David Stockman says we're headed towards a nasty recession

[desura]

https://youtu.be/rkIuKxf-lHM

Not a big Fox News person at all, but Stockman seems pretty reasonable.

Simply put, Trump will bust the budget. He's going to lower taxes, expand the military, not touch entitlements like social security or Medicare, keep Mexican immigrants out (expensive and lower growth).

Except he will run into the debt ceiling in March. Freedom caucus will refuse to raise it. Democrats will refuse the domestic cuts.

Next recession there simply won't be any financial weapons to counteract it. Could we do another QE or TARP?

 

[brycejones]

Wasn't Stockman a supply sider and creator of the Regan deficits?

 

[desura]

Wasn't Stockman a supply sider and creator of the Regan deficits?

He says that one lesson he learned from the Reagan years is that supply side doesn't work. Revenues lost by cuts in taxes are not made up for in overall growth. There needs to be concurrent cuts in spending...and Trump doesn't look like he has the discipline to do this.

 

[First]

Cuts in spending don't really make sense, as they lead to a vastly reduced quality of life for about 70% of the population, and have only the feel-good effect of lowering debt without the promised effect of higher economic growth.

 

[Jhhnn]

https://youtu.be/rkIuKxf-lHM

Not a big Fox News person at all, but Stockman seems pretty reasonable.

Simply put, Trump will bust the budget. He's going to lower taxes, expand the military, not touch entitlements like social security or Medicare, keep Mexican immigrants out (expensive and lower growth).

Except he will run into the debt ceiling in March. Freedom caucus will refuse to raise it. Democrats will refuse the domestic cuts.

Next recession there simply won't be any financial weapons to counteract it. Could we do another QE or TARP?

Freedom caucus? They're Republicans, right? Deficits don't matter when they're the result of fat cat tax cuts & military spending. Social spending cuts put a real shine on it, too. They'll know for sure that a lot of the others, actually their fellow Americans, will be doing worse than they are. They'll pull a smug FYGM over it like a warm blanket.

Unsustainable economic bubble? Of course. The magic of investor class tax cuts, military spending, fractional reserve banking & lax regulation will simply flood the markets with hot money chasing returns, creative financial implements of destruction & bad debt.

GWB 2.0. With more feeling.

 

[dawp]

I think what trump and the republicans will do will make the crash of 08 look like a walk in the park.

 

[Jhhnn]

We don't need to cut taxes. We need to raise them significantly on the investor class if we're to keep over exuberance from invoking a vertical stall & inequality from destroying middle America's opportunities.

Trickle down is a cruel deception. Yet conservatives keep buying it. We won't get any more out of the job creators than we can sweat out of them, bet on that. Certainly not with a permanent labor glut. Want more? The only way to get it is with taxes & redistribution. They can clearly afford to pay more, like they did in a different way back when labor earned a larger share of national income. We can't hurt the lifestyles of billionaires with taxes.

 

[fskimospy]

https://youtu.be/rkIuKxf-lHM

Not a big Fox News person at all, but Stockman seems pretty reasonable.

Simply put, Trump will bust the budget. He's going to lower taxes, expand the military, not touch entitlements like social security or Medicare, keep Mexican immigrants out (expensive and lower growth).

Except he will run into the debt ceiling in March. Freedom caucus will refuse to raise it. Democrats will refuse the domestic cuts.

Next recession there simply won't be any financial weapons to counteract it. Could we do another QE or TARP?

This is a stupid opinion. Republicans will absolutely raise the debt ceiling because the dirty Kenyan isn't the president anymore. They never actually cared about it and watch the conservatives here do a convenient about face.

Trump will bust the budget but you won't see the negative effects for awhile. In the short term I expect to see increased economic growth in fact (which republicans will claim as vindication, btw). It's the long term effects of debt financed tax cuts for people with low marginal propensity to spend that will cause damage.

 

[Dari]

He says that one lesson he learned from the Reagan years is that supply side doesn't work. Revenues lost by cuts in taxes are not made up for in overall growth. There needs to be concurrent cuts in spending...and Trump doesn't look like he has the discipline to do this.

