View Poll Results: Who is to blame for the high Unemployment rate?

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  • Bush and the Republicans

    9 47.37%
  • Obama and the Democrats

    7 36.84%
  • Europe

    0 0%
  • High Gas Prices

    2 10.53%
  • The Earthquake in Japan

    1 5.26%
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Thread: Who is to blame for the high Unemployment rATE?

  1. #61
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    Re: Who is to blame for the high Unemployment rATE?

    Quote Originally Posted by Goldenboy219 View Post
    There is not (and does not a require) a deflationary spiral during this stage of the liquidity trap. We then can refer to our current situation as a jobless recovery trapped with liquidity.
    You're not answering the original question. We presumably would have had a deflationary spiral had quantitative easing not taken place, right? So why was there no deflationary spiral during all of the panics before the Great Depression?

    Who shall ascend the hill of the Lord? And who shall stand in his holy place? He who has clean hands and a pure heart, who does not lift up his soul to what is false, and does not swear deceitfully. Psalm 24
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  2. #62
    Student Иосиф Сталин's Avatar
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    Re: Who is to blame for the high Unemployment rATE?

    I blame everybody except myself!

  3. #63
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    Re: Who is to blame for the high Unemployment rATE?

    Quote Originally Posted by phattonez View Post
    That's not an attitude that in good conscience I can have. If something is wrong, I need to speak about it, rather than just accept it.
    And I would rather develop solutions that are cognizant of political and economic realities. I find it's almost always better to base our policies on the way things ACTUALLY work, rather than the way we WISH they worked. Our government, regardless of which political party is in power at any given point in time, will always bail out financial institutions...and rightly so IMO. Economically, the pain from the collapse of the entire financial sector would outweigh the moral hazard incurred. And politically, no one wants a financial collapse to occur on their watch.

    And it wouldn't have been built back up by now without the moral hazard? Oh I wonder what we did during the Panic of 1893. We did not save all of those companies, yet we did not go back to the stone age.
    100 years ago, our economy was far less dependent on credit and far less globalized than it is today. Furthermore, the ramifications of the Panic of 1893 WERE catastrophic. Unemployment remained at double-digit levels for over five years following the financial crisis.

    Just because that is the status quo does not mean that I have to accept it and find another solution.
    Fine, but I think this shows a lack of awareness of political realities. Even if Congress passed a law declaring that no financial institutions would be bailed out in the future and they were super-serious this time around, they would simply repeal the law at the first sign of trouble and bail the banks out anyway. So given the fact that our government is not about to allow the banks to fail, I think it's prudent to minimize the chance of this happening so that the taxpayers don't get stuck with the bill for bankers' mistakes.

    The problem with this solution is that regulations cannot adequately define what is excessive risk and what isn't unlike how market mechanisms can truly show you what was right and what wasn't.
    You're right, I don't expect financial regulation to define this perfectly. They will almost certainly underregulate something which does pose a serious risk, or overregulate something that does not. But that doesn't make the regulations ineffective; although people might disagree over where exactly the line is between a stupid risk and a worthwhile risk, there are plenty of situations that are clearly stupid risks. That's part of the reason that the government sets reserve requirements for banks, for example. If banks only keep 1% of their funds onhand and loan out the other 99%, they're being stupid and are very likely to become insolvent during a downturn...and therefore the government mandates that they generally need to keep 10% onhand. That's not because the government knows that 10% is the magic number where banks are safe, but it's better to have an arbitrary cutoff than no reserve requirement at all.
    Last edited by Kandahar; 07-10-11 at 05:54 PM.
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  4. #64
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    Re: Who is to blame for the high Unemployment rATE?

    Quote Originally Posted by Kandahar View Post
    And I would rather develop solutions that are cognizant of political and economic realities. I find it's almost always better to base our policies on the way things ACTUALLY work, rather than the way we WISH they worked. Our government, regardless of which political party is in power at any given point in time, will always bail out financial institutions...and rightly so IMO. Economically, the pain from the collapse of the entire financial sector would outweigh the moral hazard incurred. And politically, no one wants a financial collapse to occur on their watch.
    Rightfully so? Because now we can get the same problem all over again? You act as if we would never recover if we had let the companies fail. Where is the historical evidence of that?

    100 years ago, our economy was far less dependent on credit and far less globalized than it is today. Furthermore, the ramifications of the Panic of 1893 WERE catastrophic. Unemployment remained at double-digit levels for over five years following the financial crisis.
    The length of it probably has to do with the McKinley Tariff. In other panics where we decreased the burden of government we saw quick recoveries and remarkable growth.

    Fine, but I think this shows a lack of awareness of political realities. Even if Congress passed a law declaring that no financial institutions would be bailed out in the future and they were super-serious this time around, they would simply repeal the law at the first sign of trouble and bail the banks out anyway. So given the fact that our government is not about to allow the banks to fail, I think it's prudent to minimize the chance of this happening so that the taxpayers don't get stuck with the bill for bankers' mistakes.
    I guess I'm just more of an idealist than a compromising pragmatist. I'm not satisfied with our overall growth rates that are meager compared to what we had before we morphed into a corporatist economy.

    You're right, I don't expect financial regulation to define this perfectly. They will almost certainly underregulate something which does pose a serious risk, or overregulate something that does not. But that doesn't make the regulations ineffective; although people might disagree over where exactly the line is between a stupid risk and a worthwhile risk, there are plenty of situations that are clearly stupid risks. That's part of the reason that the government sets reserve requirements for banks, for example. If banks only keep 1% of their funds onhand and loan out the other 99%, they're being stupid and are very likely to become insolvent during a downturn...and therefore the government mandates that they generally need to keep 10% onhand. That's not because the government knows that 10% is the magic number where banks are safe, but it's better to have an arbitrary cutoff than no reserve requirement at all.
    But, ignoring your incessant call to recognize political realities, what is wrong with using profit and loss to let the market show us what it should be? What is so terrible about that system that we cannot allow it to operate?

    Who shall ascend the hill of the Lord? And who shall stand in his holy place? He who has clean hands and a pure heart, who does not lift up his soul to what is false, and does not swear deceitfully. Psalm 24
    "True law is right reason in agreement with nature . . . Whoever is disobedient is fleeing from himself and denying his human nature [and] will suffer the worst penalties . . ." - Cicero

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