GDP grows 3.2% in first quarter:

[kalm]

How'd that stability work while the derivatives market was exploding?

What about the vast majority of the time when there is stability in the capital markets? Futures and insurance contracts were not the cause of the recent financial crisis. In fact, it was only a certain type of derivative that was involved.

Yes everthing has it's place, it's about the degree. Farmers locking in crop prices probably wouldn't have taken down AIG. There were many causes of the crisis, derivatives made it much, much worse.

[AZGrizFan]

Just wait. If they pass cap and trade watch it come crashing down again.

Even without cap-n-tax, the economy is already likely to come crashing down unless Obama changes his stripes and becomes a cheerleader for lower taxes, less government and less spending. Despite massive government intervention and "cheap" money, the current growth rate is oney half of what it was during the Reagan recovery of the eighties. Moreover, Obama's tax increases and the shock effect of higher gas prices have yet to hit the economy, and we will soon run out of "stmulus."

"...As for monetary policy, the Fed has held short-term interest rates at close to zero for 16 months. The only question is how soon and how high rates will rise. Meanwhile, Washington is raising costs for business by expanding its regulatory reach via tougher antitrust enforcement, mandates on health care and energy, more political limits on telecom investment, restrictions on bank lending, and much more. ..."



http://online.wsj.com/article/SB1000142 ... el_opinion" onclick="window.open(this.href);return false;

Truth. You think money is tight NOW???? Wait until the Fed starts jacking up interest rates to attempt to control the runaway inflation that's on the horizon.

Talk about final nail in our economic coffin.

[youngterrier]

Just wait. If they pass cap and trade watch it come crashing down again.

Even without cap-n-tax, the economy is already likely to come crashing down unless Obama changes his stripes and becomes a cheerleader for lower taxes, less government and less spending. Despite massive government intervention and "cheap" money, the current growth rate is oney half of what it was during the Reagan recovery of the eighties. Moreover, Obama's tax increases and the shock effect of higher gas prices have yet to hit the economy, and we will soon run out of "stmulus."

"...As for monetary policy, the Fed has held short-term interest rates at close to zero for 16 months. The only question is how soon and how high rates will rise. Meanwhile, Washington is raising costs for business by expanding its regulatory reach via tougher antitrust enforcement, mandates on health care and energy, more political limits on telecom investment, restrictions on bank lending, and much more. ..."



http://online.wsj.com/article/SB1000142 ... el_opinion" onclick="window.open(this.href);return false;

it could be just me but the second link isn't working,

and as long as we have the current monetary system the economy will always be on a boom-bust cycle

[kalm]

Just wait. If they pass cap and trade watch it come crashing down again.

Even without cap-n-tax, the economy is already likely to come crashing down unless Obama changes his stripes and becomes a cheerleader for lower taxes, less government and less spending. Despite massive government intervention and "cheap" money, the current growth rate is oney half of what it was during the Reagan recovery of the eighties. Moreover, Obama's tax increases and the shock effect of higher gas prices have yet to hit the economy, and we will soon run out of "stmulus."

Reagan raised taxes on everyone else after he cut taxes on the rich. Oh, and he dramtically grew government and spent more. The Reagan recovery happened after these things.

[CitadelGrad]

Even without cap-n-tax, the economy is already likely to come crashing down unless Obama changes his stripes and becomes a cheerleader for lower taxes, less government and less spending. Despite massive government intervention and "cheap" money, the current growth rate is oney half of what it was during the Reagan recovery of the eighties. Moreover, Obama's tax increases and the shock effect of higher gas prices have yet to hit the economy, and we will soon run out of "stmulus."

Reagan raised taxes on everyone else after he cut taxes on the rich. Oh, and he dramtically grew government and spent more. The Reagan recovery happened after these things.

I suppose that depends on how you define "the rich" and "everyone else". I don't suppose the growth of government and spending at that time had anything to do with guys like Rostenkowski and O' Neill. Ever heard of them? Even with all that spending, the deficit as a percentage of GDP was much smaller than it is now. The Reagan recovery began as the tax cuts took effect in '82 and inflation dropped dramatically as a result of Paul Volker's tight monetary policy.

[kalm]

Reagan raised taxes on everyone else after he cut taxes on the rich. Oh, and he dramtically grew government and spent more. The Reagan recovery happened after these things.

I suppose that depends on how you define "the rich" and "everyone else". I don't suppose the growth of government and spending at that time had anything to do with guys like Rostenkowski and O' Neill. Ever heard of them? Even with all that spending, the deficit as a percentage of GDP was much smaller than it is now. The Reagan recovery began as the tax cuts took effect in '82 and inflation dropped dramatically as a result of Paul Volker's tight monetary policy.

The top marginal tax rate from Roosevelt through Carter ranged from around 65%-91%. Reagan cut it to around 30%. He also cut corporate taxes and tariffs both of which benefit the wealthy and multi-national corporations. All of these taxes have remained relatively low since Reagan (Clinton and Bush 1 used small increases to balance the budget) as has another cornerstone of reaganomics - deregulation. So in essence we have experienced 30 years of reaganomics regardless of which party has been in power, and it has been great for extremely wealthy and Chinese manufacturing, but for the middle class - not so much.

And just like I hold Clinton responsible for Graham-Leach-Bliley and the Commodities Futures Trading Act I also partially fault Reagan for the spending and the growth of the federal governement. Sure each President has to negotiate with congress but they also have ability to veto. Besides, much of the spending under Reagan was defense spending.

