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

[Frisco_Slug_Esq]

1-17-2009

With the Dow climbing near 10,000 again what's happened to all of the dire, end of the world ravings of our resident "conservative" economists?

Where is all of this inflation we were warned about? According to reports the Consumer Price Index is down 1.5% overall from last year. Despite Augusts increase in prices, gasoline is still down 30% from the high a year ago.

Despite the dire warnings of some of Lit's resident math wizards the Chinese are still very much interested in buying US Treasury securities.

I guess the sky isn't falling after all.

Where’s the inflation? The calls have come tauntingly, from the usual suspects. The Keynesian economists who warned of deflation in the aftermath of the 2008 financial crisis are trying to declare victory now, pointing to falling price levels as evidence that they were right. The most illustrative example is a recent blog post by Paul Krugman, the New York Times columnist, entitled, “What Have We Learned?” The post featured one chart showing a decline in inflation since late 2008, and another showing a decline in the rate of interest paid on ten-year Treasury notes. “The other side declared that we were in imminent danger of runaway inflation,” Krugman scoffed, “and that federal borrowing would lead to very high interest rates.”

The first link — “imminent danger of runaway inflation” — takes readers to a May 2009 op-ed by Carnegie Mellon University economist Allan Meltzer, author of the acclaimed History of the Federal Reserve. Nowhere in the op-ed did Meltzer warn that runaway inflation was “imminent”; in fact, he specifically stated:

When will it come? Surely not right away. But sooner or later, we will see the Fed, under pressure from Congress, the administration and business, try to prevent interest rates from increasing. The proponents of lower rates will point to the unemployment numbers and the slow recovery. That's why the Fed must start to demonstrate the kind of courage and independence it has not recently shown.

I phoned Meltzer to ask him about Krugman’s distortion of his work, of which Meltzer was unaware. “I don’t read him,” he said. “And I wouldn’t attempt to convince Paul Krugman, because he has a set of beliefs that he won’t give up.” The kinds of policies Krugman has been advocating lately — e.g., more quantitative easing from a Fed that has already over-extended its balance sheet — are precisely the kinds of policies Meltzer was warning against, and Krugman is offering precisely the justification that Meltzer predicted.

The danger of an inflationary fire, as Meltzer took pains to note, was not imminent in early 2009. Rather, his point was that the Fed and the U.S. Congress had done the equivalent of laying an enormous amount of newspapers and gasoline around a house that was not exactly fireproof to begin with, making it vulnerable to two possible sparks: (1) An economic recovery could begin in earnest, leading banks to start lending out the nearly $1 trillion dollars in excess reserves the Fed had pumped into them; or (2) a big domino in the sovereign-debt markets — Japan, say — could fall, sparking a re-pricing of sovereign debt across the board and a spike in U.S. borrowing costs.

On the first point, some note that the Fed has recently started paying interest on reserves. If interest rates start to rise, tempting banks to loan out their reserves, the Fed can offer them a similar rate in order to keep them from flooding the economy with new money. But Meltzer doesn’t believe this strategy is likely to work. In an op-ed for the Wall Street Journal last January, he noted that politicians want banks to lend the money. The demand for the Fed to keep interest rates low — including the rate it pays on reserves — will be strong, as Keynesians such as Krugman encourage the Fed to put concerns about unemployment ahead of concerns about inflation.

In this context it is worth remembering that, after the tech bubble burst, Krugman cheered on the Fed’s disastrous policy of using easy money to fight the ensuing recession, even as he acknowledged that the logical endpoint of the policy was “a housing bubble to replace the Nasdaq bubble.” It is also worth noting that most measures of inflation do not include home prices, but rather use a “rent equivalent” measure to incorporate the cost of shelter into most price indices. Thus, most measures of the general price level completely missed the enormous flood of cheap money into real-estate speculation. If a sudden doubling or tripling of the price of housing doesn’t constitute a form of inflation, what does?

