News What are the potential impacts of public confidence on the economy's recovery?

[maverick_starstrider]

I'm not american but Canada's taking a similar approach by trying to buy their way out and I'm quite floored by it. In basic macroeconomics isn't the main example of the failure of keynesian government policy (a policy where the gov't tries to heat up or cool down the economy by adjusting its spending level, i.e. hitler building roads and such) was the stagflation of the 70's where we had both massive inflation AND unemployment (which goes against the philip's curve). Now here's the rub. Wasn't stagflation in the 70's CAUSED by increasing oil prices? So our classic example of when government spending will fail to heat up the economy is when the recession/depression if being fueled (so to speak) by rising oil prices? Is that not the exact same bloody situation we're in now?

 

[mheslep]

...Recovering this economy is expensive. ..

Why is it expensive? Who is doing this 'recovering'? Where?

 

[Astronuc]

Who is doing this 'recovering'? Where?

Goldman Sachs, JPMorgan Chase, Bank of America, Citibank - they should be able to pay bonuses this year.

Meanwhile - Treasury cancels plans to hire cartoonist
http://news.yahoo.com/s/ap/us_treasury_cartoonist

They needed a senator to question the merit of the idea?

Afterall - there is Dilbert!

 

[OmCheeto]

Goldman Sachs, JPMorgan Chase, Bank of America, Citibank - they should be able to pay bonuses this year.

Meanwhile - Treasury cancels plans to hire cartoonist
http://news.yahoo.com/s/ap/us_treasury_cartoonist

They needed a senator to question the merit of the idea?

Afterall - there is Dilbert!

Wow. I didn't realize they were doing so well. Sachs and Chase stocks look like where they should be, if you chop out that big 05-08 bubble. If anyone had asked me if I'd invest in those companies six months ago, I'd have laughed in their faces.

And I assume that since you said they might be getting bonuses, that they've all paid back their stimulus $$$, yes? Cause if they didn't, it's pitchfork time again...

 

[Astronuc]

Wow. I didn't realize they were doing so well. Sachs and Chase stocks look like where they should be, if you chop out that big 05-08 bubble. If anyone had asked me if I'd invest in those companies six months ago, I'd have laughed in their faces.

One has to look behind the numbers. Citibank made money by selling assets. Meanwhile, Citi is being hurt by rising credit card and commercial loan defaults (credit crisis part 2).

Meanwhile - CIT to Avert Bankruptcy With $3 Billion Loan
http://dealbook.blogs.nytimes.com/2...-deal-for-3-billion-loan-to-avert-bankruptcy/

CIT is involved with small and medium size business, and well as providing financing to the transportation sector.

. . .
The company spent the last week appealing unsuccessfully to Washington regulators for more financial help while scrambling to try to raise as much as $3 billion from investors. Still, ratings agencies slashed its debt and its stock was in a virtual free fall. If CIT does not reach a deal by Monday morning, it plans to file for Chapter 11 protection as soon as Monday afternoon, people briefed on the situation said.

Under the terms of the proposal, CIT would receive $3 billion from some of its main bondholders. The money is meant to give the company several weeks to set up an exchange of bondholders’ debt for equity, alleviating some of the pressure from billions of dollars in obligations.

CIT’s board approved the proposal at a meeting Sunday evening.

The plan was formed after days of round-the-clock negotiations between CIT, its financial and legal advisers and a group of large bondholders. Jeffrey Peek, CIT’s chief executive and the architect of the 101-year-old company’s aggressive yet ill-timed push into subprime mortgages and student loans, was actively involved in the financing talks, according to people briefed on the matter.
. . . .
It is also uncertain how much — if any — of the $2.33 billion in taxpayer money that CIT received late last year will be recouped.

If the plan does not succeed, CIT, with $75 billion in assets, could be the biggest failure of a financial institution since the collapse of Lehman Brothers last fall. Since then, federal regulators have been pumping billions of dollars into numerous banks across the country to prop them up and create some stability in the nation’s financial system.
. . . .

Under the terms of the deal, CIT would receive $3 billion from some of its main bondholders, though at an initial rate of about 10.5 percent. The money, arranged by Barclays Capital, is meant to give the company several weeks to set up an exchange of bondholders' debt for equity, alleviating some of the pressure from billions of dollars in obligations.

 

[OmCheeto]

Meanwhile - CIT to Avert Bankruptcy With $3 Billion Loan
http://dealbook.blogs.nytimes.com/2...-deal-for-3-billion-loan-to-avert-bankruptcy/

Looks like something went through. The stock is up ~100% this morning. Not too difficult though I guess, given it was a penny stock two hours ago.

