greece in a death spiral

[wiegie]

I think I made it failrly clear I read respoded to the abstract you posted and bolded for emphasis.

 

along with the cheap hyperbole yo mama pointed out, this kind dismissive evasion pretty much fills up your bag of tricks these days.

you mockingly criticise a paper you didn't read and then blame me for dismissive evasion when I mock the fact that your comments about the paper would be easily addressed if you just had actually read the paper??? good job

 

(And I don't understand what your comment about "cheap hyperbole" means--the simple fact is that things actually COULD have gotten as bad as the Great Depression if the Fed and federal government hadn't taken action.)

Edited August 24, 2010 by wiegie

[yo mama]

I think lenders are scared to lend money out, moreso then people not wanting credit.

I wouldn't say they are scared - just more discriminating. You know, actually verifying income, conservatively estimating the value of collateral, etc. Believe me - banks want to lend money to make a profit. It's just that they would rather hold cash than make a bad loan.

[yo mama]

I think I made it failrly clear I read respoded to the abstract you posted and bolded for emphasis.

 

along with the cheap hyperbole yo mama pointed out, this kind dismissive evasion pretty much fills up your bag of tricks these days.

Hey, its the best I could do with kids crawling all over me. And I hadn't had my morning coffee yet.

[MrTed46]

I wouldn't say they are scared - just more discriminating.

 

From a bank's point of view, i would say scared and more discriminating are one in the same.

[wiegie]

I wouldn't say they are scared - just more discriminating.

let's not forget the possibility that they aren't lending because their balance sheets are still very ugly (ala the Japanese banks of the 1990s).

[Azazello1313]

you mockingly criticise a paper you didn't read and then blame me for dismissive evasion when I mock the fact that your comments about the paper would be easily addressed if you just had actually read the paper??? good job

 

I was mockingly criticizing the excerpt you posted and highlighted. but in a sense, I admit you are right, with respect to my speculation that this was yet another defense of policy based on the circular reasoning of using 'data' derived from the same economic models used to justify the policies in the first place. it doesn't appear the paper goes in that direction at all.

 

so now I DID read the paper (or at least skimmed it), and the guts of it basically seems to be a comparison of the 2007-09 recession with 1929-32, and basically all this just shows how much worse the great depression was in pretty much every way. I don't really get how the stuff from the abstract (about how policy saved us from another great depression) really flows logically from the data. there seems to be a built-in presumption that but-for better monetary and fiscal policy, this would have been just as bad as the worst contraction EVER. and the paper really doesn't seem to lay the foundation for that presumption. yeah, we learned our lessons and reacted better than in the early 30s (which frankly is a pretty low bar -- the miserable failures of policy, particularly monetary policy, in response to the great depression have been evident for decades). my question is....why does he ignore every other recession since 1932 in this analysis? there have been a lot of them, many with steeper drops in important metrics than the current one. obviously, none of them were as bad as the 1929-32 depression. comparing the recent recession only to the "big one" seems to be cherry-picking, because EVERY recession, every policy response and every recovery looks good compared with that one. so again, what about all of the other recessions since? yeah, we learned lessons from the GD, but those lessons have mostly been learned and incorporated for a long time. and given the ugliness of our "recovery" coming out of this one, I think it is worth considering if maybe past policymakers learned those lessons better than our current ones. in any case, yeah, of course we learned lessons from the GD...what are we going to learn from our response to THIS recession?

Edited August 24, 2010 by Azazello1313

[wiegie]

but in a sense, I admit you are right

Big John, please note this for posterity.

 

[wiegie]

my question is....why does he ignore every other recession since 1932 in this analysis? there have been a lot of them, many with steeper drops in important metrics than the current one.

that is pretty much not true--by almost all useful metrics, the current recession was clearly the worst since the Great Depression. (The one obvious exception is the unemployment rate in the early 1980s which got higher than what happened to the unemployment rate this time; but that recession was not at all like this because it was the result of the Fed trying to fight inflation. I'll note that by other labor market metrics (in particular, % job losses) this recession is much worse than the 1980s.)

