* Drawings, Charts, And Videos That Explain The Recession

9/11 Wars + Tax Cuts + Bailouts = Recession.

By Erik J. Heels

First published 11/22/2011; ErikJHeels.com; publisher: GiantPeople.

This article analyzes, chronologically, how the US got itself – and the world – into the current recession. I wrote this post primarily for me, because I don’t want to forget how we got into this mess. But if others like it, that’s gravy.

For the record, I have never belonged to any political party. As it says under “political views” on my Facebook profile, “I vote for the smartest candidate. It doesn’t always work out.”

1946-2001: Back Story

  1. Book Review: Economics In One Lesson, by Henry Hazlitt (1946, Yes, 1946)
    The current recession began in 1946 when zero politicians bought this book. You don’t need to study economics in school. You need to read this book. Hazlitt explains, in simple terms, how classic economic mistakes are made by pursuing short-term policies that benefit only a select few at the expense of a long-term policies that could benefit many.
  2. Bush: ‘Our Long National Nightmare Of Peace And Prosperity Is Finally Over’ (2001-01-17)
    Under President Bill Clinton, the US enjoyed peace and prosperity. With this story, [satirical publication] The Onion joked about what would happen after George W. Bush was inaugurated. Now who’s laughing?

2001-2008: The Big Four Expenses

President George W. Bush started two wars and created two windfalls (Bush tax cuts for the rich and TARP bailouts for Wall Street banks). These are the Big Four expenses that started the current economic downturn.

  1. Afghanistan War (2001-10-07)
  2. Iraq War (2003-03-20)
  3. Bush Tax Cuts (2003-05-23)
  4. TARP Bailouts (2008-10-03)

2008-2010: Recession (Part 1)

President Barack Obama promised to end the two wars and the two windfalls (Bush tax cuts and TARP bailouts). To date, he has done none of this. In late 2010, Obama extended the Bush-era tax cuts. So they are Obama’s tax cuts now.

  1. The Sub-Prime Primer (2008-05-07)
    The housing market started to collapse in 2008. This presentation explains how and why the housing market failed.
  2. The Crash Course: The Unsustainable Future Of Our Economy, Energy, And Environment (2008-10)
    First a video series, then a book, Crash Course will teach you why we’re all screwed – unless we change now. If you dare watch/read it. For example, you’ll learn why ordinary Americans are forced to invest their retirement savings in risky stocks just to keep up with inflation.
  3. Chart: Debt With And Without Bush Tax Cuts (2008-12-02)
    Nearly four years ago, The New York Times warned about the impact of the Bush tax cuts.
  4. Infographic of the Day: Our Lost Decade (2010-01-06)
    Zero percent job growth over the last decade.
  5. Infographic of the Day: Just How Big Is the Deficit? (2010-02-03)
    Worst deficit since World War II (WWII, WW2).
  6. Chart: VC-Backed IPOs and M&A Deals 1992-2009 (2010-05-31)
  7. Infographic of the Day: The Entire History of the American Presidency (2010-06-10)
    This great poster gives context to politics and the economy from 1776 to 2010.
  8. The Student Loan Scheme (2010-09-16)
    Amendments to the Bankruptcy Code in 2005 prevent student loan debt from being discharged in bankruptcy.
  9. Comic: Puzzled by the Downturn (2010-11-05)
  10. Chart: Economic DownTurn, Financial Rescues, And Legacy of Bush Policies Drive Record Deficits (2010-12-03)
  11. Obama extends Bush-era tax cuts (2010-12-17)

2011-Present: Recession (Part 2)

Some economists have declared that the late 2000s recession is over. But with US unemployment at 9%, it’s safe to say that the 2008-present recession is alive and well.

