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Recovery Cockroaches

David_N

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We all know what the bad ideas are..
http://krugman.blogs.nytimes.com/20...Opinion&action=Click&pgtype=Blogs&region=Body
Many years ago a long-time policy wonk gave me a very useful metaphor. Bad ideas, he explained, are like cockroaches: no matter how many times you flush them down the toilet, they just keep coming back.

Still, economic debate since the 2008 crisis has seemed unusually cockroach-infested: bad arguments just keep coming back, no matter how totally they have been refuted by evidence.

Jonathan Chait finds Kevin Williamson of National Review reviving, for the umpteenth time, the claim that Obama is an economic failure — despite a record of job creation much better than that of his predecessor, or of any other major advanced country — because we didn’t have a rapid, V-shaped recovery from the 2007-2009 slump.

The key point was that we had suffered from a postmodern recession. Unlike, say, the double-dip recession of 1979-1982, brought on by interest rate hikes to fight inflation, 2007-9 was brought on by private sector overreach: interest rates weren’t very high to begin with, and even cutting them to zero wasn’t enough to offset the downdraft from the housing bust and the banking crisis. So the normal recession-fighting weapons ran out of ammunition. Sustained fiscal stimulus could have led to a better recovery, but it didn’t happen: the Recovery Act was both too small and too short-lived, again something many of us predicted in advance.

The debate over the causes of sluggish recovery is part of the broader debate about economic models — in which one side predicted runaway inflation and soaring interest rates, while the other, using the same general approach that predicted sluggish recovery, predicted quiescent inflation and rates. Rarely in the history of economics has one side of a debate been so completely vindicated, and the other so completely discredited by events.


Summarized: We suffered from a "Post modern recession" brought on by private sector overreach, and the usual methods to handle a recession were ineffective due to interest rates not being high to begin with and the severity of the housing bust/banking crisis. Fiscal Stimulus was the only tool we had left, if sustained, but we got a pathetic small/short lived stimulus. One side lost the debate, and that is the side that predict runaway inflation and soaring interest rates. Now is the time for a larger deficit, with spending aimed at the poor, in my opinion, especially when looking at this:
Why Did US GDP Growth Slow Down in 1Q16? - Yahoo Finance
The US economy (QQQ) (SPY) (VOO) (IWM) saw GDP (or gross domestic product) growth of 0.5% in the first quarter of 2016 as compared to the 1.4% expansion in the fourth quarter of 2015, according to data provided by the US Bureau of Economic Analysis. However, this was below the market expectations of 0.7% growth. It was the weakest performance in the last two years. In the first quarter of 2014, the US economy contracted 0.9%.
The weaker movement of the US GDP growth indicates that American consumers controlled their spending and demand also slowed down in the first quarter.
 

Henrin

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"Private Sector Overreach" :lamo
 

David_N

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"Private Sector Overreach" :lamo

Laugh all you want...

Now, I don't want to fully blame the private sector, since the lack of government deficit spending forced the private sector to go into debt rapidly, and Clinton played a part, but the government isn't solely to blame, hell, the most they can be blamed for is not spending enough when everything started to fall down.

(I don't think the image is shown correctly, it essentially shows credit growth and the collapse of that growth, which caused GDP to fall.)
 

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DA60

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Massive government deficits and record low interest rates have delivered this:

Food-Stamps-Yearly.jpg


Food Stamps Charts | Matt Trivisonno's Blog

In fact, food stamp usage is actually FAR WORSE now then it was at the end of the Great Recession.


united-states-home-ownership-rate.png


United States Home Ownership Rate | 1965-2016 | Data | Chart | Calendar


Yet, since Obama took office, the DOW has more then doubled (though it has been stagnant overall for the last 18 months or so).


So...far more Americans need food stamps just to eat, a far lower percentage of Americans own their own home and the DOW has skyrocketed. Obviously the various government/Fed stimuli has helped the rich at the expense of the middle class and the poor.

Now if that is what the point of the stimuli were...mission accomplished.

My guess is most Americans would not be too thrilled with that.
 
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DA60

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BTW, I am still waiting for the factual/statistical proof from an unbiased source that had the government done nothing that the economy would not have recovered faster and more completely on it's own?

Because without it, it is impossible to accurately and honestly state that the stimulus helped AT ALL relative to doing nothing.
 
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gavinfielder

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Krugman's description of a "postmodern recession" is silly. He seems to be waving his hand and saying "the bubbles did it! the bubbles did it!" What bubbles, and how? It seems a convenient and yet overcomplicated excuse that avoids the underlying issue entirely. Recessions happen when people don't have money.

Is that the private sector's fault? I tend to think it's just a rent-seeking economy doing what it does best.

BTW, I am still waiting for the factual/statistical proof from an unbiased source that had the government done nothing that the economy would not have recovered faster and more completely on it's own?
I'm waiting on your factual/statistical proof from an unbiased source that unicorns don't exist.
 

David_N

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Krugman's description of a "postmodern recession" is silly. He seems to be waving his hand and saying "the bubbles did it! the bubbles did it!" What bubbles, and how? It seems a convenient and yet overcomplicated excuse that avoids the underlying issue entirely. Recessions happen when people don't have money.

Is that the private sector's fault? I tend to think it's just a rent-seeking economy doing what it does best.

I'm waiting on your factual/statistical proof from an unbiased source that unicorns don't exist.

