He predicted the economic crisis back in 2007..What does he think of the Stimulus Plan?

[No DUplicitous DUpe]

Way back in November of 2007 Mr. Kazan predicted the Financial Crisis with his article:

How To Protect Yourself From The Coming Financial Crisis

Are you prepared for the coming financial crisis? We Americans haven't seen one like this since The Great Depression, as the dollar's value will get cut in half, real estate will lose 1/3 of its value and millions of people will lose their jobs." These words were written in November, 2007 and were hard for people to believe. They certainly believe them now. Please review this site for advice on how to protect yourself from today's economic meltdown.


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What does Mr. Kazan think of the Economic Stimulus Plan? Have a read:

The Stimulus Plan Will Disastrously Fail

The U.S. economy is collapsing. In response, the government is rushing through another stimulus program. But as we saw in Japan during the "lost decade" of the 1990's and early 2000's and also during the New Deal of the 1930's, when America tried to spend its way out of the Great Depression, no giant stimulus plan is going to rescue it. Despite last year's massive corporate bailout and last July's stimulus when the public got government rebate checks to spend, the situation has only grown worse.


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[Juche]

1. Interesting article

But he isn't the only one to predict this crisis. Krugman and Roubini also predicted it, and they are both pro-stimulus. Not only that but it seems most wealthy nations on earth are proposing domestic stimulus packages. So even though I am not an economist, I do not know if his statements that the stimulus will not matter are totally true. If that were the case then other nations wouldn't be doing their own stimulus plans and many economists wouldn't support the stimulus like they are doing.

I personally wonder how we are going to fund healthcare in this country. It is supposed to hit 4 trillion by around 2016. But with 90% of the economic growth going to the top 10%, that means the majority of americans will be forced to pay even more for healthcare with less income. So we are just beginning to see our healthcare system collapse.

[trotsky]

2. He also apparently bought into the GOP lies about the Great Depression and New Deal.

Bottom line is, no one KNOWS this will work or fail. It will likely work, and there will be real costs in terms of dollars, inflation, etc. But the alternative would be....?

[No DUplicitous DUpe]

4. Thank you for your comments...I'll pass them on to the Author...

..and see if I can get him to comment on what you said.

[denverbill]

13. You might have him comment on the GDP growth in the 30's also.

A DU'er posted an article about it earlier.
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x5036400

From 1933-1937, the GDP grew at 13%, and from 1938-1941 at 10%.

The best years we've had in the last 20 saw growth around 5%, tops, by my recollection anyway.

If the New Deal stimulus didn't work, I hope the current stimulus package doesn't work in the exact same way.

13% growth for 4 consecutive years would be an economic miracle, in my opinion.

[No DUplicitous DUpe]

22. I spoke with the author, and his point is, that we have to change our ways...

(no more massive military spending on weapons and wars and other thing that have no positive benefit to society). The Stimulus package is like a life raft to a swimmer who is treading water, but the increase in debt is like an anvil tied to his foot. Problem is, we already have an anvil tied to the other foot (our current debt), so while the life raft gives the tired swimmer more time with his Head above water, when the raft begins to lose air, the 2 anvils on the swimmers legs, will pull him back under water.

[denverbill]

23. I certainly agree with that.

If the Republicans hadn't blown the budget surplus on tax cuts for the wealthy and at least one unnecessary war, we'd probably have paid down 1/2 or more of the national debt by now. And though it's impossible to prove, it's highly unlikely we'd be in this current mess if that had happened, because the economy wouldn't have gotten into the enormous housing bubble. Growth would have been slower initially probably, but the drop in the debt would have meant a strong dollar and low interest rates. Frankly, I don't know how we are going to keep finding buyers for our debt without interest rates going up and if interest rates go up, that will slam the door in the face of any new growth.

If, by some miracle, we manage to get out of this mess reasonably quickly, without things getting much worse, then we can start worrying about balancing the budget and paying off the debt. If things keep going downhill as quickly as they are right now, the budget deficit will only get worse, and you'll end up with a perfect economic storm of more demand for govt services like food stamps, unemployment and Medicaid, at the same time that revenues are falling because of unemployment, and increased borrowing driving up interest rates. And that's like slapping another anchor on the swimmer without giving him even a leaky life raft.