  1. Average Sole Proprietor’s Net Income 1980-2007 (2011-01-10)
  2. Scary Unemployment Chart (2011-02-07)
  3. Rising Inequality Since 1970s: A Sharp Break From Shared Prosperity Of Earlier Era (2011-04-08)
  4. Chart: Startups As A Percentage Of All Businesses 1977-2009 (2011-06-06)
  5. US Budget: 20% Defense, 20% Social Security, 15% Medicare (Elderly), 8% Medicaid (Poor), 37% Other *http://en.wikipedia.org/wiki/Us_budget (2011-06-10)
  6. Too Big to Fail: Inside America’s Economic Downfall [Infographic] (2011-06-30)
  7. The Truth About Who’s Responsible For The Explosion In Government Spending (2011-07-11)
  8. The Truth About Who’s Responsible For Our Massive Budget Deficit (2011-07-11)
  9. USA Inc. – Where We Are, How We Got Here, What May Be Next (2011-07-20)
    USA Inc. is a nonpartisan group that looks at the US federal government as if it were a business.
  10. Chart: Policy Changes Under Two Presidents (2011-07-26)
  11. Chart: Where Does U.S. National Debt Come From? [Infographic] (2011-07-27)
  12. The Original ‘Scariest Jobs Chart Ever’ Is Still Plenty Scary (2011-08-05)
  13. A timeline of events (2011-08-06)
  14. US Debt Crisis Explained (2011-08-10)
  15. The Onion predicts the future (2011-08-11)
    Bush: ‘Our Long National Nightmare Of Peace And Prosperity Is Finally Over’
  16. Remove Eight Zeros (2011-08-14)
    The best way for most Americans to understand the big numbers in the US budget is to remove eight zeros and pretend its a family budget.
  17. The Limping Middle Class (2011-09-04)
  18. The Great Prosperity 1947-1979 vs. The Great Regression 1980-2011 (2011-09-04)
  19. WARREN BUFFETT CALLS BS ON TAX BS: Taxing Billionaires More Won’t Hurt The Economy (2011-09-10)
    Buffet talks a good talk, but he rarely acts on his political ideas.
  20. 9/11 anniversary: National Memorial in New York opens (2011-09-12)
  21. The Middle Class Is Dead (2011-09-12)
  22. US poverty rate hits record high (2011-09-14)
  23. The lost decade for the middle class (2011-09-16)

2011-Present: #Occupy

The #Occupy Movement: The Frogs Figured Out That The Water Was Boiling. To late? Or just in time. (That first sentence is in init caps because it was going to be the title of this post.) I recall what one Occupy Boston protester said about why he was protesting: “The Bush Administration may have caused the recession, but the Obama Administration didn’t do what it said it was going to do to end the recession (namely ending the wars, the Bush tax cuts, and the bailouts), and so we the Occupiers feel disenfranchised, with nowhere to turn but the streets.” Then, rather than arresting the politicians and bankers that caused the economic mess, the police started arresting the 99%! Crazy. Perhaps 10 years after 9/11, the terrorists have won.

  1. Occupy Wall Street (OWS) Starts (2011-09-17)
  2. 14 Reasons People Are Occupying Wall Street (2011-09-28)
  3. 11 Ways America is Keeping Poor People Poor (2011-09-30)
  4. One Third Of Veterans Don’t Back Wars (2011-10-06)
  5. Watch Protesters Take Wall Street as Fancy Bankers Look On [Video] (2011-10-06)
  6. Finally, A Clear Explanation Of What The Wall Street Protesters Are So Angry About (2011-10-09)
  7. Here’s The Chart That Will Get Obama Fired (2011-10-09)
  8. 72 Cities That Have Joined The Occupied Movement (2011-10-09)
  9. Chart: Growth Of Family Income 1947-2007: We Grew Apart (2011-10-11)
  10. What Would George Carlin Say About #OccupyWallStreet? (2011-10-12)
    NSFW but worth the read.
  11. Here’s What The 99% Are Angry About (2011-10-13)
  12. The Protesters Are Getting Their Act Together! (2011-10-13)
  13. Violence Erupts in Rome as Occupy Wall Street Goes Global (2011-10-15)
  14. Four Charts That Explain What The Protesters Are Angry About (2011-10-15)
  15. Amazing Charts Show How 90% Of The Country Has Gotten Shafted Over The Past 30 Years (2011-10-15)
  16. NYPD Arrests Citibank Customer For Taking Money Out Of Own Account (2011-10-15)
  17. Chart: US Debt Accumulation by President (2011-10-16)
  18. Thirteen Observations made by Lemony Snicket while watching Occupy Wall Street from a Discreet Distance (2011-10-17)
    This is a great read. Example:

    “11. Historically, a story about people inside impressive buildings ignoring or even taunting people standing outside shouting at them turns out to be a story with an unhappy ending.”

