Posted on by Erik J. Heels

* Drawings, Charts, And Videos That Explain The Recession

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

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)
  18. 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.
  19. 9/11 anniversary: National Memorial in New York opens (2011-09-12)
  20. The Middle Class Is Dead (2011-09-12)
  21. US poverty rate hits record high (2011-09-14)
  22. 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.

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

  5. Actually Erik, I think we should spend our time writing our Senators and Representatives rather than write on blogs. Write your local paper! I have a huge letter to the editor in my head for the NYT. It would probably get printed in the WSJ, but I’d be preaching to the choir.

    Seriously though, the big campaign issue I think this year should be “VOTE THEM ALL OUT.” Every single freaking one of them. And take their staffs too. It’s a mess and t hey continue to create it. I’m going to start the Sensible Party. My platform would start with term limits for all –ALL – public servants. (so right there, I’d never win because they control the electorate). I’d have a balanced budget amendment and line item veto. I’d make Congress stick to cost of living increase in the budget or they lose their seat automatically. And, I would make them spend at least 4-6 months in their districts or states. Then they would really know what was going on. You couldn’t accept any money from outside your district (rep) or state (Sen) either. And no one can be President unless they have actually RUN something. A business, non-profit, university, or a state. That would mean that if you have been in politics all of your life, you have to go out and do something else for a while before you can run from President. Obama lacks such leadership skills it is frightening.

    And, Congress can’t pass a law that doesn’t apply to them. Period.

    I’d do with away with all deductions. Flat tax. You could keep the mortgage deductions for those with incomes under $105,000, or to the max SS deduction level. I would have means testing for all – ALL – government payouts. So if you are getting disability, then you better damn well not be walking, or if you can walk, then you better not be able to use your arms. And, if you are accepting unemployment, then you have to report to your town hall every day to get your assignment list for the day – driving the elderly, picking up the local parks, working with kids in school…

    I talked to a Vietnam vet today who was building a shed roof for us. He told me he was retired, getting SS and disability. I asked why the disability if he could swing a hammer, use power tools and accept a pay check for construction work??? He said, he was disabled from doing his other job. “Which was?” I inquired. “fighting in the war.” OK, he is 63, he wouldn’t be allowed to fight, and besides the pack of cigarettes and no teeth, he is in good shape. Why are we paying him disability?

    I don’t want to become Greece, but boy are we headed there.

    We need the entrepreneurs of the country to STEP UP AND MAKE SOME NOISE!!!

    That’s my blog for the day. Feel free to post it…

    Reply

  6. My hope in writing the piece is that it will help politicians focus on the issues during this election. A discussion like the one we are having can only help our democracy.

    Reply

  7. OK, I liked you until this. (said with a smile on my face). And this appears very political. It’s not that simple. It’s not just the wars. The bailouts of the banks have been mostly paid back by the banks, although we will never see the lost taxpayer dollars to Obama’s Great Green experiment. It’s the entitlements that have been increasing astronomically recently. 57% of our budget is on entitlements, not wars. And, I would rather bet on this country’s entrepreneurial spirit to grow the economy than giving Congress more of our tax dollars to spend. No country has ever been taxed into prosperity. And we can’t keep putting more people on the govt dole – whether through entitlements or through govt jobs.

    As a lawyer, you know there are two sides to every story. On the Bush tax cuts, the other side of the story is that during that time REVENUES TO THE US TREASURY WERE THE HIGHEST THEY HAVE EVER BEEN. The NYT doesn’t ever talk about that, the WSJ does. I’m going to trust the WSJ more when it comes to understanding business, taxes and revenues.

    It’s not the Bush Tax Cuts that caused the deficit. It is the out of control spending by the Pelosi /Reid run Congress, hyperfueled by Obama’s policy. That and entitlement spending (57% of budget, $2 Trilllion, up from 25% 40 yrs ago) plus interest on the debt that if we don’t stop the spending, will bankrupt this great nation. Even Mary Meeker explained this part well. Entitlements and Interest on the debt alone will exceed revenue by 2025, squeezing out all other programs. This is the problem. And until we tackle that and our tax code in general, raising taxes or doing anything else is a waste of time. Literally. Look up Fiscal Wake Up Tour by Concord Coalition.