 

[Ivan Seeking]

The DJIA just broke 9000.

 

[OmCheeto]

The DJIA just broke 9000.

And what's this? A profitable auto maker?

10:14 AM ET Jul 23, 2009
SAN FRANCISCO (MarketWatch) -- Ford Motor Co. shares jumped 8% Thursday after the automaker said it swung to a surprise second-quarter profit on the back of a lighter debt load, market-share gains and vastly improved cash flow.

Who's been buying Fords?

 

[Astronuc]

And what's this? A profitable auto maker?

Who's been buying Fords?

Apparently new home buys are up, and folks on Wall Street are excited.

Ford, AT&T and EBay all look better than expected. Throw in some good home resales data and an apparently encouraging weekly jobs figure and the corks are popping all over Wall Street.

http://www.publicradio.org/columns/marketplace/scratchpad/2009/07/bustin_out_1.html#more

Meanwhile - Subprime lenders return as loan fixers

It could be a jobless recovery
http://marketplace.publicradio.org/display/web/2009/07/23/am_jobless_recovery/

and

Watch out for high oil/energy prices
http://marketplace.publicradio.org/display/web/2009/07/21/pm_gas_q/
I think Chris Steiner is a bit pessimistic, but we'll see.

 

[OmCheeto]

It could be a jobless recovery
http://marketplace.publicradio.org/display/web/2009/07/23/am_jobless_recovery/

hmmm...

I just hired someone on Monday, and he was happy to make minimum wage...

gulp.

But hey. That's how I got started back in '83.

He's a college student, just like I was. I hope he sticks to it though. The college part, not the minimum wage thing.

hmmm... I was 4 years old when the following movie came out. I think it's true what they say. What is past, is prologue.

https://www.youtube.com/watch?v=<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/VH4nVMJEopU&hl=en&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/VH4nVMJEopU&hl=en&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>

 

[Astronuc]

Buffett’s Goldman Stake Pays Richly
http://dealbook.blogs.nytimes.com/2009/07/24/buffetts-goldman-stake-worth-91-billion/

Warren E. Buffett showed again why he is known as one of the world's best investors, thanks in part to another prominent investor, Goldman Sachs.

Mr. Buffett's stake in Goldman is now worth $9.1 billion, or about $4.1 billion more than what he paid 10 months ago, according to an analysis by Linus Wilson, an assistant professor of finance at the University of Louisiana at Lafayette.

According to Mr. Wilson's calculations, Mr. Buffett would realize an annualized return of about 111 percent if he sold his Goldman stake, which is held by his conglomerate, Berkshire Hathaway.

In comparison, the federal government received a 23 percent annualized return for its Goldman investment, the bank said after it agreed on Wednesday to pay $1.1 billion to settle warrants the Treasury Department received after injecting $10 billion into the bank in November.

. . . .
Goldman turned to Mr. Buffett in September, seeking a cash injection. In return, Mr. Buffett negotiated what was considered even then to be very favorable terms.

Berkshire Hathaway received perpetual preferred shares in Goldman, which pay a 10 percent annual dividend, or $500 million a year. Berkshire Hathaway also received warrants to buy $5 billion in common stock at a strike price of $115 a share, which could be used at any time within five years of the initial investment.
. . . .

So - Obama should hire Warren Buffett to manage the country's finances?

 

[Ivan Seeking]

New homes sales surged in June to their highest rate this year, according to Commerce Department data released Monday, another sign that the housing market could be starting to stabilize even as prices continue to stumble.

Sales rose 11 percent over the previous month to an annualized rate of 384,000. That was far better than analysts were expecting and the largest monthly gain in nine years...

http://www.washingtonpost.com/wp-dyn/content/article/2009/07/27/AR2009072700967.html?hpid=topnews

I wonder how the Reps will try to put a negative spin on that one!

[Being that this is a physics forum, I should have said spin-down.]

 

[mheslep]

http://www.washingtonpost.com/wp-dyn/content/article/2009/07/27/AR2009072700967.html?hpid=topnews

I wonder how the Reps will try to put a negative spin on that one!

[Being that this is a physics forum, I should have said spin-down.]

I think its great as far as it goes (still down ~23% from last year), and expect most will agree. But if the Dems think this is really that positive, then why not cancel the ~$700Billion left outstanding on the stimulus? Can we agree in the future, again if this is indeed a recovery, that the criticism of the stimulus (mainly that it takes too long to get it out there to do anything) was valid and let's not resort to colossal fiscal stimulus any more.

