What U.S. Economic Recovery? Five Destructive Myths


by rhody
Tags: destructive, economic, myths, recovery
Hlafordlaes
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#55
Sep15-11, 05:50 PM
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Worse here in Spain: 36% of young people never finish high school at all. Guess they were thinking they could make bucks in the now vanished construction industry. Good luck now.

@daveb: Few seem to understand aggregate demand and the multiplier effect, the rest seem to find denying reality altogether a nice contact sport. Probably same group who took basket weaving and motorcycle appreciation courses in high school.
mheslep
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#56
Sep15-11, 07:45 PM
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Quote Quote by daveb View Post
Yet another piece that claims the stimulus was not a failure insofar as it wasn't enough.
...Even some Republican economists and Nobel laureates like Paul Krugman argued that it was too small. Republican economist Mark Zandi,...
Yet another Zandi/Krugman rehash maybe. Mark Zandi is not a 'Republican economist'. He freely acknowledges being a registered Democrat, holds markedly liberal views, is a strong Keynesian. He was indeed on contract to deliver some basic econ data to the McCain campaign, but not policy advice. That's enough to give reporters leave to cite him as a Republican economist, giving the appearance of 'balance' to story on economics after putting in a hysterical Krugman blurb.
http://www.commentarymagazine.com/ar...oner-of-zandi/
mheslep
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#57
Sep15-11, 08:40 PM
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There is a large and growing list of literature from working economists that suggest fiscal stimulus is ineffective.

New Keynesian versus Old Keynesian Government Spending Multipliers
John F. Cogan, Tobias Cwik, John B. Taylor, Volker Wieland*
Journal of Economic Dynamics and Control, February 2009
Informal summary
Quote Quote by Wieland, University of Frankfurt
...Our analysis suggests government spending quickly crowds out private consumption and investment, because forward-looking households and firms will consider eventual increases in future taxes, government debt, and interest rates...

An Empirical Analysis of the Revival of Fiscal Activism in the 2000s
Quote Quote by Taylor, Stanford
Conclusion
In sum, this empirical examination of the direct effects of the three countercyclical
stimulus packages of the 2000s indicates that they did not have a positive effect on consumption and government purchases, and thus did not counter the decline in investment during the recessions as the basic Keynesian textbook model would suggest. Individuals and families largely saved the transfers and tax rebates. The federal government increased purchases, but by only an immaterial amount. State and local governments used the stimulus grants to reduce their net borrowing (largely by acquiring more financial assets) rather than to increase expenditures, and they shifted expenditures away from purchases toward transfers.

Fiscal Stimulus, Fiscal Inflation, or Fiscal Fallacies?
Quote Quote by Cochrane, University of Chicago
The central question is whether fiscal stimulus can do anything to raise the level of output. The question is not whether the “multiplier” exceeds one – whether deficit spending raises output by more than the value of that spending. The baseline question is whether the multiplier exceeds zero.

Some 'Keynesian' criticism is not very new:
Quote Quote by John M. Keynes, 1942
Organized public works, at home and abroad, may be the right cure for a chronic tendency to a deficiency of effective demand. But they are not capable of sufficiently rapid organisation (and above all cannot be reversed or undone at a later date), to be the most serviceable instrument for the prevention of the trade cycle.
rhody
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#58
Sep16-11, 06:13 AM
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Finally, some potential good news to home owners who are attempting to sell in a troubled economy, something to think about.

I have to admit, this is creative.

How to sell your house in a rent-to-own deal

Rhody...
WhoWee
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#59
Sep16-11, 07:37 AM
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How does this man have time for world travel, what is the purpose and what does it cost? After reading this I thought of the old term "the blind leading the blind".

http://news.yahoo.com/geithner-us-no...103020729.html

"WROCLAW, Poland (AP) U.S. Treasury Secretary Timothy Geithner has told eurozone finance officials the U.S. is not trying to lecture them on their debt crisis."

While he's not trying to lecture them - he might have some advice?http://news.yahoo.com/geithner-urge-...154859873.html

"Euro zone leaders agreed in July to give the 440 billion euro ($601 billion) European Financial Stability Facility (EFSF) the right to intervene on bond markets, extend credit lines to governments and fund the recapitalization of banks.

Geithner will take part in an informal meeting of EU finance ministers on a one-day trip to the Polish city of Wroclaw on Friday, amid growing U.S. concern over the single currency bloc's inability to put an end to the sovereign debt crisis.

He is likely to tell the ministers that they should consider increasing the size of the EFSF to equip it better for the needs of potential bank recapitalization.

"He will probably tell Germany to give up its resistance to an increase in the size of the EFSF," the source said.

