New CBO numbers on the Stimulus Bill

[bpwallace49]

so, if those models were accurate before the stimulus was passed, then their estimate of how many jobs have been created by the stimulus would still be accurate. but as it says in the link above, "the models that are telling us how many jobs the stimulus saved are the same models that predicted that unemployment today would be close to 7 percent with the stimulus".

 

Actually that only counts if you beleive the CBO is somehow omnipotent and can control everything in the US. It did an economic model and did before and after. The fact that unemploymnet hasnt shrunk rely and a lot more factors than the CBO can control . . . one was a prediction, one was analyzing results.

 

Or does that not count either Az?

[evil_gop_liars]

 

That avatar is funny.

 

[Brentastic]

Brent I thought of you today when I was listening to a finance guy on the radio i've been tuning into for the past few months on my commute. He's been doing this stuff for 30 years and he also uses the Elliot Wave theory as one of his tools to speculate where we are going. In all of my listening however, he hasn't advised anyone to build a bomb shelter and ration food. In fact quite the opposite. His advice is to put away your political leanings and ride the market as it goes watching for buy and sell signs. Of course he's selling his own product, but i'm wondering if all adherents to this philosophy you've latched onto read those tea leaves as signs of the end times?

Let's be clear here, I haven't painted any doomsday scenario, I've only forecasted the DOW at 1,000 as a worst case scenario. I've mentioned DOW between 3,000-5,000 as a more likely target. The many on here who strongly disagree with my forecasting are the ones claiming that if this were to happen, we'd be rationing food and such. I think the DOW tanking is necessary in the cleansing process and if you're prepared, the pain will be minimal if even felt at all. The EWT points to those areas by using fibonacci retracement points. If anyone on here has interpreted my 'get cash-heavy' strategy as fear mongering, that was not my intention. The intention is to be as risk averse as possible because if the DOW reaches those points, you can be sure that most retirement funds will tank too. Another part of this cleansing out process means there will be many more bank failures and in fact, just today I was reading an article about the FDIC - did you know they are in the RED? With a potential failure of the FDIC and bank closures, cash is the safest option for anyone. So to sum up my recommendations - get cash heavy right now, ride out the storm and get long when the market turns again (which could be several years).

 

Curious - what is the radio guy claiming as a potential bottom for the market? If he's using EWT, he must have some range of expectancy on where the market is heading.

[bpwallace49]

Curious - what is the radio guy claiming as a potential bottom for the market? If he's using EWT, he must have some range of expectancy on where the market is heading.

 

He actually stopped his radio show early to go bulldoze his house to the ground to piss off the bank . . . . kinda a bummer, I wanted to see where he was going with his line of thinking . . .

[CaP'N GRuNGe]

Let's be clear here, I haven't painted any doomsday scenario, I've only forecasted the DOW at 1,000 as a worst case scenario. I've mentioned DOW between 3,000-5,000 as a more likely target. The many on here who strongly disagree with my forecasting are the ones claiming that if this were to happen, we'd be rationing food and such. I think the DOW tanking is necessary in the cleansing process and if you're prepared, the pain will be minimal if even felt at all. The EWT points to those areas by using fibonacci retracement points. If anyone on here has interpreted my 'get cash-heavy' strategy as fear mongering, that was not my intention. The intention is to be as risk averse as possible because if the DOW reaches those points, you can be sure that most retirement funds will tank too. Another part of this cleansing out process means there will be many more bank failures and in fact, just today I was reading an article about the FDIC - did you know they are in the RED? With a potential failure of the FDIC and bank closures, cash is the safest option for anyone. So to sum up my recommendations - get cash heavy right now, ride out the storm and get long when the market turns again (which could be several years).

 

Curious - what is the radio guy claiming as a potential bottom for the market? If he's using EWT, he must have some range of expectancy on where the market is heading.