 

[Ivan Seeking]

I think its great, and expect most will agree. But if the Dems think this is really that positive, then why not cancel the ~$700Billion left outstanding on the stimulus? Can we agree in the future, again if this is indeed a recovery, that the criticism of the stimulus - (mainly that it takes too long to get it out there) was valid and let's not resort to fiscal stimulus any more.

Sure, let's undermine the plan that is working.

Then you can complain about jobs.

 

[mheslep]

Sure, let's undermine the plan that is working.

Then you can complain about jobs.

What's your rationale that 'the plan' is working? And is the economy still lousy or not? Which is it?

Edit: When is fair to complain about 9.5% unemployment and jobs?

 

[Ivan Seeking]

What's your rationale that 'the plan' is working? And is the economy still lousy or not? Which is it?

The plan was designed to address the housing market as well as jobs and future growth. Of course the intial reaction was to prevent the global economy from collapsing, which it did by stabilizing the credit markets. Clearly the economy is improving, and we expect to see it expand next quarter. It is even being announced on many fronts that the recession is over.

Edit: When is fair to complain about 9.5% unemployment and jobs?

Please do! The Republicans obviously left things a bigger disaster than was realized. Once the stimulus money is rolling out in bulk, the job situation should begin to improve.

Of course the Reps would have loved nothing more than to see the money being spent hurriedly and frivolously. Then they could hand Obama his Waterloo [or was that another Waterloo?]

 

[mheslep]

The plan was designed to address the housing market as well as jobs and future growth. Of course the intial reaction was to prevent the global economy from collapsing, which it did by stabilizing the credit markets.

Two different things - TARP related bailouts (which we are largely getting back directly), Fed monetary policy and then the fiscal stimulus bill. The stimulus bill had little or nothing to do with credit markets.

Clearly the economy is improving, and we expect to see it expand next quarter. It is even being announced on many fronts that the recession is over.

Please do! The Republicans obviously left things a bigger disaster than was realized. Once the stimulus money is rolling out in bulk, the job situation should begin to improve.

Ok, if you grant that the 'clearly the economy is improving', and that the stimulus largely hasn't been executed yet, then you agree it can not take credit for improving the economy? Only the TARP/bank bailouts could logically claim that, or other self correction in the economy.

Of course the Reps would have loved nothing more than to see the money being spent hurriedly and frivolously.

No, clearly they didn't want to see it being spent (most of it) at all, because they knew it couldn't be spent in a timely matter.

 

[OmCheeto]

Ok, if you grant that the 'clearly the economy is improving', and that the stimulus largely hasn't been executed yet, then you agree it can not take credit for improving the economy? Only the TARP/bank bailouts could logically claim that, or other self correction in the economy.

It's like having money in the bank. Just because it's there doesn't mean you have to spend it. I think just saying the money was available made everyone happy. The Democrats were sitting on a virtual pile of cash, and the Republicans had something non corporeal to complain about.

 

[Ivan Seeking]

Obama's recovery continues:

Housing Prices Up!

Home prices in major U.S. cities registered the first monthly gain in nearly three years, according to a new report that provided fresh evidence that the severe U.S. housing downturn could be easing.

Standard & Poor's Case-Shiller index, which tracks home prices in 20 metropolitan areas, rose 0.5% for the three-month period ending in May, compared with the three months ending in April. It marked the index's first increase after 34 straight months of decline, and came after a variety of housing indicators has shown glimmers of hope for the past several months...

http://online.wsj.com/article/SB124878477560186517.html

Significantly Improved GDP - Growth Expected Next Quarter

Friday's big news was an update on the health of the economy. U.S. second quarter GDP growth declined 1.0%, which was much better than the 1.7% decline that markets expected. First quarter GDP was downwardly revised to a -6.4% rate from -5.5%, and fourth quarter was revised up to a -5.4% pace from -6.3% previously reported.

Real consumption declined at a 1.2% clip (weaker than expected), after a sharply upwardly revised 0.6% increase in the first quarter. The BEA also reported that real GDP increased 0.4% for 2008, rather than the 1.1% gain previously calculated...

http://www.businessweek.com/investor/content/jul2009/pi20090731_118205.htm

The Stock Market - Up 40% From Low
The DJIA is over 9100; up from its low of about 6500 around March 15th - a 40% increase since the low water mark.

