What happened to all of the doom and gloom economic threads?

[Frisco_Slug_Esq]

Mr. Williams launched into a rather disjointed defense of the reasons that the Fed had to employ new monetary policy tools. (He proudly declared that, of the 12 policy tools on the Fed's own website, 9 of them did not exist four years ago.) I bet you he didn't realize that one reason monetary policy had to change was because of advances in the payment system. It seems that our ability to use debit and credit cards for purchasing goods and services has made traditional monetary aggregates obsolete. Again, in his own words:

How do 1950s theories of cash and checks apply in a world in which you and I can instantly take out a loan of several thousand dollars with the swipe of a card at the cash register?

It is obvious that Mr. Williams has never read Ludwig von Mises's The Theory of Money and Credit. In this, Mises's first great book, he explains the differences between money and credit; hence the name. Money represents final payment beyond which there is no recourse; credit must be satisfied via money.

I'm certain that Mr. Williams would be surprised to learn that in early 1950s America credit was granted just as rapidly at some retail counters as it is today. Back then it was common for housewives to buy groceries on credit. The neighborhood grocer recorded the housewife's almost-daily purchases in a book kept under his counter. The transaction took just a few seconds. Housewives settled their grocery accounts after their husbands were paid, usually in cash, at the end of the week.

These credit transactions did not affect the money supply any more than do today's credit-card transactions. Furthermore, Mr. Williams may be surprised to learn that the debit card is simply "an electronic check"; it embodies all the legal risks and protections of a paper check. Of course, paper checks were around long before 1950!

Next, Mr. Williams bemoans the failure of some cherished monetary theories, such as the breakdown in the link between additional reserves and a growing money supply via the money multiplier. The volatility of the velocity of money gives him the vapors. Both theories assume that there is a mathematical linkage between the quantity of reserves, the quantity of money, and GDP. The thinking is thus: increase reserves, observe an increase in money; increase money, observe an increase in GDP. But, according to Mr. Williams,

Despite a 200 percent increase in the monetary base — that is reserves plus currency — measures of the money supply have grown only moderately. … [The] mechanical link between reserves, money supply, and ultimately inflation no longer hold.

Driving down the interest rate hasn't worked either.

Model simulations recommended setting the feds funds rate below zero.
So, what should we do? Let's try quantitative easing! The Fed bought $1.7 trillion in assets (many of dubious value) starting in late 2008, and it will have added an additional $600 billion by June of this year. According to Mr. Williams, this is working. Based upon his "econometric analysis and model simulations … GDP will go up by 3 percent and the economy will add three million jobs." Yes, this must be true — his econometric models say so, and who are we to argue with an econometric model? All of this nonsense would have been enough to get Mr. Williams laughed out of any Mises Circle gathering.

Defining "Growth" as an Increase in GDP

Embodied in Mr. Williams speech is the assumption that an increase in GDP represents an increase in economic output. That is why the Fed is unconcerned about rising prices (which it calls "inflation") and very concerned about falling prices (which it calls "deflation"). If there really is some link between money and economic output via a money multiplier, then increasing money is the simplest way ever invented to bring on prosperity. (By this reasoning, Zimbabwe was tremendously prosperous.)

So if prices rise by 5 percent and people are buying the same volume of goods and services, then according to the Fed the real economy improved by 5 percent. If it doesn't happen — that is, if measured GDP fails to increase by 5 percent — then the government must deficit spend and the Fed must provide the funds at 0 percent interest. As the Staples ad says, "That was easy!"

Of course, the Fed's fixation with nominal GDP is the problem. As Jesus Huerta de Soto masterfully explains in Money, Bank Credit, and Economic Cycles, nominal GDP measures only final sales, and the majority of sales are not final sales but rather intermediate sales between companies. In fact, a growing economy in which people extend their time preference, save more, and consume less may actually record a falling GDP! The structure of production would be widened and lengthened, meaning that there are more stages of production and each stage gets larger. But GDP does not measure these intermediate stages.

http://mises.org/daily/5381/The-Feds-Brave-New-World-of-Monetary-Policy

 

[RightField]

A Confession from the CBO Director

Posted by Daniel J. Mitchell

The Congressional Budget Office recently estimated that the so-called stimulus generated jobs and growth. I addressed some of the profound shortcomings in CBO’s Keynesian model in a previous post, pointing out that the model is structured to produce certain results regardless of what happens in the real world.

Interestingly, the Director of the CBO, Doug Elmendorf, basically agrees with me. In a recent speech, recorded by C-SPAN, he was asked during the question-and-answer session whether the model simply spits out pre-determined numbers. After some hemming and hawing and a follow-up question, he confessed “that’s right” when asked if the model would be unable to detect whether the stimulus failed. The relevant exchange begins around the he 39-minute mark of this recording, and Elmendorf’s confession takes place shortly after the 40-minute mark (I selflessly watched the entire thing so you wouldn’t have to suffer waiting for the key moment).

I’m not sure whether this admission is good news or bad news. It is a sign of progress, I suppose, that CBO’s Director is now on the record acknowledging that the model is useless (at least for purposes of measuring the effectiveness of more government spending). But it is perhaps an even more troubling indication of what’s wrong in Washington that nobody is concluding that the time has come to junk Keynesian analysis. This is either an updated version of The Emperor’s New Clothes or a perverse form of the joke about the drunk looking for his keys under the streetlight because there’s light, even though he lost them someplace else.

http://www.cato-at-liberty.org/a-confession-from-the-cbo-director/

That reference aside, the fact remains that the White House said something the the effect of "Invest this money ($787B - more than the cost of the entire spending on the two wars up to that point) and unemployment won't exceed 8%." The fact that their projections and promises were so far off leaves the feeling in many people's minds that the stimulus was inneffective.