[wiegie]

here is another (shorter) article that compares the current downturn to the Great Depression so that you can see just how bad things initially were in the world economy in 2008-2009:

 

http://www.voxeu.org/index.php?q=node/3421

 

The graphs make it clear that "doomsday" might not be all that ridiculous of a term to use.

[yo mama]

Doomsday = great depression, hard times, starvation, no jobs. Fill in the blank...its not good.

Maybe we are in for hard times. If so, do you really think putting the nation deeper in debt an accelerated pace is the answer? National debt is 13+ trillion. We're adding about another 10% per year to that - about $1.4 trillion in each of 2010 and 2011. How long do you think we can keep that up before it rots out the foundation of economy? (See, e.g., Greece) I guess I just care less about short-term growth than I do about the long-term economic health of the country. Frankly, I'd be fine with 10 years of no growth IF during that time the state and federal governments could balance their budgets, and business and individuals used that time to pay down debt and get realistic with their finances.

[TimC]

here is another (shorter) article that compares the current downturn to the Great Depression so that you can see just how bad things initially were in the world economy in 2008-2009:

 

http://www.voxeu.org/index.php?q=node/3421

 

The graphs make it clear that "doomsday" might not be all that ridiculous of a term to use.

 

 

I believe those two hacks, Barry Eichengreen and Kevin H. O’Rourke, simply proved that a World War is all we need to turn this planet's economy around.

 

Killing 60 million people when the world population is around 2.5 billion or so is a helluva way to increase productivity? Well, that and digging out from the rubble.

Edited August 24, 2010 by TimC

[Azazello1313]

that is pretty much not true--by almost all useful metrics, the current recession was clearly the worst since the Great Depression. (The one obvious exception is the unemployment rate in the early 1980s which got higher than what happened to the unemployment rate this time; but that recession was not at all like this because it was the result of the Fed trying to fight inflation. I'll note that by other labor market metrics (in particular, % job losses) this recession is much worse than the 1980s.)

 

so the 1982 recession was worse in terms of unemployment, and worse in terms of GDP contraction. exactly which "truly useful metrics" (I guess unemployment and GDP don't qualify?) do you have in mind for saying that this was "clearly" the worse since the GD?

 

but even if what you say is true, nearly all of those metrics were astronomically worse with the GD. people can debate whether 2008 was worse than 1982 -- nobody can argue that either was anywhere close to the GD. regardless of which is "worse", they are much closer to each other in pretty much every way imaginable than either is to the big one.

 

but again, why would he ignore every other recession if they only bolster his point?

[MrTed46]

Maybe we are in for hard times. If so, do you really think putting the nation deeper in debt an accelerated pace is the answer? National debt is 13+ trillion. We're adding about another 10% per year to that - about $1.4 trillion in each of 2010 and 2011. How long do you think we can keep that up before it rots out the foundation of economy? (See, e.g., Greece) I guess I just care less about short-term growth than I do about the long-term economic health of the country. Frankly, I'd be fine with 10 years of no growth IF during that time the state and federal governments could balance their budgets, and business and individuals used that time to pay down debt and get realistic with their finances.

 

The govt is not putting the nation in deeper debt just to do so. They are trying to stimulate the economy and by doing so can collect more tax revenue to pay off this debt while cutting costs in the future. Whether or not this works is yet to be determined no matter what anyone hypothesizes. Our economy has been decimated by bad business practices and this was a necessary action IMO. To remind you, I don't agree how they spent the money but I do not mind them spending it right now. Does it scare me? Yes, but letting the economy just die scares me more. You mention hard times, but no one can define these hard times. It's hard to argue one way or another without seeing the end result of both scenarios, but we only get to see the end of one and I hope its a happy ending. The way I see it, we are currently in "hard times" WITH all this spending. I can't imagine what it would be WITHOUT this spending. Many of my friends are jobless and I have lost my comfort zone with my job security because of this.

