I always think that the Fed. Reserve has more info than I do, so I shouldnt second guess them... But then, lately, they havent really been acting with much confidence... And they didnt know the extent of the problems at Lehman or AIG... So I wonder if they really do have any good info, or if they are just flying in the dark up there....
"At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained," Bernanke said in prepared testimony to Congress' Joint Economic Committee. (edit: 3/28/07)
Krugman takes a rather self-serving view of history. The "economic growth" of the mid-30's was entirely artificial and revealed itself to be exactly that. Same goes for now.
Guess this is why we're letting Iran get their nukes . . . why wait?
Seriously this also presumes that war is a stimulus which I don't agree with. Did we really have to wait 10 years through the Depression to recover? If that were the case then between Iraq and Afghanistan everything should be just ducky and it's not. I saw someone post this before and it really seems that after that White House dinner Krugman went to he's become a lackey for the Obama administration.
"The only way to climb out of a debt-deflationary depression is to pay down debt or to write it off. Levering up only delays the inevitable. Unfortunately Americans, and lately the Obama administration, have shown absolutely no political will to do this. Republicans decry growing deficits, but do you ever hear them enumerate cuts they would make or taxes they would raise? Clearly our plan is to keep borrowing until our lenders cut us off."
I am starting to believe that there is a geographical disconnect in this whole sordid affair. All the pronouncements of greens shoots, we are in the clear, prosperity is around the corner and all manner of smoke blowing up asses comes from one specific area. This area would be between Boston and Washington. I really do not think that they understand the enormity of the problem or the day to day nighmare that this thing has become.
So we are presented with the view of the economy from the most important area of the Eastern time zone. They are very comfortable making the predictions and then parsing it out to the media so they can lap it up. Meanwhile the reality is everywhere but the blessed zone of government jobs and economies not hit as hard by this mess.
All the Iraq-war slogans (weapons of mass destruction, stay the course, surge is working) or variations thereof are being recycled for the stimulus (Global War on Savers).
Don't forget that it's the pampered mass media types that buy into the whole meme and promote it so widely. Their lives are entirely disconnected from those of normal citizens.
MLM, yeah - good point. There are always people that think - when they get into positions of power - that they know more than they do. When I was an executive, I just kept talking to my fellow employees and our customers - the same thing I always did - and I never thought I knew every thing (because I don't). You'd never find me worried about a new carpet for office ... or buying a $35K commode like Merrill Lynch CEO John Thain!
".......but even if we are nearing the bottom of the economic cliff, the eventual "recovery" will be very sluggish."
.....the bottom of what economic cliff? That implies solutions have been initiated. That also implies that in addition to the remedies, changes & improvements have been made. That is entirely INCORRECT. Nothing has been FIXED or CHANGED. Money HAS been thrown at it, but nothing has been modified, other than the national debt is now incomprehensible and the national budget is 4-times normal.
As I've said before, it's all in which juggled chainsaw gets dropped first. Afterwhich they'll all come crashing to the ground.
Black Star Ranch, then you are even more pessimistic than me - and that argues against the Green Shoot metaphor.
I find it weird how bipolar the media is "Great Depression II" to Immaculate Recovery in a few months. Sorry for repeating - but I think both are very unlikely.
Krugman: "The second example is Japan in the 1990s. After slumping early in the decade, Japan experienced a partial recovery, with the economy growing almost 3 percent in 1996. Policy makers responded by shifting their focus to the budget deficit, raising taxes and cutting spending. Japan proceeded to slide back into recession."
Can you find Krugman's draconian frugality is this graph of Japanese debt spending?
It wasn't implied that the war caused the recovery, or that wars in general are good for economies.
@ not one cent
From you link ...
But, also the sluggish growth has meant debt / GDP ratio has risen. Also, the cost of servicing national debt is placing a great strain on any attempts to reduce debt. I have seen various figures for Japanese national debt, depending on which measure you use. But, national debt in Japan is 170% of GDP - more than twice the US, and is a much more serious problem than many seem to think. How long can Japan continue to fund such massive deficits?
.......I have no dog in this fight, but even I would like more time to better prepare. I don't stand in the corner with an AK and tinfoil on my head thinking Mad Max is a couple blocks away, but I do think the class warfare will get pretty ugly, 'bad guys' will take what they want, more are getting scared, many more "normal" are "acting out", Las Vegas is slowly becoming a war zone, (just listen to a scanner), and we're fortunate we live in the sticks and don't need to worry about the first time the stores empty out. A black swan will set it off - something not planned for.
......hoping for the best, and preparing for the worst.
Yet another commentariat prediction comes true...time to start trading recipes.
Too Poor to Make the News
By BARBARA EHRENREICH
"And for those who like their meat fresh, there’s the option of urban hunting. In Racine, Wis., a 51-year-old laid-off mechanic told me he’s supplementing his diet by “shooting squirrels and rabbits and eating them stewed, baked and grilled.” In Detroit, where the wildlife population has mounted as the human population ebbs, a retired truck driver is doing a brisk business in raccoon carcasses, which he recommends marinating with vinegar and spices."
Hilarious. Yet again, the myth that the digestion of the gold seizure created "growth" from '33 to '37 as the 70% devaluation was absorbed. How stupid are these people?
HollywoodHack (homepage, profile) wrote on Sun, 6/14/2009 - 10:23 pm
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Hilarious. Yet again, the myth that the digestion of the gold seizure created "growth" from '33 to '37 as the 70% devaluation was absorbed. How stupid are these people?
Hours ago we looked at PK's argument for doing more stim than OB is doing. What's the point of now considering his asking to ignore demands by those who want to do less than OB? It's backwards, and the wrong issue again, PK obscuring the problem of how much more if any TR printing and FR buying can be undertaken without spooking bondholders, investors, rates, and pushing the next row of indebted consumers/borrowers off the cliff. The 10 year rate going higher and closing above last Wednesday's spike highs will clarify the real issue, that the fed has not "run out of interest rates" as did Japan, but has run out of credibility, and is now taking us through a minefield. .
I admit, this isn't my area of expertise, but... didn't we PAY the local Iraqi militias to NOT kill each other? Or us? Either way, it was payola, no? NOT 'The Surge'.
I'd love to see your analysis. Really, you say potayto I say potahto. The generals got what they wanted and got results. Fast. Opposition to the Iraq war should not perclude cold, hard analysis of it. The casualty rates in Iraq are f**king miracles.
Hey Calculated Risk.
Your charts look awfully familiar.
Is there any explanation other than "CR took someone elses charts and used them after wiping attribution"? Or did this other site take your charts?
are you honestly going to argue that moving gold from $20 - where it had been forever - to $35 overnight on the world markets wasn't inflationary? Or that the gold/dollar trade in the run-up to the war in Europe wasn't the key global monetary event of the time?
this is what is amazing - a pinhead like Bernanke (and, nothing personal, but yourself) can't do the basic math I'd expect from a CVS cashier when it comes to this event. To be fair, it sometimes takes them a few moments when I give a fifty and two singles for a $31.45 bill. What's your excuse?
"are you honestly going to argue that moving gold from $20 - where it had been forever - to $35 overnight on the world markets wasn't inflationary? Or that the gold/dollar trade in the run-up to the war in Europe wasn't the key global monetary event of the time?"
~~~~
I'll argue that all day long ... the war was years away ... this took place in 1933 !
The financing of Germany's military buildup had nothing to do with US gold ...
But much to do with US Banks ... who owned their gold outright ...
That and increasing the force presence to the level needed to do the job to stabilize Iraq. Bad mistakes were made, particularly dismissing the existing army and not only ignoring more reasonable cost, duration and force requirements, but actually punishing those who provided them.
Eight weeks ago I could play pool on Sunday night.at six local bars.
I went out tonight at 10:30 pm and FIVE of them were closed.
I played a guy that moved back in with his brother a few months ago.
I joked that the only cheaper rent was the county jail.
He didn't laugh, he checks the local crime stats and said they've been rising steadily.
Somehow Krugman knows with great certainty that the US dollar will escape enourmous levels of debt, plus abysmal fundamentals going forward. We have just escaped a crisis brought on by the realization that US households could not repay their massive debt. What happens when the government suffers the same fate, because of its decision to bail out connected cronies at the expense of taxpayers?
We are putting our nation and our economy in a position to go "boom".
