Given the nature and the depth of the problems the US and many other countries faced economically, and the extreme level of governmental intervention that has gone on to combat the economic slowdown, the possibility (probability) of a double dip should not suprise anyone. I would suggest the double dip will be worse for more individuals then the first dip has been. Especially as their will not be as much government money avaliable to combat the slowdown as was in the first
It's government money that caused the problem. How else do you explain the rise in consumer prices and fall in demand that occurs at the onset of a recession? Animal spirits that come to life out of nowhere?
The economy is up? By what measure? Certainly not unemployment. That still is the same. GDP? That's probably still negative when you look at numbers that don't come from the government.
Alternate Gross Domestic Product Chart
Well you have to remember that this is real GDP growth that is charted, and that CPI is not a perfect measure of inflation because the total supply of goods changes with time. So yes, of course we grew, but probably not all that much. Looking at SGS charts on inflation will tell you why real GDP numbers are what they are.
What do you mean by the government caused the problem.
I was expecting an economic recession of a large magnitude to occur within a short period of time in around 2005, due to excessive debt levels and over heated assets prices. Did the governemnt play a role in the bubble getting as big as it was, sure, but bubbles do occur without governmental involvement and so do recessions/depressions.
Governemnt spending did bring the economy up over the last year or so, leading the high probability of a double dip
It's government money that caused the problem. How else do you explain the rise in consumer prices and fall in demand that occurs at the onset of a recession? Animal spirits that come to life out of nowhere?
Do you count Federal Reserve actions part of government involvment? If so then letting the money supply grow and keeping interest rates too low to long was a big cause of the asset ( real estate) bubble.
Arthur Laffer gets the facts wrong on Bush tax cuts | GatherArthur Laffer gets the facts wrong on Bush tax cuts
In a recent op-ed published in the Wall Street Journal, Arthur Laffer predicted that the expiration of the Bush tax cuts on January 1, 2011 will lead to a tax increase that could cripple the nation's economy. According to Laffer's crystal ball, substantial tax hikes will trigger a plunge in the stock market and increase both unemployment and the deficit. It is scary talk, but one doesn’t have to read too far to figure out what Laffer is really worried about: the fact that the rich will soon have to pay their fair share after years of a tax vacation sponsored by the Republican Party.
Laffer dedicates little energy to discussing how the expiration of the Bush tax cuts will affect the average American. Instead, he focuses on figures showing how the highest tax rates will increase after January 1st, i.e. those paid only by the wealthiest of Americans.
The nine states that don’t have any income tax are among the fastest growing in the nation, according to Laffer. First of all, lets get the facts straight. Only seven states have no income tax. Another two, New Hampshire and Tennessee, only tax income from dividends and interest. Now, let’s take a look at current unemployment rates in a few of the states without an income tax to see if Laffer’s claims hold any water
Nevada – 13.7% unemployment
Florida - 12% unemployment
Unemployment rates in income tax free Florida and Nevada have grown to be among the highest in the nation. In fact, unemployment in these two states is even higher than the national unemployment rate of 9.9 percent.
Of course there is always good old South Dakota, no income tax and a healthy unemployment rate of 4.7 percent. You know, South Dakota? Strangely, people are not flocking to South Dakota to take advantage of the state’s lax tax structure and low unemployment rates. The U.S. Census Bureau estimates that only around 800,000 people are proud to call South Dakota home. That’s even less people than my home state of New Hampshire, population 1.3 million. Seems like the only thing growing in these no income tax states is unemployment!
But unemployment numbers don’t matter to Laffer. His constituency is the super rich minority, the only Americans that benefited from the Bush tax cuts. These folks don’t need to worry trifling matters like unemployment.
Mr. Laffer also seems to have overlooked one key fact in making his case about the threat of impending tax increases. “The truth is that the major tax cuts enacted in the 2009 economic stimulus bill actually reduced federal income taxes for tax year 2009 for 98% of working families and individuals,” according to Citizens for Fair Taxes. If taxes have actually gone down for 98% of Americans, what is Laffer worried about? He's worried about the other 2 percent who control most of this nation's wealth.
Was it that or was it laws that allowed lenders to qualify people for loans based on artificially introductory low rates which increased significantly after two or three or five years depending on the contract, creating a situation in which people could no longer afford their payments? I really dont know that the fed reserve had as much to do with that as piss poor regulating on the part of the mortgage industry. And truthfully, I am talking about self regulating, not gov regulating
These large banks were buying up every morgage they could so that they could repackage them and sell them as supposedly safe "CDOs" to people who assumed they were safe as they were stamped with good ratings by the ratings companies. Of course the ratings companies were engaging in fraud when they were giving good ratings to CDO's that they new were not safe. The ratings companies really didnt care as long as they were making (stealling) lots of money by doing so. Morgage origionators were then pushing morgages on to consumers in which the origionators new the people would not be likely to pay once the payments went up. Independant morgage origionators could make from $5,000 to $25,000, virtually instantly and with only a few hours of work, by origionating a single morgage. Real estate agents were pushing their clients to the morgage origionators who would then give them a finders fee for locating a victom.