If you look at it from the tax policy point of view (macro) it is also inneffective. Earlier tax policy changes, those of Kennedy, Reagan and Bush reduced the marginal rate of taxes so that business people would use the new, "permanently" lower revised rates as part of their decision making process in deciding whether to make new investments (investments create jobs). Obama's "tax break" really wasn't a tax break. It didn't lower the marginal rates, what it did was give away money to people who were paying no taxes in the first place and creatively calling it a "tax break" was a very liberal interpretation of the action because it was not a reduction in how much money was taken, rather it was a simple additional spending line (credits). It was also only "temporary" - 2 years I believe, another point which makes it ineffective in moving the balance line to invest from not-invest. It had no effect on the business person who was weighing whether to create investment/jobs at all....and the irony is that it was jobs that was the original goal of the "stimulus". If anything, Obama punished the people who were deciding whether or not to make investments through demagogary, additional taxes and new regulations and obligations in healthcare and other areas (think of Joe the Plumber here).

Granted, it went to people who needed more money, but I would bet that most of them would have rather had more job opportunities than some small one-time tax credit/check. It's sort of the difference between a government handout or a job...or the difference between giving a person some food or teaching them to fish. Just give them food and they become dependents, teach them to fish and they become independent, resourceful and confident. Democrats deal in handouts, Republicans facilitate resourcefulness, independence and creativity.

The other part of it was that Obama said that the majority of it was going to shovel ready jobs. He recently admitted that it didn't do that effectively. There are a bunch of construction projects that are going on now that have the "funded by the Stimulus" sign up there, but what was reported in the Wall Street Journal, many of those projects were already under way before the stimulus was implemented and the "stimulus" money simply paid for the sign to be put up at the site. It was also noted that in many cases that states accepted the stimulus money and put it towards the already in-process projects so they could take their own money and put it towards other budget priorities.

Another problem with the "stimulus" was that lots of it was squandered. There was a lot of money set aside for new energy projects. It sounds good, but the government directed money there whether it was effective, needed or not and caused an economic imbalance which was quickly remedied by smart-thinking enterprising people like the President's appointed deputy energy secretary who retired from her government job, started an new energy company, quickly got millions and millions in "energy funding" from her former working peers and hired a bunch of people and created.....nothing.....except for a big paycheck for herself and lots of jobs for her democrat friends. That probably wasn't a good use of taxpayer funded "stimulus" money....though the CBO probably did count those as a few new "industry" new jobs. This company has nothing to sell and will disappear as soon as government handouts stop. Think of Fannie Mae and Freddie Mac who have been burning through billions in taxpayer money. They started out doing a decent service several decades ago, but in the last decade with Obama (a leading recipient of campaign donations from them) Frank and Dodd, they've become wings of the social engineering wing of the democrat party and have been squandering our resources on wasteful investments at a prodigious rate. That's the type of thing that you get when cronyism is king and it certainly is king in democrat circles.

The stimulus probably did save some jobs, many of then in states and locals where tax revenue dropped off significantly and the jobs they saved were probably government jobs...examples, the extra librarian hired 2 yeares earlier, the new clerk in the county office, the janitor, the landscaper around the state beach...etc. Now that the temporary stimulus funding is drying up, those jobs are being lost anyway because the states don't have enough revenue to keep the huge number of additional people they hired in the last 5 years using the unsustainable property tax revenues they got from the democrat-driven real estate bubble.

If there was a stimulus, it should have been a reduction in our marginal rates and gone into places that helps improve our world competitiveness, additional investment and other places like that in the private sector that would have created more jobs rather than just saving government jobs, providing one-time handouts and bolstering overly generous government union pension investments. There shouldn't have been a "stimulus" in the first place, the smart thing to do would have been to bring our government spending down significantly into line with what we could afford.

 

[Frisco_Slug_Esq]

But those aren't "independent" economists...

 

[RightField]

But those aren't "independent" economists...

lol...I'm independent. I need to get to work today. Too much to do.

 

[Frisco_Slug_Esq]

Bean-counter!

 

[mercury14]

One third of the cost was tax breaks. Stop calling that spending. Either that or start calling the Bush tax cuts "spending". You can't have it both ways.

And stop getting your news from Cato, Heritage, Thinker, WND, and the NRO. Sucking extremist conservative bloggers' cocks 24/7 doesn't make you informed or "well-read" as you call it. It just makes you a cocksucker.

I get my economic data and analysis from business journals. You freely admit that you get yours from partisan propaganda outlets. But if I ever did use Michael Moore or Soros as a source you'd jump down my throat in an instant. See what's going on here?

 

[RightField]

One third of the cost was tax breaks. Stop calling that spending. Either that or start calling the Bush tax cuts "spending". You can't have it both ways.

And stop getting your news from Cato, Heritage, Thinker, WND, and the NRO. Sucking conservative bloggers' cocks 24/7 doesn't make you informed or "well-read" as you call it. It just makes you a cocksucker.

I get my economic data and analysis from business journals. You freely admit that you get yours from partisan propaganda outlets. But if I ever did use Michael Moore or Soros as a source you'd jump down my throat in an instant. See what's going on here?