Good point. I suppose that goes hand in hand with the observation that private sector debt growth year after year always leads to a downturn. People focus on paying down debt, spending decreases..
 

imagep

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Massive government deficits and record low interest rates have delivered this:

Food-Stamps-Yearly.jpg


Food Stamps Charts | Matt Trivisonno's Blog

In fact, food stamp usage is actually FAR WORSE now then it was at the end of the Great Recession.


united-states-home-ownership-rate.png


United States Home Ownership Rate | 1965-2016 | Data | Chart | Calendar


Yet, since Obama took office, the DOW has more then doubled (though it has been stagnant overall for the last 18 months or so).


So...far more Americans need food stamps just to eat, a far lower percentage of Americans own their own home and the DOW has skyrocketed. Obviously the various government/Fed stimuli has helped the rich at the expense of the middle class and the poor.

Now if that is what the point of the stimuli were...mission accomplished.

My guess is most Americans would not be too thrilled with that.

Part of the reason we have had such deficits is because the Obama administration pushed welfare, literally advertising for people so sign up. so why would he want to do that? Because he couldn't get any jobs programs or other economic recovery programs through congress (after the spendulous bill of course). I find means tested welfare very distasteful, but it was republicans who actually caused this. If they would have played nicely, instead of trying to ruin our economy, then we would have ended up paying people to rebuild our infrastructure, rather than to sit at home doing nothing.
 

austrianecon

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Part of the reason we have had such deficits is because the Obama administration pushed welfare, literally advertising for people so sign up. so why would he want to do that? Because he couldn't get any jobs programs or other economic recovery programs through congress (after the spendulous bill of course). I find means tested welfare very distasteful, but it was republicans who actually caused this. If they would have played nicely, instead of trying to ruin our economy, then we would have ended up paying people to rebuild our infrastructure, rather than to sit at home doing nothing.

Oh come on Imagep.

Obama had 2 years of Democratic controlled Congress and he pissed it away, much like Clinton did as well.

Obama screwed his own pooch. He had the ability to do a massive stimulus bill in the trillions. But he settled on $787b in which $82b went to increasing welfare spending. $155.1b in Healthcare spending, expanding programs (didn't make sense knowing he was gonna do Obamacare). So basically 1/3rd was welfare based expansion. Only $100b of that stimulus bill went to actually improving infrastructure.

Obama was in a position to spend $1 plus trillion just on infrastructure and get his Health Care act done.
 

David_N

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Oh come on Imagep.

Obama had 2 years of Democratic controlled Congress and he pissed it away, much like Clinton did as well.

Obama screwed his own pooch. He had the ability to do a massive stimulus bill in the trillions. But he settled on $787b in which $82b went to increasing welfare spending. $155.1b in Healthcare spending, expanding programs (didn't make sense knowing he was gonna do Obamacare). So basically 1/3rd was welfare based expansion. Only $100b of that stimulus bill went to actually improving infrastructure.

Obama was in a position to spend $1 plus trillion just on infrastructure and get his Health Care act done.

Obama is a deficit hawk, even Krugman criticizes the pathetic stimulus.
 

austrianecon

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Obama is a deficit hawk, even Krugman criticizes the pathetic stimulus.

And Krugman is an idiot on what is a good stimulus.. but again he's more of a political hack then an actually economist these days.
 

David_N

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And Krugman is an idiot on what is a good stimulus.. but again he's more of a political hack then an actually economist these days.

Really? Krugman criticized the stimulus heavily, for being to small and focusing on the wrong things, such as politicians and their own little personal projects.
 

VanceMack

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You know...what with him being an 'expert' and all you would think Krugman would lead an army of socialists creating these wonderful and profitable businesses that share financial success equally to all. You know...instead of just talking **** about economics cuz he's an 'expert'.
 

austrianecon

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That article does nothing to prove your point.
That's an article about global warming and the economy. What?

Krugman cares about boosting AD and that's all. Stimulus is about boosting AD and providing future needs and that's the difference. Krugman is for shovel ready jobs. But taking on huge amounts of Stimulus means you don't need shovel ready jobs but rather jobs that would last years.
 

David_N

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Krugman cares about boosting AD and that's all. Stimulus is about boosting AD and providing future needs and that's the difference. Krugman is for shovel ready jobs. But taking on huge amounts of Stimulus means you don't need shovel ready jobs but rather jobs that would last years.

And that's what Krugman should care about, and if you read Krugman often like I do, you'll realize he wants spending on infrastructure.
 

austrianecon

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David_N

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At what point does Krugman say is what type of investment for infrastructure.. he never does.. in fact.. he didn't in this article.. he's just saying spend to spend. He never has a plan. Hell even I put a small plan.. of what infrastructure spending I would like.. on this forum a few weeks ago. That took me less then 20 mins to do.

The first case is simply that America has an obvious infrastructure deficit, and that it has never been cheaper to address that deficit. Government borrowing costs are at record lows; markets are in effect pleading with the government to borrow and spend. So why not do it? It’s completely crazy that public construction as a percentage of GDP has declined to record lows even as interest rates have done the same:
Hmm, I wonder what he's saying here? :lol:
 

austrianecon

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Hmm, I wonder what he's saying here? :lol:

He's saying NOTHING specific. Infrastructure is a wide range of things. Not all equal, Not all short term. So until he can lay out a specific plan (which he NEVER has) all he is doing is blowing hot air.
 

DA60

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He's saying NOTHING specific. Infrastructure is a wide range of things. Not all equal, Not all short term. So until he can lay out a specific plan (which he NEVER has) all he is doing is blowing hot air.

The tired Krugman mantra...'MORE MONEY'.

And when he gets more money...what does he ask for?

'MORE MONEY'.

Paul Krugman is a stimulus junkie...he can NEVER get enough.


And his nonsense is long past tiresome...it's become pedantic.
 
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