James K. Galbraith; Stimulus Is for Suckers ...."This is a Chronic Illness"

[RedEarth]

"This is a Chronic Illness"
Jamie Galbraith has a plan to fix the economy:

Stimulus Is for Suckers, by James K. Galbraith, Mother Jones: ...There is an economic crisis and a demand for action to deal with it. ... How big and far reaching should changes to the economy be? ...

The historical role of a stimulus is to ... get things "moving again." But the effect ends when the stimulus does, when the sugar shock wears off. Compulsive budget balancers who prescribe a "targeted and temporary" policy followed by long-term cuts to entitlements don't understand the patient. This is a chronic illness. Swift action is definitely needed. But we also need recovery policies that will continue for years.

First, we must fix housing. We need, as in the 1930s, a Home Owners' Loan Corporation to restructure failed mortgages on sustainable terms. The basic objective should be to keep people in their homes...

Second, we must backstop state and local governments with federal funds. Otherwise falling property (and other) tax revenues will implode their budgets, forcing destructive cuts in public services and layoffs for teachers, firefighters, and police. And when these public servants are laid off, guess what? They have trouble paying their mortgages. ...

Third, we should support the incomes of the elderly, whose nest eggs have been hit hard by the stock market collapse. ... The best way is to increase Social Security benefits. ... I'd say raise them 30 percent, and let the federal government make the contributions for five years. This would be good for the elderly,... and good for the economy, since people who need money spend it when they get it.

http://economistsview.typepad.com/economistsview/2008/12/this-is-a-chron.html

[Fovea]

1. We need to embrace the future

and stop trying to remake our halcyon days.

The halcyon days are over.

We need to redefine wealth, move to more durable material goods, lower energy input lifestyles, make sure the whole fucking population
is fed and well.

We need to do more than rewrite paper for homes that cost too much to heat, located in places too remote from goods and services.
We need to relocate the owners in newer, more sustainable housing closer to work and shpping.

We need to safeguard farming, from water management to topsoil conservation, to intensive farming many crops.
We really need to watch how we use our aquifers out in Kansas, for example.

The kind of infrastructure we need for the future is different from what we needed in the past, which is what we are making now.
We really need to get cracking at it, and not just spend bucks for doomed things like three thousand square foot mini mansions in former corn fields.

The wolves are at the door, boys and girls.

[mmonk]

2. I actually faxed in a position back when Obama said he was looking

for input during the financial crisis and mentioned reestablishing the Home Owners' Loan Corporation. I'm not alona as the great Galbraith chimed in. Very nice.

[ColbertWatcher]

3. I see no reason to bring back stuff that's worked before. n/t

[mmonk]

4. I believe you use what works. That was one of two things

used before I suggested. The other was the Reconstruction Finance Corporation for infrastructure. It would be more efficient than much of what they ended up doing so far with the lack of oversight.

[ColbertWatcher]

5. Let me guess both those ideas were "phased out" by GOP administrations and/or Congresses? n/t

[mmonk]

7. The HOLC was used to refinance homes and prevent foreclosure

and after all the funds were appropriated, it stopped lending in 1935. It closed in 1951 with a profit. The RFC was actually created during the Hoover Administration to finance loans to the railroads, etc.. Roosevelt used it to fund much of the New Deal solutions. At some point, it was figured to be no longer needed.

[ColbertWatcher]

8. Hoover created to it fund corporations, FDR used it for people ...

... then it disappeared because it was deemed no longer necessary.

I guess that's reason enough to start it up again!

Thank you for posting a little history.

[mmonk]

15. No problem. Thanks for engaging in discussion of it.

[blondeatlast]

6. K/r--you should post this in GD for more exposure, IMHO.

[lumpy]

9. Kick

for the top economist

[indepat]

10. Can just see all 'pukes stampeding to endorse every one of Galbraith's

ideas. :P

[Pale Blue Dot]

11. I heard Galbraith on NPR yesterday. I didn't like him.

His opinion is that federal deficits, no matter how big, don't matter. He never explained the logical or scientific reasoning behind this thinking. I think deficits DO matter, especially when they get this large.

[ColbertWatcher]

12. Do you have a link? n/t

[Pale Blue Dot]

14. Here you go:

http://www.cpbn.org/program/%5Bfield_episode_cpbi_program%5D/episode/intimate-life-thornton-wilder-lowering-medicare-coverag

It's a local CT NPR program. James Galbraith is on in the 2nd half.

[economicgeography]

13. Galbraith

I see the apple doesn't fall far from tree in that family.

His dad arguing that big firms like GM were too big and needed to be broken up regulated lest they dominate the market too much. Regardless of your opinion on the bailout, isn't it ironic that the complete opposite is now true, that we're debating whether to use government to protect GM from the consumers, not the other way around.