There will be no lender of last resort to bail out the USG. At that point, I hope Krugman is properly roasted for all of his assinine proposals, full of hubris and devoid of any caution or balance. He acts as if all before him were ignorant fools. Clearly, we have not really gotten any smarter over the hundreds of years of capitalism. In fact, arguably we have created a bigger mess than ever before. Krugman and his ilk are a big reason for why we are where we are.
I did not do it.. groups of humans afflicted by hubris do however hang themselves.
I remember talking to pharma execs and scientists for the last few years and NOBODY was willing to accept that the ship was sinking.. that their "paradigms" were not working .. that the direction of the big pharma since the early 80s was seriously offcourse.
//I played a guy that moved back in with his brother a few months ago. I joked that the only cheaper rent was the county jail.//
All the pronouncements of greens shoots, we are in the clear, prosperity is around the corner and all manner of smoke blowing up asses comes from one specific area
I thought so, too, but I did a quick check of the meme distribution and frequency. I'm fairly sure that it's mostly MSM telling the public what they think the public wants to hear.
I've seen purposeful manipulation before, I doubt this is it, but if so, it's very sophisticated.
Apology for what? Did I accuse him of stealing? I was just asking for an explanation. It seems like one was provided, by a third party. It does look like both of them independently graphed the actual, and overlayed with the Obama charts. The one I linked to actually has the May number incorporated, which would make a case that he saw that one weaker. Would they not look familiar to someone who saw the first one; with the exact same title and colors, even the axis labels?
I don't feel an apology is in order, in fact I left open the possibility this is a metric that CR has been graphing since February, and March. The fact that he recently also charted it makes the case he saw that chart prior stronger. I suppose it is moot; but I don't think it was easy for either of them if they made the charts without help from Excel and eyeballing the unemployment data.
I don't see any sign of either 'recovery' or 'hitting bottom' -- not from any of the Fed data, EU data, academic papers/bogs, or plain old local observation.
(That is, unless you are talking about the folks who can no longer afford their drugs/alcohol/cigs and are too morally upright to thieve -- they might be close to hitting bottom, or beginning recovery.)
I am sick to death of people even using these phrases without any actual or even pro forma data back up for 'em -- and stagnating decline IMHO doesn't indicate EITHER.
Just stop it, stop it now. This dumb meme is as annoying as the 12 y.o. humming one phrase of a black eyed peas song over and over again in the car...
Re: the Barbara Ehrenreich article vis a vis Urban Hunting --
At least here in Marin we have plenty of pesky Canadian Geese and Wild Turkeys. As I've noted previously on this site, food AND blankets! And plenty of deer too! Good thing that orange is a fashionable color now...
Re: Stay the Course?
What effing course? Cracker-sized bits of stimulus, plus great, greasy bacon slabs of $ to the banksters? Give me a break.
And for the personal side...
Spent the afternoon with various late 40 something gals like myself - kids in middle school, they have hubs, one works for uc, with a uc prof hub; one is self-employed, with self-employed hub. Haven't seen 'em in a bit.
Both are pretty frugal and hard-working -- like myself. Paid for old cars, no fancy vacations, no blackberry/iPhones, etc. Unlike me, they still live in SF and have hubs.
UC friends are asking me 'how bad do I think it will get?'
My comment is: for you guys, probably not so bad. You have subsidized very low interest state funded mortgage loans, have tenure, pensions, no debt, etc. Though you might wish to re-consider urban living in the future. But I did note that IMHO, things in the market are going to get very bad come the fall -- as I think that lots of formerly middle class' 401k cash-outs will press pension funds, and UI (for the few in our generation who are eligible) will likely be ending.
Self-employed friend is finally getting some work after 6 months but now has no more credit, no more HELOC, was (imho) suckered into applying for a BofA business LOC but (of course) turned down (but the dude made his app quota, probably). Owns her own (now apprx, 20% underwater) home and office condo (paid in full via the HELOC on home...) The hub has close to zero work.
This friend asked me what to do. About the only thing that I could say was cut costs where you still can (she and I have been cutting since 2000, btw...) and write to your reps. Take the time to tell your story.
Both of us look at the 1k/month that we pay for health insurance and are just about ready to can it.
As we both note, kinda pointless waste of money: these days we could barely pay our share of the costs up to our high deductible, all the later 'participation' percentages would also be impossible. We couldn't pay. Probably better to just save the $ and at least afford to get preventive care.
We are both thinking of just insuring the kids. At this point -- after 25 plus years of paying for our own insurance -- this actually is the only thing that makes sense. And one of the few things left where we can cut.
Sorry for the long post -- just totally annoyed and still looking to find a shop class for adults : - ) then I'll learn to hunt.
Personal anecdote...am in Southern California for a wedding, and decided to take the kids to Disneyland.
There are lots of available rooms right around the park, with prices right around $100 for the 3.5-to-4-star hotels. Lots of folks milling about on the streets, but no shortage of rooms.
Looking at the chart of projected vs. real unemployment kinda begs the question on whether the Obama administration is A) Naive and Stupid or B) trying to intentionally mislead people. The difference between the dark blue line (their projection on what would happen with the stimus) and the red line (what actually happened with the stimulus) is so huge that whoever came up with those estimates should've been fired already.
The rates of change in several graphs are inflected, which implies that the worst has passed.
However, inflection points are tricky things, especially with such large levels of centralized intervention.
I wouldn't be surprised if this second wave of foreclosures throws out a new inflection point.
There is a dilbert strip that asks - are you lying or are you incompetent?'
//Looking at the chart of projected vs. real unemployment kinda begs the question on whether the Obama administration is A) Naive and Stupid or B) trying to intentionally mislead people.//
Thanks, broward. I remember that, and very much agree -- EDIT -- with your comment about the next wave potentially throwing off the inflection point. I feel that is likely.
That was one reason that I was so surprised to see the annoying meme terms repeated.
Also one more personal note -- the self-employed friend's formerly successful small business owner brother (phd engineer, industrial metal machine parts/hvac stuff) is now living in his office. Lost the home, kids are with the ex. Can hold on for a few more months, but then will be done.
The other bright side, I tell my friends, all our kids are still very young. Hopefully in six to ten years, we'll have a better sense of how to cope, in terms of education/training decisions. I am sad for those folks who are just graduating college and who took ill-advised tranches of student loans...
........ today copper hit limit low at Shanghai merchantile exchange due to excess inventory worries ......
........ BTW ,concerning about two Japs with presumably fake bond....... every time N Korea tested nuke , counterfeit became an issue ...... the slight differences of this time are fake bond and a month later .......Yomiuri , Asahi , Mainichi et al. are all quite . they already knew what 's going on ........
How appropriate is the URL "www.hoocoodanode.org"? The people who can say wecoodanode and we acted accordingly are still OK. Aaaah, hell, it's too late, both for a long post tonight, and for the bailout effort. All I can say is, hubris still rules in the world capitals, but too many people still want to believe that the politicians can actually fix what they broke. Time to review dynastic cycles...
Thanks, CR
I tried to choose my words nicely but as I was finding when posting at 10:32, there's not really a nice way to "suggest" plagiarizing.
I think if you had stopped here:
Hey Calculated Risk.
Your charts look awfully familiar.
You would have suggested plagiarism without leveling an unnecessary accusation at any specific person. And posting on either blogsite, the polite thing to do would be to ask for an explanation first, without supplying the worst case scenario as an either/or.
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War is only stimulus if you kill the productive capcity and then exproriate its earnings power. The equivilant of going into Iraq and taking the oil. Politics doesn't allow such action today as it stands. Sadly if anyone benefits its china as the us does the demolishing china makes up for the lost production with its overcapacity. As for wars petraeus said this weekend afghan worst since 2001. Also that Adam ghadan yalunab American who died a in a pedetor strike has a new video out.
War is only stimulus if you kill the productive capcity and then exproriate its earnings power. The equivilant of going into Iraq and taking the oil. Politics doesn't allow such action today as it stands. Sadly if anyone benefits its china as the us does the demolishing china makes up for the lost production with its overcapacity. As for wars petraeus said this weekend afghan worst since 2001. Also that Adam ghadan yalunab American who died a in a pedetor strike has a new video out.
It will be fascinating to watch how much political will there is for staying the course during an L shaped recovery. Not to mention economic will -- a lot of powerful companies that want this thing to be over quickly are channeling their message through the media. And then, there is the impatient consumer (if we are to believe all of these recent consumer-confidence polls) singing 'the sun will come out tomorrow.' The long, sideways slog out of this will stress-test them all.
