Loc: Sunnyvale, CA, USA
Well, Newt Gingrich proved to be Clinton's best clueless ally. Gingrich's 'don't raise the debt ceiling' got traction with the idiots, and so Clinton managed a couple of disastrous temporary shutdowns, a lot of stuff went way south, and investors lost confidence in U.S. government bonds. Clinton IIRC borrowed from pension funds ( which were repaid ) to avert a total meltdown. And this damage occurred with a sound U.S. economy and a sounder global economy.
Now, some of the GOP wants to repeat this disaster with a U.S. and a global economy on life support, and under a lot more dire unique circumstances.
Investors ultimately landed in the 'safety' of U.S. debt ( which has never previously defaulted ), after the instability of the Euro markets ( Greece and Ireland meltdowns ) that they turned to after the great financial instruments meltdowns. Massive, concentrated, unprecendented capital flows. If the U.S. defaults, markets panic, unprecedented unloading, a run on Treasurys, massive unprecedented capital flows ( commodities, for example: largest economies crumble, already fragile, with the basic inputs [ such as metals, or whatever ] costs for economic growth skyrocketing ).
As well as the U.S. specific obvious damage: Gutting/elimination of the most basic and essential services such as the FBI, Department of Justice, Homeland Security, border security, education funding, unemployment insurance, school lunches, national parks, food stamps, student loans, air transportation safety, drug enforcement, food and drug safety, etc. Oh yeah, can't forget that the interest rate on our debt doubles or triples ( or higher, likely, as a 'default risk' penalty would reasonably have to be priced in ).
Oh, and extending unemployment benefits in a severe recession is folly, but extending $700 billion of tax cuts to the rich is not, despite the historical evidence that the unemployed spend immediately ( and then doing the economics math, saving 1.6 million jobs and making the recession 18 percent less worse than it would be without it ), whereas the average $370,000 tax cut doesn't not buy a new yacht or an interior design boutique for the wife, but instead gets socked away ( or perhaps invested in Afghanistan lithium ).
Personally, a managed shutdown/meltdown/default might not be that bad of an idea for eliminating systemic-level cancers.
An architectural flaw is our banana republic ( or more accurately, Hedge Fund Republic, as Nick Kristof puts it ) concentration of political power in a predatory elite, and misappropriation/private expropriation/monopolization, which the GOP appears to be the primary political means for ( well, the Dems do it, too ).
The other architectural flaw, a fairly new one, is the full economic topology wide embedding of a deregulated financial industry into all the economic sectors. The financial sector was the linkage in the economy that allowed shocks to be propagated from one sector to another. As late as 2003, five key sectors, technology, oil, other basic materials, finance linked to real estate and other finance, and real estate isolated were relatively discrete. By 2008, they were a tightly linked link love jumble, with finance at the center.
Structural flaws absolutely have to be eliminated, and the fallout of temporary shutdown/meltdown would do that. Unfortunately, not all the GOP is responsible, so that's too bad that they will all have their heads on pikes, perhaps the final dissolution of the party; and the financial sector would be decoupled from the other sectors. Structural flaws have to be eliminated.
We'll recover. I think ordinary economic activity was the growth during the Reagan years, nothing else, no trickle down, Laffer, nothing, nada, zip, and dumb luck good timing and luck for Reagan. Carter-Volcher fix for double-digit inflation worked, so then the rates came down, just in time for the normal upgrading of boomer homes, cars, appliances, lifestyles, etc. That's all that happened. Normal activity ( well, on steroids, because of the boomer mass ). But now we're crippled by the network effects crippling of the financial sector.
Nuke the structural flaws, and a lot of normal activity might resume.
Of course, we've lost a lot of green tech to the South Koreans - They're happily cranking out millions of photovoltaic panels for the rest of the world.
China is going to launch their own commercial aviation industry to match their own demands for 4500 new aircraft - The U.S. can't do this because there's insufficient high-skill aerospace, because education is in meltdown and/or the candidacy doesn't appear to be there ( frankly, the entire U.S. is grossly undereducated for the new world, and appears to have no interest in keeping pace ). The U.S. needs to issue work visas like toilet paper, fix immigration, or die, or fix education instead of gutting it, or die, or die, or die.
China is preparing to build 330 giga-watts worth of wind generators. That will require about 59,000 tons of neodymium to make high-strength magnets — more than that country’s annual output of neodymium. China supplies the world with a lot of those rare earth elements, like neodymium, and will have little or none to export if it moves ahead with its wind power plan. So the source for the West is problematical.
However, we have reserves, but outsourcing applies to rare minerals, too. The relative value of the currency, and relaxed-to-poor environmental regulation of mines in China made sourcing there favorable for buyers. So, again, we have been very stupid, and again phantom bottom lines decimate fundamentally sound realities. Mining is a long convoluted thing, you don't just turn the machinery of it on and off willy nilly - It doesn't work that way. With coloration, for example, the world color council has to determine the palettes years into the future, on account of the glacial process.
Oh well, so much for renewable energy, autonomous energy, green tech, etc - It's not clear if there's a market or any money in it, it's risky, there's no future in it, etc, etc. We'll turn off the lights and sleep on it. There's time.
Oh, here, you'll like this. Graphical explicitness of the Bush tax cuts' impacts (OK, you'll have to go to the URL because this software can't hack images without an extension). What's funny, too, is that the best growth periods were Dem, Kennedy, Clinton, Carter (slightly outperforming the Reagan years). That Carter thing is too funny:
"Well, to be fair, most of the top made their money creating useful stuff, or doing it more efficiently, etc, rather than the usual misappropriation or private expropriation/monopolization and the concentration of political power in a predatory elite, of a banana republic ( oh wait, maybe we are a banana republic, afterall Smile ).
It's complicated. A lot of the inequality is the increased economic returns to high-skill acquisition, low high-skill supply to demand, changes in executive pay and policies/procedures/norms, technologically expanded rewards in superstar markets, low political demand for reformed redistribution. A lot of that stuff is fixable, but apparently we're apathetic to fixing it. Education is in crisis. Americans remain undereducated for a changed world requiring higher education. Stock performance and bonuses reward executive slumlordship. The wealthy are capitalists, they have the massive amounts of capital required ( capital, specialization, convolution ) to prosper in a bad societal situation, whereas the greater society's potential is continuing failure to thrive, the net effect a greater disproportion, i.e., the rich get richer and the rest get poorer."
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