Add that fact that Keynes himself said that, while increase government spending during a recession is good, government should cut back during an expansion. See, politicians only like one part of what economists tell them and then blame the economists (or worse, label them) when things go wrong. Trump may be no different. I seriously doubt that there will be a recession anytime soon. There will definitely be increase inflation (increase government spending coupled with less illegals and more protectionism), which usually leads to an expansion in the economy. I don't foresee stagflation at all

 

[Blackjack200]

This is a stupid opinion. Republicans will absolutely raise the debt ceiling because the dirty Kenyan isn't the president anymore. They never actually cared about it and watch the conservatives here do a convenient about face.

Trump will bust the budget but you won't see the negative effects for awhile. In the short term I expect to see increased economic growth in fact (which republicans will claim as vindication, btw). It's the long term effects of debt financed tax cuts for people with low marginal propensity to spend that will cause damage.

If Trump boosts spending and cuts taxes, you could see prolonged economic growth, but I wouldn't be surprised if it comes with a big jump in inflation. The fed would respond with rate hikes, and when the music stops the economy can go into a complete fucking tailspin. If you think 2008-2009 was fun, wait till it happens with government debt at 160% of GDP, and the idiots in congress refuse stimulus because they don't understand how money works.

 

[theeedude]

He's a broken clock that will be right eventually, but that's not saying much.
Here is him in 2012:
http://www.cbsnews.com/news/why-david-stockman-isnt-buying-it/

Stockman suggests you'd be a fool to hold anything but cash now, and maybe a few bars of gold. He thinks the Federal Reserve's efforts to ease the pain from the collapse of our "national leveraged buyout" - his term for decades of reckless, debt-fueled spending by government, families and companies - is pumping stock and bond markets to dangerous heights.

Stocks are up something like 80% since then, and gold is down 35%. So eventually we'll have a nasty recession, but he's been completely clueless on when.

 

[agent00f]

https://youtu.be/rkIuKxf-lHM

Not a big Fox News person at all, but Stockman seems pretty reasonable.

Simply put, Trump will bust the budget. He's going to lower taxes, expand the military, not touch entitlements like social security or Medicare, keep Mexican immigrants out (expensive and lower growth).

Except he will run into the debt ceiling in March. Freedom caucus will refuse to raise it. Democrats will refuse the domestic cuts.

Next recession there simply won't be any financial weapons to counteract it. Could we do another QE or TARP?

Why would you assume american conservatives have principles, because you're one of them?

 

[Blackjack200]

He's a broken clock that will be right eventually, but that's not saying much.
Here is him in 2012:
http://www.cbsnews.com/news/why-david-stockman-isnt-buying-it/

Stocks are up something like 80% since then, and gold is down 35%. So eventually we'll have a nasty recession, but he's been completely clueless on when.

The old joke about correctly predicting nine out of the last five recessions.

 

[fskimospy]

The old joke about correctly predicting nine out of the last five recessions.

It's like all the people who tried to claim that Peter Schiff predicted the financial crisis. He sure did, he just predicted about 30 other cataclysmic events that didn't happen. I loved his 'gold is going to $5,000 an ounce' prediction due to hyperinflation right before the price of gold crashed.

 

[Blackjack200]

It's like all the people who tried to claim that Peter Schiff predicted the financial crisis. He sure did, he just predicted about 30 other cataclysmic events that didn't happen. I loved his 'gold is going to $5,000 an ounce' prediction due to hyperinflation right before the price of gold crashed.

Yeah, the hyperinflation that was going to follow the destruction of $7 trillion in housing wealth because the fed dropped interest rates a few points.

AUDIT THE FED!

Spoiler

We already do.

 

[interchange]

You don't shrink a bubble and grow an economy. You either keep blowing and hope it doesn't pop or let some air out and deal with the consequences.

 

[Moonbeam]

You don't shrink a bubble and grow an economy. You either keep blowing and hope it doesn't pop or let some air out and deal with the consequences.

I generally stay out of economic threads because I know nothing but I have recently become quite happy with that decision because my dear friend, LunarRay, who has 6 degrees and whatever the PhD equivalent on the applied side of economics is (or some side, I know so little,) told me that he doesn't post in them either because the rest of us know so little it's pointless.

One of the stipulations of therapy I was given by my teacher was to pay for my own therapy, a piece of advice I found to be very suspicious at that time but which I have subsequently verified under the heading, "We don't value what we don't pay for." Just another of the many things I try to keep in mind when people seem not to listen.

 

[interchange]

I generally stay out of economic threads because I know nothing but I have recently become quite happy with that decision because my dear friend, LunarRay, who has 6 degrees and whatever the PhD equivalent on the applied side of economics is (or some side, I know so little,) told me that he doesn't post in them either because the rest of us know so little it's pointless.