    http://www.outsidethebeltway.com/wp-content/uploads/2010/07/FireShot-Pro-capture-314-Republican-Tax-Nonsense-I-Capital-Gains-and-Games-capitalgainsandgames_com_blog_bruce-bartlett_1864_republican-tax-nonsense_utm_sourcefeedburnerutm_mediumfeedutm_.png

    2001 – 2003 was the recession caused in large part by the 9/11 bombings. The full extent of the Bush tax cuts went into effect 2005-2007. Pelosi’s spending takes over in 2008. And things start heading south The Nobel Prize winners in Economics this year, have studied for years the effect on the economy when people think bad things are going to happen. Pelosi, Reid and Obama were telling business people that we are the root of all the US problems, that we had to pay for this, and that our taxes have to go and Obama was even floating a close to 45% rate (39.6% + 3 % in extra medicare and raising the SS floor + no charitable deductions). Add state of 5-9% on top of that and over half of every extra earned now goes to the govt. So there is a lot of incentive for us to go out and risk our capital, borrow money, to hire people and grow our business right? Right…

    Corporate tax revenues, percent of GDP and of federal revenues Corp contribution to revenues increased during 2003-2007. Pelosi takes over in 2006 and her spending spree scared the pants out of any business person paying attention.

    The wars- expensive. Yes. But, would you rather we did nothing after 9/11? I think that message and the ensuing consequences would have been far more expensive.

    Defense spending is 4.5% of GDP. Lowest it has ever been. Was low even during the Bush years. Obama’s spending spree is 24% of GDP. Highest ever. EVER. By a lot. And this is what is bankrupting us. Worse, there is no accountability for this expense. There is no job creation. $540 million for Solyndra and that’s gone, and $200 million National Renewable Energy Lab in CO and they are laying off 100-150 people. Tell me why the Energy Dept should be handling investment in these companies. What do they know about investment strategies? If saavy investors aren’t investing in these companies, should the American taxpayer?

    So, while Obama has been busy picking winner that his friends want to invest in (follow the money with Solyndra – his friends who invested in this, didn’t get burned like most of us would have in a bad investment. No, the govt took a subordinate role – AS A LENDER…what?), he on the other hand, vilifies those of us who do pay taxes, create jobs and get no stimulus money. As a patent attorney, I would be very concerned about Obama’s anti business rhetoric. It has stopped innovation. He has demonized those of us trying to run small businesses by classifying us as “millionaires and billionaires.” How is that most people who go to Washington, go having come from moderate means and end up being multi-millionaires soon after? At least those of us in manufacturing, and business create something… usually jobs.

    I have no sympathy with the Occupiers. Especially those trespassing (as in NYC), sitting there with their iMacbooks, iPhones and Starbuck’s Latte. Please. Disenfranchised? Hardly. Go out and do something with your education.

    Michael Dell said something terrifying recently. He said when they post a job for engineers, they get few applicants. However when they post a job for a warehouse job, the line goes around the block. So tell me, how can this be? There are 16,000 jobs going vacant in ND, PA and other places in the natural gas and oil fields. These are $70-100,000 /yr jobs. Obama is vilifying oil and natural gas executives and companies.

    http://online.wsj.com/article/SB10001424052970204226204576602524023932438.html?KEYWORDS=STEPHEN+MOORE

    The bankers only did what Washington allowed them to do. If you feel they bought the legislation they wanted, then do something to get rid of the folks in Congress who allowed this. Start with Barney Frank. If you think Solyndra was bad, just take a look at all of the money we have lost in Fannie and Freddie! At least most of the TARP money has been paid back, with interest. Then work toward getting term limits for everyone (all of Congress, aides, white house staff, everyone) in Washington DC on every ballot in every state. Get rid automatic pay deductions for unionized Fed workers – and why, why are federal, state and municipal workers even allowed to unionize ?– and those are the only unions growing. Federal and state pensions are sucking us dry.

    The nation’s income have grown on average about 5-6% per year with the exception of 2009-2010 when it dropped to 2-3%.

    http://www.ssa.gov/oact/cola/AWI.html

    We have met the enemy and they are us.

    I realize my response is very disjointed because I wrote this in spits and spats over the day. But, sorry, nothing personal…but I’m not passing this on.

    I’m impressed by the amount of work though…

    Reply
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