[crikkett]

3. I saw a rachel maddow segment two days ago that directly refutes this claim.

The New Deal worked exactly the way it was supposed to except for a short period of time when Roosevelt did what conservatives wanted him to do... cut spending.

She showed a pretty chart and everything.

[Javaman]

15. Exactly, repukes claim that unemployment was at 14% in 1938, but given the fact that

when he took office it was at 25%. I'd say an 11% point drop is a pretty damn good job.

[leftchick]

5. wow!

I am getting more depressed by the second.....



But with the latest stimulus and bailout plans, no-one knows how high it will actually go. And there is no end in sight to these massive trillion dollar deficits.

To fund them the U.S. government is counting on global investors to buy ever greater amounts of U.S. debt but if they instead cut back their purchases, two ugly scenarios take place:

1) In order to attract funds, the U.S. will be forced to sharply raise interest rates. This will compound the already skyrocketing growth of the deficit.

2-A) The U.S. still won't be able to borrow enough money and so it will run the printing presses to make up the shortfall. The result of this action will be too many dollars chasing too few goods which will bring monumental inflation. The Fed has already begun to run the printing presses as of last September.

2-B) But it gets worse. The latest bailout is meant to flood the economic system with money. Its shortfall could be an astounding $2.5 trillion! The first $350-billion is supposed to come from what remains of the prior bailout money. The rest, aside from any money private investors provide in a plan not yet devised, is to be created by the Federal Reserve simply printing the money.

2-C) The value of the dollar is only that which we believe it to be, for since 1971, it has not been backed by gold or any other assets. If the Federal Reserve just creates tons of dollars out of the blue, the dollar will lose its credibility and with it, it's value.

How will you and I be affected by the disasterous failures of the stimulus and bailout plans? We will all be impacted by the terrible economic times to come. Some of your and my family and friends will lose their jobs, and may lose their homes. So might you and I. We must learn to live with less and to be generous in sharing what we have with others for we need to come together as family and as humanity to weather this frightful storm.

[northernlights]

10. I'm not convinced that printing $$ will automatically create inflation

Don't forget that *part* of what started the meltdown was that trillions of dollars of "funny money" were created out of thin air, via financial fraud. And that trillions of dollars subsequently vanished when the fraud was uncovered. The lost value of homes and the stock market totals trillions.

So if the government creates a couple trillion dollars, they're simply replacing the money that had been created from thin air. But putting it into the pockets of ordinary people who need it to survive, instead of it going into the offshore accounts of bazillionaires.

The fact is, we are in totally uncharted territory. Nobody knows for sure what will happen as a result of the stimulus. The the result of no stimulus is continued free-fall.

[Mojorabbit]

6. interesting article. thanks, nt

[Gregorian]

7. Does anyone recall Bush telling Americans to shop after 9/11?

It's almost laughable, because in a way he was showing some intelligence. It was offensive, but they knew. And then they continued their destruction of the country's economy through war.

If you think this thread is depressing, it sounds quite a lot like Max Keiser, who has a show on ResonanceFM. I apologize for having called him shrill sounding. Because I now love his show.

http://www.maxkeiser.com/

He also predicted the disaster. Here and in Britain.

He claims there will be another bailout. And then devaluation. And since we're not on the gold standard, the only way to devalue is to print, which will result in huge inflation.

[burythehatchet]

8. The only important benefit of the stimulus will be to provide a limited safety net

for the people who are going to get hit the hardest. It will have no impact at all on the fixing the economy because the economy is based on a faulty set of guiding principles.

[Ikonoklast]

9. He is completely wrong on some points.

He states that interest rates on Treasury bills will rise in order to attract foreign buyers of our debt. To compete against who, exactly, for that capital?

Ain't happening now as foreign money sees Treasuries as a safe haven against currency collapse even though they are yielding negative numbers. Don't see any reason why that will change in the near term, or the foreseeable future. We are still the safest parking place for capital in the world.

