The Tea Party won!!

[Anonymous]

Anonymous wrote:Here is what no one is going to say about the economy. The country is de-leveraging, ie they are paying down their own debt. And that means they are not spending. And that means that unemployment is going to be that way for a while. It takes years to unwind a debt problem. Years. I heard that peak unemployment after financial crises is between three and eight years from when it starts.

The government can take the sting out of it by deficit spending. That actually does cause spending.

Tax cuts do nothing for the near term economy. People just use it to pay down debt, not invest. What's the point in investing in growth when there is no demand? But it is completely rational to pay down debt.

Unfortunately we just have to wait it out. The government cannot create an economy, whether it is through tax cuts or spending. Still, I'd rather they spend than not.

I agree with this, except for the "rather they spend". You basically admit that we just have to lick our wounds and wait it out, so why burden our future with crushing debt?

[Anonymous]

Anonymous wrote:Here is what no one is going to say about the economy. The country is de-leveraging, ie they are paying down their own debt. And that means they are not spending. And that means that unemployment is going to be that way for a while. It takes years to unwind a debt problem. Years. I heard that peak unemployment after financial crises is between three and eight years from when it starts.

The government can take the sting out of it by deficit spending. That actually does cause spending.

Tax cuts do nothing for the near term economy. People just use it to pay down debt, not invest. What's the point in investing in growth when there is no demand? But it is completely rational to pay down debt.

Unfortunately we just have to wait it out. The government cannot create an economy, whether it is through tax cuts or spending. Still, I'd rather they spend than not.

Not sure I follow you. You seem to be arguing that government spending in a time of recession can be stimulative (which I agree with), while in the same breath you argue that there's nothing that can be done. It's just "de-leveraging".

The government can "take the sting out of it by deficit spending", but "unfortunately we just have to wait it out." Which is it?

[Anonymous]

While on the subject of federal spending:

Indeed, the US spends only 2.4 per cent of gross domestic product on infrastructure – less than half the average of 5 per cent that prevails in European countries – and half the level of 1960, according to the Treasury. [...] The number of miles travelled by cars and trucks has doubled in the past 25 years, but highway lane miles have increased by only 4.4 per cent. Demand for electricity has increased by about one-quarter but the construction of new transmission facilities has decreased by 30 per cent. The US now ranks 23rd for overall infrastructure quality, according to a World Economic Forum study.

We're going to have to spend that money. We can do that now when private sector spending is non-existent, and while we're able to finance our debt spending at effectively zero percent. (I'm sure there are some conservatives who would argue that such infrastructure spending wouldn't be stimulative, but I'd like to hear a non-magical explanation for why that is.)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:the tea party is 100% right in their thinking: the govt's budget long-term is not sustainable. the budget does not need to go up by $1.5 trillion in the next few years - there is no reason behind it other than built in increases that are much higher than inflation.

that said, I disagree with their approach but it seems to have worked.

and the tea party is not at all concerned with race. playing the race card just makes YOU look stupid.

Makes ME look stupid?? hahahaha, lady, you are either BLIND or in DE NILE!!! LOL(denial). The hatred that rose up from beneath the surface of this nation when Obama got elected is in our faces every freaking day, the venom is out there for all to see unless you are on the inside looking out. Which apparently you are.

that is incredibly stupid. the tea party welcomes black members. Alan West is one of the rising stars of the movement, and the Godfather Pizza dude works the crowds. Obama's color isn't the issue, it is his belief system.

Even David Duke had some black supporters.

look. clearly you see everything in life through a race-based prism. I get that, and actually understand it. But it really isn't nearly as important as you think it is. Good luck.

How do you know? I just wrote a seven word observation, and suddenly you know my prism? My only point is that a few notable black people does not validate a political movement. That is a reasonable observation. Maybe you have me confused with someone else.

[Anonymous]

Anonymous wrote:While on the subject of federal spending:

Indeed, the US spends only 2.4 per cent of gross domestic product on infrastructure – less than half the average of 5 per cent that prevails in European countries – and half the level of 1960, according to the Treasury. [...] The number of miles travelled by cars and trucks has doubled in the past 25 years, but highway lane miles have increased by only 4.4 per cent. Demand for electricity has increased by about one-quarter but the construction of new transmission facilities has decreased by 30 per cent. The US now ranks 23rd for overall infrastructure quality, according to a World Economic Forum study.

We're going to have to spend that money. We can do that now when private sector spending is non-existent, and while we're able to finance our debt spending at effectively zero percent. (I'm sure there are some conservatives who would argue that such infrastructure spending wouldn't be stimulative, but I'd like to hear a non-magical explanation for why that is.)

you do realize that interest rates change, right? and that principal on the debt is never repaid, unless you run a surplus for such a long period of time that the bonds expire.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Here is what no one is going to say about the economy. The country is de-leveraging, ie they are paying down their own debt. And that means they are not spending. And that means that unemployment is going to be that way for a while. It takes years to unwind a debt problem. Years. I heard that peak unemployment after financial crises is between three and eight years from when it starts.

The government can take the sting out of it by deficit spending. That actually does cause spending.

