Is the government half-assing our plan for economic recovery?

[bamacre]

Keynesians: "Deficits aren't high enough, spend more, not enough stimulus."

Austrians: "Deficits are too high, cut spending, don't attempt to stimulate."

My point here is not which side is right, and which side is wrong. That debate has been around for a long time, here and elsewhere, and seeing how neither is getting their way, we'll continue to have that debate in the future too. And that is my point.

It seems like the Obama administration, or Congress rather, is trying to appease both sides here. As if this is a great time to be a "moderate." And it's ironic because, as I see it, in their attempt to appease both sides, they're really appeasing neither. Krugman said just recently, and has been saying for a while, the government isn't doing enough, and of course the other side (which, yes, includes more than just Austrians) has been saying the opposite all along.

I suppose however there are others who believe the government is doing just enough, the right amount. And I cannot help but assume this belief is based upon their political bias instead of some economic theory or understanding.

Given this, how can we expect a full economic recovery?

 

[sao123]

Keynesians: "Deficits aren't high enough, spend more, not enough stimulus."

Austrians: "Deficits are too high, cut spending, don't attempt to stimulate."

My point here is not which side is right, and which side is wrong. That debate has been around for a long time, here and elsewhere, and seeing how neither is getting their way, we'll continue to have that debate in the future too. And that is my point.

It seems like the Obama administration, or Congress rather, is trying to appease both sides here. As if this is a great time to be a "moderate." And it's ironic because, as I see it, in their attempt to appease both sides, they're really appeasing neither. Krugman said just recently, and has been saying for a while, the government isn't doing enough, and of course the other side (which, yes, includes more than just Austrians) has been saying the opposite all along.

I suppose however there are others who believe the government is doing just enough, the right amount. And I cannot help but assume this belief is based upon their political bias instead of some economic theory or understanding.

Given this, how can we expect a full economic recovery?

we cant unless we:

eliminate - libtards, envirokooks, the saftey patrol, socialists handouts

and return to the 1 party system of Bush Fascism.

 

[Jaskalas]

and return to the 1 party system of Bush Fascism.

Cause TARP worked so well. Let me know when you actually suggest a change in policy.

Given this, how can we expect a full economic recovery?

The economy will attempt to recover in spite of the government. It has always succeeded before, although government's actions at this point are unprecedented so there is always the risk that they have meddled too far.

 

[MotF Bane]

The government's incompetence will delay it, but the market will eventually stabilize itself.

 

[waggy]

and return to the 1 party system of Bush Fascism.

what makes you think we ever really left it? people are just less vocal (well some) and call it something else.

The government's incompetence will delay it, but the market will eventually stabilize itself.

i was thinking the same.

 

[Lemon law]

What is being missed here, is that if you stimulate the economy, which economic demographics do you stimulate? I don't recall many bitching in the GOP when GWB tax cuts benefited mainly the rich, but we sure see much GOP congressional opposition when Obama tries to even extend unemployment for the hardest hit.

Or alternately, if we wan to reduce deficits, we can also increase taxes. And those same which economic demographic do we target questions apply. And if we want to reduce spending, which cuts in government spending effects various economic demographics most and least?

And we also must ask, given the fact that the USA has been hit by two unmitigated disasters in a row, namely the collapse of the banking system, and the BP oil spill, why are we so tardy in getting effective regulations in place to make sure reassurances is made almost impossible? And on the latter question, we can mainly blame lock step GOP opposition.

 

[ShawnD1]

What is being missed here, is that if you stimulate the economy, which economic demographics do you stimulate? I don't recall many bitching in the GOP when GWB tax cuts benefited mainly the rich, but we sure see much GOP congressional opposition when Obama tries to even extend unemployment for the hardest hit.

The opinion was different because the flow of money was reversed. Rich people make money, so cutting their taxes just means they keep more of their own money. Giving handouts to people means you are giving them money they did not earn. Cutting taxes on Bill Gates by a million dollars doesn't seem so bad, but I get really really upset when I see someone with 5 kids on welfare and not working. The cost of that person is far less than a million dollars but it's a lot more upsetting.

So your question is who to help? Help the people who want help. Put out a bunch of government contracts to build things. Obviously the US doesn't need a bigger military, so let's look at things like bridges, wide certain highways, put some kind of tax credit for people trying to retrofit things like insulation or main electrical service (old buildings have pathetic electrical systems). The people who get that money are the people who want to work but are currently unable to find good work. Lazy fucks with 20 kids will get none of this.

 

[Jhhnn]

If Japan is any sort of model, and I think it is, we'll be making incremental downward adjustments for years to come. The bank bailout and the stimulus funds won't, can't, do much more than ease us down the slope rather than having us fall off a cliff...

If anything, the Japanese "recovery" will likely be stronger than our own, because they still run a balance of trade surplus.

