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Best economic growth in six years - Is the recovery finally here?

post #1 of 123
Thread Starter 
Best economic growth in six years

Quote:
The U.S. economy grew at the fastest pace in more than six years during the fourth quarter of 2009, according to a government report Friday.

The nation's gross domestic product, the broadest measure of economic activity, rose at a 5.7% annual rate in the fourth quarter. That was much stronger than expected and provides another sign that a recovery in the economy is taking hold.

But even with the strong growth in the second half of 2009, the economy shrunk by 2.4% last year. That was the biggest drop in 63 years and first annual decline for the economy since 1991.

The GDP report does not mark an official end of the recession. That determination will be made by the National Bureau of Economic Research, and that group typically waits months -- if not more than a year -- to declare when recessions ended and began.

But two straight quarters of economic growth is typically a sign of a recovery, and most economists agree that the recession ended at some point in the middle of 2009. The Federal Reserve even used the word "recovery" in the statement following its latest meeting earlier this week.

So, is this the light at the end of the tunnel? Or are we doomed to ultimately drown under a mountain of debt? Is it still Bush's fault? Obamas? Can a government even do much to actually control an economy? Or is it all a mix of voo-doo and differing schools of thought fighting it out until somebody gets lucky?


(If this should be merged with an existing thread I apologize, I didn't seen any economic ones currently being discussed)
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post #2 of 123
Quote:
Originally Posted by iPoster View Post

Best economic growth in six years



So, is this the light at the end of the tunnel? Or are we doomed to ultimately drown under a mountain of debt? Is it still Bush's fault? Obamas? Can a government even do much to actually control an economy? Or is it all a mix of voo-doo and differing schools of thought fighting it out until somebody gets lucky?


(If this should be merged with an existing thread I apologize, I didn't seen any economic ones currently being discussed)

That is a good number. I'm glad to see it. I think it probably has to do with massive cash injections from the stimulus and Fed actions over the last year. It's therefore likely short-term. The underlying economy is still weak, from new home sales to the auto sector. Obviously employment is a huge factor, though that is a lagging indicator. If will take unemployment a good 2-3 years to come back AFTER we have sustained growth (this is typical for any recession).
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post #3 of 123
The recession was much sharper and deeper than some anticipated. However, deep recessions have strong growth in recovery. For example, the 1982/83 recession(s) were followed by 8% growth.

The last quarter his 6% growth, which is very good. The bottom (which many predicted) was this last summer, so yes things are doing well. And if the stimulus has added any effect (a dubious proposition) it should be hitting around now.

However, the CBO predicts a serious slowdown in the second half of this year (2 percent). And 2011 will have some serious tax increases for everyone. So the longer term predictions are less rosy - and then the deficit looms.

I got back in the market 6 months ago, and will likely leave the market this spring. I am waiting for one more rally (hopefully) and then bail. There are too many clouds on the horizon for me to feel comfortable.
post #4 of 123
More than likely Obama has engineered a double dip recession. Sales of existing homes is going back down. Unemployment in my area is getting worse. His war on banks and businesses have frozen capitol markets and his anti-business saber rattling has spooked VC firms into holding on to cash.

Get ready for round two.
post #5 of 123
Quote:
Originally Posted by iPoster View Post

So, is this the light at the end of the tunnel?

Not 'till we start to get on the path to the natural rate of unemployment, and we've not stopped losing jobs yet, so, No.

Business and labor have a symbiotic relationship, one can't be said to be in recovery unless both are.
post #6 of 123
I really don't think this will be a double dip, more like some robustness slowing to so-so growth in late 2010. Presidents can do harm, but little good. I don't go by the "blame it on the guy who is in office", except to the extent their policy makes things worse.

Obama's big problem is he is throwing 800 billion at a problem, not understanding that it all has to be paid for later. The CBO predicts that the deficit will be around 600,000,000 a year in 2014, and that is assuming all the tax beaks expire and everyone gets hit with higher taxes and many more get hit with the AMT.