Tax cuts do nothing for the near term economy. People just use it to pay down debt, not invest. What's the point in investing in growth when there is no demand? But it is completely rational to pay down debt.

Unfortunately we just have to wait it out. The government cannot create an economy, whether it is through tax cuts or spending. Still, I'd rather they spend than not.

Not sure I follow you. You seem to be arguing that government spending in a time of recession can be stimulative (which I agree with), while in the same breath you argue that there's nothing that can be done. It's just "de-leveraging".

The government can "take the sting out of it by deficit spending", but "unfortunately we just have to wait it out." Which is it?

What I mean is that the spike in unemployment is large enough and will persist for long enough that spending is pretty much a bandaid. A government can put a few million people to work for a year. Normally that would be enough to weather a recession. Call it "stimulative" or maybe just call it borrowing to keep people in jobs and spending paychecks until things pick up.

But when the numbers are so large and will last for so long, it is a bandaid. We can't do three or four years of stimulus, and certainly not north of a trillion a year for several years, which is what I think the economists thought would be necessary. On top of it, the problem we face is not even just a lack of jobs. The country needs to de-leverage. The real estate mess is not straightened out. Private debt has not been brought down to normal. People will start spending again when they are done paying down excess debt and straightening out their home mortgages (one way or the other). And giving unemployed people jobs doesn't really make this go any faster. But for now, the rational thing for people to do is to pay down debt and that means they spend less and that means that jobs are not created.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Here is what no one is going to say about the economy. The country is de-leveraging, ie they are paying down their own debt. And that means they are not spending. And that means that unemployment is going to be that way for a while. It takes years to unwind a debt problem. Years. I heard that peak unemployment after financial crises is between three and eight years from when it starts.

The government can take the sting out of it by deficit spending. That actually does cause spending.

Tax cuts do nothing for the near term economy. People just use it to pay down debt, not invest. What's the point in investing in growth when there is no demand? But it is completely rational to pay down debt.

Unfortunately we just have to wait it out. The government cannot create an economy, whether it is through tax cuts or spending. Still, I'd rather they spend than not.

Not sure I follow you. You seem to be arguing that government spending in a time of recession can be stimulative (which I agree with), while in the same breath you argue that there's nothing that can be done. It's just "de-leveraging".

The government can "take the sting out of it by deficit spending", but "unfortunately we just have to wait it out." Which is it?

What I mean is that the spike in unemployment is large enough and will persist for long enough that spending is pretty much a bandaid. A government can put a few million people to work for a year. Normally that would be enough to weather a recession. Call it "stimulative" or maybe just call it borrowing to keep people in jobs and spending paychecks until things pick up.

But when the numbers are so large and will last for so long, it is a bandaid. We can't do three or four years of stimulus, and certainly not north of a trillion a year for several years, which is what I think the economists thought would be necessary. On top of it, the problem we face is not even just a lack of jobs. The country needs to de-leverage. The real estate mess is not straightened out. Private debt has not been brought down to normal. People will start spending again when they are done paying down excess debt and straightening out their home mortgages (one way or the other). And giving unemployed people jobs doesn't really make this go any faster. But for now, the rational thing for people to do is to pay down debt and that means they spend less and that means that jobs are not created.

I completely disagree with that statement. The people most likely to be under a crushing debt burden are those who are unemployed and borrowing to make ends meet. How are they supposed to pay down debt if they don't have a job? It has been shown that stimulus in forms that have to be spent (be it jobs for people who don't have them, food stamps, or social security payments) are far more effective than stimulus in the form of tax cuts, which people simply save. We can't deleverage without solving the jobs problem, and business will not do that, so the government has to step in, even if it's not that efficient compared to the private sector.

[Anonymous]

First a dot-com bubble, then a real estate bubble....now it's a big government bubble with even more leverage than the others. The result is totally predictable.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Here is what no one is going to say about the economy. The country is de-leveraging, ie they are paying down their own debt. And that means they are not spending. And that means that unemployment is going to be that way for a while. It takes years to unwind a debt problem. Years. I heard that peak unemployment after financial crises is between three and eight years from when it starts.

The government can take the sting out of it by deficit spending. That actually does cause spending.

Tax cuts do nothing for the near term economy. People just use it to pay down debt, not invest. What's the point in investing in growth when there is no demand? But it is completely rational to pay down debt.

Unfortunately we just have to wait it out. The government cannot create an economy, whether it is through tax cuts or spending. Still, I'd rather they spend than not.

Not sure I follow you. You seem to be arguing that government spending in a time of recession can be stimulative (which I agree with), while in the same breath you argue that there's nothing that can be done. It's just "de-leveraging".

The government can "take the sting out of it by deficit spending", but "unfortunately we just have to wait it out." Which is it?

What I mean is that the spike in unemployment is large enough and will persist for long enough that spending is pretty much a bandaid. A government can put a few million people to work for a year. Normally that would be enough to weather a recession. Call it "stimulative" or maybe just call it borrowing to keep people in jobs and spending paychecks until things pick up.