 

[russ_watters]

The GDP was down 1% in Q2 and Obama says the improvement is at least partly due to the stimulus:

The economy contracted at a 1% annual rate in the spring, a strong sign recession is winding down, and President Obama said Friday that it got a boost from the $787 billion economic stimulus program Congress enacted within weeks of his taking office.

http://www.usatoday.com/money/economy/2009-07-31-gdp-economy_N.htm

So how much stimulus money was spent in Q2? Exactly how much of that can we really attribute to it?
[edit] Answer: http://voices.washingtonpost.com/federal-eye/2009/07/eye_opener_july_8_2009.html

GAO estimates that the Treasury Department has paid out approximately $29 billion to states and cities so far this year, about 60 percent of payments estimated for fiscal year 2009, which ends Sept. 30.

Let's say 2/3 of that was in q2 or about $10 billion (sorry, I don't have monthly numbers). Our GDP is about $14 trillion, so that's 0.07% of our GDP. In Q2, the GDP was down 6.5%, so the stimulus was almost exactly 1% of the improvement. The other 99% must then either have happened on its own or been the result of the actions of those in power last year. Either way, it wasn't Obama and the Democratic congress.

 

[russ_watters]

What's your rationale that 'the plan' is working? And is the economy still lousy or not? Which is it?

Edit: When is fair to complain about 9.5% unemployment and jobs?

The best thing about Obama, to his supporters, is that he's a great talker. He says things they want to hear. When he made his unemployment prediction a few months ago, complete with that pretty graph, the effect of the stimulus sounded great. It didn't matter that nothing on that graph had anything to do with reality. But here we are 6 months later and Democrats are still talking the same way! It doesn't matter to the True Believers that Obama simply has no clue what the economy is doing or how to fix it (or even if it needs him to fix it).

But to everyone else, in 2012, it just might.

 

[Office_Shredder]

The GDP was down 1% in Q2 and Obama says the improvement is at least partly due to the stimulus: http://www.usatoday.com/money/economy/2009-07-31-gdp-economy_N.htm

So how much stimulus money was spent in Q2? Exactly how much of that can we really attribute to it?
[edit] Answer: http://voices.washingtonpost.com/federal-eye/2009/07/eye_opener_july_8_2009.html Let's say 2/3 of that was in q2 or about $10 billion (sorry, I don't have monthly numbers). Our GDP is about $14 trillion, so that's 0.07% of our GDP. In Q2, the GDP was down 6.5%, so the stimulus was almost exactly 1% of the improvement. The other 99% must then either have happened on its own or been the result of the actions of those in power last year. Either way, it wasn't Obama and the Democratic congress.

It should be obvious the argument is that the stimulus, y'know, stimulated the economy. I.e. got people not receiving economic stimulus funds to spend more money, or even just encouraging the people who did get those funds to spend more than just that money. Your argument that the stimulus package can only contribute to the economy its face value is wrong.

 

[mheslep]

Obama's recovery continues:...

Yes Help Us Obi Wan Obama, You're Our Only Hope

 

[mheslep]

It should be obvious the argument is that the stimulus, y'know, stimulated the economy. I.e. got people not receiving economic stimulus funds to spend more money, or even just encouraging the people who did get those funds to spend more than just that money.

Why? Because Obama signed a piece of paper with 'stimulus' written on it and announced it with fan fair on the news? Because some guy two states away got some money, I'll go out and spend more? This essentially argues that the government can just announce "I stimulate you, I stimulate you, I stimulate you" three times and we'll all go out and spend more. This was the second recent stimulus by the way. The first one, the Bush 2008 stimulus, was ~http://www.msnbc.msn.com/id/22725498/" One could go argue, as we hear now, that the 2008 money kept things from getting worse, it 'saved X jobs', but I am not buying it.

A reasonable assumption based on cause and effect, is that the sometimes stumbling actions of Bernanke, Paulson, Geitner[1] and the TARP guarantee money from 2008 through now eventually stabilized the banks and credit markets. So though the free fall has stopped, it is quite possible credit won't get much better, as lenders now have a valid fear that their loans will inflated away given the run away spending.

[1] Geitner I'm less sure of, as he calculated the best way to sell his own long sitting house was http://gregmankiw.blogspot.com/2009/07/some-people-wont-accept-price-cuts.html"

 

[Ivan Seeking]

Obama's recovery continues:

The cash for clunkers program a raging success!
https://www.physicsforums.com/showthread.php?t=328229

 

[russ_watters]

It should be obvious the argument is that the stimulus, y'know, stimulated the economy. I.e. got people not receiving economic stimulus funds to spend more money, or even just encouraging the people who did get those funds to spend more than just that money. Your argument that the stimulus package can only contribute to the economy its face value is wrong.