And Japan screwed up by letting the banks carry toxic debt on the books for years instead of writing down the loss and taking their lumps. They decided to see if the real estate bubble that caused it would magically resurrect itself to bail them out. Ten years before they realized it wasn't gonna happen. In the meanwhile, those banks turned into zombies, they were the walking dead as they had negative market value.

[No DUplicitous DUpe]

16. Do you think he is wrong on this point?

<snip>
The U.S. must face the consequences of its horrendous actions. Wars, massive military spending, gigantic record breaking deficits, long importing goods it couldn't afford and shifting most of its manufacturing elsewhere.

Add to that unparalleled corporate greed masked by false accounting, still not fully disclosed and lax, if any regulation. Now add rapidly growing defaults that started with real estate and are quickly spreading to car loans, credit cards and other debt and you have a towering tidal wave heading for us.
<snip>

From: The U.S. Is Going Broke!
http://saneramblings.com/phpBB/viewtopic.php?f=1&t=139

I think it's true that all the wars and military spending has got to be cut WAY back. Not just closing bases in the middle east, but worldwide.

[Ikonoklast]

17. I stated the he was wrong on *some* points.

Some, not all. And I stated the reason I thought he was mistaken on those points.

Look, I agreed with Pete Schiff about his predicting the economic crisis, but that doesn't mean he's correct with the rest of his free-market, Austrian School, Libertarian nonsense.

[On the Road]

11. With All Due Respect,

Treasury Secretary Geithner himself warned of this crisis, and the stimulus plan is largely his.

The attempt to stimulate jobs might well not live up to its billing. That does not equate to the economy collapsing. The financial system has had a major shock, but things have stabilized since September.

Mexico, Argentina, South Korea, Indonesia, and several other countries all had various economic crises during the 90s that were proportionately a lot worse than what's happening today. In all those cases, the countries were able to stablize and recover. No one (including the author) knows if there's another shoe about to drop. But it is not inevitable.

[northernlights]

12. he's wrong on several points

The New Deal succeeded. It only slipped back when FDR folded to pressure and tried to balance the budget too soon.

Furthermore, the New Deal infrastructure projects led to much of the advancement in our society that we enjoyed growing up -- the higher education, better wages, better living standard than our grandparents had.

And Japan's lost decade was not due to a government stimulus package. It was due to waiting too long and doing too little.

That said, it doesn't mean the stimulus package will be a success. Nobody can say for sure if it will work. Only what will happen if we do nothing...

[girl gone mad]

14. He was way off about the collapse.

A lot of people saw the downturn coming, but only a few accurately predicted how it would play out.

This person was advising to sell the dollar and buy foreign currencies and stocks. That would have been a terrible strategy. I saw the impending banking collapse in July 2007 and said US traesuries and yen would be the safest place to ride it out.

I think he's wrong about the stimulus plan, too. It isn't going to take us back to what we thought was normal, but it will help ease us into a less robust business cycle. China's demand for our debt is increasing, not decreasing, a trend that most economists expect to continue.

[garybeck]

18. personally I believe

there is no magic bullet here. you can't turn a ship around overnight. we are headed down.

what we need to do now is help the people who need it the most. we should be sending money to the soup kitchens, homeless shelters, unemployment offices, heating assistance, etc... first.

there should be NO tax cuts for upper middle class and up. Rich should get tax increases.

we have to deal with the distribution of wealth. that's what we're seeing is the result of the rich getting richer and the poor getting poorer over the last decade, and it's about to collapse.

once we take care of those who need it the most, then we can talk about the changes we need to make to the system to right the ship and set us in the right direction again.

[mistertrickster]

19. Kazan is full of shit. There're ALWAYS people who are saying that the economy is about to crash.

This guy just happened to be the one saying it when it actually did.

FDR's massive spending bill WORKED!

Unemployment went down and GDP went up every year from 1933 (when he took office) until WW2 every year but one.

[No DUplicitous DUpe]

20. Thank you for adding to what was, before your arrival, a civil discussion..

The smell around here, is not from Mr. Kazan's opinion.

I guess time will tell.

[crikkett]

21. Great comeback. n/t