The next "Financial Crisis" & the politics of populism

[TGHusker]

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/12151115/The-world-cant-afford-another-financial-crash-it-could-destroy-capitalism-as-we-know-it.html

 

I thought I'd be a ray of sunshine with this cherry article . The article basically says the current system has run out of bullets and if another financial crisis hits, we are doomed.

 

One concern I have is noted in the article - Smoot-Hawley Tariff Act. I could see Trump repeating this big mistake by imposing tariffs on China, etc. All of his 'Make America Great' talk and his 'tough' (may I say misguided) talk on China could cause a real backlash economically. That is why cooler heads during one of the debates took him to task over his idea of slapping tariffs on China. I can also see wt the fall of stock prices happening now and if the economy slips deeper, voters saying the political leaders didn't take care of us - time for an economic savior -- ala Trump. What a disaster that would be.

 

A few excerpts :

 

 

They bounce back after terrorist attacks, pick themselves up after earthquakes and cope with pandemics such as Zika. They can even handle years of economic uncertainty, stagnant wages and sky-high unemployment. But no developed nation today could possibly tolerate another wholesale banking crisis and proper, blood and guts recession.

We are too fragile, fiscally as well as psychologically. Our economies, cultures and polities are still paying a heavy price for the Great Recession; another collapse, especially were it to be accompanied by a fresh banking bailout by the taxpayer, would trigger a cataclysmic, uncontrollable backlash.

The public, whose faith in elites and the private sector was rattled after 2007-09, would simply not wear it. Its anger would be so explosive, so-all encompassing that it would threaten the very survival of free trade, of globalisation and of the market-based economy. There would be calls for wage and price controls, punitive, ultra-progressive taxes, a war on the City and arbitrary jail sentences.

Two men walk along the road to Los Angeles in 1937, during the Great Depression

For fear of allowing extremist or populist parties through the door, mainstream politicians would end up adopting much of this agenda, with devastating implications for our long-term prosperity. Central banks, in desperation, would embrace the purest form of money-printing: they would start giving consumers actual cash to spend, temporarily turbo-charging demand while destroying any remaining respect for the idea that money needs to be earned.

 

History never repeats itself exactly, but the last time a recession was met by pure, unadulterated populism was in the Thirties, when the Americans turned a stock market crash and a series of monetary policy blunders into a depression. President Herbert Hoover signed into law the Smoot-Hawley Tariff Act, dreamt up by two economically illiterate Republican senators, slapping massive taxes on the imports of 20,000 goods and triggering a global trade war. It was perhaps the most economically destructive piece of legislation ever devised, and it took until the Nineties before the damage was finally erased.

 

 

 

This is exactly the tonic that the populists have been waiting for. Despite their dramatic emergence, they have so far failed to make a real breakthrough. The SNP was unable to win the Scottish referendum and the National Front didn’t gain a single region in France. Mariano Rajoy remains Spain’s prime minister, and anti-establishment parties have been thwarted in Germany. Even lighter forms of populism, such as Ed Miliband’s, were rejected. Syriza’s victory in Greece was one of the few genuine populist triumphs; but it was soon crushed by the combined might of Brussels and Frankfurt.

The Republican presidential nominee often proclaims that his presidency will make America a "great" country again

This could be about to change. The fact that Donald Trump and Bernie Sanders both won their respective New Hampshire primaries is certainly one remarkable indication of the state of mind of many US political activists. Any economic relapse would help Marine Le Pen’s chances in next year’s French presidential election, and further undermine Angela Merkel’s sinking popularity in Germany.

[KazLong]

Not sure if this is an attack ad on the Trump, or if this an attempt to discuss populism.

 

I went to the George W. Bush presidential museum first thing he says in his greeting video is that he was a compassionate conservative carrying about the people and helping the masses.

 

Why should we care about the big banks or wall street? Most americans the majority live with less then a $500 in there savings account the number goes even more depressing if you look less then $1000... I remember as a kid I saw a bank had a sign up saying get your low rate vacation loan here! I asked my dad why would anyone take a loan to go on vacation? He said it is the only way some people can afford it...

