On Edit: The Monday following the Great S&P Downgrade.
At the moment, it looks as if I was way wrong.
Originally posted:
The Republican party has thrown our ability and willingness to pay our obligations into question, world-wide. An increase in perceive credit risk, regardless of the credit rating, will drive our nation's cost of borrowing up. (See, also, my blog just before this.)
Short term t-bill rates have been volatile, with investors demanding higher yields on already issued t-bills. There will be an auction on Monday - we'll get a feel then as to just how the GOP caused crisis will cost us all, directly and indirectly.
If T-bill rates go up, all lending rates will go up (except for the relatively tiny amount of "fixed rate" loans currently outstanding:)
At the moment, it looks as if I was way wrong.
Short terms, anyway. It looks as if my prediction was miles off the mark - t-bill rates seem to be holding steady, or even dropping as investor money flees the stock market and looks for the best bet in town.
At this point, it looks as if the market has shown us just how wrong S&P was in down grading treasuries.
We'll have to await developments, of course, including the t-bill auctions later this week.
For the moment, though, it looks like I swung at and missed a wild pitch....
Originally posted:
The Republican party has thrown our ability and willingness to pay our obligations into question, world-wide. An increase in perceive credit risk, regardless of the credit rating, will drive our nation's cost of borrowing up. (See, also, my blog just before this.)
Short term t-bill rates have been volatile, with investors demanding higher yields on already issued t-bills. There will be an auction on Monday - we'll get a feel then as to just how the GOP caused crisis will cost us all, directly and indirectly.
If T-bill rates go up, all lending rates will go up (except for the relatively tiny amount of "fixed rate" loans currently outstanding:)
Which means:
- Increased credit card rates;
- Increased rates on variable rate mortgages;
- New loans will be more expensive - for everyone ;
- Companies borrowing to bring in inventory will be paying more and passing that cost on to consumers;
- Oil drilling companies, transportation companies and refiners will all be paying more to finance their activities - and passing that cost onto consumers;
- Inter-bank lending will become more expensive, driving up the cost of payments made through the bank payments systems - meaning increased bank transaction charges.
I'm sure there's more, but isn't this already too much of a "tax increase" to pay because of the right wing taking our credit hostage to advance their radical and unpopular ideas?
Instead of railing on Republicans as if the Democrats have no responsibility for this mess, why not call on ALL politicians to put party aside for a minute for the sake of the country.
ReplyDeleteWhy not ask ALL politicians to take a 20% pay cut for themselves and their staff? Why not ask ALL politicians to cut existing budgets by 20% right now and for real?
If you want to be like Obama and blame Bush for everything, then why not hold his feet to the fire for continuing the reckless spending?
This should not be about which party is to blame because they are equally responsible. We need to introduce these political lifers and the country to a 12 step program. We need to cut up the cards as a country. Spending our way out of trouble isn't possible when the economy is stuck in reverse. And borrowing to do it is just plain stupid.
Well, I am a liberal, so I probably go lighter on dems, but I have dissed them, too. If you'll skim through my older posts, you'll see I've been pretty harsh on Obama.
ReplyDelete>>If you want to be like Obama and blame Bush for everything, then why not hold his feet to the fire for continuing the reckless spending?
I'm curious as to what "reckless spending" you're referring to.
The "bank bailout," aka TARP? That was Bush's program, and while there were many aspects of TARP I didn't like (especially the way the bankers responsible for the trillions of dollars in losses got to skate) the alternative was far greater system failure.
I was in the commercial banking business with a money center banks (a biggy) and got to see (and work with) the incredible importance to our entire commercial system of the commercial bank payment systems. If that commercial payment system had gone down, which would likely have happened without TARP, then every non-cash transaction would have been endangered - checks, credit cards, ATM payments, whole-seller to manufacturer payments, retailer to whole-seller payments, etc.
I'd say the TARP package was not "reckless." ( Aside from Obama's giving the bankers a ride and failure to institute rigorous bank reforms.)
The Stimulus package? I believe it was necessary; the major problem is it was insufficient.
If you look at the chart of job creation in my earlier blog entry, (http://rjw-progressive.blogspot.com/2011/07/where-are-jobs.html) yo'll see the only spurt of job growth since 2000 was during the operation of the Stimulus program. (See the light blue line at the lower right.)
Reckless spending? Do you mean like putting thed cost of Bush's wars "on the books" so we can actually see what we're spending on them?
Do you mean like the increased unemployment insurance payments from the joblessness Bush's recession lead to? (And yes, unemployment is insurance, paid for by the workers covered by it.)
What reckless spending are you referring to?
Do I blame Bush for everything? Nope, but his administration and the economic policies of the GOP bear the lion's share of responsibility for our current financial situation. Cutting government revenues, running up debt - (take a look at who has run up the most deficits here: http://rjw-progressive.blogspot.com/2011/07/who-increased-how-much-debt.html) - deregulation of the banking industry - starting the unnecessary and extremely costly Iraq war. (and yes, I'm pretty concerned about how Obama is continuing the Bushian policies and practices in the Middle East)
>>This should not be about which party is to blame because they are equally responsible.
ReplyDeleteSorry, I disagree. The Bush admin and GOP policies are responsible for the vast majority of our debt and the need for deficit spending right now. (The recession has drastically cut government revenues, the tax cuts have also deprived us of revenues. The Bush medicare pharmaceutical give away has redistributed hundreds of billions of our nation's wealth to the drug companies, Bush's wars have cost us trillions, so far.)
>>Spending our way out of trouble isn't possible when the economy is stuck in reverse. And borrowing to do it is just plain stupid.
Our economy runs on demand - 70% of which is consumer demand. With record high unemployment and under-employment, there isn't sufficient demand to get our economy going again.
Corporations aren't hiring much because there is very limited growth in demand for their products.
So, if the corporations aren't hiring, then people just don't have any extra money to create any extra demand, which is what our economy needs to recover.
Increased spending is needed. Its as simple as that. It isn't going to come from the corporations, for easily understood reasons - they are responsible only for maximizing profits for their shareholders - they aren't patriotic organizations who are going to spend shareholder money to stimulate the economy.
So, what is going to get our economy going? "Austerity programs?"
Look at the Great Depression. Roosevelt, at the demands of "fiscal conservatives" cut the "pump-priming" government stimulus spending going into the '36 elections, and the economy went into a fairly severe recession in '37.
"Austerity" is the worst thing we could do.
Sorry, but I can't see anything which will get our economy going again except for increased economic activity and there is only one player in town.