 

You also mention 10 years of no growth. If our economy fails the way they thought it was going to, forget no growth and imagine starvation. If no growth was the only problem, I doubt they would spend what they are. No growth (or worst) is a time where it is harder to balance out budgets and pay down their debt. Eg, if a individual takes out a loan to start a business (THE American DREAM) and then see's no growth how would he/she be able to balance it out?

 

This govt spending is NOT a short-term fix (theoretically from their eyes). This is to stabilize the economy on a continuous basis. Their plan is not to fix it now and let it get messed up long-term. Think of it as a continuous stream, and the earlier you fix the stream the better the future. This WILL NOT correct itself, the grave is too deep.

 

You can't compare Greece (mostly socialist state) to USA. Their economy can never support the "unethical" off balance sheet borrowing that country did (I am Greek BTW). I am not saying we will not have financial ruin like they are having, but the causes will not be similar.

[wiegie]

so the 1982 recession was worse in terms of unemployment, and worse in terms of GDP contraction. exactly which "truly useful metrics" (I guess unemployment and GDP don't qualify?) do you have in mind for saying that this was "clearly" the worse since the GD?

response outsourced to Minzie Chinn: http://www.econbrowser.com/archives/2009/0...ment_and_1.html

(summary, Mulligan was cherry-picking his data)

 

As for other metrics, check out the graphs in the other link I provided.

 

but even if what you say is true, nearly all of those metrics were astronomically worse with the GD. people can debate whether 2008 was worse than 1982 -- nobody can argue that either was anywhere close to the GD.

yes--that is the whole freaking point: initially things WERE worse than the beginning of the Great Depression, but because of the policy responses of the fed and federal government, it did not turn into another Great Depression.

[bpwallace49]

The govt is not putting the nation in deeper debt just to do so. They are trying to stimulate the economy and by doing so can collect more tax revenue to pay off this debt while cutting costs in the future. Whether or not this works is yet to be determined no matter what anyone hypothesizes. Our economy has been decimated by bad business practices and this was a necessary action IMO. To remind you, I don't agree how they spent the money but I do not mind them spending it right now. Does it scare me? Yes, but letting the economy just die scares me more. You mention hard times, but no one can define these hard times. It's hard to argue one way or another without seeing the end result of both scenarios, but we only get to see the end of one and I hope its a happy ending. The way I see it, we are currently in "hard times" WITH all this spending. I can't imagine what it would be WITHOUT this spending. Many of my friends are jobless and I have lost my comfort zone with my job security because of this.

 

You also mention 10 years of no growth. If our economy fails the way they thought it was going to, forget no growth and imagine starvation. If no growth was the only problem, I doubt they would spend what they are. No growth (or worst) is a time where it is harder to balance out budgets and pay down their debt. Eg, if a individual takes out a loan to start a business (THE American DREAM) and then see's no growth how would he/she be able to balance it out?

 

This govt spending is NOT a short-term fix (theoretically from their eyes). This is to stabilize the economy on a continuous basis. Their plan is not to fix it now and let it get messed up long-term. Think of it as a continuous stream, and the earlier you fix the stream the better the future. This WILL NOT correct itself, the grave is too deep.

 

You can't compare Greece (mostly socialist state) to USA. Their economy can never support the "unethical" off balance sheet borrowing that country did (I am Greek BTW). I am not saying we will not have financial ruin like they are having, but the causes will not be similar.

 

While I agree with a lot of this premise, the actual behavior by the gubmnet hasnt followed the same logic. By going off on the health care question, that really hasnt saved us anything, and my quotes for my company are rolling in . . and they look pretty bleak (like 30-40% increases).

 

In respects to the stimulus, I agree with you, and I agree with the unemploymnet extensions. However I would rather have more of the stimulus and focus be on consumer confidence, expanding job creation and more "shovel ready" projects that would have ahd more direct economic stimulus by putting money in the pockets of the consumers.