 

Now the standard if it all fails then everyone losses everything! Not true, the government insures all your accounts from banks doing a run on the money like they did in the depression up to 100k per bank, how many people on this board have more then 100k in one account at a bank...

 

How far we have gone politically from there, that at the time a person labeled as neocon by the left would now label him a 'populist' I know Ronald Regan would be labeled as a populist as well...

 

We dint trade with China for years and we did just fine, several intellectuals within the republican and democrat parties have pointed out that 'free' trade with china is not free, how can we realistically compete with slave labor, child labor and price fixing and price subsides by a communist country?

 

China is in a trade war with us, we just arent firing any bullets back. When I studied economics at Nebraska the talking points then was we would over come and transform into an intellectual society and innovation would solve all our problems with our losses to China. Even then I pointed out the problems with that idea when china does not respect our copy rights intellectual property and they make cheap knock offs of all our inventions. Now our inventions are just made there...

 

We are the only major economic power to have a regional tax code, allowing countries to benefit from being located within the united states and manufacture and house there profits over seas.

 

I could continue to explain why the war on china is not a thing trump created or a trump inspired or a populist idea, in the 90s and the early 2000 it was a nationalist idea, before nationalist was associated by the liberals are racist etc and a bad word.

 

Well I am a nationalist, and like I said then I dont care about the rest of the world or there benefit all I care about is America. If Trumps or any tough on China's president policy go into effect they may cause a lot of short term pain to regain power, under the current establishment republicans or democrats we are slipping into a 4th or 5th rate country with the most powerful military, how did that work out for the soviet union?

 

 

Both parties are guilty, communist china (the legitimate government of China is in what we call Taiwan) first opened to trade under Nixon then expanded under Bush Sr. then greatly expanded under Clinton, now we just accept that everything we make is made in the hell hole of China.

 

China's government is telling there graduates of there equivalent of west point to prepare for war with the United States within there life time.

 

If any one is still reading this I remember an interesting story that was on C-Span a congressional investigation I may have the exact numbers wrong. When the congressional investigation began there where something like 11 hanger companies left in america the previous year 32 and the year before even more. Hangers cost something like 22 cents to be made in America and where selling for something around 32 cents, the chinese where making hangers for 11 cents, we found out through the investigation that chinas government was actually subsiding there hanger manufactures by 25 cents, so it was actually more expensive to make hangers in china, by the time this report was done the last US company had just closed it doors.

 

Do you think now that china is the sole provider of hangers they will continue to keep the prices artificially low? Historically no they do not.

 

Look at the war they have been having with us with Tires and tire manufacturing jobs and all of the companies we have lost due to the China on going unfair trade policies.

 

I assume you work in a service economy,as most Americans do I do myself. How long will our service provider jobs last when there is no manufacturing base behind them? Surely not every one can develop the latest software or be a mechanical engineer.

 

Last time you went to a fast food place what was the age of the workers? When I was a kid in the 90s fast food places and gas stations where employing kids, now it seems to be all people around my age (in there 30s). Why do you think there is 40-60% unemployment for american youth? Should those youth go to college? Rack up thousands of dollars of debts for jobs that dont exist... I worked retail in undergrad and after several people i worked with got there degrees from UNO UNL or UNK they continued to work in retail and do to this day due to there degrees not being worth the paper they are wrote on. The professional school I graduated from had less then 50% employment after a year and that is counting employment at a gas station...

 

If you work for the government in a service provider how long will that last, how long will the government have jobs if no one is working to pay taxes?

 

Why has this continued to go on? Because like the holocaust or when they do anything to screw over people, they chip away one group at a time, first the low end garment makers shipped to India bangladish etc then the auto workers then etc..

 

We all like going to walmart and paying a low price for a soccer ball we all love having our GDP high and having our shelves stocked with goods, however there is a high cost to the low prices, humans, slaves, children, american workers, our country.

 

These 'republican' and 'democrat' ideas of bail outs are always a bad idea, they just lead the next collapse of the system to be even worse.