When you give "credits" in the form of checks to people who didn't pay any tax or minimal tax in the first place, it's spending no matter what your liberal rags or politicians call it and that is what was mostly in the "stimulus." I think it would be generous to call the temporary tax credit spending in the stimulus "one-time vote buying with deficit spending."....if you were being less generous, you would call it "irresponsible use of our precious national resources and grandkids birthright." In any case, it didn't get to the private sector job creators.

It's far different from the marginal tax reductions provided by Kennedy, Reagan and Bush.

Are you trying to say that Elmendorf didn't admit that his model was inadequate? It was quoted and published widely throughout the press, both conservative and liberal outlets.

Can't you have an discussion with someone without reverting to name-calling?

I've got to get back to work. Until my next break, adieu.

 

[Frisco_Slug_Esq]

One third of the cost was tax breaks. Stop calling that spending. Either that or start calling the Bush tax cuts "spending". You can't have it both ways.

And stop getting your news from Cato, Heritage, Thinker, WND, and the NRO. Sucking extremist conservative bloggers' cocks 24/7 doesn't make you informed or "well-read" as you call it. It just makes you a cocksucker.

I get my economic data and analysis from business journals. You freely admit that you get yours from partisan propaganda outlets. But if I ever did use Michael Moore or Soros as a source you'd jump down my throat in an instant. See what's going on here?

They were not tax breaks, they were targeted tax benefits to people who would do what government desired, in short, government picking winners and losers, and when government does that, we all lose, for they direct resources from risk takers, take no risk, and spend it on pipe dreams. Take ethanol, for example...,

Then why do you so rarely reference business journals? We all quote from the WSJ too, is that just more "RW" propaganda too? You began with a partisan C&P and then acted like that was the truth when you quoted the HIGH number as if it were a "fact."

And, since the inception of this thread, our sources have been better at explaining where the economy was headed than those you read touting last year's summer of recovery; why would you not want to read them too or are you afraid that like von Mises, David Mamet, Ron Silver, and ol' A_J, you might be turned to "The Dark Side?"
__________________
There will be no medieval magic when one turns to government to be their champion. Government is not a shining knight on a strong horse; it is a night mare.
A_J, the Stupid

 

[RightField]

Finished a draft. Cool! Now I'm going running. It's a cloudy cool day here, just perfect for a run through the park. I read <something like> that if you can do an 8 minute mile that your chances of a heart attack are only 10% of the average. I can do much better than that. Now I need to work on some sort of cancer prevention program, I guess lots of situps aren't the answer there huh?

 

[busybody..]

Only NIGGERS can pretend NIGGEROMICKS is OK

America flirts with a fate like Japan’s
By Clive Crook

Published: June 19 2011 19:37 | Last updated: June 19 2011 19:37




The stalling of the US recovery raises big, scary questions. After a recession, this economy usually gets people back to work quickly. Not this time. Progress is so slow, the issue is not so much when America will return to full employment but what “full employment” will mean by the time it does.

The administration thinks the pace of recovery will pick up soon. Last week President Barack Obama called the pause a “bump in the road”. Others think the slowdown will persist and might get worse, fears that cannot be dismissed. One alarming possibility is that the traits the US has relied on to drive growth in the past – labour market flexibility, rapid productivity growth – might have become toxic. If the US is unlucky, traits seen as distinctive strengths are now weaknesses, and a “lost decade” of stagnation, like Japan’s in the 1990s, might lie ahead.

The mainstream view is more optimistic and goes as follows. The recovery in the first half of the year was weak but special or temporary factors were to blame: bad weather, the timing of defence expenditures, the phasing out of fiscal support, the Japanese earthquake, the oil-price surge, worries over Europe’s debt, and so on. Together these could have cut 1.5 percentage points from growth in the first half of this year, yielding a feeble 2 per cent – too slow to put a dent in unemployment.

Some of those factors should fade in the second half, letting the growth rate recover to between 3 and 4 per cent. That would be disappointing with so much ground to make up – though unemployment would be falling, albeit slowly. Even optimists acknowledge it will take a while for consumers to cut debt to comfortable levels, for the housing market to stabilise, and for other aftershocks of the Great Recession to be worked out. But, in the end, the economy will bounce back and close the gap between actual and potential output.

Strong productivity growth, reflecting the US economy’s famous ability to cut jobs promptly, is central in all this. Potential output is growing even as actual output and employment stutter. This hurts now, the optimists acknowledge, but when conditions improve workers will be rehired. A low-friction labour market is fast to hire as well as to fire, and American companies will take up the slack quickly once conditions allow. In the end, US labour-market exceptionalism will deliver new jobs and strong growth as in the past.

But will it? Two things might work differently this time. First, since the recession was unusually deep and the recovery unusually slow, the US is experiencing unheard-of long-term unemployment rates. The housing slump and its associated plague of negative equity aggravate this by making it harder for the unemployed to move to find work. Long-term joblessness erodes skills and employability. Structural unemployment is surely inching closer to European levels. America has not been here before.

As Financial Times columnist Martin Wolf recently pointed out, after a recession such as this you can make a case for welcoming low productivity growth if it keeps more people in work. Better to spread the pain around through short-time working, he argued, than cut jobs. In a new paper, Robert Gordon of Northwestern University makes essentially the same point. He shows that in the past quarter-century the US labour market has become markedly more exceptional – more organised around the “disposable worker”. Management thinking and declining unions have driven friction ever lower, while employment subsidies and regulation have made Europe’s labour markets stickier. The Great Recession and its surge of long-term unemployment are a severe test of what was once seen as a distinctive US economic strength.

