Merry Christmas and Happy New Year

I think that next year will be better than this one. The economy will grow faster; the U.S. will continue its march toward more plentiful and cleaner energy; crime rates will continue their two decade long decline, as will cancer deaths. Highway travel in the U.S will be safer and airline accidents will continue their descent into statistical insignificance.

Politics will be divisive and nasty as ever, as every politician works overtime to get credit for all the good things that happen and shift his/her share of the blame for what goes wrong but maybe they can all get together and fix all those problems that will define ObamcCare. That will make everyone feel like a hero.

The economy will boom. I base my economic prediction on the simple concept of regression to the mean. The economy has sucked for the last six years. Eventually it will return to something more like normal and we can all rejoice.

And by the end of 2014, I hope we will be looking forward to even better times and better leadership in the New Year.

Merry Christmas and Happy New Year. Wesolych Swiat Bozego Narodzenia! Boas Festas e Feliz Ano Novo! God Jul og Godt Nytt Aar. Fröhliche Weihnachten! Or as my father might say, "Yeah, Merry Christmas; now get the hell outahere and do something useful."

Almost forgot - a little late but Happy Festivus. We do the airing of grievances all year round, but I look forward to the feats of strength.

Posted by Christine & John at December 24, 2013 1:59 PM
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Posted by: Royal Flush at December 24, 2013 4:12 PM
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Yeah thanks Barak! No thanks to the government shut-down group (non-smoking section). Republicans/Democrats are taking credit for it like they had something to do with it. It was all SMOKERS—think about it. Non-smokers don’t work—think about the mindset of a non-smoker contrasted to the intellectual curiosity of a smoker. It wasn’t congress though they might mistakenly gloat.

Posted by: simpleheaded at December 24, 2013 4:15 PM
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Posted by: Rich KAPitan at December 24, 2013 8:55 PM
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I sincerely hope so, C&J!

Btw, Merry Christmas to ALL!!!

I am utterly disgusted not only with my own progress over the last 5 - 6 years, but for all other Americans who are having a very tough go of it (not my personal achievements, but the lack of opportunity that wasn’t available as a whole).

I don’t blame Obama for the Great Recession…that was precipitated going back to the early-mid ’90s, and carried forward by ALL subsequent presidents.

No, I simply believe in my heart of hearts that any president other than B.O. would’ve navigated the country out of the myriad domestic landmines that we’ve endured sooner, rather than later.

The HIGH Opportunity Cost associated with wasting 16 months on healthcare reform whilst Rome was burning was/is unforgivable, IMHO.

Hillary would’ve been a much, much better leader if no GOP candidate won the office.

Posted by: Kevin L. Lagola at December 25, 2013 12:23 AM
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Merry Christmas!

Your article provides a good example of how the economy is entering another major phase. In 2008 - 2009, we were in a capitulation phase. Markets hit lows, and everyone believed nothing would ever get better. Bad numbers were the ‘new norm,’ and the terrible situation would last forever.

We then entered the disbelief phase. Yeah, sure, the markets were going up, but it was bound to be temporary. Inflation was bound to skyrocket. The recovery would be weak. There were no jobs. Every statistic that showed otherwise was a conspiracy, or weak, or somehow not good enough.

As your article indicates, we are now entering the acceptance phase. Everyone is beginning to recognize we are in a recovery. Markets are going up, both for stocks and housing. Unemployment is going down. The funny thing is, everyone agrees in the acceptance phase long after these things have already occurred. About 80% of the gains to be made have probably already happened- forty-some months of consecutive job gains, year after year of economic growth, unemployment about to drop below 7%, housing up 13% in one year, and so on. But that is what it takes to enter the acceptance phase. It is not even a political thing, really, it is just human nature.

We will know we are in the last phase when the stock market hits 20,000 and everyone predicts 30,000. It will seem obvious and indisputable at that time. There will be articles about a ‘new norm’ and other articles declaring economic cycles will no longer exist- everything will just keep going up forever. Housing will go up 13% for the third year in a row, or whatever, and tv shows will show us how to flip houses for big profits because obviously housing will keep going up that much every year from then on.

Posted by: phx8 at December 25, 2013 12:35 PM
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Who (all) do you say that it is that is responsible for this potential recovery? That should be a bouncy one.

Too much goodwill towards men of opposing parties.

Posted by: simpleheaded at December 25, 2013 12:54 PM
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The cycle will always exist because human emotion drives it. The four stages- despair, disbelief, acceptance, and euphoria- are natural. What does vary is the length and amplitude of the wave, and what makes it vary are events and, most importantly, political decisions.

Political decisions come in many shapes and sizes. Some take years to take effect, but most take six months or less to manifest themselves.

Posted by: phx8 at December 25, 2013 1:30 PM
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Caucophanously then it was begat in terms of the push—no one does this.

Posted by: simpleheaded at December 25, 2013 3:20 PM
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The economy is not like going through stags of grief. It will recover. Economies recover. It is past time. So I guess I am optimistic because I just figure things have to get better after six or seven years. If we just regress to the mean, it would be progress in this case.