 

Donald Trump is absolutely right when he says the government is lying about there unemployment numbers they are. They tweak the standards and measures to count the 'losers' as not counting, so if you believe Obama economic numbers I have a bridge to sell you. Why should you care about the 'losers' because we are all paying for them in one way or another and they are the canary in the mine that is warning us all that our society is failing. However Obama approach is he is doing a great job and there is no gas in the mine and just take another calm deep relaxing inhale.

 

18 trillion dollars in debt, growing every second.

 

Could write more dont care too, saying Trumps ideas are any dumber then any of the other idiots running for president is laughable.

 

Ron Paul 2016.

[BigRedBuster]

I have to admit, my father has been passing along emails for the last 5-7 years about the catastrophic doom and gloom economic crash that is just around the corner. It has made me numb to this stuff. It's always going to happen "THIS YEAR". But.........

 

However, I AM concerned if either Bernie or Trump get elected. Both seem to not give a sh#t about keeping things stable and think massive changes need to happen "RIGHT NOW."

 

Part of the reason why our economy has been so good for so long is the stability of the system. Yes, there are tweaks that need to be made and those can always be discussed. But, I believe massive changes in our economy structure can have devastating affects and not just on the upper class like what Bernie wants.

 

And...before certain posters go over board here, I'm not saying raising taxes on the rich or doing things to help lower income families will crash the economy.

[84HuskerLaw]

Here are some basic economic facts that cannot be simply ignored or dismissed as meaningless.

 

1. The national debt acknolwedged by the U.S. government is around 18 trillion now and climbing at an astounding rate.

2. The U.S. government has programs and obligations therefrom of a variety of scope and nature which many knowledgeable experts on the matter state approach 100 trillion more as "unfunded" liabilities or future obligations for promises already made to various constituencies.

3. The total market value based on current stock market figures of the NYSE stocks is $31 trillion. Therefore, the gross value of all the companies and businesses represented in the publicly traded 'stock markets' equals ONLY 1/4th of the present Federal government debts. Put simply: the federal government alone 'owes' 4 times the total value of America's publicly traded businesses.

4. States and local governments owe debts combining to total something in range of the what the federal government does.

5. All government entities continue to incur and grow the public debts at unprecedented rates and there is no end in sight as a practical matter.

6. The tax burden of Americans who actually pay taxes has never been higher and exceeds by a substantial margin the burden of nearly all other well industrialized nations.

7. The unemployment rate is presently reported by the Federal government to be about 5%. This rate measures only certain people without jobs and compares that measure to certain other people who do have jobs. It does not in any reasonable or meaninful way indicate the rate of joblessness which is rampant and unpredented in this country. Joblessness is as bad today as it was during so-called Great Depression of the 1930s. There was nothing 'great' about the economic depression of the 1930s during the FDR years. FDR compounded and made the suffering worse and but for the U.S.A. entry into World War II, that 'Depression' which is basically defined by economists to a be severe recession, the Nation would not have gotten out of the said recession until rational economic policies were adopted by a future President and Congress, etc.

8. The effective unemployment rate is approximately 15% by traditional standards of comparison. Labor force participation rate is the generally viewed measure of the population that is actually working (gainfully employed). This rate is as bad as it has been in nearly 40 years, dating back to the hideous economy of Jimmy Carter. Actually, the Carter years, generally regarded as some of the worst economic years of the 20th century outside of the 1930s, were much better than anything of the past 6 years.

9. None of the current Presidential candidates have laid out specific policies and plans to help revive our dead economy and hopefully save us frorm the present downward spiral into the dark abyss of economic depression. However, we know that more liberal / socialism will lead to more of the problems we are enduring today. We need massive doses of free market capitalism or we will lose what little remains of this Nation's economy and the wealth in has taken 10 generations to build. The past ten years have seen the loss of as much as 10 trillion of the net worth of this country. We cannot afford to lose anymore.

[HuskerShark]

Part of the reason why our economy has been so good for so long is the stability of the system.

 

So being 19 trillion dollars in debt is a good economy?

 

So much of what make people say "our economy is good" are illusions to draw our eyes off the real issues with our economy.