 

He doesn't seem to focus on the DOW that much. I believe he has been predicting the S&P 500 to hit around 1300 sometime this year. Admittedly he doesn't talk about EWT all the time and seems to only use it as one tool. I wouldn't say he's a bull. Just more of a guy that says regardless of your fears, you need to ride the market as it is.

Edited February 24, 2010 by CaP'N GRuNGe

[CaP'N GRuNGe]

Here's the guy i'm talking about. He's an interesting listen and has good guests.

[Brentastic]

This is generally the same rationale that people use who think 9/11 was an inside job and at the end of the day that opinion is really baseless.

It's not even close to being the same. If I could draw an analogy to my rationale it would be this:

 

Company xyz forms a 'nonbiased' committee that aims to deliver accurate data reflecting the current state of said company. This committee is used by investors and speculators in determing fair market value of company xyz.

 

This might be the fairest committee known to man, appointed by stockholders or even appointed by non employees/stockholders. But the fact is that this committee is still employed by company xyz and if you think you're getting true, accurate and unbiased information from this committee, you're foolish.

[bushwacked]

so, if those models were accurate before the stimulus was passed, then their estimate of how many jobs have been created by the stimulus would still be accurate. but as it says in the link above, "the models that are telling us how many jobs the stimulus saved are the same models that predicted that unemployment today would be close to 7 percent with the stimulus".

 

Seems disingenuous to me. You've referred to the CBO projections plenty of times if it painted things in the perspective that lines up with your partisan view and now you are trying your darnedest to minimize their projections. Everyone here knows you'd be jumping all over these numbers today if it painted the stimulus bill in a negative light. Today's report discusses the gap in actual vs. projected employment numbers.

Edited February 24, 2010 by bushwacked

[bushwacked]

It's not even close to being the same. If I could draw an analogy to my rationale it would be this:

 

Company xyz forms a 'nonbiased' committee that aims to deliver accurate data reflecting the current state of said company. This committee is used by investors and speculators in determing fair market value of company xyz.

 

This might be the fairest committee known to man, appointed by stockholders or even appointed by non employees/stockholders. But the fact is that this committee is still employed by company xyz and if you think you're getting true, accurate and unbiased information from this committee, you're foolish.

 

Right, then you never believe anyone anything says if they are getting paid for their work because it's always a big giant conspiracy.

[Brentastic]

He doesn't seem to focus on the DOW that much. I believe he has been predicting the S&P 500 to hit around 1300 sometime this year. Admittedly he doesn't talk about EWT all the time and seems to only use it as one tool.

Oh wow, so he actually thinks the market is going up this year if he sees the S&P going to 1300 (I think it's around 1,100ish right now). All the indexes are the same - in other words they all fall and rise together in a macro sense.

[Brentastic]

Right, then you never believe anyone anything says if they are getting paid for their work because it's always a big giant conspiracy.

Not true - but you do need to take that type of information with a grain of salt (especially inside info). I'm not saying all information is bad, I'm just saying that you only really know the truth in hindsight - and even then you might not know for sure. There's a poopy ton of news out there, all varrying in degrees of knowledge and opinions. If I were to believe a given news source, I would be looking hard for a source with no hidden agenda. And I would most certainly be very skeptical of any inside information.

[CaP'N GRuNGe]

Oh wow, so he actually thinks the market is going up this year if he sees the S&P going to 1300 (I think it's around 1,100ish right now). All the indexes are the same - in other words they all fall and rise together in a macro sense.

 

Here you go Brent, your guy Prechter being interview by the guy i'm talking about. About 20 minutes in so fast forward if you don't want to listen to it all. About a month ago.

[Brentastic]

Here you go Brent, your guy Prechter being interview by the guy i'm talking about. About 20 minutes in so fast forward if you don't want to listen to it all. About a month ago.

Nice - Bobby P in the house!!!! Anytime I can listen to Prechter, I will. Listening now, thanks for the link.

[Azazello1313]

one was a prediction, one was analyzing results.

