This is a great interview of Tom Ferguson on Real News Network on the consequences of the “head’s I win, tails you lose” the financial sector has constructed with the rest of us, with Baltimore as object lesson. Enjy!
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Ferguson’s The Golden Rule is an amazing book.
Who’s gonna tell the professor Fidel was recently quoted as saying the Cuban model doesn’t work.
Bueno! Es que…el compañero Fidel, no tiene que manejar y pelearse con los tios de la Calle Del Muro, ¿sabes?
No se.
That was a misquote:
Castro, speaking at the University of Havana, said his words had been misinterpreted by his interviewer, U.S. journalist Jeffrey Goldberg of the Atlantic Monthly magazine, who quoted a U.S. analyst saying they indicated Castro now supports a smaller state role in the island’s Soviet-style economy.
CASTRO/CNBC
“My idea, as the whole world knows, is that the capitalist system now doesn’t work either for the United States or the world, driving it from crisis to crisis, which are each time more serious.”
Listened to it, hoping for a unique insight. Yes, Wall Street is win/lose. Yes, the FIRE economy is sapping America.
But the debt is “not a problem”? Just spend more government money? When has that ever worked? Why isn’t the debt a problem – just because bond interest rates are low for now?
Isn’t government spending simply deferred taxes? Does Neo-Keynesian stimulus ever work? Is the multiplier above or below 1? Haven’t we just spent trillions of dollars just to get 1.6% GDP growth?
Listening to this stuff gets me more convinced that the endgame is a crisis – no consensus on solutions or even what the problems are.
Debt…as people s diverse as Ben Bernanke, John Mauldin, Paul Krugman etc. have repeatedly stated, debt in a time of solvency crisis is not a problem over the short term.
It will become a problem if there is no solid and credible plan to tackle the debt problem over the medium to long term.
Moreover, trying to tackle the debt problem in the midst of this crisis only guarantee a bigger debt problem down the road because lack of stimulus only prolong the recession for several years.
Finally, this recession we have now could morph into a deflationary depression, where the value of debt only increases.
In a word, it’s a matter of timing, and timing is everything.
Spoken like a great Neo-Keynesian. Krugman’s been calling for stimulus for however long. He called for a housing bubble to fix the dot.com bubble. How’d that work out for everyone.
http://www.zerohedge.com/article/how-keynesian-archduke-krugman-recommended-housing-bubble-solution-all-americas-post-tech-bu
And Ben – is sub-prime contained?
The idea that you can have a “solid and credible” plan to fix the debt LATER is absurd. That’s simply austerity deferred – which will never come at the right time (because it will always cause a drop in someone’s income). There will always be a reason to defer austerity. And by delaying it, you’ve only caused more mal-investment and a larger debt issue to solve.
We would have been so much better off to have a recession in 2002 than to kick the can for 8 years. Another 8 years isn’t going to do us any good.
We’re over-leveraged, over-spent, with too many structural inefficiencies. Can’t solve any of that with more of the same.
You ought to have raised taxes in thegood times, not cut them…and you ought not to cut spending ion the bads times, but increase it.
Tax increases and austerity only when the economyis booming: never when the econ0omy is tanked, as it is now.
Traderjoe has it 180 degrees wrong, on its head.
Now is precisely the time to pile on the debt: and pay it off in the boom…what did Bush do when times were yet good? Slashed taxes….what a bonehead!
Yes, we should have raised taxes in the boom AND lowered spending.
So, let’s spend our way out of a recession! We’ll have the Greenspan “Great Moderation” because the politicians and economists are SO smart.
And then when everyone is doing great, we’ll pay it all back. No one is going to complain then…
We’ll never have a recession again! /sarcasm
What if the point is that our level of economic activity – without everyone borrowing to the max – is simply unsustainable? Using your home like an ATM. Why is more spending always the right idea? Let’s fix debt with more debt!
> The idea that you can have a “solid and credible” plan to fix the debt LATER is absurd.
THE big debt come from demographics with our commitments for Medicare. That needs to be fixed (and yes, that means rationing) but not necessarily this year.
Yes our unfunded liabilities are a big problem. But they have nothing to do with our current spending deficits. It’s the unfunded wars, the structural imbalance between spending and taxation, the tremendous loopholes in taxation and crony capitalism, and the imbalances in our welfare programs.
For every dollar received in taxation, we borrow an additional $1. It’s not trimming by a 10%. It’s not a small matter. It’s a 50% deficit!