The war forced down domestic comsuption, but kept production up, but that production was unproductive, effectively just producing tons of steel and sinking it into the Atlantic, unfortunately with saliors on board with it. Also ran up the nat'l debt far more than any of the new deal stuff. It did result in a massive tranfer of debt from the pvt sector, both HH and business, to the Govt. The new deal was not as big, but it did result in rather startling economic growth in terms of real GDP and Industrial Production growth 33-37. Steel was produced and used for productive things, buildingthe Hoover Dam, The GW and GG bridges etc, that still help the US economy. The current stinulus has helped and is one reason why we seem to be at the bottom of the cliff, and removing it would be a mistake at least until we see U3 UE start to fall, pref for mor than two months in a row. Yes the $ was devalued by removing gold standard, but in the face of massive deflation, so what? You think the economy should have continued to be crucified on a cross of gold in that situation. Sounds like a case of economic S&M to me.
Or to use a medical metaphor, the patient (econ) is out of the emergency room and has been stabilized, but now is no time to take it off the ventilator, (As you know staying in the hospital is expensive though)
Anyhow, US futures tanking, SAXCME way down, HK/Tai/Korea leading Asia down, DAC lost 2%, Europe massive volume in financials, AUD/NZD reversing surge against USD, and there's a big slop back into USTs, bouncing up right across the curve (media suggests "on Russia comments" etc which is pretty implausible).
@Counterpointer - TPTB setting the trap for bears?
@Dirk - post-WW2 capacity destruction in rest of world had a lot to do with the North American economy boom then. What will replace that dynamic post-bailout?
"Or to use a medical metaphor, the patient (econ) is out of the emergency room and has been stabilized, but now is no time to take it off the ventilator,"
..........and we will continue to not deal with the cancer ridden body during the long-haul recovery.
Big difference between green chutes and green shoots.
And I think the unemployment chart is a little off. Shouldn't government intervention reduce unemployment in the beginning and generate higher unemplyment over the long term vs. the no intervention line?
I guess they really do want to believe that government is going to kickastart the economy and not choke off private investment!
I wish someone would have asked the question, "what sector is this recovery in"?..I asked several people this weekend during a family gathering of fools "what sector is the economy recovering in", as some were cheering abroad about this that and the other thing ( ya I always like to be the black sheep in the crowd ), and no one had an answer.
All I got was that dumb look, kind of like " why would you ask such a question "
( crickets chirping )...needless to say I walked away smiling ear to ear, and ignored them for the rest of the evening...As noted I despise stupidity and fast speak based on Hope and thin air chest pounding.
Our policies are guaranteeing that the Great depression all of them are trying to avoid will happen again.
I think Krugman is full of shit and worse intellectually dishonest. To draw comparisons between the thirties and today without acknowledging that there are major differences between the the economy then and now- the role of government, globalization and most important of all the level of debt- is just piss poor analysis.
I am struck that none of them chooses to look at the 1919-1921 period which was as bad as 1929-1932 and I believe is more comparable to our current condition. Then as now the economy was sustained through artificial demand- WW1 then and the great debt bubble now. The answer then and now isn't to try and sustain the economy at its artificial level but to cut back to some sustainable level.
Tres Altered- nothing, and we will not have the equiv of a post war boom, I am not that optimistic, but think that if the stim were removed right noe, the cliff diving would resume.
BSR, yes there are many underlying emdical problems that have to be dealt with, but first you have to deal with the cardiac arrest.. Its going to be a long and painful series of chemo treatments.
Over time America is getting poorer, the question is do we have an all out collapes or a slow decline. Slow decline is better for social stability.
Plenty of green shootery today - housing starts, manufacturing, 3- and 6-month bill auction.
Euroids looking wobbly, UK intends doing GBP5b in gilts but syndicated through banks to reduce chance of massive scwer-up as with the long gilt failure in March, employment looks horrible...
@Dirk - the problem being that we never actually get around to trying to heal the patient, and what started out as a pebble forty years ago is now an oil-storage tank sized can we're trying to kick down the road.
While I don't subscribe to it, Keynes theory isn't completely invalid. The problem is that Keynesian economists seem to forget that those deficits absolutely must be paid off during the good years.
I think in your analysis of the 1930's you pay too little attention to the role that bank failures played. It was the progression of bank failures that caused the economy to collapse. If people couldn't trust that the money they put in a bank would be there when they needed it you created a tremendous reason for people to hold cash with its concomitant decline n borrowing and investing.
I for one believe that if the policy makers had learned this lesson (rather than spend more money) and nationalized the banking system (any bank unable to operate without the special Fed facilities) that would have been more effective than spending the US into a hole.
I think part of the discussion has to be whether what we are witnessing is "economic damage" or an inevitable and necessary readjustment following a reckless 25 year or so. If it is the later than we should have been thinking about encouraging that readjustment while simultaneously trying to avoid the human suffering of the readjustment. That would have led to higher interest rates but greater spending on low income housing, food stamps and yes some kind of health care safety net.
crazyv,
I hope all the comparisons between now and the Great Depression are just marketing on the part of the stimulus chearleaders. It obviously is a completely different set of causes and circumstances.
Two things I don't hear Krugman or any other member of the Whitehouse (defacto or dejure) staff mention are;
how are we going to encourage small business development? and
how are we going to service this debt?
Dirk, even chemo destroys the entire immune system. Nothing short of that will repair the damage done by the previous inept surgeon - except now we've brought a young physician's assistant into the OR to resume the "repair work".
I think the basic problem is that all the economists who have come of age in the last 28 years and are now in positions of authority have bought into the meme of free markets, free trade and deregulation as the panacea for all ills. The only thing that right wing and left wing economists disagree to some extent is the level of taxation. Consequently they are all assume the the system they have worshiped is right and the failures can be fixed. I think the most apt comparison is the Easter Islanders who thought that their problems could be fixed by cutting more trees to erect more statues to their gods.
What if the entire premise of the last 28 years is wrong. If things are working so well shouldn't we have less debt rather than more?
T-ARP, fully agree about need to pay back in good times, we were making a start at end of Bill Term, al least in terms of bringing Debt/GDP down, W blew that big time. Again, it is going to be a very long and painful rehab process, and paying down debt has to be part of that process.
CrazyV, also agree that bank runns were a big part of the prob, but could not fit an entire analysis of the 30's into one or 2 paragraphs. FDIC was one of the 3 legs of the Fin Reg structure that came out of the GD, and were undermined in the 00's. Elizabeth Warrne has written about that far more eloquently than I.
....someone had asked about this a few days ago..........
"Strip Club Depression - Strip clubs are the ultimate boom time creation. After all, the business model rests on masses of men overpaying for cocktails while overpaying lithesome young women to bump and grind on their laps – all of this after paying an exorbitant charge just to enter the building...."
BSR, agree that strip clubs are very discretionary spending and all discrtionary spending is going to be under pressure for many years to come. You know of any publically traded Gentlemns clubs to short?
..............I would just as soon change the subject. The Mrs looks at my screen when she awakens - I'd rather be talking even about global change. LOL. It'll make for more pleasant conversation under MilkShake.
@crazyv - debt is rising because we're collectively borrowing on our future (and at this point, that of our kids and grandkids). That didn't happen because of a free market system. Other forms of gov't/society have had the same problems.
If you take all US debt, including unfunded obligations, we've 'pulled ahead' about six or seven years worth of GDP. Maybe if people started thinking in those terms - six or seven years of zero GDP to make up for the problem, we'd get more serious about fixing the problem.
The issue I'd take with Krugman's advice goes back to his analysis of 1937. He attributes the re-depression to the government attempts to wean the economy off a dependency. What else does he think they could have done? Maintained the dependency forever?
In that light, the question must be asked: was 1937 really just a postponement of something that should have been allowed to happen in 1933-1934? I have the same feeling now, that we are still kicking the can down the road and someday, sooner or later, we must take the hits. If not we will have permanent dependency rather than structural growth.
Krugman's other frequently expressed opinion is that we are repeating the Japanese experience, and his 'stay the course' advice seems to say that he approves.
Wally, yes, turning Japanese is the good outcome, a repeat of the Grapes of Wrath is the bad outcome. I did not hear any reports of people starving in Japan over the last few decades.