The second danger also works through productivity, but arises from the role played by debt in this cycle. Under circumstances such as today’s, with households striving to cut debt and interest rates at zero, economies can behave in strange ways. In a paper last year, Paul Krugman of Princeton and The New York Times, and Gauti Eggertsson of the Federal Reserve Bank of New York drew attention to the possibility of a “paradox of toil”, akin to the paradox of thrift (whereby if everyone tries to save more, the economy shrinks and so does aggregate saving). The logic of the paradox of toil is simple. Suppose the supply of labour increases, or productivity rises. Initially, prices would tend to fall. If nominal interest rates are stuck at zero, the real interest rate and burden of debt both rise. This leads overleveraged consumers to cut spending still more. Demand is not just slow to respond: the economy shrinks.

It is a peculiar world where higher productivity reduces output; and willingness to accept wage cuts worsens unemployment (which Mr Krugman and Mr Eggertsson call the “paradox of flexibility”). The idea that easy hiring and firing might permanently raise long-term unemployment is less bizarre, but still not something the US has needed to worry about in the past.

A gradually improving recovery would put things right side up. US strengths would be strengths again. But a prolonged slowdown, with consumers still not on top of their debts, might be self-reinforcing. Some would say this has already begun, hence the pause. The optimists say no, not yet – and they had better be right
.

 

[mercury14]

They were not tax breaks, they were targeted tax benefits to people who would do what government desired, in short, government picking winners and losers, and when government does that, we all lose, for they direct resources from risk takers, take no risk, and spend it on pipe dreams. Take ethanol, for example...,

Then why do you so rarely reference business journals? We all quote from the WSJ too, is that just more "RW" propaganda too? You began with a partisan C&P and then acted like that was the truth when you quoted the HIGH number as if it were a "fact."

And, since the inception of this thread, our sources have been better at explaining where the economy was headed than those you read touting last year's summer of recovery; why would you not want to read them too or are you afraid that like von Mises, David Mamet, Ron Silver, and ol' A_J, you might be turned to "The Dark Side?"
__________________
There will be no medieval magic when one turns to government to be their champion. Government is not a shining knight on a strong horse; it is a night mare.
A_J, the Stupid

No, you quote from the OPINION page of the WSJ. Rarely do we see a quote from the rest of that paper from you.

And whenever the government changes the tax code or gives temporary breaks there are winners and losers. This "simplify the tax code" mantra we hear from the right is brimming with winners and losers - how come you aren't bitching about that?

And, since the inception of this thread, our sources have been better at...

Laughable. Dismissible. Your "sources" are pure extremist propaganda. Magically they failed to predict +4000 points on the dow. Little things like that.

 

[mercury14]

It's far different from the marginal tax reductions provided by Kennedy, Reagan and Bush.

Yeah it's different than rate reductions because it didn't make the rich richer. Instead it focused on folks with less money who spend 98%-100% of what they make, creating demand for products and services. That demand is what saved jobs.

Cutting taxes on the rich just means they squirrel their money away and invest it overseas. And since they don't need the money, they take FAR longer to spend it, if they ever do spend it. They might invest it in an American company, but investment doesn't create much demand compared to actually buying stuff. And which wealthy people were pouring money into the market when it was in its big slide? No, a marginal rate cut would have meant no little spending and little investment, and no stimulus.

My wife and I are fairly well off. Cut my taxes by a dollar and I'll invest 25 cents of it in Brazil and invest the other 75 cents elsewhere. I'm not going to create much demand in the local economy with it. I'm not going to spend it.

 

[RightField]

Yeah it's different than rate reductions because it didn't make the rich richer. Instead it focused on folks with less money who spend 98%-100% of what they make, creating demand for products and services. That demand is what saved jobs.

Cutting taxes on the rich just means they squirrel their money away and invest it overseas. And since they don't need the money, they take FAR longer to spend it, if they ever do spend it. They might invest it in an American company, but investment doesn't create much demand compared to actually buying stuff. And which wealthy people were pouring money into the market when it was in its big slide? No, a marginal rate cut would have meant no little spending and little investment, and no stimulus.

My wife and I are fairly well off. Cut my taxes by a dollar and I'll invest 25 cents of it in Brazil and invest the other 75 cents elsewhere. I'm not going to create much demand in the local economy with it. I'm not going to spend it.

Where is your proof, other than liberal opinion pieces, that this demand side approach often advocated by Robert Reich has created the situation where "that demand saved jobs"? From everything I've seen, it hasn't created any other than a very few, especially considering the vast sums "invested" or stolen from our grandkids. We are at 9%+ unemployment and growing...certainly it's not reflected in those well publicized figures. The quote you used above, with a wide range, is nothing more than a wild ass guess (WAG) with no substance behind it....unless you can provide some figures to substantiate it...

 

[mercury14]

Where is your proof, other than liberal opinion pieces, that this demand side approach often advocated by Robert Reich has created the situation where "that demand saved jobs"? From everything I've seen, it hasn't created any other than a very few, especially considering the vast sums "invested" or stolen from our grandkids. We are at 9%+ unemployment and growing...certainly it's not reflected in those well publicized figures. The quote you used above, with a wide range, is nothing more than a wild ass guess (WAG) with no substance behind it....unless you can provide some figures to substantiate it...