Yea, let’s make it 60% – that will fix the economy!
1. RE: the Krugman quote. It’s painful when people don’t understand Krugman’s humor. It is very dark, and if you’ve read & understood his writing style, you would have known that was a joke. He never supported Greenspan’s policies, and was saying that Greenspan is the type of person to compound failure by trying to fix a mistake with another mistake. If you’ve rarely read him, and the austerian types typically *don’t* read him, you would understand.
2. Debt. The reductio ad absurdum argument you make is tired. Debt is a means to an end, not the end itself. You would never tell a broke 3rd year college student who is up to their eyeballs in student loans to drop out of school because “you don’t solve debt with more debt.”
Debt is a tool, and should be viewed accordingly; it is not the Boogie Man. The logical extension of your argument is that all debt is bad. In fact it is neither, you just use debt to get where you need to go. And economically, this country needs to go *anywhere* but where we are right now. I don’t understand why this is so hard to understand.
3. IMF style austerity programs are usually an unmitigated disaster. They simply never work. I challenge you to find examples where it has worked, vs. where it has not. The evidence isn’t on your side, just your ideology.
Yes, debt is a tool. Yes, IMF austerity plans are a disaster.
1. There was an article in my metro paper today that essentially asked whether college made sense anymore if you are going to wrack up huge debts to get there.
2. How’s that $800 billion stimulus plan going for ya? The one that kicked the can down the road with some union payments, short-term minute tax breaks, and a couple “shovel ready” projects thrown in there so they could stimulate some sign making jobs?
3. Not all debt is bad, but structural, consistent, and monsterous deficits are bad, yes. And then solving a huge de-leveraging balance sheet depression by simply blindly spending more?
So, if government spending was so good, wouldn’t the economy be humming along? 50% deficits seem to be quite a decent stimulus. Did you notice that Congress didn’t even bother to do a budget this year?
Krugman never even bothers to talk about what he would spend his stimulus on. Just throw the kitchen sink at it. Should we break some windows and then spend money to fix them?
My point is that suggesting more spending just isn’t the answer. There has to be a grand reset of our economy and the way it works. Not simple fiddling while Rome burns. I do not think we can pay our debts back, nor meet our unfunded liabilities. The crisis will come. The question is whether we will meet it in advance, or react when it comes…
The politicians/banksters/industrialists have painted us into a corner. Why give them more money to steal from our futures?
Very compelling argument, Jest! Traderjoe is right about the stimulus, but sadly only because it was conceived and managed by crony, supply-side Wall-Streeters who lack imagination or understanding about the true purpose of commonwealth investment.
“Where there is no vision, the people perish.” (Solomon)
tradejoe –
1. college doesn’t make sense anymore because the quality of education at the undergraduate level is poor, particularly w/liberal arts. don’t even get me started on the garbage they teach in economics. even then, the lack of jobs prevent people from paying off their loans. most who graduate college find their skills are not needed for the jobs available, but we digress.
2. the stimulus has been a life saver for me. I lost my job in Q1 of 2009, and found out my mother had a stroke a month later. I had no idea how to support myself and her on unemployment benefits. A few months after the ARRA passed, my employer called to offer my job back working on a new $37mm infrastructure project for the state of Delaware. It breaks ground next month, and will keep me and a great many other people employed for the next year. I am also able to buy health insurance for my mother, who would not have qualified for insurance prior to the passage of the health care bill due to her pre-existing conditions.
So to answer your question: yes, both the stimulus *and* the health care bill have been life savers to me, and the CBO says the latter will cut the deficit in the long run, which I am sure you are ecstatic about.
3. the structural deficits are not good, but they are largely due to the military & the most inefficient health care system in the developed world, and were exacerbated by the Bush tax cuts. if you take care of the wars & restructure health care costs, most of the structural deficit goes away.
the stimulus has nothing to do with this.
further, the balance sheet problems are from the private sector; no one is asking an overleveraged private sector to take on more debt. if the balance sheet problems were on the gov’t side, the TNX chart wouldn’t be heading down and to the right on your monitor. Declaring that the gov’t cannot borrow because the private sector went on a debt binge is a non sequitur.
Also, Krugman has spoke in depth about what the stimulus should have been spent on. (I guess you really don’t read him) He advocated against tax cuts (and they didn’t listen), and more direct aid to states to keep firemen, police officers, and teachers employed. It keeps food banks open & stocked, and ensures unemployment benefits get paid. There are others.