On the small chance that Obama keeps his promise, the mid-low income groups won't get the tax increase, which means the deficit will be higher.

And it only gets worse when you compute Medicare, Medicaid, Social Security etc.

Obama and the democrats, if they had been responsible, would have focused on this issue their first year in office rather than health reform, stimulus goodies (cash for clunkers), and cap and trade. But when you are the "welfare is good" ideology, handing out goodies is the number one way to get re-elected.
post #7 of 123
Quote:
Originally Posted by MaxParrish View Post

cash for clunkers

I think this program was the only one that performed as well as expected.

It also seems to be the only program that people could take advantage of. The rest took advantage of the people.
post #8 of 123
Thread Starter 
As someone with only one freshman semester of economics, what is the problem many seem to have with the stimulus? (other than the obvious one of running up the deficit) I understand Keynesian economics aren't the hot theory these days, but it has worked in the past. Besides the obvious example of the Great Depression/WW2, Reagan's huge spending increases helped fuel the 80's boom, I'm sure there are other examples.


In this case, did they aim at the wrong sectors? Not enough money? Too much? Should have left well enough alone?
You need skeptics, especially when the science gets very big and monolithic. -James Lovelock
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post #9 of 123
Until we get American companies to drastically slow down or stop outsourcing so many jobs (primarily for income tax avoidance reasons, no thanks to the second-highest corporate income tax rate in the industrialized world and the payroll tax), we're not going to get anything resembling a decent recovery.
post #10 of 123
Quote:
Originally Posted by iPoster View Post

As someone with only one freshman semester of economics, what is the problem many seem to have with the stimulus? (other than the obvious one of running up the deficit)

Let's start with the fact that it's all back-loaded and much of it has nothing to do with "stimulus." There is an assload of pork in it.

Quote:
I understand Keynesian economics aren't the hot theory these days, but it has worked in the past. Besides the obvious example of the Great Depression/WW2, Reagan's huge spending increases helped fuel the 80's boom, I'm sure there are other examples.

Total misunderstanding. Keynesian policies did not help during the Great Depression, they made things worse. WWII is what pulled us out of the depression. FDR actually made things far worse and extended the depression. Reagan? Do you have any idea WTF you're talking about? His policies were the polar opposite of the Keynes model. He was a supply-sider. It was the Reagan tax cuts that fueled the economic boom. I'm sure defense spending didn't hurt, but that wasn't the primary engine. Reagan and Keynesian economics...

The fact is that there are no examples of those policies fixing anything long term. The best solution is to get government the hell out of the way. It works every time it's tried. Examples? Kennedy. Reagan and yes, Bush 43. All enacted tax cuts and pro-business policies that resulted in ecnomic expansion, not to mention more revenue to the federal gov't. The problem is that few have been able to control runaway spending.


Quote:

In this case, did they aim at the wrong sectors? Not enough money? Too much? Should have left well enough alone?

Wrong sectors? Yes. Poorly designed and not immediately fundable? Yes. But the real problem is that a "stimulus" like this will only produce short term results even if designed/implemented perfectly. It's the nature of the beast. The government is creating temporary jobs, saving jobs for a time and investing in" shot in the arm" projects. When it runs out, things go back to what they were. And we get a mountain of debt to boot! It's like taking cold medicine when one needs an antibiotic.

This money would have been far better spent on tax cuts. For what they spent, we could have suspended payroll and income tax for 3-4 months. Or, we could have lowered rates, etc. This would have "cost" money, but it would have stimulated the private sector more long-term. As a result, revenue would have gone up. We'd still have "spent" some money, but we'd have invested it in the economy. It wouldn't be a "once and done" shot like we've had.
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post #11 of 123
d/p, apologies.
post #12 of 123
Quote:
Originally Posted by SDW2001 View Post

Let's start with the fact that it's all back-loaded and much of it has nothing to do with "stimulus." There is an assload of pork in it.

