Obama Stimulus=Fail

silverharp

I personally think the stimulus is a bad idea based on dubious economic assumptions, the unemployment increase in the US would indicate its not working. Will there be a back track anytime soon?





original document
http://otrans.3cdn.net/45593e8ecbd339d074_l3m6bt1te.pdf

brianwalshcork

What if their prediction for the "Without recovery plan" scenario was also incorrect, and had there been no stimulus package that the plot for unemployment turned out to be closer to a vertical line.

The maroon dots would look attractive then.

DTrotter

Has the stimulus spending started yet? I read today that some banks are ready to pay back some of the bail out money. I think it's a no win situation. If he didn't do anything and let the magic market fairy take care of things he would be accused of doing nothing and when he puts money in he's a socialist. So it provides a good opportunity for sh** sack Gingrich to fire shots at him.
It's hard to know how it will work, if most of the money is spent wisely on good capital projects it might help people get over the worse until things pick up.

silverharp

brianwalshcork wrote: »

What if their prediction for the "Without recovery plan" scenario was also incorrect, and had there been no stimulus package that the plot for unemployment turned out to be closer to a vertical line.

The maroon dots would look attractive then.

that would seem to be the ultimate get out clause for a politician. I'd rate a doctor by his abilty to diagnose the correct problem and treat accordingly. An example was the stress tests, the bar was set so low that it was easy enough for the banks to jump over it. So the question is do they want to deal with reality or the world of spin?

DTrotter wrote:

I think it's a no win situation. If he didn't do anything and let the magic market fairy take care of things he would be accused of doing nothing and when he puts money in he's a socialist.

Not sure about that, "doing something" doesnt have to invlove running up unsustainable debts (remember thats what caused the problem in the first place) , or bailing out auto companies for the benefit of the unions.

Black Swan

Whipping out the federal credit card to offset the failure of US corporate America is problematic indeed, especially when CEOs are given multi-million dollar golden parachutes as a reward for failure? But in all fairness to Obama, what kind of mess was handed to him after 8 years of Bush-Cheney? Two seemingly endless wars that cost billions per month, an historic federal deficit, and the worse economic recession since the Great Depression?

And the last shoe has yet to fall. It was reported recently that credit card debt in USA has now exceeded one trillion dollars, an historic high, and is still climbing to the sky. When this bubble bursts, things will get a lot worse before they get better (and not just for USA, but for all of us!).

silverharp

Blue_Lagoon wrote: »

Whipping out the federal credit card to offset the failure of US corporate America is problematic indeed, especially when CEOs are given multi-million dollar golden parachutes as a reward for failure? But in all fairness to Obama, what kind of mess was handed to him after 8 years of Bush-Cheney? Two seemingly endless wars that cost billions per month, an historic federal deficit, and the worse economic recession since the Great Depression?

And the last shoe has yet to fall. It was reported recently that credit card debt in USA has now exceeded one trillion dollars, an historic high, and is still climbing to the sky. When this bubble bursts, things will get a lot worse before they get better (and not just for USA, but for all of us!).

I agree, in reality who'd want the job and indeed economically more shoes to drop. but still at any point in the cycle the new policies can either make things better, worse or have no affect at all. In reality there is no free lunch, run up debts and shock horror interest rates and oil prices satart running up. If I remember the stat correctly a 1% rise in interest rates means that 10+% less assets can be financed.
If he sees himeself in the role of FDR then the Fail will turn into Epic Fail.

Black Swan

silverharp wrote: »

I agree, in reality who'd want the job and indeed economically more shoes to drop.

Another scary factor that no one is talking about is the impact on the value of the US dollar? Historic debt must depreciate its value in the money markets? What happens to retirement savings in the US or Social Security that their population is counting on?

silverharp

kind of related but hay its Comedy Central

https://www.youtube.com/watch?v=_nPbnQG-rcg

Manic Moran

DTrotter wrote: »

I read today that some banks are ready to pay back some of the bail out money.

