January 10, 2008
Recession and Interest
It is amazing how little interest there is in some kinds of bad news. There are some bad news issues voters apparently are just not interested in, preferring instead the glossy and uplifting candidate speeches doctored and pre-tested by high priced Public Relations firms. But, before the bad news, a non-partisan tip of the hat.
One has to wonder why persons of Candi Wolff's caliber are not running for President. Whether one likes or dislikes her role in working on GW Bush's behalf, she must be respected for her talents, accomplishments, and skills as a political goal realizer. Candi Wolff has left the White House, with the reputation of having been the single most important person in preventing this president from becoming the 'lame duck' his tenure would otherwise have dictated. Imagine what she could have accomplished with a capable president.
On to the bad news. The economic recession believed just months ago to be an improbable event, is likely already here. A majority of Wall St. prognosticators indicate we are now in, or will shortly be in, an economic recession. However, these same folks are confident it will be short lived and not very deep. Triggered by the sub-prime mortgage industry debacle, unemployment has risen, profits and investments have been lost by some of the world's largest financial institutions, and consumers are getting more anxious.
Some adroit economy analysts say responsible fiscal policy, meaning that implemented by the Congress and White House, would go a long to resolving the problem, but that such solutions are not in the offing due to the partisan stand off between the White House and Democrats and Republicans in Congress. A few are calling for political preemptive action on the looming credit card industry bubble and threat, but recognize such action is not likely in the current political environment. Therefore, the best they hope for is a monetary response by the Federal Reserve in the form of increased dollars made available through the banking system and lower interest rates to borrow those funds.
Slam dunk, many say, except for the prospect of inflation which may result, 12 to 18 months down the road, as interest rate cuts today fully filter through the economy. Some governors of the Federal Reserve are concerned that while overall inflation appears to be in check, the inflation in consumer staples, energy, food, education, and health care, pose a potential problem, which the overall inflation statistics may be masking. Inflation (rising costs for goods and services) eats away at worker and business earnings faster than wages and profits rise. These particular rising costs, except energy, are not affecting business, but, consumers. Too much loss of buying power by the consumer, as a result of rising prices, means consumers will cut back on purchases from businesses, which can lead to worker layoffs, which can lead to less consumer spending, and onward as a vicious cycle.
Which is why the Russel 2000 index drop early this week by 19% from its previous high in 2007 is a growing concern. The Russel 2000 index reflects investor confidence in in domestic companies which are generally smaller, and do not have international components to their business. This index therefore, is one reflection of the overall health of America's domestic and smaller businesses. A 19% drop in overall stock values in the last several months is creating a bit of a stir in the back rooms of Congress, Wall Street, White House, and Federal Reserve Committee. This is not what any of them want to see in an election year.
Historically, politicians are want to cut taxes to stimulate consumer activity with the freed up dollars, as a way of fighting recessions. But, with unprecedented year over year deficits for the last 6 years, and the addition of more than 3.67 trillion dollars to the national debt, cutting taxes has its opponents. Republicans will only go along with tax cuts which include those on business and the wealthiest Americans. Democrats will go along with only targeted tax cuts for working consumers. Neither side is willing to cut spending which would impact voters in an election year. This is the very definition of partisan grid lock.
Hence, the only recession and inflation fighting efforts will fall again exclusively on the Federal Reserve Committee and Banking system. (The very Federal Reserve system presidential candidate Ron Paul calls for eliminating.)
Which forms the crux of the debate over whether the Federal Reserve should lower interest rates, by how much, and how fast? Business advocates want rapid, steep, and sustained interest rate cuts placing a higher priority on the recession today than tomorrow's inflationary consequences. Consumer advocates are raising red flags over such a course of action due to the potential for even greater inflation down the road which could reignite another recession, in what is termed stagflation, or rising prices in a receding economy.
Stagflation is a virtual nightmare for both politicians and the Federal Reserve to deal with. The tools at their disposal can only improve one, or the other, of rising prices or slowing economic activity; but not both, and with the consequence of making the other worse. Put another way, raising interest rates fights inflation but, diminishes business activity and consumption. Lowering interest rates, fights slowing or stalled economic activity but, generally inflates consumer and business prices 12 to 18 months later. If prices rise faster than wage increases, the consumer, and the businesses that depend on consumer, must pull back on spending and business growth in an attempt to stay solvent.
The political 800 pound gorilla breathing down politician's necks is global interest rates and our national debt, however. Currently, global interest rates are at historical lows. Which has meant that the interest rate payable on our national debt of 9 + trillion dollars has also been low. But, it is clear that with the emergence of gigantic economic growth in places like India, China, and others, the competition for investment dollars to fund that growth is going to cause an inevitable shortage of investment dollars, and realignments as to where investment dollars go, which can in turn cause regional and global interest rates to rise.
CitiBank last week had to go on the open market to secure a loan of $1.5 billion to cover their losses from the sub-prime mortgage fallout. The best deal they could make was an 11% loan from a Middle Eastern lender. 11% for an enormous financial corporation in a low interest environment, is incredibly high. The United States paid $405.9 Billion tax payer dollars to lenders as interest on our national debt in the last fiscal year (2006). And that was at low interest rates. The national debt is still rising. And in the future, interest rates will rise as well.
The interest on our federal debt equals $2,761.22 for every wage earner in America (1). And that was for one year. On average, each American worker paid this amount received not a single dime of government service or benefit for their $2761.22. They did did not receive one inch of Interstate Highway repair, not one extra teacher for schools, not one extra dollar of Medicare benefits, nor did a single soldier receive a single meal, nor a single country receive any foreign aid, nor a single government worker receive a dime of raise, for that $2761.22 in federal taxes. For all the good it bought them, American workers would have been no worse off flushing $2761.22 down the toilet, except for the fact that government is still operational spending more than it taxes the public.
Interest on the national debt is the 3rd largest spending item in the Federal Budget with only social and military spending being greater. And this interest is paid every year, year after year, decade after decade, even generation after generation, amounting to trillions of dollars of taxation for American workers for which they receive no government services or benefits. The interest on the national debt is the greatest waste, fraud, and abuse of the public taxpayer, by far. And it constitutes the greatest theft and immoral act one generation can perpetrate upon the next by living it up and passing the cost for living it up on their children's taxes. As if the next generation won't have its own calamities, mistakes, and recessions to pay for.
Ultimately, it is the voter's own fault this occurs. You don't give someone else your money to manage and walk away saying do whatever you like with it. When you give your money to someone else to manage, you oversee how that money is being managed and withdraw the money or fire the person when they mismanage it. Congress has been mismanaging voter's money for decades. And yet, the voters continue to reelect between 92 and 98% of politicians in Congress.
The voters are not holding their Presidents and Congress's Senators and Representatives responsible for the handling and management of their money. Yet, these Congress politicians continue to vote themselves pay raises, cost adjustments, and perks for their immoral and negligent conduct. And voters vote to reelect them. This is not how our founding father's generation of voters would have voted for these Congress people today. They demanded accountability, prudence, and necessity to justify politician's spending of their hard earned and precious tax dollars.
Today, voters act as if they are all wealthy and can afford such waste of their money as a tip, or bet, on whose political party can best the others. We are among the wealthiest middle class in the world. But, less so today, than last year, and less so last year than 7 years ago. Continuing down this path will come to an abrupt end. And when it does, the bottom could fall out from under the middle class that literally could make beggars of 100 million or more of them. Like the naysayers of the Roaring '20's of the last century, some will say it hasn't happened in their lifetime, so it won't happen in the future. But, the Great Depression of the 1930's came anyway, despite the degreed and expert naysayers.
Is this one of your campaign issues in 2008 when it comes time to vote for your incumbent Congress person or presidential candidate? If not, you are either quite well off, have no children to worry about, or, unable to grasp the import of this article. And you would not be alone, as the incumbent reelection rate of more than 92% demonstrates.
(1) 405.9 billion divided by 147 million American workers.
Well, it isn’t too hard to see how the following might have a little something to do with inflation and the falling U.S. Dollar:
Yet, that doen’t deter the rosy predictions.
Haven’t you heard?
Everything is still rosy.
Everything is near historic norms.
Which forms the crux of the debate over whether the Federal Reserve should lower interest rates, by how much, and how fast? Business advocates want rapid, steep, and sustained interest rate cuts placing a higher priority on the recession today than tomorrow’s inflationary consequences. Consumer advocates are raising red flags over such a course of action due to the potential for even greater inflation down the road which could reignite another recession, in what is termed stagflation, or rising prices in a receding economy.Well have to pay the piper sooner or later.
We can delay the pain, but delaying will magnify the pain later.
Posted by: d.a.n at January 10, 2008 06:43 PMDavid:
I think it is important to note that after your post Bernanke made a substantial comment.
Here is where it can be read in completeness:
http://www.federalreserve.gov/newsevents/speech/bernanke20080110a.htm
A second major news event related to this issue is the Countrywide might be sold to bank of America. Here is the information on this subject:
I am struggling with the exact premise of your article. Maybe you could restate it?
For instance when Clinton said (or rather Carville) said “It’s the economy stupid” was the 1992 recession. The unemployment rate at that time was about 7.5% or just about 50% higher than today.
Did you “bury the lead?” in your article? Is your point in the last paragraph?
I would not agree with you that recession talk is the major driver. I would think income disparity is still the negative driver in the economy married to health care. If you are on the left wanting to pound the pulpit, it’s that the wealthy are having a party while there are millions of children without basic health care.
I’m not sure of your thesis.
Posted by: Craig Holmes at January 10, 2008 07:10 PMI would think income disparity is still the negative driver in the economy married to health care.That’s part of it.
The 30+ year disparity trend is too.
But it is a combination of MANY factors.
Also, as expected, unemployment is rising too.
Posted by: d.a.n at January 10, 2008 07:16 PMCraig, I watched Bernanke’s speech. The Fed is ready to act, which most take to mean they are willing to cut rates and pump in more liquidity. So?
What has BofA potentially bidding for CountryWide have to do with the economy? CountryWide’s losses are not diminished by the move. All that happens is B of A gets a bargain basement deal on a company which has already cost investors 100’s of millions. So your point in referencing is what?
Can’t see how you missed the rather thesis of the article if you read the whole article. There is a recession to be dealt with and 460 billion dollars in wasted American tax dollars unavailable to fight it, in an election year. And our political and fiscal systemics are contributing to more dire scenarios for the new generations of workers and taxpayers. I thought these points were rather obvious stated, and the thesis summed up at the end. Did you not read the whole article?
Well, David, for once I can agree with the general tone of this piece.
While you still snuck in references to the 29 crash and Depression, at least you weren’t declaring an imminent depression.
I’m not quite sure I agree with this assertion:
The economic recession believed just months ago to be an improbable event, is likely already here.
It isn’t news to me, nor was it seen as improbable by the economic forecasters I listen to.
It should be noted that due to quixotic nature of human beings, the business cycle will never be overcome, entirely.
Posted by: googlumpugus at January 10, 2008 09:31 PMWall street might not want to admit that we’re in a recession just yet, but it’s here. At least here in the South it is.
With the drought agricultural based businesses and farms are going under. This is causing rising unemployment as these businesses either cut back or go down the tubes.
Add to that the sub rate mortgage scam, stagnant wages, rising fuel cost, and the price of other good going up, folks just can’t afford to spend their money on things other than necessities. And even then some folks can’t afford them. They are having to choose what necessities are the most important.
This is putting a pinch on businesses like car dealers, theaters, restaurants, etc. If they aint making money they’re going to start laying off employees. And some will be forced to close down. Both will increase unemployment.
Heck, it almost sounds like a depression to me.
Heck, it almost sounds like a depression to me.
Indeed, it’s time to use Occam Razor, yet again.
Posted by: Philippe Houdoin at January 11, 2008 09:09 AMHeck, it almost sounds like a depression to me.Not yet.
But it is not far fetched.
If we stay on this course though, it is almost guaranteed. Recovery will be difficult with so much debt and government dysfunction.
The root problem is US; ALL of US.
Do we have the moral fiber to correct these many regressive/oppresive systems, growing in number and severity?
The problem is rampant, widespreasd fiscal and bankruptcy; a general lack of moral fiber, and rampant complacency and apathy.
Blaming politicians only will solve nothing.
Wallowing in the circular partisan warfare distracts from the solutions.
There will be consequences. The economy will be one of the first casualties. Rosy talk, and sticking our head in the sand only prolongs it. Red flags should be going up, but every next shoe that drops is trivialized by the so-called experts. Rememeber that many of these so-called experts have failed to forecast the seriousness of many growing problems, not to mention overlooking the seriousness of the combined effect of so many problems growing in number and severity.
The trivialization of these issues is becoming less convincing as more Americans become jobless, homeless, and hungry. But voters are culpable too. Must voters always wait until they are jobless, homeless, and hungry until they become less complacent and apathetic? That’s their choice. Repeatedly rewarding a corrupt, dysfuncational Do-Nothing Congress with 95%-to-99% re-election rates is their choice. Either way, the voters will get their education one way or another, and they will have the government that they deserve.
Posted by: d.a.n at January 11, 2008 11:02 AMOh hell, let’s just throw out the definition of “recession”, such as this one for the American Heritage Dictionary, which is drawn from the economic textbook definition I learned in Economics 101: An extended decline in general business activity, typically two consecutive quarters of falling real gross national product.
Now, I’ll admit it’s frustrating, but we haven’t had a REAL recession since the end of the Carter Administration. Sure, go on. If it will make you feel better just call this a “recession”. Better yet, make up a new, really bad sounding word. How about “Denuclitiation”? That has a dangerous sound to it and you can come up with your own definition that fits today’s economic reportage.
Anyway, I hope that helps you make people feel appropriately bad (for whatever your political purpose may be).
Posted by: Lee Jamison at January 11, 2008 11:06 AMRon:
This looks like a depression?
This December marked 51 consecutive months of job growth, a new record for our American economy.
So let me get this straight, our economy sets a new record of consitently adding jobs, and you are all pessimistic.
Folks we are in the sixth year of a recovery. Write this down, the risk of recession should be high as this is a long recovery. This is normal. It is normal for imbalances to rise over time.
I read many economist. They range from Bill Gross (CEO of Pimco funds) who says we are already in as recession to many who say we will avoid a recession.
Here is an excellent summary of what I am reading:
http://online.wsj.com/article/SB119990867859778525.html?mod=googlenews_wsj
All of that doomsday talk about the current business cycle is a bunch of crap.
What is real however is that normal business cycles effect elections. I don’t think the discussion about whether or not we are going to be in a recession is particulary relevant.
What is relevant is that ALL of the economists are expecting a slowdown in the economy. What does a slowdown mean? Most of the economist who are themselves republicans or predicting a Democratic president.
Economists are projecting.
1. A slowdown in the economy for sure, with a rising change of recession.
2. A democratic president.
What is interesting to me is that about 60% of economists believe we will avoid a recession and about 60% also believe the Democrats will take over the whitehouse.
Watch this point, this is interesting. Remember these economists are mostly Republican. Stating the above point in reverse, they believe the odds of a recession are roughly equal to the Republicans chances of winning in November.
In a final note. So what, we all saw what consensus meant in New Hampshire.
Craig
Yeah things might better in general for most the country. But we’re in the middle of a drought down here. This is putting pressures on our economy and causing unemployment as farms and agricultural businesses either cut back or go under. With less or no money these folks aren’t spending like they used too. This is causing other business to either cut back or go under. This is causing more unemployment. And less spending. And more layoffs.
I don’t know where ya live, but around here we don’t call this kind of economic activity a boom. It might not be a depression yet. But we sure aint doing much recovering around here right now.
Anyway, I hope that helps you make people feel appropriately bad (for whatever your political purpose may be).True. Things are not terrible … yet.
The real issue is the big picture and the path we are on.
So we can debate whether we are really in a recession or not, but the real issue is a large number of economic factors that show a high probability of a recession, and other factors that show recovery from a recession will be difficult.
How long can we crap in our own nest before the branch it all rests upon finally snaps?
The problems should not be exaggerated, but they should not be trivialized either.
Should we be trivializing the warning signs?
Should we be trivializing the potential/probability for a recession?
Shouldn’t we be cognizant that some states may already in recession?
There is most certainly potential for a recession, and recovery from it may be difficult with so much debt, liabilities, and dysfunction in Do-Nothing Congress (possibly the most damning factor).
That’s the important issue.
There’s the big picture.
Ignore the warning signs, stay on the same course we’re on now, continue rampant the spending, borrowing, money-printing, inflation, falling U.S. Dollar, pork-barrel, waste, regressive taxation, ignoring illegal immigration, massive trade deficits, massive entitlements liabilities, exploding and unaffordable healthcare costs (too many middlemen). etc.
As for political purpose, few really benefit from negative news. Especially if it is exaggerated. But we often hear and see the IN-PARTY and the CURRENT administration (whoever it may be at that time) try to always paint a rosy picture; one that is often more rosy than reality. Needless to say, it has affected the administrations’ credibility.
