> Cam wrote: > The inability for any single president to effect the economy with > policy *during his administration* is a fairly well established > principle. >
There are 2 general throttles on the economy: 1.) Monetary policy. The Fed controls this in coordination with the President. 2.) Fiscal policy. The President and Congress control this 100%. To say that a President cannot fuck up the economy in his term is chock full of assumptions such as markets and throttlers acting rationally which makes it, in general, true. In this case, however, there were a few extra factors that have shown us that the general rule doesn't always apply. And may never again. Let's take a look, shall we? (A.) The Fed's monetary policy was irresponsibly loose. This meant that cheap leverage became a much used drug on Wall Street. Get it, lend it, get profit lend it, get more profit, lend more. As this money flooded the economy it encouraged ridiculous and irresponsible behavior. But surely regulation should prevent anything REALLY stupid right? Nope. (B.) Beginning in the 70s the government began deregulating the financial industry under the "chicago school" notion that the markets know what they're doing. This created all kinds designer investment vehicles which, the theory said, spread out risk and so was a great thing. But what they did instead is make it so confusing for anyone to understand what their risk actually was, they were completely exceeding their regulated risk levels. And nobody had any idea, including the regulators, what risk was whose. (C.) Because of (b.) the regulated banking system actually became SMALLER than the "shadow" banking system of hedge funds, etc which means that the government now has no data for which to move either lever. That is, there have no idea what the fuck is going on anymore. (D.) The president pursued a borrow-spend policy himself by borrowing shitloads of money from China which has dropped the value of the dollar and the rate that we can pay people who want our money. Now nobody wants our money and this hurts all of the credit markets and limits the fiscal and monetary distance the levers can move. (E.) Much of this money that was borrowed was done so with the underlying asset of houses and people, neither of which are turning out to be worth as much as thought. Thus we have $3 Trillion of money outstanding with no (or little) backing asset. So. What have got. A president that did nothing whlie all of these things happened around him, and a president that was warned time and aging to do something but did nothing, or worse, helped accelerate the problems. So your "principle" ain't worth as much as it used to be and my guess is that Bush will become the first president to prove it false. But that'll take at least 5 years to figure out. Oh, and all of this is also when he knew the debt of ages was coming. Bush: worst foreign and domestic policy of an US president ever. That's his legacy. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Adobe® ColdFusion® 8 software 8 is the most important and dramatic release to date Get the Free Trial http://ad.doubleclick.net/clk;203748912;27390454;j Archive: http://www.houseoffusion.com/groups/CF-Community/message.cfm/messageid:264308 Subscription: http://www.houseoffusion.com/groups/CF-Community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=89.70.5