On the second point, the risk of inflation stems from the concern that, in the event that a crisis of confidence precipitated a sudden increase in Treasury’s borrowing costs, the Fed would print money to fund the deficit rather than allow the U.S. government to default on its debt. Such an event could have any number of triggers, but Krugman tells us not to worry about the “invisible bond vigilantes.” It would be one thing if Krugman had a better track record of appropriately evaluating the risks associated with his preferred fiscal and monetary policies. But he doesn’t (see above).

In other words, the fact that we haven’t seen inflation yet isn’t proof of anything, much less proof that critics of our current fiscal and monetary policies are wrong. Meltzer is correct that it’s pointless to try to change Krugman’s mind. But it’s important to keep pointing out how his ideology blinded him to the risks of his brand of recession-fighting before, and to note that those risks are present — and growing — today.

Stephen Spruiell
NRO

Yeah, we know, you pay no attention to Krugman. Too bad Obama and Turbo Timmy do...

 

[Frisco_Slug_Esq]

Oh look!


The Market's going up, but ol' A_J ain't gonna shut up!

Forcing Consumers to Buy Renewable Energy
Congress pretends to solve an energy crisis
Ronald Bailey
Reason.com

So Democrats and some Republicans are pushing legislation that will reward favored industries, chiefly wind and solar power, by forcing consumers to buy the electricity that they produce. How? By requiring that retail electricity distributors purchase 15 to 20 percent of their electricity from wind and solar power producers by 2020. This so-called national renewable energy standard, or clean energy standard, is being carved out of energy legislation such as the American Clean Energy Leadership Act [PDF] proposed by Sen. Jeff Bingaman (D-NM).

...

The claim that renewable energy mandates boost overall job creation is persistent and powerful, but the experience of other countries clearly shows that such mandates destroy more jobs than they create. A study last October by an independent German economics think tank found that each solar power job cost $240,000 and overall the result of renewable energy subsidies was higher energy prices, lost jobs in other sectors of the economy, and reduced consumer purchasing power. The German study mirrored the findings of an earlier Spanish university study which reported that every green job created by subsidizing renewable energy destroyed 2.2 jobs in other sectors of the economy.

...

Crudely, these levelized costs suggest that substituting wind for conventional coal under a 20 percent mandate would boost electricity prices by 10 percent. Similarly substituting solar photovoltaic power would increase electricity prices by about 20 percent. A recent analysis by the Heritage Foundation takes into account the costs of building a vast new national high voltage electricity grid to transmit wind and solar power from the plains and the deserts to coastal cities, the costs of building and maintaining additional natural gas electricity generation capacity to back up intermittent renewable energy sources, and consumer cuts in their electricity use due to higher prices. Once these and other factors are added in, the Heritage Foundation study finds that in 2020 a 15 percent renewable energy standard would reduce the disposal incomes of American families by $1,700 per year and increase unemployment over what it would otherwise have been by more than one million jobs.

Ideology over Economy
That's all Obama is and he's living a very good life, so why the hell should he care what happens to the little guy? The more panicked they are, the more he sees it a s a win-win because government has walking-around money...
__________________
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?
A_J, the Stupid

 

[jeninflorida]

Even if it's a distortion by 300%, which it's not, it still shows that the Iraq war has a far greater cost than the stimulus.

And on going, the cost that is. meaning, if someone is injured in the war that person needs to have free healthcare for the rest of his or her life…and what about rehabilitation?

 

[Beco]

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.

NY Times

 

[mercury14]

And on going, the cost that is. meaning, if someone is injured in the war that person needs to have free healthcare for the rest of his or her life…and what about rehabilitation?

What about it?

 

[GrumpyOldGoat]

A massive wave of borrowing will start cresting this year when the U.S. and European governments sell an estimated $4 trillion in new bonds. The surge will course through the world financial system for several years as countries, corporations and banks borrow record amounts of money to repair the damage from the financial crisis and pay back loans from the boom that preceded it.

 

[unregistered]

 

[Ulaven_Demorte]

Stephen Spruiell
NRO

Yeah, we know, you pay no attention to Krugman. Too bad Obama and Turbo Timmy do...

Gotta love it..