For example.

Quote:
Originally Posted by SDW2001 View Post

Total misunderstanding. Keynesian policies did not help during the Great Depression, they made things worse. WWII is what pulled us out of the depression. FDR actually made things far worse and extended the depression.

This is absolutely false, I'm afraid, SDW2001.

Demonstrably false:

Quote:
Tax Federal GNP Unemp.
Year Receipts Spending Growth Rate
-------------------------------------------------
1929 -- -- -- 3.2% < Hoover era, Great Depression begins
1930 4.2% 3.4% - 9.4% 8.7
1931 3.7 4.3 - 8.5 15.9
1932 2.9 7.0 -13.4 23.6
1933 3.5 8.1 - 2.1 24.9 < FDR, New Deal begins; contraction ends March
1934 4.9 10.8 + 7.7 21.7
1935 5.3 9.3 + 8.1 20.1
1936 5.1 10.6 +14.1 16.9
1937 6.2 8.7 + 5.0 14.3 < recession begins, May
1938 7.7 7.8 - 4.5 19.0 < recession ends, June
1939 7.2 10.4 + 7.9 17.2
1940 6.9 9.9
1941 7.7 12.1
1942 10.3 24.8
1943 13.7 44.8
1944 21.7 45.3
1945 21.3 43.7

As you can see, Roosevelt began relatively modest deficit spending that arrested the slide of the economy and resulted in some astonishing growth numbers. (Roosevelt's average growth of 5.2 percent during the Great Depression is even higher than Reagan's 3.7 percent growth during his so-called "Seven Fat Years!") When 1936 saw a phenomenal record of 14 percent growth, Roosevelt eased back on the deficit spending, overly worried about balancing the budget. But this only caused the economy to slip back into a recession, as the above chart shows.

I have been unable to find reliable economic growth figures from World War II, but as a generalization it is safe to say the economy exploded, experiencing itÃ*s greatest growth in U.S. history. Between 1940 and 1945, the GDP nearly doubled in size, from $832 billion to $1,559 billion in constant 87 dollars. And this occurred as deficit spending soared, to levels Keynes had earlier and unsuccessfully recommended to Roosevelt.

Edit: see also here, Paul Krugman explaining here how FDR's investing in America basically dug the nation's way out of the Depression:

http://videocafe.crooksandliars.com/...here-are-any-r

Edit:

also

Quote:
Originally Posted by SDW2001 View Post

Wrong sectors? Yes. Poorly designed and not immediately fundable? Yes. But the real problem is that a "stimulus" like this will only produce short term results even if designed/implemented perfectly. It's the nature of the beast. The government is creating temporary jobs, saving jobs for a time and investing in" shot in the arm" projects. When it runs out, things go back to what they were. And we get a mountain of debt to boot! It's like taking cold medicine when one needs an antibiotic.

Well, that's a point that's been made and rebutted by people who know more about this than I do. But after the money's been spent, the improved infrastructure and projects don't just disappear. China invests massively in this sort of stuff for pretty good reasons. Also, in a mortgage crisis, say, this kind of thing keeps people liquid until the mortgage sector catches up and people start lending again... you're not disputing that it saves jobs, but to save them at the nadir of a crisis prevents things from getting much, much worse, surely?
post #13 of 123

Malo periculosam, libertatem quam quietam servitutem.

(I prefer the tumult of liberty to the quiet of servitude.)

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Malo periculosam, libertatem quam quietam servitutem.

(I prefer the tumult of liberty to the quiet of servitude.)

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post #14 of 123
Quote:
Originally Posted by jazzguru View Post

PDF: Great Myths of the Great Depression

Would you like to quote from that .pdf, produced by a right wing economics think-tank, anything that specifically rebuts the facts I posted above, jazzguru?
post #15 of 123
Quote:
Originally Posted by Mumbo Jumbo View Post

Would you like to quote from that .pdf, produced by a right wing economics think-tank, anything that specifically rebuts the facts I posted above, jazzguru?