That's what happens when we let the lootocracy run wild, when income distribution skews strongly towards the top .1%.

When the FRB, Wall St, and the Whitehouse conspired to create this real estate bubble, they damaged the economy in a way that no other form of leveraged & hedged speculative peak and fall could ever approach. Housing as a commodity is the single biggest market in the US by a wide margin. Total investment is enormous. Total shrinkage of the money supply is equally enormous as banks are forced to de-leverage, owners default, and those who hold on do so because they can't come up with the cash difference it'd take to get out from under.

As high unemployment continues, real estate prices will necessarily decline further because of over supply. Which, in turn, creates more employment difficulties. Only when the payment on a 30 year mortgage drops to be approximately the same as rent on a comparable property will we see a turnaround. Residential real estate rallies are usually led by small investors, and that's what they need to see to tempt investment, something with neutral cashflow now and the promise of positive cashflow down the road. We're nowhere near that in most markets.

Looking at it realistically, what reason is there to think that the economy will recover more than slightly, anyway? What will we do to avoid the endgame of the Triffin dilemma?

Answer that question to win the nobel prize in economics...

For my money, we're pretty much screwed, thanks to the application of right wing economic song and dance lessons over time... still waiting for that trickledown, huh? Don't hold your breath.

 

[Danube]

Last GDP report showed gov. contribution to be 0 (zero)

The stimulus was mostly wealth transfers.

Businesses are terrified of this admin and dont want to assume any risks. Obama is happy with that because he finds opportunity in crisis and doesnt want a robost economy that rips off the rest of the world (Obama is a head case like that)

 

[sandorski]

Keynesians: "Deficits aren't high enough, spend more, not enough stimulus."
...

This is a false characterization. Higher Deficits would indeed be the result, but Keynesians don't concern themselves with what the Deficit should be. Just the size of the Stimulus.

 

[masteryoda34]

Somehow we always seem to thrive in spite of the government.

 

[IGBT]

it's the obama disaster by design. dependency enables liberals.

 

[DucatiMonster696]

it's the obama disaster by design. dependency creates votes.

Correction.

 

[Bitek]

You didnt actually expect an honest discussion did you?
No one here is a qualified economist, and even then they can't agree. Instead we'll substitute partisan hyperbole for actual knowledge and substance.


I'm going to go with half-assed muck up. It seems to me the TARP and the Stimulus worked in so much as to staunch the bleeding and restore some psychological confidence in the markets (which is incredibly important) among other benefits of tax cuts, state aid, deferred budget cuts, and credit market supports.

Longterm however, I'm more leery. Politics will always drift to the most senseless arrangement of compromises and screw anything up.

Plus, IDK what we are going to really build our economy back on, given how much of our manu base we've lost and how much more competitive the world has become. I think the housing bubble just hid an economy that was already in a slide as part of a much larger trend of an equalizing of world economies.
Our previous level of wealth was aided by the large inequalities in the world due and the massive advantages we had in a much more developed economy. There will be overall benefits to the US for this, but will be fragmented across econ sectors and portions of society. Enter civil strife among the have's and have nots.

Pile on huge legacy costs like our massive military, on going wars, an untouchable entitlement system, and a massive debt load, its hard to see us pulling out of that easily. Germany is going the Austrian approach, so we'll see how it compares.


I think we will just end up providing useful data to future generations on what/what not to do during an econ crisis...

 

[Jhhnn]

Last GDP report showed gov. contribution to be 0 (zero)

That's like an argument to not open the parachute as the ground is rushing up to greet you... I mean, it won't lift you up, so why bother?

 

[Lemon law]

Last GDP report showed gov. contribution to be 0 (zero)

The stimulus was mostly wealth transfers.

Businesses are terrified of this admin and dont want to assume any risks. Obama is happy with that because he finds opportunity in crisis and doesnt want a robost economy that rips off the rest of the world (Obama is a head case like that)

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Why not compare this with the only thing comparable in US history, namely the great depression that started in 1929. And the comparison is somewhat apt, because both Hoover and Obama inherited systemic problems created by years of bad government policy.

Hoover tried austerity as his solution, and unemployment rapidly grew to 25%.

Obama has tried stimulus and has kept unemployment at 10%

Now ask, if Obama had tried the Hoover method, would we have 25% unemployment now?

Where does this stupidity come from, we just melted down our entire banking system before Obama was elected and some idiots think that is going to be without a huge hit on our economy.

 

[rudder]

The Europeans are starting to figure out that you need to reign in costs...

http://news.yahoo.com/s/nm/20100619/bs_nm/us_germany_g20_merkel

 

[bamacre]

Hoover tried austerity as his solution, and unemployment rapidly grew to 25%.

How many times are going to spread this lie?