 

If they waited on health care, and put more of a focus on main street issues . . . maybe unemployment wouldnt be so high?

 

Health care could have waited until the economy was stronger, and the economy needed to be /should be NOW . . the main focus.

[Perchoutofwater]

While I agree with a lot of this premise, the actual behavior by the gubmnet hasnt followed the same logic. By going off on the health care question, that really hasnt saved us anything, and my quotes for my company are rolling in . . and they look pretty bleak (like 30-40% increases).

 

In respects to the stimulus, I agree with you, and I agree with the unemploymnet extensions. However I would rather have more of the stimulus and focus be on consumer confidence, expanding job creation and more "shovel ready" projects that would have ahd more direct economic stimulus by putting money in the pockets of the consumers.

 

If they waited on health care, and put more of a focus on main street issues . . . maybe unemployment wouldnt be so high?

 

Health care could have waited until the economy was stronger, and the economy needed to be /should be NOW . . the main focus.

 

Exactly! If we had focused on building needed infrastructure (not a high speed rail between LA and Nevada or a bridge to nowhere) then it would have been real stimulus. As it is the stimulus was in large part a give away to some, and did very little to help most. I wouldn't have minded if we had gotten something for our investment instead of just funding a few pet projects. I've always said something needed to be done about health care, but I also said from the get go, that now in a down economy is the worst time to do something like this. There is way to much uncertainty out there, and our rulers have decided to heap more on top of it. As a result those that do have cash are holding on to it until they can figure out how the new rules and regulations from health care, and possibly cap and tax affect them. I've always seen the government's main purpose as being to provide defense for our country, and to help eliminate uncertainty through contractual law, and based on southern Arizona and the GM debacle as well as adding to the uncertainty by passing a terrible health care bill, and threatening to pass other legislation that will have a negative impact on businesses bottom line at this point in time they have failed miserably.

[MrTed46]

While I agree with a lot of this premise, the actual behavior by the gubmnet hasnt followed the same logic. By going off on the health care question, that really hasnt saved us anything, and my quotes for my company are rolling in . . and they look pretty bleak (like 30-40% increases).

 

In respects to the stimulus, I agree with you, and I agree with the unemploymnet extensions. However I would rather have more of the stimulus and focus be on consumer confidence, expanding job creation and more "shovel ready" projects that would have ahd more direct economic stimulus by putting money in the pockets of the consumers.

 

If they waited on health care, and put more of a focus on main street issues . . . maybe unemployment wouldnt be so high?

 

Health care could have waited until the economy was stronger, and the economy needed to be /should be NOW . . the main focus.

 

Like I said, I don't agree how they spent the money, but spending is necessary right now.

 

I don't think the Health Care reford crap he is doing is really to stimulate the economy. It was on his agenda and he followed through. HORRIBLE timing.

[yo mama]

While I agree with a lot of this premise, the actual behavior by the gubmnet hasnt followed the same logic. By going off on the health care question, that really hasnt saved us anything, and my quotes for my company are rolling in . . and they look pretty bleak (like 30-40% increases).

 

In respects to the stimulus, I agree with you, and I agree with the unemploymnet extensions. However I would rather have more of the stimulus and focus be on consumer confidence, expanding job creation and more "shovel ready" projects that would have ahd more direct economic stimulus by putting money in the pockets of the consumers.

 

If they waited on health care, and put more of a focus on main street issues . . . maybe unemployment wouldnt be so high?

 

Health care could have waited until the economy was stronger, and the economy needed to be /should be NOW . . the main focus.

That's pretty much how I see it. Spending on infrastructure is fine. Funding 99 months of unemployment benefits and free health care isn't. We're currently spending $1.4 trillion (of borrowed) dollars a year more than we're collecting in tax revenues. I'd rather see investments in things that generate revenue, rather that programs that just put spending money into people's pockets. It's not like the country doesn't have a massive wish list of things that need building, or services that need to be performed.

