OK Republicans can you defend this?

Question

You say more Americans own homes and new cars, but what you forget is the debt associated with it! America is jnow in negative savings for the first time since the late 1920's. The only country that has investment money is China with 330 Billion and they are buying everything in sight. The stock market is inflated and simular to the dot coms will be seeing an adjustment. How mulch and how soon is anyones guess. For close to 26 years now Reagan policies have driven us into a debtor nation and unless we get a handle on this the only way to survive will be continuous war like the neocons want. What say you now?

Answer 1

Interesting, but not surprising. The Republican response to this question has been nothing but name calling, plus a few messages saying Democrats are just as bad. Only one person, Scott, has actually tried to answer the question - and Scott's answer is pretty good, but ignores the fact that a substantial part of our debt problem is the government's own borrowing, which has been overwhelmingly a result of irresponsible Republican policies.

Answer 2

There has been a persistent trend in the US towards increased debt-financing of purchases. First homes, then automobiles, now almost everything. That trend started as far back as the 20s, and has been strongly encouraged by the Keynesian economic policies started with FDR, and perpetuated up to the Reagan era. The result was the stagnant economy and high inflation of the Carter years (though these were not exactly Carter's fault), which, actually, got a lot of people off the debt hook as they paid off old loans with 'cheaper money.'

Today, after the Reforms of the Reagan years, and following the long tenure of Fed Chairman Allen Greenspan, we have relatively stable interest and inflation rates, making the high level of debt financing less burdensome and less destabilizing than it was in the past - but, it's still a very real issue, and one that we would have to 'grow' ourselves out of. Something that is not likely in such a mature economy.

What is more likely is a tightening of credit - perhaps triggered by the growing sub-prime mortagage debacle - leading to a recession. If the Administration in power at that time manages to push the Fed into a Keynesian 'solution' allowing inflation to run rampant, that /will/ solve the debt problem (much as happened in the 70s, many of us paying mortgages now, will pay them off and have homes worth 10 million dollars - equivalent to half a million 2007 dollars - in 2030), but, as those of us who remember the 70's will attest, it will be far from painless.

The Chinese, interestingly, are not buying up a lot with the proceeds of thier trade imbalance with the US. Rather, they are choosing to 'lend' money, that is, hold large amounts of dollar-denominated bonds to keep the Yaun pegged to the dollar. Private Equity is using that easy credit to create a stock market bubble, something like the one created by the corporate raiders of the 80s. A great - and protracted - 'buying opportunity' could be forthcoming in the next 5 or 10 years, if that pattern holds.

Answer 3

I'm not a Republican but I'll take a stab at it.

First things first. I didn’t get your point. And I was reading very carefully. You basically rattled off a series of unconnected facts which individually or cumulatively fail to substantiate any point in particular but ended it with something about Reagan’s policies which you failed to clarify.

You are correct in that too many Americans have more debt than equity. In fact the debt to equity ratio is higher than it has ever been. But this tendency to leverage one’s lifestyle is not new. Americans can be very profligate and otherwise irresponsible but these are individual decisions. I cannot see how Reagan caused this.

The stock market is high for sure. In fact it has doubled in the last five years. But it is not overvalued. Take a look at the P/E Ratios. That is the key here. During the Clinton years the market rose on the basis of what Greenspan poignantly referred to as “irrational exuberance.” An apt description to say the least. People bought and sold stocks at prices wholely unrelated to their actual value. In most cases they were trading shares in companies that had not sold a single product, engaged in a single act of commerce (other than selling shares) or reported a single dollar in revenues. This was a recipe for disaster and when the actual value of these items became impossible to conceal it dragged down the value even of legitimate securities. Current volume and value is based on actual economic facts which is the only valid measure of value.

All economies are cyclical and the market always corrects/adjusts. But these adjustments are not evidence of recession.

Answer 4

Yes, during wartime a country invests much money in its efforts. How about the senseless billions dedicated to the space program or for paying off hostile nations? The national healthcare program that the Clinton's propose would outspend this tenfold! Don't forget that congress (predominately democrat) has the power to control this but will not. What you fail to understand is that tying up a terrorist threat in their own region is a better strategy and less expensive than trying to do so in the U.S.
Also, the deficit has been reduced considerably in 10 of the last 12 quarters. I am unsure why the media does not report it. This is something previous administrations were unable to accomplish. I do not mean to defend the president, but he is not the only spendthrift in Washington!
TO HENRY M.: Your commentary is extreme and unfounded. Unlike you, I lived under a Totalitarian regime. There was no opportunity to buy on whims and have a voice in government there. Survival itself was/is a gamble. It is why I am officially a proud American today.
TO DAN K.: It truly is a small world! Yes, I taught at the 10-12th grade level while securing my citizenship. I encountered many in my years teaching so it is difficult to remember you. Were you in my economics or world history class?

Answer 5

I assume I can answer if I'm not a Republican:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, --That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.-

--Thomas Jefferson, with a little help from some friends.

Answer 6

I say your a Goof. Regan's policies? I'm sure they worked while Clinton was getting a ******** and keeping his cigars moist. Look bottom line is your looking in the past and looking to blame. Move forward and vote if you want change. Don't worry about convincing others of you opinion. No one politician is going to have all the answers. The dept associated with all the homes and cars were the individuals choice. Stop trying to keep up with the Jone's and live within your own means is my advice. There will always be rich and there will always be poor. No matter what nation we live in. In most cases everyone could have alto to show for their hard work if they would just stop spending money as soon as they get it. People just gotta have that new car or the newest line of clothes. It's not so much a political problem as it is a matter of lust amongst the people. That's just me though not you.

Answer 7

Reaganomics didn't work, plain and simple. It was supposed to create jobs and instead it created the first double digit unemployment rate in recent history. And before you start blaming Carter, Reagan left office with virtually the same rate that he inherited after hitting a all time high of 10.5 %. Look it up.

Answer 8

Patriot...Get a grip on REALITY!
So you think demon-crats are better at allocating tax dollars?
Maybe you conveniently forget the proposal for $4,000,000,000,000 in pork by congress ...If I remember right the chief supporters were "Chappaquiddick" Ted, Nancy Pelosi, Harry Reid and "Dirty" Dick Durbin. Hmmm, sounds like candidates for America's Most Wanted! So don't waste the valuable space here for your lefty agenda.
To Ugandan: Is that you Prof. M? I remember a teacher my senior year of high school a few years back who was from Africa on visa. If so, I was a student of yours. I can't thank you enough for your insight and inspiration. It is probably what kept me in college today. Peace, man!

Answer 9

I think that there's a possibility that a Democrat will be elected in 2008 which means that the economy will tank and that will be the end of it. Taxes will go up, goverment will triple in size and the working class will be forced to support the sick, lame and lazy.

Answer 10

Yes, and I'm glad that now Democrats have control of Congress, they've put a stop to all the spending.

Hahahahahhaaaa!

Sorry, I couldn't keep a straight face!