Krugman's certainty in every opinion he expresses makes me fairly dubious of his sagacity. I'm not sure why CR puts so much faith in his pronouncements.
Stay the course is wrong. The bill was nothing more than pork spending with no long term investments in it. Stay the course would only be correct if the pork bill had long term investments in it. It did not. Without investments the money is just wasted and will provide no long term benefit. Krugman is just wrong!
Example of the pork bill. Food pantries are told to buy excess food to give away in the amount of 100 million dollars. It only provides a temporary solution to the poor by providing some extra food for a short time. When the money is gone so is the food and you are left with just debt. No investments to help the people to learn to fish to feed themselves. Some of the excess food will end up being sold but no long term benefit. Just wasted money.
Krugman's certainty in every opinion he expresses makes me fairly dubious of his sagacity. I'm not sure why CR puts so much faith in his pronouncements.
It is one opinion of a fairly prominent wonk. He has every right to be 'confident' * CR to report on him.
Note that the video of the week was Peter Schiff - also cock sure but from the other end of the spectrum.
I am confused with your analysis and tend to disagree. Paul wrote that the stimulus was more political than practical and did not put enough money in the right place at the right time. The actual benefits of the stimulus will kick in about the time he runs for re-election. currently all he has done with billions of dollars of stimulus is repay election debts with public money.
If the economy is starting to recover then now is the time to signal clearly that a recover is in place. An increase in the interest rate to an actual target is a good place to begin. It will take a long time for policies to actually have any effect so set the interest goal at .5 or .75% and you send a positive message without stopping the economy in its tracks. This will do nothing for mortgage rates and the fear they will rise is irrational.
Paul also continues to claim that the private economy needs public stimulus and never defines when it no longer remains a private economy. We should not be bailing out Chrysler and GM with Banking funds. Even Tim Geitner has admitted that there does not seem to be any reason to purchase toxic assets as the market seems to be taking care of those gambles on its own.
Part of the reason we got in to this mess was the free money that flowed from the Fed. We must look at fiscal sensibility now rather than after we have gone through the intersection and been hit by the truck.
Money doesn’t grow on trees for most of America. We sit down at our kitchen tables and write out checks to the phone-company, electric company, credit card-company, mortgage-company, and auto finance company every month. We clip coupons and go to the grocery store every week to put food in the mouths of our children. This is what our parents did before us.
Paul Krugman is an asset to this nation. He was in the class behind me in high school, and he achieved mightily with his Mathematic skills. I'm happy he's had an brilliant career..
Even so, he is a colleague of Mr. Bernanke at Princeton, and I fear that the "buddy in a foxhole" influence might color his opinions. I do not see the stimulus spending helping the economy so far. And, I fear the tremendous deficits.
I'm not sure if the scholarly investigation of the Great Depression of the 1930s is germane to the current snapshot of this country. Our oil reservoirs are not as large, and the iron ore is depleted ( witness the efforts to refine iron ore mine tailings), the virgin timber is gone, and our workers are not assembling products for export.. I'll assume we are still exporting grain, airplanes, weapons and some machinery. But. we're not exporting manufactured good as we were in the 30's,50's, 60's and 70's. We still construct houses and motor vehicles ( many fewer, and for domestic consumption).
We'll need to move beyond "movies, software, and high-speed pizza delivery". Every job needs to be as jealously guarded as the jobs in the EU and East Asia. The hideous example of "Chinese wall board" imports is just an example. Yes, I'm calling for some modified "Smoot-Hawley" type protectionism. I'm not buying into the globalization/corporate hogwash. When the playing field is level, we'll talk/trade with the foreigners.
No way 1?
More stimulus pleaz!!!!
Someday this war's gonna end...
Key Quotes from Biden on the Stimulus - The Page by Mark Halperin - TIME.com
Stay the course?
Crap, keep bailing you fools!!!
There is no chance that this over, this is going to have another plop coming.
Someday this war's gonna end...
Yogi I left one post on the last thread after the pig...
I always think that the Fed. Reserve has more info than I do, so I shouldnt second guess them... But then, lately, they havent really been acting with much confidence... And they didnt know the extent of the problems at Lehman or AIG... So I wonder if they really do have any good info, or if they are just flying in the dark up there....
Did he seriously just say Stay The Course?
Oh it is to laugh.
Time to tune you out Kruggie Baby, you've lost your marbles
EDIT: Shouldn't you all be in bed so I can be first ?
Didnt Stay the Course come from Bush 1?
ShadowInventory -
You really need to get over that.
"At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained," Bernanke said in prepared testimony to Congress' Joint Economic Committee. (edit: 3/28/07)
I think I was blinded by the cueball head and the beard...
That red line for unemployment looks like a Missile to the moon to me !
I have to laugh at him trying to back away from the 'green shoots' before it explodes in his face.
Not so fast fat Boy...
Ok Dow - I'm going to bed so you can take over... Manana all...
ShadowInventory, nah - the Fed doesn't know anything we all don't know about the economy (except some specifics on companies using the facilities).
This is true for the government - they don't know anything special.
best wishes
Krugman takes a rather self-serving view of history. The "economic growth" of the mid-30's was entirely artificial and revealed itself to be exactly that. Same goes for now.
"full recovery had to wait for World War II"
Guess this is why we're letting Iran get their nukes . . . why wait?
Seriously this also presumes that war is a stimulus which I don't agree with. Did we really have to wait 10 years through the Depression to recover? If that were the case then between Iraq and Afghanistan everything should be just ducky and it's not. I saw someone post this before and it really seems that after that White House dinner Krugman went to he's become a lackey for the Obama administration.
It is called deflation and until the United States reconciles
$50 trillion in aggregate debt it won't end ...
If stay the course means propping up Zombie Banks
it is all money down a rat hole ...
"Krugman: Stay the Course"
The surge is working.
Here's the "Stay the Course" skit from SNL with Dana Carvey:
Hulu - Saturday Night Live: George Bush Debate
From Naked Capitalism ...
Guest Post: What De-leveraging?
Guest Post: What De-leveraging? « naked capitalism
"The only way to climb out of a debt-deflationary depression is to pay down debt or to write it off. Levering up only delays the inevitable. Unfortunately Americans, and lately the Obama administration, have shown absolutely no political will to do this. Republicans decry growing deficits, but do you ever hear them enumerate cuts they would make or taxes they would raise? Clearly our plan is to keep borrowing until our lenders cut us off."
CR -
The real question is whether they think they know something we don't know.
I am starting to believe that there is a geographical disconnect in this whole sordid affair. All the pronouncements of greens shoots, we are in the clear, prosperity is around the corner and all manner of smoke blowing up asses comes from one specific area. This area would be between Boston and Washington. I really do not think that they understand the enormity of the problem or the day to day nighmare that this thing has become.
So we are presented with the view of the economy from the most important area of the Eastern time zone. They are very comfortable making the predictions and then parsing it out to the media so they can lap it up. Meanwhile the reality is everywhere but the blessed zone of government jobs and economies not hit as hard by this mess.
Stay the course and a thousand points of green shoots.
The real question is whether they think they know something we don't know.
Heh heh... no, the problem is they believe they know better.
I'm still trying to work out how the $3T of foreign debt is going to be reeled in without a drastic drop in buying power.
All the Iraq-war slogans (weapons of mass destruction, stay the course, surge is working) or variations thereof are being recycled for the stimulus (Global War on Savers).
french mistake,
Don't forget that it's the pampered mass media types that buy into the whole meme and promote it so widely. Their lives are entirely disconnected from those of normal citizens.
MLM, yeah - good point. There are always people that think - when they get into positions of power - that they know more than they do. When I was an executive, I just kept talking to my fellow employees and our customers - the same thing I always did - and I never thought I knew every thing (because I don't). You'd never find me worried about a new carpet for office ... or buying a $35K commode like Merrill Lynch CEO John Thain!
best wishes
".......but even if we are nearing the bottom of the economic cliff, the eventual "recovery" will be very sluggish."
.....the bottom of what economic cliff? That implies solutions have been initiated. That also implies that in addition to the remedies, changes & improvements have been made. That is entirely INCORRECT. Nothing has been FIXED or CHANGED. Money HAS been thrown at it, but nothing has been modified, other than the national debt is now incomprehensible and the national budget is 4-times normal.