Anyway, I hope that helps you make people feel appropriately bad (for whatever your political purpose may be).Make people feel bad?
I’m sure some people really only have that goal in mind, and that may be true in some cases, but not this time, becaues there is inflation, and there is a real potential for recession, and with so much debt and other problems, there is a valid reason for concern.
There a number of real problems facing the nation. Voters have a good reason to be upset about this worsening trend.
However, it is also increasingly difficult to be very sympathetic with the majority of voters when they repeatedly reward irresponsible and corrupt politicians in the two party duopoly in Congress with very high re-election rates of 95% to 99%.
Posted by: d.a.n at January 11, 2008 12:53 PM
Don’t worry, be happy. Go shopping. Use that new credit card you got in the mail today.
Ron:
Yeah things might better in general for most the country. But we’re in the middle of a drought down here. This is putting pressures on our economy and causing unemployment as farms and agricultural businesses either cut back or go under. With less or no money these folks aren’t spending like they used too. This is causing other business to either cut back or go under. This is causing more unemployment. And less spending. And more layoffs. I don’t know where ya live, but around here we don’t call this kind of economic activity a boom. It might not be a depression yet. But we sure aint doing much recovering around here right now.
Wow things are different in different parts of the country. Here wheat farmers are enjoyed a great crop and a great price. $8 wheat!!
I was in a situation not unlike yours. I was a pastor in an oil town in the mid 1980’s. It was a depression, by any standard. Our church property dropped by 75%, housing dropped 1.5% a month for 18 months. 2/3rds or our congregation moved out of state. Now that is depressing!!!!
On a national level, I think the semantics of recession/slowdown are irrelevant for the campaign. The agreement is slowdown which will impact the election favoring democrats I assume.
Not that Democrats care about what I think, but if they did, I would have them look at their polling data from 10 months ago and see what was number 1, (iraq). By November this slowdown should be in the rearview mirror. However the health care issue and income disparity will still be with us.
In addition, although I’m not a doomsdayer on entitlements like David and Dan are, I still see them as problems that need to be addressed. They will still be here!!
Best wishes for your community as you struggle. In your area it looks like there is no semantics going on, you are clearly in a recession.
Posted by: Craig Holmes at January 11, 2008 01:02 PMCraig,
The current recovery has very weak. Job creation has been especially weak, the worst postwar recovery we have seen. It gets worse, because for most people, wages did not keep up with inflation.
The Bush administration and Republicans elected to ignore the concept of fiscal policy. Instead of raising taxes and cutting spending during the recovery, they continued cutting taxes & raising spending, which acted as a continual economic stimulus. Since the tax cuts and spending increases were not targeted towards stimulus, but instead towards wealth capture, corporations and the wealthiest did very well, but almost no one else saw the benefit. Worse, outsourcing continued to cripple the long term prospects for the US.
The Federal Reserve, fearing the coming recession, kept rates too low, too long. But what else could the Fed do? With an enormous national debt- the result of Republican policies- and an enormous federal deficit- the result of Republican policies & Bush policies- and an awful trade deficit, which just topped $60 billion for the month- the result of Republican policies- well, the Fed had no choice with its monetary policy.
Because of Republican policies, the nation’s economy has been damaged, and we don’t dare face another recession.
But the economic cycle is, of course, inevitable.
Other countries are unwilling to enable Republican policies anymore. The dollar is tanking, and we are all hearing a horrible tune in the background. The Bush economic program is a disaster. And it’s time to pay the piper.
d.a.n.
In every age the real cause of recession, depression, or “Denuclitiation” (to borrow my own non-word) is people who try to short-circuit the economic process by getting something (work product) for nothing (not producing a real work product). The housing “crisis”, for example, has been pushed forward by a bevy of housing speculators who bought thinking they could hold properties for a little while with minimal improvement and sell for a quick profit. This sort of get-rich-quick mentality saps the real productive strength of the economy and undermines the psychological underpinnings of the markets.
Posted by: Lee Jamison at January 11, 2008 01:19 PMPhx8:
But the economic cycle is, of course, inevitable. Other countries are unwilling to enable Republican policies anymore. The dollar is tanking, and we are all hearing a horrible tune in the background. The Bush economic program is a disaster. And it’s time to pay the piper.
You are way off base here. Hoovers program was a disaster. Routine slowdowns are just that.
The current recovery has very weak. Job creation has been especially weak, the worst postwar recovery we have seen. It gets worse, because for most people, wages did not keep up with inflation.
It has not been a weak recovery it’s been an uneven recovery. Corporate profits as a percentage of GDP are nearly at all time highs. Productivity increases have meant that we have not needed to hire as many people.
On a large scale looking at the nation at the big picture, this has been a fine recovery.
Where the problem lies is in the fact that there is a labor glut which has kept labor prices stagnant at best.
The unemployment rate, get this is lower right now than the average of the 70’s 80’ and yes the 1990’s. Unemployment is low.
This is not a terrible environment, it’s a normal one. It’s not George Bush’s fault. And the revovery is really not to his credit either.
Let me give you an example. Check out this quote:
WASHINGTON (MarketWatch) — The U.S. economy expanded at the fastest pace in four years during the third quarter, growing at a real annual rate of 4.9%, the Commerce Department said Thursday in making its second estimate of growth for the three-month period.
Finally, this is a long recovery. It is far longer than average.
So when you say an above average recovery from the point of view of,
1. Unemployement data
2. Corporate profit growth
3. Length of recovery
4. Low interest rates
Etc etc, and that the last quarter was strong growth (3rd) you are totally inaccurate in calling Bush’s policies a disaster.
I know that is a democratic perspective, but it’s just wrong.
What is correct, is that this has been an uneven recovery. It is a very fair argument that this economy has not lifted all boats. It has lifted America’s boat however. (Most recoveries do!!)
Posted by: Craig Holmes at January 11, 2008 01:58 PMCriag,
“Corporate profits as a percentage of GDP are nearly at all time highs.”
Yes, corporations have done fine. No question about that. And the wealthiest among us have done well, too.
But there has been no trickle down. The benefits of the recovery took the form of wealth capture, leaving everyone else, not just flat, but worse off- because everyone is holding the bag for the debts and deficits.
Job creation never kept up with population growth. Labor Pool participation numbers are unusually low. Personally, I think it is because a lot of people are off the radar of economists. But that’s just an unsubstiated opinion on my part.
A lot of people are missing from the unemployment numbers, yet we don’t see millions upon millions of unemployed.
There are no numbers on outsourcing. We all know it is happening, but no one can do anything more than guess.
The length of the recovery was prolonged by both fiscal and monetary policy: low interest rates, low taxes, and high spending. It looks like the Fed will keep doing the same with low rates, making the scary choice of stalling a downturn at the expense of the risk of inflation.
Has this recovery lifted America’s boat? No. Because “America” is not synonomous with large corporations, nor the welfare of the wealthiest among us.
Posted by: phx8 at January 11, 2008 02:34 PMphx8:
Nice response!! Really. It’s not filled with a bunch of political stuff.
The length of the recovery was prolonged by both fiscal and monetary policy: low interest rates, low taxes, and high spending. It looks like the Fed will keep doing the same with low rates, making the scary choice of stalling a downturn at the expense of the risk of inflation.
I disagree with you here. Deficit spending is now in the below normal range. Bush’s historically high deficit spending was early in his presidency when he was faced with a war and recession at the same time. The last several years we have had deficits in the “normal” range.
Debt as a percentage of GDP has stablized after rising earlier.
There are no numbers on outsourcing. We all know it is happening, but no one can do anything more than guess.
I can accept this as a point against both Bush and Clinton. Clinton did sign Nafta. I’m not sure you can blame Bush and call his policies a disaster when Nafta is in the Dem column.
phx8,
“But there has been no trickle down. The benefits of the recovery took the form of wealth capture, leaving everyone else, not just flat, but worse off- because everyone is holding the bag for the debts and deficits.”Actually this is just false. It has been masked by the effects of illegal immigration (the “labor glut” mentioned by Craig) The normal result of the increase in demand for services which would come from the rich having greater resources would be an increase in the value of simple labor. Instead, this demnand has been filled with imported labor and the usual recycling of income from spending and re-spending in the economy here has been eliminated by illegals sending much of their income home. Posted by: Lee Jamison at January 11, 2008 03:00 PM
Craig said: “I disagree with you here. Deficit spending is now in the below normal range.”
Disagree all you want, but one year’s deficit below a quarter trillion over the last 5 does indicate a below normal range, AT ALL.
You may want to rethink that assessment. Adding 3.65 trillion in deficits to the debt over 6 years is NOT in the below normal range. It is in fact, absolutely unprecedented in American deficit history as the most rapid growth in the national debt and deficits over such a short period of time.
One year’s lower deficit does not a trend make. Nor a very sound argument.
Posted by: David R. Remer at January 11, 2008 03:46 PMLee, phx8 actually has a valid and fundamental point. The Fed’s actions have but one primary objective: Encourage MORE borrowing and debt. There is no other primary objective in lowering interest rates and increasing lending liquidity.
Phx8 is quite correct to point out this very fundamental result of the Fed’s actions. Increase borrowing and therefore debt. It can be a good thing or bad, depending on who is doing the borrowing, for what purposes, and whether or not the borrowing allows wealth creation and distribution opportunities, or restricts future economic activity at a bad time due to excessive debt loading.
Posted by: David R. Remer at January 11, 2008 03:51 PMCraig said: “This December marked 51 consecutive months of job growth, a new record for our American economy.”
Doesn’t take much for you to celebrate, does it. Just some population growth. You do realize that employment growth SHOULD occur with population growth, right?
Now, if that some job and population growth were accompanied by real wage growth at all income levels, that would have been a record to celebrate. But, alas, that was not the case by a long shot.
Posted by: David R. Remer at January 11, 2008 03:57 PMLee, your resources are flawed. Bush inherited a real recession in his first presidency, a result of the tech bubble bursting. By the way, that definition you are using is one created by the media. It is not technically correct at all nor used by economic technicians at the CBO and GAO, Treasury, or Fed Reserve.
Perhaps a little homework is called for before making such elementary and inaccurate claims. The fact is, as Bernanke said yesterday, we are not likely to have all the evidence to determine if we are in a recession for about 6 months. That fact however, does not prevent Wall Street and investors and businesses and consumers reacting to current conditions, as Ron Brown is in his area.
Bernanke is acting as if a Recession is imminent in the absence of preemptory action by the Fed, despite the fact that as he said, they will not know if this is a recession or not for 6 months or more.
For those not willing to wait around for 6 months to know whether this is a recession or not, and that is the majority of analysts, businesses, and business leaders, it is prudent to act as if a recession is either here or on the horizon and act accordingly and preemptively, for blatantly obvious reasons.
Posted by: David R. Remer at January 11, 2008 04:09 PM“the usual recycling of income from spending and re-spending in the economy here has been eliminated by illegals sending much of their income home.”
Lee Jamison,
I guess AMEX ought to quit issuing credit to those darn illegals:
Is illegal immigration a problem? Yes, but sheesh!
December retail sales were disappointing, consumer confidence is in the toilet, the dollar is falling ………… blame the illegals!!!!!!!!!!!!!
If we’d do away with the minimum wage that would probably help too, eh?
Posted by: KansasDem at January 11, 2008 04:24 PMDavid:
Disagree all you want, but one year’s deficit below a quarter trillion over the last 5 does indicate a below normal range, AT ALL.
2004 and 2005 were pretty high deficits the rest were pretty routine.
You may want to rethink that assessment. Adding 3.65 trillion in deficits to the debt over 6 years is NOT in the below normal range. It is in fact, absolutely unprecedented in American deficit history as the most rapid growth in the national debt and deficits over such a short period of time
It is rare to have a war and recession at the same time to battle.
This did raise the debt as a percent of GDP by a few points.
Lee Jamison wrote: d.a.n. In every age the real cause of recession, depression, or “Denuclitiation” (to borrow my own non-word) is people who try to short-circuit the economic process by getting something (work product) for nothing (not producing a real work product). The housing “crisis”, for example, has been pushed forward by a bevy of housing speculators …Yes, most of our problems are rooted in wide-spread greed and laziness.
However, our problems, growing in number and severity, are not merely due to a housing “crisis” alone.
Remember the reasons for the Great Depression?
Same thing.
There are MANY problems, which are all various manifestations of un-checked greed …
- One blames it on illegal immigration.
- One blames it on speculation.
- One blames it on National Debt.
- One blames it on foreclosures and the mortgage/housing crisis.
- One blames it on regressive taxation.
- One blames it on corprcisy, out-sourcing, and selling-out American workers at ever turn.
- One blames it on spending and borrowing.
- One blames it on inflation (a U.S. Dollar from 1950 is now worth than 11 cents).
- One blames it on excessive money printing.
- One blames it on failed trickle-down.
- One blames it on a dysfunctional, FOR-SALE, increasingly plutocratic government.
- One blames it on two wars in Iraq and Afghanistan.
- One blames it on legal plunder, eminent domain abuse, a constitutional crisis, and warfare on the middle-income-class.
- Many blame this or that on a number of different things.
And those of US that know it have a duty to help others understand it.
Too many of US are too complacent, apathetic, lazy, brainwashed, and/or delusional (preferring to wallow in the distracting and circular partisan-warfare, preferring to blindly pull the party-lever; abdicating our responsibility to vote responsibly to the two-party duopoly who loves to fuel the partisan warfare, pit voters against each other, and despicably pit American citizens and illegal aliens against each other for profits from cheap labor and pandering for votes).
Government will not become more responsible and accountable until the voters do too.
That won’t ever happen by repeatedly rewarding irresponsible, corrupt, bought-and-paid-for, incumbent politicians in Do-Nothing Congress with 95%-to-99% re-election rates.
There is one consolation.
There is a built-in self-correction mechanism.
However, there’s a down side.
Often, things can’t get better until they get much worse.
- QUESTION: When will we get on a better path ?
- ANSWER: When the path we are now on finally becomes too painful.
That may take another decade or so.
And when it unravels (and it most likely will eventually), it will take a long time to repair.
Some don’t think we have anything to worry about.
We may or may not be in a recession now, but it is hard to say we have nothing to worry about.
There is a gathering storm, and the problem is US.
An economic melt-down is not far-fetched.
Our education is already in the pipeline.
Either way, we will get our education, and we will have the government that we deserve.
David:
Bernanke is acting as if a Recession is imminent in the absence of preemptory action by the Fed, despite the fact that as he said, they will not know if this is a recession or not for 6 months or more.
Bernanke is acting as if the risk of slowdown/recession is greater than the risk of inflation.
From the readings of other Fed officials they are not certain a recession in on the way.
I do agree with you inpart. Semantics. There is univeral agreement that a slowdown is coming. That would be expected with the recent robust economy. (Over 4% gdp in third quarter)
Posted by: Craig Holmes at January 11, 2008 04:45 PMCraig,
To me, the point is not so much that we may be enterting a recession. Economies run in cycles. Stuff happens. That part is not a matter of partisanship. The point is that we’re entering this downturn in a very vulnerable position.
For example, servicing the national debt now consumes 9% of the federal budget.
Another drop in interest rates will tank the dollar even further, which results in commodity fueled inflation.
These are examples of penalties which are paid by all Americans, not just corporations or the very wealthy. And to get a little political for a moment, that is why I detest the Bush administration so deeply- one reason, anyway- because so much effort has been made to extend a helping hand to those who least need the help.
Foreign investors will not allow the US to inflate its way out of the national debt, which is funded by inflation-vulnerable bonds. We have to keep them investing in US debt, so at some point, the real rate of return of bonds will have to exceed inflation to make it attractive to foreign investors.
Posted by: phx8 at January 11, 2008 05:29 PM
phx8:
For example, servicing the national debt now consumes 9% of the federal budget.
Interest expense reached 3% of gdp in the 1980’s and stayed there for about 15 years. Since the federal economy is about .20 times gdp that equates to about 15% of the federal budget back then. We have really benefited from a prolonged period of low interest rates.
The nine percent is not unusual.
There is not a direct correlation between lower interest rates and the value of the dollar. It is more closely related to real gdp growth prospects. Lowering interest rates can result in and increase in the dollar.
There is also not a direct correlation between a drop in the dollar and inflation. It does have a modest effect.
Posted by: Craig Holmes at January 11, 2008 07:07 PMOther than that and this, everything is rosy!
Posted by: d.a.n at January 11, 2008 07:30 PMThe point is that we’re entering this downturn in a very vulnerable position.Yep. But talk like that will earn the “Chicken-Little” award of the year. Posted by: d.a.n at January 11, 2008 07:42 PM
The nine percent is not unusual.
But it is irresponsible and foolish to continue wasting money in paying interest when we don’t have to.
Posted by: Rhinehold at January 12, 2008 01:04 AMRegarding interest, look at the potential cost (in interest alone) for the $9.2 Trillion National Debt.
