms to find the root cause.In this case it would be a federal reserve policy of loose money and a federal government that eliminated risk of failure by bailing out the banksters after strong arming them to lend to anyone who could fog a mirror.
I think bubbles stink. They create the illusion of growth and wealth, and lead to excess valuations that favor asset holders, but penalize asset buyers. To the degree that the inflated asset values enrich the rich, and the inevitable fall in prices enslaves the buyers with debt, they just cannibalize the future.
Real growth builds substantive wealth that plants the seeds for future demand and growth.
For instance the recent bubbles (dot.com and housing), both favored the boomers substantially,who were doing quite well in the first place. Now, the fallout has hit the Gen. X and Millenials with devastating effect. They are dealing with being underwater on overvalued mortgages, heavy student loans, stagnant or declining wages, and unemployment simultaneously. Hard to believe the good outweighed the bad in this case.
I would add that bubbles disguise bad economic trends. The 2000s was largely a jobless recovery. The artificially low unemployment of 2003-2006 was driven by debt-fueled spending orgy based on imaginary wealth. The truth is the middle class was being hollowed out the whole time, but the bubble hid the truth. Now that the tide has gone back out, the same cast of characters can pin it on Obama, but we all know it is just the hangover from a bender that started in the late 1990s.
To the degree that an incumbent will get a short-term political tailwind from a bubble (both Clinton and Bush did), and can leave the bill to the next guy, they create a moral hazard. Far better for a short timer to good an asset bubble than to actually enact sustainable business practices, which require the long view and sound reasoning.
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