If Dems win in '08, they might inherit an economic mess. Will they have the nerve to think big?

from The American Prospect:


Windfall or Wipeout?

If Democrats win in '08, they might inherit a messy economic situation. Will they still have the nerve to think big?

Robert Kuttner | August 14, 2007



If the economy goes into a tailspin, which now seems to be a growing possibility, how would it influence the 2008 presidential campaign? And if the Democrats should be elected, how would a severe recession affect their ability to govern?

Until now, the economy has been an issue mainly to the extent that most Americans are not sharing in prosperity, and have felt vulnerable to unreliable jobs, wages, pensions, and health care. As Stan Greenberg, Robert Borosage, John Judis, and Ruy Teixeira have demonstrated in these pages , an increasing percentage of voters favors much more vigorous government action. The Democratic presidential field has been offering a mélange of policies to marginally improve the economic situation of regular Americans, while not making a fundamental break with the elite bipartisan consensus on deregulated financial markets and low public spending.

But this could be one of those historic moments when excesses in the financial economy spill over and damage the real economy, in turn requiring bolder government action.

Until July, consumer demand, economic growth, and the stock market had all been pumped up by low interest rates and plentiful foreign credit. The economy seemed buoyant despite stagnant wages, America's chronic trade imbalance, and the falling dollar. Private equity and hedge-fund deals provided a high-adrenaline use for the cheap credit, attracting a growing flood of money not just from rich individuals but also from pension funds and university endowments hungry for higher returns. The deployment of these funds pushed the private equity and hedge-fund operators into ever more dubious deals. By spring, however, the smart money had concluded that the financial economy was looking a lot like a bubble, and invited the rubes to buy in.

Now, the financial engineering has begun unwinding. In late July, a combination of worse-than-expected damage to mortgage markets from sub-prime lending, rising oil prices, a flight from the dollar, and a credit drought for speculative deals sent stock prices plunging. We've now had a decade-long speculative binge that paused only briefly for the dot-com crash of 2000–2001 and the scandals of Enron, WorldCom, et al.

So what to do if an economy based on heavy financial speculation and narrowly distributed prosperity triggers a deep recession? .....(more)

The complete piece is at: http://www.prospect.org/cs/articles?article=windfall_or_wipeout

Whoever wins is going to be destroyed by trying to shovel the shit out of the Augean stables that America has become.

:) I'm going to have to use that one!

Of course, Americans are still to stupid to comprehend how bad things are.

They did, after all, cast enough votes for Bush in 2000, and unbelievably, again in 2004, to make both elections stealable.

The American people are going to be blown away when they realize just how bad this government has been fiscally mismanaged by these crooks. The solution is going to demand radical adjustment to tax policies and budget priorities.

were the *only* things that Schimpanski and his pack of trolls have wrecked?

The problem with being the butt-boy of the rich is that the rich never stop sucking until they've pulled your intestines out through your asshole and your whole belly implodes.

Among the top three most destructive things Bush has done is accelerate -- to warp speed -- redistribution of the country's wealth from the middle class to the uberrich. We're on the brink of becoming the type of third-world country where you have nothing BUT the very very rich and the very very poor.

Of course the next president is going to have a fiscal crisis on her/his hands. Of course that person is also going to be staring at a foreign policy disaster of hitherto unknown magnitude and an ecocrisis that could cause the die-off of most species inhabiting the planet today.

It's pretty obvious why the Republican field is full of wackos and psychos -- the smart money is planning on lying low for the next decade or so until the dust settles. Maybe they should retire the term "Republican."

Whoever wins the White House in 2008 will *not* win in 2012, and will go down in history as a failure. Frankly, that's why I think Gore should avoid running now and come in -- White Knight-like -- to pick up the pieces in 2012 when some of the perturbations of the Bush interregnum have (hopefully) died down a bit.

That last thing I want associated with Poland is George W.!

The July 20th plotters (Count von Stauffenberg, et al) used to refer to Adolf Hitler while they were planning to blow him up.

I remain blissfully ignorant of any way to use "Shimpanski" and "Poland" in the same sentence.

I think only Dennis Kuchinich and Ron Paul have any guts and that's because they have no chance to win and aren't up to their necks in IOUs. Maybe Joe Biden and John Edwards come in a weak second place.

But if the democratic president has the foresight to choose good people for their administration and not "friends" and contributors like bush did they might be able to make headway.

I think that Wes Clark would be a damn good secretary of defense. Although he is out of the running, I think Bill Clinton would make a good secretary of state. He knows foreign policy, he can bring people together and he is a fence mender. He almost had Israel and Palestine together before he left office. bush screwed up all the plans he had made. And look at bring Britian and Ireland together. I can't think of another person who would make a good secretary of state.

I think Patrick Fitzgerald, even tho he is republican would make a good AG. BECAUSE we know he is not partisan. Nominate some people see who you all think would be good.

Right now, there's no real pressure to select among the Democratic candidates. The main debate has been what slams the Republicans will use to destroy them..."a lesbian, a gay boy and a black teenager" is how I think Bill Maher called it.

But if there is an economic collapse, the Democratic candidates will have to put forward solid plans to fix things. They will have to explain how they will revive the economy, and none of that is going to come from corporate money. It will make the race for President important. Who knows? It might get more than six percent of the population to vote.

Infrastucture sucks. Interest rates are artificially low.

It's a no-brainer.

That gives me little hope of their being "bold" on the economy. "Bold Democrat" is beginning to sound like an oxymoron.

I am extremely pessimistic about the future of this country. I think we're going to have a really hard landing. 2008 is going to require the boldness and vision of an FDR, and I fear that we're going to get a Clinton, who will just tinker around the edges and soothe the worries of the affluent without doing much for the people on the bottom.