Some of the banks have already paid back the money. The problem was that after the money was handed out, the government changed the rules and conditions, meaning that banks decided it was safer to simply pay it back to the government instead of loan it out to the public.

NTM

Black Swan

The other scary chart is for the obscene and rapid increase in the price of gold, which normally goes in the opposite direction of the dollar; i.e., Negative directional HR: As the dollar decreases in value, gold increases in value.


In other words, confidence in the value of the dollar has fallen into the dumpster, and this must reverse if the US economy is to recover? In addition to chatting up foreign relations, at home Obama must "change" this!

DTrotter

If the economy picks up next year isn't there a chance that he can leave office at the end of the first term having spent less than Bush (he can probabaly break even to achieve this) and adding less to the deficit? If possible this is the best he can realistically hope for.
Also aren't countries turning away from holding most of their reserve currency in USD?
I think there is too much of a credit culture in the US (business and personal) for any real change to take place. On the daily show last night they had a fella who predicted this recession years ago and got laughed at regularly. Think his name is Peter Schiff.
Also has anyone seen IOUSA?

Black Swan

DTrotter wrote: »

On the daily show last night they had a fella who predicted this recession years ago and got laughed at regularly. Think his name is Peter Schiff.

So did Warren Buffett, who bought a huge position in silver, and everyone thought the old man had lost his marbles. Silver is up 4 times since then and no one is laughing today at him. I also ran across a 2004 article in The Economist that predicted the bursting of the housing bubble.

DTrotter

Blue_Lagoon wrote: »

So did Warren Buffett, who bought a huge position in silver, and everyone thought the old man had lost his marbles. Silver is up 4 times since then and no one is laughing today at him. I also ran across a 2004 article in The Economist that predicted the bursting of the housing bubble.

It's worth doing a youtube search on Peter Schiff if you get a chance jsut to see the way people sneered at him.

All that money that went to the banks initially was always going to be kept to shore up their reserve ratio..once they've stopped lending their balance sheets started looking a bit short...and all that cash paid to aig just went back to the banks, due to aig insuring all the cdos etc..And the initial rise in the dollar after the whole fiasco was just hedge funds and the like covering their short positions..Between that and the amount of quantitive easing thats gone on lately, the dollars on the way through the floor..

Sand

Will be interesting to see if one of the prime casualties in this economic recession is the belief that governments must always try to spend their way out of a recession, acting as a spender of last resort.

jank

OK so you cant spend your way out of a recesion or you cant tax your way out of a recesion.....

Which one is it?

Manic Moran

Who says it has to be either.

Sit back, hold on, and ride it out. Recessions aren't supposed to be pleasant.

Whilst I can see some of the logic to 'spending your way out of a recession' (Hey, it works in wartime), the problem is that the mountain of debt which is created whilst getting you out of the short-term hole may well end up making a long-term hole which is much harder to get out of, and you might as well have just taken the market readjustment on the chin and left it at that.

NTM

bobbyjoe

Manic Moran wrote: »

Who says it has to be either.

Sit back, hold on, and ride it out. Recessions aren't supposed to be pleasant.

Whilst I can see some of the logic to 'spending your way out of a recession' (Hey, it works in wartime), the problem is that the mountain of debt which is created whilst getting you out of the short-term hole may well end up making a long-term hole which is much harder to get out of, and you might as well have just taken the market readjustment on the chin and left it at that.

NTM

What does taking it on the chin entail?
Mass unemployment, people loseing their homes, rise in crime etc etc....

Overheal

jank wrote: »

OK so you cant spend your way out of a recesion or you cant tax your way out of a recesion.....

Which one is it?

Both.

The Government should have held steady and let the market level itself out. They were trying to use Macro Economics to solve Micro problems. and it has had Macro repercussions on everything else that was performing just fine before everything went to hell.