But when the numbers are so large and will last for so long, it is a bandaid. We can't do three or four years of stimulus, and certainly not north of a trillion a year for several years, which is what I think the economists thought would be necessary. On top of it, the problem we face is not even just a lack of jobs. The country needs to de-leverage. The real estate mess is not straightened out. Private debt has not been brought down to normal. People will start spending again when they are done paying down excess debt and straightening out their home mortgages (one way or the other). And giving unemployed people jobs doesn't really make this go any faster. But for now, the rational thing for people to do is to pay down debt and that means they spend less and that means that jobs are not created.

Actually, most economists who believed in the idea of stimulus (who really are the only ones we need consider here) recommended a stimulus of about $1.5 trillion. Fortunately, we had reasonable centrists who were completely behind the idea of a stimulus bill, but had to burnish their centrist credentials by ensuring the stimulus was too small to have the desired affect. And they were cheered lustily by the establishment media and various know-nothings who think cutting the baby in half is always the right strategy.

[Anonymous]

Anonymous wrote:First a dot-com bubble, then a real estate bubble....now it's a big government bubble with even more leverage than the others. The result is totally predictable.

This is just dumb. How is spending money on critical infrastructure that's falling to pieces a "bubble"? The whole point of a bubble is that it's an irrational overinvestment.

[Anonymous]

One final observation:

I see the debt ceiling vote tanked the market.

And, no, I don't claim to believe I can write the monocausal headlines with certainty the way the financial press always does, but it's quite possible that the people who are betting their cash instead of betting their ideology might not think austerity is a good thing.

[Anonymous]

Anonymous wrote:First a dot-com bubble, then a real estate bubble....now it's a big government bubble with even more leverage than the others. The result is totally predictable.

You mean like the Great Depression of the 1950s?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Here is what no one is going to say about the economy. The country is de-leveraging, ie they are paying down their own debt. And that means they are not spending. And that means that unemployment is going to be that way for a while. It takes years to unwind a debt problem. Years. I heard that peak unemployment after financial crises is between three and eight years from when it starts.

The government can take the sting out of it by deficit spending. That actually does cause spending.

Tax cuts do nothing for the near term economy. People just use it to pay down debt, not invest. What's the point in investing in growth when there is no demand? But it is completely rational to pay down debt.

Unfortunately we just have to wait it out. The government cannot create an economy, whether it is through tax cuts or spending. Still, I'd rather they spend than not.

Not sure I follow you. You seem to be arguing that government spending in a time of recession can be stimulative (which I agree with), while in the same breath you argue that there's nothing that can be done. It's just "de-leveraging".

The government can "take the sting out of it by deficit spending", but "unfortunately we just have to wait it out." Which is it?

What I mean is that the spike in unemployment is large enough and will persist for long enough that spending is pretty much a bandaid. A government can put a few million people to work for a year. Normally that would be enough to weather a recession. Call it "stimulative" or maybe just call it borrowing to keep people in jobs and spending paychecks until things pick up.

But when the numbers are so large and will last for so long, it is a bandaid. We can't do three or four years of stimulus, and certainly not north of a trillion a year for several years, which is what I think the economists thought would be necessary. On top of it, the problem we face is not even just a lack of jobs. The country needs to de-leverage. The real estate mess is not straightened out. Private debt has not been brought down to normal. People will start spending again when they are done paying down excess debt and straightening out their home mortgages (one way or the other). And giving unemployed people jobs doesn't really make this go any faster. But for now, the rational thing for people to do is to pay down debt and that means they spend less and that means that jobs are not created.

I completely disagree with that statement. The people most likely to be under a crushing debt burden are those who are unemployed and borrowing to make ends meet. How are they supposed to pay down debt if they don't have a job? It has been shown that stimulus in forms that have to be spent (be it jobs for people who don't have them, food stamps, or social security payments) are far more effective than stimulus in the form of tax cuts, which people simply save. We can't deleverage without solving the jobs problem, and business will not do that, so the government has to step in, even if it's not that efficient compared to the private sector.

As much as I sympathize and believe in the policy of stimulus, those jobs only affect a few percent of the people who are overleveraged. And frankly the best bet for the unemployed underwater on their homes is to declare bankruptcy and start over. They are in an impossible situation and a short term job that only lasts the duration of the stimulus isn't going to save them.

[Anonymous]

the best stimulus would have been a program to buy 2,500,000 foreclosed homes. say the average price was $200,000 - the federal govt could have put down 20%, so is that $100B, and had the FED finance the other 80% through mortgages to the states and use the houses for public housing at low cost rent. would have immediately solved the housing problem and gotten a great deal on public housing for state and local govts.

[Anonymous]

Anonymous wrote:the best stimulus would have been a program to buy 2,500,000 foreclosed homes. say the average price was $200,000 - the federal govt could have put down 20%, so is that $100B, and had the FED finance the other 80% through mortgages to the states and use the houses for public housing at low cost rent. would have immediately solved the housing problem and gotten a great deal on public housing for state and local govts.

Why not just give a job to every unemployed person, at the median family income, for years? That's how much money we're talking about.