So...then what is the point of the $700 billion? Are you saying that the point of the stimulus wasn't to spend money to stimulate the economy but was to cause people to stimulate it themselves via cheerleading?

Should I point out that that's not what Obama or his supporters (see poster above me) claimed was going on?

 

[rootX]

So...then what is the point of the $700 billion? Are you saying that the point of the stimulus wasn't to spend money to stimulate the economy but was to cause people to stimulate it themselves via cheerleading?

Should I point out that that's not what Obama or his supporters (see poster above me) claimed was going on?

I don't see them rejecting that argument either. The only point of the government injections is to
(1) create confidence and
(2) give economy a tiny push

1 and 2 are not mutually exclusive.

 

[russ_watters]

I don't see them rejecting that argument either. The only point of the government injections is to
(1) create confidence and
(2) give economy a tiny push

1 and 2 are not mutually exclusive.

Indeed, they are not mutually exclusive, but republicans are contributors to the economy too - bigger contributors than democrats, I would suspect. And his plan to spend $700 billion doesn't give them confidence, it scares them. So if this was all a trick, he at least half succeeded: he was able to trick democrats and republicans like into thinking that he really intended to spend $700 billion, instead of this "tiny" amount. But as a result of that trick, democrats got confidence and republicans got convinced he didn't know the first thing about economics.

So that doesn't even make Obama a good cheerleader.

And could we clarify this, please: do you and Office Shredder believe that Obama never intended to spend that money?

 

[russ_watters]

Obama's recovery...

I suppose with that stance, you would also give Bush credit for turning the biggest crash in the stock market since 1929 into the softest recession we've ever had? You believe Bush prevented another great depression in 2001, right?

 

[OmCheeto]

All of my stocks, bonds, and funds are in the black.
Of course, without the market collapse, I'd have never been interested in the first place, and would probably have gone to my grave without having ever directly invested a penny.

Has anyone else noticed that stock prices seemed unreasonably deflated over the last 8 months, and decided to pump money in?

 

[Skyhunter]

Indeed, they are not mutually exclusive, but republicans are contributors to the economy too - bigger contributors than democrats, I would suspect. And his plan to spend $700 billion doesn't give them confidence, it scares them. So if this was all a trick, he at least half succeeded: he was able to trick democrats and republicans like into thinking that he really intended to spend $700 billion, instead of this "tiny" amount. But as a result of that trick, democrats got confidence and republicans got convinced he didn't know the first thing about economics.

So that doesn't even make Obama a good cheerleader.

And could we clarify this, please: do you and Office Shredder believe that Obama never intended to spend that money?

Republicans follow economic indicators just like Democrats.

It is not the stimulus that is scaring the Republicans... it's the noise machine.

 

[kasse]

Will somebody answer my questions in the liberalism thread more thoroughly?

 

[Ivan Seeking]

So...then what is the point of the $700 billion?

Jobs, infrastructure, energy conservation, expansion of programs like wind power, future growth to help reduce the ratio of debt to GDP.

Why is it that Republicans always seem willing to do nation-building everywhere but here in the US?

For a nice review of the progress and who gets the credit,
http://abcnews.go.com/thisweek

Their main veiwer isn't working yet for me, but you can select the individual segments at the top of the page, beginning with Geitner.

 

[Ivan Seeking]

It is also interesting to note that when Bush took over, our debt to GDP ratio was at about 60%. Under Bush it rose to about 78% with a nearly vertical ascent during the last part of his Presidency, and now the Republicans are complaining that it will go above 80% under Obama - the guy who was handed an economy spiralling out of control and about to collapse.

The hypocrisy is beyond belief!

 

[Office_Shredder]

Indeed, they are not mutually exclusive, but republicans are contributors to the economy too - bigger contributors than democrats, I would suspect. And his plan to spend $700 billion doesn't give them confidence, it scares them. So if this was all a trick, he at least half succeeded: he was able to trick democrats and republicans like into thinking that he really intended to spend $700 billion, instead of this "tiny" amount. But as a result of that trick, democrats got confidence and republicans got convinced he didn't know the first thing about economics.

So that doesn't even make Obama a good cheerleader.

And could we clarify this, please: do you and Office Shredder believe that Obama never intended to spend that money?

Democrats and Republicans have nothing to do with it. We're talking about generic people here. If Obama spends more government money, more money is being spent. This is fact. This is undeniable. If more money is being spent, more people are being paid. Fact. If more people are being paid, more people can then spend their own money. And the cycle continues.