No, I would not. Thank you.

Malo periculosam, libertatem quam quietam servitutem.

(I prefer the tumult of liberty to the quiet of servitude.)

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Malo periculosam, libertatem quam quietam servitutem.

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post #16 of 123
Quote:
Originally Posted by jazzguru View Post

No, I would not. Thank you.

Then what did you post it for?

If youre not interested in actually adding to this discussion in any meaningful way, exactly what did you hope to achieve by posting a .pdf of revisionist free market cult nonsense?

If you have nothing to say, probably better you say nothing.
post #17 of 123
Quote:
Originally Posted by Mumbo Jumbo View Post

Then what did you post it for?

If youre not interested in actually adding to this discussion in any meaningful way, exactly what did you hope to achieve by posting a .pdf of revisionist free market cult nonsense?

If you have nothing to say, probably better you say nothing.

There are some here who are actually interested in learning. I posted that for their benefit. Carry on.

Malo periculosam, libertatem quam quietam servitutem.

(I prefer the tumult of liberty to the quiet of servitude.)

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Malo periculosam, libertatem quam quietam servitutem.

(I prefer the tumult of liberty to the quiet of servitude.)

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post #18 of 123
Quote:
Originally Posted by jazzguru View Post

There are some here who are actually interested in learning. I posted that for their benefit. Carry on.

If you want to promulgate revisionsist free market cult horseshit, start a blog.

No one has this url. It's perfect.

Otherwise, you're welcome to contribute to the thread constructively. You might start by pointing out relevant sections in that .pdf to actually make a case for something.
post #19 of 123
Quote:
Originally Posted by Mumbo Jumbo View Post

If you want to propogate revisionsist free market cult horseshit, start a blog.

No one has this url. It's perfect.

Otherwise, you're welcome to contribute to the thread constructively. You might start by pointing out relevant sections in that .pdf to actually make a case for something.

If it were anyone else asking me to do so, I just might.

I posted something that openly challenges your assertions and there is nothing you can do or say that can prevent people from reading it.

Malo periculosam, libertatem quam quietam servitutem.

(I prefer the tumult of liberty to the quiet of servitude.)

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post #20 of 123
Quote:
Originally Posted by Mumbo Jumbo View Post

For example.



This is absolutely false, I'm afraid, SDW2001.

Demonstrably false:



Edit: see also here, Paul Krugman explaining here how FDR's investing in America basically dug the nation's way out of the Depression:

http://videocafe.crooksandliars.com/...here-are-any-r

OK..one...the way you have that data pasted it's impossible to see what's what. Secondly, after the New Deal kicked in, we had a recession within the depression. Hmmm. And you blame this on deficit spending being backed off. Of course, this makes no sense. Economic changes take 2-3 years to kick in due to "lag." So if anything, his reduced spending helped...according to your own numbers.

Two..Krugman is an unmitigated fool and liberal stooge. I make no apologies for dismissing his comments out of hand.

Here is some other info for you:

http://newsroom.ucla.edu/portal/ucla...sion-5409.aspx

Quote:
Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.

http://www.nps.gov/archive/elro/glos...depression.htm

Quote:
FDR, after assuming the presidency, promoted a wide variety of federally funded programs aimed at restoring the American economy, helping relieve the suffering of the unemployed, and reforming the system so that such a severe crisis could never happen again. However, while the New Deal did help restore the GNP to its 1929 level and did introduce basic banking and welfare reforms, FDR refused to run up the deficits that ending the depression required. Only when the federal government imposed rationing, recruited 6 million defense workers (including women and African Americans), drafted 6 million soldiers, and ran massive deficits to fight World War II did the Great Depression finally end.

