Ivan Seeking said:
Cripes, do you have any idea what has transpired over the last few years?
Actually, I do.
This was not just a recession, but thanks to the final actions of Bush [the one thing he did right was to initiate the first bailout and then nationalize Fannie and Freddie], and the followup by Obama, we didn't lose the entire global economy.
Global economics isn't a simple, closed classroom system. It's a mega-hydra comprised of thousands of variables which we can barely measure, and most of which are beyond our control to manage, and tens of thousands more variables about which we still really do not have a clue.
Neither Bush, Obama nor the global economic summits had anything to do with any recession or degree of recovery, save for one thing: As world leaders, their actions have calmed the hearts and minds of people around the world.
And that is saying something! But that's their role, and at that, they performed acceptably well, although I think they'd have done a better job if they spent less time trying to throw billions of good dollars after bad, or convince people their economic policies had any direct or measurable effect on the situation.
They most certainly did not.
talk2glenn said:
By what metric do you rest the claim that "Obama and his team have helped to pull us from the brink of disaster"? None of the presidents economic prognostications (worst case or best case, the latter being promised outcomes if we pass the stimulus) were born out by reality.
Is it simply the fact that economic malperformance has peaked? This is an inane basis. Every recession is history has peaked. This is the first recession in history to feature Obama as president. Why does it just follow, as a matter of fact, that the peak was in any way caused or influenced by the president or his advisers? I could make a stronger claim that this recession followed a typical semiannual cyclical form, which has characterized every negative cyclical period since the Great Depression. It takes capital markets about 18 months to divest themselves from their worst investments, and labor markets a bit longer to reach a new labor market equilibrium consistent with the change in supply and demand.
That is where we are now - a market equilibrium. Private sector job growth and GDP growth are both practically zero. The American economy is not growing, and it is not shrinking. It is not shrinking because the systemic risks have been removed from the system, with help from the government (TARP, not ARRA). The economy is not growing because investors have no confidence in the systems structural future, again because of government (excessive spending on the wrong things, dramatic regulatory structural changes in healthcare, energy, and financial services that will take years to work out at the agency-level, tax hikes, etc).
Government didn't stop the crash; companies did when they'd fired enough employees to remain productive and profitable given new market realities. There was no observable correlation between stimulus spending and changes in the private sector job market (this is not true for the public sector, however).
Job markets don't just crash forever every time there's a crisis, just as they don't just expand forever every time there's economic growth. When the demand or supply curves for labor shift, the market adjusts labor rates (number of jobs and pay) to meet a new equilibrium; this takes time.
Exceptionally well said, talk2glenn. This matches my twenty years of experience and training working for the U.S. Government, as well that from my MBA, and the year I spent as a consultant in the private sector before government service. Much of this thread reads like some folks aren't too sure of the difference between MB and MZM. http://en.wikipedia.org/wiki/Money_supply" . :)
As for how this works in life, there are three basic theories, much of which are in contention with one another:
http://en.wikipedia.org/wiki/Real_business_cycles"
http://en.wikipedia.org/wiki/Sticky_(economics)"
http://en.wikipedia.org/wiki/New_Keynesian_economics"
There are many more, but what I took away from my MBA is that these three include most of the precepts from all of them, and that it's not so much that any of the three are wrong, but rather, that each tends to focus on one facet or another of the rather large (as in thousands) of variables which comrpise market cycles. The other thing I gathered is that none of these models delve much into market psychology, which can largely negate predictions from any or all of the models, depending on what's going on in the hearts and minds of the folks out there spending the money, all the way from end consumers who control thousands of dollars to corporate execs who control billions of dollars.
There are a few post-doctorate all-sciences models out there which are unbelievably complex but which do a much better job of both tracking and using the thousands of factors for predictive analysis than anything else. These are staffed by the super-wizards behind the scenes throughout the gobal financial markets. The folks will work for a decade or two before retiring to a beach house somewhere in the world where they can surf the waves, or the Internet, for the rest of their lives in comfortable abandon.