As I've said before, it's all in which juggled chainsaw gets dropped first. Afterwhich they'll all come crashing to the ground.
Slick Dog, very funny! I remember that skit ... awesome.
best wishes
Black Star Ranch, then you are even more pessimistic than me - and that argues against the Green Shoot metaphor.
I find it weird how bipolar the media is "Great Depression II" to Immaculate Recovery in a few months. Sorry for repeating - but I think both are very unlikely.
best wishes
I think the course of action is not in our control like it was in the 30's, we now have massive debt loads funded by other countries.
BSR,
Yeah, TPTB are making things worse, not better, but hey -- as long as they're keeping up appearances it's all okay, right? Right.
CR,
The "Greater Depression" is still building, and you'll be documenting it the whole way. Stay healthy... it's a long road ahead.
Krugman: "The second example is Japan in the 1990s. After slumping early in the decade, Japan experienced a partial recovery, with the economy growing almost 3 percent in 1996. Policy makers responded by shifting their focus to the budget deficit, raising taxes and cutting spending. Japan proceeded to slide back into recession."
Can you find Krugman's draconian frugality is this graph of Japanese debt spending?
History of National Debt in Japan | Economics Blog
Gotta say that if those are my only two choices, I'm betting 3:1 for Greater Depression vs. Immaculate Recovery.
Not One Cent
Exactly ...
and
Great graph !
TPTB are going in with the premise they can least afford to accommodate ...
That they must save the too big to fail banks ...
The first thing FDR did was put insolvent banks out of business ...
Damn, is Krugman really this stupid? We never got to see the long run effects of new deal policies, wwii got in the way.
Also, OT: but has the bearer bond smuggling story been put to rest? Territory for the conspiracy theorists, now?
Yes the green shoots metaphor is wrong.
It should be hothouse flowers.
@ sick dog
It wasn't implied that the war caused the recovery, or that wars in general are good for economies.
@ not one cent
From you link ...
But, also the sluggish growth has meant debt / GDP ratio has risen. Also, the cost of servicing national debt is placing a great strain on any attempts to reduce debt. I have seen various figures for Japanese national debt, depending on which measure you use. But, national debt in Japan is 170% of GDP - more than twice the US, and is a much more serious problem than many seem to think. How long can Japan continue to fund such massive deficits?
.......I have no dog in this fight, but even I would like more time to better prepare. I don't stand in the corner with an AK and tinfoil on my head thinking Mad Max is a couple blocks away, but I do think the class warfare will get pretty ugly, 'bad guys' will take what they want, more are getting scared, many more "normal" are "acting out", Las Vegas is slowly becoming a war zone, (just listen to a scanner), and we're fortunate we live in the sticks and don't need to worry about the first time the stores empty out. A black swan will set it off - something not planned for.
......hoping for the best, and preparing for the worst.
The surge is working.
Well, the Iraq surge did work. Turns out those generals know something about fighting. Hoocoodanode?
Pick another metaphor.
Cheers,
prat
Krugman is a coward ...
He knows the history of the Great Depression as does Bernanke ...
They both know that the Zombie Banks will suck capital out of the system faster
than GDP will create it ...
Krugman and Bernake both know that the insolvent banks, most of the 19 tested,
have to be nationalized .... or there will be no end to the destruction of capital ...
This "hope against hope" crap is going to tear apart our whole economy as the good companies
follow the bad companies into oblivion ...
"Stay the course and a thousand points of green shoots. "
Perhaps O' can start handing out "Green Shoot" awards to those who do exceptional work in support of the economy?
Thousand points of light - Wikipedia, the free encyclopedia
BSR,
You can never be totally prepared, but you appear to be well ahead of the game.
Yet another commentariat prediction comes true...time to start trading recipes.
Too Poor to Make the News
By BARBARA EHRENREICH
"And for those who like their meat fresh, there’s the option of urban hunting. In Racine, Wis., a 51-year-old laid-off mechanic told me he’s supplementing his diet by “shooting squirrels and rabbits and eating them stewed, baked and grilled.” In Detroit, where the wildlife population has mounted as the human population ebbs, a retired truck driver is doing a brisk business in raccoon carcasses, which he recommends marinating with vinegar and spices."
OP-ED CONTRIBUTOR; Too Poor to Make the News - NY Times
Build a 10 foot wall around the flavelas to protect the rain forest...filed in the "you can't make this stuff up".
Walls Around Rio's Slums Protect Trees But Don't Inspire Much Hugging - WSJ.com
"Well, the Iraq surge did work. "
~~~~
No ... it didn't ...
Enlisting local militias is what worked ...
Now we stay there to keep them from killing each other ...
Hilarious. Yet again, the myth that the digestion of the gold seizure created "growth" from '33 to '37 as the 70% devaluation was absorbed. How stupid are these people?
HollywoodHack (homepage, profile) wrote on Sun, 6/14/2009 - 10:23 pm
reply
Ignore user
Hilarious. Yet again, the myth that the digestion of the gold seizure created "growth" from '33 to '37 as the 70% devaluation was absorbed. How stupid are these people?
~~~~
Who said that ?
Hours ago we looked at PK's argument for doing more stim than OB is doing. What's the point of now considering his asking to ignore demands by those who want to do less than OB? It's backwards, and the wrong issue again, PK obscuring the problem of how much more if any TR printing and FR buying can be undertaken without spooking bondholders, investors, rates, and pushing the next row of indebted consumers/borrowers off the cliff. The 10 year rate going higher and closing above last Wednesday's spike highs will clarify the real issue, that the fed has not "run out of interest rates" as did Japan, but has run out of credibility, and is now taking us through a minefield. .
"Well, the Iraq surge did work. "
~~~~
No ... it didn't ...
Enlisting local militias is what worked ...
I admit, this isn't my area of expertise, but... didn't we PAY the local Iraqi militias to NOT kill each other? Or us? Either way, it was payola, no? NOT 'The Surge'.
"Who said that ?"
"The U.S. economy grew rapidly from 1933 to 1937, helped along by New Deal policies. "
TFA, mi amigo
mmckinl, yossarian,
I'd love to see your analysis. Really, you say potayto I say potahto. The generals got what they wanted and got results. Fast. Opposition to the Iraq war should not perclude cold, hard analysis of it. The casualty rates in Iraq are f**king miracles.
And, hell, happy flag day everybody!
Cheers,
prat
HollywoodHack
"Who said that ?"
"The U.S. economy grew rapidly from 1933 to 1937, helped along by New Deal policies. "
TFA, mi amigo
~~~~
Oh please get a life ... the Gold Confiscation policy wasn't even necessary ... back then the US
was the biggest creditor nation ... the biggest oil producer ... and the largest industrial nation ...
Hey Calculated Risk.
Your charts look awfully familiar.
Is there any explanation other than "CR took someone elses charts and used them after wiping attribution"? Or did this other site take your charts?
"Oh please get a life ."
are you honestly going to argue that moving gold from $20 - where it had been forever - to $35 overnight on the world markets wasn't inflationary? Or that the gold/dollar trade in the run-up to the war in Europe wasn't the key global monetary event of the time?
this is what is amazing - a pinhead like Bernanke (and, nothing personal, but yourself) can't do the basic math I'd expect from a CVS cashier when it comes to this event. To be fair, it sometimes takes them a few moments when I give a fifty and two singles for a $31.45 bill. What's your excuse?
"are you honestly going to argue that moving gold from $20 - where it had been forever - to $35 overnight on the world markets wasn't inflationary? Or that the gold/dollar trade in the run-up to the war in Europe wasn't the key global monetary event of the time?"
~~~~
I'll argue that all day long ... the war was years away ... this took place in 1933 !
The financing of Germany's military buildup had nothing to do with US gold ...
But much to do with US Banks ... who owned their gold outright ...
Hey YLSP -
Both CR and the other blogger note that the source is the Obama admin.
Check CR's link; check other blogger's legend.
YLSP - an apology is in order.
"Enlisting local militias is what worked ..."
That and increasing the force presence to the level needed to do the job to stabilize Iraq. Bad mistakes were made, particularly dismissing the existing army and not only ignoring more reasonable cost, duration and force requirements, but actually punishing those who provided them.
Eric Shinseki - Wikipedia, the free encyclopedia
Wow.
Eight weeks ago I could play pool on Sunday night.at six local bars.
I went out tonight at 10:30 pm and FIVE of them were closed.