If we stopped borrowing and printing an extra $1 billion per day, and started paying down the debt by about $1.2 Billion per day, it would only take 153 years to pay of the $9.2 Trillion National Debt.
Look at the Accumulative Finance Charge of $53 Trillion dollars.
And the reason we’d have to pay back at least $1.2 Billion per day is because if it is any lower, the debt continues to grow.
With rampant outsourcing, jobs leaving the country in droves, global competition, huge trade deficits, and an irresponsible, FOR-SALE Congress that sells out its own citizens on a daily basis, what are the chances of the federal government ever getting a handle on the debt?
Look out. If you think inflation is bad now, it can get a lot worse.
The danger now is that one of the only options left is to print more money. Especially with all the candidates promising this and that (more huge spending and growing the severely bloated federal government ever larger), and bribing the voters with their own tax dollars.
Other than that, everything is rosy, and someone will be along soon to tell you all the wonderful things about inflation.
Posted by: d.a.n at January 12, 2008 12:28 PMCraig, said: “That would be expected with the recent robust economy. “
There was nothing expected about this recession/slow down. It was triggered by the sub-prime mortgage meltdown. Had that been mitigated when others and I began writing about it in 2006, this slow down could have been averted entirely or at least diminished greatly, through fiscal and legislative measures.
But, no. Congress refused to pay attention and as usual, is relying on the Fed to bail them out. One of these times they will find out the Fed’s efforts either not available or ineffective.
Posted by: David R. Remer at January 12, 2008 01:42 PM“But it is irresponsible and foolish to continue wasting money in paying interest when we don’t have to.”
Rhinehold,
I was really hoping someone else would ask you to explain more, but since they didn’t, I will.
How do we not have to?
Posted by: KansasDem at January 12, 2008 07:06 PMYou mean, how do we pay down on the debt we have incurred over the years while we have been in a generally prosperous period so that if we do have issues we can respond to them adequately?
Simple, don’t spend as much as we take in…
Does that seem impossible? If so, if we can’t seem to do it now while we are generally prosperous, then we might as well just swear fealty to China now and get it over with…
Posted by: Rhinehold at January 12, 2008 11:43 PMDavid:
There was nothing expected about this recession/slow down. It was triggered by the sub-prime mortgage meltdown. Had that been mitigated when others and I began writing about it in 2006, this slow down could have been averted entirely or at least diminished greatly, through fiscal and legislative measures.
Of course this is expected. This is the sixth year of a recovery. It is normal for recoveries to get fragile. It’s like a tightrope act with the “rope” getting steeper and steeper until the tightrope walker finally falls only to start again.
Growth cycles are normal. This is normal. It is pretty easy to show that after periods of above trend growth, periods of below trend growth ensue.
We are fine. No worries.
The problem arrises when people “expect” trends to continue indefintely. Stability brings instability because in stable environments investors “assume” more and more risk, which of course creates instability.
Posted by: Craig Holmes at January 14, 2008 02:32 PMDavid:
I above I should have said:
The problem arrises when people “expect” short term trends to continue indefintely.
I should have added “short term”.
So what are you predicting for 2009?
Posted by: Craig Holmes at January 14, 2008 02:48 PMCraig
I doubt that the local conditions here will have much of an impact on the way most folks around here vote in Nov. Unless they want to blame the current bunch in office for an act of God.
But I do think that they will be looking at the national economy (though I doubt it’ll have much impact in Nov unless we’re in a recession by then.), Iraq, health care (a lot seem to favor national health care), border security, and illegal immigration in Nov. These will have the most impact on how folks vote.
David
Local economic conditions over national conditions are more important to most folks as they have the greatest impact on them. If things aint going good locally folks don’t seem to much care if the rest of the nation is enjoying a boom. That boom somewhere else aint helping them much if any at all locally.
So yeah I’m reacting to the conditions in my area. There the ones that have the greatest impact on me. The factory might depend on national economic conditions. But I’m selling it to my son and son-in-law. We sold the convenient store a year ago. The feed and supply store is the only business I have left. And if it makes a profit or not depends on how the local economy is doing. All my customer there are from a four county area. And if they can’t pay their bills because of local economic conditions the store aint gonna do very good.
But I’m also looking at the national economic conditions. What I see is a general slow down in the national economy. Most likely part of the natural trend of things. And while I’m not ready to say that the nation is in a recession we’re going through one down here. And until we get out of this drought I don’t have a whole heap optimism for our local economy getting much better sense our it’s based about 90% on agriculture.
Unless the politicians make the economy an issue in the campaign I doubt if it will have much impact on the national elections. That is unless the country is in a recession or worse by then.
Craig, I read from your reply that excessive greed and excesses are inherent to our economic cycles and thus require cyclical corrections.
The sub-prime trigger for this correction was neither unavoidable nor intrinsic to economic cycles. A point you seem to be side-stepping.
If one buys conservative economic theory of today, then we have created a Frankenstein monster which is beyond our control and lives and acts according to its own rules, not those humans. As your comment implies.
If on the other hand, one accepts the premise that what humans create, humans can manage for their own long term benefit and preservation of the speicies, then one has to reject the notion that economic cycles of bubble and correction are inevitable, which dislocate massive amounts of capital resources and causes tremendous suffering and anxiety for untold millions of people.
It is the fulcrum of the philosophical debate between the right and left on economics. Adam Smith’s invisible hand works appropriately and for human’s benefit ONLY if the government, society, and its people abide by his Theory of Moral Sentiments. A book by Adam Smith very, very few conservatives have ever read or owned. Which of course, leads them to their grotesquely harmful modern theories of supply side economics, even when it is demand that is lacking. And their misguided trickle down economics, even when future profitabilty is threatened by political backlash (today) or loss of consumption (1930’s), which is the foundation of profitability. And their humanity threatening globally interdependent markets which literally are creating a house of cards of the future, in which but one card at the base need bend and the whole world economy tumbles, causing unprecedented privations for a billion or more of people.
Simple truth and wisdom of the ages like the food you pick, grow, and harvest yourself is the safest and best, is lost in conservative economic theory. Another is, the best defense is a barrier not easily or quickly trespassed allowing time for interdiction and prevention from invasion. Lost on the economic conservatives who seek open borders to cheap import labor, along side their more liberal Democrats who seek open borders for greater political power in future elections.
Posted by: David R. Remer at January 14, 2008 04:55 PMRon Brown, you seem to be describing a classic case for voters in your region needing to vote out their incumbents in both the State and National Congress.
Unless you live in one of those regions in which the majority don’t believe government should meddle in economic affairs, in which case, it is the business owners themselves responsible for their plight.
Either the people in your region want state, interstate, and federal help in dealing with your regional economic recession, or you don’t. But, you can’t rationally ask for help from the government and at the same time clamor for smaller less intrusive government in local economic affairs. Where are the entrepreneurs seeding clouds in your area to bring rain, or the seawater desalination plants and pumping infrastructure to insure against future droughts in your area? Or, is the risk/profit ratio to high for private enterprise, requiring a federal response and assistance. And if your area is entitled expect federal assistance for your region’s people, what is wrong with other people in other regions also expecting assistance?
Posted by: David R. Remer at January 14, 2008 05:05 PMDavid:
Craig, I read from your reply that excessive greed and excesses are inherent to our economic cycles and thus require cyclical corrections.The sub-prime trigger for this correction was neither unavoidable nor intrinsic to economic cycles. A point you seem to be side-stepping.
I don’t mean to sidestep. If the sub-prime issue was not there, another would take it’s place eventually.
Your first sentence above I agree with completely. Stability always leads to to instability.
I think there is a reason you think I am sidestepping so I will try to clear that up. I am speaking more of theory, and you are more specifically addressing subprime mortgages.
We do learn. On a broad view, greed does lead to excess which leads to cyclical downturns. That always has happened, and I believe you and I will not see the end of it. However, cycles are lengthening. Both Reagan and Clinton set new records for longerst business expansion. I would theorize that as we face more and more “problems” we record solutions. Gradually we are able to overcome a higher majority of them. In fact this may be why economist today are debating whether or not we are in a recession instead of how deep our recession is. Prior knowledge may be helping to contain this issue into a slowdown instead of a recession.
In terms of the right verses left arguments you make I am not so sure.
Conservative politics (when done in theory correctly not as Bush has done), should achieve higher long term growth rates with a higher standard of deviation because of a lower safety net. Liberal politics should achieve a lower over all growth rate in the economy and a lower standard of deviation.
I would offer current Europe as an example of Liberal politics, and pre Rosevelt USA as one of conservative. politics. Europe grows slower but has a much better safety net. Pre-Rosevelt USA had a higher growth rate that we do now but also had many depressions and deep recessions. It is up to the people to vote in or dial in our comfort level. If I have my economics hat on, I can look at the three or more systems without judgment, on the other hand if I choose to where a polictical hat, actually as a moderate, I sort of like things as they are in terms of government involvement in economics. It looks like a pretty good blend.
Posted by: Craig Holmes at January 14, 2008 05:36 PMDavid
We sure as the sun comes up in the morning need to vote ALL incumbents, local, state, and federal out around here. So far as I can tell none of them has even made any attempt to get any kind of financial relief for those needing it.
The city government says it’s up to the county. The county is saying it’s up to the state. And the state aint doing a thing. Our Congressman and both Senators haven’t even been around to talk to the farmers to find out what they need. And aint returning calls.
I called Sonny Pardue’s (Govenor) office to ask what the state was going to do to help the local farmers and try to explain their plight to him. All I got was the run around and was told that the whole state was effected by the drought and we needed to be patient. Meantime Sonny is making sure that Metro Atlanta is geting all the money it needs to buy water. But says the state can’t afford to bail out every farmer. Maybe not. But why the hell aint he asking Bush for help? Reckon the money’s going where the votes are.
Yeah we need a good house cleaning alright.
Some cloud seeding has been attempted with very little or no results. This is very expensive and unless it can break the drought (which so far it hasn’t) it can leave folks in worse shape than they already are.
As far as I know there aren’t any disalination plants in Gerogia. And if there are, all the water is either being used locally or going to Atlanta. There were some folks a few years ago that were talking about building 3 or 4 plants along the coast. But no one in the state government was for the idea, “We got plenty of water in our lakes and rivers.”, so I don’t think any got built.
Craig said: “I don’t mean to sidestep. If the sub-prime issue was not there, another would take it’s place eventually.”
Not here and now. And if prophylactic Congressional action was capable of preventing the sub-prime bubble, why would it not be capable of prophylactic action with other bubbles that might begin to swell in the future?
Craig said: “Stability always leads to to instability”.
Where is that written in stone? Stability is by definition stable, and stability achieved by dynamic balancing is perpetually stable. Or, perpetually by human standards of a lifetime. The gasoline internal combustion engine has been a stable form of human transportation for 75 years now. That’s stable by human standards, despite the fact, that we must now move to a new energy standard for transportation.
The growth and development of disease control was stable for more than 60 years, until population densities and distributions and mobility now pose new challenges to the entire science of disease control.
Dynamically balanced economics which maintains stability is possible. But, because economics encompasses a great many other factors which may change over time, vigilance, anticipation, and prophylactic action by the powers in control of the nation’s economics is required. A herculean task, I agree, but, possible if certain other factors can be reined into stability like population growth, and population distribution and mobility.
Anarchy is ultimate liberty, but, very unhealthy for longevity. At the other end of the spectrum, society is all about social engineering by design or happenstance, which may limit choices and options for the greater good, but, can increase peace, prosperity, and reliably protected liberty though more limited than in anarchy.
Personally, I don’t want anyone attempting designed social engineering until the powers in control of the design are directly answerable to the people who will be subject the design’s limitations. That is why America is desperately in need of serious political reform toward that end.
The alternative is social engineering by happenstance, which isn’t playing out too well as the unfunded mandates, unfair and unequal taxation, and chasmic disparity in earned incomes attest.
CountryWide’s CEO may be forced out of his job for his role in growing and busting this sub-prime mortgage bubble, and yet, if forced out he will receive a 101 million dollar going away present. That kind of earned income disparity should bring American voters to the polls with their hearts and minds filled with revolution. Will it? Perhaps in greater numbers than in 2006, but, in America that classic saying is prevalent as to have to become a truism, “Ignorance is Bliss”.
Ron Brown, that is a very sad but, growing scenario in regions of the U.S. Michigan has been suffering severely as a result of the declining competitiveness of the auto industries with foreign manufacturing, marketing, advertising and quality.
I bought a used Cadillac in apparent excellent condition. Within 20,000 miles of driving, it literally became money pit and piece of junk, for which GM would no longer provide parts. Planned obsolescence, a failed American brainstorm and guiding principle of America’s auto industry sanctioned and protected by Republican governors like George Romney, and Democratic governors like Blanchard and Granholm.
If Michigan’s governors and president’s like Jimmy Carter had not worked so hard to protect the autonomy and lobbyist power of the Big 3, the Big 3 would very likely have responded appropriately to Japanese invasion and competition. Government was never intended to bail out private enterprise, but, to optimize the environment for enterprise to take place, for the benefit of all in the society.
Nevada, Arizona, and S. California have been struggling with water issues for decades. It’s a simple enough proposition. Calculate the water available, (doable), calculate the human population that water will support and what conservation measures are needed to optimize that number, and limit population numbers accordingly. Deserts afterall, as many an Arab tribe will attest, can only support a limited population. Even with technological advances and conservation, its still limited.
But, our citizens and politicians act as if there are no limits. Las Vegas being a primary example. Isn’t this a situation calling for responsible leadership at the local, state, and federal level? Sure seems like it to me. So, where is the demand from the people for such leadership and their resounding defeat at the polls of the incumbents who allowed such hardships to befall the people under their watch?
Americans are so very, very bad at democracy; the irony is hilarious in between those moments when so many are suffering.
I know that you are doing your part, Ron. For certainly education of children is the safeguard against such perpetuation of mediocrity in the next generation. And I again tip my hat in respect to your perseverance in running for the School Board and taking a very active role in the politics of your region.
Posted by: David R. Remer at January 14, 2008 08:49 PMThe mixing of macro economics, micro economics and physics with economics is a bit confusing in this thread. But I’m sure it will all make sense after a couple of martini’s and a joint.
Posted by: googlumpugus at January 14, 2008 08:54 PMCraig said: “Conservative politics (when done in theory correctly not as Bush has done), should achieve higher long term growth rates with a higher standard of deviation because of a lower safety net.”
Therein lies the seeds of destruction of conservative politics. The notion, now adopted by far too many liberals I might add, that perpetual economic growth is possible in a finite world, is preposterously false and one of the greatest delusions of modern thought.
It is this horribly erroneous belief system that has wrought mankind’s contributions to the global climate crisis, and created a world populated by nearly half of humanity living in poverty, hunger, ethnic conflicts, and other violence as a moment to moment fear in everyday life.
GDP growth at any cost is the cornerstone of conservative politics. And now constitutes the greatest threat to our globe now that it has been adopted by the Chinese, Indians, Malaysians, and S. Americans, not to mention Europe and Russia.
And in total abandonment of the revelations and wisdom of the 1950’s and 1960’s centered on conservation, preservation, homeostasis, and balance. We have even made commercial profit GDP growth out of ever increasing refuse and waste. Not enough to halt the the growing stockpiles of refuse and waste, but, hey, at least we are profiting it, even if our grandchildren will have to wade through it to go anywhere.
One day a prophet shall arrive who shall have the opportunity, wisdom and charisma to call convincingly upon all consumers to make the 1st day of each month a boycott day on consumption. And the people shall revel in this new wisdom that less can actually create more, less consumption, less waste, less anxiety, less energy, less taxes, and more savings, more leisure time, and more freedom to pursue activities other than consumption and working for the activity. And the people shall be pleased, and the business world will attack consumers upon which they feed, targeting them advertising and marketing to instill guilt and subconscious pain.
And the consumers shall, in retaliation, invoke the 1st and 15th of each month as boycott day, and the politicians shall declare the people the enemy of the state. The people shall then declare the 1st Monday of each week a boycott day, and the government will pass laws against the people arresting those who do not shop on Mondays, convicting them, fining them, even imprisoning them as insurrectionists.
And the people shall rise as a Tsunami upon the sea on election day, and vote out all politicians, in all offices of government, and install their own to those offices, and begin anew, with hope, wisdom, and balance as the cornerstones of their new society. And the era of human history governed by endless greedy effort to achieve perpetual GDP growth, shall fade into textbooks referenced in the footnotes as the second Dark Ages of human history.
Posted by: David R. Remer at January 14, 2008 09:18 PMgooglumpus, quite right. Society and nationhood are multi-sensory multi-dimensional and multi-disciplinary activities, requiring one to expand one’s mind to encompass its complexity and diversity and potential for harmony and balance. Where is T. Leary when you need him? Oh, yeah, the government got to him, outlawed him and his product. But, hay, at least pot’s back as a decriminalized substance in more states. See what a little harmony and balance and patience with absurdity can produce?
