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Interview with Reagan's budget director, David Stockman.

 
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theq



Joined: 10 Apr 2000
Posts: 636

PostPosted: Sat Feb 06, 2010 3:48 pm    Post subject: Interview with Reagan's budget director, David Stockman. Reply with quote

http://video.pbs.org/video/1405989476

News Hour interview with a member of the reasonable wing (Hopefully growing) of today's GOP, David Stockman, who is "mortified" that he's in agreement with the likes of Paul Krugman.

Fast-forward to 23:50 for interview segment of Paul Solmon's "Making Sense of the Financial Crisis".
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swchandler



Joined: 08 Nov 1993
Posts: 5698

PostPosted: Sat Feb 06, 2010 8:10 pm    Post subject: Reply with quote

I saw that interview with Stockman the other night. Surely an eyeopener, particularly from an experienced member of the Reagan Administration. I'm encouraged that at least an element of the Republican side sees things more practically. Our nation needs that right now.
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mac



Joined: 07 Mar 1999
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PostPosted: Sat Feb 06, 2010 10:23 pm    Post subject: Reply with quote

Hard to stomach agreeing with David Stockman. Who mentioned the starving the beast strategy. It is inevitable. Medicare benefits will be cut and taxes will go up. There was a structural deficit of about 1/2 trillion in the annual budget, plus the shortfall in the trust funds (primarily medicare) before the economy tanked and revenues dropped by about a trillion.
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theq



Joined: 10 Apr 2000
Posts: 636

PostPosted: Sun Feb 07, 2010 11:04 am    Post subject: Reply with quote

Unfortunately, I do believe that things will still get a little worse before they get better. I also believe that the Obama administration committed a grave error, with the stimulus package, by being led to believe that this new version of Geithner-Summers trickle-down would work. "Just help the banks, and they'll do the right thing for downstream America." I thought that the stimulus was going to get some infrastructure programs going? I haven't seen any of that yet.

Some people never learn. It does appear as if Stockman has seen the error of his ways, much in the way that Greenspan has. Now if only clowns like Grover Nordquist and Rush will pull their heads out, and get their minions in Congress to do the same... Nah, I think that they have neck barbs, making this painful and perhaps impossible without tearing up their "mouthpiece". Twisted Evil Wink

When there's a consensus view between David Stockman and Paul Krugman on anything, it's as close as we'll get to something being absolute certainty.
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mac



Joined: 07 Mar 1999
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PostPosted: Sun Feb 07, 2010 12:08 pm    Post subject: Reply with quote

Q--I have a partial answer on stimulus. I am close enough to enough things in California government to see projects getting ready, particularly in water projects. The time line was to get them under way by February 1, 2010, which was extraordinarily fast for normal government projects. Not many in government at any level had any decent projects ready for construction--tough times meant that people had adjusted their expectations. So getting a project through the design and permitting process was tough--everywhere. But we should start to see construction starting this spring, particularly in California.

The second problem is the size. As I was taught in economic history in the 1970's, Federal funding to re-start the economy was not a failure in the 1930's, as revisionist historians (with a "conservative" bent) would have it. Rather, the contraction in spending at State and local governments was about an order of magnitude larger than Federal efforts to "prime the pump." In ordinary numbers, the job loss is about 7 times the potential benefit in the stimulus package.

The third problem is that we had an artificial economy, built on a housing bubble and cheap credit. So you had construction workers building a surplus of for-sale housing, generally at the higher end, and they aren't going back to doing that until the existing inventory is exhausted. The US auto industry is "exhausted", but I also think that the bail-out there was wise, both to give labor something, and to force labor to begin to deal with the restructuring that had to happen. Only a Democrat could have done that. In any event, we don't yet see what the new economy is going to be, and that is one reason banks aren't loaning--they have no idea what the can't miss investments are going to be.
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theq



Joined: 10 Apr 2000
Posts: 636

PostPosted: Sun Feb 07, 2010 2:15 pm    Post subject: Reply with quote

mac:
I hope that you're right about the infrastructure stuff. There's no question that our roads, bridges, etc., are in need of updating. Even with so much at our fingertips, we still need to move this "coil", and the stuff that feeds, clothes, and entertains it, around.
It's true that I don't know enough about what it takes to start work on the infrastructure, to comment with any authority. Again, I hope that such things get started soon.

Quote:
The third problem is that we had an artificial economy, built on a housing bubble and cheap credit. So you had construction workers building a surplus of for-sale housing, generally at the higher end, and they aren't going back to doing that until the existing inventory is exhausted. The US auto industry is "exhausted", but I also think that the bail-out there was wise, both to give labor something, and to force labor to begin to deal with the restructuring that had to happen. Only a Democrat could have done that. In any event, we don't yet see what the new economy is going to be, and that is one reason banks aren't loaning--they have no idea what the can't miss investments are going to be.


You mean our captains of industry and Stockman-like gunslingers, need a "can't miss" investment?! The big banks have certainly been blessed with the availability of "free money" from the Fed., and their ability to lend it out and get much better than zero interest back. Those days are numbered. They're going to have to be the risk-takers, and small-business backers, they've always touted themselves to be, and start America back on the road to making real products.

Speaking of "products", I guess I have the same problem with financial creations being called "products", as the anti-gay-marriage folks have in calling homosexual unions "marriages". Is that so wrong of me? Perhaps I expect too much from the language.

Thanks for your comments.
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