I played a guy that moved back in with his brother a few months ago.
I joked that the only cheaper rent was the county jail.
He didn't laugh, he checks the local crime stats and said they've been rising steadily.
This is not good.
Krugman bashing seems rather popular lately......
broward,
"Closed" as in permanently?
FIVE of them were closed
Closed for the night, or closed for good?
Krugman bashing seems rather popular lately......
Lately?!? Where've you been?
Somehow Krugman knows with great certainty that the US dollar will escape enourmous levels of debt, plus abysmal fundamentals going forward. We have just escaped a crisis brought on by the realization that US households could not repay their massive debt. What happens when the government suffers the same fate, because of its decision to bail out connected cronies at the expense of taxpayers?
We are putting our nation and our economy in a position to go "boom".
There will be no lender of last resort to bail out the USG. At that point, I hope Krugman is properly roasted for all of his assinine proposals, full of hubris and devoid of any caution or balance. He acts as if all before him were ignorant fools. Clearly, we have not really gotten any smarter over the hundreds of years of capitalism. In fact, arguably we have created a bigger mess than ever before. Krugman and his ilk are a big reason for why we are where we are.
broward,
I did not do it.. groups of humans afflicted by hubris do however hang themselves.
I remember talking to pharma execs and scientists for the last few years and NOBODY was willing to accept that the ship was sinking.. that their "paradigms" were not working .. that the direction of the big pharma since the early 80s was seriously offcourse.
//I played a guy that moved back in with his brother a few months ago. I joked that the only cheaper rent was the county jail.//
The U.S. finds itself with one hell of a debt hangover and he so he prescribes more drinking. Great advice, that.
All the pronouncements of greens shoots, we are in the clear, prosperity is around the corner and all manner of smoke blowing up asses comes from one specific area
I thought so, too, but I did a quick check of the meme distribution and frequency. I'm fairly sure that it's mostly MSM telling the public what they think the public wants to hear.
I've seen purposeful manipulation before, I doubt this is it, but if so, it's very sophisticated.
Oh there cannot be enough Krugman bashing.
We can only hope that someday the MSM and the establishment will give him his due, in the same way that Greespend has now been exposed.
Apology for what? Did I accuse him of stealing? I was just asking for an explanation. It seems like one was provided, by a third party. It does look like both of them independently graphed the actual, and overlayed with the Obama charts. The one I linked to actually has the May number incorporated, which would make a case that he saw that one weaker. Would they not look familiar to someone who saw the first one; with the exact same title and colors, even the axis labels?
I don't feel an apology is in order, in fact I left open the possibility this is a metric that CR has been graphing since February, and March. The fact that he recently also charted it makes the case he saw that chart prior stronger. I suppose it is moot; but I don't think it was easy for either of them if they made the charts without help from Excel and eyeballing the unemployment data.
Closed for the night, or closed for good?
I think closed for the night but I'm not sure, I was gone for seven weeks.
I'm still a little shocked.
YLSP,
Your words were very poorly chosen, hence the calls for an apology.
Re: Recovery and/or 'hitting bottom'
Grrrr. Grrrr.
I don't see any sign of either 'recovery' or 'hitting bottom' -- not from any of the Fed data, EU data, academic papers/bogs, or plain old local observation.
(That is, unless you are talking about the folks who can no longer afford their drugs/alcohol/cigs and are too morally upright to thieve -- they might be close to hitting bottom, or beginning recovery.)
I am sick to death of people even using these phrases without any actual or even pro forma data back up for 'em -- and stagnating decline IMHO doesn't indicate EITHER.
Just stop it, stop it now. This dumb meme is as annoying as the 12 y.o. humming one phrase of a black eyed peas song over and over again in the car...
Re: the Barbara Ehrenreich article vis a vis Urban Hunting --
At least here in Marin we have plenty of pesky Canadian Geese and Wild Turkeys. As I've noted previously on this site, food AND blankets! And plenty of deer too! Good thing that orange is a fashionable color now...
Re: Stay the Course?
What effing course? Cracker-sized bits of stimulus, plus great, greasy bacon slabs of $ to the banksters? Give me a break.
And for the personal side...
Spent the afternoon with various late 40 something gals like myself - kids in middle school, they have hubs, one works for uc, with a uc prof hub; one is self-employed, with self-employed hub. Haven't seen 'em in a bit.
Both are pretty frugal and hard-working -- like myself. Paid for old cars, no fancy vacations, no blackberry/iPhones, etc. Unlike me, they still live in SF and have hubs.
UC friends are asking me 'how bad do I think it will get?'
My comment is: for you guys, probably not so bad. You have subsidized very low interest state funded mortgage loans, have tenure, pensions, no debt, etc. Though you might wish to re-consider urban living in the future. But I did note that IMHO, things in the market are going to get very bad come the fall -- as I think that lots of formerly middle class' 401k cash-outs will press pension funds, and UI (for the few in our generation who are eligible) will likely be ending.
Self-employed friend is finally getting some work after 6 months but now has no more credit, no more HELOC, was (imho) suckered into applying for a BofA business LOC but (of course) turned down (but the dude made his app quota, probably). Owns her own (now apprx, 20% underwater) home and office condo (paid in full via the HELOC on home...) The hub has close to zero work.
This friend asked me what to do. About the only thing that I could say was cut costs where you still can (she and I have been cutting since 2000, btw...) and write to your reps. Take the time to tell your story.
Both of us look at the 1k/month that we pay for health insurance and are just about ready to can it.
As we both note, kinda pointless waste of money: these days we could barely pay our share of the costs up to our high deductible, all the later 'participation' percentages would also be impossible. We couldn't pay. Probably better to just save the $ and at least afford to get preventive care.
We are both thinking of just insuring the kids. At this point -- after 25 plus years of paying for our own insurance -- this actually is the only thing that makes sense. And one of the few things left where we can cut.
Sorry for the long post -- just totally annoyed and still looking to find a shop class for adults : - ) then I'll learn to hunt.
Personal anecdote...am in Southern California for a wedding, and decided to take the kids to Disneyland.
There are lots of available rooms right around the park, with prices right around $100 for the 3.5-to-4-star hotels. Lots of folks milling about on the streets, but no shortage of rooms.
Looking at the chart of projected vs. real unemployment kinda begs the question on whether the Obama administration is A) Naive and Stupid or B) trying to intentionally mislead people. The difference between the dark blue line (their projection on what would happen with the stimus) and the red line (what actually happened with the stimulus) is so huge that whoever came up with those estimates should've been fired already.
I tried to choose my words nicely but as I was finding when posting at 10:32, there's not really a nice way to "suggest" plagiarizing.
C in Marin,
CR posted this a couple of days ago.
http://www.cfr.org/content/publications/attachments/2009OutlookFinal_Long.pdf
The rates of change in several graphs are inflected, which implies that the worst has passed.
However, inflection points are tricky things, especially with such large levels of centralized intervention.
I wouldn't be surprised if this second wave of foreclosures throws out a new inflection point.
There is a dilbert strip that asks - are you lying or are you incompetent?'
//Looking at the chart of projected vs. real unemployment kinda begs the question on whether the Obama administration is A) Naive and Stupid or B) trying to intentionally mislead people.//
Thanks, broward. I remember that, and very much agree -- EDIT -- with your comment about the next wave potentially throwing off the inflection point. I feel that is likely.
That was one reason that I was so surprised to see the annoying meme terms repeated.
Also one more personal note -- the self-employed friend's formerly successful small business owner brother (phd engineer, industrial metal machine parts/hvac stuff) is now living in his office. Lost the home, kids are with the ex. Can hold on for a few more months, but then will be done.
The other bright side, I tell my friends, all our kids are still very young. Hopefully in six to ten years, we'll have a better sense of how to cope, in terms of education/training decisions. I am sad for those folks who are just graduating college and who took ill-advised tranches of student loans...
"We can only hope that someday the MSM and the establishment will give him his due, in the same way that Greespend has now been exposed."
Greenspan was exposed? I must have missed it.
Greenspan was exposed? I must have missed it.
Thank God!
Broward -
LOL! And EW!
My personal prediction in 2006 was that there'd be riots, most likely in summer of 2008, with summer 2009 as less likely.
Riot in LA.
Isolated case or trend?
L.A. Lakers fans riot outside the Staples Center
"Isolated case or trend?"