Somehow you seem to have confused Obama's confidence boosting for the economy with political maneuvering

 

[mheslep]

Democrats and Republicans have nothing to do with it. We're talking about generic people here. If Obama spends more government money, more money is being spent. This is fact. This is undeniable. If more money is being spent, more people are being paid. Fact. If more people are being paid, more people can then spend their own money. And the cycle continues.

Somehow you seem to have confused Obama's confidence boosting for the economy with political maneuvering

Office_S, Obama is not the great and powerful Oz. The money has to come from somewhere. Where do you think that is? Consider the logic of your argument: If spending in and of itself was all that was needed to create a bigger economy, then we could simply have the government spend us all into vast wealth. Visibly it doesn't work that way.

 

[Office_Shredder]

Office_S, Obama is not the great and powerful Oz. The money has to come from somewhere. Where do you think that is? Consider the logic of your argument: If spending in and of itself was all that was needed to create a bigger economy, then we could simply have the government spend us all into vast wealth. Visibly it doesn't work that way.

That's fine, but has nothing to do with political affiliation. A small business owner whose getting paid more because one of his clients received stimulus funding isn't going to say "Well, I'm a Republican, so I'm going to burn this cash in my backyard"

We're not talking about how he got the stimulus passed, or the political ramifications of it, we're talking about the effects of the stimulus on the economy. You still haven't demonstrated where political affiliation comes into play for this

 

[russ_watters]

Jobs, infrastructure, energy conservation, expansion of programs like wind power, future growth to help reduce the ratio of debt to GDP.

It doesn't matter how many times how many people say it: He barely spent any money, so the stimulus could not possibly have made a significant difference yet. Every effect needs a cause and he did virtually nothing to cause the improvements seen over the past two months.

All this turnaround shows us is that his stimulus spending isn't necessary and should be cancelled.

Why is it that Republicans always seem willing to do nation-building everywhere but here in the US?

Why do democrats only complain about deficit spending when it is a Republican doing it?

There is nothing wrong with doing some infrastructure. There is nothing wrong with promoting wind power. But to disguise those as "economic stimulus", when they really just are his pet projects that he wanted whether there was a recession or not is dishonest. Obama was given a blank check when he got into office due to with recession and he's going to do his best to spend as much as he can, regardless of if what he's doing is what is best for the economy.

It is also interesting to note that when Bush took over, our debt to GDP ratio was at about 60%. Under Bush it rose to about 78% with a nearly vertical ascent during the last part of his Presidency, and now the Republicans are complaining that it will go above 80% under Obama - the guy who was handed an economy spiralling out of control and about to collapse.

The hypocrisy is beyond belief!

Should I pull out more of your quotes from the past few years where you talk about the deficit/debt being too high? Look in the mirror, Ivan!

And by the way - how can you possibly believe any of Obama's economic predictions when his unemployment prediction was way off, just a month after he made it? And the GAO says his numbers on the debt are just rediculous. But I guess reality can't get in the way of your beliefs.

Also, the "vertical ascent"? That's the financial bailout last year. And guess what: we're getting that money back! So it's a pretty misleading picture we get from that graph you like to post. Obama is just plain spending money. Bush was investing it. Yeah, turning a profit wasn't of high importance, but the odds are good his spending will turn a profit. Obama's is pure debt, like he put it on a credit card.

 

[russ_watters]

Republicans follow economic indicators just like Democrats.

And indicators follow improvements - so Republicans and Democrats still have to make the improvements happen before the indicators will show them.

It is not the stimulus that is scaring the Republicans... it's the noise machine.

Says you. I am a Republican and I'm very nervous about doubling our national debt. The ironic thing is that we had lots of threads about the national debt over the past few years and most of the democrats on this forum were worried about Bush's spending too! The inconsistency is telling - this forum is full of partisans; reality be damned.

 

[russ_watters]

All of my stocks, bonds, and funds are in the black.
Of course, without the market collapse, I'd have never been interested in the first place, and would probably have gone to my grave without having ever directly invested a penny.

Has anyone else noticed that stock prices seemed unreasonably deflated over the last 8 months, and decided to pump money in?

Unfortunately, I didn't have any to put in except for my 401K, but yeah, at the beginning of the year, I really wanted to dump a lot in. After the crash last fall, the stock market was severely undervalued.