Posted by: David R. Remer at January 14, 2008 09:24 PMDavid:
Therein lies the seeds of destruction of conservative politics. The notion, now adopted by far too many liberals I might add, that perpetual economic growth is possible in a finite world, is preposterously false and one of the greatest delusions of modern thought.
Well since it has been true since say the 1500’s with the enlightenment I suppose long term economic growth is based on a pretty good premise. The premise is built on two principles, productivity increases (increases in knowledge) and population growth.
If you can figure out a way to stop improvements in knowledge and the free flow of information, you can stop economic growth.
Craig said: “Stability always leads to to instability”.Where is that written in stone?
It is written in the stone of human history. My earliest knowledge of this concept is in the Bible. My latest is in this mornings newspaper.
When people are comfortable, they are comfortable with more and more risk, which
leads to instability.
stability brings instability.
Not here and now. And if prophylactic Congressional action was capable of preventing the sub-prime bubble, why would it not be capable of prophylactic action with other bubbles that might begin to swell in the future?
Because bubbles are only obvious to all after the fact. Example 1, Greenspan’s use of the words “irrational exuberance”, was correct but several years early.
GDP growth at any cost is the cornerstone of conservative politics.
That is just plain BS.
Posted by: Craig Holmes at January 15, 2008 12:06 PMCraig,
GDP growth at any cost is the cornerstone of conservative politics.
“That is just plain BS.”
One only need listen to each and every Republican candidate for state or federal non-judicial office to hear them recite this cornerstone of conservative politics. Take off your ear muffs and give an empirical listen to the conservative candidates.
Posted by: David R. Remer at January 15, 2008 03:42 PMCraig said: “Well since it has been true since say the 1500’s with the enlightenment I suppose long term economic growth is based on a pretty good premise.”
There you go again, dismissing the myriad of changes to the world and the human species that make our current circumstance UNIQUE from that period of the 1500’s to the present. Remember, I am talking finite resources. Our resources appeared infinite until just the last 20 years or so. Now, it is a whole different context the billions of humans face, than when there numbers were less than 1 billion.
You continue to make that fatal flaw of argument to assume that the past is a guarantor of the future. If that were true, the world would still be flat, rectangular, with oceanic waterfalls at its four edges. Rome would still be master of the known world. The past is no guarantor of the future.
High Jumpers have been breaking world records for more than 50 years. Does that mean they will continue to do so infinitely gravity remaining what it is? The premise of your argument is patently false.
Posted by: David R. Remer at January 15, 2008 03:51 PMDavid:
There you go again, dismissing the myriad of changes to the world and the human species that make our current circumstance UNIQUE from that period of the 1500’s to the present. Remember, I am talking finite resources. Our resources appeared infinite until just the last 20 years or so. Now, it is a whole different context the billions of humans face, than when there numbers were less than 1 billion.
We can go back more than 20 years.
Here is 40 years ago:
The Population Bomb (1968) is a book written by Paul R. Ehrlich. A best-selling work, it predicted disaster for humanity due to overpopulation and the “population explosion”. The book predicted that “in the 1970s and 1980s hundreds of millions of people will starve to death”, that nothing can be done to avoid mass famine greater than any in the history, and radical action is needed to limit the overpopulation.
Here is your argument in 1798 form:
I think I may fairly make two postulata. First, That food is necessary to the existence of man. Secondly, That the passion between the sexes is necessary and will remain nearly in its present state. These two laws, ever since we have had any knowledge of mankind, appear to have been fixed laws of our nature, and, as we have not hitherto seen any alteration in them, we have no right to conclude that they will ever cease to be what they now are, without an immediate act of power in that Being who first arranged the system of the universe, and for the advantage of his creatures, still executes, according to fixed laws, all its various operations. … Assuming then my postulata as granted, I say, that the power of population is indefinitely greater than the power in the earth to produce subsistence for man. Population, when unchecked, increases in a geometrical ratio.– Malthus 1798, Chapter 1, online
Throughout history many have made the same arguments you are making. They are good arguments. Each time in history when faced with finite resouces new ones have been created.
It will sure be fun to watch as the world creates new energy sourses.
Posted by: Craig Holmes at January 15, 2008 06:44 PMDavid:
High Jumpers have been breaking world records for more than 50 years. Does that mean they will continue to do so infinitely gravity remaining what it is? The premise of your argument is patently false.
Yes. However the law of dimishing returns teaches us that the margins will be less and less and high jumpers get closer and closer the the limit of human potential.
Human bodies have limits which is why we started riding horses. Horses have limits which is why we started riding trains. Trains have limits which is why we started flying. Flying has limits which is why we will start to do something else yet to be invented.
Posted by: Craig Holmes at January 15, 2008 06:48 PMCraig said: “The book predicted that “in the 1970s and 1980s hundreds of millions of people will starve to death””
Tens of millions have starved to death since the 1970’s. You want to quibble over the prediction of a 20 year vs. 40 year span. The man was right. We don’t have the economic or distribution systems to accommodate the world’s hungry.
There are still having trouble feeding the 100,000 refugees in one concentration camp in Darfur.
Disregarding the biblical references, Malthus said: “I say, that the power of population is indefinitely greater than the power in the earth to produce subsistence for man.”
He is being proved correct and has been proved correct for the last 75 years. In our own wealthiest nation, we have millions who go hungry each year for a myriad of reason, not the least of which is distribution systems to feed the hungry. Multiply this by a factor of 1000 for the rest of the world. Malthus was correct. We are overpopulating our production, distribution, and political systems to the point that all humans cannot and do not maintain subsistence living on this planet at this very moment.
Then he says: “Population, when unchecked, increases in a geometrical ratio.”
That is an empirically demonstratable truth. The experiment has been done with rats and fruit flies. He is quite correct. Of course, in the natural world there are checks, which is precisely what he argues about human population, and those checks come in the form of starvation, disease, lack of distribution and financial systems for health care, water, and food delivery to those in need.
Amazing that you can read Malthus and fail to match current day news with his predictions, inaccurate only in their estimate of time frame of 20 years vs. 40. Or, is it that your comments must engage in a state of ignorance and denial regarding news events that demonstrate that Malthus was correct in order to defend the limitations of their conservative defense arguments?
Posted by: David R. Remer at January 15, 2008 07:22 PMTechnology did not prevent Chernobyl, Craig, nor Katrina, nor the loss of life and injury from the Ca. earthquake, nor the Tsunami that hit Indonesia, nor the war ravages upon 100’s of thousands in the Sudan, nor the high infant mortality rate in third world countries, all examples of population density creating massive loss of life and injury for failures of the species to act preventively to catastrophe and disaster visited upon its massive numbers and densities.
Don’t talk to me of energy, talk to me of global climate change that could check human species numbers out of existence by the 10’s of millions in a scant few decades, and show me evidence that we are capable of preventing the effects to be caused by our own contributions to it.
Don’t give me pie in the sky experimental projects that give people hope. Give me proven technology to mitigate global warming today. The Hydrogen fuel cell technology has been invented, but, American cars will never be fueled by them, precisely because of the lack of will and profit and borrowing of the gas station owners and government to install hydrogen pumps in gas stations for 1 out of 20 vehicles which may pull up for the hydrogen. The profit losses would be too great, and the political will to raise the national debt to cover their installation and subsidize the losses is also too great.
Technology has answered many needs, but, will never answer them all, especially global human population needs which cannot be fulfilled even if technology were available, because of the limitations of the political, financial, and philosophical regimes which won’t support those technological answers.
It’s a multi-dimensional challenge that overpopulation creates, across not just technological capacity, but, also across dimensions and limitations of time, economic and financial, distribution and labor capital, political, and philosophical systems. You cannot hope to win your argument Craig, as I just demonstrated with the Hydrogen fuel cell, by approaching the challenges of overpopulation with such a simple and singular variabled approach.
The overpopulation challenges are vastly more complicated and multi-dimensional than that spanning the intersections of time, money, will, knowledge, politics, and the ever rising points of no return that will be bypassed in heading off massive losses and grotesque inhumanities caused overpopulation. Yes, there will be checks on unlimited growth, and that was Malthus’ central point.
Those checks can be voluntary and orderly optimizing quality of life or involuntary, natural, and inhumane causing complete absence of quality of life and losses of life itself in most inhumane and unplanned fashion, brought about by ignorance, denial, greed, and resistance to change that may cost those who have accumulated so much.
Posted by: David R. Remer at January 15, 2008 07:46 PMCraign Holmes wrote: Yes. However the law of dimishing returns teaches us that the margins will be less and less and high jumpers get closer and closer the the limit of human potential.
Craign Holmes wrote: Human bodies have limits which is why we started riding horses. Horses have limits which is why we started riding trains. Trains have limits which is why we started flying. Flying has limits which is why we will start to do something else yet to be invented.You acknowledge limits, and then contend that limits can be overcome.
Yes, we’d better hope technology can save us.
Because a tiny planet with 6.7 Billion people, and the world population growing by 211,000 per day (77 million per year, 8791 per hour; 147 per minute; 2.44 per second) has limits.
As resources (e.g. oil; land; food) become more stressed, there will be trouble.
Already, there are only 5.46 acres of land per person.
But not all of it is arable (farmable).
There is only 1.15 acres of arable land per person.
By 2039, at the current population growth rate, the world population could grow to 9.1 Billion, and only 0.84 acres of arable land per person.
Even if the current population growth rate fell by 50%, the world population could grow to 7.9 Billion, and only 0.97 acres of arable land per person.
Already, China (1.3 Billion) and India (1.1 Billion) have 2.4 Billion people (35.8% of the world population).
Already, we see these nations competing for resources (e.g. oil), rampant pollution, and other societal problems.
Yes. we’d better hope technology can save us.
Especially on ways to produce more food with less and less land.
Is it a wise gamble?
Same thing with global warming.
Is it a wise gamble to be so confident that we will solve the problem in time?
With what history shows us, and human attitudes, and the rate of progress versus the rate of population growth, there appears to be valid reasons for concern.
Wars are started over such things (e.g. land, resources, oil, etc.).
Wars and poverty in suffering nations also puts pressures on other nations, and produces cheap labor pools that others exploit.
Illegal employers in some nations (e.g. the U.S.) do everything they can, and violate every law they can, to import cheap labor.
Some are so despicable that they (snake heads, coyotes, etc.) smuggle human cargo (some victims of slave labor and other nefarious activities) into the country.
The result is more societal chaos, as plutocratic politicians despicably pit citizens and illegal aliens against each other.
Despite the death by wars, no war ever put a dent in the growth of the world population.
In fact, the only time the world human population decreased significantly was during The Bubonic Plague (started about late 1320s).
The population of China dropped by 35 million (from 125 million to 90 million).
Europe’s population (every country we affected) dropped by 25 million in only 5 years (dropped from 75 million in 1347 to 50 million in 1352).
Total world-wide deaths were estimated around 75 million.
At any rate, it looks as though the recession started mid-to-late 2007.
All of the data isn’t in yet, but there were decreases in sales and spending November and December 2007.
Unemployment is rising (now 5.0%; up from lowest value for 2007 of 4.4$; rose by 474,000 to 7.7 million in December, 2007).
More borrowing, spending, and money printing may delay it, or soften it, but it will probably create a larger bubble that will burst later. Eventually, we won’t be able to borrow or print enough money to solve our problems.
Posted by: d.a.n at January 16, 2008 12:50 PMDavid:
I am short on time today and will answer your good response in more detail later.
Here are three quick responses:
1. There is a huge difference between hundreds of millions and tens of millions. tens of millions is less than one percent of the population.
Craig said: “The book predicted that “in the 1970s and 1980s hundreds of millions of people will starve to death””Tens of millions have starved to death since the 1970’s. You want to quibble over the prediction of a 20 year vs. 40 year span. The man was right. We don’t have the economic or distribution systems to accommodate the world’s hungry.
2. Malthus wrote over 200 years ago. (1798)
Amazing that you can read Malthus and fail to match current day news with his predictions, inaccurate only in their estimate of time frame of 20 years vs. 40.
3. Obesity is a far higher health concern than starvation among the poor in the united states.
Obesity issues among the poor indicate that the hunger issue is not as great as you assume. Obesity and starvation do not work well together when in the same group. (The poor) obviously the issue is not supply but rather distribution.
He is being proved correct and has been proved correct for the last 75 years. In our own wealthiest nation, we have millions who go hungry each year for a myriad of reason, not the least of which is distribution systems to feed the hungry.
Craig, why are you talking the U.S. when your Malthus argument was world population? Which means you must discuss world resources, starvation, premature death, illness, etc. So, the U.S. is wealthy. Malthus never said their wouldn’t be a small percentage who wouldn’t wealth it over everyone else, now did he? He was discussing world population and his prediction that resources would fail to support that population was dead on right. It is in the news constantly, if you get read past the front pages.
Posted by: David R. Remer at January 16, 2008 04:19 PMDavid:
Craig, why are you talking the U.S. when your Malthus argument was world population?
Because you did.
In our own wealthiest nation, we have millions who go hungry each year for a myriad of reason, not the least of which is distribution systems to feed the hungry.
I was responding your your bringing our country into the discussion of Malthus.
Posted by: Craig Holmes at January 16, 2008 04:30 PMDan:
You acknowledge limits, and then contend that limits can be overcome.
Yes. Man can only move so fast on his own feet. That is why he got on a horse.
Posted by: Craig Holmes at January 16, 2008 04:32 PMDan:
At any rate, it looks as though the recession started mid-to-late 2007.
The economy grew at a rate of 4.0% in the third quarter. That was very healthy.
Most economists (60% or so) believe that there will be no recession. No one knows if we are in a recession at this time. If we are in a recession at the earliest it would be “late 2007”.
Craig Holmes,
Oh right.
GDP grew.
The rich got richer.
Nevermind that most Americans are not benefiting as well from it.
Other than that, and the wealthiest 1% of the population that owned 20% of all wealth in 1980 now own 40% of all wealth (never worse since the Great Depression), everything is rosy!
Dan:
I was mearly correcting your point that we entered a recession in 2007. I just read the beige book from the federal reserve. It says that growth was modest in mid november - december.
No recession yet. You may get your wish though in 2008!!
Posted by: Craig Holmes at January 16, 2008 05:45 PMOK. You have your definition of recession (2 quarters of negative GDP growth?).
But there are some states that are already in recession.
Unemployment rose to 5.0%.
$9.2 Trillion National Debt is still growing fast.
I also think there’s something fishy about the governments reporting on inflation, GDP, and unemployment. After all, they lie about lots of things, and some CPI inflation numbers don’t even include the cost of gasoline.
So, when are we going to change course?
For several years, many factors have worsened.
Taxation is more regressive than ever.
People are working harder for less.
We may be making a living, but not a life.
We added to our possessions, but not to our values.
We’ve added years to life, but not life to years.
HealthCare is becoming an oxy-moron, when medical mistakes are killing 195,000 per year.
Our politicians are selling us out daily.
Like the Titanic, we may not change course in time.
That’s not mere pessimism.
It is based on many things that have worsened in the last 30 years.
What’s inflation?
Have you seen the U.S. Dollar lately?
It’s actually getting pretty ridiculous.
Craig Holmes wrote: No recession yet. You may get your wish though in 2008!!I am not wishing for a recession or depression, but if it makes you feel good to believe that, go right ahead.
What I, and David R. Remer, and many want is fiscal sanity.
The fiscal path we are on now is not sane.
Or do you think we are?
I don’t. The path we are on now will guarantee an economic meltdown within a decade. Not just a recession, but worse.
Even if we get on the right course soon, there’s still a lot of pain and misery already in the pipeline. There will be consequences for many decades for so much debt and erosion of the Constitution.
Posted by: d.a.n at January 16, 2008 06:12 PMCraig said: “It says that growth was modest in mid november - december.”
You still don’t appear to know the definition of ‘recession’, despite your failed attempts to argue about it.
Consecutive growth declines constitute a recession. The GDP may have been modest in Nov. and Dec. but, if it was declining in rate from Sept. Oct. the economy was RECEDING! I have quoted the official definition in a preceding thread. It is not as the media simplies it, 2 quarters of consecutive decline in GDP growth. It is the period between the most recent high rate of GDP growth and the bottom rate of GDP growth before leveling off and growing again.
The organization responsible for assessing whether there was a recession or not is where Bernanke came from and as he himself recently said, it takes 6 months for all the data to come in before they can determine if a recession was underway 6 months previously.
But, whether or not there is a recession nationally, there certainly are recessions underway regionally, some of them sustained for years as in Michigan. For those Americans, it doesn’t matter if you call it a rut, declination, or foulup, it feels the same; hard to find a job, escalating prices and stagnant wages, and losses by the unemployed, through no fault of their own.
Posted by: David R. Remer at January 16, 2008 07:11 PMCraig, can’t you take a comment in context. My reference to the U.S. was to demonstrate the best of circumstances in the world. Nearly everywhere else in the world, it is far, far worse. That was the contextual point being made.