Oh yes, a trend! Soon laker fans will be burning down Los Angeles. I will do my best to direct them to Orange County.
........ today copper hit limit low at Shanghai merchantile exchange due to excess inventory worries ......
........ BTW ,concerning about two Japs with presumably fake bond....... every time N Korea tested nuke , counterfeit became an issue ...... the slight differences of this time are fake bond and a month later .......Yomiuri , Asahi , Mainichi et al. are all quite . they already knew what 's going on ........
........ To Prod N. Korea, U.S. Relents in Counterfeiting Case - washingtonpost.com ....... S Korean pres. Lee is scheduled to meet Obama on 16th .......
........ coincidence ? ......well , let's see what they will announce......I expect SK under nuke umbrella ..........
broward,
LA riots similar to Philadelphia riots this fall...
See this...
Alternate angle...
Ouch.
That didn't even make any sense.
How appropriate is the URL "www.hoocoodanode.org"? The people who can say wecoodanode and we acted accordingly are still OK. Aaaah, hell, it's too late, both for a long post tonight, and for the bailout effort. All I can say is, hubris still rules in the world capitals, but too many people still want to believe that the politicians can actually fix what they broke. Time to review dynastic cycles...
Thanks, CR
Clearly.. "Mission Accomplished"
Futures diving
I tried to choose my words nicely but as I was finding when posting at 10:32, there's not really a nice way to "suggest" plagiarizing.
I think if you had stopped here:
Hey Calculated Risk.
Your charts look awfully familiar.
You would have suggested plagiarism without leveling an unnecessary accusation at any specific person. And posting on either blogsite, the polite thing to do would be to ask for an explanation first, without supplying the worst case scenario as an either/or.
I thought about it and even without comment it seemed rather inflammatory yet I thought it was worth pointing out.
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remember Herbert Hoover?
Herbert Hoover assumed office in 1928 with strong skills, genuine confidence, and what seemed a healthy economy. Then in 1929...
AmericanHeritage.com / The Wrong Man at the Wrong Time
War is only stimulus if you kill the productive capcity and then exproriate its earnings power. The equivilant of going into Iraq and taking the oil. Politics doesn't allow such action today as it stands. Sadly if anyone benefits its china as the us does the demolishing china makes up for the lost production with its overcapacity. As for wars petraeus said this weekend afghan worst since 2001. Also that Adam ghadan yalunab American who died a in a pedetor strike has a new video out.
War is only stimulus if you kill the productive capcity and then exproriate its earnings power. The equivilant of going into Iraq and taking the oil. Politics doesn't allow such action today as it stands. Sadly if anyone benefits its china as the us does the demolishing china makes up for the lost production with its overcapacity. As for wars petraeus said this weekend afghan worst since 2001. Also that Adam ghadan yalunab American who died a in a pedetor strike has a new video out.
It will be fascinating to watch how much political will there is for staying the course during an L shaped recovery. Not to mention economic will -- a lot of powerful companies that want this thing to be over quickly are channeling their message through the media. And then, there is the impatient consumer (if we are to believe all of these recent consumer-confidence polls) singing 'the sun will come out tomorrow.' The long, sideways slog out of this will stress-test them all.
The war forced down domestic comsuption, but kept production up, but that production was unproductive, effectively just producing tons of steel and sinking it into the Atlantic, unfortunately with saliors on board with it. Also ran up the nat'l debt far more than any of the new deal stuff. It did result in a massive tranfer of debt from the pvt sector, both HH and business, to the Govt. The new deal was not as big, but it did result in rather startling economic growth in terms of real GDP and Industrial Production growth 33-37. Steel was produced and used for productive things, buildingthe Hoover Dam, The GW and GG bridges etc, that still help the US economy. The current stinulus has helped and is one reason why we seem to be at the bottom of the cliff, and removing it would be a mistake at least until we see U3 UE start to fall, pref for mor than two months in a row. Yes the $ was devalued by removing gold standard, but in the face of massive deflation, so what? You think the economy should have continued to be crucified on a cross of gold in that situation. Sounds like a case of economic S&M to me.
Or to use a medical metaphor, the patient (econ) is out of the emergency room and has been stabilized, but now is no time to take it off the ventilator, (As you know staying in the hospital is expensive though)
Arrgh. Lost draft comment.
Goddam good fkn morning Mary-nam! *@&#$^
Anyhow, US futures tanking, SAXCME way down, HK/Tai/Korea leading Asia down, DAC lost 2%, Europe massive volume in financials, AUD/NZD reversing surge against USD, and there's a big slop back into USTs, bouncing up right across the curve (media suggests "on Russia comments" etc which is pretty implausible).
Looks like a course worth staying...
C
@Counterpointer - TPTB setting the trap for bears?
@Dirk - post-WW2 capacity destruction in rest of world had a lot to do with the North American economy boom then. What will replace that dynamic post-bailout?
45 days and counting till California Implodes.
"Or to use a medical metaphor, the patient (econ) is out of the emergency room and has been stabilized, but now is no time to take it off the ventilator,"
..........and we will continue to not deal with the cancer ridden body during the long-haul recovery.
.....G'Morning. All - A fine day it is!
@BSR - won't the patient's chance of survival depend on whether any of the other cancer patients succumb first?
@T-ARP - no more so than the last 3 months (!)
Bear-traps in the eye of the bagholder...
C
Big difference between green chutes and green shoots.
And I think the unemployment chart is a little off. Shouldn't government intervention reduce unemployment in the beginning and generate higher unemplyment over the long term vs. the no intervention line?
I guess they really do want to believe that government is going to kickastart the economy and not choke off private investment!
I wish someone would have asked the question, "what sector is this recovery in"?..I asked several people this weekend during a family gathering of fools "what sector is the economy recovering in", as some were cheering abroad about this that and the other thing ( ya I always like to be the black sheep in the crowd ), and no one had an answer.
All I got was that dumb look, kind of like " why would you ask such a question "
( crickets chirping )...needless to say I walked away smiling ear to ear, and ignored them for the rest of the evening...As noted I despise stupidity and fast speak based on Hope and thin air chest pounding.
Our policies are guaranteeing that the Great depression all of them are trying to avoid will happen again.
I think Krugman is full of shit and worse intellectually dishonest. To draw comparisons between the thirties and today without acknowledging that there are major differences between the the economy then and now- the role of government, globalization and most important of all the level of debt- is just piss poor analysis.
I am struck that none of them chooses to look at the 1919-1921 period which was as bad as 1929-1932 and I believe is more comparable to our current condition. Then as now the economy was sustained through artificial demand- WW1 then and the great debt bubble now. The answer then and now isn't to try and sustain the economy at its artificial level but to cut back to some sustainable level.
......
Treasury -
Tres Altered- nothing, and we will not have the equiv of a post war boom, I am not that optimistic, but think that if the stim were removed right noe, the cliff diving would resume.
BSR, yes there are many underlying emdical problems that have to be dealt with, but first you have to deal with the cardiac arrest.. Its going to be a long and painful series of chemo treatments.
Over time America is getting poorer, the question is do we have an all out collapes or a slow decline. Slow decline is better for social stability.
Plenty of green shootery today - housing starts, manufacturing, 3- and 6-month bill auction.
Euroids looking wobbly, UK intends doing GBP5b in gilts but syndicated through banks to reduce chance of massive scwer-up as with the long gilt failure in March, employment looks horrible...
- Bloomberg.com
But at least the PIRATE problem is under control. Stay the course, Capn!
EU Extends Anti-Piracy Mission, Sees ‘Serious Threat’ (Update2) - Bloomberg.com
/edit - ok, 14 captains, some from Greece and Italy. Whatever. Buongiorno.
C
@Dirk - the problem being that we never actually get around to trying to heal the patient, and what started out as a pebble forty years ago is now an oil-storage tank sized can we're trying to kick down the road.
While I don't subscribe to it, Keynes theory isn't completely invalid. The problem is that Keynesian economists seem to forget that those deficits absolutely must be paid off during the good years.
Dirk van Dijk
I think in your analysis of the 1930's you pay too little attention to the role that bank failures played. It was the progression of bank failures that caused the economy to collapse. If people couldn't trust that the money they put in a bank would be there when they needed it you created a tremendous reason for people to hold cash with its concomitant decline n borrowing and investing.