 

well, no. both were plugging very similar numbers into the EXACT same set of equations. the only way the CBO mid-stream assessment could change significantly from their prediction is if they changed the fundamental assumptions that went into their model. they haven't done that (yet).

 

again, the only news here is that the CBO is standing by their macro model. I posted some info questioning the efficacy of those kinds of models. read it and decide for yourself. again, if you want to you can still believe that those models missed completely in predicting anything that can actually be measured, but they happened to be dead-on accurate when it comes to stuff that can't be measured.

[Brentastic]

Here you go Brent, your guy Prechter being interview by the guy i'm talking about. About 20 minutes in so fast forward if you don't want to listen to it all. About a month ago.

That was a good listen - I actully listened to that 2 weekends ago via Prechter's site. FYI, Prechter comes on at 18:40. But if you want to hear the meat and potatoes of the EWT, or more specifically, socionomics, ff to the 33:00 mark. Good listen for the novice investor.

[Brentastic]

Here you go Brent, your guy Prechter being interview by the guy i'm talking about. About 20 minutes in so fast forward if you don't want to listen to it all. About a month ago.

Since we're providing links, here's a great interview with Prechter from Feb 10, 2010. This is part I of V:

 

 

[driveby]

The first anniversary of the Obama stimulus package generated a lot of discussion about whether and how much the package (originally estimated at $787 billion but now priced at $862 billion) moderated the recession. These are complex questions, and their answers require more than merely counting the quantity of goods and services that the government purchased or the number of people that the government hired.

 

We need to ask whether the government's spending reduced or enhanced private spending and whether public-sector hiring lowered or raised private hiring. This requires an empirical model based on the history of past fiscal actions in the U.S. or other countries. The administration must have such a model, but my own analysis makes me skeptical about the numbers they've reported about GDP increases and saved jobs.

 

 

Thus, viewed over five years, the fiscal stimulus package is a way to get an extra $600 billion of public spending at the cost of $900 billion in private expenditure. This is a bad deal.

 

The fiscal stimulus package of 2009 was a mistake. It follows that an additional stimulus package in 2010 would be another mistake.

 

Temporary, artificial jobs financed with borrowed money

[CaP'N GRuNGe]

More Prechter.

[Perchoutofwater]

Didn't Pelosi browbeat the CBO pretty badly last June?

[driveby]

CBO's Job Estimate is Dubious

 

and this;

 

More on That CBO Jobs Report [Kevin D. Williamson]

 

As Veronique notes, the Congressional Budget Office has released a new report on the stimulus (ARRA, American Recovery and Reinvestment Act), and Democrats are, predictably, citing the report as evidence that another round of stimulus is required in the form of the so-called jobs bill. That jobs bill has already found its way out of the Senate, with Scott Brown having blown his first big call in the big leagues. But the House version is about ten times the size of the Senate version — another terrifying hundred-billion-dollar slab of pork-a-palooza. Still, if the CBO says the stimulus works, then the stimulus works, right? So let's hit it again!

 

The CBO report is, as usual, more carefully hedged than a paranoid commodities trader’s retirement fund. But a few things are worth noting:

 

The first is that, even if we take the CBO’s most generous interpretation of the stimulus and credit it with creating the equivalent of 2 million jobs, the price tag remains absurd: $136,000 per job. Given that these jobs are not likely to pay an average salary of anything like $136,000 per year, the government, the workers, and the taxpayers probably would have been better off if Uncle Sam had just written these workers $60,000 checks for two years. (The stimulus's effects are expected to fade over the course of about 24 months, if they last that long.)