Edited August 24, 2010 by yo mama

[bpwallace49]

Like I said, I don't agree how they spent the money, but spending is necessary right now.

 

I don't think the Health Care reford crap he is doing is really to stimulate the economy. It was on his agenda and he followed through. HORRIBLE timing.

 

Spending IS necessary now . . but doing a pet project like health care (although it NEEDED to be reformed) when the economy is in the crapper was purely discretionary. that was a CHOICE . . and not one in the best interests of the country right now. Just like the Republicans deciding to NOT legislate is a BAD idea right now.

 

NOW should be about the economy strengthening and doing what is best for America . . not about bullcrap political jockeying for votes this fall, which is what the left did with passing health care and the righ has done by doing ANYTHING of value except whine.

 

I wish more people supported the Roadmap . . but neither party has the balls to do what is difficult, versus doing what is politically popular and pandering to their base . . .

[TimC]

They simply should've paid off every mortgage in the country instead of doing anything else. That would've been the smartest thing and would've stimulated the hell out of the economy.

Edited August 24, 2010 by TimC

[bpwallace49]

I'd rather see investments in things that generate revenue, rather that programs that just put spending money into people's pockets.

 

But putting money in people's pockets in the case of unemploymnet means they SPEND it, which stimulates the economy, and they also pay taxes on it.

 

We need more ACTIVITY and spending to get the economy moving and growing. inaction is the enemy of recovery.

[CaP'N GRuNGe]

If we double exports in the next 5 years (or whatever similar was promised) that will help.

 

(How in the heck are we going to accomplish that anyways?)

[Perchoutofwater]

We need more ACTIVITY and spending to get the economy moving and growing. inaction is the enemy of recovery.

 

The problem is that pretty much everything the government has done in the last year and that is still on the agenda to do is making those that have money to spend hold on to it until they can figure out how the new legislation and proposed legislation is going to affect their taxes and regulate their business interests. Tell me, how do buying bonds in a corporation look since the government basically ignored the rights of the GM bondholders? Actions like that don't exactly make me want to go out and invest in a business other than my own. Unfortunately since I'm still not 100% sure how the health care legislation will effect my businesses, or how the looming taxes to pay off the spending spree are going to affect my businesses, so I and countless others like me are sitting in a holding pattern until these things shake out.

[Azazello1313]

response outsourced to Minzie Chinn: http://www.econbrowser.com/archives/2009/0...ment_and_1.html

(summary, Mulligan was cherry-picking his data)

 

As for other metrics, check out the graphs in the other link I provided.

 

the only metric (focused on in both of your links) by which the initial stages of the current recenssion look anywhere near as bad as the great depression are industrial output/manufacturing. GDP, job losses, unemployment, global exports, deflation -- all staggeringly worse during the great depression than in 2008 and 2009. just manufacturing. talk about cherry picking data. so, it might be worth asking, what share of the US economy was manufacturing in 1929, and what was that share in 2008? I can't find a solid answer for 1929, but I know it was a LOT bigger share of the economy than in 2008, when it was something like 12%.

 

yes--that is the whole freaking point: initially things WERE worse than the beginning of the Great Depression, but because of the policy responses of the fed and federal government, it did not turn into another Great Depression.

 

I think you misread what I wrote. to me, the argument that this recession was initially as bad as the great depression seems absurd. double-digit GDP drops, unemployment over 20% for years, a 70% decrease in foreign trade, a 32% decline in wholesale prices. nothing about the current recession comes anywhere close to those shocking numbers.

[Azazello1313]

Spending IS necessary now . . but doing a pet project like health care (although it NEEDED to be reformed) when the economy is in the crapper was purely discretionary. that was a CHOICE . . and not one in the best interests of the country right now. Just like the Republicans deciding to NOT legislate is a BAD idea right now.

 

wait. so doing health care in the middle of a recession was a bad idea. but saying it was a bad idea was also a bad idea?