  19. U.S. Marine Demolishes NYPD, Defends #OccupyWallStreet (2011-10-17)
  20. The Greatest #OccupyWallStreet Sign Ever (2011-10-17)
  21. Occupy George, Occupy Wall Street Infographics Printed On Dollar Bills (2011-10-18)
  22. 15 Great #OccupyWallStreet Political Cartoons (2011-10-18)
  23. Libya’s interim leader confirms Gadhafi killed (2011-10-20)
  24. Chart: How Many Millionaires In Congress? (2011-10-20)
  25. Chart: Self-Employment Income 2006-2011 (2011-10-24)
  26. Top Earners Doubled Share of Nation’s Income, CBO Says (2011-10-26)
  27. Why Obama should call for a breakup of big banks (2011-10-26)
  28. Before & After: Occupy Oakland (2011-10-26)
  29. Jon Stewart: ‘What the F*ck Happened in Oakland?’ [Video] (2011-10-27)
  30. Why the current revenue model of higher education is in trouble (2011-10-27)
  31. If US Land Were Divided Like US Wealth (2011-10-28)
  32. The Washington Post: What caused the financial crisis? The Big Lie goes viral (2011-10-31)
  33. Congress’ Net Worth Up 25% Since 2008 [The Rich] (2011-11-01)
  34. College has been oversold (2011-11-02)
  35. Super committee: Let Bush tax cuts expire and your work will be done (2011-11-02)
  36. Why College? A Comic Strip People Should See In High School (2011-11-04)
  37. Chart: Italy GDP Growth (2011-11-08)
  38. Why American Roads Are So Bad (2011-11-08)
  39. NEW POLL: Americans Want Everything [Video] (2011-11-08)
  40. US poverty: Blame the government (2011-11-09)
  41. Please Help Us Figure Out How To Solve The Inequality Problem (2011-11-13)
  42. Police Destroy 5,000 Books In Their Eviction Of #OccupyWallStreet (2011-11-15)
  43. How the rich stay rich (2011-11-15)
  44. Occupiers occupied: The hijacking of the First Amendment (2011-11-16)
  45. OUTRAGE OF THE MONTH: Insider Trading In Congress (2011-11-16)
  46. Chart: The Popularity Of Congress Compared With Other Unpopular Things (2011-11-17)
  47. Senator Bernie Sanders (Independent, Vermont), Senate Budget Committee (2011-11-18)
  48. Lobbyists and Politicians Beware: First Street Reveals Your Hidden Connections (2011-11-18)
  49. The real problem with Occupy Wall Street? This Google search: http://t.co/LMJRKSYs (2011-11-19)
  50. Venn Diagram: Federal Government vs. Goldman Sachs (2011-11-20)
  51. Egyptian State TV Uses The Police Response To #Occupy To Justify Their Own Brutality (2011-11-21)
  52. CNN’s David Gergen: Have they gone nuts in Washington? (2011-11-21)
  53. Five reasons why the congressional supercommittee failed (2011-11-21)
  54. Occupy Wall Street Moves Into New Phase With Student Debt Refusal Campaign (2011-11-21)

Summary

There are many problems with the world, its economy, and its denizens.

People have a short attention span. Most have forgotten the Big Four and what preceded it (9/11).

People make decisions based on emotion, not on logic.

People don’t understand large numbers like billions and trillions (hint: try removing eight zeros).

People take facts out of context.

News is entertainment.

Politicians know people.

So what happens? Politicians prey on emotions to get people to vote in certain ways.

It’s takes money to make money.

Power corrupts.

Lobbyists lobby, laws change.

Follow the money.

The rich get richer, the poor get poorer.