The Wall Street Journal chimes in:

Quote:
he downturn of 1937-38 was preceded by large wage hikes that pushed wages well above their NIRA levels, following the Supreme Court's 1937 decision that upheld the constitutionality of the National Labor Relations Act. These wage hikes led to further job loss, particularly in manufacturing. The "recession in a depression" thus was not the result of a reversal of New Deal policies, as argued by some, but rather a deepening of New Deal polices that raised wages even further above their competitive levels, and which further prevented the normal forces of supply and demand from restoring full employment.

Quote:

Edit:

also



Well, that's a point that's been made and rebutted by people who know more about this than I do. But after the money's been spent, the improved infrastructure and projects don't just disappear.

True, and they don't add anything to the economy either. The jobs go away.

Quote:
China invests massively in this sort of stuff for pretty good reasons.

So? For what reasons? Are you aware that we have different economy than does China?

Quote:
Also, in a mortgage crisis, say, this kind of thing keeps people liquid

How many people...the ones who got the stimulus jobs? Even by the most optimistic bullshit estimates, that's not even 10% of the unemployed.

Quote:
until the mortgage sector catches up and people start lending again...

The mortgage sectors is lending. They never stopped. The kind of loans you're talking about aren't coming back anyway. And what..people are dependent on these loans?

Quote:


you're not disputing that it saves jobs,

Perhaps some jobs, yes.

Quote:
but to save them at the nadir of a crisis prevents things from getting much, much worse, surely?

No, I don't think it does. Employment is a result of business being transacted. That part hasn't gotten better. Paying people to dig holes only works for a while. The underlying issues don't get fixed.
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post #21 of 123
Quote:
Originally Posted by FloorJack View Post

More than likely Obama has engineered a double dip recession. Sales of existing homes is going back down. Unemployment in my area is getting worse. His war on banks and businesses have frozen capitol markets and his anti-business saber rattling has spooked VC firms into holding on to cash.

Get ready for round two.

How this "recession" has managed to avoid being called a "depression" is beyond me. Actual unemployment is around 20%! Is tunnel vision now called television?

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post #22 of 123
Quote:
Originally Posted by iPoster View Post

As someone with only one freshman semester of economics, what is the problem many seem to have with the stimulus? (other than the obvious one of running up the deficit) I understand Keynesian economics aren't the hot theory these days, but it has worked in the past. Besides the obvious example of the Great Depression/WW2, Reagan's huge spending increases helped fuel the 80's boom, I'm sure there are other examples.

In this case, did they aim at the wrong sectors? Not enough money? Too much? Should have left well enough alone?

"Keynesian economics" is an oxymoron. It has never made sense, as it is impossible to get something for nothing, except in the devious calculus of politics. In the real world, the economic harm and damage to the monetary system is now proving near fatal.

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post #23 of 123
My gut feeling is that we're not out of the woods yet.

From a local perspective the city of Phoenix (the 5th largest city in the United States) is about to lay off 500 policemen and firefighters.

Malo periculosam, libertatem quam quietam servitutem.

(I prefer the tumult of liberty to the quiet of servitude.)

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Malo periculosam, libertatem quam quietam servitutem.

(I prefer the tumult of liberty to the quiet of servitude.)

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post #24 of 123
If we want REAL economic recovery and growth, I'd suggest we do the following at least in terms of taxation:

1) MASSIVELY overhaul our national taxation system so it encourages savings accounts and capital investments staying in the USA. The method is simple: end all income taxation on bank savings accounts, dividend payments and capital gains by going to a far simpler means of taxation, whether by a true simple flat income tax system or getting rid of the income tax in favor of a national consumption tax (a la FairTax).

2) If you want to direct the type of consumption, impose an "environmental excise tax" like 20% on fuel-guzzling cars, 15% on certain home electrical goods that fail to meet EPA Energy Star 5.0 requirements, and maybe 2-3% on the majority of take-out food. We can also impose through a graduated step over 4-5 years an excise tax on gasoline to eventually be as high as US$3.00/US gallon to REALLY force people to buy more fuel-efficient cars (they've been doing that in Europe and Japan for many decades).