The Obama times have no been bad for me personally. The irony is that people already well established did well. That was the change. Stocks have done well. Those with some cash could pick up real estate at low prices. I got my mortgage down to 2.6%.

The problem has been for the new people, especially young people. My kids are having lots of trouble getting good jobs and getting established.

Simple and Phx8

Re recovery - one word - fracking. A few more words, inexpensive American energy creating millions of jobs.

But no matter the reason, it is recovering, I think.

Posted by: CJ at December 25, 2013 4:17 PM
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Fracking inject toxic chemicals into the ground. NIMBY. I like the lower prices, and I am especially thankful it is not being done where I live. People living in areas where fracking occurs are going to have to live with a poisoned water table. They seem to be ok with that.

The most recent recession was deeper and lasted longer than previous recessions. The amplitude and the length of the wave was different. Why? The Second Bush Recession was an asset deflation, the worst possible kind of economic downturn. That kind of a downturn lasts longer, goes deeper, and takes longer to escape than ordinary recessions. To make matters even worse, the Bush administration and the GOP Congress ran up the debt with tax cuts and unfunded wars. They literally took a projected 10 year surplus of $10 trillion, and turned it into a $10 trillion national debt. And just as bad, the Bush administration pursued a policy of offshoring jobs. In just one year, 50,000 manufacturing plants were sent overseas. Not jobs. That’s 50,000 PLANTS. GOP policies were simply catastrophic, and we still still feel the effects.

It is interesting to use objective economic measurements to compare the performances of Republican and Democratic administrations. The Democrats outperform the GOP by wide margins- and that is not even including the most recent Bush and Obama administrations! Choose the measurement- jobs, stock market, whatever- and the Democrats wipe the floor with the GOP. Tells you something.

Posted by: phx8 at December 25, 2013 5:07 PM
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I wish I was perfect and could do no wrong. Maybe if I was a Democratic…

Just close your eyes and click your heels together saying, “There’s no one like Democratics. There’s no one like Democratics. There’s no one like Democratics.”

Wow! Look how big my head is now!

Posted by: Weary Willie at December 25, 2013 7:21 PM
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Fracking fluid is mostly water, some sand and some lubricants. You can drink it, but it tastes very bad. Fracking takes place well below water tables. That is why it works. Gas has long since escaped from areas around most water tables. Where this has not happened, you have naturally occurring methane, which is how you can set fire to water.

No form of energy extraction is w/o problems. Wind kills birds; solar requires cutting of shade trees. And we know the problems with coal. Fracking is relatively benign and the use of natural gas has allowed us to cut greenhouse gas emissions faster than any other country in the world since 2006.

Of course, whether or not you like it, there is no doubt that it has provide a fantastic stimulus to the U.S. economy, injecting more money into it than the Obama stimulus. And this is real money, not borrowed and debt creating.

Re economy of Republicans and Democrats - it is much to complex for your simplistic analysis. Does the Clinton boom belong to Democrats because of the president or Republicans who controlled congress? Of course, if you just discount Congress, all those complaints about Republicans stopping Obama in congress make no sense. And when do you start giving credit or blame? The economic slowdown under Bush started in his first year and the economy started to slow rapidly in March 2000. If you blame Bush for 2001-2, you need to blame Obama for 2009-10. I bet you like to do the first but not the second.

There is also lag times. Take the example of fracking. All the plans that have delivered energy so far were in process before Obama took office, so the biggest plus of his presidency so far is not due to his policies.

As I have said on many occasions, presidents get too much credit or blame for economics. I would not even blame Obama, except that his folks so brashly raved and swore that they would bring the economy back in the recovery summer of 2010. As it happens now, it is like predicting that the weather will be warmer in May than it is today. This is probably true, but not due to anything anybody is doing.

Posted by: CJ at December 25, 2013 9:16 PM
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Under no circumstances should a person drink water contaminated by fracking. It includes chemical additives that are carcinogens, others that disrupt hormones, and others which are toxic. The assumption is that pumping the water & its additives deep underground means the dangerous chemicals will simply go away.

Good luck with that.

Like I said, I am glad I do not live in an area where they are doing that.

As for the last recession… The housing market began its decline in 2006. The stock market began its decline in October 2007, and officially became a bear market (with a 20% decline) in June 2008. Job losses started in January 2008. Various markets moved from euphoria, to disbelief, to acceptance of falling markets, to despair.

We have just entered the next phase of this bull market, acceptance. I caught a nice little confirmation by FOX News the other night. At the very end of a broadcast, the anchor noted the stock market had hit another high, economic growth was strong, employment numbers were strong, and the housing market was strong, and then he signed off. That was it. No caveats, no attempts to downplay or pretend there was actually something wrong. He just recited them, then signed off. Acceptance.

In political terms, it means the economy will continue to be off the table as a 2014 midterm issue. Health care reform will be water under the bridge too. Unless something completely unforeseen arises (and that never happens! Heh), the midterm might devolve into a series of localized races without any overarching national issues.

Posted by: phx8 at December 25, 2013 10:00 PM
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The fluid that goes in the ground is drinkable. It is not good to drink and nobody should do it, but some Halliburton executive drank some of it make a point. They did not get sick.