And instead of a government of the people, by the people, for the people, we have a government of the rich, by the rich, for the rich.

It is sad, but it is true. Copyright law was long ago hijacked by Hollywood. In 2011, patent law was hijacked by big business.

50% of those in Congress are millionaires. Whose interests do you think they have in mind?

I don’t know who the next US president will be. But the formula for breaking the economy is well known:

9/11 Wars + Tax Cuts + Bailouts = Recession

Here’s how to fix the economy:

End The 9/11 Wars + End The Bush Tax Cuts + End The Bailouts = End The Recession

There has been a failure of leadership in Washington, DC. There been a failure of followership. And there has been a failure of get-out-of-the-way-ship. The 112th Congress will go down in history as one of the most political, least effective, and most corrupt ever. Unless things change soon, this independent voter may end up casting protest votes in all contests for himself. Again.

I’m pretty good at spotting trends. Do you see the trend here? The natives are getting restless. The US government must reform now.

Said the king to his protesting subjects, “You have to do what I say or I can’t be king anymore!”

Exactly.


Erik J. Heels is an MIT engineer; trademark, domain name, and patent lawyer; Red Sox fan; and music lover. He blogs about technology, law, baseball, and rock ‘n’ roll at erikjheels.com.

43 Replies to “* Drawings, Charts, And Videos That Explain The Recession”

  1. Owen-

    You are correct, I neglected to include the $200 billion in unfunded prescription drug benefits for seniors. But you can see the numbers in the charts above and make your own conclusions. Perhaps it should have been the “Big Five.” But arguing against any benefit for seniors – or against any health benefit in general – is political suicide. Wars and windfalls for the rich and bankers should be EASY to argue against.

    -Erik

  2. Amazing Erik. You missed that Bush also added unfunded medicaid prescription plan. But you need to look at the motivation and think outside the box. Basically it’s spend as if there is no tomorrow. And perhaps there isn’t. Perhaps that’s what those in power know that we don’t. That due to the consequences of climate change and peak oil, the planet can’t support more than 1% of the existing population. And if you follow the money in everything you cite above (and even in the financial crash where money was redistributed, 99% lost it, 1% picked up bargains and made a fortune all under Obama’s watch)–it’s clear that they have written off the other 99%- they (we) are really no longer needed. What’s needed is oil and unpolluted land to sustain the 1%. We may laugh at the camel jockies and Afghanistanie’s living in the 17Th century, but they have resisted cars, factories, chemicals etc leaving them with perhaps the only place the “survivors” can ride out the storm. Where they already have their toys, but need water, food and golf courses to spend their days bragging to each other how they had pulled off the perfect crime. Deciding who will live and who will die is very much like Hitler. Perhaps the 99% of us are already in a concentration camp where we will be exterminated slowly by lack of food, water, medicine, fuel, services and shelter all while we experience nature’s wrath. Most reading this will call me crazy, but what’s crazy is watching a useless political system do nothing that has made life better for you or I. To accept leaders at their word and get us into a mess fighting a war none of us understand the benefit to us.

    The simple fact that we only have one planet with finite resources for which to sustain human civilization. No amount of human ingenuity or technology will change that reality.

    Go back to Reagan’s inaugural speech which is on YouTube for all to see. Sounds like Obama could read that same speech today and if you compare texts, he has simply cut and pasted a lot of it with a different spin.

    Reagan had basically told us that infinite growth was not sustainable on “sharing of scarcity”. The folk idea of unlimited good prevents Reagan and the dominant culture from understanding that natural resources are finite, that increasing scarcity, not income distribution and regulation, are reducing the increase in our standard of consumption. As Dundes claims, the folk idea of unlimited good is tied to the folk idea of dominating nature, of expecting nature always to provide an undiminishing store of energy and raw materials. And so Reagan asserts — against all ecological evidence — that “prosperity is a fundamental part of our environment.”112 For Reagan, believing in the New World’s exceptionalism, natural resources are infinite, and so too is America’s ability to increase its standard of consumption: “Our hemisphere has an unlimited potential for economic development and human fulfillment.”ll3 Where Carter learned that America must conserve resources, use them more slowly so that the United States can change over to non-fossil fuels before they run out, Reagan calls for extracting more energy from fossil fuel, using it faster, as if it will replenish itself: “Those who preside over the worst energy shortage in our history tell us to use less, so that we will run out of oil and gas a little more slowly.” “America must get to work producing more energy. The Republican program for solving economic problems is based on growth and productivity.” 114 When Reagan rejects “an energy policy based on the sharing of scarcity,”115 he rejects reality in favor of his folklore.

