Register to reply

Germany's Economic Recovery Despite Lack of Stimulus

by CAC1001
Tags: economic, germany, lack, recovery, stimulus
Share this thread:
mugaliens
#19
Dec9-10, 12:44 AM
P: 595
Amazing how that works, simply given some time for a free market to work itself out.

The only thing is, if a government does nothing, it can't later claim any success for the natural swing of the tide.
CAC1001
#20
Dec9-10, 06:04 PM
P: 18
Quote Quote by Gokul43201 View Post
As Monique suggested in an earlier thread, going through a period of crushing hyperinflation can have that kind of effect on the national psyche.
I think one of the articles mentions this. Basically the Germans fear inflation, whereas America, due to the Great Depression, fears deflation.
WhoWee
#21
Dec9-10, 06:22 PM
P: 1,123
Quote Quote by CAC1001 View Post
I think one of the articles mentions this. Basically the Germans fear inflation, whereas America, due to the Great Depression, fears deflation.
I'm not sure of that - my guess is that most people blame the Great Depression on the 1929 Stock Market Crash and lack of a safety net. Now with the FDIC, Social Security, Unemployment, and welfare - there is a false sense of security.
CAC1001
#22
Dec9-10, 07:34 PM
P: 18
Quote Quote by WhoWee View Post
I'm not sure of that - my guess is that most people blame the Great Depression on the 1929 Stock Market Crash and lack of a safety net. Now with the FDIC, Social Security, Unemployment, and welfare - there is a false sense of security.
Most people do, but I meant the American economics establishment, many of whom view allowing massive deflation to occur at the time created the depression. Part of this for example was the Federal Reserve made the mistake of cutting the money supply and allowing the banking system to fail. So now we see the Fed floods the economy with liquidity to counter the deflation, but it might end up creating inflation at some point.
WhoWee
#23
Dec9-10, 08:03 PM
P: 1,123
Quote Quote by CAC1001 View Post
Most people do, but I meant the American economics establishment, many of whom view allowing massive deflation to occur at the time created the depression. Part of this for example was the Federal Reserve made the mistake of cutting the money supply and allowing the banking system to fail. So now we see the Fed floods the economy with liquidity to counter the deflation, but it might end up creating inflation at some point.
Especially if they continue to print money.

On the heels of the TARP bailout, I thought it would be a good idea to put incentives in place for saving money - tough to do when interest rates are hovering at 0% though.
CRGreathouse
#24
Dec9-10, 08:52 PM
Sci Advisor
HW Helper
P: 3,684
Quote Quote by WhoWee View Post
I thought it would be a good idea to put incentives in place for saving money - tough to do when interest rates are hovering at 0% though.
Do you know if real (savings) interest rates are low, or just nominal? That is, our inflation rate is so low at the moment that it wouldn't surprise me if interest was just as high in real terms as (say) a decade ago.
WhoWee
#25
Dec9-10, 09:10 PM
P: 1,123
Quote Quote by CRGreathouse View Post
Do you know if real (savings) interest rates are low, or just nominal? That is, our inflation rate is so low at the moment that it wouldn't surprise me if interest was just as high in real terms as (say) a decade ago.
This is something that concerns me. We are truely in uncharted waters with respect to suppressed interest rates coupled with tight credit, and a Federal printing press running 24/7. We also have a reduced manufacturing output, a potential sell-off in the stock market, a very weak real estate market, unresolved derivatives issues, $Trillions in cash parked off-shore, a Chinese economic resurgance, great uncertainty with respect to cap and trade and other other potential "green" legistlation, and uncertainty over health care reform costs and requirements. Last, couple this with an inexperienced President and a disfunctional Congress and I don't know if anyone can model all (or any) potential outcomes with any degree of certainty?
CRGreathouse
#26
Dec9-10, 09:33 PM
Sci Advisor
HW Helper
P: 3,684
Fair enough.
Gokul43201
#27
Dec10-10, 03:16 AM
Emeritus
Sci Advisor
PF Gold
Gokul43201's Avatar
P: 11,155
Does the modeling become easier if you have a more experienced President?
WhoWee
#28
Dec10-10, 06:27 AM
P: 1,123
Quote Quote by Gokul43201 View Post
Does the modeling become easier if you have a more experienced President?
The only predictability with this President is his penchant to outspend everyone that governed before him - with hope over his change - outcomes are uncertain at best. How does this help with modeling?
Gokul43201
#29
Dec10-10, 09:41 AM
Emeritus
Sci Advisor
PF Gold
Gokul43201's Avatar
P: 11,155
My previous post was rhetorical. As is this one. But since you didn't answer the question in my previous post, I foresee no danger of you mistakenly deciding to answer the question in this one either.

I suppose a penchant to outspend everyone introduces greater uncertainty in your models than a penchant to be a maverick, or to suddenly reverse many of your previous positions on important issues?
WhoWee
#30
Dec10-10, 10:01 AM
P: 1,123
Quote Quote by Gokul43201 View Post
My previous post was rhetorical. As is this one. But since you didn't answer the question in my previous post, I foresee no danger of you mistakenly deciding to answer the question in this one either.