Not that Malthus was talking about the U.S. as your comment implied referring to obesity where you introduce the U.S.: “Obesity is a far higher health concern than starvation among the poor in the united states.”
And let me educate you on another fallacious point you made. An obese person can die of starvation even while they are gaining weight. Starvation does not have to include weight loss. I can feed a child rice from birth 8 times a day and that child will both become obese and die of starvation of the necessary proteins, minerals, and vitamins to sustain life.
“starvation - a state of extreme hunger resulting from lack of essential nutrients over a prolonged period”. An obese person can starve. People have died in the winter wilderness of starvation even though they ate game meat every day. It is called protein poisoning. Game meat has no fat, and some fat is required to sustain life, especially on a pure protein diet.
Posted by: David R. Remer at January 16, 2008 07:13 PMCraig, can’t you take a comment in context …Sure … hold on … let me take of my rose colored glasses.
Ahhhhh … Oh my … !
Posted by: d.a.n at January 16, 2008 07:30 PMDavid R. Remer wrote:Craig said: “It says that growth was modest in mid november - december.”You still don’t appear to know the definition of ‘recession’, despite your failed attempts to argue about it.
Consecutive growth declines constitute a recession. The GDP may have been modest in Nov. and Dec. but, if it was declining in rate from Sept. Oct. the economy was RECEDING! I have quoted the official definition in a preceding thread. It is not as the media simplies it, 2 quarters of consecutive decline in GDP growth. It is the period between the most recent high rate of GDP growth and the bottom rate of GDP growth before leveling off and growing again.
That’s right. Thanks for that correction. He almost fooled me. It is defined as a decline (negative rate; not necessarily a negative amount).
And, does GDP growth really show the entire picture, when median household incomes are falling? (not to mention increasing workers per household for the last 30 years), taxes are regressive, Americans are being sold-out and pitted against illegal aliens for profits and votes, etc., etc., etc. ?
Looking at GDP only is cherry-picking the data, when there are a large number of other factors that have been worsening for 30 years.
Posted by: d.a.n at January 17, 2008 09:31 AMDavid:
You still don’t appear to know the definition of ‘recession’, despite your failed attempts to argue about it.
Definition
A period of general economic decline; specifically, a decline in GDP for two or more consecutive quarters.
Posted by: Craig Holmes at January 17, 2008 11:55 AMDavid:
Craig, can’t you take a comment in context. My reference to the U.S. was to demonstrate the best of circumstances in the world. Nearly everywhere else in the world, it is far, far worse. That was the contextual point being madeI will concede all of that to you without even reading it.
My point is that you and Dan’s viewpoint have been around for a very long time. They are not new.
I can go to Malthus. I can even go back further if you want but the point remains, you believe the finite resourses of our planet are going to undermine our economy. In short term analysis there will be times when you are correct. Necessity is the mother of invention. (Necessity being short term lack). On the long term there is for all practical purposes infinite resourses.
We will discover and learn to use them, as necessity dictates.
As Greenspan says, productivty has been increasing at about 2% a year for a very long time. He believes that is close to the limit of humanities ability to learn. There is really no reason to think this will change since knowledge learned is hard to discard.
David:
The GDP may have been modest in Nov. and Dec. but, if it was declining in rate from Sept. Oct. the economy was RECEDING! I have quoted the official definition in a preceding thread. It is not as the media simplies it, 2 quarters of consecutive decline in GDP growth. It is the period between the most recent high rate of GDP growth and the bottom rate of GDP growth before leveling off and growing again.
Assuming there is negative growth somewhere.
Craig Holmes wrote: My point is that you and d.a.n’s viewpoint have been around for a very long time. They are not new.Craig, Again, you think things are “fine” (perhaps even “great”) based on your recent comments:
Craig Holmes wrote: America as a whole has never been this rich, and it’s getting richer all the time. It’s a great time to be an AmericanSure, if you are the 1 in 10 people that own 70% of all wealth in the U.S.
Things may look good for some people and those that cherry-pick a few statistics, but the big picture indicates something different for most Americans.
Things are NOT getting better for most Americans.
These 10 things have been getting worse. NOT better.
So your comment above is highly debatable.
So, the definition of recession is decline for two quarters. Is that a decline in the Real GDP, or a decline in the rate?
Either way, again, whose receiving the majority of that GDP, when median household incomes are falling?
Also, don’t forget that productivity has increased too, but not median household incomes.
I still don’t see how you can paint a rosy picture out of the big picture, but I really wish I could too.
Posted by: d.a.n at January 17, 2008 01:50 PM… and ignore the massive debt being piled up, inflation, the falling U.S. dollar, rising unemployment, decreasing median incomes, worsening weatlh disparity, regressive taxation, illegal immigration, constiutional violations, rampant eminent domain abuse (legal plunder), voter fraud, corruption, and two wars in Iraq and Afghanistan.
Posted by: d.a.n at January 17, 2008 01:57 PMDan:
Craig, Again, you think things are “fine” (perhaps even “great”) based on your recent comments:
It is a great time to be an American isn’t it. Longevity has never been higher. America as a whole has never been richer, and you can’t point to a place you would rather live. The Dan index tells me that this is the best place in the world to live.
Craig Holmes wrote: It is a great time to be an American isn’t it.Sure, if you are the 1 in 10 people that own 70% of all wealth in the U.S.
Craig Holmes wrote: Longevity has never been higher.A couple of years. Big deal. Is that the best you can do?
How about the 195,000 people killed every year in the U.S. by medical mistakes?
How about 7 wars in the last 90 years? (some that were unnecessary wars)?
How about increasingly unaffordable healthcare. It’s just as well, since it is increasingly dangerous.
Craig Holmes wrote: America as a whole has never been richer,Sure, if you are the 1 in 10 people that own 70% of all wealth in the U.S.
Craig Holmes wrote: … and you can’t point to a place you would rather live. The Dan index tells me that this is the best place in the world to live.False.
I would like to move. I would (at the very least) like to move farther north (I’m in Texas) to a state that is not being severely overrun by illegal aliens (Montana perhaps). There are 1 million illegal aliens in the north-east quadrant of Texas.
I’ve genuinely given some thought to living elsewhere, but “wanting” and “being allowed” are two different things. I’ve been to 14 foreign countries, and there are several that are as good or better than the U.S.
But not all nations are like the U.S., which imports 5 million immigrants per year (1 million legally, and 4 million illegally).
Also, do I want to be like other immigrants that bailed and chose to give up and refuse to fix their own country?
And you underestimate/trivialize the difficulty of up-and-leaving one’s nation of birth and family.
The point is, there are many nations that are as good or better than the U.S.
So, your argument is pretty much full of holes.
Also, all of the following nations score better than the U.S. on the Transparency International Corruption Index:
- 028 Canada Debt-to-GDP=65.40% (2006 est.)
- 030 France Debt-to-GDP=64.70% (2006 est.)
- 033 Austria Debt-to-GDP=63.00% (2006 est.)
- 046 Switzerland Debt-to-GDP=51.00% (2006 est.)
- 047 Netherlands Debt-to-GDP=50.80% (2006 est.)
- 054 Sweden Debt-to-GDP=46.40% (2006 est.)
- 058 Norway Debt-to-GDP=44.80% (2006 est.)
- 062 United Kingdom Debt-to-GDP=42.20% (2006 est.)
- 064 Spain Debt-to-GDP=39.90% (2006 est.)
- 067 Finland Debt-to-GDP=37.70% (2006 est.)
- 089 Denmark Debt-to-GDP=28.10% (2006 est.)
- 094 Iceland Debt-to-GDP=23.50% (2006 est.)
- 096 Ireland Debt-to-GDP=22.80% (2006 est.)
- 100 New Zealand Debt-to-GDP=19.90% (2006 est.)
- 105 Australia Debt-to-GDP=14.10% (2006 est.)
If everything is so rosy, why is Congress considering an economic stimulus package?
Posted by: d.a.n at January 17, 2008 03:03 PMCare to explain how all of this justifies …
Craig wrote: It is a great time to be an American isn’t it.… unless you are the 1 in 10 people that own 70% of all wealth in the U.S.
I’m sure there were some other people (wealthy or delusional) that also believed the same thing during the Great Depression.
So it’s all relative.
Just a tiny oversight.
Posted by: d.a.n at January 17, 2008 03:15 PM
Bernanke said today, go ahead, economic stimulus is good, the faster the better. Just don’t increase deficits or the debt. He said going that route results in an explosion of the debt as we move out toward 2030.
A rather prosaic way of what I have been saying here since 2003. Of course he is saying two emphatic things here.
We are near our limit on debt, going further in debt will have dangerous implications and consequences over the next decade or two.
And when he refers to 20 years, he is of course referring to the entitlement crisis. A crisis obviously because the debt from funding entitlements that far out threatens our economy. And simply canceling the entitlements to prevent the debt growing ALSO threatens our future as 10’s of millions of Americans suffer and die unnecessarily for lack of health care, homes, and retirement income, while the wealthier enjoy the good life. A situation which the American electorate will not tolerate.
Posted by: David R. Remer at January 17, 2008 03:59 PMCraig declining GDP growth is a recession. (The rate recedes from its high in a consecutive quarterly trend, hence there are mild recessions and severe recessions). Negative GDP growth as in GDP losses sustained for a time is a depression (Think of a flat surface as zero GDP growth, and a dent in that flat surface as a depression in the surface).
Really pretty simple when observes the root definitions of recede and depress.
Posted by: David R. Remer at January 17, 2008 04:06 PMDavid:
Great. The we are in recession about 50% of the time since the economy is either expanding or decelerating. Your definition of recession is decleration in growth.
So if the growth rate is 12% and the GDP growth rate slows to 10% we are in recession which is bad. However is we stay at 0% and are steady we are not in recession (because the growth rate is not going down) nor are we in depression (because we do not have a decline in GDP) which is good.
However here is the definition from an economics dictionary:
Definition
A period of general economic decline; specifically, a decline in GDP for two or more consecutive quarters.
Dictionaries specifically cite a decline in GDP not a decline in the rate of growth.
Decelerating growth rate serves little useful purpose since we are decelerating about 50% of the time, and there is another word for that, (decleration, slowdown) etc.
Posted by: Craig Holmes at January 17, 2008 04:52 PMDan:
Care to explain how all of this justifies …
By the Dan rule. Until I hear from Dan a better place on the planet to live, I will assume this is the best place on earth.
David:
Craig declining GDP growth is a recession
No. Negative GDP growth is recession/depression. (only after two quarters).
Posted by: Craig Holmes at January 17, 2008 04:55 PMCraig Holmes wrote: By the d.a.n rule. Until I hear from d.a.n a better place on the planet to live, I will assume this is the best place on earth.Do you not read what is written?
I just gave you a list (above) of 15 countries with less corruption, and lower Debt-to-GDP (just a few of many factors).
I’ve been to several of those countries, and would find living in any of those countries preferable.
You still have not explained how you can reconcile all of the following (below) and your statement:
Craig wrote: It is a great time to be an American isn’t it.What’s so great about all these serious economic conditions?
- Is it the dangerous, but expensive healthcare that kills 195,000 people per year that you like best?
- Is it the aditional 4 million illegal aliens per year that you like best (for cheap labor and votes)?
- Is it the thousands of crimes and homicides by illegal aliens every year that you like best?
- Is it the $70 Billion to $338 Billion in annual net losses to American tax payers due to illegal immigration that you like best?
- Is it the hundreds of closing hospitals overrun by illegal aliens (84 in California alone) that like best?
- Is it the despicable incumbent politicians in Congress that despicably pit American citizens and illegal aliens against each other for profits and votes that you like best?
- Is it the rising productivity, disappearing 40 hour work-week, and falling median household incomes that you like best (not to mention more workers per household) ?
- Is it the FOR-SALE, do-nothing, corrupt federal government that you like best?
- Is it the regressive taxation that you like best?
- Is it the 1950 Dollar that is now worth less than 11 cents that you like best?
- Is it the inflation that you like best (the U.S. Dollar falling drastically against all major currencies for the last 5+ years)?
- Is it the severely bloated, wasteful, plutocratic, kleptocratic federal government, growing ever larger, to nightmare proportions that you like best?
- Is it the tens of thousands of pages of earmarks sneaked into huge omnibus BILLs full of corporate welfare, pork-barrel, corpocrisy, corporatism, and selling out Americans daily the part that you like best?
- Is it the eminent domain abuse that you like best?
- Is it the fact that only 1 in 10 in the U.S. own 70% of all wealth that you like best?
- Is it the excessive borrowing, money printing, and $9.2 Trillion National debt that you like best?
- Is it the 7 wars in the last 90 years that you like best (some unnecessary wars based on trumped up, exaggerated, and flawed intelligence, if not out-right lies)?
- Is it the Gerrymandering that you like best?
- Is it the 23 innocent prisoners, executed between 1900 and 1987 that you like best?
- Is it the 29% of all incarcerated in federal prisons that are illegal aliens that you like best?
- Is it the 32% of all illegal aliens that receive welfare that you like best?
- Is it the violation of Article V and other parts of the U.S. Constitution that you like best?
- Is it the 99.85% of all 200 million eligible voters that are vastly out-spent by a tiny 0.15% of all eligible voters that make 83% of all federal campaign donations that you like best?
- Is it the Congress that refuses a myriad of common-sense, no-brainer reforms that you like best?
- Is it the abuase of H-1B Visas to avoid hiring quailified Americans that you like best?
- Is it the addiction to oil, energy vunlerabilities, and $3 per gallon gasoline that you like best?
- Is it the millions of foreclosures per year that you like best?
- Is it the dishonest Federal Reserve Bank that keeps the interest from money created out of thin air that you like best?
- Is it the dishonest Federal Reserve Bank that turns money printed out of thin air into real assets by confiscating property from defaulted loans that you like best?
- Is it the PBGC pension system $450 Billion in debt that you like best?
- Is it the Savings and Loan bail-outs and the current bank bail-outs that you like best?
- Is it the $12.8 Trillion borrowed and spent from Social Security that you like best (with an approaching 77 million baby boomer bubble approaching)?
- Is it the Medicare system with hundreds of billions of unfunded liabilities that you like best?
- Is it the falling quality and rising cost of public education that you like best?
- Is it the Congress that gives itself a raise every year (9 times between 1997 and 2007; while our troops go without armor, adequate medical care, and promised benefits)?
- Is it the crooked CEOs, CFO, Presidents, VPs, and invest fraud that you like best? (e.g. Ken Lay (ENRON), Bernard Ebbers (WorldCOM), David Myers (WorldCOM), Dennis Kozlowski (Tyco), Mark H. Swartz (Tyco), John Rigas (Aldelphia), Timothy Rigas (Aldelphia), Scott Sullivan (WorldCOM), Burford Yates (WolrdCOM), Jeff Skilling (ENRON), Andrew Fastow (ENRON), Lea Fastow (ENRON), Samuel D. Waksal (ImClone Systems), David Duncan (Arthur Andersen), E. Kirk Shelton (Cendant), Ben Glisan Jr. (ENRON), Dan Boyle (ENRON), Weston Smith (HealthSouth), Aaron Beam (HealthSouth)
- Is it the 2.3 million jobs displaced by illegal aliens that you like best?
- Is it the voter fraud and Diebold voting machines that you like best?
- Is it the 45 million Americans (many children) that can’t afford health insurance that you like best? Just as well perhaps, since medical mistakes kill 195,000 people per year.
- Is it the loss of jobs (we now have more jobs in government than all manufacturing) that you like best?
- Is it the lawlessness, constitutional violations, and rising crime rates (nationwide) that you like best?
- Is it the pandering, lying, flip-flopping, proselytizing, bribing, and fueling the partisan warfare that you like best?
- Is it the abuse of presidential pardons that put politicians and their buddies above that law that you like best?
- Is it the falling stock markets that you like best?
- Is it what George Bush (43) thinks about the U.S. Constitution: “It’s just a goddamned piece of paper!” (source: Capitol Hill Blue) that you like best?
- Is it the urban sprawl that is literally killing us the part that you like best?
- Is it the trillions spent for defense that can’t stop terrorism despite numerous warnings (e.g. by Rick Rescorla and Dan Hill), the part you like best?
- Is it the general complacency and apathy of the electorate that will guarantee all of the above gets worse before it gets better that you like best?
- Or is it most or all of that above that you like best?
So, you like (even defend) all of that?
So, you still think it is the best country in the world?
Most (73%) Americans seem to think the U.S. is on the wrong track.
I don’t think most Americans will agree with your statement that:
Craig wrote: It is a great time to be an American isn’t it.
No. Negative GDP growth is recession/depression. (only after two quarters).Regardless of whether it is the amount or the rate, it’s not a pretty picture. Nevermind the list of problems above, growing in number and severity. Please continue, if you like, to believe that :
Craig wrote: It is a great time to be an American isn’t it.… but don’t expect others to agree with you (that is, unless they are one of the 1 in 10 that own 70% of all wealth in the U.S.).
Other than all of those several dozens of serious problems threatening the future and security of the nation, everything is rosy! WHhhhhoooohoooo!