    Capitalism, at least as we know it, requires infinite growth. For-profit companies have to continue to grow in size and increase their profits year after year or risk losing investment money. Many people have gotten very wealthy with this economic model and the rest of us, at least in industrialized countries, have benefited greatly as well. We have many modern conveniences and most of us are quite disconnected from the natural world in a way that would have been unimaginable to people only a few centuries ago. This is certainly good from the standpoint of making our lives easier but it’s not good when you look at the long term picture.

    The problem in the long term is that an economic model of infinite growth requires the use of natural resources at increasing rates. The most obvious of these natural resources is petroleum or oil. But many other resources like water and coal are being used at increasing rates to sustain growth in population. This growth in population is fueled by the continued increase in use of natural resources. It’s a cycle of infinite growth that is simply unsustainable on a planet of finite resources.

    Hardly anybody in the government or the media is talking about this problem because it’s unimaginable to most people living in modern, industrialized countries that the only way of life they’ve ever known is simply unsustainable in the long term. It’s as if people have either (a) buried their heads in the sand or (b) hope that the shit doesn’t hit the fan until they are long gone. Unfortunately neither position will stop what is inevitable. It really is up to us to realize this now and attempt to build an economic model that is sustainable. This is not possible without major changes. What is apparent is that these changes are going to happen one way or another either by choice or by force as we begin to hit the peaks of supply with regard to some of our most valued natural resources.

  3. Hi Erik – Although you are preaching to the choir sending this to me, thank you for the effort of pulling together all this material. What I have never understood is how so many of our fellow citizens can be so gullible to the deceptions that politicians spout. Johnson:”Guns and Butter”, Reagan:”We’re past the peak of the Laffer curve”, Bush1: “No new taxes”, Bush2:”The best way to grow jobs is to cut investment related taxes and lower the tax rates (on people who already have more discretionary income than they know what to do with)”, etc. And they punish politicians who tell the truth: Mondale:”we will both raise taxes – the only difference is that he won’t tell you and I just did.”

  4. Love what you’ve put together with one (non-political) overarching, oft-neglected and critical component-demographics and life-cycles and our aging population.

    These cycles can be traced back centuries in the U.S. and Europe. When this is factored in it presents a situation last seen in the roaring 20’s and depressed, warring thirties. The other huge difference is back then wealthy class re-invested in the U.S. because it was the only economically realistic game in town. Now we have 3 billion newbie capitalists in Asia and opportunity costs have never been better.

    Money has no heart or patriotism.

    So we have politicians through these past decades with no memories or experiences of the 20’s and 30’s and only short-sighted party-driven unsustainable ‘fixes’.

    Start reading some of Harry S. Dent’s books about demographics and life-cycles. It will give you even a broader perspective of what’s happening and how to work with some inevitabilities which no political party can fix. (IMHO)

  5. Jane, I agree that the policies of past presidents also played a part. (See “A timeline of events” link above.) But I had to start somewhere, and most of my readers don’t remember President Carter (or Clinton, for that matter). I agree that Clinton’s housing policies contributed to the 2008 housing collapse. But the “Big Four” are what put the country in the current hole it is in. The tax cuts, in particular, only 2 months after the second 9/11 war, were irresponsible.

  6. Erik,

    I think you have to look to the community re-investment act begun under Carter which was expanded under Clinton if you want to understand the current recession. The whole thing was perpetuated by the housing bubble which Bush actually warned about in his 2006 SOTU address. Congress simply ignored the warning.

    Everything else was incidental.

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