If you have a better plan (and not just slogans and talking points) please share it - the country needs all the good ideas it can get
Why blame the Republicans? Because there is no crisis without them. Yes, the debt is an issue, but there was nothing about it that required immediate action. Creditors were still very happy to loan the United States hundreds of billions of dollars at exceptionally low interest rates.
ReplyDeleteThe crisis only exists because the Republicans have decided to play chicken with the full faith and credit of the country at stake.
They could have saved the budget battle for when the budget was being worked on and simply raised the credit limit. If they couldn't get the savings they demanded, they could shut the government down this fall. That action (which they will probably still do regardless) would be much less destructive than not raising the debt ceiling.
>>They could have saved the budget battle for when the budget was being worked on
ReplyDeleteThey could of, and if they could only keep their promises, they would of....
The GOP Pledge to America. Sept, 2010:
"Advance Legislative Issues One at a Time
"We will end the practice of packaging unpopular bills with "must-pass" legislation to circumvent the will of the American people. Instead, we will advance major legislation one issue at a time."
See, http://rjw-progressive.blogspot.com/2011/07/broken-gop-promise.html
Two points:
ReplyDelete1. Go back and look at who forced banks into lending to unqualified borrowers for homes. Allowing the two Fannies to buy sub prime mortgages was reckless. The program was sold under the banner of making home ownership affordable for more people (meaning the poor). The rules were written in such a way that not only did they take advantage of it, but so did people with money when they bought way more house than they could afford to. Want to blame the banks? They were playing by the rules congress gave them. Want to say the banks created products nobody understood? Then where were the regulators or the Democrats for that matter to stand up and say, "if you can't explain these products to a fifth grader, then you can't sell them"?
2. The reasons corporations are sitting on piles of cash is because the politicians (ALL OF THEM!) have created such uncertainty that it makes no sense to put the money to work in any ways other than mergers and aquistions because the rules of the game are in such flux. You thinking the government has to pick up the slack for consumer spending is incredibly naive. First, it cannot except along the margins and only for a short time. Look at the recent history of Japan. Government spending has been the order of the day there and they have been limping along for the last fifteen years. Is that what you want for US? I don't. Second, the more government spends of our money now, the more the politicians feel they are ENTITLED to spend in the future. The more they spend, the more control they have over us. If you like the European model, buy a ticket.
I had an employee leave my company a year ago. Still no job. Know why? He still has almost another year of unemployment to collect.
If the federal government is the answer, then national security better be the question.
Anonymous. Re Point 1
ReplyDeleteI'm glad you brought up the "Go back and look at who forced banks into lending to unqualified borrowers for homes."
I know a bit about this assertion and it is wrong: banks were not forced to make mortgage loans (or other) to unqualified lenders.
You're referring, of course, to the Community Reinvestment Act - the CRA - one of the GOP's bête noires.
In the 70s and 80s I worked on CRA compliance for one of the nation's largest banks (in the top 5), with a team of other lawyers and bankers. As millions of dollars, possibly even hundreds of millions, were at stake, we spent a lot of time making darned sure we knew the act and the regs. And we dealt regularly with the Fed to make sure we were in compliance.
I know (well, knew) this stuff in depth and in detail.
The CRA did not, I repeat, did not force banks to make mortgage loans to unqualified lenders.
What the CRA did and does is require banks to take applications form areas which the bank's had previously "red-lined" - literally areas banks had mapped out and would not even consider for mortgage lending.
The Fed did suggest that banks use "creative" underwriting approaches -- BUT the Fed was very clear in the Regulations, in the seminars they gave, and in meetings with bankers that banks were not to lower their credit standards.
Again, nobody "forced banks into lending to unqualified borrowers for homes." That claim is without any merit whatsoever. Another GOP "misunderstanding."
BTW- the big jump in sub-prime lending was after Bush took office and his admin pushed sub-prime lending as a part of his "Ownership Initiative."
Personally. I think the general principles of that initiative were a positive for the country. Sadly, some of the elements of that initiative were implemented without sufficient thought or knowledge.
Yes, Fannie Mae and Freddie Mac contributed to the debacle, but if the large investment houses (which aren't subject to CRA) hadn't been willing to buy, and bundle and slice and dice the sub-primes to resell them (getting the credit rating agencies to classify them as AAA) the whole thing would have never happened.
And it was the non-bank rebundlers who, operating under "free market" freedom continually dropped the underwriting standards for those mortgages.
And it was the unregulated, non-bank mortgage lenders wrote the majority of those sub-prime mortgages.
Finally, the vast bulk of the sup-prime mortgages were written long after Clinton left office.
Thanks for bringin this up - I'm glad I coul;d correct that mis-impression.
Anonymous - Re point 2
ReplyDeleteI agree that corporations are, to some extent, holding back from hiring (in the US) because of uncertainty, despite record profits and record cash on hand.
As recently pointed out in the Wall Street Journal, however - the main reason they aren't hiring is the relatively limited demand for their products.
I don't blame the corporations for not hiring - by their very nature (and by law) they are required to maximize investor profits -they are not "patriotic" organizations nor are they concerned with the responsibilities our government has. They are specified in the Preamble to the constitution: http://constitutionus.com/#preamble)
But take the next step - where a corporation's fundamental value is, intentionally and by law, pursuit of the economic self-interest of its investors, it is foolishness itself to think that corporations and their values should be adopted for the governance of our country
Corporations have their place in this world - being the model for governance simply isn't one of them. (See, e.g., my blog entry at http://rjw-progressive.blogspot.com/2011/06/economic-wrong-turn.html)
>> You thinking the government has to pick up the slack for consumer spending is incredibly naive.
Who or what is going to pick up the slack? Corporations? The richest 1%? Over last 25 years, the top 1% have taken 80 of all new income created in this country. They do not and cannot create the sort of demand that our economy needs to recover. (BTW, mush of that other 20% reflects increased work hours by the middle class - we're working more and making the same wages.)
You're depiction of Japan is fun but far too simplified. It bears little resemblance to the US economy, aside from the fact that during the Bush admin, we pretty much emulated them by creating an unsustainable real estate bubble and then refusing to truly clean up the banks we
BTW, Japan's net public debt to GDP is 200%, the net US's is around 65%
Japan's problems were exacerbated significantly when it's credit rating was dropped twice, first in 1998.
Which is why the right wing suicidal attempts to deliberately cause the US to default are close to treasonous.
>>I had an employee leave my company a year ago. Still no job. Know why? He still has almost another year of unemployment to collect.
I don't know where you are located, but around the country, there are still more than 5 job seekers for every job opening.
And many companies are not explicitly refusing to hire people who have been laid off
Do you really think that ex-employee's life is so economically rewarding he or she is content to live on unemployment?