Don’t worry!
Be happy!
Nevermind that iceberg directly ahead.
BTW, Bernanke looks nervous.
Did anyone else notice that?
Dan:
You sure have your Phd in pessimism.
Posted by: Craig Holmes at January 17, 2008 06:49 PMDan:
Just for the record, the term “rosy” is your term.
What we are seeing is normal economics. There is very little rosy about normal economics. Normal economics is messy. You keep repeating your list of problems as if there is some new information in there or something. Little you say is new. It’s just normal capitalism. There has never been a time in history when you could not come up with a list like yours. It will always be there. Well except this, if you solve many of your problems you will simply create others.
You are not new. As I mentioned with my writings to David, people were writing like you at least 200 years ago in economics.
It all moves in cycles. Your list will always be about the same length. As a problem is solved another will be added. You have chosen as a mission in life to be a keeper of the list. That is great, as someone I suppose needs to be a keeper of the list. What a dreadful job you have chosen for yourself to constantly be keeping a list of every single thing that can go wrong.
At some point, I hope you grow weary and can come to peace that you can have a good life even with your list. Life is good!!
Posted by: Craig Holmes at January 17, 2008 07:02 PMJust curious, but is it a good idea to be cavalier about a recession while we are technically bankrupt, according the the GAO?
Posted by: Rhinehold at January 18, 2008 03:13 AMCraig, here is something new. Moody’s is saying our Treasury Bonds could lose their AAA rating by 2019 if we don’t halt the deficit spending immediately. This reference was made during the Bernanke testimony yesterday. Do you have a clue what that would mean to tax payers in opportunity cost for the significantly higher interest rate on our national debt? What it would mean for our government in terms of ability to borrow to meet the needs of the people in a large natural disaster, very destructive terrorist attack, or cyclical recession?
Do you not see the diminished probability that our Congress and next President will halt deficit spending, forcing this future prediction to become a reality. Circumstances today are unlike previous periods in our history.
Bernanke said he is confident in our economic future, but quickly qualified that we must halt the deficits, simplify and make more fair the tax system, and make the hard choices of priority as to what spending is to be reduced or cut in ORDER to meet the costs of the needs of the retirement generation.
He also warned that our current national debt level is seriously understated as the unfunded entitlement mandates dwarf the current national debt. Additionally, that if fiscal restraint is not very soon forthcoming, the debt explodes in less than 20 years compromising our economic future.
Bernanke was incredibly forthcoming and pointed in his testimony yesterday especially in his answers to Representative’s questions. There was a decidedly favorable leaning to the liberal case of meeting the people’s needs in his comments, though he was diligent to avoid partisan policy advice and gratuitously agreeable with both Republican and Democratic points of view.
Posted by: David R. Remer at January 18, 2008 04:50 AMCraig said: “I hope you grow weary and can come to peace that you can have a good life even with your list. Life is good!!”
At 58, for myself, I agree. My problem is how to keep it this good for the next 75 years of my daughter’s life. 10’s of millions of Americans share my concern according to the polls, which is why Republicans have been given pink slips and will receive even more in November. Not that Democrats will salvage our future, but, what choice do voters have? They tried the GOP, and the GOP lied.
If just one Democratic Candidate for President would VOW to zero deficit spending by their 3rd year in office, I would vote for them. I wouldn’t vote any one of the Republican candidates, except maybe McCain, but only if he let go of his revenge trip on his Vietnamese captors in his approach to Islamic nations like Iraq, Iran, Syria, and Pakistan.
His commercial running in S. Carolina demonstrates all too clearly he has never been able to let go of his envy and hatred for the Woodstockers and his deepseated need for revenge upon those who remind him of his Hanoi Hilton captors. He truly is a candidate trapped in the past. And that is precisely how he will be beat if he becomes the GOP candidate. This S. Carolina ad of his will be replayed the entire month before Nov.’s election and it will be his undoing.
Gotta commend him for his honesty, however. That ad is very honest about who he is and what his values, passions, and influencing memories are.
Posted by: David R. Remer at January 18, 2008 05:01 AMSorry, Craig, recession is NOT negative GDP, but, a decline in GDP. The reason many say we may NOW be in a recession is because of declining GDP growth. No one on Wall St. believes or has given any indication they believe we are in NEGATIVE GDP growth rate territory.
No wonder your arguments on the topic never make sense. I suggest you research the definitions. The official definitions, not the idiot journalist’s definitions, or the political definitions which have a vested interest in defining recessions as the shortest possible duration definition as possible.
Start here with The Business Cycle Dating Committee at the National Bureau of Economic Research (NBER). They define a recession as the time when business activity has reached its peak and starts to fall until the time when business activity bottoms out. When the business activity starts to rise again it’s called an expansionary period.
Posted by: David R. Remer at January 18, 2008 05:04 AMCraig Holmes wrote: There has never been a time in history when you could not come up with a list like yours. It will always be there. Well except this, if you solve many of your problems you will simply create others… . You are not new. As I mentioned with my writings to David, people were writing like you at least 200 years ago in economics.False.
The list is growing.
You just admitted to cycles.
That part is true … this list is growing.
Craig Holmes wrote: What a dreadful job you have chosen for yourself to constantly be keeping a list of every single thing that can go wrong.Not “can”. But “has” or “is” going wrong. There’s a big difference.
But, how typical to dismiss the growing list, and attack the messenger instead.
I don’t just list problems, but potential solutions too.
What’s wrong with that?
Craig Holmes wrote: At some point, I hope you grow weary and can come to peace that you can have a good life even with your list. Life is good!!My life is good.
But my situation is not the norm.
My situation is much better than most other Americans.
Maybe your situation is better too.
But I can not stick my head in the sand and ignore the fact that there are 10 Regressive/Oppressive systems that are worsening; not getting better.
Craig, what you fail to see is things are getting worse.
It doesn’t have to be that way, if you believe we are intelligent beings with some control over our future.
You appear to always dismiss anyone with bad news as pessimism.
Anyone that can’t see the seriousness of the problems, and can’t see that those problems are growing in number and severity, must be wearing blinders (or rose colored glasses).
Sure, as you say, there are always problems, but that is not the issue.
Saying that is just a lame way of dismissing problems, and for what goal is a mystery.
The issue is the the number of problems that are growing in number and severity.
Yes, there are cycles:
- ,-(1) Corruption, oppression, tyranny,
- | (2) courage, Responsibility, rebellion,
- | (3) liberty, growth, abundance,
- | (4) selfishness, complacency, fiscal irresponsibility
- | (5) apathy, dependency, fiscal & moral bankruptcy,
- ` - - return to step (1)
But does that mean we must resign to the futility to fix any of these problems, without learning from history?
Especially with so much widespread apathy and complacency?
This is not a contest over merely who is right or wrong, who is overly pessimistic or overly optimistic.
The pressing problems growing in number and severity, and the future and security of the nation is the issue.
You acknowledge the list, but you fail to acknowledge it growing in number and severity.
Please feel free to make corrections if you like.
Craig Holmes wrote: What a dreadful job you have chosen for yourself to constantly be keeping a list of every single thing that can go wrong.You should be glad that some one is paying attention. Why do you have so much disdain for people trying to educate others about problems growing in number and severity? How can you be so cavalier about the U.S. Dollar falling like a rock? How can you be so cavalier about violations of the Constitution? How can you be so cavalier about the U.S. Dollar falling like a rock? How will anything be fixed by ignoring or trivializing the problems? How will anything be fixed by sticking your head in the sand?
I agree with Rhinehold, David, and others that refuse to stick their head in the sand …
Rhinehold wrote: Just curious, but is it a good idea to be cavalier about a recession while we are technically bankrupt, according the the GAO?
Even Jack believes the fiscal problem is dire …
Jack wrote:
The demographics are just going to smash us unless we do something.
I’d rather have the job of acknowledging problems and proposing solutions, rather than always ignoring and trivializing the problems and offering no solutions.
You can call me pessimistic, but it is not true.
I deal with reality.
Some people don’t like dealing with reality, and that is often the source of their painful predicaments.
The reality is the list of pressing problems facing the nation are growing in number and severity, and we are all culpable.
The solutions will come when we learn from our mistakes and/or when what we are doing becomes too painful. If you want to call that pessimism, that’s your choice, but don’t expect others to believe it.
Most Americans (73%) also see the growing list that you so easily dismiss.
So, does that mean 73% of Americans polled are also pessimistic?
Do you think it just might be true that our pressing problems are growing in number and severity?
Other than that, everything is rosy!
At least, according to the Craig Holmes Index which always states:
Craig wrote: It is a great time to be an American isn’t it.
Pay no attention to that iceberg directly ahead.
Posted by: d.a.n at January 18, 2008 06:26 AMAh, that reminds me so much of Harry Chapin’s Danceband on the Titanic. He wrote that in the 70s when he felt that the US was the Titanic and we were heading for the iceberg and no one would listen to the lookout shouting about them…
Great song, I recommend it highly!
(“There’s no way that this could happen.”
I could hear the old Captain curse
He ordered lifeboats away, that when I heard the
Chaplain say, “Women, and Children, and Chaplains first.”)
David:
I appreciate your posts. Yes, yesterday was classic Bernanke. Your concerns mirror his in that like him you above post is about justice for the future generations.
This is exactly why I don’t think the collapse you fear will come. The tipping point will come, but is not yet here. The tipping point will be the long term treasury market. 30 year treasuries are at 4.29% today which is far from loosing AAA status.
The AAA status thing is important but what is really important is interest rates.
I think the tipping point that you will enjoy will come when the large deficits show up in the CBO’s ten year projections. Then the numbers will show up in their interim forcasts. Right now the 10 year numbers look very good for the budget. I think you will diagree with that, but I can take a further back position and say that they don’t look horrible. It’s the 20-40 and beyond year numbers that look very bad.
So here is one more predection for you to write down:
Significant congressional and presidential action will occur.
The tipping point will be the US Treasury market. It will force the needed action.
It will be business as usual until then.
With a glut of savings worldwide, I don’t see this happening for a while. Although that glut is diminishing.
I remain optimistic that these problems will be solved for several reasons, not the least of which is that other countries are ahead of us, in this slow moving issue. We can watch Japan, Germany and Italy for instance and see how they deal with their entitlement issues and learn from them.
I think your daughter will have a good life.
Thank you for correcting me on recession, it is negative growth not negative GDP
Posted by: Craig Holmes at January 18, 2008 12:51 PMCraig Holmes wrote: I think the tipping point that you will enjoy will come when the large deficits show up in the CBO’s ten year projections.Right.
People warn about bad these things because they want bad things to come true.
Never mind the list of problems growing in number and severity for 30+ years, and exacerbated by wide-spread apathy, complacency, and delusion.
Craig Holmes wrote: I remain optimistic that these problems will be solved for several reasons,…Really?
Who would have ever guessed?
You acknowledge cycles and the list of problems, but seem to believe we will somehow avoid the real potential for the painful consequences, and the bottom of the next major down-turn.
Isn’t that going against the cycle and history?
The human factor is what you are overlooking.
The most dangerous factor is the widespread apathy, complacency, dependency on government, and fiscal and moral bankruptcy.
So, you admit that recession is defined as a decline in GDP for 2 or more quarters.
So, are we in a recession?
If not, why all this talk by Bernanke and politicians about some sort of stimulus package?
Why was Bush on TV asking Congress to create a $150 Billion stimulous packages and saying we need to do something soon?
Some are suggesting rebate checks.
That’s just great.
Borrow and print more money.
That’s seems to be their solution for everything.
No wonder the U.S. Dollar has been falling against all major currencies for over 5 years.
Craig said: “Yes, yesterday was classic Bernanke.”
I didn’t think so. I thought this was a whole new Bernanke who shot down a Republican from Dallas Texas trying to make the case for Supply side tax cuts in a consumer and liquidity led recession. What I saw was Bernanke throwing down the gauntlet, repeatedly and saying in his inimical way, I ain’t playin’ politics with either side, anymore.
“The tipping point will come, but is not yet here.”
It is very Damn close as it was pointed out that we are only about 10 years away from losing Treasury Bond’s AAA rating to underwrite our national debt. Considering that many of the decisions and policy issues now being discussed won’t impact the economy for from 1 to 5 years from now, that closes the 10 year gap to just five years to do major things differently and do them right, or lose our international ability to borrow cheap. You want to talk inflation, losing the AAA rating will be all about inflation and a collapse of the U.S. dollar.
Perhaps you missed that tidbit. Or, Bernanke’s insistence that certain things MUST be done soon and done Right, of bets on the economic future to be worth anything. He wasn’t waxing poetic when he said the economy could explode if deficits continue. He was being very literal.
Where does your confidence and optimism come from regarding Congress’ willingness to zero out deficits in the next 5 years, which is when entitlements begin zero out surplus revenues?
“Significant congressional and presidential action will occur.”
And your basis is our overwhelming and non-tardy responses to global climate change, energy independence, deficit and debt elimination, illegal immigration resolution, tax simplification and justice, health care cost inflation, rising tide of uninsured, right?
Your optimism belongs in a Shakespearean Comedy like the Taming of the Shrew.
Posted by: David R. Remer at January 18, 2008 02:21 PMRhinehold, Cool! I love Harry Chapin’s works.
Posted by: David R. Remer at January 18, 2008 02:23 PMHarry Chapin’s Danceband on the Titanic
Taming of the Shrew.Funny!
Craig, Do you have a boat?
If so, have you considered naming it the Titanic II ?
David:
Sorry, Craig, recession is NOT negative GDP, but, a decline in GDP.
I read my comments above and you misread them. I said a recession is negative GDP growth not negative GDP. Negative GDP growth and a decline in GDP are identical.
The reason many say we may NOW be in a recession is because of declining GDP growth. No one on Wall St. believes or has given any indication they believe we are in NEGATIVE GDP growth rate territory.
You said:
Craig declining GDP growth is a recession.
This is wrong. I declining growth rate means that the economy is growing but at a slower rate than before but may be still growing. That is not a recession.
Recessions are measured from peak to valley. The peak is the inflection point when growth changes from positive to negative. The valley is the reverse when growth rate turns from negative to positive.
By the definition you use if GDP is 12% and the rate of growth declines to 10% that is recession. By your definition we are in recession about 50% of the time!!
Recessions are a decline in real GDP not a decline in GDP growth rate as you have stated many times.
I would suggest you reread the material you suggested I read.
You are just wrong on your definition. Or maybe you are mistating what you mean?
David:
I didn’t think so. I thought this was a whole new Bernanke who shot down a Republican from Dallas Texas trying to make the case for Supply side tax cuts in a consumer and liquidity led recession. What I saw was Bernanke throwing down the gauntlet, repeatedly and saying in his inimical way, I ain’t playin’ politics with either side, anymore.
I read the text. It look pretty classic Bernanke to me. He said about the same thing in October 2006.
It is very Damn close as it was pointed out that we are only about 10 years away from losing Treasury Bond’s AAA rating to underwrite our national debt
Can you get 30 year money at 4%?
Where does your confidence and optimism come from regarding Congress’ willingness to zero out deficits in the next 5 years, which is when entitlements begin zero out surplus revenues?
There is no need to “zero out” deficits. There is only a need to prevent debt from growing faster than nominal GDP over time. This can be done with one solution pretty much, which is solving heatlh care costs increases.
Last I looked it is a major issue in this campaign.
Craig said: “There is only a need to prevent debt from growing faster than nominal GDP over time.”
Not according to Bernanke’s testimony yesterday. Apparently you didn’t understand my nor Bernanke’s comments in this regard. Oh, Well. !
Deficits are the keys to saving or destroying our future. We need to zero them out now because in a few years they are going to rise precipitously, also a reference by Bernanke. Not to mention Greenspan, CBO, GAO, but, you don’t want to hear all that. You have heard it all before and reject it out of hand. I understand, that glass must remain half full at all costs.
Posted by: David R. Remer at January 18, 2008 04:22 PMDan:
The rebutal!!
One day Dan and David were walking in the woods when — KERPLUNK — an acorn fell on her head “Oh my goodness!” said Dan/David. “The sky is falling! I must go and tell the king.”
On her way to the king’s palace, Dan/David met Henny Penny. Henny Penny said that she was going into the woods to hunt for worms.
“Oh no, don’t go!” said Chicken Little. “I was there and the sky fell on my head! Come with me to tell the king.”So Henny Penny joined Dan/David and they went along and went along as fast as they could.
Soon they met Cocky Locky, who said, “I’m going to the woods to hunt for seeds.”
“Oh no, don’t go!” said Henny Penny. “The sky is falling there! Come with us to tell the king.”
So Cocky Locky joined Henny Penny and Dan/David, and they went along and went along as fast as they could.
Soon they met Goosey Poosey, who was planning to go to the woods to look for berries.
“Oh no, don’t go!” said Cocky Locky. “The sky is falling there! Come with us to tell the king.” So Goosey Poosey joined Cocky Locky, Henny Penny and Dan/David, and they went along as fast as they could.