Thre's gonna be inflation! No wait! Deflation!

Just because it hasn't happened doesn't mean anything.


I'm thinking whoever wrote that opinion piece went to the same school of economics that you did Cap'n.

 

[ivantheterrible]

http://news.yahoo.com/s/nm/20100714...zZWMDeW5fdG9wX3N0b3J5BHNsawNmZWFyc2dyb3dhc20-

 

[mercury14]

Gotta love it..

Thre's gonna be inflation! No wait! Deflation!

Just because it hasn't happened doesn't mean anything.


I'm thinking whoever wrote that opinion piece went to the same school of economics that you did Cap'n.

We're going to have inflation AND deflation. Just like Obama is a radical Christian AND a Muslim.

 

[unregistered]

 

[eyer]

"Lol, another right winger who decided that Democrats don't exist anymore. There are now only Republicans and Socialists....

Meanwhile, Republicans support Medicare and Medicaid, which are clearly "take from the rich, give to the poor" socialized programs. So using your rationale they're socialists as well.

Kind of dumb even for you..."


The only thing "dumb" I see in your words above is naming me a "right winger" - but that obviously must do according to your limited, political understanding range...

Any group that forms politically to rule individuals is socialist, mercury - the only TRUE difference between them in that regard is by degree...which doesn't alter the fact of who they basically are. I simply know that whereas you're still playing the game of choosing sides by degree; and I don't play their game.

So, yeah - "they're socialists as" you are socialist; they call themselves "Republican", you call yourself "Democrat" - you're no different at all in TRUTH.

Why do you think this great country is so sadly screwed up? There's a reason why your party of choice holds dear its symbolic ass...

 

[eyer]

Meanwhile in Dallas, Texas...

...the city says they're eliminating 500 jobs to "help" the budget.

Whadda ya think, firespin? Just one more of your "traditional adjustments" or a trend that portends the beginning of the end of financially rewarded public servitude?

Sad thing is that there are plenty of lemmings in this socialist country who'd count it a honor to "serve" government and receiving nothing in return but "free" housing, and "free" food, and "free" healthcare, and "free"...

 

[Sean Renaud]

?

Sad thing is that there are plenty of lemmings in this socialist country who'd count it a honor to "serve" government and receiving nothing in return but "free" housing, and "free" food, and "free" healthcare, and "free"...

The military?

 

[cebalrai]

Any group that forms politically to rule individuals is socialist...

How come the idea of "ruling individuals" is nowhere in the definition of socialism?

Looks like you just changed the definition of socialism for everyone. How did you get those super powers?

 

[eyer]

You know the answer...

...if you gotta ask, you can't afford to understand.

Lemming.


"The military."

Yeah, it included. Or haven't you noticed our "wars" today are for political, "humanatarian" purposes? Don't you find that quite oxymoronic? You go to war to kill people, not "socialize" 'em.

Our military is so socially bloated today that all you got to do to see it is look in a certain thread here on this forum so see 'em talking about how to game the system...

Sorry - give me just enough of those boys walking barefoot through the snow to Trenton with nothing but the grace of God to carry them against all odds, and the world - as those true heroes proved - can be changed.

 

[firespin]

Meanwhile in Dallas, Texas...

...the city says they're eliminating 500 jobs to "help" the budget.

Whadda ya think, firespin? Just one more of your "traditional adjustments" or a trend that portends the beginning of the end of financially rewarded public servitude?

Sad thing is that there are plenty of lemmings in this socialist country who'd count it a honor to "serve" government and receiving nothing in return but "free" housing, and "free" food, and "free" healthcare, and "free"...

The City of Dallas employs about 13,000 people, so this would be a 4% change.

I figure you're on to something here, and in just a few months, all of their city services will be provided on an all-volunteer basis.

Jeezus you are a moron.

(PS: I think "help" the budget in this case means live within their means.)

 

[Frisco_Slug_Esq]

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.

NY Times

Look, there are places in California and elsewhere where a million-five used to be a starter home...

 

[Frisco_Slug_Esq]

Gotta love it..