Look up your state's maximum unemployment rate (assuming that person is at the max) and take your own personal budget ratios and try to figure out how much that person has to live on and where that person's money goes.
>>If the federal government is the answer, then national security better be the question.
Ah, a Reagan anarchist: "government is the problem."
Our national security is based on our economic strength.
Which has been crippled by right wing economic and governmental policy fantasies being implemented over the last 30 years or so.
The 2011 Democratic Tax Increase
ReplyDeleteThe Democratic Party has thrown our ability and willingness to pay our obligations into question, world-wide. Their spending is massive, reckless, and brings the country so close to a cliff, it will only take a slight crumble to send the US over the edge. But still, they will not discuss real spending cuts. This will lead to an increase in perceive credit risk, regardless of the credit rating, will drive our nation's cost of borrowing up.
And if T-bill rates go up, all lending rates will go up (except for the relatively tiny amount of "fixed rate" loans currently outstanding:
Which means:
• Increased credit card rates;
• Increased rates on variable rate mortgages;
• New loans will be more expensive - for everyone ;
• Companies borrowing to bring in inventory will be paying more and passing that cost on to consumers;
• Oil drilling companies, transportation companies and refiners will all be paying more to finance their activities - and passing that cost onto consumers;
• Inter-bank lending will become more expensive, driving up the cost of payments made through the bank payments systems - meaning increased bank transaction charges.
Isn't this already too much of a "tax increase" to pay because of the left wing taking our credit so close to the edge to advance their radical and unpopular ideas?
>>The Democratic Party has thrown our ability and willingness to pay our obligations into question, world-wide. Their spending is massive, reckless
ReplyDeleteFirst, that is a matter of perception and opinion, not fact. And Polls show that the vast majority of people believe the GOP is the party responsible for this crisis.
>>Their spending is massive, reckless
Funny, because the GOP presidents have run up ran more proportional debt then the dems. See, http://rjw-progressive.blogspot.com/2011/07/who-increased-how-much-debt.html
Yes, We had to spend a boatlaod when Obama took office, but that was to prevent ever greater economic destruction from Bush's economic policies which drove us into the financial ditch of 2008
Some stuff is opinion, but the financial ruin resulting from Bush's tax cuts, unfunded wars and Medicare Part D* pharmaceutical give away is fact.
And the GOP conveniently overlooks the facts that both TARP and the Stimulus package were one time deals and that TARP was Bush program. (As untasteful as TARP was, as an ex-commercial banking lawyer who worked with payment system issues, (I wore several hats over the years) I know that had we'd let the major banks fail, the economic ruin would have been unimaginable - the banks are, for better of worse, the backbone of our payment systems. Without a payment system, no commerce: cash transactions only, assuming that a retailer could even get product to sell with only cash payments (and how would, say, your grocery store headquarters get the cash from its stores to the wholesaler/distributor - and that company get cash payments to the farmers domestic and foreign? How would the trucker get cash to buy thee fuel needed to deliver from the port to the wholesaler and then to the retailer?)
= = = =
* Remember, the Bush admin lied when it said how much it would cost and its cost will be well over a trillion dollars over 10 years - in large part because Bush refused to let the gov bargain for prices below "retail."
>>Isn't this already too much of a "tax increase" to pay because of the left wing taking our credit so close to the edge to advance their radical and unpopular ideas?
Well, I suppose that to today's right wing extremists, the way we have done business since the founding of our country, through debt financing, looks extreme.
Is the train leaving the station or is the station leaving the train. Its all a matter of perception. I suppose. The right wing idea that the station is leaving the train is interesting, but fewer see it that way every day, which is not a matter of perception: the Tea Party and its economic fantasies are already fading from sight - leaving the Tea Party freshmen as the major infectious outbreak.
You say, “We had to spend a boatlaod when Obama took office, but that was to prevent ever greater economic destruction from Bush's economic policies which drove us into the financial ditch of 2008”
ReplyDeleteEver greater economic destruction, umm, like what, exactly? – The Big D, maybe? Well, I got news for ya – it’s been 2 ½ years since the Stimulus and the economy has actually gotten worse – what is it that the Stimulus saved us from, money disintegrating in our hands? 40% unemployment? Civil War II? The great Barbie single shoe disaster? Beyond that, your premise boils down to saying that, “Even if McCain had been elected president, our debt and deficit would still be what it is today.” And to that I say, “Aaaaaaaaaaaaaaaaa-ahahahahahahahahhahaha”
>> Well, I got news for ya – it’s been 2 ½ years since the Stimulus and the economy has actually gotten worse –
ReplyDeleteSorry, but that just isn't true. Hiring soared when the stimulus took effect -sadly, the GOP squashed any longer term stimulus so that the trend could continue
Take a look at the light blue curve in this chart: http://rjw-progressive.blogspot.com/2011/07/where-are-jobs.html
The rate of unemployment was reversed from increasing to decreasing when the stimulus was put forward
Corporate profits have soared to new records
True, the economy still sucks for people, but is that because the stimulus didn't work or because of GOP obstructionism and corporate pursuit of the economic self-interests of senior management and the investors?
For the economy to move forward, demand for product has to rise. The corporations are sitting on their vast new riches (except for the obscene amounts the boards of directors give to their buddy CEOs.). The richest aren't investing their lucre in the US economy, either.
>>what is it that the Stimulus saved us from, money disintegrating in our hands? 40% unemployment?
Well, Bush's recession and the bank crash of 2008 disintegrated trillions in the artificial wealth their games created (after trillions had been siphoned off by the bankers.
Of course, the stimulus didn't fix that, and the GOP has blocked any meaningful reform to prevent future such crashes and theft..
Where will the demand come from?
40% unemployment - well that was the direction unemployment was headed in under Bush admin and recession: http://reflectionsofarationalrepublican.files.wordpress.com/2011/04/liberal-total-private-jobs-worldview1.jpg?w=482&h=290
There has been positive job growth for over a year.
I have no idea how you think that qualifies as "worse."
True, it isn't as good as it could be - how much of that is the result of GOP obstructionism?
Look at the brief period the Stimulus was in effect and look at the slow down as soon as the GOP blocked any extension of it.
As your disdain for your speculative straw man arguments about "what if McCain had won..."
Your response is dead on the money perfect: “Aaaaaaaaaaaaaaaaa-ahahahahahahahahhahaha”
.
Actually, lets look at what you have put forth as my argument:
>>Beyond that, your premise boils down to saying that, “Even if McCain had been elected president, our debt and deficit would still be what it is today.”
You seem to have misread something I wrote (or I didn't write clearly enough.)
