If I were still a Democrat....

[Dr Mordrid]

I'd be considering Hara-kiri ;

* Bush's approval rating is up to 61% again

* The economy is racing ahead like a rocket

* The American public supports Bush on Iraq, especially now that the US forces have taken the gloves off in the Sunni Triangle.

* Ralph Nader has started a 2004 presidential exploratory committee, which is intended to raise money for a third-party run. This would likely draw liberal votes from the Democratic nominee.

* Even the party faithful know that the likely nominee, Howard Dean, will draw about as many votes from independents as George McGovern (took just 1 state in 1972) or Walter Mondale (also just a single state in 1984).

Maybe they'd be better off running Howard the Duck

Dr. Mordrid

[Kruzin]

* The economy is racing ahead like a rocket

Unless you live in Denver or Seatle, where the the economy and job market still suck rocks.

[Greebe]

Just Seatle or Denver.. you give Rep. too much credit.

[Brian Ellis]

Re: If I were still a Democrat....

Originally posted by Dr Mordrid
* The economy is racing ahead like a rocket

Not according to the economists and analysts on Wall Street. Neither the DJ nor the Nasdaq has shown any signs of it in recent days and the dollar is at an all-time low against other currencies, EVEN against the Euro. That is all a result of the so-called racing economy being at the expense of the National Debt that has never been so high, in the trillions of dollars (literally), at $6,918,070,050,193.21 at 07.33 GMT this morning or nearly $24,000 for every man, woman and child in the US. So a family of four is owing almost 100 grand.

And the National debt is increasing by more than $2 billion per day on average. In fact, in just 10 minutes since the above figure was published, it increased to $6,918,084,204,007.06, a difference of over 14 MILLION dollars. I think even Bill Gates would take more than 10 minutes to think about spending $14,000,000.

Do you REALLY call that a racing economy? I do -- racing further and further into debt.

[Dr Mordrid]

1. As noted in another thread the low dollar is an intentional Federal Reserve policy that helps exports. It tends to stimulate the economy and stabilizes prices of imported goods, among other things. From Forbes.com;

"The U.S. authorities are not unhappy about the dollar's decline and will maintain this position until either the trade position has stabilised or the dollar's weakness starts to undermine the treasury market," said Bear Stearns chief European economist David Brown.

"We think that we are a very long way away from this situation and hence dollar weakness has many, many months, if not years, to run."

2. Deficits have the effect of stimulating to the economy, which is what you want coming out of a recession. Over time their value as a percentage of GDP decreases as the economy in general improves. Example;

In 1983 the federal deficit was 6% of GDP, a level that decreased rapidly as the Reagan tax cuts took hold and the economy grew its way out of them.

In contrast the projected 2004 deficit, while higher in absolute terms, will only be 4.2% of GDP.

Lesson: don't watch the absolute level of dericits, watch the % of GDP. The economic numbers are not a zero sum game.

Dr. Mordrid

[Brian Ellis]

I agree that this is a terrible stimulating package which will cost your country extremely dear in the long run. The de facto devaluation of the dollar that has already started is a very short-term and short-sighted policy which will eventually lead to a galloping inflation. As Russia has already indicated and the other major oil-producing countries will follow, it will probably place the Euro as the major trading currency.

National debt is no healthier for the economy than personal debt for the individual.

Growth cancelling deficits will only happen at the cost of a galloping inflation, leading to further devaluation.

Compare this situation with the de facto devaluation of Sterling between the mid-1960s and the early 1980s, where the value of the pound dropped to < 1/4.

[Dr Mordrid]

In the 1980's we grew our way out of deficits without major inflation. No reason to think now will be otherwise, especially since annualized inflation is now under 2%.

That devaluation of the pound sterling had a co-conspirator: an economy that wasn't growing at all and tax policies that assured it would stay that way. That doesn't apply to the US today.

BTW: making comparisons to how European economies react to recession and how the US economy reacts is fraught with dangers. Our economy is much more capitalistic than the socialist economies of Europe. This makes our economy more flexible; allowing it to end recessions sooner and to grow much faster (and longer) coming out of them.

Dr. Mordrid

[Brian Ellis]

OK, think what you like but massively increasing debts is NEVER a good move, IMHO. I believe the US economy is extremely precarious at this moment, especially as it is likely that China will become a major competitor over the next decade. Looking at the short term is very poor policy.

[Dr Mordrid]

To the contrary, we're looking long term. We actually have the faith of our conviction that capitalism is the right policy, and for 200+ years it has been. It's Europe that is of two minds, and the economy there shows it.

China will grow into a health economy....and an economically health and much more capitalistic China means lots of customers for their trading partners.

Just remember one of the major ideas of capitalism: a rising tide floats all boats

Dr. Mordrid

[Brian Ellis]

Except those which are anchored by short chains, such as those where the owner was so heavily in debt and whose interest payments were so swingeing that he could not afford to buy some extra links.

[UtwigMU]

Dr Mordrid, I'm surprised that a man of your age looks at things from such short term perspective.