Yes that's right, demand for goods and services is what creates and sustains jobs. This is the same exact economic theory used by Republicans when we got our stimulus checks in the mail - that we'd go out and spend that money on goods and services and that would fuel businesses and jobs. So before you accuse me of referencing liberal opinion pieces (which you don't see me doing at all), just look at your side's own philosophy.

This topic is one where I believe you're badly mistaken. The rich do not create jobs, no matter how much Fox News talking heads, the NRO, Cato, or the Thinker like to say that. DEMAND creates jobs. If there is no demand (and the ability for people to buy), businesses can't sell their crap to anyone. This is basic economic theory I learned in AP class in high school.

De-unionize and pay crap wages with no benefits if you want. It just makes for far less buying power and therefore less consumer demand for goods and services. Families making a buck over minimum wage struggling to deal with medical debt aren't going to spend much at Wal-Mart and they're not going to buy new cars or new homes.

Paying crap wages means more money in the hands of businesses and (maybe) more capital. But when the demand is feeble they're not going to add jobs.

 

[RobDownSouth]

Right back atcha, G-fucker!

You gonna shoot us another one of your hollow-point bullet proof facts?
Or are you just hateful, angry rhetoric?
One of Dem inspirational and motivational speakers?

Throb thread:
http://forum.literotica.com/showthread.php?t=745068

You should not read anything that counters your purview.

The Gospel According To AJ (Book 1).

Who cares wtf you think?

The Gospel According To AJ (Book 2).

 

[eyer]

Meanwhile in Minnesota...

Dayton outlines 'painful' shutdown

"Gov. Mark Dayton on Wednesday proposed a broad government shutdown that would touch every corner of the state and reach deep into Minnesotans' homes.

"The governor's proposal -- which must still be ruled on by a judge -- would maintain critical services but close all state parks, the Minnesota Zoo, the state lottery and most state road projects by July 1, when the current state budget runs out. K-12 schools, local governments and health providers would no longer receive state payments."

More @

http://www.startribune.com/politics/statelocal/123960939.html

 

[eyer]

In Greece, things are getting truly dicey (some economists say the USSA is in even worse shape than Greece); Europe's money boys have delayed making a decision on how much to float the backdoor nation until July, waiting to see what kind of private funding can be arranged first and to see if Greece's Parliament gives the Greek government its vote of confidence, and to see how far Greece's government goes in privatization and cuts.

"After a week of intense political and social turmoil that ended with an overhaul of the ruling Socialist party’s cabinet on Friday, Prime Minister George Papandreou of Greece signaled on Sunday that he was prepared to make radical changes to the indebted Greek state system, and proposed an overhaul of the Constitution.

"Declaring that the bloated government sector was largely to blame for the dire state of the Greek economy, Mr. Papandreou called for a referendum in the fall on a proposal to “change the political system” and revise the Constitution, which protects some 800,000 government employees."

http://www.nytimes.com/2011/06/20/business/20euro.html

 

[mercury14]

In Greece, things are getting truly dicey (some economists say the USSA is in even worse shape than Greece); Europe's money boys have delayed making a decision on how much to float the backdoor nation until July, waiting to see what kind of private funding can be arranged first and to see if Greece's Parliament gives the Greek government its vote of confidence, and to see how far Greece's government goes in privatization and cuts.

"After a week of intense political and social turmoil that ended with an overhaul of the ruling Socialist party’s cabinet on Friday, Prime Minister George Papandreou of Greece signaled on Sunday that he was prepared to make radical changes to the indebted Greek state system, and proposed an overhaul of the Constitution.

"Declaring that the bloated government sector was largely to blame for the dire state of the Greek economy, Mr. Papandreou called for a referendum in the fall on a proposal to “change the political system” and revise the Constitution, which protects some 800,000 government employees."

http://www.nytimes.com/2011/06/20/business/20euro.html

Watch the Dow jump when they act on this.

 

[RightField]

Yes that's right, demand for goods and services is what creates and sustains jobs. This is the same exact economic theory used by Republicans when we got our stimulus checks in the mail - that we'd go out and spend that money on goods and services and that would fuel businesses and jobs. So before you accuse me of referencing liberal opinion pieces (which you don't see me doing at all), just look at your side's own philosophy.

This topic is one where I believe you're badly mistaken. The rich do not create jobs, no matter how much Fox News talking heads, the NRO, Cato, or the Thinker like to say that. DEMAND creates jobs. If there is no demand (and the ability for people to buy), businesses can't sell their crap to anyone. This is basic economic theory I learned in AP class in high school.

De-unionize and pay crap wages with no benefits if you want. It just makes for far less buying power and therefore less consumer demand for goods and services. Families making a buck over minimum wage struggling to deal with medical debt aren't going to spend much at Wal-Mart and they're not going to buy new cars or new homes.

Paying crap wages means more money in the hands of businesses and (maybe) more capital. But when the demand is feeble they're not going to add jobs.

Junior high school feel-good economics aside, lets get back to the point. You said that the stimulus created demand that created jobs. Show me the proof of these jobs because at a macro level we lost a whole bunch of jobs. Give me the benefit of the information source you used.

 

[mercury14]

Junior high school feel-good economics aside, lets get back to the point. You said that the stimulus created demand that created jobs. Show me the proof of these jobs because at a macro level we lost a whole bunch of jobs. Give me the benefit of the information source you used.