My argument is that without TARP (really a Bush package) and the Stimulus and the aid to the auto industry (i.e, if McCain had won) our economy would be in far, far worse shape than it is now, even quote possibly worse than it was in the Great Depression.
Okay, so on the one hand, it’s not true that the economy has actually gotten worse [your comment: Sorry, but that just isn’t true] – but on the other hand, the economy stills sucks for people. [Your comment: True, the economy still sucks for people].
ReplyDeleteIs that about right? The economy is better than it was 2 ½ years ago, but it still sucks for people. I’m just making sure I have that right. Better than spring of 2009, but now still sucks for people. Right? I want to make absolutely sure that I’ve got your words and meaning exactly how you meant them: Better now, but still sucks for people. Better, but sucks. Better, sucks. Is that about right? Let me know. Quickly, okay?
Yeah, you have my words right but I'm not sure you understand them.
ReplyDeleteThe condition of "sucks" isn't like the condition of "pregnancy." One is either pregnant or not.
Some stuff sucks a little bit. Some stuff sort of sucks. Some stuff really sucks. Some stuff is major suckamundo big time.
For people, at least working class and middle class people, 2 1/2 years ago the economy sucked big time, now, since unemployment is lower, we could say the economy sucks less than it did 2 1/2 years ago.
That's how it could suck 2 1/2 years ago and still suck even though the economy is better.
And, of course, for corporations, the economy is booming, and doesn't suck at all - corporate profits are at record highs, as are corporate savings (aka "retained earnings.")
For CEOs, pay is at all time highs: Philippe P. Dauman, the chief executive of Viacom made $84.5 million in 2010. (Want a mental image of how big $84.5 million is? See, http://rjw-progressive.blogspot.com/2011/07/picture-84-million.html
So you've got my words exactly right, and I hope now you've also got "it": the economy sucks, but not as much as it did 2 1/2 years because the economy has improved a bit
Of course, with the debt ceiling and budget deal the right wingers just got "for the country" it looks as if the job situation will deteriorate again, so the suck level will be going back up.
This was the first thing I've responded to since logging on this morning. I hope it was quick enough for you.
And thanks for asking the questions, I appreciate the dialog and opportunity to explain what might not have been clear in my messages.
Yes, it was quick enough and I appreciate the calm and serious response, one that’s free of waffling and deflection. I also appreciate the dialogue and the opportunity to have my questions answered—in fact, your response is such that I’m excited about our dialogue. I’m a person that won’t be convinced of something by fiat—but I do have an open mind and can be convinced by logic and history. So if you can make a logical argument that stands up to experience, you’ll be able to convince me that you’re correct, and I will admit that I was wrong. Conversely, if I find your argument illogical or unsupported by history (really the same thing), I’ll say so, then demonstrate why it’s illogical and defy you to prove me wrong.
ReplyDeleteThat said, let’s run right to the heart of the problem as I see it—but if I’m wrong in my summary, let me know. So here it is: Your economic philosophy is Keynesian, that is, to be successful, an economy requires stimulation by government spending. Once the government has stimulated the economy, it will take off and there will be a greater amount of economic growth than there was government spending.
The problem is that view isn’t supported by logic and it isn’t supported by history. It isn’t logical and it’s never worked before, so why do you think it’s going to work now?
I’m leaving my question general because I’d rather not get caught up in the details of economic theory. So here’s your chance to write a winning and convincing defense of the Keynesian economic theory.
I feel like that guy who's waiting for the bus on Monday morning, not aware that it's actually Sunday morning. For now I'll assume that your defense is so comprehensive and overwhelming that it's taking an extra day to finish. So I'll be patient.
ReplyDelete>>I feel like that guy who's waiting for the bus on Monday morning, not aware that it's actually Sunday morning. For now I'll assume that your defense is so comprehensive and overwhelming that it's taking an extra day to finish. So I'll be patient.
ReplyDeleteI charge a premium rate for immediate turn around: 1.5 times the usual charge
Reply Part 1
ReplyDelete>> Your economic philosophy is Keynesian, that is, to be successful, an economy requires stimulation by government spending.
I'm not sure I would go that far - that it _always_ requires public sector stimulus (although an argument can be made there for some degree of government spending, as well.)
I would say that there are times when an economy needs "stimulating." IOW, when economic activity and growth are to low to attract investment and sustain sufficient growth, then stimulation of some sort is needed*.
There are two or maybe three major players which can provide that stimulation: the private sector and the public sector.
The private corporate and investment sector is currently on the side lines - at last as far as the US economy is concerned. Corporate profits are at record highs, as are corporate savings, a.k.a. retained earnings a.k.a. retained profits.
Folks disagree as to why they are on the sidelines, but the fact that they are is not in dispute, so far as I know.
(There is a huge amount of investment from the US private sector in China, despite it's being a communist country still with a high degree of central planning and control, suggesting that private money doesn't really have trouble with that issue - if the returns promise to be high enough, central planning of a communist economy combined with high risk won't stop investment.)
The richest 1% to 2% control huge piles of investment money, and they aren't investing in the US economy, either.
So, who is left to invest in the US, to "prime the pump" as we said during the great depression?
The public sector. A.K.A. the government.
>>Once the government has stimulated the economy, it will take off and there will be a greater amount of economic growth than there was government spending.
That's what usually happens.
>>The problem is that view isn’t supported by logic
Why not? - declaring a "truth" doesn't make it so.
>>I’m a person that won’t be convinced of something by fiat
Nor am I. What do you see as the logic against the stimulative effects of public sector economic stimulus?
Reply Part 2
ReplyDelete>> and it isn’t supported by history. It isn’t logical and it’s never worked before, so why do you think it’s going to work now?
There are innumerable examples of where public investments, a.k.a. "stimulus," have boosted economic activity.
It worked during the Great Depression** and really worked during WWII when government borrowing and spending reached astronomical levels.
The stimulus package worked for the brief period it was in place, when employment and economic activity briefly soared. Sadly, because of GOP obstructionism and rigid ideology, it was too little.
Look at any large proposed development - say, sports stadiums and arenas where the investments are accomplished through municipal revenue bonds.
How do the promoters justify the public financing of them? By pointing to the increased economic activity and jobs created.
From a slightly different angle, look at the early automobile industry. There were very few, if any paved roads and no paved highways.
Without (1) the public sector investment in an efficient and usable road system, and (2) the many tax policy subsidies for the oil industry the automobile industry would likely have remained a stagnant entertainment. Not to mention the huge economic impact the publicly financed efficient transportation system has had across our economy, reaching virtually every nook and cranny.