 

The unemployment number is startling when you look at the REAL number. The government reports it normally between 5 and 10%, but the real number would be closer to 35 or 40%

 

Like KazLong said, a vast majority of people in this country are barely making ends meet every month. The system that we throw everyone into of "Go to school, get good grades, then go get a safe, secure job" has failed WAY more people than it has worked for. Damn near everyone in our country is either dead or dead broke by the time they reach the age of 60.

 

If you look at what is REALLY happening in our country, almost NOTHING points to our economy being strong. There's too much government intervention in our daily lives. There isn't a politician in the world that could take office and clean up the mess that we have going on. The thing that will make the biggest improvement in our economic condition, as well as a multitude of other deficiencies in our country right now, is if people stop themselves and their children from submitting to the "deferred life plan" and teach them financial education, and entrepreneurship.

[BigRedBuster]

I will not argue against the fact that the national debt is a major issue that I want to see taken care of. Funny thing is, the last President that was actually doing something about it was Clinton and I couldn't stand him and don't like his wife.

 

35-40% unemployment??? Hmmm...a little bit of an exaggeration.

 

The U-6 is basically what you are talking about.

 

LINK

 

Or....you're talking about the number the Trumpster throws out there.

 

Here's a nice discussion about his numbers. Not necessarily as alarming as you make it sound.

 

LINK

 

Here's another interesting article on the differences of the numbers.

 

LINK

 

Basically, this is similar to the Republicans coming out and being ssooooooo alarmed not too long ago that "45% of the population doesn't pay taxes". That statement was proven shortly after to be total BS unless you expect people in nursing homes....etc. to be paying taxes.

 

 

And...as I said in my post, I am not talking about actions that can be taken to help lower income segments of our population.

[QMany]

Here are some basic economic facts that cannot be simply ignored or dismissed as meaningless.

 

1. The national debt acknolwedged by the U.S. government is around 18 trillion now and climbing at an astounding rate.

2. The U.S. government has programs and obligations therefrom of a variety of scope and nature which many knowledgeable experts on the matter state approach 100 trillion more as "unfunded" liabilities or future obligations for promises already made to various constituencies.

3. The total market value based on current stock market figures of the NYSE stocks is $31 trillion. Therefore, the gross value of all the companies and businesses represented in the publicly traded 'stock markets' equals ONLY 1/4th of the present Federal government debts. Put simply: the federal government alone 'owes' 4 times the total value of America's publicly traded businesses.

4. States and local governments owe debts combining to total something in range of the what the federal government does.

5. All government entities continue to incur and grow the public debts at unprecedented rates and there is no end in sight as a practical matter.

6. The tax burden of Americans who actually pay taxes has never been higher and exceeds by a substantial margin the burden of nearly all other well industrialized nations.

7. The unemployment rate is presently reported by the Federal government to be about 5%. This rate measures only certain people without jobs and compares that measure to certain other people who do have jobs. It does not in any reasonable or meaninful way indicate the rate of joblessness which is rampant and unpredented in this country. Joblessness is as bad today as it was during so-called Great Depression of the 1930s. There was nothing 'great' about the economic depression of the 1930s during the FDR years. FDR compounded and made the suffering worse and but for the U.S.A. entry into World War II, that 'Depression' which is basically defined by economists to a be severe recession, the Nation would not have gotten out of the said recession until rational economic policies were adopted by a future President and Congress, etc.

8. The effective unemployment rate is approximately 15% by traditional standards of comparison. Labor force participation rate is the generally viewed measure of the population that is actually working (gainfully employed). This rate is as bad as it has been in nearly 40 years, dating back to the hideous economy of Jimmy Carter. Actually, the Carter years, generally regarded as some of the worst economic years of the 20th century outside of the 1930s, were much better than anything of the past 6 years.

9. None of the current Presidential candidates have laid out specific policies and plans to help revive our dead economy and hopefully save us frorm the present downward spiral into the dark abyss of economic depression. However, we know that more liberal / socialism will lead to more of the problems we are enduring today. We need massive doses of free market capitalism or we will lose what little remains of this Nation's economy and the wealth in has taken 10 generations to build. The past ten years have seen the loss of as much as 10 trillion of the net worth of this country. We cannot afford to lose anymore.