The proof is in the economic analysis of nonpartisan sources. These figures are from 19 months ago, so the true figures are higher, as 30% of the stimulus wasn't yet spent in Jan of 2010.

• CBO: Between 800,000 jobs (low estimate) and 2.4 million jobs (high estimate) saved or created.

• IHS/Global Insight: 1.25 million jobs saved or created.

• Macroeconomic Advisers: 1.06 million jobs saved or created.

Remember, I just cited a source saying that the CBO shifted their high-end estimate to 3.3 million jobs. Not sure what IHS/MacroAd shifted their figures to but I could probably find out.

Here's a segment of the abstract of the Moody's report on the recovery, which is more current:

When we divide these effects into two components—one attributable to the fiscal stimulus and the other at-
tributable to financial-market policies such as the TARP, the bank stress tests and the Fed’s quantitative eas-
ing—we estimate that the latter was substantially more powerful than the former. Nonetheless, the effects
of the fiscal stimulus alone appear very substantial, raising 2010 real GDP by about 3.4%, holding the unem-
ployment rate about 11⁄2 percentage points lower, and adding almost 2.7 million jobs to U.S. payrolls. These
estimates of the fiscal impact are broadly consistent with those made by the CBO and the Obama administra-
tion.2

Source: http://www.economy.com/mark-zandi/documents/End-of-Great-Recession.pdf


Rightfield, your flaw is that you ignore professional independent analysis. You're rightfully suspicious of figures from the administration because yes, they're sometimes partisan and spun (even though in this case they're relatively accurate). But then you just go and get partisan, spun numbers from the other side of the spectrum, making you just as guilty as lefty spinners. You settle for arguing over who has the superior spin when you could just look at professional nonpartisan analysis. And before you accuse Zandi and Moody's of being left-wing, Mark Zandi has worked for a number of Republicans and was John McCain's chief economic advisor.

Anything else you'd like me to show you?

 

[cebalrai]

You're wasting your time with these guys Mercury. They will always prefer to dismiss facts in favor of a narrative they wish to hear.

 

[mercury14]

You're wasting your time with these guys Mercury. They will always prefer to dismiss facts in favor of a narrative they wish to hear.

I know, I know. I'm going to send them scurrying back to the NRO.

 

[Frisco_Slug_Esq]

America flirts with a fate like Japan’s
By Clive Crook

Published: June 19 2011 19:37 | Last updated: June 19 2011 19:37




The stalling of the US recovery raises big, scary questions. After a recession, this economy usually gets people back to work quickly. Not this time. Progress is so slow, the issue is not so much when America will return to full employment but what “full employment” will mean by the time it does.

The administration thinks the pace of recovery will pick up soon. Last week President Barack Obama called the pause a “bump in the road”. Others think the slowdown will persist and might get worse, fears that cannot be dismissed. One alarming possibility is that the traits the US has relied on to drive growth in the past – labour market flexibility, rapid productivity growth – might have become toxic. If the US is unlucky, traits seen as distinctive strengths are now weaknesses, and a “lost decade” of stagnation, like Japan’s in the 1990s, might lie ahead.

The mainstream view is more optimistic and goes as follows. The recovery in the first half of the year was weak but special or temporary factors were to blame: bad weather, the timing of defence expenditures, the phasing out of fiscal support, the Japanese earthquake, the oil-price surge, worries over Europe’s debt, and so on. Together these could have cut 1.5 percentage points from growth in the first half of this year, yielding a feeble 2 per cent – too slow to put a dent in unemployment.

Some of those factors should fade in the second half, letting the growth rate recover to between 3 and 4 per cent. That would be disappointing with so much ground to make up – though unemployment would be falling, albeit slowly. Even optimists acknowledge it will take a while for consumers to cut debt to comfortable levels, for the housing market to stabilise, and for other aftershocks of the Great Recession to be worked out. But, in the end, the economy will bounce back and close the gap between actual and potential output.

Strong productivity growth, reflecting the US economy’s famous ability to cut jobs promptly, is central in all this. Potential output is growing even as actual output and employment stutter. This hurts now, the optimists acknowledge, but when conditions improve workers will be rehired. A low-friction labour market is fast to hire as well as to fire, and American companies will take up the slack quickly once conditions allow. In the end, US labour-market exceptionalism will deliver new jobs and strong growth as in the past.

But will it? Two things might work differently this time. First, since the recession was unusually deep and the recovery unusually slow, the US is experiencing unheard-of long-term unemployment rates. The housing slump and its associated plague of negative equity aggravate this by making it harder for the unemployed to move to find work. Long-term joblessness erodes skills and employability. Structural unemployment is surely inching closer to European levels. America has not been here before.

As Financial Times columnist Martin Wolf recently pointed out, after a recession such as this you can make a case for welcoming low productivity growth if it keeps more people in work. Better to spread the pain around through short-time working, he argued, than cut jobs. In a new paper, Robert Gordon of Northwestern University makes essentially the same point. He shows that in the past quarter-century the US labour market has become markedly more exceptional – more organised around the “disposable worker”. Management thinking and declining unions have driven friction ever lower, while employment subsidies and regulation have made Europe’s labour markets stickier. The Great Recession and its surge of long-term unemployment are a severe test of what was once seen as a distinctive US economic strength.