Trying to image our country without that publicly financed transportation system is next to impossible, except perhaps for those of us who have traveled to 3rd world countries.
Adam Smith, the "father" of economics and capitalism supported the idea of government investments in the economy. Specifically, in nascent technologies and industries. I don't know if he addressed such investment in stagnant economies and industries, but I don't see why his underlying rationale wouldn't apply there, as well.
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* In the context of a rural, agrarian barter society, the founders specified that government support a postal system and roads. (Article I, Section 8, Clause 7.)
They pretty clearly weren't thinking of supporting high volumes of Christmas cards and Mothers Day cards. Federalist Paper 42 seems to make it pretty clear that they viewed a postal system as necessary for a sound economy.
Our world is a tad more complicated than that of the late 1700's and a strong postal system isn't sufficient for all current needs. Who would try to argue that the federal government investments in the internet have paid off enormously in terms of national and international wealth creation?
** Conservatives like to point ti the '37-38 recession as proof that the Roosevelt economic stimulus programs weren't working. What they apparently don't see or know of is that the government adopted an austerity program due to "popular demand" for the '36 elections, and the '37 recession immediately followed that temporary reversal of the long term government stimulus programs adopted by Roosevelt.
An indirect historic proof that government economic stimulus works and government austerity programs don't.
Since you did respond, I’ll take that into account next time. Usually, no response in a day means no response. But you did, thoughtfully and extensively. Thank you. Unfortunately, I think your response is, at best, weak, at worst, contradictory. First of all, you assume because some government spending stimulates the economy, all government spending should stimulate the economy. Further, you assume that the stimulating impact of government spending depends on its size, that is, the more spending, the more it stimulates. In fact, all government spending is just spending and rarely stimulates beyond its direct impact. In metaphoric terms, if the economy were a roomful of standing dominos, government spending could never knock down all the dominos—it only knocks down what it touches directly. This is how government spending can appear to stimulate—advocates point to all the knocked over dominos, and say, “See? It works” while at the same time missing all the dominos that are still standing. In summary, government spending has diminishing returns; every additional dollar spent has less impact that the dollar spent just before. That’s the theory. Now to the proof. There are many points in your treatise that I could use to that end, but let’s go right to the grand dame: Your “proof” that government stimulus works is The Great Depression. Your comment: “It [stimulus] worked during the Great Depression**.:” Come on now. Holding up the Great Depression as proof that Government stimulus works would be like Weight Watchers holding up the fat Roseanne Barr as one of their success stories. The Great Depression encompassed some of the worst economic times of the last, say, 200 years, and that’s the example you use to prove the efficacy of government stimulus? You may as well show me a high school graduate who can’t read to demonstrate the potency of his education. You may as well show me a person who died on the operating table as a way of bragging about the wonders of the patient’s surgeon. This reminds me of the drowning proof for witches—if she floats, she’s a witch, but if she drowns, she was not a witch. Oh good, she was found innocent. Too bad she’s dead. Oh good, government stimulus works. Too bad it only got us up to the Great Depression.
ReplyDeleteReply Part 1 - to Aug 5 12:33 AM message
ReplyDelete>>First of all, you assume because some government spending stimulates the economy, all government spending should stimulate the economy. Further, you assume that the stimulating impact of government spending depends on its size, that is, the more spending, the more it stimulates. In fact, all government spending is just spending and rarely stimulates beyond its direct impact.
No, I believe different types of spending have different stimulative effects - economists refer to this as the multiplier effect.
For example, stimulative spending on a industry which manufactures useful good not only puts money into the hands of the worker and the corporation, but also puts useful goods in the economy.
The worker spends the money and thus helps create other jobs in the chains of the purchased products.
The corporation may use the money for internal investment, for profit payouts to investors, for hiring additional workers, if they perceive sufficient demand, for senior executive compensation, if they see their fellow sr managers in other companies surging ahead.
Stimulative spending on wars and munitions has a somewhat lower economic multiplier effect - Using munitions necessarily results in destruction of the product and destruction of another nation's economic capacities. OTOH, war does provide a lot of employment for the working class.
Right now, the extra corporate profits are going into retained earnings and thus have minimal stimulative effect. (I don't know where the big banks are recycling those dollars - in the 70s, they recycled the petro-dollars coming in from the Saudis et al into the oil patch (the oil rich LDC countries, the SW real estate and commerce generally as well the oil industry itself. Then they got burned when the Reagan gov convinced the Saudis to drop the price of oil to deny necessary hard currency to the USSR. I worked in that area for one of the big banks and got to see this cycle first hand.... But I digress.)
For reasons that I'm not sure about, for example, unemployment compensation has one of the highest multiplier effects of money put into the pockets of regular folks. I suspect it is because they simply have to spend it all.
Reply Part 2 - to Aug 5 12:33 AM message
ReplyDeleteWhat activity will, to use your metaphor, knock down "all the dominoes?
So far as I know, there is no such thing, so you are criticizing stimulative spending because it doesn't achieve an impossible goal.
Why set an impossible standard as a of criteria? I think it better to knock down some dominoes than to knock down none
The GOP claims that tax breaks create jobs, but if you look at job creation following Bush's tax cuts. you see that job creation lagged well behind what was needed to even keep up with growth of the work force through out his administration, except for a brief period in 2003: http://rjw-progressive.blogspot.com/2011/07/where-are-jobs.html -- and even then, job growth was only slightly above workforce population growth.
Look at the year 2009 and you'll see that job growth soared well above the growth of the work force population. (Note, the graph makes it look as if the growth started immediately, due to the vagaries of computerized graphing and doing it by year, with a reset for when Obama took office, it actually started slowly and then soared even faster as the program got into gear - the light blue line at the lower right does show how much faster job growth was in that period.)
In your earlier post you said "I’m a person that won’t be convinced of something by fiat"
Interesting that you aid that, because all you've offered up is "fiat" - unsupported statements and assertions.
Why should anyone reading these comments accept your assertions which don't even meet you own criteria?
Fo example, you dismiss stimulative spending as having had an effect during the great depression, and make some almost amusing comparisons to non-economic situations which provide no actual analytic substance or value.
If the Roosevelt programs and the stimulus spending of that era didn't work, how do you explain the reversal of GDP from falling to rising starting soon after he took office and got his programs in place: http://upload.wikimedia.org/wikipedia/commons/thumb/d/de/US_GDP_10-60.jpg/350px-US_GDP_10-60.jpg
How do you explain the drop in unemployment during that period (with the surge in 37-38 following the austerity program adopted during the 36' re-election program?) http://upload.wikimedia.org/wikipedia/commons/thumb/5/58/US_Unemployment_1910-1960.gif/350px-US_Unemployment_1910-1960.gif
And how do explain the huge rise in GDP and employment when the government adopted stimulus programs and high borrowing to meet those needs during WWII.