Then who should appear on the path but sly old Foxy Woxy.
“Where are you going, my fine feathered friends?” asked Foxy Woxy. He spoke in a polite manner, so as not to frighten them.
“The sky is falling!” cried Dan/David. “We must tell the king.”
“I know a shortcut to the palace,” said Foxy woxy sweetly. “Come and follow me.”
Wicked Foxy Woxy did not lead the others to the palace. He led them right up to the entrance of his foxhole. Once they were inside, Foxy Woxy was planning to gobble them up!
Just as Dan/David and the others were about to go into the fox’s hole, they heard a strange sound and stopped.
It was the king’s hunting dogs, growling and howling.
How Foxy Woxy ran, across the meadows and through the forests, with the hounds close behind. He ran until he was far, far away and never dared to come back again.
After that day, Dan/David always carried an umbrella with her when she walked in the woods. The umbrella was a present from the king. And if — KERPLUNK — an acorn fell, Chicken Little didn’t mind a bit. In fact, she didn’t notice it at all.
The End
Posted by: Craig Holmes at January 18, 2008 04:26 PM
There seems to be some dispute on the real definition of “recession”.
For example. Recession:
- Definition # 1: At least two consecutive quarters of negative growth in the GDP.
- Definition # 2: Two consecutive quarters in which GDP contracts.
- Definition # 3: two successive quarters showing negative economic growth.
- Definition # 4: two consecutive quarters of negative growth in real GDP.
- Definition # 5: hard times
- Definition # 6: When your neighbor loses their job. A depression is when you lose your job.
Either way, there are other signs, such as:
Could it be a recession?
Wasn’t Bush just telling us a few days ago how rosy things were?
Interesting that he is now saying Congress needs to pass an economic stimulus as soon as possible.
Even if we’re not in a recession by some definitions, how could anyone not see it coming with all the signs above?
Even Bush appears to have taken off his rose colored glasses, and admit that there’s a problem. And we all know he doesn’t do that easily.
Lastly, even if GDP was increasing, that does not diminish the fact that the majority of wealth is going to a tiny 2% of the entire U.S. population, who own over 50% of all wealth, while incomes for most Americans are falling.
Even though productivity has increased (the 40 hour work-week is disappearing), and considering inflation and that there are more workers per household, the median household incomes are falling.
Regardless of the definition of “recession”, there is something wrong, which should not be trivialized and dismissed so cavalierly.
These regressive/oppressive systems are squeezing the majority of Americans, and these systems did not all come about by mere coincidence.
Craig, the major flaw with your story is that these many growing problems are much more than a mere acorn.
Also, the problems are growing in number and severity, and have been for decades, and we are reaching some limits of how far and long that can last.
Yes, only a fool would jump to the totally unsubstantiated conclusion that the sky-is-falling just because an acorn fell on their head.
But, equally foolish is the ostrich that sticks its head in sand, only to find out (too late) that it was actually bucket of concrete … something that might not have happened had the ostrich first removed its rose-colored glasses?
Other than that, everything is rosy!
Take two aspirins and stick you head in the sand!
Posted by: d.a.n at January 18, 2008 04:48 PMDan:
An the problem with your story is that we have radar sonar and satellite photography.
It is is fun though. So you want to go fishing? Your boat can be chicken little and mine will be the titanic II.
Posted by: Craig Holmes at January 18, 2008 10:35 PM
Dan:
I agree with much of what is in your post above on recession. In terms of whether we are in a recession or whether a recession will come, it’s really mixed. I just read just a moment ago that the odds have risen to 45% of a recession coming.
All of those definitions you mentioned except the last few are forms of the actual.
Two consecutive quarters of negative growth. It is not a decline in the growth rate as David claims but rather an actual economic decline.
Either way I think the path is the same. If I president and the facts to him were the facts as we hear them today, (45% chance of recession) I would act as if we were in recession. It’s better to act now because any fix needs to be fast. Even now I wonder if they can stimulate the economy fast enough. I heard on the radio while driving home that the soonest rebate checks can be in taxpayers hands are in June, by then I think we will be past these short term issues.
Right now consensus of economist polled is that this quarter growth will be I think .7%. Not recessionary but slow growth. I am typically close to consensus you are usually more pessimistic than consensus.
There are two reasons I do not think we are in recession right now. First we created 18000 jobs in December. That is a low number, but it is still growth. Second, Jobless claims actually have fallen, and are sort of routine at around 320,000.
I don’t know how an economy can be declining and adding jobs, admittedly at tepid rates.
In this response to you I didn’t mean to give that much detail. Actually my main point was to be a slowdown is still a problem. This is what it feels like to be europe most of the time!!
Posted by: Craig Holmes at January 18, 2008 10:48 PMDavid:
I reread Bernanke’s prepared remarks. No where did he call for a zero deficit. He was very clear that the stimulus package not increase the structural deficit.
Here is one quote:
Finally, any program should be explicitly temporary, both to avoid unwanted stimulus beyond the near-term horizon and, importantly, to preclude an increase in the federal government’s structural budget deficit. As I have discussed on other occasions, the nation faces daunting long-run budget challenges associated with an aging population, rising health-care costs, and other factors. A fiscal program that increased the structural budget deficit would only make confronting those challenges more difficult.
I agree with every word Bernanke said, but disagree with your comments here:
Not according to Bernanke’s testimony yesterday. Apparently you didn’t understand my nor Bernanke’s comments in this regard. Oh, Well. !Deficits are the keys to saving or destroying our future. We need to zero them out now because in a few years they are going to rise precipitously, also a reference by Bernanke. Not to mention Greenspan, CBO, GAO, but, you don’t want to hear all that. You have heard it all before and reject it out of hand. I understand, that glass must remain half full at all costs.
It will do not good to “zero them out now”. Without reform Health care costs will still smother the economy. As Bernanke clearly says, this stimulus package SHOULD NOT INCREASE the structural deficit.
I agree with Bernanke, and disagree with you.
Posted by: Craig Holmes at January 18, 2008 10:59 PMCraig Holmes wrote: If I [were] president and the facts to him were the facts as we hear them today, (45% chance of recession) I would act as if we were in recession. It’s better to act now because any fix needs to be fast.The problem is the actions they will probably take will make things worse long-term; a result of incessant short-term thinking.
Borrowing and/or printing up another $140 Billion of new money won’t help the falling U.S. Dollar or the $9.2 Trillion National Debt, projected short falls due to $12.8 Trillion borrowed and spent from Social Security with a 77 million baby boomer bubble approaching, hundreds of billions of unfunded Medicare liabilities, the $450 Billion PBGC pension debt, and the cost of the ongoing wars in Iraq and Afghanistan?
Craig Holmes wrote: Even now I wonder if they can stimulate the economy fast enough. I heard on the radio while driving home that the soonest rebate checks can be in taxpayers hands are in June, by then I think we will be past these short term issues.It’s not a short-term problem.
The problem is these many long-term problems, which did not all come about by mere accident during the last 30+ years.
Bush mentioned taxes, but his idea is to make the current regressive tax system permanent.
Either he is ignorant and doesn’t know the tax system is regressive, or he knows it is regressive and doesn’t care.
Also, is a rebate check and telling people to go spend-spend-spend the right message?
Why is it all about spending and consuming more and more and more?
And then borrowing to spend and consume and spend and consume some more?
How long can that last?
The Federal Reserve and the government are printing too much money, as evidenced by the U.S. Dollar falling like a rock. A 1950 U.S. Dollar is now worth less than 11 cents.
Excessive borrowing, money printing, and spending is what caused the inflation and a lot of our problems, yet the Federal Reserve and government want to borrow and print up some more to fix the problem?
Sounds stupid to me. Sounds like trying to put out a fire by throwing gasoline on it.
Yet, everything is rosy?
Posted by: d.a.n at January 19, 2008 10:16 AMCraig, you need to listen to his question and answer period following his prepared remarks.
As for zeroing out deficits, that was my quotation, not Bernanke’s. Bernanke cautioned Congress to not increase deficits for the stimulus package, warning that deficits going forward could explode over the next 20 years, obviously referring to the entitlement unfunded mandates, which he also said now dwarf our current national debt and cause the 9.2 trillion figure to be seriously understated.
Go back and you will see I was speaking in my own voice on zeroing out deficits, and my reference to Bernanke was the following “because in a few years they [deficits] are going to rise precipitously, also a reference by Bernanke. In other words, Bernanke referred to the unfunded mandates dwarfing current national debt creating large deficits going forward and that these deficits will make or break our economic future since he said point blank, such debt and deficits are not sustainable.
Posted by: David R. Remer at January 19, 2008 12:50 PMDavid:
I can go back and listen to the question answer period. However I am not sure I need to. A stimulus package does increase the deficit now by whatever the stimulus package is, say $145 Billion. What I understood Bernanke to say was not to increase the deficit going forward and thus adding to our long term issues.
This can be very useful. Although it isn’t true that generally reducing taxes increases revenue, (otherwise we should just reduce taxes to zero and balance the budget), it is true that well placed deficit spending can increase tax revenue by jump starting a slowing recessionary economy. Sort of on the premise that an ounce of prevention is worth a point of cure.
My understanding of Bernanke’s position is to increase the deficit short term, without increasing the deficit going forward. I would assume a tax rebate would meet this standard but making Bush’s tax cuts permanent would not.
Posted by: Craig Holmes at January 19, 2008 05:09 PMDavid:
All of what you said in your recent post sounds like “classic Bernanke”.
Craig said: “A stimulus package does increase the deficit now by whatever the stimulus package is, say $145 Billion.”
Sorry, that is not what Bernanke said in the Q&A, you do need to listen to it, or insist on a falsehood as a core of your belief on the matter. It is a little incredulous to say what I have reported as Bernanke’s Q&A themes as typical Bernanke.
Especially when he denies Republican Representatives affirmation of their assertion that the economic stimulus should target suppliers, instead of consumers. Bernanke absolutely refused telling the Republicans THIS economic slow down is caused by supply or production shortages, quite the opposite. Hence, stimulating productivity is not going be much help when consumption of existing inventories is the heart of the slow down, along with financial sector balance sheet uncertainties.
Very atypical Bernanke, and very honest and forthright. One Texas Rep.’s inquiries resulted in embarrassing lack of fulfillment. Aside from Bernanke’s actual words, you could see it on Republican Congressman’s face too when he turned his mike off at the end of his period.
The days of Republicans getting the Fed Chief to back their supply side trickle down theory are over if Bernanke’s Q&A was an indication of what is to come. A marked change in course from previous sessions.
What was truly impressive, was his ability to continue to draw the partisans on both sides back to the facts, without himself ever sounding or appearing partisan himself. One Democrat attempted to get Bernanke to back their call for stimulus for the poor, Bernanke said, while the poor will certainly spend what money the government sends their way in the form of increased food stamps or longer unemployment compensation periods, such actions might not meet the stimulus’ requirement for being issued forth as quickly as possible, 6 months or less preferably, one year at the outset.
I was also truly impressed by his reassertions that Congress, not he, has the responsibility to decide policies which balance the needs and quality of life of the people against questions of size of government and priorities for spending. Acknowledging that this is precisely what one of the major roles of Congress is. I’d only heard Greenspan allude to that role once that I recall, and not as directly as Bernanke did.
Bernanke has typically shied away from defining or asserting what Congress role or responsibilities are. A level of candor I would not regard typical Bernanke.
Posted by: David R. Remer at January 19, 2008 11:40 PMCraig said: “Although it isn’t true that generally reducing taxes increases revenue”
A Republican Representative affirmed that as well. Despite many Republicans insistence to the contrary. Bernanke has previously affirmed that assertion as well, along with Greenspan just before his departure when he had nothing political to lose.
Posted by: David R. Remer at January 19, 2008 11:43 PMCraig said: “My understanding of Bernanke’s position is to increase the deficit short term”
That is not what he recommended in his Q&A session. He recommended avoiding allowing the stimulus to increase the deficit if possible, while acknowledging that it is Congress role to decide such matters. In previous comments I told what he said about the 9.2 trillion being grossly understated and dwarfed by the entitlement mandates. Making it larger is absolutely not something he was recommending to the Representatives before him.
You really should listen to the Q&A and dispel yourself of this notion that short term deficits today, don’t compromise tomorrow. Each Congress that creates deficits makes the future “explosion” to use Bernanke’s word, more likely and intense.
Today, in light of the entitlements, there is NO SUCH THING as short term deficits. ANY deficit is added to the National Debt incurring growing service charges, which in turn will be added to the unfunded entitlement mandate deficits dwarfing the current national debt. The National Debt is going to grow! Only if one could see a path to paying off the national debt, could one make a case for “short term deficits”. That is not in the cards given boomer retirement demographic.
Posted by: David R. Remer at January 19, 2008 11:52 PMDavid:
There are short to intermediate times when lowering capital gains taxes increases revenue. This was actually one of the causes for the balanced budget in the late 1990’s. Lowering Capital gains taxes from 28% induced many who had held real estate and highly appreciated stock to begin to sell. This increased tax revenue. Some could have wrongly concluded from this that lower taxes increases revenue permanently.
Of course this tactic would have diminishing returns. For instance if capital gains taxes were lowered today, I would predict it would have less of an effect as in the 1990’s because capital gains taxes are so much lower.
Conversely however, it should be noted by those wishing to raise capital gains taxes that initially it could actually reduce revenues as those considering selling a highly appreciated stock or real estate would now “sit on the investment” to let it grow longer in order to achieve the after tax gain they desire.
If taxes rates go up, (particularly capital gains tax rates) I would assume there is a risk of revenue remaining flat or dropping for an interim period much like the reverse of the 1990’s until balance is achieved.
I do believe there is a point where raising taxes reduces revenue in theory. I think one could assume that very high taxes will reduce incentive to make a living and thus you would see productivity plummet. If someone were taking 90% of my earnings, (making the number up) why work? There is probably a band where taxes are safe for economic growth.
I also in theory believe lower taxes mean greater economic growth. Actually to be more precise, lower government spending. That is simply because the private sector is more efficient than the government sector. Even this is a balancing act. It is pretty much universally agreed that many of the regulatory agencies created in during the 1930’s are useful. Especially those requiring full disclosure before investing. It would be interesting to read what the optimum involvement in government as a share of the economy is.
Posted by: Craig Holmes at January 19, 2008 11:55 PMDavid:
Continuing above.
The last sentence should read:
“It would be interesting to read what the optimum involvement in government as a share of the economy is to promote long term economic growth.”
I would also wager that we are closure to that spending number than Europe. ie, America grows faster than Europe in part because government spending is less.
Posted by: Craig Holmes at January 20, 2008 10:11 AMEuropean countries are much smaller.
The dynamics are much different.
The Titanic couldn’t change course in time because it was so big and sluggish.
The problem is that there are so many problems growing simultaneously in number and severity.
Even if more money printing and borrowing delay the inevitable, it will only make it worse later.
Craig, most people say were already in a recession.
Why resist reality so much?
We can withstand a lot of abuse and corruption, but there are limits. Why rule it out so adamantly?
Posted by: d.a.n at January 20, 2008 07:03 PMDavid, it keeps getting worse, but few realize how many things are fundamentally flawed.
Posted by: d.a.n at January 20, 2008 07:10 PMDan:
Most people aren’t saying we are already in a recession. Bernanke just last week thought we would avoid a recession. At www.intrade.com the odds of a recession are 70%. There would be no odds if we were actually in a recession. Here is an article from the Wall Street Journal that has the odds about 40%
http://online.wsj.com/public/article_print/SB119990867859778525.html
Most people who understand economics do not believe we are in a recession.
All however believe we are in a slowdown. Bernanke believes we will see positive growth this quarter.
Posted by: Craig Holmes at January 20, 2008 08:14 PMDan:
EU is larger than the American economy. It grows slower because of higher government spending and more government regulation.
It has a much higher social safety net.
Posted by: Craig Holmes at January 20, 2008 08:16 PMCraig, the EU consists of many separate nations.
Japan is a smaller nation too (population and geographically).
Also, none of those nations have to deal with urban sprawl (add that to the list) which is literally killing dozens of American each day, not to mention the time and energy wasted.
A one hour commute to-and-from work, 5 days per week, is 520 hours per year, which is 65 eight-hour days, sitting in the automobile, breathing benzine, carbon monoxide, etc., not to mention the stress.
Also, don’t forget these other factors. Look at the big picture.
Also, remember WHO is benefiting most from increased productivity and GDP.
The two biggest factors you are over-looking is human-nature and history.
The point is, we are already on a path of decline.
How can anyone be so certain we will change course in time, when that is not what history shows us.
History repeats itself, and progress is slow (2.00 steps forward, 1.99 steps backward).
Just based on history, and the current trends, and so many pressing problems growing in number and severity, a rosy outlook and trivializing the problem will simply help to guarantee our demise.
It’s similar to the climate-change/global warming issue.
Is it smart to be so cavalier about it?