One of the stipulations of therapy I was given by my teacher was to pay for my own therapy, a piece of advice I found to be very suspicious at that time but which I have subsequently verified under the heading, "We don't value what we don't pay for." Just another of the many things I try to keep in mind when people seem not to listen.

If you intended more than getting me to think about how what you wrote might apply to my post, I'm having trouble deciphering it.

 

[Moonbeam]

If you intended more than getting me to think about how what you wrote might apply to my post, I'm having trouble deciphering it.

I am saying that I have no idea how accurate your post was because I lack a foundation upon which to evaluate it. I'm saying that if it is point on, I wouldn't know it nor would probably most others who read it. As to questions we have dealt with personally between us, the resistance of others to open evaluation of ideas and how to deal with that, I was suggesting an awareness that people don't value what they don't pay for helps to offset disappointment when 'freely' expressing ideas such as we do in this thread meet with little reaction. This last point is why my friend doesn't post in them, or that is my understanding. A ship can't sail where the water is too shallow. And in all of this there is the implied possibility that you or I or both of us may suffer that condition. I was not implying either, both or neither. I am ignorant but I can see the possibilities even though I don't know which if any apply.

I see now in reflecting on this an ancient dilemma I face. I do not want people to suffer but my own suffering was what freed me of it.

Anyway, pay no attention to me. I may have gone off on something irrelevant.

 

[OrByte]

I generally stay out of economic threads because I know nothing but I have recently become quite happy with that decision because my dear friend, LunarRay, who has 6 degrees and whatever the PhD equivalent on the applied side of economics is (or some side, I know so little,) told me that he doesn't post in them either because the rest of us know so little it's pointless.

One of the stipulations of therapy I was given by my teacher was to pay for my own therapy, a piece of advice I found to be very suspicious at that time but which I have subsequently verified under the heading, "We don't value what we don't pay for." Just another of the many things I try to keep in mind when people seem not to listen.

Tell LunarRay we miss his posts and he should instruct those of us that were/are willing to learn!

 

[pauldun170]

http://www.pbs.org/newshour/making-sense/paul-krugman-on-why-david-stoc/

http://krugman.blogs.nytimes.com/2013/03/31/cranky-old-men/

Cranky Old Men
MARCH 31, 2013 1:14 PM March 31, 2013 1:14 pm


Shorter David Stockman:

"We’ve been doomed, yes doomed, ever since FDR took us off the gold standard and introduced unemployment insurance. What about those 80 years of non-doom? Just a series of lucky accidents. Now we’re really doomed. I mean it!"

Actually, I was disappointed in Stockman’s piece. I thought there would be some kind of real argument, some presentation, however tendentious, of evidence. Instead it’s just a series of gee-whiz, context- and model-free numbers embedded in a rant — and not even an interesting rant. It’s cranky old man stuff, the kind of thing you get from people who read Investors Business Daily, listen to Rush Limbaugh, and maybe, if they’re unusually teched up, get investment advice from Zero Hedge.

Sad.

 

[Jhhnn]

What happened the last time we deregulated finance, cut taxes for the investor class & binged on military spending?

Why should we expect that doing the same thing will yield different results?

Donald Trump?

Alrighty, then. The truth of what Conservative voters have done will unfold rather shortly. Be ready to own it

 

[Sonikku]

The GoP has full control so they can pay for tax cuts and bigger military by simply slashing education/HEAP/healthcare/infrastructure/welfare etc.

 

[Jhhnn]

The GoP has full control so they can pay for tax cuts and bigger military by simply slashing education/HEAP/healthcare/infrastructure/welfare etc.

Or they can just go with deficits don't matter. They might have to start a war to sell that.

Either way, the guys at the top cash in big time whenever there's hot money chasing too few real returns.

 

[desura]

Or they can just go with deficits don't matter. They might have to start a war to sell that.

Either way, the guys at the top cash in big time whenever there's hot money chasing too few real returns.

The Political Correctness in Washington basically means that defense spending will always be too high, because saying that you're concerned about some scary foreigner is more compelling on a campaign debate stage than saying that the fear is overblown and that we can cut defense spending. And because so many people rely on defense spending for jobs, it is like this never ending ball. Probably the only way it will stop will be either defense spending doesn't keep up with inflation or we hit some budget crunch which requires us to dismantle the Empire Soviet Union collapse style.