Again, bald assertions carry no weight in this blog -
You seem to believe that you have some sort of right to demand immediate responses to your posts.
Well, here's my request: meet your own criteria and stop trying to argue by fiat and meaningless "comparisons" with no logical or substantive bases.
From here out, my responses will be limited to actual discussion based on fact and substance.
(Please indicate which assertions you make are in your view, supported by fact and/or logic. }
And if stimulus works, you ought to be able to see it at work in great economies. So what exactly was the stimulus that preceded the successful economy of the 1920s? And what was the stimulus that preceded the great economy of 1983-2000? Actually, there was no stimulus preceding those periods—as a matter of fact, it was quite the opposite. Anti-stimulus lead to the boom of the 1921-29, and anti-stimulus lead to the sustained growth of 1983-2000, while stimulus led to higher employment of 1936-37. And you claim that stimulus works?
ReplyDelete>>And if stimulus works, you ought to be able to see it at work in great economies.
ReplyDeleteBad logic - that assumes anyone has argued that the only thing that drives an economy is a stimulus -- but no one has asserted that.
When my car battery is dead, I jump start it, a stimulus, to get it going.
That doesn't mean I have to jump my car every time I want it to run.
>> And what was the stimulus that preceded the great economy of 1983-2000?
The vastly increased federal spending and federal debt during Reagan's terms kept the economy going in fits and starts- but saying it was a great economy doesn't reflect the reality.
GDP growth varied widely from year to year during Reagan's administration
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Remember Bush I at the beginning of his term "No New Taxes!" And then he had to raise taxes because the economy was struggling and revenues sucked?
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And remember the wailing at the beginning of the Clinton admin that we were going to pass on an outrageous debt to our children?
The idea that we some sort of soaring economy because of the Reagan tax cuts is GOP myth, not fact. In fact, Reagan had to raise taxes several times (11 times) to keep the economy from tanking
And during Reagan, the national debt went from $700 million to $3 billion -- 4 times higher.
And don't forget, Reagan also signed the largest corporate tax increase in history,
http://www.cbsnews.com/8301-503544_162-20030729-503544.html
BTW Anon - my mailbox shows a long post from you earlier today , starting with a bit about testiness.
ReplyDeleteThat message has not appeared in the blog's comment sections and I can find no reference to it in the admin tools I have for the blog.
I did not remove it and I have only seen the email notice.
Perhaps it was too long?
Let me know if you'd like me to repost it from the email copy I have.
I will repost in several parts; apparently it was too long. Part One:
ReplyDeleteYou seem to be getting testy; I’m not sure why. I’ve been nothing but clear and polite—my arguments are aggressive, but that’s it. I was very clear that I was grateful for your response and that I would take into account any delays you might have in response. I have waited and waited for responses on other blogs only to finally give up—I was only telling you my experience, that’s all—I don’t believe and never claimed to have a right for immediate response.
Now let’s respond to your answers. Yes, of course job growth soared in 2009 after the stimulus started. If someone borrows money to create a job, indeed, that job will be created. And if someone borrows enough money, many jobs will be created. The problem is that those jobs only last as long as the borrowed money does. As soon as the borrowed money runs out, the job disappears, unless there is what you refer to as a multiplier effect—or in more basic terms, the job becomes self-sustaining. For example, if money is borrowed to sell a product or service, borrowed money provides the job, but after the product starts to sell, the profits from the sale of the product or service are used to pay back the loan and sustain the job. If the product or service does not sell, the job is lost and there is no way to pay back the borrowed funds.
Part Two:The critical point here is that the activity in 2009 was not a product or service that could be sold. What the stimulus was spent on was simply not self-sustaining—there were funds for roads and bridges and teachers and social services, etc.—none of which sustains itself through the sale of products or services. This also exactly what happened during 1936-37. In terms of dominos, the government spending in both periods knocked down only the dominos that it reached directly—for example, some stimulus was used to save teaching positions. Well, what do you do after that stimulus money runs out? That teaching position disappears, unless taxes are raised or more money is borrowed—that is, more stimulus. So government stimulus is generally not self-sustaining.
ReplyDeleteThis is why there was a rise in the economy in 2009, but by the summer of 2010, the Obama Administration was bragging about the “Summer of Recovery”—and that was 12 months ago.
Now to “The GOP claims that tax breaks create jobs, but if you look at job creation following Bush's tax cuts.” Job creation is not the ultimate goal of an economy. If the goal is full employment, that’s easy to achieve—simply have the government hire everyone who’s unemployed. The ideal goal for an economy is efficiency is, that is, productivity should match demand—or in even simpler terms, the economy should produce goods and service in proportion to the demands of those in the economy.
Part Three:And that the “thing” that will knock down all the dominos: allowing demand to determine which products and services should be provided, while at the same time giving producers and servicers the freedom to provide what people want. Stimulus upsets that balance because it provides goods and services that out of proportion with what people want. In simpler terms, the reason that business have lots of cash sitting around now is because they’re afraid that if they make any money, Obama is going to take it away from them to fund more stimulus—something that he’s said he will do. Listen to Steve Wynn if you don’t believe me.
ReplyDeleteNow, to my previous arguments. Here is my Logic: You claimed stimulus works. As an example of it working, you trotted out 1936-37. My logical response is that your example is a very poor example. You can’t claim that something works, then provide a very poorly working model as proof of your statement. If something works, it ought to work very well if you are you use it as proof for your argument. It’s only logical.
New Comment:
ReplyDeleteMe: >>And if stimulus works, you ought to be able to see it at work in great economies.
>>your response >>Bad logic - that assumes anyone has argued that the only thing that drives an >>economy is a stimulus -- but no one has asserted that. When my car battery is dead, I jump start it, a >>stimulus, to get it going. That doesn't mean I have to jump my car every time I want it to run.
Actually, your logic is bad. But it’s extremely complicated to explain why, so I’ll just ask a question: If, as you state here, that stimulus is not the only thing that drives an economy, what are the other things? And why are you spending all this time defending a stimulus when you could extol the virtues of one of these other things that drive an economy?
new comment:
ReplyDelete>>The vastly increased federal spending and federal debt during Reagan's terms kept the economy >>going in fits and starts- but saying it was a great economy doesn't reflect the reality.