Thre's gonna be inflation! No wait! Deflation!

Just because it hasn't happened doesn't mean anything.


I'm thinking whoever wrote that opinion piece went to the same school of economics that you did Cap'n.

You know the funny thing is...

You have explained that we need to have patience with Obama's economic plan (like we used to beg you for with the war in Iraq, which, btw, WE WON) because it's going to take several years, but if inflation doesn't happen right now, it's proof that our economists are wrong...


__________________
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?
A_J, the Stupid

 

[unregistered]

 

[Ulaven_Demorte]

You know the funny thing is...

You have explained that we need to have patience with Obama's economic plan (like we used to beg you for with the war in Iraq, which, btw, WE WON) because it's going to take several years, but if inflation doesn't happen right now, it's proof that our economists are wrong...



A_J, the Stupid

This thread is just shy of a year old and the world hasn't crumbled around our ears despite the dire warnings of the "right" this entire time. You're the economic equivalent of the boy who cried wolf.

We "won" Iraq? Really? Violence is on the rise in Iraq again, the political reconciliation that was the objective of the "surge" still hasn't happened and likely never will.


Iraq’s Parliament has met once, for 18 minutes on June 14, since the close outcome of national elections more than four months ago created a political stalemate.

Such a peaceful place since we "won" too.

Daily report: July 14, 2010

Baghdad

A magnetic bomb that was stuck to a civilian car detonated in Yarmouk neighbourhood, west Baghdad, Wednesday, injuring two civilians.

Armed men raided the home of Khudhair Ouda, the commander of Sahwa in the town of Yousifiyah, to the south of Baghdad, at around dawn Tuesday, killing his wife and three young sons. Ouda was not at home during the attack.

Two roadside bombs targeted a police patrol near a petrol station in Muhendiseen neighbourhood, Palestine Street, east Baghdad at 9 a.m. Tuesday, killing two policemen and injuring five civilians.

A magnetic bomb that was stuck to a civilian car detonated in Dora neighbourhood, south Baghdad, Tuesday evening, injuring two civilians including the driver and a passer-by.

Armed men using pistols fitted with silencers shot and killed Adnan Mekki Abdullah, a university professor, in Qadisiyah neighbourhood, central Baghdad, at 11 p.m. Tuesday. He was standing in front of his house watering the plants.

Anbar

Armed men raided the home of a candidate of the National Unity Coalition in the March, in Fhaylat district, 30 km to the south of Fallujah, Wednesday. The candidate himself was not at home during the attack. The armed men killed his wife, daughter and son using pistols fitted with silencers.

Nineveh

Armed men threw a home made bomb at a group of people gathered around a television-news-crew at work on the street in Dekkat Barakah neighbourhood, central Mosul, Tuesday injuring one policeman and eight children.

 

[Ulaven_Demorte]

Cebalrai's problem was, unlike those above who suffered the ravages of Valley Forge, he tiptoed through the tulips. The most aggressive thing he did all day was to divide and conquer the first set of cheeks he saw in the shower.

Typical homophobic ignorance. Way to keep that bar low Vette.

 

[unregistered]

 

[Frisco_Slug_Esq]

Yeah, U_D we gotten absolutely nowhere with all that stimulus and all that debt and sooner or later we have to service that debt with either massive inflation or massive taxation because the ideologue-in-chief isn't about to change course.

There is no more evidence that his father's dreams of equality are going to produce any more prosperity than they did in Japan.

Since we know he's not stupid, then creating a dependency state MUST be his goal as it was in Europe before us.

In January, round one of the tax increases is going to begin socking it to American small business...

You really think that's going to have a stimulative effect on the economy?
__________________
In America, they first came for the very rich and I didn't speak up because I wasn't rich," said the Rev. Imadem Doinggood. "Then they came for the Bourgeoisie and I didn't speak up because I wasn't Bourgeois. Then they came for the Upper Middle Class blue-collar workers. I didn't speak up because I was a Government clerk. Then they came for me and there was no one left to speak up.

 

[unregistered]