 

[Munky]

The stimulus, TARP, and mark-to-model are just measures to sweep the dirt under the rug, in an attempt to hide the very probable fact that many of our big banks are insolvent, as in they'd go bust. I don't like the fact that the government is so focused on restoring "confidence" in the market, because IMO the bubble that bust was not a sustainable market, and I don't agree that we should place any confidence in a system that profited on lies, corruption and fraud.

 

[ShawnD1]

http://en.wikipedia.org/wiki/Herbert_Hoover

Hoover feared that too much intervention or coercion by the government would destroy individuality and self-reliance, which he considered to be important American values. Both his ideals and the economy were put to the test with the onset of the Great Depression. At the outset of the Depression, Hoover claims in his memoirs that he rejected Treasury Secretary Andrew Mellon's suggested "leave-it-alone" approach.[37]
.....
Hoover generally shared the economic theory that the stock market crash was a consequence of inequality of wealth and income. In November 1929, he met with industrialists and union leaders and negotiated a deal whereby industry agreed not to reduce wages and labor unions agreed not to strike. This later led to Hoover signing into law the Davis-Bacon Act, which required local governments to pay union wages on public works projects and the Norris-LaGuardia Act, which prevented courts from issuing injunctions against union strikes. According to Ohanian, keeping wages artificially high limited employment opportunities such that by the end of 1931, the unemployment rate was 16% and growing.
......
Congress approved the Smoot-Hawley Tariff Act in 1930. The legislation, which raised tariffs on thousands of imported items, was signed into law by Hoover in June 1930. The intent of the Act was to encourage the purchase of American-made products by increasing the cost of imported goods, while raising revenue for the federal government and protecting farmers. However, economic depression now spread through much of the world, and other nations increased tariffs on American-made goods in retaliation, reducing international trade, and worsening the Depression.[41]

Hoover didn't sit around doing nothing. He did stuff; it just didn't work. If he was keeping wages artificially high so government jobs paid as well as union jobs, it seems like the unemployment caused by doing that would be the result of the government not having enough taxes to account for increased spending. Either lower the wages so more people can be hired (hacp would like this) or raise taxes on the richest people to pay for all of this (union people would like this).

 

[MotF Bane]

-------------------------------------------------------------------------------------------------
Why not compare this with the only thing comparable in US history, namely the great depression that started in 1929. And the comparison is somewhat apt, because both Hoover and Obama inherited systemic problems created by years of bad government policy.

Hoover tried austerity as his solution, and unemployment rapidly grew to 25%.

Obama has tried stimulus and has kept unemployment at 10%

Now ask, if Obama had tried the Hoover method, would we have 25% unemployment now?

Where does this stupidity come from, we just melted down our entire banking system before Obama was elected and some idiots think that is going to be without a huge hit on our economy.

You lie to cover your ideological shortcomings.

 

[MotF Bane]

If Japan is any sort of model, and I think it is, we'll be making incremental downward adjustments for years to come. The bank bailout and the stimulus funds won't, can't, do much more than ease us down the slope rather than having us fall off a cliff...

If anything, the Japanese "recovery" will likely be stronger than our own, because they still run a balance of trade surplus.

That's what happens when we let the lootocracy run wild, when income distribution skews strongly towards the top .1%.

When the FRB, Wall St, and the Whitehouse conspired to create this real estate bubble, they damaged the economy in a way that no other form of leveraged & hedged speculative peak and fall could ever approach. Housing as a commodity is the single biggest market in the US by a wide margin. Total investment is enormous. Total shrinkage of the money supply is equally enormous as banks are forced to de-leverage, owners default, and those who hold on do so because they can't come up with the cash difference it'd take to get out from under.

As high unemployment continues, real estate prices will necessarily decline further because of over supply. Which, in turn, creates more employment difficulties. Only when the payment on a 30 year mortgage drops to be approximately the same as rent on a comparable property will we see a turnaround. Residential real estate rallies are usually led by small investors, and that's what they need to see to tempt investment, something with neutral cashflow now and the promise of positive cashflow down the road. We're nowhere near that in most markets.

Looking at it realistically, what reason is there to think that the economy will recover more than slightly, anyway? What will we do to avoid the endgame of the Triffin dilemma?

Answer that question to win the nobel prize in economics...

For my money, we're pretty much screwed, thanks to the application of right wing economic song and dance lessons over time... still waiting for that trickledown, huh? Don't hold your breath.

You are blinded by your flawed ideology.

 

[First]

I like how this thread went nowhere, and for obvious reasons. Lot of crow being eaten the past 2-3 years.

 

[db]

The most connected (moneyed) got bailed out (Socialism for them). Capitalism for the rest of us.

 

[Acanthus]

The Europeans are starting to figure out that you need to reign in costs...

http://news.yahoo.com/s/nm/20100619/bs_nm/us_germany_g20_merkel

The Europeans dont have money or credit.

We have both and borrow in our own currency.