A well connected fund source told Reuters Geithner had been pushing for a solution for European banks along the lines of the TARP program in the United States, but had not made much headway."
rhody
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#60
Sep20-11, 12:12 PM
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This story puts a human face on a Greece's slow economic downward spiral,

Greek Crisis Exacts the Cruelest Toll

An honorable hard working man turned to desparation through no direct fault of his own.
I had never heard of this technique used by banks (domestic or as is the case here foreign) before either, at least not till reading this story:

Small businesses struggled with cash shortages because they had to pay their overhead when due, but wait months for hard cash from customers. Mr. Petrakis managed the same way other small entrepreneurs did: To get money quickly, he took his customers' postdated checks to banks and sold them at a discount.

If he had a check for 1,000 that couldn't be cashed for five months, a bank would give him 800 right away, then another 100 on the date the check became cashable, his lawyer, Aggelos Zervos, says. The bank would keep the remaining 100.
Could a scenario like the one portayed in this article happen, here in the U.S. ? If so, why, and if not, why not ?

Rhody...
WhoWee
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#61
Sep20-11, 12:55 PM
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Quote Quote by rhody View Post
This story puts a human face on a Greece's slow economic downward spiral,

Greek Crisis Exacts the Cruelest Toll

An honorable hard working man turned to desparation through no direct fault of his own.
I had never heard of this technique used by banks (domestic or as is the case here foreign) before either, at least not till reading this story:



Could a scenario like the one portayed in this article happen, here in the U.S. ? If so, why, and if not, why not ?

Rhody...
Factoring is a common practice in the US.
http://www.businessfinance.com/factoring-receivable.htm

Smaller retail merchants use their merchant accounts.
http://expressfinancing.americanexpr...rchant_-_Loans

For individuals - there are "pay day" loans:
http://www.advanceamerica.net/payday-loans
mheslep
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#62
Sep20-11, 03:06 PM
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Quote Quote by rhody View Post
This story puts a human face on a Greece's slow economic downward spiral,

...

Could a scenario like the one portayed in this article happen, here in the U.S. ? If so, why, and if not, why not ?

Rhody...
Could happen, and does, everywhere: see credit cards. That's a ~20% loan the bank gave the guy.
mheslep
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#63
Sep20-11, 03:12 PM
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Quote Quote by rhody View Post
This story puts a human face on a Greece's slow economic downward spiral,

Greek Crisis Exacts the Cruelest Toll

An honorable hard working man turned to desparation through no direct fault of his own.
...
Greece's government and protected bureaucracy is where my anger goes with this story. Same WSJ issue:

Why Greece Won't Reform
Over the past year the government hasn't laid off a single civil servant.


Quote Quote by WSJ, Takis Michas
"The present government has done absolutely nothing during the last 12 months to speed up privatizations, reduce the public sector or open up closed professions," Athanasios Papandropoulos, a leading economic analyst, told me recently in an interview. "In these 12 months it has not fired even one civil servant. The only thing it is doing is trying to tax the private sector out of existence.
...
"Whereas more than 1,000 Greeks were losing their jobs in the private sector every day in August, the government was assuring civil servants with lifetime tenure that their job privileges were not in danger."
rhody
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#64
Sep22-11, 02:34 PM
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A ray of hope for young college graduates who choose to be in the following fields: Finance, Medical Assistant, Network Administration.

3 College Majors That Can Get You Hired Right Away

For graduates in these fields who have had no luck finding jobs, here is your chance to debunk this article.

Rhody...
AlephZero
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Sep23-11, 08:16 PM
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Quote Quote by rhody View Post
Could a scenario like the one portayed in this article happen, here in the U.S. ? If so, why, and if not, why not ?
The part of the story that you quoted about discounting (or factoring) bills has been a standard (and perfectly respectable) business practice for hundreds of years, except that normally when you "sell" the bill to the factoring company or discount house (the bank, in your quote) they take over the responsibility of collecting the debt directly from your customer, and they also take the risk that they can't collect it. The 10% discount on the bill is your "insurance payment" for transferring the risk to them.

Financial fraud isn't a new invention, either.
rhody
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#66
Oct3-11, 09:08 AM
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Starbucks wants $5 more, to create U.S. jobs
Starting Nov. 1, Starbucks will collect donations of $5 or more from customers to stimulate U.S. job growth through its "Jobs for USA" program. The Seattle-based coffee chain is collaborating with the Opportunity Finance Network, a nonprofit that works with nearly 200 community development financial institutions to provide loans to small businesses and community groups.

Starbucks says 100% of donations will go toward loans for companies and organizations that can add jobs or stem job losses.
For any contribution 100% voluntary, I am all for. I have a problem when the government, state, local, or federal mandates a tax or fee and you have no choice but to pay it.

Rhody...
MrNerd
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#67
Oct3-11, 10:43 AM
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Quote Quote by rhody View Post
Starbucks wants $5 more, to create U.S. jobs

For any contribution 100% voluntary, I am all for. I have a problem when the government, state, local, or federal mandates a tax or fee and you have no choice but to pay it.