 

The second thing to consider is that the CBO takes two different approaches to counting up these jobs, both of them problematic. The first is the familiar technique of accepting job-counts from recipients of stimulus dollars. We all know how reliable those numbers have turned out to be. And even if those numbers were reliable, they’re not especially encouraging. CBO writes: “According to the recipients’ reports, a total of 595,263 full-time-equivalent jobs — more than two-thirds of them in education — were created or retained using ARRA funds during the fourth quarter. Those assistant vice principals and deputy diversity counselors are not creating much real economic value. The CBO report, to the authors' credit, barely conceals its contempt for these recipient reports.

 

When it’s not taking somebody else’s word for it, the CBO uses a different approach, but it still isn’t going out and actually counting up jobs created by the stimulus. Instead, it’s using a couple of different mathematical and macroeconomic models. Good models or bad models? I couldn't say, but I’m happy to give CBO the benefit of the doubt — as I am when it comes to the CBO's own qualifications of its findings. For instance: “Because they emphasize the influence of aggregate demand on output in the short run, the macroeconometric forecasting models tend to predict greater economic effects from demand-enhancing policies such as ARRA than some other types of models do.” In other words, the stimulus is being measured with a yardstick custom-designed to maximize its estimate. The CBO is up front in acknowledging the limitations of its models; don't count on congressional Democrats or Paul Krugman to be so scrupulous.

 

Lastly, the CBO acknowledges that stimulus spending has a crowding-out effect that inhibits private investment, thereby weakening the long-term health of the economy. How does that crowding-out work? Often through higher interest rates: “Higher interest rates,” CBO writes, “discourage spending on investment and on durable goods such as cars because they raise the cost of borrowed funds. However, that mechanism was not an important factor in 2009 because the Federal Reserve kept short-term interest rates very low.” Again, if we take the CBO at its word and offer the most generous interpretation, then the limited success the stimulus has had in creating jobs at $136,000 a pop rests, ultimately, on another Fed cheap-money bubble. And when interest rates start to rise? What happens then? Oh, we’ll worry about that when it … oh, yeah.

[Deathpig]

All I want to know is what jobs were created. Shovel-ready jobs are typically the equivalent of contract work, when the contract is up the job is up. A month ago, the AP reported that stimulus construction jobs did next to nothing to help unemployment.

 

http://www.msnbc.msn.com/id/34802254/ns/bu...at_a_crossroads

 

Some portion of the stimulus is creating jobs, though. What does the CBO say?

 

Direct purchasing of goods and services by the federal government and states have been the most effective provision of the act, CBO said.

 

What goods and services are being purchased by the government that is creating millions of jobs? Are those 1-2 million jobs sustainable? Are they only sustainable as long as the government is pumping money? And is that the real reason for a need for a second stimulus?

 

I'd like to see some actual, solid data that says stimulus money is fixing the economy, as the economy is, essentially, the private sector. I see no correllation between stimulus spending and the strength of the private sector.

 

Does anyone have links to actual data, and not news agencies spewing summaries of reports of summaries? I honestly don't even know where to begin to look.

[bushwacked]

Does anyone have links to actual data,

 

 

http://www.cbo.gov/ftpdocs/110xx/doc11044/02-23-ARRA.pdf

[bpwallace49]

Didn't Pelosi browbeat the CBO pretty badly last June?

 

Yes she did . . because the CBO is impartial and non-partisan and what the CBO was saying at the time, Pelosi didnt like.

 

Kinda like driveby's links to conservative blogs that now question the CBO, after heralding their projections in other areas. Just another example of a party slamming the CBO when their predictions/analysis doesnt jibe with the party line.

 

BTW, here is an article from Drivebys blogsite that he is quoting that points out what a great job the CBO is doing , , , when it matches their agenda. . . there were more, but when a site advertises on the side for a website to "meet rublican singles in your area" some of their "objectivity" can be questioned . .

 

http://corner.nationalreview.com/post/?q=O...TU1ZWFkMTEwMTI=

[evil_gop_liars]

You do realize that Driveby is more looney fringe than Perch but less than WV.

[driveby]

You do realize that Driveby is more looney fringe than Perch but less than WV.

 

Says the centrist.