I for one believe that if the policy makers had learned this lesson (rather than spend more money) and nationalized the banking system (any bank unable to operate without the special Fed facilities) that would have been more effective than spending the US into a hole.
I think part of the discussion has to be whether what we are witnessing is "economic damage" or an inevitable and necessary readjustment following a reckless 25 year or so. If it is the later than we should have been thinking about encouraging that readjustment while simultaneously trying to avoid the human suffering of the readjustment. That would have led to higher interest rates but greater spending on low income housing, food stamps and yes some kind of health care safety net.
crazyv,
I hope all the comparisons between now and the Great Depression are just marketing on the part of the stimulus chearleaders. It obviously is a completely different set of causes and circumstances.
Two things I don't hear Krugman or any other member of the Whitehouse (defacto or dejure) staff mention are;
how are we going to encourage small business development? and
how are we going to service this debt?
Dirk, even chemo destroys the entire immune system. Nothing short of that will repair the damage done by the previous inept surgeon - except now we've brought a young physician's assistant into the OR to resume the "repair work".
@lama - the plan is to inflate the way out of debt. How'd that work in the 70's/80's?
Morning posters........I'm marking my spot, gotta go to work and don't want to miss a post.
I think the basic problem is that all the economists who have come of age in the last 28 years and are now in positions of authority have bought into the meme of free markets, free trade and deregulation as the panacea for all ills. The only thing that right wing and left wing economists disagree to some extent is the level of taxation. Consequently they are all assume the the system they have worshiped is right and the failures can be fixed. I think the most apt comparison is the Easter Islanders who thought that their problems could be fixed by cutting more trees to erect more statues to their gods.
What if the entire premise of the last 28 years is wrong. If things are working so well shouldn't we have less debt rather than more?
T-ARP, fully agree about need to pay back in good times, we were making a start at end of Bill Term, al least in terms of bringing Debt/GDP down, W blew that big time. Again, it is going to be a very long and painful rehab process, and paying down debt has to be part of that process.
CrazyV, also agree that bank runns were a big part of the prob, but could not fit an entire analysis of the 30's into one or 2 paragraphs. FDIC was one of the 3 legs of the Fin Reg structure that came out of the GD, and were undermined in the 00's. Elizabeth Warrne has written about that far more eloquently than I.
....someone had asked about this a few days ago..........
"Strip Club Depression - Strip clubs are the ultimate boom time creation. After all, the business model rests on masses of men overpaying for cocktails while overpaying lithesome young women to bump and grind on their laps – all of this after paying an exorbitant charge just to enter the building...."
Strip Club Depression by Doug French
BSR, agree that strip clubs are very discretionary spending and all discrtionary spending is going to be under pressure for many years to come. You know of any publically traded Gentlemns clubs to short?
Empire state index -9.41 vs -4.55 in May. Headed wrong direction.
Watch for the IP/CU numbers later this week, will be very telling, esp mfg CU, historically it has bottomed right around when
..............I would just as soon change the subject. The Mrs looks at my screen when she awakens - I'd rather be talking even about global change. LOL. It'll make for more pleasant conversation under MilkShake.
@crazyv - debt is rising because we're collectively borrowing on our future (and at this point, that of our kids and grandkids). That didn't happen because of a free market system. Other forms of gov't/society have had the same problems.
If you take all US debt, including unfunded obligations, we've 'pulled ahead' about six or seven years worth of GDP. Maybe if people started thinking in those terms - six or seven years of zero GDP to make up for the problem, we'd get more serious about fixing the problem.
.....I've found being under an anxious cow with an equally irate woman - makes Jack a dull boy.
@BSR - wouldn't talking global commodity prices tick her off too? (the wife, not the cow)
BSR - I'd rather be talking even about global change.
'Round here we call it "The Change."
ROFL! Do you mean Global Weirding? I know what you mean about topics and screens, though.
Shadow Inventory Does the Fed have any good info?
Of course they do only they are not sharing it, they are spinning it.
The issue I'd take with Krugman's advice goes back to his analysis of 1937. He attributes the re-depression to the government attempts to wean the economy off a dependency. What else does he think they could have done? Maintained the dependency forever?
In that light, the question must be asked: was 1937 really just a postponement of something that should have been allowed to happen in 1933-1934? I have the same feeling now, that we are still kicking the can down the road and someday, sooner or later, we must take the hits. If not we will have permanent dependency rather than structural growth.
Krugman's other frequently expressed opinion is that we are repeating the Japanese experience, and his 'stay the course' advice seems to say that he approves.
Wally, yes, turning Japanese is the good outcome, a repeat of the Grapes of Wrath is the bad outcome. I did not hear any reports of people starving in Japan over the last few decades.
You cannot stay the course if you run out of taffy, can't make more taffy and nobody will lend taffy to you.
You cannot stay the course if you run out of taffy, can't make more taffy and nobody will lend taffy to you.
Krugman's certainty in every opinion he expresses makes me fairly dubious of his sagacity. I'm not sure why CR puts so much faith in his pronouncements.
Stay the course is wrong. The bill was nothing more than pork spending with no long term investments in it. Stay the course would only be correct if the pork bill had long term investments in it. It did not. Without investments the money is just wasted and will provide no long term benefit. Krugman is just wrong!
Example of the pork bill. Food pantries are told to buy excess food to give away in the amount of 100 million dollars. It only provides a temporary solution to the poor by providing some extra food for a short time. When the money is gone so is the food and you are left with just debt. No investments to help the people to learn to fish to feed themselves. Some of the excess food will end up being sold but no long term benefit. Just wasted money.
Krugman's certainty in every opinion he expresses makes me fairly dubious of his sagacity. I'm not sure why CR puts so much faith in his pronouncements.
It is one opinion of a fairly prominent wonk. He has every right to be 'confident' * CR to report on him.
Note that the video of the week was Peter Schiff - also cock sure but from the other end of the spectrum.
They both have opinions - everybody does.
I am confused with your analysis and tend to disagree. Paul wrote that the stimulus was more political than practical and did not put enough money in the right place at the right time. The actual benefits of the stimulus will kick in about the time he runs for re-election. currently all he has done with billions of dollars of stimulus is repay election debts with public money.
If the economy is starting to recover then now is the time to signal clearly that a recover is in place. An increase in the interest rate to an actual target is a good place to begin. It will take a long time for policies to actually have any effect so set the interest goal at .5 or .75% and you send a positive message without stopping the economy in its tracks. This will do nothing for mortgage rates and the fear they will rise is irrational.
Paul also continues to claim that the private economy needs public stimulus and never defines when it no longer remains a private economy. We should not be bailing out Chrysler and GM with Banking funds. Even Tim Geitner has admitted that there does not seem to be any reason to purchase toxic assets as the market seems to be taking care of those gambles on its own.
Part of the reason we got in to this mess was the free money that flowed from the Fed. We must look at fiscal sensibility now rather than after we have gone through the intersection and been hit by the truck.
Money doesn’t grow on trees for most of America. We sit down at our kitchen tables and write out checks to the phone-company, electric company, credit card-company, mortgage-company, and auto finance company every month. We clip coupons and go to the grocery store every week to put food in the mouths of our children. This is what our parents did before us.
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Paul Krugman is an asset to this nation. He was in the class behind me in high school, and he achieved mightily with his Mathematic skills. I'm happy he's had an brilliant career..
Even so, he is a colleague of Mr. Bernanke at Princeton, and I fear that the "buddy in a foxhole" influence might color his opinions. I do not see the stimulus spending helping the economy so far. And, I fear the tremendous deficits.
I'm not sure if the scholarly investigation of the Great Depression of the 1930s is germane to the current snapshot of this country. Our oil reservoirs are not as large, and the iron ore is depleted ( witness the efforts to refine iron ore mine tailings), the virgin timber is gone, and our workers are not assembling products for export.. I'll assume we are still exporting grain, airplanes, weapons and some machinery. But. we're not exporting manufactured good as we were in the 30's,50's, 60's and 70's. We still construct houses and motor vehicles ( many fewer, and for domestic consumption).
We'll need to move beyond "movies, software, and high-speed pizza delivery". Every job needs to be as jealously guarded as the jobs in the EU and East Asia. The hideous example of "Chinese wall board" imports is just an example. Yes, I'm calling for some modified "Smoot-Hawley" type protectionism. I'm not buying into the globalization/corporate hogwash. When the playing field is level, we'll talk/trade with the foreigners.