I suppose a penchant to outspend everyone introduces greater uncertainty in your models than a penchant to be a maverick, or to suddenly reverse many of your previous positions on important issues?
I am being honest about the current conditions and my observations of this Presidents actions.
Gokul43201
#31
Dec10-10, 10:20 AM
Emeritus
Sci Advisor
PF Gold
Gokul43201's Avatar
P: 11,155
It struck me as an attempt at trolling (still does), but I must admit that I very often can not determine the point you are attempting to make in a post. As is the case here. I don't see how anyone can reasonably blame the difficulty of modeling on the level of experience of a President. If anything, your earlier post suggests a predictability (desire to outspend, no matter what) rather than the opposite. Adding additional descriptors of unfavorability does nothing to forward a meaning argument, but it does serve as a useful smear.

You clearly posit that the situation inherited by the President counts as being "uncharted waters", yet blame the President for taking measures not taken previously. You call his (historically large) tax cuts a waste of money yet berate his party as being taxers when all they have done for the past two years is heap on tax cuts over tax cuts. You use words like "disfunctional" as though they have very special meaning to this particular Congress over any other in history. Or as though it has any relevance to the actual question about real interest rates.
WhoWee
#32
Dec10-10, 10:57 AM
P: 1,123
Quote Quote by Gokul43201 View Post
It struck me as an attempt at trolling (still does), but I must admit that I very often can not determine the point you are attempting to make in a post. As is the case here. I don't see how anyone can reasonably blame the difficulty of modeling on the level of experience of a President. If anything, your earlier post suggests a predictability (desire to outspend, no matter what) rather than the opposite. Adding additional descriptors of unfavorability does nothing to forward a meaning argument, but it does serve as a useful smear.

You clearly posit that the situation inherited by the President counts as being "uncharted waters", yet blame the President for taking measures not taken previously. You call his (historically large) tax cuts a waste of money yet berate his party as being taxers when all they have done for the past two years is heap on tax cuts over tax cuts. You use words like "disfunctional" as though they have very special meaning to this particular Congress over any other in history. Or as though it has any relevance to the actual question about real interest rates.
If you read my post carefully, I made comment that we are in uncharted waters - which is true. Then I listed a few of the variables (as I see them). Then I commented "I don't know if anyone can model all (or any) potential outcomes with any degree of certainty?"

How is this trolling? I think any attempt to move us in the right direction must factor in all variables and be highly focused and responsive to change.

Admittedly, I don't believe we should engage in any more massive spending programs packed with nonsense either.
Gokul43201
#33
Dec10-10, 11:04 AM
Emeritus
Sci Advisor
PF Gold
Gokul43201's Avatar
P: 11,155
Quote Quote by talk2glenn View Post
According to an exhaustive report by the SF Fed, the effect of the stimulus bill on the job market was negligible.

http://www.frbsf.org/publications/ec.../wp10-17bk.pdf
Thanks for the link t2g. I haven't seen this one before. I'll take a look at it over the weekend, when I find a little extended time. I'll maybe also post citations for the other estimates that are in literature - I've seen at least one or two besides the CBO report.
mheslep
#34
Dec10-10, 04:46 PM
PF Gold
P: 3,072
Quote Quote by Gokul43201 View Post
Most estimates I've seen say that the Stimulus Bill saved/created on the order of a million or so jobs as of several months. I don't know how many of those were specifically attributed to the tax cuts.
I don't see how that it can be so, that most estimates you've seen show this, given previous expression of some fairly wide reading. Here's another contrarian voice:
The Obama Stimulus Impact? Zero, by JOHN F. COGAN AND JOHN B. TAYLOR

Here's why:
http://sg.wsj.net/public/resources/i...1208193002.gif

The bottom-line is the federal government borrowed funds from the public, transferred these funds to state and local governments, who then used the funds mainly to reduce borrowing from the public. The net impact on aggregate economic activity is zero, regardless of the magnitude of the government purchases multiplier.

This behavior is a replay of the failed stimulus attempts of the 1970s. As Gramlich found in his work on the antirecession grants to state and local governments: “A large share of the [grant] money seems likely to pad the surpluses of state and local governments, in which case there are no obvious macrostabilization benefits.”

The implication of our empirical research and Gramlich’s is not that the stimulus of 2009 was too small, but rather that such countercyclical programs are inherently limited. The lesson is to beware of politicians proposing public works and other government purchases as a means to stimulate the economy. They did not work then and they are not working now.
Gokul43201
#35
Dec10-10, 05:21 PM
Emeritus
Sci Advisor
PF Gold
Gokul43201's Avatar
P: 11,155
Quote Quote by mheslep View Post
I don't see how that it can be so, that most estimates you've seen show this, given previous expression of some fairly wide reading.
I'm unable to parse this sentence correctly. Could you clarify or rewrite?

Haven't looked into your links yet - reading for the weekend. Thanks.
mheslep
#36
Dec10-10, 07:03 PM
PF Gold
P: 3,072
Quote Quote by Gokul43201 View Post
I'm unable to parse this sentence correctly. Could you clarify or rewrite?

Haven't looked into your links yet - reading for the weekend. Thanks.
Sorry. I meant: given your own background research on display in various posts, I don't see how its possible that "most" all of the economic writers you've come across say the stimulus created million(s?) of jobs.


Register to reply

Related Discussions
Economic Recovery Current Events 603
Global Economic Recovery Current Events 7
Cash Your Economic Stimulus Check At Walmart General Discussion 54
I'm no Keynes, but Germany seems to have illogical economic goals... Current Events 22
Lack of air resistance VS lack of gravity General Physics 13