4. yes I agree, there will be another crisis. But *we* need to organize as a group to head off these challenges. the way citizens do that is through something called government. so at some point, yes, politicians and tax money will be utilized. it is inevitable, unless you prefer going back to 1861, getting a gun and going Robert E. Lee on us.
If you actually read Krugman’s full column that this quote was taken out of context from you’d figure out that he’s not calling for a housing bubble to be established. He’s pointing out that some kind of asset bubble, perhaps a housing bubble, is what he expects Greenspan may create to juice the economy.
Go peddle your distortions elsewhere.
It’s a good idea to check links. Durden is stretching to say that Krugman endorsed the bubble. He’s describing how the bubble reflated the economy–early in the process. Please find a quote in which Krugman calls for Greenspan to create a new bubble. That needle doesn’t exist in any haystack.
Re: It will become a problem if there is no solid and credible plan to tackle the debt problem over the medium to long term.
Ummm… to a politician (aka sociopath) is there ANYTHING except the short term?
In a nation of the sociopaths by the sociopaths for the sociopaths why would you expect medium to long term solutions?
“Just spend more government money? When has that ever worked?”
1933.
A lot of people are making the mistake of talking about “debt” as if it had its own reality, unconnected to people and institutions. It’s the same error pointed out by others on this site, of referring to “capital” as if it were self-willed and autonomous.
For example, personal debt has supposedly grown monstrous over the last eight years. However, much of that is debt is owed by people who are functionally bankrupt, and would have been legally bankrupt before the last round of “reform”. While traders may treat it as if it had its own existence, it’s never going to be paid back. It’s wallpaper. Even much of the debt owed by solvent borrowers is probably uncollectable. But the statisticians and traders and politicians still add it up as private debt, a measured quantity that exists objectively in the material world along with water, air, songs downloaded, miles of highways, etc.
Now, if this is true of private debt, which by the way dwarfs public debt, is it any less true of public debt? For public debt, the question is one of public policy. It may be a good policy to repay the public debt, it may be bad policy. Reasonable men, women, and children can disagree. But the debt doesn’t have its own existence outside the will of the government. And, again, public policy might dictate it be turned into air.
I’ve herded cows and I’ve handled money. Livestock has more self-will and autonomous existence than money and its equivalents. But money does smell better.
Excellent points. Moreover, the debt that has been the problem has been private debt, not gov’t debt. How on earth those two things have been conflated is beyond me.
FWIW, I’d take the smell of a good steak over the smell of money any day.
When interviewing at a large equipment semiconductor equipment manufacturer during the depths of the downturn in 2002, the head of R&D told me something interesting about hiring during the downturn. He essentially said: when we have recessions we typically ramp up investment spending on R&D becuase it gives us the opportunity to develope the next generation equipment while we have the time. He also stated it can position the company for the next upturn. The company plan was to borrow and spend during recessions to keep important people around and ready doing productive stuff so the company could hit the ground running.
One of the biggest issues is that government (at all levels) accounting makes the financial sector’s and Enron’s look open and transparent.
One of the biggest single moves that should be done over the next couple of years is to put in place firm rules on government accounting so that promises made are accounted for properly.
1. Everything needs to be in the budget. The concept of items being “off-budget” is laughable. The fact that states and municipalities had not even tred to do the math on retiree health care coverage is virtually fraudelent.
2. A major reassessment needs to be made of the appropriate discounting mechanism for pensions and medical coverage using the interest rates, dividend rates, and inflation rate each year as a starting point for a dynamic analysis going out. The concept of a constant 8% return used in both 2000 and 2003 for discounting the future is another laughable concept.
3. Tax cuts and program coverage accounting need to be much simpler and more transparent. The annual charade of AMT indexing, the Medicare drug coverage, and the sunset of the Bush taxcuts after 10 years are classic examples where it was clear that the long-term viability of those particular tax choices are not viable without making adjustments elsewhere. As a result, we are on a tax roller coaster where it is nearly impossible to predict taxation 1 or 2 years out. Personally, I have a very simple, predictable income and cost scenario that should be very predictable. But because we are on the AGI bubble for AMT and numerous deduction cutoffs every year, the amount that I owe or get refunded varies by thousands of dollars every year.
Right now the politicians are gaming the system to maximize current political gain while postponing the financial pain at any cost.
