BUSH USED UP EMERGENCY MEASURES (What options will Obama have? What's left?)

If you are falling out of a plane, you are supposed to pull your parachute string. Should that fail to deploy the chute, you are supposed to pull your emergency string. In sky diving, there is a backup system.

The US, in various ways, has backup systems. Bush pretty much used up all of them.

INTEREST RATES (Bernanke's Hanky Panky):

During a recession (unemployment, low sales, etc.), interest rates are supposed to be lowered to stimulate the economy. At the beginning of the W. Bush administration, the Federal Reserve chairman correctly lowered interest rates to stimulate the economy. (That was a temporary bubble in the economy probably caused by transitioning to another president by corporations buying supplies ahead of time at the end of the Clinton administration in preparation for the W. Bush administration, in case delays could occur in getting needed supplies. . . You can see the inventory figures rise and fall during the transition).

The Federal Reserve kept interest rates low for W. Bush thoughout his entire term (even during good times), I suppose as a special favor to W. Bush. I would call that Bernanke's "hanky panky."

This artificial stimulation of the economy was designed to make W. Bush look great, but the lower interest rates cost the US a lot of money. Literally, the US was providing cheap loans to the entire world at our expense, and the cost of those loans went to the National Debt (and various other debts of the United States).

It is important to realize that Capitalism requires a free market in order to work. The invisible hand of Capitalism is supposed to seek out the best deals, but it can't do that if the economy is manipulated by artificially cheap loans.

Furthermore, the economy was manipulated by a huge amount of subsidies (some going to foreign owners) at the expense of the US taxpayer (this likely accounts for the bulk of the money that W. Bush added to the National Debt (and other US debts)).

Paul Volker was the chairman of the Federal Reserve during the Carter administration, during a time when unemployment was very high and interest rates were double digit. Today, Republicans blame Carter for those economic conditions, but actually the blame goes to Republican appointee, Volker. It was Volker's job to lower interest rates to stimulate the economy.

Notice that as soon as Ronald Reagan became president, Volker lowered interest rates and stimulated the economy. That was one of many ways in which President Ronald Reagan "appeared" to be powerful. It was probably all cooked up ahead of time to make Carter look bad and Reagan look great.

That reminds me of the Iran Hostage Crisis at the end of the Carter administration. President Ronald Reagan, before he became president, made a deal with the Iranian kidnappers to continue to hold the hostages until he became president, then release them on his command (in order to make him look more powerful). By my way of thinking, that made Reagan a co-conspirator in the kidnapping (making President Ronald Reagan a kidnapper and international terrorist).

SUBSIDIES:

As mentioned, above, W. Bush made huge subsidies to US companies to sell products abroad. This is why W. Bush is now able to tell lies to us about the robust American economy. He says that sales are brisk, but, in reality, sales are manipulated, and the cost of that manipulation is causing the National Debt (and other US debts) to soar.

WORLD ALLIES:

W. Bush insulted France because they would not reciprocate and help out the US (Bush pointed out that the US saved them from Hitler during WW II and asked them to fight a war in Iraq). France refused to fight with the US against Iraq, citing the lack of evidence of WMD. Bush insulted the country, essentially saying that they were ingrates and cowards.

Similarly, many nations of the world have been insulted and/or abused by W. Bush. As a consequence, the US has very few allies to bail us out of the financial crisis.

Furthermore, the US economy is dragging down the economies of the entire world, so no other country is in a position to save us.

CONCLUSION:

In many ways (more ways than I can mention here), W. Bush used up all emergency measures, leaving Barack Obama with no emergency measures. There is very little that Obama can do that Bush didn't.

W. Bush (and Republican economic theory) got us into this mess, and Obama is going to have to figure out how to get us out.

The evidence of how bad Shrub has been just keeps piling up, doesn't it?

The only "reserves" Obama will have left will be the reserves the American people have left. Electing Obama will be the first test for Americans; the second test is whether we will be able to cooperatively rise to the next set of challenges. I don't envy Obama the task that they have left him, and us.

Greenspan was Chairman of the Fed at that time.



Volcker was appointed by Carter in August 1979. At that time, inflation was 11.8%. Lowering rates would have made it even worse.



Volcker kept the discount rate high, which caused a recession in 1981, which eased inflationary pressures. He subsequently lowered rates to stimulate growth. The problem during the Carter years wasn't that monetary policy was too tight, but too loose. The US could not achieve sustainable growth until it won the fight against inflation.



It seems wise to me to try everything to avoid an economic disaster, rather than hold something in reserve for the new president. Also, the Fed has been pretty clever in coming up with new ways to try to help. I don't think they're done.

BTW - I think this plays right into Obama's hands. Things should start improving by the time he takes office, so he can take all the credit.

Ummm well Bush didn't do any of those things to help us. Bush doesn't really give a damn. You know that right?