This is really where I step away from the Left. Yeah bush did a bailout too but Obama has done nothing different. The important thing is they both took this Too Big to Fail thing way too seriously. I agree with that lad on the Daily Show the other day: nothing is too big to fail.

What really pisses me off is since the start I've wanted them to just let these institutions file bankruptcy but theyre like NO NO NO THATS BAD and then they bailout the auto companies, they fail anyway and now that we own the auto companies they are saying BUT BANKRUPTCY IS A GOOD THING.

...I want to throw something through a window.

Sand

OK so you cant spend your way out of a recesion or you cant tax your way out of a recesion.....

Which one is it?

Maybe recessions are a natural part of the economic cycle? People misallocate resources into enterprises where there those resources offer no return and indeed loss.

What do we do when we realise this?

Do we reallocate those resources into new enterprises that will offer returns even if that means short term difficulties? Or do we throw good money after bad to "protect jobs"?

Economically, reallocating resources seem the best course of action in the long term. But politically, the jobs of those at risk are the prime concern of voters who ultimately set the priorities. Hence, long term economic benefits are set aside in favour of short term political gains.

Everyone is agreed that vast spending on borrowed money with little or no realistic risk assement caused this global recession. Indeed, the roots of the prior reckless spending is down to the easy acess to credit which was fuelled by .... yes, world government reacting to the threat of recession in the aftermath of 9/11 by pumping the world economy full of money to encourage spending.

And yet, Obama and indeed many economists would argue that vast spending on borrowed money with little or no realistic risk assement is going to cure the global recession. Is it? Or is it simply going to move the reckoning on a couple of years to the next big global crisis when global governments simply cant pump more money into an economy? Money is an artificial creation. It only has as much value as humans believe it has. If government keep creating money, with no actual economic activity to back it how long are humans going to fall for that?

Manic Moran

bobbyjoe wrote: »

What does taking it on the chin entail?
Mass unemployment, people loseing their homes, rise in crime etc etc....

Yes.

I didn't say it would be pleasant. Just necessary.

NTM

jank

So we should just do nothing.......

I dont know of ANY economist that said this.

Overheal

jank wrote: »

So we should just do nothing.......

I dont know of ANY economist that said this.

Im sure theyre out there. You just arent hearing them

http://www.americanthinker.com/2009/03/wheres_the_do_nothing_congress.html

Sir Digby Chicken Caesar

http://www.cato.org/special/stimulus09/alternate_version.html

Manic Moran

jank wrote: »

So we should just do nothing.......

I dont know of ANY economist that said this.

I recall hearing an economics professor on the BBC saying just that. He pointed out that recessions actually tend to be good for the economy as a whole as they force rationalisation. Busineses become bloated and inefficient, and under the pressure of a recession they are forced to make efficiencies which they really should have done on their own in the first place without outside interference, in order to make them sustainable.

NTM

Overheal

Mordeth beat us to it

amacachi

Didn't you vote Obama Overheal?

jank

So how about the Irish situation. Should the government do nothing?

The thing is if Obama did nothing there would be just as many or more economists and pundits saying that he should do something.

You cant please everyone I suppose thats my point. I am not sure if he is doing the right thing or not cause I am not an economist but many are in the same boat as me and just want to take pot shots at someone they disagree with about everything he does.

lmtduffy

What should have been done and what should be done from now on is that the benefits of booms need ot be kept to so the the inevitable busts.

Busts and booms are generally unavoidable and the booms are getting bigger and bigger but so are the busts, we're building up bigger and bigger but were going to fall too.

Governments need to tax to the bone in the good times and give it back in the bad times so rather then going up and down we'll just go slowly up.

Lirange

Sand wrote: »

Maybe recessions are a natural part of the economic cycle?

This isn't your run of the mill recession in fairness.

silverharp

Lirange wrote: »

This isn't your run of the mill recession in fairness.

Its your run of the mill depression 1873 , 1929 , 2008