There is nothing wrong with profits. There is noting wrong with wanting to make all the money that you can (greed). But I have a big problem when profits are made without morals.
I really dont know that the Fed Reserve had a big part to play in all of that.
As I'm Supposn points out, there is always another viewpoint. Laffer seems more concerned for the rich than the rest of the 98% in this country
Arthur Laffer gets the facts wrong on Bush tax cuts
In a recent op-ed published in the Wall Street Journal, Arthur Laffer predicted that the expiration of the Bush tax cuts on January 1, 2011 will lead to a tax increase that could cripple the nation's economy. According to Laffer's crystal ball, substantial tax hikes will trigger a plunge in the stock market and increase both unemployment and the deficit. It is scary talk, but one doesn’t have to read too far to figure out what Laffer is really worried about: the fact that the employers and those who create jobs will soon have their effective taxes hiked after Bush lowered them
Laffer dedicates little energy to discussing how the expiration of the Bush tax cuts will affect the average American outside of the fact that it will lower his income and employment opportunities. Instead, he focuses on figures showing how the highest tax rates will increase after January 1st, i.e. those paid only by those who employ other Americans.
The nine states that don’t have any income tax are among the fastest growing in the nation, according to Laffer. First of all, lets get the facts straight. Only seven states have no income tax. Another two, New Hampshire and Tennessee, don't collect income tax, but do tax capital gains. Now, let’s take a look at current unemployment rates in a few of the states without an income tax to see if we can create a strawman argument as opposed to actually addressing his point.
Nevada – 13.7% unemployment
Florida - 12% unemployment
Unemployment rates in income tax free Florida and Nevada have grown to be among the highest in the nation. In fact, unemployment in these two states is even higher than the national unemployment rate of 9.9 percent.
Of course there is always good old South Dakota, no income tax and a healthy unemployment rate of 4.7 percent. You know, South Dakota? Strangely, people are not flocking to South Dakota to take advantage of the state’s lax tax structure and low unemployment rates. The U.S. Census Bureau estimates that only around 800,000 people are proud to call South Dakota home. That’s even less people than my home state of New Hampshire, population 1.3 million. Seems like the only thing growing in these no income tax states is unemployment! And then of course there is Texas, but strangely nobody wants to talk about Texas.
But unemployment numbers don’t matter to Laffer. His constituency is the small business owners, one segment of the many Americans that benefited from the Bush tax cuts. These folks don’t need to worry trifling matters like unemployment, instead it is their employees who need to worry about the effect of increased taxation and regulation upon those trying to provide them with jobs.
Mr. Laffer also seems to have overlooked one completely irrelevant fact in making his case about the threat of impending tax increases. “The truth is that the major tax cuts enacted in the 2009 economic stimulus bill actually reduced federal income taxes for tax year 2009 by a wopping 400 bucks, in a one-time rebate, which history has repeatedly shown to be useless for 98% of working families and individuals,” according to Citizens for Fair Taxes. If taxes have actually gone down for 98% of Americans, what is Laffer worried about? He's worried about the other 2 percent who create most of this nation's wealth.
I recently heard Laffer deliver this speech within an NPR broadcast. Few people would disagree with many of this speech’s contentions.
emphasis added by bubbaI agree. It really sucks that people who took "introductory rate" type loans to invest in real estate have walked away from loans. It really does. I'm pretty much a moron when it comes to investing, but during the bubble years I watched all those home flipping shows, OK, dont laugh at me, I just think they are interesting. The one thing that I found my self commenting about with those shows was "how the heck can THAT house be worth $800,000"? Some of those hot market $800,000 homes would be worth about $80,000 in my neck of the woods. In our area, we didn't participate in the bubble, fortunately that means that we didn't have a big price decline either.
I am also aware that some banks felt pressured by government regulation to make high risk loans, that should have never happened. To that extent, this problem was created by the gov.
I'm Supposn wrote:Actually, quite a few folks have taken Laffer to the woodshed for this particular commentary. One of the better responses was from Barry Ritholtz. Ritholtz rebuts Laffer's points, one-by-one.
As I'm Supposn points out, there is always another viewpoint. Laffer seems more concerned for the rich than the rest of the 98% in this country.
Arthur Laffer gets the facts wrong on Bush tax cuts | Gather
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