>>GDP growth varied widely from year to year during Reagan's administration
I’m curious why you used particular set of criteria (plural) to evaluate the current economy, while using a different criterion (singular) to evaluate the economy of the 1980’s. Why not use the same one? That would lead one to speculate whether or not you reach your conclusions first, then pull the statistics you want to support that conclusion. Is that what you did? Let’s compare using the same statistics. You say the Reagan economy was not that great, but that today’s economy is pretty good, or at least good.
I compared the GDP growth from January 1981 through July of 1983, and compared it to the period January 2009 through July of 2011. And you know what? Growth in GDP over both periods was nearly identical. January 1981 – July 1983 was a growth of 13.85%, while January 2009 – July 2011 was a growth of 14.30%.
So how is it that today’s economy can be good, while the economy under Reagan was, as you said, “but saying it was a great economy doesn't reflect the reality.” According to the criterion you used, GDP, the economies showed the same amount of growth?
Then let us look at growth in the deficit over the same period. At the end of each of the following years, here is the deficit as a percentage of GDP:
ReplyDelete1981 -.026
1982 -.039
1983 - .06
Total over all three years: -.125
2009 -.101
2010 -.089
Total over 2 years: -.19
So Obama’s deficits over 2 years outstrip Reagan’s over 3 years.
Further, it’s clear that from 2009 to 20101, the growth in GDP was due at least some part to growth in the deficit. The growth from 1981 to 1983 apparently was due to something else.
Finally, lest you make the claim that Obama’s and Reagan’s numbers will continue on the same course, from July 1983 to December 1988, the GDP growth was 162%. That’s like doubling and then half again as much—and in only 5 years.
ReplyDeleteFurther, first quarter growth in 1983 was 5.1%, second quarter was 9.3%. First quarter growth in 2011 was 0.4%, second quarter was 1.3%.
And the deficit as a percentage of GDP actually declined, from the high of 6% in 1983 to 3.1% at the end of 1988. Gee, economic growth without stimulus and the deficit actually goes down? Wow.
Do you honestly think Obama’s numbers will match Reagan’s GDP growth and Deficit percent if the former gets re-elected? If so, why the talk of a double dip recession now, when there was no such talk back in 1983?
First:
ReplyDelete>>You seem to be getting testy; I’m not sure why. I’ve been nothing but clear and polite—my arguments are aggressive, but that’s it.
First, you were demanding that I reply within some sort of time period of your own design.
You're a guest here who doesn't even i9dentify himself.
>>I don’t believe and never claimed to have a right for immediate response.
You don't make the rules and apparently have little awareness as to how you come across.
Second, you declared you don't respond to declarations by fiat, and yet so far, most of your arguments have been nothing but.
Particularly, you don't make rules that you yourself don't follow, although it looks as if finally you are actually getting past pronouncements.
Second:
ReplyDelete>>The problem is that those jobs only last as long as the borrowed money does. As soon as the borrowed money runs out, the job disappears, unless there is what you refer to as a multiplier effect—or in more basic terms, the job becomes self-sustaining
Yep, that's what the multiplier effect can do if not cut short or insufficient.
Again the experience of the Great Depression is a great example.
Roosevelt's New Deal and its stimulative spending was bringing the country out of the Depression -- there was the '37 recession caused by the sudden implementation of the austerity package (which we are about to see again) and then stimulative spending using borrowed money was kicked into high gear because of WWII and our economy soared and never looked back (except typical minor recessions.
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>>Actually, your logic is bad. But it’s extremely complicated to explain why,
Another argument buy fiat - if have an argument, make it, we have all the time in the world for complicated discussion.
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>>So I’ll just ask a question: If, as you state here, that stimulus is not the only thing that drives an economy, what are the other things? And why are you spending all this time defending a stimulus when you could extol the virtues of one of these other things that drive an economy?
Briefly, Investment. labor, ideas, natural resources
>> And why are you spending all this time defending a stimulus when you could extol the virtues of one of these other things that drive an economy?
The private sector and the richest who with the money aren't investing it in the US economy, they are sitting on the sidelines and/or investing overseas.
So that investment has to come from somewhere - and the public sector is the only game left.
Sadly, "corporate America" and the promoters of "all things corporate" have taken a very wrong turn - corporate America maximizes profits by shipping jobs and production overseas and bringing in imported goods to sell.
That's good for the corporations but bad for the wealth of the nation. The adoption of corporate values as a substitute for national values is, for the US, in my opinion, the "poisoning from lead pipes which brought the Roman Empire down."
See, http://rjw-progressive.blogspot.com/2011/06/economic-wrong-turn.html
Third:
ReplyDelete>>I’m curious why you used particular set of criteria (plural) [debt and deficit] to evaluate the current economy, while using a different criterion (singular) [GDP] to evaluate the economy of the 1980’s. Why not use the same one?
I know the difference between the singular and plural of the word, and I expect any blog readers who have persisted this far so as well. And I'm pretty good at reading what is written.
>>That would lead one to speculate whether or not you reach your conclusions first, then pull the statistics you want to support that conclusion.
LOL - I guess it would lead to that speculation if one didn't understand that debt and deficits were used to describe a set of events and the GDP (as is typical ion discussion of the economy and how it works) was used to describe the effects of the Reagan cumulative debt run-up based on his annual deficits.
>>I compared the GDP growth from January 1981 through July of 1983, and compared it to the period January 2009 through July of 2011. And you know what? Growth in GDP over both periods was nearly identical.
Given the massive difference between the recession when Reagan took office and when Obama took office - that's for the great argument.
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>>So how is it that today’s economy can be good, while ....
We've already discussed this - today's economy still sucks, but not as badly as it did under Bush and his Great Recession
I would have thought you'd have remembered being set straight on the idea that there is only one degree of suckiness
Fourth
ReplyDelete>>the GDP growth [during Reagan] was 162%.
What a coincidence - the deficit during his terms almost tripled - it rose 285% to get that GDP growth.
>>first quarter growth in 1983 was 5.1%, second quarter was 9.3%. First quarter growth in 2011 was 0.4%, second quarter was 1.3%.
And the Bush Recession was far worse than the recession when Reagan took office.
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>>Do you honestly think Obama’s numbers will match Reagan’s GDP growth and Deficit percent if the former gets re-elected?
No, I don't think that. First, because the stimulus was too small and turned off too soon.
Second, and more importantly, because the GOP is determined to tank the economy so Obama will not be re-elected.
During Reagan's terms, the Democrats did not try to drown the economy for political ends.
You say: >>Second, you declared you don't respond to declarations by fiat, and yet so far, most of your arguments have been nothing but.
ReplyDeleteMY response: I’m sorry you think that way. But when I do make a logical argument or ask a question – you don’t respond.
