Obama's biggest mistake: Reappointing Bernanke

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Thursday September 02, 2010 · 5:21 PM PDT

2010/09/02 · 17:21

Barack Obama's biggest mistake so far was reappointing right wing Republican Ben Bernanke fed chairman.

Ben Bernanke presided over a horrible economic crash and did very little to stop it. He failed to recognize the burst of the housing bubble in late 2006. He failed to help save the lifeblood of the US financial system, Lehman Brothers, from collapse.

And for those of you who say Bernanke could have done nothing to save Lehman you are wrong. The fed has access to a printing press and this could have been easily used to save this company from collapse.

EricChen

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Wednesday September 01, 2010 · 8:12 PM PDT

2010/09/01 · 20:12

The idiotic idea running through Congress right now is to extend the tax cuts for the rich for another two years. This is a horrible idea that will never, ever work and will simply mean that they are extended forever.

The reason is that Republicans are likely to lock down control of Congress in this election and then gain towering majorities in 2012 as they will control redistricting in most states.

What will happen is that these Republican majorities will then extend these tax cuts again in two years, making them permanent again.

EricChen

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Friday August 27, 2010 · 5:26 PM PDT

2010/08/27 · 17:26

Usually, parties learn from elections that essentially wipe their party out of national politics. Republicans learned from their post-New Deal 60 years in the wilderness that if they just cooperate and work with majority Democrats, they would never get the majority.

Democrats never learned from 1994, an election just 16 years ago that wiped Democrats out of office from Congress all the way down to local dogcatcher.

EricChen

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Thursday August 26, 2010 · 5:18 PM PDT

2010/08/26 · 17:18

I see this current political period much like the period in 1894 and 1896.

In 1892, Democrats won back the White House from Republicans with former President Grover Cleveland(the only President to serve two non-consecutive terms). The next year, Cleveland become completely discredited due to the economic panic of 1893.

This resulted in Democrats being wiped out as political force in Congress in the 1894 midterm elections, losing a record setting 125 seats in the House. William Jennings Bryan was defeated in a Senate race that seem year.

In 1896, the economy had barely improved and Cleveland was in such bad shape that he decided not to bother seeking reelection. William Jennings Bryan ran for the Democratic nomination and won.

EricChen

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Monday August 23, 2010 · 7:42 PM PDT

2010/08/23 · 19:42

In the early 1980's, right wing economist Art Laffer created the "Laffer Curve". This was essentially a hump curve that said that an effective tax rate of 50% will gain the government the most revenue, while tax rates of 0% and 100% would obviosuly result in the government taking in zero revenue or very close to it.

When taking into account the 6.2% Social Security payroll tax(which ends up being close to 0% for the wealthiest because they stop paying these taxes after around $105,000) and the 2% Medicare payroll as well as state taxes being around 5%-6%, a top federal rate at 39.6% will pretty much bring the effective rate up to that magical, revenue maximizing 50%.

EricChen

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Friday August 20, 2010 · 5:58 PM PDT

2010/08/20 · 17:58

As promised in my last entry where I ran what unemployment numbers would look like in the next two years if this recovery followed the 1976 recovery.

The 1976 recovery was one of the last hurrah's for the old instant snapback recoveries. Before the 1990-1991 recession, economic recoveries happened like an on/off switch, with large numbers of jobs coming back as soon as the recession ended.

The 1974-1975 recession ended in mid 1975 and in late 1975 through mid 1976, economic growth was absolutely incredible, at almost 9% per quarter at a real annual rate. This was most of the reason why Gerald Ford came back to nearly beat Jimmy Carter at the end of the 1976 campaign.

EricChen

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Wednesday August 18, 2010 · 5:08 PM PDT

2010/08/18 · 17:08

Last week, I ran the unemployment numbers over the next few years assuming that 200,000 jobs are created a month and 150,000 new workers join the workforce each month.

Today, I will run the unemployment numbers for the next few years assuming that this recovery looks like the one that followed the 2001 recession. After each recession, it seems that it takes longer and longer to get sustained job creation. After the 1990-1991 recession, it took about a year. After the 2001 recession, it took about three years.

Prior to 1991, it usually took only four to six months after a recession ended to get sustained job creation and before the 1981-1982 recession, it happened immediately.

EricChen

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Monday August 16, 2010 · 4:15 PM PDT

2010/08/16 · 16:15

There are two ways the government can stimulate the economy. One is through monetary policy(the federal reserve) and another is fiscal policy(taxing and spending by Congress). The cake is baked on fiscal policy. Any new spending or middle class tax relief is almost certain to blocked and what remains of the stimulus is likely to be cut to the bone by Republicans after the November elections.

The other way to stimulate the economy is fiscal policy. The federal funds rate cannot possibly go any lower at a record low .15% and the fed balance sheet increased by almost four times in 2009 and early 2010 to record $2 trillion.

EricChen

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Friday August 13, 2010 · 6:09 PM PDT

2010/08/13 · 18:09

In this diary, I quote the word recovery since many dont actually feel this is a recovery and many probably didnt in 1981 or 1983 either.

What I am trying to do is look at what happened in those "recoveries" from severe recessions and how they compared to today's and what might be different between the recoveries of then and now.

Both the 1981 and 1983 recoveries were very robust as you will see below and showed the kind of growth that we cant get anymore in this country for several reasons.

EricChen

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Thursday August 12, 2010 · 10:43 AM PDT

2010/08/12 · 10:43

The unemployment situation for the next three or four years is not good. Assuming there is no double dip recession, the unemployment rate will fall at a glacially slow pace.

My calculations assume that for the next two years, 200,000(about the average of what was added per month between 1992 and 2000) jobs will be added per month and around 150,000 new people will enter the labor force each month.

RSS

Obama's biggest mistake: Reappointing Bernanke

Extending tax cuts for the rich for two years is as good as making them permanent

Have Democrats learned anything from 1994?

Russ Feingold as William Jennings Bryan in 2012?

39.6%: The magic top tax rate

How unemployment would look if this recovery followed the 1976 recovery

How unemployment will look if this recovery follows the 2003 recovery

The federal reserve is going to have to lead this recovery

Comparing the 2010 "recovery" to the 1981 and 1983 "recoveries"

Unemployment projections for the next few years