Rhody...
I agree, the government forces us to pay too many taxes that we don't want. I think of it like the greatest racketeering scam ever. Pay up or go to jail. However, I admit that the government also does a fair amount of good, too, with the money it collects(and doesn't waste). But I still don't want to pay for some taxes that I don't even want the effects of. I suppose it's hypocritical to say this before I even get a first job(I'm beginning to resent the world from my frustration), so I can't really say I pay too many taxes myself.
rhody
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#68
Oct3-11, 11:31 AM
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Wow,

North Dakota isn't feeling the slump
This state epitomizes a problem the Obama administration may face even if it is able to turn the economy around by 2012: People have suffered in this recession, and even when back on their feet, they have long memories of what they lost along the way.

and

But Williams is losing his $1-million home in Montana to foreclosure, and spent his first few months in North Dakota camped out in a tiny RV with his family, going to the bathroom in a bucket and living without running water.

"We're starting over again at 60, and we're adaptable. But our hopes and dreams got washed by the wayside," he said, as he fed his grandsons carrots and potatoes in his kitchen, where he and his wife sleep on a foldout couch each night. Light bulbs hang from the ceiling near exposed sockets, and the yellow, peeling walls are stuffed with sacks of fiberglass for insulation.
Every incumbent should read this article, then plan accordingly. It's sink or swim time...

Rhody...
mheslep
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#69
Oct3-11, 01:33 PM
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Quote Quote by rhody View Post
Wow,

North Dakota isn't feeling the slump...
Yes some employers say the "lowest unemployment rate" of 3.5% doesn't describe job situation there:
Quote Quote by WSJ
...[Oil company CEO]Mr. Hamm believes that if Mr. Obama truly wants more job creation, he should study North Dakota, the state with the lowest unemployment rate in the nation at 3.5%. He swears that number is overstated: "We can't find any unemployed people up there. The state has 18,000 unfilled jobs," Mr. Hamm insists. "And these are jobs that pay $60,000 to $80,000 a year." The economy is expanding so fast that North Dakota has a housing shortage.

Quote Quote by LA Times
...But Williams is losing his $1-million home in Montana to foreclosure,...
Million dollar home? That's probably two million on the coasts.

Quote Quote by rhody
Every incumbent should read this article, then plan accordingly. It's sink or swim time...
Plan for what? Who's sinking in this story? Voters or incumbents? Should the incumbents plan to fix the problems of the million dollar home owners by imposing on everyone else? If there is an plan from the current administration, perhaps it is to look for strong job growth and harras business there:
Quote Quote by WSJ
A few months ago the Obama Justice Department brought charges against Continental and six other oil companies in North Dakota for causing the death of 28 migratory birds, in violation of the Migratory Bird Act. Continental's crime was killing one bird "the size of a sparrow" in its oil pits. The charges carry criminal penalties of up to six months in jail. "It's not even a rare bird. There're jillions of them," he explains. He says that "people in North Dakota are really outraged by these legal actions," which he views as "completely discriminatory" because the feds have rarely if ever prosecuted the Obama administration's beloved wind industry, which kills hundreds of thousands of birds each year.

Question: Do people imagine some incumbent politician made a 'plan' for the economic boom enjoyed by N. Dakota, or is more likely that tens of thousands of motivated people like Williams, some of them even rich, made the N. Dakota economy what it currently is?
rhody
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#70
Oct5-11, 10:16 AM
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Sobering news...

This does not bode well for the Greeks, according to the article, the Government only has funds to keep going to mid November.

Greece paralyzed by 24-hour strike by civil servants
A nationwide strike by Greek civil servants to protest ever steeper austerity measures paralyzed the country today, bringing transport to a halt and grounding all flights.

Teachers and lawyers joined the work stoppage and even hospitals were running only on emergency staff, the Associated Press reports.

and

Greek civil servant and trade unionist Tiana Andreou told the BBC that people's lives hav been ruined by the austerity measures and that unions "have decided that we're going to stop this."
Rhody...
mheslep
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#71
Oct5-11, 02:48 PM
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Quote Quote by rhody View Post
Sobering news...

This does not bode well for the Greeks, according to the article, the Government only has funds to keep going to mid November.

Greece paralyzed by 24-hour strike by civil servants
:
Let me guess, the striking civil servants will be paid while on strike.
...men and women shouted "traitors" at riot police in central Athens while a crowd of younger protesters chanted "cops, pigs, murderers."
Sure. It is the protesters that set fire to a bank, killing a pregnant woman so of course it is the police that murder.
WhoWee
WhoWee is offline
#72
Oct6-11, 09:57 AM
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I've been listening to news analysis day and night regarding the economy. Regardless of the channel - the question asked is (basically) "what will the Government do about this problem?". Perhaps the question asked should be "what have Government(s) done that contributed to these problems - what can be undone"?.


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