 

[russ_watters]

That's fine, but has nothing to do with political affiliation. A small business owner whose getting paid more because one of his clients received stimulus funding isn't going to say "Well, I'm a Republican, so I'm going to burn this cash in my backyard"

We're not talking about how he got the stimulus passed, or the political ramifications of it, we're talking about the effects of the stimulus on the economy. You still haven't demonstrated where political affiliation comes into play for this

Political afiliation comes into play because Democrats are closing their eyes while Obama swipes our credit card. They are acting like the stimulus money is free money when it isn't.

Besides - need I remind you that you just claimed the stimulus could stimulate without spending money?:

It should be obvious the argument is that the stimulus, y'know, stimulated the economy. I.e. got people not receiving economic stimulus funds to spend more money, or even just encouraging the people who did get those funds to spend more than just that money.

 

[WhoWee]

Political afiliation comes into play because Democrats are closing their eyes while Obama swipes our credit card. They are acting like the stimulus money is free money when it isn't.

Besides - need I remind you that you just claimed the stimulus could stimulate without spending money?:

I haven't posted since May 22 - and the economy has not gotten any better in this time.

If you recall, the signing of the stimulus bill was so important and so urgent that our elected officials did not have time to read it. The money had to flow out to those "shovel ready" jobs immediately or the economy would collapse...

It was BS then and it's BS now.

The same can be said of the save or create jobs line. A government job (especially jobs created to count the census) is not helping the economy to recover. To pay for a government job - the government has to borrow, tax or print money. Lost private sector jobs means lost tax revenues.


I've been working on a wage credit project. Last year over $9 billion went unclaimed - this year the number could be $30 billion. Basically, there are tax credits available - incentives to hire certain workers at a rate of $1,500 to $9,000 per worker. There are hundreds of different programs nationwide. The best credits are provided for hiring minorities, youth, ex-felons, and welfare recipients. The most lucrative incentives are in inner city "Empowerment Zones".

The problem is the credits (which are actually REDUCTIONS - dollar for dollar reductions of an income tax liability) can only be used if the business has a tax liability. The majority of the small businesses in the "EZ's" are not profitable. Instead of hiring workers and taking advantage of these incentives, many of the businesses are laying off workers or closing.

Businesses run on revenues - sales drive business. Wages are not possible without sales revenues. Taxes come from sales, wages, and profits. Government runs on taxes.

No sales - no taxes - no legitimate government spending.

 

[OmCheeto]

Housing prices have dropped to what appear to be appropriate non-bubble levels

http://mysite.verizon.net/vzeqrguz/housingbubble/united_states.png
http://mysite.verizon.net/vzeqrguz/housingbubble/"

Perhaps that's why

http://news.yahoo.com/s/nm/20090818/bs_nm/us_usa_economy"
Tue Aug 18, 5:44 pm ET

WASHINGTON (Reuters) – Ground-breaking for new U.S. single-family homes rose for a fifth straight month in July and producer prices tumbled, keeping hopes for an economic recovery alive.

...

The economy is recovering, this is the turning corner. We will have positive growth this quarter, but not a lot of strength. It very much looks like a U-shaped recovery rather than V-shaped,

...

The housing market, the main culprit behind the worst U.S. economic downturn in 70 years, is being closely watched for signs of recovery after a three-year slump.

70 years! Wow. No wonder everyone's all in a huff about it.

And one of my staff members told me yesterday that our company no longer has a hiring freeze.

And my portfolio is up 19%. Woo Hoo! I've made $164 in only 8 months. Bwah hahaha... move over Mr. Buffet, OmCheeto's in town.

 

[bleedblue1234]

OMCheeto I don't understand why you go around spewing this nonsense. You grossly assume that your situation applies to all 300+ million Americans in this country, which is complete nonsense.

The U.S. economy has not improved at all, and in fact we are faced with drastically larger issues down the road. Sure, if you pump trillions upon trillions of dollars into any economy, you will buy a short term bounce, but it is silly to assume that growth rates of an economy can be maintained in such a way.

The budget committee just released estimates of a $10 trillion dollar deficit extending out 10 years, and that will bring the national debt WELL above 150% of GDP, and as such we will face massive issues trying to finance and sustain economic growth as well as finding a way to pay our obligations to other nations.

You also fail to realize that stimulus is buying at best a one year bounce, and at worst an even shorter time frame. I will propose that by November of this year we will once again be facing "economic catastrophe" just as it was last year. We have not fixed the banks in any meaningful way, we have not turned this country around in any drastic way, the only thing we are doing is buying a one year bounce with an incredible amount of stimulus dollars. We need to completely change the way this economy works, and I am simply not seeing that happening, and until we do we will not see a 'recovery' and we will only continue sliding off into the economy abyss.