(By the way, don't think tomorrow's gas-sipping cars will be slow--Motor Trend reported in the new March 2010 issue Ford is developing on a new 1.2-liter I-3 (that's right, a three-cylinder) engine with Ecoboost technology that is actually more powerful than the 1.6-liter I-4 soon to be in the US-market Fiesta, but with maybe nearly 18% better fuel economy.)
post #25 of 123
Thread Starter 
Thanks for the informative posts! I guess the partisan side tracks are to be expected in PO.

@SDW, yes I forgot to mention the 'voodoo' economics. Supply side has it's proponents, but (from what I've read) there are just as many economists who think Reagan's increased deficit spending "primed" the economy and allowed the tax cuts to take effect.

This was one of the points of my original post, you ask 10 economists about a certain event time-line and you'll get 10 differing theories on what worked/failed. Not to mention the political side of the arguments.
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post #26 of 123
Quote:
Originally Posted by Taskiss View Post

I think this program was the only one that performed as well as expected.

It also seems to be the only program that people could take advantage of. The rest took advantage of the people.

Yes, it did have an effect on the GDP. I think 1/2 of the 3rd quater growth was attributed to cash for clunkers - but it came at a price.

First, it moved sales forward (those who would buy in the future rushed to take advantage of the government subsidy), so in the longer term it did nothing.

Second, it removed nearly a million cars from the road that were economically valuable and destroyed them (the "clunkers" being 10 to 15 years old).

Third, it cost money in subsidies that add to the debt.

The program demonstrated one of the oldest economic lessons - the broken window fallacy.

If you are not familier with it, wiki it up. Quite interesting.
post #27 of 123
Quote:
Originally Posted by MaxParrish View Post

Yes, it did have an effect on the GDP. I think 1/2 of the 3rd quater growth was attributed to cash for clunkers - but it came at a price.

The most important thing it did was to change the numbers for the better.

Impressions ... reputations ... are more important to restore than the real causes to begin changing trends. Consumer confidence can make it or break it. That's why jobs are SO important - people that worry about their jobs aren't going to buy durable goods even if they have great need if they don't have jobs or are worried about their jobs.

The apparent growth will do a lot to restore consumer confidence, and when people are confident about their income they will go back to buying.

It's all about jobs.
post #28 of 123
Quote:
Originally Posted by Mumbo Jumbo View Post

For example....
Edit: see also here, Paul Krugman explaining here how FDR's investing in America basically dug the nation's way out of the Depression:

http://videocafe.crooksandliars.com/...here-are-any-r

Although I did not view the video to see how "FDR's investing" "dug" the US out of the depression, I suggest either you misunderstood Krugman or Krugman is a bit pixilated.

Krugman: http://www.nytimes.com/2008/11/10/op...10krugman.html

Quote:
That said, F.D.R. did not, in fact, manage to engineer a full economic recovery during his first two terms. This failure is often cited as evidence against Keynesian economics, which says that increased public spending can get a stalled economy moving. But the definitive study of fiscal policy in the 30s, by the M.I.T. economist E. Cary Brown, reached a very different conclusion: fiscal stimulus was unsuccessful not because it does not work, but because it was not tried.

Krugman's opinon is that because the FDR stimulus was small, and because of Hoover tax increases, it didn't do much.

Kinda hard to play it both ways and be taken seriously, don't you think?
post #29 of 123
Yeah, but that's only accurate if you count making hamburgers as manufacturing jobs.
post #30 of 123
Quote:
Originally Posted by Taskiss View Post

The most important thing it did was to change the numbers for the better.

Impressions ... reputations ... are more important to restore than the real causes to begin changing trends. Consumer confidence can make it or break it. That's why jobs are SO important - people that worry about their jobs aren't going to buy durable goods even if they have great need if they don't have jobs or are worried about their jobs.

The apparent growth will do a lot to restore consumer confidence, and when people are confident about their income they will go back to buying.

It's all about jobs.