Do you have any citations for these "basic economic facts that cannot be simply ignored or dismissed?"

[BigRedBuster]

Here's a closer look at that 35-40% unemployment mark.

 

One of the articles I listed above said this came from simply taking the entire population over 16 years of age and subtracting out the number working.

 

Well.....some simple googling on the internet brought up some interesting facts about that. So...let's look at everyone over 16.

 

Your figure was 35-40% were unemployed. I'll give you the 40%. Then, I found these facts.

 

13% of the population is above 65 years old. Many of these are going to be unable to work

1% is in prisons

6% of the population is attending some type of college

3% is in HS (between the ages of 16 -18)

 

I've just lowered your number down to 17%.

 

I wasn't able to find what percentage was disabled and not able to work or what percentage is in some type of long term care (under 65)

 

Do you start to see where this figure starts losing it's credibility?

[Moiraine]

Here's a closer look at that 35-40% unemployment mark.

 

One of the articles I listed above said this came from simply taking the entire population over 16 years of age and subtracting out the number working.

 

Well.....some simple googling on the internet brought up some interesting facts about that. So...let's look at everyone over 16.

 

Your figure was 35-40% were unemployed. I'll give you the 40%. Then, I found these facts.

 

13% of the population is above 65 years old. Many of these are going to be unable to work

1% is in prisons

6% of the population is attending some type of college

3% is in HS (between the ages of 16 -18)

 

I've just lowered your number down to 17%.

 

I wasn't able to find what percentage was disabled and not able to work or what percentage is in some type of long term care (under 65)

 

Do you start to see where this figure starts losing it's credibility?

 

 

Not to mention house wives still exist and so do house husbands.

[BigRedBuster]

 

Here's a closer look at that 35-40% unemployment mark.

 

One of the articles I listed above said this came from simply taking the entire population over 16 years of age and subtracting out the number working.

 

Well.....some simple googling on the internet brought up some interesting facts about that. So...let's look at everyone over 16.

 

Your figure was 35-40% were unemployed. I'll give you the 40%. Then, I found these facts.

 

13% of the population is above 65 years old. Many of these are going to be unable to work

1% is in prisons

6% of the population is attending some type of college

3% is in HS (between the ages of 16 -18)

 

I've just lowered your number down to 17%.

 

I wasn't able to find what percentage was disabled and not able to work or what percentage is in some type of long term care (under 65)

 

Do you start to see where this figure starts losing it's credibility?

 

 

Not to mention house wives still exist and so do house husbands.

 

And, once that alarmist myth is debunked, it's pretty easy to dismiss the rest of what someone says as inaccurate stats used to get people all worked up and get their vote.

[TGHusker]

Good discussion. I do believe we need a 'shake up' but I don't think Trump is the right guy for it. It is obvious with our massive debt, unemployment, stagnant economy that hasn't been revised by Obama's 'stimulus' spending nor will be by Sander's excessive spending we need to take a different approach. We've tried since FDR's day massive govt spending and we still fighting similar battles. The Great Society spending didn't solve poverty, the drug war hasn't solved the drug problem, govt bailouts haven't solved the financial crisis (yes we are better than 2008 but no one can seriously say we have recovered when we have such a high # of unemployment and slow growth, etc).

[BigRedBuster]

My future dream world is where people hear something from a politician and question EVERYTHING to the point they do their own investigation into if it really is true or not.

 

It honestly is amazing to me the very smart people I know that just drink up this stuff and never question it because it agrees with their view of how the world works. Hell, everyone should even be constantly questioning their own beliefs.

[Danny Bateman]

My future dream world is where people hear something from a politician and question EVERYTHING to the point they do their own investigation into if it really is true or not.

 

It honestly is amazing to me the very smart people I know that just drink up this stuff and never question it because it agrees with their view of how the world works. Hell, everyone should even be constantly questioning their own beliefs.

 

Nothing like some good old fashion confirmation bias to brighten up your day.

 

Ignorance is bliss, my friend. Being enlightened takes too much work.