The home market is still much to saturated with excess housing, and if you look at the housing report, 50% of the houses purchased in July were attributed to new home buyers which is most likely bolstered by the government $8,000 tax credit on down payments, which further distorts actual demand. You cannot tell me we are growing at a rate to sustain 50% of housing sales to first time home buyers.

Secondly, you fail to see the stock market is simply in another bear market rally...

Here's an example:

During the crash of 1929, you see a 60% rebound in stock prices (we are at approx. 53% today vs. March lows), followed by a steady decline interspersed with several rallies, but the inevitable conclusion is that the market continues to decline. Now in the situation we have today, the market could actually gain nominally in value, but because the dollar has been so weak (it is extremely close to making record lows once again), the actual realized value will still be lower.

 

[russ_watters]

OMCheeto I don't understand why you go around spewing this nonsense. You grossly assume that your situation applies to all 300+ million Americans in this country, which is complete nonsense.

You're kinda new in the politics forum, so I'll be nice here and say you just need to calm down and take a breath. Of the things in OMCheeto's post, only one was a situation specific to him. The things that apply to the economy in general:

-Housing prices
-The stock market
-Home building

There were a few good points in your post, though, such as the problem of the deficit and the possibility of a double-dip recession.

 

[OmCheeto]

OMCheeto I don't understand why you go around spewing this nonsense.

What in my post struck you as nonsense?

The home market is still much to saturated with excess housing

Then why is anyone bothering to build new ones?

I will propose that by November of this year we will once again be facing "economic catastrophe" just as it was last year.

I propose that by November of next year, my portfolio's profit will still be around 20%, given that I invest monthly. As was pointed out by Mr. Karl, we appear to be in a U shaped recovery rather than a V shaped recovery. I'd have preferred an L shaped recovery myself, as I have 8 years to continue investing before I retire. But that's just being greedy.

 

[russ_watters]

"...worst U.S. economic downturn in 70 years..."

When it ends and we get some distance betwen us and it, we'll see how economists actually rank it. A good, recent candidate that could be considered worse:

Early '80s. The NBER says there were two recessions in the span of three years. That's rediculously short and they should probably be seen as part of the same economic crisis. Regardless, the 2nd recession was the worse and might on its own be a candidate for being worse than the current crisis. It included a 20% prime interest rate, and 10.8% unemployment to go with 4 nonconsecutive quarters of negative gdp growth with two of them being consecutive at -5 and -6%. The 20% interest rate chased away the 10.3% inflation from 1981.

http://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States

People often list the length of the current recession as being the reason it is so bad, but the economy essentially plateau'd for a year before the recession really took off in the beginning of this year (precipitated by the stock market crash and bank failures last fall). So the length is not a good measure without proper context.

 

[OmCheeto]

"...worst U.S. economic downturn in 70 years..."

When it ends and we get some distance betwen us and it, we'll see how economists actually rank it. A good, recent candidate that could be considered worse:

Early '80s. The NBER says there were two recessions in the span of three years. That's rediculously short and they should probably be seen as part of the same economic crisis. Regardless, the 2nd recession was the worse and might on its own be a candidate for being worse than the current crisis. It included a 20% prime interest rate, and 10.8% unemployment to go with 4 nonconsecutive quarters of negative gdp growth with two of them being consecutive at -5 and -6%. The 20% interest rate chased away the 10.3% inflation from 1981.

http://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States

People often list the length of the current recession as being the reason it is so bad, but the economy essentially plateau'd for a year before the recession really took off in the beginning of this year (precipitated by the stock market crash and bank failures last fall). So the length is not a good measure without proper context.

hmmm... Your link somehow led me here:

http://en.wikipedia.org/wiki/List_of_countries_by_past_GDP_(PPP)

Interesting how 200 years ago we were a pauper nation, 100 years ago we were number 2, and now, at the depths of a catastrophe, we come to the following graph

It's no wonder McCain said there was nothing fundamentally wrong with our economy. I actually agreed with him. I wish everyone else had.

 

[mheslep]

...
It's no wonder McCain said there was nothing fundamentally wrong with our economy. I actually agreed with him. I wish everyone else had.

It all depends on what one calls the fundamentals. On what I call the fundamentals I think he was generally right, but politically it was a dumb thing to say with this many people losing jobs and the banks in dire trouble. He should have further clarified.

 

[russ_watters]

It also doesn't help that he made is statement just before the recession and bank failures gained steam. The one thing (and it is big) that was fundamental and wrong at the time was financial regulation. Just about everything in this recession can be traced to the financial system's problems.