Is it? The broken window fallacy (a parable):

Quote:
“ Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation—"It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?"

Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier's trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen."

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented."

http://en.wikipedia.org/wiki/Parable..._broken_window
post #31 of 123
Quote:
Originally Posted by tonton View Post

Yeah, but that's only accurate if you count making hamburgers as manufacturing jobs.

Heh, heh....

Our system is clearly broken and to that we can attribute our own government overprotecting, overtaxing, and overtaking us in growth. As Pres. Obama likes to say, "you're talking about using a hatchet, where I want to use a scalpel"... well, I'd rather use both the hatchet and scalpel to slice and dice the burdensome taxation and governmental waste at every level.

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post #32 of 123
Quote:
Originally Posted by tonton View Post

Yeah, but that's only accurate if you count making hamburgers as manufacturing jobs.

One of my favorite items from the last decade! Well that and " Freedom fries! "

Jesus! How stupid!
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post #33 of 123
Quote:
Originally Posted by SDW2001 View Post

O
So? For what reasons? Are you aware that we have different economy than does China?

Are you seriously asking why an economically ambitious nation invests in infrastructure? Come on.

Genuinely sorry I don't have time to address the rest of your post... weird actually having a civil conversation on PO.
post #34 of 123
As far as economic growth is concerned I'm afraid this recovery is going the way Paul Krugman said it might when I saw him at a lecture almost a year ago. He said the thing that would lag is jobs. And without the proper stimulus like WWII was in the Great Depression it could go on for quite awhile. Which is depressing in itself. This is exactly why both sides should work together on a solution. This isn't a simple recession like the ones we've seen in recent history. This is a really bad problem and will require all of the political system to solve. It won't just solve itself in the short term unless we take action of some sort.

Otherwise it could be like this for a very long while.
I think Krugman said 10 years or more if you want to go the solve itself route. So lets see last year was 08' until 2018!
Without the need for difference or a need to always follow the herd breeds complacency, mediocrity, and a lack of imagination
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Without the need for difference or a need to always follow the herd breeds complacency, mediocrity, and a lack of imagination
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post #35 of 123
Quote:
Originally Posted by Mumbo Jumbo View Post

For example.
This is absolutely false, I'm afraid, SDW2001.
Demonstrably false: (etc.)

Mumbo Jumbo, perhaps you are not aware that Paul Krugman is not a macroeconomist that is specialized in issues of fiscal policy and national income. In fact, his prejudices on fiscal policy and deficit spending date from the orthodoxy of the early 1970's.

Economics has "moved on" from those old notions, and he has not kept up.

Quote:
1. On the issue of macroeconomics, I think I understand Paul's point of view. He accepts the 1970-vintage Keynesian economics he first learned from, say, Jim Tobin when Paul was an undergraduate at Yale. Like Tobin and Bob Solow, one of his teachers at MIT, Paul thinks a lot of modern macroeconomics was an unfortunate turn in the wrong direction. In this old paper (published version), I tell the story of modern macro and describe how many old Keynesians were more likely to denigrate modern macroeconomics than to engage it intellectually. Paul is following in that tradition.

And as Greg Mankiw highlights, the recent work of economists are calling into question even the textbook theories:

Quote:
For example, here is the conclusion of Andrew Mountford and Harald Uhlig (a prominent econometrician now at the University of Chicago) in an empirical study called "What are the Effects of Fiscal Policy Shocks?":

Our main results are that
•a surprise deficit-financed tax cut is the best fiscal policy to stimulate the economy
•a deficit[-financed government] spending shock weakly stimulates the economy.
]•government spending shocks crowd out both residential and non-residential investment without causing interest rates to rise.

These finding are not consistent with standard Keynesian theory, according to which government spending multipliers are larger than tax multipliers and crowding out occurs through increases in interest rates.