The second danger also works through productivity, but arises from the role played by debt in this cycle. Under circumstances such as today’s, with households striving to cut debt and interest rates at zero, economies can behave in strange ways. In a paper last year, Paul Krugman of Princeton and The New York Times, and Gauti Eggertsson of the Federal Reserve Bank of New York drew attention to the possibility of a “paradox of toil”, akin to the paradox of thrift (whereby if everyone tries to save more, the economy shrinks and so does aggregate saving). The logic of the paradox of toil is simple. Suppose the supply of labour increases, or productivity rises. Initially, prices would tend to fall. If nominal interest rates are stuck at zero, the real interest rate and burden of debt both rise. This leads overleveraged consumers to cut spending still more. Demand is not just slow to respond: the economy shrinks.

It is a peculiar world where higher productivity reduces output; and willingness to accept wage cuts worsens unemployment (which Mr Krugman and Mr Eggertsson call the “paradox of flexibility”). The idea that easy hiring and firing might permanently raise long-term unemployment is less bizarre, but still not something the US has needed to worry about in the past.

A gradually improving recovery would put things right side up. US strengths would be strengths again. But a prolonged slowdown, with consumers still not on top of their debts, might be self-reinforcing. Some would say this has already begun, hence the pause. The optimists say no, not yet – and they had better be right
.

Fucker!



Here's one example of government taxation rates hurting the economy:

Some of the nation’s largest corporations have amassed vast profits outside the country and are pressing Congress and the Obama administration for a tax break to bring the money home.

Apple has $12 billion waiting offshore, Google has $17 billion and Microsoft, $29 billion.

Under the proposal, known as a repatriation holiday, the federal income tax owed on such profits returned to the United States would fall to 5.25 percent for one year, from 35 percent. In the short term, the measure could generate tens of billions in tax revenues as companies transfer money that would otherwise remain abroad, and it could help ease the huge budget deficit.

Corporations and their lobbyists say the tax break could resuscitate the gasping recovery by inducing multinational corporations to inject $1 trillion or more into the economy, and they promoted the proposal as “the next stimulus” at a conference last Wednesday in Washington.

http://www.nytimes.com/2011/06/20/business/20tax.html?_r=1&partner=rss&emc=rss
(Not exactly a RW source of lies and misinformation)

Before the markets open, Europe weighs in:

FORTUNE -- After a year of kicking the proverbial can down the road, it appears more than likely that Greece will default on its massive debt load. Riots and political deadlock in the tiny European nation this week show that there are limits to the amount of economic stress a population can take before they simply give up. While Greece itself will be the hardest hit in a default, the ripple effects of such a move could rock the European banking sector to its core and even create a liquidity event not seen since the dark days of 2008.

http://finance.fortune.cnn.com/2011...eed:+rss/magazines_fortune+(Fortune+Magazine)

(Another RW rabble-rouser [we know, of course, Merc has already perused his financial papers])

Moody's said Friday that it may downgrade Italy's debt, thanks to "fragile market sentiment" for deeply indebted European governments. It is the first downgrade warning for one of the stronger European economies since the Greek debt crisis flared up this spring.

The rating agency said that as investors grow more risk averse, Italy -- currently rated Aa2, the second-highest rating -- may be unable to sell bonds without offering higher interest rates.

Italian 10-year bonds recently yielded around 4.8%. That is below the 5.6% that Spanish bonds have been trading at lately but up a full point from the Italian rate last fall, when investors were flooding into government bonds amid the latest deflation scare.

http://finance.fortune.cnn.com/2011...eed:+rss/magazines_fortune+(Fortune+Magazine)

Oh those silly Socialist, INterventionalist, Statist €PIIGS!

ADRID (AFP) – Tens of thousands of protesters flooded the streets of Madrid Sunday blaming bankers and politicians for causing a financial crisis that forced the country to adopt painful spending cuts.

Demonstrators of all ages linked to a protest movement called the "indignants" assembled early Sunday in several neighbourhoods on the outskirts of Madrid.

They then formed six columns and converged on the city centre, gathering near Spain's parliament where they met various forms of police resistance, including 12 vans blocking several major roads.

Protests over the economic crisis and soaring unemployment began in Madrid on May 15 and fanned out nationwide as word spread by Twitter and Facebook among demonstrators.

http://news.yahoo.com/s/afp/20110619/bs_afp/spainpoliticsprotest_20110619154515

 

[Frisco_Slug_Esq]

No, you quote from the OPINION page of the WSJ. Rarely do we see a quote from the rest of that paper from you.

And whenever the government changes the tax code or gives temporary breaks there are winners and losers. This "simplify the tax code" mantra we hear from the right is brimming with winners and losers - how come you aren't bitching about that?

Laughable. Dismissible. Your "sources" are pure extremist propaganda. Magically they failed to predict +4000 points on the dow. Little things like that.

None of your sources are going to predict the DOW in anything but the most general of terms and my sources predicted the stimulus would not have the desired effect so your continual ad hominem falls flat in the face of what actually happened.

If your sources, your administration and their sycophant economists are not in themselves laughable, why have they all run back to academia before they solved the problem of the economy?

Now, why am I not bitching about that. Well, for a fact, it's one of the lessons I continually point out on a daily basis coupled with the idea that government is deficient at picking winners and losers because government makes *gasp* political, not economic decisions and this too is why I am a FairTax.org proponent over the putative and economically hurtful progressive system of income taxing which is nothing more than naked class envy and pandering to the passions of the mob.