Where fracking fluid causes some problems it has been from badly constructed wells. The main problem is not the fluid that goes down, but the stuff it picks up while down there. These chemicals and minerals are already there.

Fracking, like any form of energy exploration, should be and is regulated. You need to look at the situation absent fracking. In many areas where fracking is done there is naturally occurring methane. You find methane in drinking water because there has always been methane there. In fact, fracking may actually reduce seepage, as oil exploration is doing off the Pacific coast.

Re the economy - I think the economy will indeed be “off the table” in 2014. The big issue will be the failures of ObamaCare. I don’t blame Obama for the bad economy, but ObamaCare is his baby.

Posted by: CJ at December 25, 2013 10:22 PM
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Social issues might become national issues in the 2014 midterms. The GOP base wants this. Liberals & the Democratic Party would be thrilled to see it happen. The GOP leadership and establishment faction will do everything possible to avoid such a focus. They can read the polls as well as anyone, and pushing social issues would snatch defeat from the jaws of victory. The GOP has the wind at its back in the upcoming midterms: a midterm during the second term of a president and hugely favorable math in the Senate races. All the GOP has to do is keep it quiet and local.

By next summer, the only remaining issue surrounding the ACA will be Medicaid.

Remember how Obamacare was supposed to be a job killer? Didn’t happen. Remember how firms were supposed to make everybody part-time? Didn’t happen. (For those who weren’t paying attention, the fall unemployment numbers blew that talking point out of the water). People will already have insurance- better insurance. Some will pay more. The vast majority will pay less.

Medicaid will be the make-or-break issue next fall. States opting out of full federal funding for three years are essentially refusing an injection of money, an economic stimulus. States accepting it will receive a stimulus. It will be very difficult for GOP legislators to explain the bad economic consequences. And it gets worse. Uninsured people use the emergency room, and 60% of patients in ER do not pay their bills. The hospitals receive their payment from Medicaid. If red states refuse Medicaid for the ACA, hospitals will still treat the uninsured, but the costs will be passed on to everyone else, and that means soaring insurance premiums for those Republican states at the same time Democratic states (and a few GOP ones) experience declining costs.

It is a completely untenable situation for the GOP.

Posted by: phx8 at December 25, 2013 10:45 PM
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Btw, here is a nice summary of where various stands stand on the Medicaid money:

Posted by: phx8 at December 25, 2013 10:48 PM
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ObamaCare probably has killed jobs. I personally know of people who are hesitating to hire full time workers for fear of the cost of ObamaCare. Maybe they are misinformed, but they are doing it.

Beyond that, we have yet to see the problems Obamacare will cause. Maybe it will work out just fine. Let’s see.

The problem with Medicaid money is that it does indeed have to come from somewhere. For government, there are two places. They can tax or they can borrow against future taxes. Obama can “gift” this to states, but sooner or later somebody has to pay.

I seriously doubt that infusion of Medicaid money will be the determiner of state prosperity. Places with lots of fracking are already doing well. There is essentially no unemployment in North Dakota, for example. Texas and Oklahoma are also doing very well in terms of growth.

Medicaid cash not like the real money input we get from something like fracking.

You might also have the unintended consequence of poor people in need of Medicaid moving to states that provide higher benefits. This probably will be better for the losing states than for the receiving ones. People being poor is not a random event and they take their habits and behaviors along when they move. aybe it is not an unintended consequence.

Posted by: CJ at December 25, 2013 11:21 PM
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Medicaid money is basically the federal government redistributing tax revenues which have been collected on an even basis across the population. If state governments refuse the Medicaid money, it may be a relatively small amount in the scheme of things, but nevertheless, it would be a brake for the states that refuse, and a stimulus for those that accept. There is also a moral aspect. Will Republican states actually refuse to allow their poor to have health coverage? It would be an astoundingly callous act, all in the name of one thing and one thing only: sabotaging the reputation of Obama.

It is possible people could move from states without coverage to states that provide it, especially if people face threats to their lives. The thing is, not everyone who gets sick, stays sick. Poor people don’t always stay poor. Unemployed people eventually find work. Many poor people who take food stamps work their way into better circumstances. Contrary to conservative myth, most people are not lazy. They do not want to be dependent or satisfied with bare subsistence living.

Posted by: phx8 at December 26, 2013 12:04 AM
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As I always point out, it is more complex than that. Stimulus itself is complex. I am not trying to be pedantic, but I have to point out that in complex systems, you often get results that are not what you expect and maybe contrary to what you want. Simply expanding Medicaid with Federal money often leads to poorer outcomes and abuse.

Re the poor - I also have many times made a distinction between the temporary poor - which includes me and may include you - and the chronically poor. Anyone can fall into poverty by bad luck or a few bad decisions. If you stay poor for a long time, there is something about you and your behavior that explains your problem. You may not be lazy. You may be working very hard, but doing the wrong things. This is rarely the case today, but it happens. Poverty should be curable, but it is like being a boozer. It requires the active participation of the “victim.” If the government just gives them stuff and encourages dependence, it makes matters worse, not better.

Posted by: CJ at December 26, 2013 9:49 AM
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