"I'd be considering Hara-kiri."

Well that would only be wise if the Reps were to transform country into single party system...

I think USA is not heading in that direction, although laws such as Patriot Act and DMCA peculiarly have similar sound to them as Mao's great leap forward.

The only way for one party's odds being hopeless in the long term is if leading party takes control of too manny instruments of power, however that is no longer democracy.

Party domination goes in cycles. For instance in 1996 Bob Dole was utterly defeated against Clinton, although he would have IMO been much better president than Bush. Were you considering a hara-kiri then?

Or for instance Germany and Helmut Kohl (CDU party - right christian democrates), who was a chancelor for 16 years. Did SPD members consider hara-kiri?

This is why we have democracy, so that 2 or more parties/coalitions rule in cycles. Eventually a party in power gets spoiled, looses momentum, looses ideas and starts doing more harm than good. They get defeated, they change the leadership, younger generation with new ideas comes forward and after a cycle or two they get back into power.

Although I agree that democrates are now in crisis and not being able to find a candidate to match Bush (not the best president ever if we look objectively) speaks of this.



Being forever affiliated to one party and never considering voting for the other party is IMO stupid/imature, unless your views are extremist and there's only one party (usually extreme right or left) that represents them or unless one has personal benefits from that party.

[Umfriend]

1. As noted in another thread the low dollar is an intentional Federal Reserve policy that helps exports. It tends to stimulate the economy and stabilizes prices of imported goods, among other things. From Forbes.com;

quote:"The U.S. authorities are not unhappy about the dollar's decline and will maintain this position until either the trade position has stabilised or the dollar's weakness starts to undermine the treasury market," said Bear Stearns chief European economist David Brown.

"We think that we are a very long way away from this situation and hence dollar weakness has many, many months, if not years, to run."

First of all, a weakening Dollar has an increasing effect on inflation as prices of imported goods rise in doller terms. Secondly, whether a devaluation of the dollar helps the national current account remains to be seen and is actually a difficult analysis. It depends on (1) the price elasticity of both imports and exports and (2) the initial levels of imports and exports. Re. (2): suppose imports are 130$, exports are 100$ and the exchange rate is 1.00. Now let's drop the dollar to 1.20. The dollar price of imports will rise to $156, exports will remain at $100. So in fact, the US needs to borrow moredollars and there is additional inflation. Obviously, trade will be affected and volumes will change, but how long will that take and to what extent? What damage has been done in the meantime?
I doubt the FRB have tried to weaken the dollar. I am unaware of the FRB selling dollars into the markets, in fact, I think it has been quite a few years since central banks tried to intervene. As far as I am aware, they focus on money growth or inflation (not sure which) levels. The weakening dollar will be a concern for them as it has an inflationary effect.

A good example may be car manufacturers: They need steel for their cars, which the tend to import. These imports are becoming dearer now. Assuming (I think correctly) that most production is intended for domestic consumption, inflation rises. Also, to the extent the cars are exported, the weakened dollar will be partly offset by the rise in cost for materials. Obviously, there are industries that may benefit a lot. I am thinking of Boeing here crushing Airbus as they can sell their planes far cheaper now. I wonder whether someone of the FRB will join Boeing shortly, which would indicate you might be right about the intentions of at least on of the FRB employees

2. Deficits have the effect of stimulating to the economy, which is what you want coming out of a recession. Over time their value as a percentage of GDP decreases as the economy in general improves.

As I stated in that other thread, the economy needs to grow a huge lot to make up in additional tax revenues for the initial "investment". Yes, until the burden of debt becomes too large, running a deficit stimulates the economy to some extent, but hardly ever enough to make up for the initial cost.

In 1983 the federal deficit was 6% of GDP, a level that decreased rapidly as the Reagan tax cuts took hold and the economy grew its way out of them.

Economies tend to grow period. It's a lot harder to argue that without the deficit, the shortfall in growth would have exceeded the cost of the deficit saved.

[Joel]

Of course those of us who actually have to work for a living probably see things in a little bit different light. Although I don't think the Democrates are the right thing for the US right now I do hope that the Republicians can get a message that we are watching them very closely.

Joel

[KvHagedorn]

Originally posted by UtwigMU
Being forever affiliated to one party and never considering voting for the other party is IMO stupid/imature, unless your views are extremist and there's only one party (usually extreme right or left) that represents them or unless one has personal benefits from that party.

Unless the party you have sworn never to vote for again has become a shallow, shrill instrument for doing the bidding of extremists. I swore never to vote for a Democrat when I watched the Bork confirmation hearings, and saw what was effectively a Nazi tribunal. Kennedy and Biden are particular trolls in my opinion. They deprived the nation of one of the greatest judicial minds ever.. a highly refined intellect which refused to lock step with their extremist left wing agenda, and so was tossed aside.

[Umfriend]

Of course those of us who actually have to work for a living probably see things in a little bit different light.

Joel, this is hard to understand without some background information. Against whom is this argued, and how would those that have to work see this (what?) then?