Some examples:

A_J's corollary #8, “In times of crises, the New Age Liberal calls for more government and higher taxes. In times of plenty, the New Age Liberal calls for more government and higher taxes. The primary motivation is always Crusader-like Altruism and the illusion of ‘fairness.’”

A_J's corollary #8a, “The New Age Liberal believes that in good times Government can afford to spend more than it receives and in bad times, it can’t afford not to.”

A_J's corollary #11, “The New Age Liberal defines a fair share of taxes as, ‘When you pay your taxes, you have no more money left than anyone else has.’”

Now that we have the basics set up, the logical outcomes:

The government big enough to do something for you is big enough to do something to you. If you accept the former then you are saddled with the latter, for the two are inseperable; for is generally at the expense of to.

If you ask your government to treat everyone "fairly," the only way it can ever accomplish that task is to treat someone "unfairly."

When your philosophy of government is based on groups, you must remember that your group can be a favored or disfavored group with equal ease and that neither status is ever permanent any more than the favors government solemnly promised to purchase your group loyalty.

When the government gets powerful enough to fight over, the people will fight over it, and to the victors go the spoils, thus setting up the next fight.

When Government gets so powerful that its purchase price is cost effective, even imperative, to business, then business will purchase government indulgences.

You loot the private sector, strip every dollar of 40¢ for overhead, and then give the other 60¢ to your political base in order to revitalize the looted.

What's not to like about that plan?

The Wealth of a Nation works best trickle-down. A Republic and an Economy work best trickle-up. A Socialist believes just the opposite.
A_J, the Stupid

(An Economy is the set of all transactions. Government is mutual cooperation for successful transacting. Wealth is the outcome of successful transactions.)

__________________
"The more communal enterprise extends, the more attention is drawn to the bad business results of nationalized and municipalized undertakings. It is impossible to miss the cause of the difficulty: a child could see where something was lacking. So that it cannot be said that this problem has not been tackled. But the way in which it has been tackled has been deplorably inadequate. Its organic connection with the essential nature of socialist enterprise has been regarded as merely a question of better selection of persons. It has not been realized that even exceptionally gifted men of high character cannot solve the problems created by socialist control of industry."
Ludwig Heinrich Elder von Mises

 

[Frisco_Slug_Esq]

Yes that's right, demand for goods and services is what creates and sustains jobs. This is the same exact economic theory used by Republicans when we got our stimulus checks in the mail - that we'd go out and spend that money on goods and services and that would fuel businesses and jobs. So before you accuse me of referencing liberal opinion pieces (which you don't see me doing at all), just look at your side's own philosophy.

This topic is one where I believe you're badly mistaken. The rich do not create jobs, no matter how much Fox News talking heads, the NRO, Cato, or the Thinker like to say that. DEMAND creates jobs. If there is no demand (and the ability for people to buy), businesses can't sell their crap to anyone. This is basic economic theory I learned in AP class in high school.

De-unionize and pay crap wages with no benefits if you want. It just makes for far less buying power and therefore less consumer demand for goods and services. Families making a buck over minimum wage struggling to deal with medical debt aren't going to spend much at Wal-Mart and they're not going to buy new cars or new homes.

Paying crap wages means more money in the hands of businesses and (maybe) more capital. But when the demand is feeble they're not going to add jobs.

If that were true, places like Haiti, Cuba and North Korea would be paradise for they are nothing but pent-up demand as were Russia and CHina before they went back to Capitalism and created the class of rich required for investment capital and startup costs for the factories that create the products that satisfy the demand. The first trade was not because everyone wanted something, but because industrious humans had created surpluses and began specializing so that no one group had to provide 100% of the goods it required, it could engage in trade instead by focusing on doing a few things well.

When you work in a modern factory, you are paid, not only for your labor, but for all the productive genius which has made that factory possible: for the work of the industrialist who built it, for the work of the investor who saved money to risk on the untried and new, for the work of the engineer who designed who designed the machines of which you are pushing the levers, for the inventor who create the product on which you spend your time making, for the work of the scientist who discovered the laws that went into the making of that product, for the work of the philosopher who taught men how to think and whom you spend your time denouncing.
...
Every man is free to rise as far as he's able or willing, but it's only to the degree that he thinks that determines the degree to which he'll rise. Physical labor as such can extend no further than the range of the moment. The man who does no more than physical labor, consumes the equivalent of the material value-equivalent of his own contribution to the process of production and leaves no further value neither for himself, nor others. ... Material products can't be shared, they belong to some ultimate consumer; it is only the values of an idea which can be shared in unlimited numbers of men making all sharer's richer at no one's sacrifice or loss, raising the productive capacity of whatever labor they perform.
...
In proportion to the mental energy he spent, the man who creates a new invention receives but a small percentage of his value in terms of material payment, no matter what fortune he makes, no matter what millions he earns. But the man who works as a janitor in the factory producing that invention receives an enormous payment in proportion to the mental effort that his job requires of him. And the same is true of all men between, on all levels of ambition and ability. The man at the top of the intellectual pyramid contributes the most to all those below him, getting nothing except his material payment, receiving no intellectual bonus from others to add to the value of his time. The man at the bottom, who left to himself, would starve in his hopeless ineptitude, contributes nothing to those above him, but receives the bonus of all their brains. Such is the nature of the 'competition' between the strong and the weak of the intellect. Such is the pattern of 'exploitation' for which you have damned the strong.

John Galt
Atlas Shrugged