Be of good cheer, TradeJoe, I will answer all your questions:
1. Q. But the debt is “not a problem”?
A. Sometimes it is, sometimes it isn’t.
2. Q. Just spend more government money?
A. Yup.
3. Q. When has that ever worked?
A. Almost every single time it was tried. It worked for Ronald Reagan a couple of times.
4. Q. Why isn’t the debt a problem – just because bond interest rates are low for now?
A. No, not because of that. If the government borrows money that is then spent, the level of demand rises and merchants place new orders at the factories. Then the factories hire more workers. Since more people now have jobs, spending increases, lifting the economy out of the recession. Once the economy is going strong, the government raises taxes (not a problem because the country’s booming and everyone’s got money) AND PAYS BACK THE DEBT!
5. Q. Isn’t government spending simply deferred taxes?
A. Yes, it’s deferred taxes, but not “simply” deferred taxes. Your choice of words indicates considerable ignorance of economics. When you say “simply” x years later/earlier, you are belittling the crucial importance of the time dimension in economics. It’s not as easy to pay $1 million in taxes when the economy is in a slump as when the economy is in a boom.
The First Postulate of Economics (which I just made up), says: “The economy cannot be in a slump and in a boom at the same time.”
The corollary to this Postulate is: “Therefore slumps and booms must occur at different times.”
A really sharp Secretary of the Treasury is bound to come up eventually with a truly diabolical and Machiavellian plan, namely, to
BORROW DURING THE SLUMP AND PAY BACK DURING THE BOOM!
Why? Because it’s easy to pay taxes when you’re rich, but difficult when you’re poor!
So waiting a couple of years before you actually pay those taxes can make all the difference.
6. Q. Does Neo-Keynesian stimulus ever work?
A. Yup.
7. Q. Is the multiplier above or below 1?
A. I don’t know.
8. Q. Haven’t we just spent trillions of dollars just to get 1.6% GDP growth?
A. Yes, but the government made a grievous mistake: It handed a bunch of money to the banksters so they would lend it to people to invest, but that silly goose Secretary of the Treasury Geithner plumb forgot to make the banksters sign any promises that they would lend the money out! AND THEY DIDN’T LEND IT OUT. The problem here was they let a parasitical financial oligarchy decide what to do with the money. They should have been forced to lend the money to investors.
Be of good cheer, TradeJoe, I will answer all your questions:
1. Q. But the debt is “not a problem”?
A. Sometimes it is, sometimes it isn’t.
2. Q. Just spend more government money?
A. Yup.
3. Q. When has that ever worked?
A. Almost every single time it was tried. It worked for Ronald Reagan a couple of times.
4. Q. Why isn’t the debt a problem – just because bond interest rates are low for now?
A. No, not because of that. If the government borrows money that is then spent, the level of demand rises and merchants place new orders at the factories. Then the factories hire more workers. Since more people now have jobs, spending increases, lifting the economy out of the recession. Once the economy is going strong, the government raises taxes (not a problem because the country’s booming and everyone’s got money) AND PAYS BACK THE DEBT!
5. Q. Isn’t government spending simply deferred taxes?
A. Yes, it’s deferred taxes, but not “simply” deferred taxes. Your choice of words indicates considerable ignorance of economics. When you say “simply” x years later/earlier, you are belittling the crucial importance of the time dimension in economics. It’s not as easy to pay $1 million in taxes when the economy is in a slump as when the economy is in a boom.
The First Postulate of Economics (which I just made up), says: “The economy cannot be in a slump and in a boom at the same time.”
The corollary to this Postulate is: “Therefore slumps and booms must occur at different times.”
A really sharp Secretary of the Treasury is bound to come up eventually with a truly diabolical and Machiavellian plan, namely, to
BORROW DURING THE SLUMP AND PAY BACK DURING THE BOOM!
Why? Because it’s easy to pay taxes when you’re rich, but difficult when you’re poor!
So waiting a couple of years before you actually pay those taxes can make all the difference.
6. Q. Does Neo-Keynesian stimulus ever work? A. Yup.
7. Q. Is the multiplier above or below 1? A. I don’t know.
8. Q. Haven’t we just spent trillions of dollars just to get 1.6% GDP growth?
A. Yes, but the government made a grievous mistake: It handed a bunch of money to the banksters so they would lend it to people to invest, but that silly goose Secretary of the Treasury Geithner plumb forgot to make the banksters sign any promises that they would lend the money out! AND THEY DIDN’T LEND IT OUT. The problem here was they let a parasitical financial oligarchy decide what to do with the money. They should have been forced to lend the money to investors.
Thanks for the cheer. And I appreciate a good discussion.
