tag:blogger.com,1999:blog-7620292423793571584.post1615317494034494738..comments2023-08-25T02:27:50.730-07:00Comments on Road to the Middle Class: Krugman and the AusteriansChristopher Chantrillhttp://www.blogger.com/profile/04115398168797134843noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-7620292423793571584.post-50088757093093511662012-05-07T16:56:06.281-07:002012-05-07T16:56:06.281-07:00A couple of points occurred to me while reading th...A couple of points occurred to me while reading this. <br /><br />First, in view of Krugman's article (on the same subject) in this morning's NYT, it looks like you and he are on the same page with regards to the Euro. It makes me wonder if, from a practical standpoint, your understanding of Europe's debt crisis and Mr. Krugman's are quite similar.<br /><br />Second, and this may be worth considering, some time ago I tried to take a look at the effect of the massive Bush tax cuts* on venture capital investments. It may of course be that my sources are not comprehensive enough to render a sound judgement, but what I found was a Price Waterhouse Coopers chart of historical trends:<br /><br />https://www.pwcmoneytree.com/MTPublic/ns/nav.jsp?page=historical<br /><br />...and it seemed to me that venture capital investments literally fell off a cliff beginning Q1, 2001.<br /><br />Relevant to your post, I speculated that a great deal, if not all of the money which the tax cuts pumped into the economy, went into spiraling mortgage backed derivitives - rather than venture investments in private businesses. And then quite simply went up in smoke when the real estate bubble burst.<br /><br />Or, in other words, as you say,<br /><br />"It means that the bet that a lot of people made against the future has failed. In the case of the Crash of 2008 the bet was made by homeowners [and MBD investors]that assumed they would have the money to service their loans and cash them out at higher home resale values."<br /><br />And THAT... begs the question. Is it possible that if the Bush tax cuts had never happened, and all that extra cash had not been available to help fuel the run-up in real property values, might the crash of '07 have been far less severe, or not even have happened?<br /><br />BTW - I put an asterisk after "the Bush tax cuts" because, as you know, when you are in the condition of deficit spending, what you refer to as "tax cuts" are actually the transfer of tax liabilities to future generations.Chrishttps://www.blogger.com/profile/02107206395412209448noreply@blogger.com