Ben Slade

I believe government stimulus is necessary to prevent The Great Depression 2.0, but articles like the one below do give me pause:

From a really gloomy article dated April 2010 on the ThePrudentBear.com website:

"The real economy remains fragile. Government actions, such as fiscal stimulus and special industry support schemes (cash for clunkers; investment incentives, trade credit subsidies), have boosted demand and industrial activity in the short term. As Wells Fargo CEO John Stumpf told The Wall Street Journal on September 19, 2009: “If it’s not a government program, it’s basically not getting done.” Private demand remains somnolent. The problem remains as government incentives encourage current consumption and investment but ultimately “steal” from future demand."

From The Business Insider:

Prosecutors haven't found wrongdoing [during the financial crash] because, under the laws in effect at the time, there wasn't any wrongdoing.

And that highlights the real crime here: The laws in effect at the time.

So it's time to call a few more people to the stand.

The folks who made the laws that allowed all this stuff [the financial crash] to happen, for example. And the folks responsible for the agencies that missed the only criminal behavior that has been found:

• The Senators who approved the lax "mark-to-market" accounting rules (which allowed banks like Lehman to print huge phantom "profits" for bonus and stock purposes, and then, on the way down, lie about the value of their crap assets until they collapsed in a heap).
  
• The folks who championed all those neg-am option-ARM mortgages (Alan Greenspan).
  
• The folks who decided Glass-Steagall was an unnecessary anachronism (Greenspan, Bill Clinton, Bob Rubin, Sandy Weill).
  
• The people who decided derivatives shouldn't be regulated (Greenspan, Rubin, Phil Gramm, Larry Summers, Enron).
  
• The man who ran the SEC while it whiffed on Madoff and Stanford (Christopher Cox).
  
• The man who ran the SEC when it decided to eliminate leverage rules, allowing the banks to gamble themselves into oblivion (Cox).
  
• The folks who got Fannie and Freddie into the sub-prime business (Daniel Mudd, etc.).
  

In an article in TomPaine.com Robert Reich argues that there can't be inflation pressures if wages aren't rising. What's more, the excess world production capacity could portend just the opposite, deflation. From the article:

Each generation responds to its own traumatic memory. Ben Bernanke and his Federal Reserve remember the double-digit inflation of the 1970s and are determined to mount a pre-emptive strike. That’s why they’re poised on raising interest rates yet again. Bernanke and company don’t have a direct memory of the trauma that haunted the previous generation, the depression of the 1930s.

An article (PDF file requires the Adobe Acrobat Reader to read) from Bernstein.com talks about how companies have historically only outsourced well defined manufacturing tasks and/or internal corporate subsystems, but that companies are now additionally divesting core business functions. The result of this new type of divesture is to:

...create economies of scale on an industry basis rather than
a company basis. Open corporate infrastructures enable a
few companies to provide a specific function to an entire
industry, eliminating the duplication of those functions
in each company. Thus, it increases productivity.

According to the article, this de-verticalization is "challenging traditional notions of what constitutes a firm."

At a presentation at the 2005 Take Back America Conference, Gar Alperovitz speaks to the issue that neither Democrats nor Republicans have coherent responses to the rampant inequities in the distribution of wealth and the immense power corporations and special interests wield in Washington.

What is ultimately needed and possible, according to Alperovitz, amounts to a radically different economic and political system.

By Dean Baker from TomPaine.com Jan 18 2005

The collapse of the stock bubble in 2000 was difficult enough, but the housing bubble collapse—and there will be one, says economist Dean Baker—will be even worse. Why? Because housing wealth is more evenly distributed than stock, meaning many more middle and low-income families will be affected. Those who have borrowed against their homes will have the toughest time. Our country's leaders have let things get this bad, Baker says. Now, regular Americans will deal with the consequences.