Germany's Economic Recovery Despite Lack of Stimulus

CRGreathouse

Thanks for the link and the analysis, talk2glenn; those are very surprising (IMO) numbers. I expected significant crowding out, but not this near-total amount.

mugaliens

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

I think one of the articles mentions this. Basically the Germans fear inflation, whereas America, due to the Great Depression, fears deflation.

WhoWee

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

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

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

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

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

Fair enough.

Gokul43201

Does the modeling become easier if you have a more experienced President?

WhoWee

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

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

I am being honest about the current conditions and my observations of this Presidents actions.

Gokul43201

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

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

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

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