As for #7 et all, including ignorance of economics:
The assumption that government spending can spur aggregate demand which therefore creates growth which therefore allows for future tax payments to repay debt (plus interest) is in effect totally based upon whether the Keynesian multiplier of government spending is greater then 1. IF it is NOT, then you are consciously entering into a debt spiral. So, I don’t know how you can recommend government spending if you don’t know the Keynesian multiplier. [I don’t it either, but think it less then one by principle (see below) – but that’s why I don’t think economics is a science because there are infinite values for the multiplier depending upon the nature of the non-closed environment.]
I think you are getting close when you talk about the parasitic financial oligarchy (though the stimulus didn’t go to them – lots of other things did though). Still lots more dots to connect though: corrupt politicians, crony capitalism, fractional reserve banking system arithmetically doomed to failure, a false desire for infinite growth in economics (ignoring the laws of physics), intentional industrial policy that hollows out the middle class, bureaucratic class that creates unfunded and un-payable entitlements, etc. My point is that the system is corrupt. It is doing exactly what it was designed to do: siphon wealth to the plutocrats. Running more money through a corrupt system only brings the crooks more wealth. A new system is needed first.
Thanks for posting this; great info.
The debt card is being played right now because the elites want to slash social spending and do away with FDR. That’s what we’re seeing. This is classic disaster capitalism.
How come raising taxes on the rich are off the table? Billionaires should be paying 70 percent on their income. If they wanna flee for another country, we pursue them.
As along as neo-liberal economists are in charge, the right thing ain’t gonna happen.
Reason billionaire taxes are off the table is same reason the incoming administration decided to further enrich the banksters rather than prosecute them as the last administration did the Enron boys for doing much the same as the banksters did, but not on so grand a scale. The administration was unwilling to prosecute its biggest donors upon taking office. It is unwilling to tax them now. They are happy to tax the petit bourgeosie- your local doctors, lawyers, accountants, etc. They are leaving the sweetheart tax breaks for the hedge fund kings, MNCs, etc. (i.e. big donors) intact.
Baltimore was an awful pit before the crisis ever began.
I think it was more along the lines of “this is what will happen to your city unless you adopt more sane economic policies.”
The irony of that is that the city welcomed the financial sector with open arms. It has a surprisingly active financial sector, partly due to the fact that the Richmond Fed has a branch right across from the Orioles’ stadium.
But yes, adopting finance hasn’t helped the city at all.
That’s not a wave goodbye, its a middle finger gesture.
Deception is the strongest political force on the planet.
I am not on Wall Street’s side, but this guy is advocating big government and bigger deficits? Come on. The last thing this country needs is more New Deal type programs. This guy is blaming Republicans for siding with the banks….has he ever heard of Barney Frank?
That video is horrible, and I wish I could have the last 11 minutes of my life back.
The only thing the Red and Blue Team agree on is when their own sociopaths are the winners that’s good, and when the other Team’s sociopaths win that’s bad.
It’s inexcusable to see such sturdy and elegant buildings fall into dereliction when people need shelter. It’s time for a new homestead act—grants and equity for sweat.
Ferguson is right about Obama’s perverse and utterly ineffectual crisis response, saying “They should’ve…done what they did in the New Deal. You should’ve seen cranes and construction stuff everywhere…”
It’s a good point you hear often, but beyond the economists’ sound-bites, it’s also critical to note that the New Deal exemplar, while experimental, was far from a hurry-up and make-work frenzy. It first included the intelligent mobilization of engineers and scientists, urban planners, landscape architects, architects, ecologists, educators, artists, etc. in commissions and study groups, to think, study, and design worthy projects as wealth-creating investments and resource development. This was followed by well-organized labor to yield major durable works that we still use and enjoy today.
The same can be done NOW for the next-generation green economy—sustainable energy and agriculture, and new urbanism, but it’s important to approach good government as an enterprise with a mission, to marshal and organize talent, and plan these as strategic investments, just as private syndicates do, but in this case with the larger public as shareholders.
Alas, Obama and his old-school cronies clearly don’t have the imagination or vision to even begin such an endeavor. Their only sustained employment propect seems to be endless war.
America only lacks the will.
Nice comment.
I think Obama has mentioned the concept of a green economy future many times.
The problem is the media mis-information campaign in newspapers/on TV, and political cluster-fuck, that is preventing any kind of intelligent round table dicussion America’s vision for the future.
“It’s inexcusable to see such sturdy and elegant buildings fall into dereliction when people need shelter.”
