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View Diary: Austerity and Depression breaking Europe apart (73 comments)

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  •  The idea is that the economy (3+ / 0-)

    continues to recover (as it already is doing) and the temporary measures phase out harmlessly. One-unit and multifamily starts are finally going up and as people buy these new units, not only are construction jobs created but durable goods orders (for appliances, furniture, etc.) also start to pick up. The downward cycle is converted into a virtuous cycle. What the Fed is doing is trying to kickstart that. It's not a panacea, but it beats doing nothing.

    •  It does not beat forgiving student debt, (9+ / 0-)

      cramming down underwater mortgages, allowing people to withdraw from retirement funds without penalty, extending unemployment benefits, and many other things things to actually help the people who are suffering most--the unemployed, underemployed, underpaid non-owners. QE is not only not helping the most economically marginalized, it is actually harming them by raising inflation.

      There are moments when the body is as numinous as words, days that are the good flesh continuing. -- Robert Hass

      by srkp23 on Sat Sep 22, 2012 at 07:59:51 AM PDT

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      •  Forgiving student debt is fantastic (0+ / 0-)

        for former students. But for the next generation of students, who will find no lenders interested in making loans that will someday be forgiven, it would be quite unfair. If as progressives we value student loans as a means of raising people out of poverty, we should support the integrity of those loans. Debt forgiveness is not a victimless policy.

        •  Let the govt make the loans (5+ / 0-)

          Student loans from banks have turned out to be Usury and Fraud Well Armored and Riding on Fire-Breathing Dragons, with no St George or anyone able or willing to slay the dragons to save the damsels and lads in distress.

          So kill the dragon and in the future get student loans thru a government program. That will work. It used to work well before the banksters, the Repubs, and their Democratic, uh, flunkies "reformed" the student loan program and "reformed" bankruptcy.

    •  Tempoary measures (6+ / 0-)
      What the Fed is doing is trying to kickstart that.
      Five years later we have little to show for that, except for a lot of bailed out banks.

      ¡Cállate o despertarás la izquierda! - protest sign in Spain

      by gjohnsit on Sat Sep 22, 2012 at 07:59:56 AM PDT

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      •  I disagree entirely. We are not (1+ / 0-)
        Recommended by:
        enemy of the people

        in a booming economy. But how do you know just how bad the economy would be if we hadn't done all these measures? When Paul Ryan and the rest of the GOP says that the stimulus didn't help the economy and cite our weak economy as proof, they are saying the same thing as you are right now.  The truth is that we have no way of knowing what policies work and to what degree. But we do know that stimulus is generally a positive thing in terms of moving the economy forward.

        •  You are confusing terms (2+ / 0-)
          Recommended by:
          Azazello, Mr Robert

          the stimulus you are referring to is fiscal stimulus.
             Fiscal stimulus tends to go directly to the working class.

          The stimulus in question here is monetary stimulus. This is totally directly at the banking industry.
             And since the banking industry does almost nothing but speculate and trade these days (as opposed to invest), its benefits are marginal at best.

          ¡Cállate o despertarás la izquierda! - protest sign in Spain

          by gjohnsit on Sat Sep 22, 2012 at 08:11:10 AM PDT

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          •  The banking industry is actually (0+ / 0-)

            doing fine these days. They don't need a stimulus, and QE3 is not designed to help them (although it can't avoid doing so). The intent is to spur the economy, and to help middle class Americans. And most economists agree that this will happen, though to differing degrees.  Your comments here indicate that you know your stuff. I think you know that buying $40 billion a month of MBS, and all the follow-on effects of that, will have lots of implications for the various participants in our economy; the statement that it will ONLY help banks is not one that I think you really believe.

            •  You have a basic misunderstanding (2+ / 0-)
              Recommended by:
              doc2, Mr Robert

              of what QE3 will do.
                 It's going to be buying MBS. Who do you think owns those MBS? The banks. They will be the ones to benefit.

                The legacy of the previous QE's are clear. They are designed to help the financial industry, and they have. And yes, I really do believe that.

              ¡Cállate o despertarás la izquierda! - protest sign in Spain

              by gjohnsit on Sat Sep 22, 2012 at 08:25:18 AM PDT

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              •  You are ignoring my main point. (0+ / 0-)

                Sure, if I own MBS I just made 8 ticks on the price increase, which is accretive. But the total implications of more liquidity and lower rates is much greater than just the one-month P&L impact on banks. I think you understand that. Maybe I'm wrong. Anyhow, gotta go, enjoyed the chat.

              •  I generally agree with your position (2+ / 0-)
                Recommended by:
                Teiresias70, Jim P

                and it is true that QE3 is just another bailout for the banks. doc2 is also correct on the theory that by clearing a lot of these MBS will clear the balance sheet of the banks such that they will be willing to lend again and re-invigorate the economy, but that's the theory. In reality, and anecdotally we are seeing it, is that the banks are putting such onerous requirements to make these loans that it is just not happening. This can only be fixed by policy and we all know what has happened to policy the last two years, nothing, and with current Congress nothing will continue to happen. In fact, the way I read it, this last action of the Fed was basically a big F.U. to Congress and at the same time a desperate action of the Fed in view of the inaction of the  pols. Of course that at this stage of the game policy actions would be a lot more effective than any fiscal actions and some of those fiscal actions require policy action to be effective but in this climate I just don't see it happening. As they say it is kind of, the beatings will continue until morale improves.

                Nevertheless, and no one should ignore this, for a long time now banks have been more interested in playing Wall St. than playing Main St. In other words, nowadays banks rather gamble in the financial markets than do traditional banking such as lending money to regular people. This can only be changed through policy and very little the Fed can do about it. The Fed does not make laws, it can influence those that make them and the guys in charge right now are not listening.

                "The great enemy of the truth is very often not the lie -- deliberate, contrived and dishonest, but the myth, persistent, persuasive, and unrealistic. Belief in myths allows the comfort of opinion without the discomfort of thought." -John F. Kennedy

                by basquebob on Sat Sep 22, 2012 at 11:10:07 AM PDT

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