Here's an interesting article on Obama's policies for dealing with current recession and some of them mirror what Reagan did.

Even Reagan Raised Taxes
Robert Shapiro, 02.03.10, 12:01 AM EST
Obama is following the paths of former presidents when it comes to balancing the budget.




It's budget week in Washington, and the $1.27 trillion deficit projected for fiscal 2011 should remind us that deep recessions, especially when accompanied by large spending increases, produce outsized deficits for years to come. The federal government has been down this road recently before, first under Ronald Reagan and then under George H. W. Bush and Bill Clinton. The way those presidents responded can help us chart the likely path of fiscal policy for the next half decade.

Presidential budgets are always a little overwhelming. Barack Obama's, for example, has a surprising number of proposals usually seen in Republican budgets--new tax breaks for business, including ending capital gains tax on new investments in small businesses; a freeze on large areas of discretionary spending; termination of some 120 small federal programs; and increases in military spending. Less unexpected, Obama's budget brings back proposals from past Democratic plans, including big spending increases for higher education, infrastructure and research and development; tax hikes for big banks, big oil and big coal; and higher tax rates for high-income people (by letting the Bush tax cuts for top earners expire and by cutting back carried interest).

More notable is Obama's emerging commitment to long-term fiscal restraint. This seems evident not only in his proposals for spending cuts, but also in his calls to bring back the "pay-as-you-go" rules, which make Congress pay for any new initiative with spending cuts or tax increases, and create a bipartisan commission to reduce entitlement spending. Senate Republicans moved to block both initiatives, even though pay-as-you-go was a key element of the Clinton-GOP budget entente that briefly balanced the budget and every GOP president since Reagan has supported entitlement commissions. But these early skirmishes are unlikely to alter the long-term path of fiscal policy.

The realities of global capital markets will largely set this path--much as they have in the past. When these markets see a long string of unsupportable deficits, they respond by pushing up long-term interest rates and driving down the value of the currency. Both of these developments have already begun to unfold, which may help explain Obama's new concern for fiscal probity. But the prospect of a sinking economy will make almost any president shift course, and when they do, the budget and the politics surrounding it provide a limited number of pathways.

The first part of that path entails raising higher revenues. Everyone remembers Reagan's 1981 tax cuts. His admirers are less likely to tout the tax hikes he accepted as the 1981 recession and his own tax cuts began to unravel his long-term fiscal picture--a large tax increase on business in 1982, higher payroll taxes enacted in 1983 and higher energy taxes in 1984. A decade later, when a serious recession and higher spending began to upend the fiscal outlook again, the first President Bush similarly raised taxes on higher-income people in 1991; Bill Clinton doubled down and raised them again in 1993.

Presidents facing the prospect that unending deficits will undo their economic legacies also cut spending in the only places that make a big difference, starting with defense. Reagan is remembered, again, for his defense buildup--but his big increases in Pentagon spending ended by 1985.

http://www.forbes.com/2010/02/02/barack ... apiro.html" onclick="window.open(this.href);return false;

[CitadelGrad]

So "Reaganomics" is a federal income tax rate less than 60%? Wow. Jellybelly has finally met his match.

[AZGrizFan]

Well, given that the national debt will be 90% of GDP by 2020, it had better start rising a fuck of a lot faster than 3.2%.

Obama is a mental midget when it comes to economics. He's proven that repeatedly.

[kalm]

Well, given that the national debt will be 90% of GDP by 2020, it had better start rising a **** of a lot faster than 3.2%.

Obama is a mental midget when it comes to economics. He's proven that repeatedly.

Interestingly enough, GDP under Reagan averaged 3.2%. But you're right it needs to grow much faster now.

[GannonFan]

Well, given that the national debt will be 90% of GDP by 2020, it had better start rising a **** of a lot faster than 3.2%.

Obama is a mental midget when it comes to economics. He's proven that repeatedly.

Interestingly enough, GDP under Reagan averaged 3.2%. But you're right it needs to grow much faster now.

Sure, over his 8 years in office it probably did average 3.2%. However, in the quarters coming out of the recession in his first term, the GDP was moving along at almost an 8% clip. That's one of the problems with how we are coming out of this recession - the GDP growth is positive, but as you say, much, much slower than what we really need.

[kalm]

So "Reaganomics" is a federal income tax rate less than 60%? Wow. Jellybelly has finally met his match.

The top marginal rate has not been above 37% since Reagan took office. Not only that, but corporate tax receipts have been reduced as well. And before you use the argument that the employees and shareholders of those corporations are already paying income tax, keep in mind that in the case of large corporations like Walmart, those same high end earners and shareholders are only paying at around a 16% rate. And last time I looked those corporations receive quite a bit in government funding whether in the form of subsidies, advanced public infrastructure, or a federal court system to resolve contract disputes.

And like I said, deregulation is another hugely important cornerstone of reaganomics. You know, those pesky regulations like restricting dangerous behavior on Wall Street or the europeans requiring companies to spend more money on shut off valves for deep sea oil drilling.

BTW, Jelly's got it figured out.

[Pwns]

http://www.google.com/hostednews/ap/art ... wD9FDKRAG1" onclick="window.open(this.href);return false;

Looks like the growth in GDP isn't going to be enough to offset joblessness. Sorry, I've tried to be fair to Obama, but he's already starting to look like a big failure on the economy. Now we've got a massive deficit, inflation on the horizon, high unemployment, and as much as businesses are hurting Obama is still talking about a VAT and Cap and Strangle.