Some of the row houses in that area are less than 700 square feet. Habitat for Humanity won’t fix them up because they are considered too small for a family. These structures are not especially sturdy, either. Once a house is removed from a row, the stability of the entire block of houses is put in jeopardy. I’ve been to the area of the video and there are many empty lots.
I liked the rest of the comment. That’s just a niggling little detail.
Sorry, I didn’t see any evidence of a connection between what appear to be empty boarded up partially renovated homes (background shot) and the Wall Street Banks. That is, I didn’t see any facts or evidence presented during the interview that would indicate that these homes were purchased /and or refinanced by individuals. No evidence that individual mortgages were obtained to finance the purchase and or renovation of the homes. Therefore, there seems to be no evidence that the hypothetical mortgages were aggregated into pools to be sliced, diced and resold and obscene profit to unsuspecting investors. No Wall Street fingerprints apparent here.
As a matter of fact, I’ve driven around many different cities and towns over the years , but have never observed that all the townhome owners of a city block, at the same time decide to renovate their homes, have difficulty and then leave them en masse(since a majority of the homes appear vacant). In fact, what frequently happens is that when people realize they’re going to be forced out of their home, they’ll trash it. Most of these homes appeared to be in fine shape.
A more likely scenario is that shells of homes were purchased by a developer who rolled the dice some years ago, and when the economy tanked possibly so did he and his lender (very possibly a local or regional institution who intended to hold the loan in its own portfolio) wound up taking back the real estate.
I could be totally wrong but there’s no evidence presented during the interview that says otherwise. My sense is that everything Ferguson said is factual but he shouldn’t have been standing in front of those particular homes. He should have done the piece on a street in Central California’s inland empire, parts of Arizona, Las Vegas or Florida where there would have been a plethora of streets he could have used as a more realistic backdrop.
The problems shown are real, but the solution proposed was just a triple dose of the same crap that got us into this mess.
The government never provides solutions to problems, they just print more money and see that their political friends receive it somehow. And it works the same for repubs or dems, but they have just different political friends that get the money.
If you want jobs, IMPLEMENT WARREN BUFFET’S IMPORT CERTIFICATES PROGRAM to balance the imports and exports. This will encourage Americans to export, and discourage imports. We will have to produce as much as we consume, and that will require people to work again.
I think the Professor’s comments reflect an attitude that many, many Americans are incompetent in handling their affairs. What else can you conclude when you hear his comments concerning unpayable mortgage debt? I’ve been in 4 real estate closings in the past 24 months and in each the buyer’s note was fully disclosed as to magnitude and the provisions for paying it off. There was zero doubt in anyone’s mind as to exactly how much would need to be paid, when it would be paid and, in the one case of an adjustable mortgage, under what circumstances those payments could change and how they could change. Further, in every case, it was specifically stated that the borrower could not rely on any promises of future re-financing. Underwriting was shoddy, no doubt, but someone please explain to me how a lender’s foolishness diminishes a borrowers capacity to understand what they can afford? Possibly these loans were unpayable, but if you extend to the borrowers the courtesy of not considering them idiots, what are you to make of their taking on these loans? Speculation seems to me the most likely explanation….”I can’t really afford this, but this kind of asset probably will appreciate so fast that I’ll profit enough to make the cash pain worthwhile.” This actually worked for millions of Americans, so I’m not morally opposed to this gamble – i just don’t want to hear sob stories later on behalf of those willing participants for which this did not work out well.
India’s central bank led by Mr. Ruddy, maintained the level of 30% down payment on any house purchase. They avoided any bubble. George Bush could have done that.
In 1920, there was a terrible depression, President Harding shrunk taxes, military, and the size of government, and things got better quickly.
Baltimore’s problem and that of most cities is the generosity of the system that subsidizes those who live without working, hence providing a high density of folks who are stuck there and who create crime and slum. By subsidy, you concentrate these folks, and so even in flush times, they drop out of school and don’t work.
Baltimore’s problem and that of most cities is the generosity of the system that subsidizes those who live without working, hence providing a high density of folks who are stuck there and who create crime and slum. By subsidy, you concentrate these folks, and so even in flush times, they drop out of school and don’t work.
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Bingo and give that guy a prize. What else do all of these cities have in common. They have been led by Democrat mayors ever since WW2 who have spent and spent increasing the cost of government many fold and driving out businesses so the end result is no tax basis.