For example ONE: My comment: >>I’m curious why you used particular set of criteria (plural) [debt and deficit] to evaluate the current economy, while using a different criterion (singular) [GDP] to evaluate the economy of the 1980’s. Why not use the same one?
Your response ONE: I know the difference between the singular and plural of the word, and I expect any blog readers who have persisted this far so as well. And I'm pretty good at reading what is written.
But my critical question was: Why not use the same criteria?
So you didn’t answer the question.
For example TWO: my argument is that if you use the same criterion, the Obama and Reagan economies over the same beginning 2 ½ year period, the economies grew the same amount. But you insisted the Obama economy was good, while the Reagan economy was weak.
ReplyDeleteYour response TWO: Nothing.
For example THREE: My comment: the GDP growth [during Reagan] was 162%.
Your response THREE: What a coincidence - the deficit during his terms almost tripled - it rose 285% to get that GDP growth.
But I gave numbers that showed the deficit decreased as a percentage of GDP. When a person makes more money, they can afford a larger deficit. Same with a country.
So why would you ignore the deficit as a percent of GDP numbers? You didn’t even comment on why it wouldn’t be a reliable indicator.
Now here’s a response that answers a question, but ignores other information.
ReplyDeleteFor example FOUR: My comment: >> what are the other things [that drive an economy]? And why are you spending all this time defending a stimulus when you could extol the virtues of one of these other things that drive an economy?
Your response FOUR: Briefly, Investment. labor, ideas, natural resources.
Later, you say>>The private sector and the richest who with the money aren't investing it in the US economy, they are sitting on the sidelines and/or investing overseas. So that investment has to come from somewhere - and the public sector is the only game left.
So let’s follow your statements:
One: Other things besides stimulus drive an economy.
Two: Those things are Investments in labor, ideas, and natural resources.
Three: Those investments should come from the private sector and the richest, but they aren’t investing it.
Four: Because the private sector isn’t investing, the public sector needs to.
That’s a pretty summary of your statements, isn’t it? If not, tell me where it’s off.
So here’s my question: Isn’t public sector investment actually stimulus? If not, what is it?
So all this means that we started with the premise that an economy is driven by other things besides stimulus, but when we defined those things, they turned out to be stimulus.
So let me state the question again: What are the OTHER things besides stimulus that drive an economy?
Then finally, your comment: >>And the Bush Recession was far worse than the recession when Reagan took office.
ReplyDeleteMy question: Are you sure about this? Have you checked the GDP numbers? I haven’t yet, but I will. But I do know that the Carter recession included inflation, while the Bush recession didn’t. So in that way, the Carter recession was worse.
Oh yeah, unemployment was also worse during the Carter Recession than the Bush recession. So in that way, the Carter Recession was worse. And, oh yeah, interest rates were also worse. GDP growth, however, was worse during the period 2005-2008 that it was during 1977-1980. The stock market also declined more in the Bush period than it did in the Carter period. So by three standards, Carter's was worse, by two standards, Bush's was worse. So I think you can make the case the Bush's recession was worse. The period after, however, is no contest: Reagan slaughters Obama and anti-stimulus crushes stimulus.
ReplyDelete>>Your response ONE: I know the difference between the singular and plural of the word, and I expect any blog readers who have persisted this far so as well. And I'm pretty good at reading what is written.
ReplyDeleteThat wasn't an answer to your question, that was supposed to be a semi-subtle way of saying you are arrogant - suggesting the reader can't tell the difference between the singular and plural of the word --- and I don't really see any grounds for that arrogance
In fact, if we break it down, it suggests that you think you are pretty clever knowing the difference. News flash - that is pretty elementary knowledge for which there is no reason whatsoever to be patting yourself on the back.
>>But my critical question was: Why not use the same criteria?
>>So you didn’t answer the question
Actually, I did answer the question - you either didn't bother to read it or didn't understand it.
>>So why would you ignore the deficit as a percent of GDP numbers? You didn’t even comment on why it wouldn’t be a reliable indicator.
Jesus,do I have to explain that measurement of one thing, call it "A" as a percentage of another, call it "B" will vary with either A or B changing?
QUOTE
So let’s follow your statements:
One: Other things besides stimulus drive an economy.
Two: Those things are Investments in labor, ideas, and natural resources.
Three: Those investments should come from the private sector and the richest, but they aren’t investing it.
Four: Because the private sector isn’t investing, the public sector needs to.
That’s a pretty summary of your statements, isn’t it? If not, tell me where it’s off.
So here’s my question: Isn’t public sector investment actually stimulus? If not, what is it?
So all this means that we started with the premise that an economy is driven by other things besides stimulus, but when we defined those things, they turned out to be stimulus.
So let me state the question again: What are the OTHER things besides stimulus that drive an economy?
END QUOTE
First: >>That’s a pretty summary of your statements, isn’t it? If not, tell me where it’s off.
No it is a misquote. Go back and reread what I wrote. Maybe you'll get it the second time
Second I have no idea what you are trying to say in that mess of words.
If you want to turn that into a coherent question, go right ahead.
July 31. 2011, Saturday, David Stockman, Reagan's budget chief who presided over his tax cuts:
ReplyDeleteThe "debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party's embrace, about three decades ago, of the insidious doctrine that deficits don't matter if they result from tax cuts."
The next day, 8/1/11, former Fed chairman Alan Greenspan, who famously helped sell the 2001 Bush tax cuts to Congress, declared them simply "disastrous."
A coherent question: What are the OTHER things besides stimulus that drive an economy?
ReplyDeleteMy question: >>But my critical question was: Why not use the same criteria?
ReplyDelete>>So you didn’t answer the question
Your response: Actually, I did answer the question - you either didn't bother to read it or didn't understand it.
My response: You’re correct—I didn’t understand it. Can you copy and paste it here? I’ll re-read it to see what I can get out of it.
My question: >>So why would you ignore the deficit as a percent of GDP numbers?
Your response: Jesus, do I have to explain that measurement of one thing, call it "A" as a percentage of another, call it "B" will vary with either A or B changing?
My response: No, you don’t. But you need to answer the original question. The question was not about the merits of the raw deficit vs. the deficit as a percent of GDP. The question was, why did you ignore that stat in your answer to my question?
So why don’t you try again?
Your comment: That wasn't an answer to your question, that was supposed to be a semi-subtle way of saying you are arrogant - suggesting the reader can't tell the difference between the singular and plural of the word --- and I don't really see any grounds for that arrogance.
ReplyDeleteMy response: The arrogance comes out when you don’t answer my questions. The question was, “Why not use the same criteria when evaluating economies from different periods?” Answering a question is respectful, and gets respect in response. Ignoring a question is arrogant, and get arrogance in response.