An earlier, related paper by Olivier Blanchard and Roberto Perotti called "An Empirical Characterization Of The Dynamic Effects Of Changes In Government Spending And Taxes On Output" reported similar anomalous results:

"we find that both increases in taxes and increases in government spending have a strong negative effect on private investment spending. This effect is consistent with a neoclassical model with distortionary taxes, but more difficult to reconcile with Keynesian theory: while agnostic about the sign, Keynesian theory predicts opposite effects of tax and spending increases on private investment. This does not appear to be the case.
Blanchard, incidentally, is now the chief economist at the IMF.
post #36 of 123
Quote:
Originally Posted by MaxParrish View Post

Mumbo Jumbo, perhaps you are not aware that Paul Krugman is not a macroeconomist that is specialized in issues of fiscal policy and national income. In fact, his prejudices on fiscal policy and deficit spending date from the orthodoxy of the early 1970's.

Economics has "moved on" from those old notions, and he has not kept up.



And as Greg Mankiw highlights, the recent work of economists are calling into question even the textbook theories:

Quote:
Economics has "moved on" from those old notions, and he has not kept up

Yeah. That's why things are unfolding pretty much like he said they would a year ago......
Without the need for difference or a need to always follow the herd breeds complacency, mediocrity, and a lack of imagination
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Without the need for difference or a need to always follow the herd breeds complacency, mediocrity, and a lack of imagination
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post #37 of 123
Quote:
Originally Posted by jimmac View Post

Yeah. That's why things are unfolding pretty much like he said they would a year ago......

Really? What did he say a year ago?
Edit, oh I see your post about having attended a lecture. Presumably he said that unemployment would be a problem. Well that is not news, everyone knows that employment lags recovery, and the current models suggest we won't return to full employment till 2015.

True, the Obama administration badly misforcast the economic downturn's depth in January (as did some others), but no one is claiming that full employment is just round the corner.

Indeed, it was not Krugman but Nick Bloom of Standford that nailed it. In January, before the stimulus, his models showed a GDP bottom in mid-year followed by a V-shaped recovery. While the V-recovery is not as a strong as Reagan's, it is not the "U" predicted by many. It is modestly robust.
post #38 of 123
Quote:
Originally Posted by MaxParrish View Post

Really? What did he say a year ago?
Edit, oh I see your post about having attended a lecture. Presumably he said that unemployment would be a problem. Well that is not news, everyone knows that employment lags recovery, and the current models suggest we won't return to full employment till 2015.

True, the Obama administration badly misforcast the economic downturn's depth in January (as did some others), but no one is claiming that full employment is just round the corner.

Indeed, it was not Krugman but Nick Bloom of Standford that nailed it. In January, before the stimulus, his models showed a GDP bottom in mid-year followed by a V-shaped recovery. While the V-recovery is not as a strong as Reagan's, it is not the "U" predicted by many. It is modestly robust.

Any models that show how and why these booms and busts occur? Anything involving monetary policy manipulation or idiotic governmental policies?

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Proud AAPL stock owner.

 

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post #39 of 123
Quote:
Originally Posted by Mumbo Jumbo View Post

Are you seriously asking why an economically ambitious nation invests in infrastructure? Come on.

Genuinely sorry I don't have time to address the rest of your post... weird actually having a civil conversation on PO.

Whatever the effect of investment in infrastructure has in China, be reminded that China is a very undeveloped nation. The Japanese tried to invest in infrastructure as a stimulus during their decade (or more) long recession and the general consensus is that it did nothing for the economy, and was a waste of resources.

The lesson here is that a stimulus ought to make sense on an ROI basis, not as voodoo multipliers.
post #40 of 123
This will be determined not to be real economic growth but simply the early boost from the huge amount of dollars tossed out there by the federal reserve and the federal government. Each time the initial numbers have come out, they have been revised down. It will happen with this number as well. Second, there is massive inflation coiled and already beginnning to unleash. It will eat all these early "gains."

People will initially be fooled but if you have 6% "growth" and 6% inflation, then it isn't real growth. You stand still while the numbers change.

"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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