So you end up with high cost government, large groups of poor people who do not finish school and are unemployable and turn to crime, this drives out businesses and middle class families and a downward spiral. The answer is just the opposite of what this Professor is proposing, but it will require a generation or two to fix this problem.
It’s no good just racking up debt to put people to work. You do have to take care of the deficit. If you are being ripped off by your trading partner don’t trade with them so much.
What is so wrong with that idea? If American is all consumption and no production. Stop consuming and start producing stuff at least for yourselves again.
Just raise the trade barriers a little and see what happens. Suggest to GE that now might be a good time to think about expanding production.
To hell with global wage arbitrage. It has put far to much money into far to few peoples pockets.
To bring down the deficit, get the money where it is, Make the rich pay!
I wouldn’t be shocked if some of those houses have been boarded up since the late 60s AND have WaMu $500K NegAm loans on them from 2006. I like Baltimore and spent a few years there ’89-92, but a lot of it has been a dump for a long time. It was a good 20 years into abandoned blocks 20 years ago. So, the video is overstating the connection between the financial crisis and Baltimore’s dumpiness.
And I have a serious question. Are massive New Deal-ish infrastructure projects possible in the world of EIS’s? Democrats are painted into a green corner. How many green jobs are there and what are they? IMO, greenishness is the center-left’s version of what anti-government-ism is for the center-right. Reconciling “putting people (and their paychecks) first” and core green principles is easier talked about than done.
THIS GUY DISCREDITS HIS UNIVERSTIY. A CARPING OBVIOUS UNINFORMED KNOW NOTHING STANDING IN FRONT OF WHAT OTHERS HAVE NOTED ARE 20 YEAR OLD DUMPS. IF WE DID WHAT HE SAYS WE’D NEED ANOTHER WORLD WAR TO KILL HALF THE POPULATION OF THE WORLD. THAT WOULD PUT THE REST OF US TO WORK (AND WITH VERY MODEST EXPECTATIONS)
Yes, right on target. Baltimore has been a crap hole for at least 25 years since I was down in that area. So if I saw it 25 years ago it must go much further back than that. I said this below but remember Nancy Pelosi’s father was the mayor and operator of the political machine their for a long time. Baltimore’s problems were poor decisions at the local level 40 plus years ago.
If you like how Baltimore looks then Nancy Pelosi could turn the whole country into the same thing.
Amazing to watch the “Rich” being defended. As long as such Thieves are “heroes” there will be the continual downward slide into anarchy/feudalism.
but hey! that’s where the money is!!.
Privatize the Profits and Socialize the Costs!
these people have drunk so much Kool aid they haven’t a clue. Meanwhile, back in America….
Tom Ferguson is one of the most clueless individuals I have ever listened to. I have some hands on experience with Philly and Baltimore.
First, I was over loss prevention for a multi-billion dollar retailer 25 years ago located in the Northeast. Guess what was one of the worse areas in the Northeast for crime in our stores. Yes, Baltimore! And you know those rowhouses that he is standing in front of. That is exactly how Philly and Baltimore looked 25 years ago. I use to drive through those areas and find it unbelievable.
Before this downturn happened about 4 years ago I was back in Baltimore and took the light rail between the suburbs into the harbour area and I would have thought I was in a third world country or Camden NJ (which is the same).
Now let us talk about employment. Once I was given the task of building and staffing a shared service center outside of Philly (Philly and Baltimore are pracitcally interchangeable economically). The pool of talent to pull from was far from the best. I was offering a low starting salary but full medical and a defined benefit plan and training to learn computers. In the end for every 3 I hired 2 would end up quitting or being fired because their productivity was 10% of the rest. There were some real excellent people but you have to spend a lot of time getting rid of the bad players.
I suspect that Baltimore’s (remember who was mayor and the political machine operator there for a long time — Nancy Pelosi’s father) problems stem from the same place as Philadelphia’s which is a deeply corrupted political system. Philadelphia was on the edge of bankruptcy 25 years ago with the average city worker (including garbage men) being paid including benefits several times what the average worker was making. Add to that out of control births at the lower income levels due to LBJ’s great society program (welfare for families with dependent children) and you have the causes. High taxes, over paid union employees and a crappy lifestyle and you drive out your tax basis leaving nothing to support the system.
I also almost forgot having to deal with organized crime which is tied into the political structure of the Northeast.
Let’s not blame the recent recession (and not even the banksters even though I blame them for a lot of things). These heavily Democrat/unionized cities have been going into the crapper for 40 years. Look at Detroit, Cleveland, Baltimore, Chicago, LA, San Francisco and Philadelphia. They all meet these criteria and they have been sliding into the crapper ever since the end of WW2. This did not happen over night (even though for various reasons California has been immune until now).
I have a friend who moved from south central US to Philly. He told me it is the worse decision he made in his whole life. Crime is rapant. If you want to see where programs like Ferguson was talking about takes you, go to Philadelphia and Baltimore and see what you get.
These cities represent socialism at its best.
Let me say one other thing. As I said, I ran a large security operation. We busted a number of different organized crime groups and I worked with lots of other anti-crime groups with corporations, states, and local. One time the head of loss prevention told me that 2/3rds of Amex’s world wide fraud happened with in 100 miles of NYC (Baltimore is close to falling in this range).
Over the last few years I just believe the organized crime moved into the banking area. Do not forget what Lucky Luciano said when he visited the floor of the NYSE, “Geez what a racket.” So the rule is now 2/3 of the countries crime now happens withing 100 miles of NYC and it is centered in the major banks.
I also believe the political machines of the Northeast nurtured this organized crime and still nurture it. None of the federally elected people out of NYC and other places are going to come down hard on the banksters because if they did it will stop the cities from benefitting from the blood sucking out of the country by these giant squids.
In the past the Mafia would pay off local politicians and now days the current crop of criminals (banksters) are paying off the federal and local politicians.
Several commentors have noted that areas like East Baltimore have been economically decimated for quite a long time. A very interesting book on the subject came out this past summer, Not in My Neighborhood: How bigotry shaped a great American City, by Antero Pietila.
A review of the book can be found here:
http://www2.citypaper.com/news/story.asp?id=19948
However, the implication that, since people in economically depressed areas were already suffering, the extra pain caused by the recent economic crisis shouldn’t hurt them is ludicrous.
Of course we would not want to blame local leadership for how Baltimore looks. Per wikipedia —
Thomas J. D’Alesandro, Jr. (August 1, 1903 – August 23, 1987) was an American politician who was a U.S. Representative from Maryland’s 3rd congressional district and subsequently the mayor of Baltimore, Maryland. He is the father of House Speaker Nancy Pelosi. Following his service in Congress he was Mayor of Baltimore for 12 years from May 1947 to May 1959. Pelosi’s brother, Thomas D’Alesandro III, also a Democrat, was mayor of Baltimore from 1967 to 1971, when he declined to run for a second term.
As always, once you get passes Econ 404, you forget Econ 101. This is such an incredible load of doodoo
I’ve never heard of Tom Ferguson, and after viewing this i wish i still had not.
The argument “Debt is a tool, and should be viewed accordingly” is the same one Madoff and the slew of other Ponzi schemers now residing in Federal housing lived by for years.
C-4, tnt, and nitroglycerin are tools too.
Tick, tick, tick, tick,…..BOOM.
I don’t know why to comment about this is that this interview is about the financial sector and the ills it has created. It was a small portion. It’s true that lower income people were suckered by mortgage brokers in the peak of the subprime boom (2005-07)and this did impact these cities. I live in NJ and most of the foreclosures are in these urban areas of lower income people: Newark, Trenton area and Patterson. Later Ferguson goes on to talk about how ailing cities/states have not been helped by the gov’t: Harrisburg, PA, California, etc. I’ve been a municipal analyst since 2002 and NEWSFLASH, all of these places had deep problems way before the credit crisis. These places have problems that the elected officials either cannot or would not solve. Often tons of money for decades has been thrown at these places and they still can’t recover. The financial crisis hurt these places, but didn’t create the problems. If this guy were honest he’d at least have to acknowledge that. Also, he’d have to acknowledge that most (not all) of these places have long been Democrat strongholds.
really — Right on target. The answer is always more money, more money. At some point and we reached this a long time ago IMHO, the reward is not worth the cost. Sorry, that is just how life is. I have worked in these areas and attempted to train people for productive jobs. As long as we reward sitting on your ass you will not make some of these people productive.
Go ahead, go forth with the Nancy Pelosi Socialist/Communist agenda and what you will find is that only Nancy Pelosi is living well. Teading the article:
http://www2.citypaper.com/news/story.asp?id=19948 above makes me wonder, since Pelosi’s husband is a real estate developer, if he was part of the scams against poor African Americans in Baltimore in the 60’s. They did live there then. Maybe that is how he started making his fortune since he had all of the political conections he would need.