Is it smart to rationalize, trivialize, and continue to predict a rosy outcome?
Regarding a recession, the official (technical) definition doesn’t mean squat, nor does it explain away these many problems growing in number and severity, which have the real potential for an economic meltdown, UNLESS we change course soon. And it may be too late already.
Go right ahead believing everything is rosy if you like, but most Americans and economists see the sign posts ahead. Welcome to the economic meltdown. It’s hard to crap in your own nest for 30+ years without the branch it all rests upon finally snapping.
Another Great Depression is not far-fetched, but none of us have a crystal ball, so let’s look at the probabilities.
These are probabilities; not certainties for the future of the U.S.:
- (1) BEST CASE:
- several government reforms are passed;
- government becomes more transparent and responsible;
- many of the 10 REGRESSIVE systems are eliminated;
- the 30 year disparity-trend starts to slowly reverse (i.e. 1% of the population currently owns 40% of all wealth; never worse since the Great Depression);
- the standard of living slowly rises for several decades, Congress becomes more fiscally responsible;
- major issues still exist, but are gradually being addressed;
- GDP grows at a slow but steady rate (a few percent per year), job growth increases;
- wages and median household incomes start to rise slowly across the board for all income levels;
- the U.S. will lead in all major sectors;
- the U.S. leads the way in alternative energy sources as it weens itself off of its addiction to oil;
- (2) IF WE FIX A FEW THINGS:
- a slow and slight decline in the standard of living for several decades, and Congress will fail to act responsibly soon enough;
- the disparity trend continues at the same or slightly slower rate;
- GDP may grow, but most of the wealth will continue to go to a very few;
- jobs will continue to leave the country;
- wages will remain stagnant or fall slightly for several decades;
- job growth will be small;
- new technologies will open some new markets and provide some job growth;
- (3) MOST PROBABLE CASE:
- a more rapid and significant decline in the standard of living over one decade starting within the next decade;
- Congress will not only fail to act in time, but will exacerbate situations with continued spending, inflation, larger debt, a failure to curb entitlements and the cost of a federal heatlhcare system, continued cost of war/occupation in Iraq and Afghanistan, and increased corruption;
- the disparity trend continues at the same rate;
- GDP growth may grow slightly, but most of the wealth will continue to go to a very few;
- jobs will continue to leave the country;
- wages will remain stagnant or fall slightly for several decades;
- (4) WORST CASE:
- Number (3) above, along with some natural catastrophe or additional war(s) that we are now not prepared for since we have already been fiscally irresponsible for so long and already have too much debt;
- corruption in the federal government is rampant;
- these regressive/oppressive systems continue to worsen, but at a faster rate;
- GDP growth stagnates or falls slightly;
- taxes will be raised significantly;
- jobs will continue to leave the country;
- wages fall significantly for several decades; energy vulnerability leads to energy shortages;
- a recession turns into a another depression that lasts for many years;
Dan:
I don’t believe everything is rosy. I believe what we are seeing is normal.
Lets see, lets look up “Rosy” and “Capitalism” and see if we get a match. Captialism is a messy business and democracy are messy businesses.
We have been in a period of good healthy growth, and now we are going to go through a period of below average growth. Right now it isn’t negative but it is below average but certainly normal.
As I right this, US futures (it’s MLK day), are down 350 points on the dow, so it might be a good time to buy tomorrow.
So you are the keeper of the negative list. That is your choice. You will find a few to walk with you as misery loves company.
As we go through this period of time of below average growth, my message is the same as before, this is normal and we will be ok. This is our system. Alternating periods of above average growth with those of below average growth.
So while you choose to filter all of the good in America out and chronicle and focus on only the bad that is ok. It is your choice. If that is what floats your boat.
I have chosen to hitch my wagon to the long term mean, and am feeling quite fine about things today.
For the record, my personal investments have averaged just about 12% a year for the last 5 years. In addition last years were up 10.3%. So far this year I am down about 10% with probably more to go before the bottom.
I don’t have a worry in the world about my money. The reason is that I have invested with the understanding there there are periods of ups and downs. This roller coaster will go on for the rest or my life. When I need the money shorter term, (nearer retirement) I will make sure the shorter term money is off the roller coaster safely in short term bonds or CD’s.
As for now, I can tell you all if in fine, this is normal. Enjoy the ride.
By the way the next step in this process is a positive surprize. If I knew the timing, it wouldn’t be a surprise. Watch for the positive surprise to come.
Nothing is rosy, but all is normal.
So you are the keeper of the negative list. That is your choice. You will find a few to walk with you as misery loves company.You don’t like that list, eh?
I suppose everything is normal, eh?
Wars are normal too.
Recessions are normal.
Depressions are normal.
Lots of things are normal.
That does not mean we should stick our head in the sand and stay on the wrong path.
You have already stated we are on the wrong path, and things could be bad if we don’t change course, but you believe that we will change course in time.
When will we change course?
We have not changed course yet.
Many things are getting worse.
Since you say we need to change course, how long can we stay on the same course before things are no longer normal?
Do you know?
Did it occur to you we have already passed the time to change course?
How can you be so certain that history won’t repeat itself?
Are you a stock broker by any chance?
For the record, my personal investments have averaged just about 12% a year for the last 5 years. In addition last years were up 10.3%. So far this year I am down about 10% with probably more to go before the bottom.Good for you.
Do you think your situation is normal for most Americans? Perhaps you project your own fortunate circumstances on others; erroneously thinking most Americans are doing as well?
Do you realize that most Americans are going backwards?
Most Americans’ incomes are falling (especially when considering increased productivity, falling median household incomes, inflation, and more workers per household, many lost a lot when the 1999 stock market bubble burst, and now many are losing a lot as the real-estate market bubble bursts).
These systems have been getting worse for 30 years, and there is no reason to think they will get better any time soon … not until they become too painful, which is usually when it is too late.
We don’t have a crystal ball, but to ignore the growing potential for a recession (or worse) now is truly rosy thinking.
You may be vastly underestimating the potential for an economic tsunami based on the following which you cavalierly dismiss as normal:
- (01) lawlessness; several Constitutional violations; pardons that put politicians above the law;
- (02) unnecessary wars (fear mongering and lies as an excuse to start wars);
- (03) pork-barrel, subsidies, graft, corporate welfare, bloat, peddling influence, waste, and other abuses of power (e.g. such as Congress giving itself 9 raises between 1997 and 2007);
- (04) illegal immigration which is costing tax payers an estimated $70 Billion to $338 Billion annually in net losses;
- (05) election fraud, blocked access to ballots; Gerrymandering; inability to pass common-sense election reforms;
- (06) $9.2 Trillion National Debt; $12.8 Trillion borrowed and spent from Social Security; excessive borrowing, spending, and money printing;
- (07) inflation; the US Dollar falling against all major international currencies;
- (08) regressive taxation;
- (09) inadequate education and misinformation; not only public education; an educated electorate is paramount; an ignorant electorate will be abused and exploited;
- (10) unnecessary middle men (i.e. government and insurance companies) making healthcare unaffordable; just as well perhaps since medical mistakes are killing 195,000 per year; also, if the 9 problems above were adequately addressed, it would reduce the pressues on the healthcare systems;
- (11) energy vulnerabilities;
- (12) environment; climate change; global warming;
- (13) over-population;
- (14) $20 Trillion nation-wide personal debt;
- (15) and worst of all perhaps, is the majority of voters that repeatedly reward incumbent politicians in the two-party duopoly with 96.5% seat-retention rates.
Those things are getting worse; not better.
One consequence of all of the (above) is a widening disparity trend (1% owned 20% of all wealth in 1980; now 1% own 40% in 2008; never worse since the Great Depression).
Any one of those things alone (above), if bad enough, could have dire consequences.
But all of them, all growing in number and severity could have dire consequences too.
How you dismiss all of it so easily is interesting.
I don’t see many people agreeing with you.
So, do you think those things above can continue to grow worse without some significant consequences?
If not, how long?
Sure, there are alwasy problems, but when are there too many?
What fools everyone is how long these things take.
It can take equally as long to recover from, which is why caution and concern is warranted.
We will see. Hopefully you are right, but I doubt it.
Posted by: d.a.n at January 21, 2008 04:07 PMDan:
I’m not sure where you ever got an impression of anyone ignoring the possibility of recession. Look at my posts above.
I’m working on two levels here.
1. It is not knowable if we are in a recession right now as economists are split.
2. Doesn’t really matter if 2008 holds a recession or not in terms of what we should do as a country. We should be acting as if we are since slowdowns feel like recessions. It will a bit harder to get work, and investment returns could be subpar.
Plus as I said above, an ounce of prevention is better than a pound of cure.
Just today I have read several economist. Bernanke thinks we wont even have a recession. I read another economist who things it will be the worst one in 25 years. Having gotten to know you in our discussions, of course you are now going to quote me on “the worst one in 25 years”. Of course most of the rest are in between. Most are split almost evenly between those who believe a recession is here and those who believe we will miss one.
You are on the far far far far pessimist end believing we are actually in one.
Let me give you another take on the dollar falling. who does it hurt? It hurts Europe. Look who is sreaming. Who does it help? China and the United States. Why? Because a falling dollar makes out goods cheaper and more competitive. It also helps china because china is pegged to the US dollar. Chinese goods just because more competitive to EU the largest economy in the world.
Posted by: Craig Holmes at January 21, 2008 04:26 PMCraig said: “You are on the far far far far pessimist end believing we are actually in one.”
Depends on the definiton of ‘WE’. If we is Michiganders or Georgians, we ARE in a recession. If ‘WE’ is Congressional politicians and Fed Reserve Governors, we ARE NOT in a recession, even by official definitions when applied to regions.
All moot! The question is what do we do to keep things from getting worse, at the very least, and to improve them at best? On this we agree entirely. Tax Breaks to Corporations and Investors, is that the solution? That is what Bush is calling for, which amounts to nothing more than political pandering to supporters of Republican candidates and holdings the Bush family is vested in. This is a demand led slow down, not a supply constriction slow down. Stimulus should be directed at consumers, not production and providers.
But, you can’t get Republicans to accept 2 + 2 = 4. Their ideology says all slowdowns are a result of constraints on producers and capitalists, even when inventories are the highest in decades, and service workers are being laid off for lack of demand. Their zebra has only one colored stripe covering their entire coat. In other words, they believe in a beast that doesn’t exist except in their imagination.
Posted by: David R. Remer at January 21, 2008 05:00 PMCraig said: “America grows faster than Europe in part because government spending is less.”
Europeans are less anxious about their future than Americans, because their government provides more future security than America.
Its a trade off. The benefits of our growth is experienced by only be a minority of the population. The benefits of European growth are shared by all citizens.
And, America’s national debt plus unfunded mandates is vastly greater than any European nation or the EU as a whole. Hence, the future, at this moment, is much brighter for Europeans.
Posted by: David R. Remer at January 21, 2008 05:05 PMDavid:
Europeans are less anxious about their future than Americans, because their government provides more future security than America.Its a trade off. The benefits of our growth is experienced by only be a minority of the population. The benefits of European growth are shared by all citizens.
I would agree with much of this. Europe is far more stable as the safety net adds to security.
I would disagree that only a minority of Americans are better off than Europeans. For many years Americans have experienced a higher standard of living. I would look forward to your sourse on average Europeans living at a higher standard of living than Americans.
And, America’s national debt plus unfunded mandates is vastly greater than any European nation or the EU as a whole. Hence, the future, at this moment, is much brighter for Europeans.
I would like to see this data as well. Can you show me where you are getting this?
And, America’s national debt plus unfunded mandates is vastly greater than any European nation or the EU as a whole. Hence, the future, at this moment, is much brighter for Europeans.
Posted by: Craig Holmes at January 21, 2008 05:31 PMDavid:
Here is an article that has the opposite view as you do:
http://boomerworkers.com/2007/a-younger-relatively-us-population-a-global-competitive-advantage/
Here is a quote:
The U.S. has a major funding problem with its entitlement spending (Social Security and Medicare) programs. However, the U.S. population is younger than that of Europe because the Fertility Rate is higher and Life Expectancy is (sadly) lower. Add to that the fact that European social programs are more generous than those of the U.S., and Europe has bigger problems than those of the U.S.This has generally been ignored during the ascension of the Euro. However, Johathan R. Laing reports in Barron’s this week (link) that a new report by GaveKal, “an international investment-research boutique” notes that “rapidly aging populations in euroland figure to decimate working populations there and increase the governmental financial burden at a pace far faster than in the U.S.”
In addition to the U.S. having a younger population, the U.S. population works longer hours and later in life. The AARP ‘Profit From Experience’ report (link) included data showing that the U.S. workers stay on the job longer than all other G7 countries other than Japan.
This is very consitent with my other readings on this topic. Do you have research to back up you claims or was that just your opinion?
Posted by: Craig Holmes at January 21, 2008 05:46 PMDavid:
All moot! The question is what do we do to keep things from getting worse, at the very least, and to improve them at best? On this we agree entirely.
It would be utter stupidity to “win the argument” on whether it is a slow down or recession. It is far more productive to use the energy to help move forward. I agree completely.
Tax Breaks to Corporations and Investors, is that the solution?
No. Not in my opinion. A jump start in spending is what is needed. The rich would appreciate the tax break, and would invest it. The average american would spend a tax break which is what is needed. Plus we can measure the success as this has been done in recent years.
Stimulus should be directed at consumers, not production and providers.
I agree completely.
I also agree that it should be a one shot deal that does not impact the long term deficit.
I also agree that it is very important to introduce real medicare and medicade reform. I think you and I however disagee on whether politicians are taking this seriously.
Here is Obama:
http://www.youtube.com/watch?v=Skf4xwCxEEs
Looks like he has it!!
Here is Hillary:
http://www.youtube.com/watch?v=ZElEswMrtAE
Looks like she has it!!
Here is McCain:
http://www.youtube.com/watch?v=20kCHO6yhSs
He gets it!!
I probably could go on. There is reason to hope that the next president will do something like Reagan-and Tip O’neal.
So, there are treasuries saved for Social Security?
Who pays when the treasury is cashed in?
Why are they not I.O.U.s ?
You are on the far far far far pessimist end believing we are actually in one.Not true. I already conceded we are not technically (by some definitions) in recession.
The point is, I don’t think the strict definition of GDP is a very good measure of the health of the economy. That one cherry-picked fact ignores all of this, and these systems that did not all come about by mere accident.
Let me give you another take on the dollar falling. who does it hurt? It hurts Europe. Look who is screaming. Who does it help? China and the United States. Why? Because a falling dollar makes out goods cheaper and more competitive.The debasing of the currency is not offset by making our goods cheaper.
It also helps china because china is pegged to the US dollar. Chinese goods just because more competitive to EU the largest economy in the world.There is no net benefit to eroding our currency.
BTW, I don’t think the Chinese YUAN has been pedded to the U.S. dollar since JUL-2005. Otherwise, how do you explain this USD - YUAN exchange rate showing the U.S. dollar falling drastically against the Chinese Yuan?
Posted by: d.a.n at January 21, 2008 07:22 PMCORRECTION (last line): YUAN has been pedded pegged
Dan:
I explain it by saying the Chinese control their currency. It does not free float. It is not a drastic reduction as you say. Take a look at the Euro as a side by side.
There is no net benefit to eroding our currency.
Of course there is. It makes our goods cheaper abroad. That is one reason Airbus is looking at moving here. Talk to Boeing and Airbus. Ask them if there is any benefit to the United States if the greenback falls. It means United States manufacturing jobs.
Posted by: Craig Holmes at January 21, 2008 10:01 PMCraig, on the health care, no, McCain doesn’t get it at all.
McCain is willing to sacrifice lives and quality of life for an economy. Which means, he fails utterly to grasp the fundamental purpose of an economy in the first place.
The goal for health care is to reform it in such a way that maximum health care benefits and distribution is achieved given the affordability constraints of the economic revenue capacity going forward to dedicate to that purpose, without sacrificing other essential needs of the nation which would in turn, impact negatively on the quality and standard of living of Americans.
Obama and Clinton are far, far closer to grasping this concept than McCain. Though it is highly debatable whether Obama or Clinton have any clue as to what the constraints of our future economic revenue capacity are, and what is required in knowledge and education by themselves to understand and manage to sustainable levels our national debt.
McCain appears to have a better general grasp of the fact that the trajectory of our national debt is unsustainable and disastrous in its consequences. But, his answer is to allow exploitation by profit and greed of the corporations and their investors to exploit patients with money for every last dime that can be squeezed out of them, and reject citizens without either the resources to pay, or the hubris to have played the odds against paying insurance premiums prior to their medical need.
Posted by: David R. Remer at January 22, 2008 04:57 AMd.a.n, Craig is right on the point of the falling currency. It has allowed the government to maintain overall low inflation figures by balancing inflation of largely domestic costs, labor, energy, food, health care, education, with falling import prices for consumables from overseas, manufactured and assembled goods. In other words, in the short term, the falling dollar has helped mask just how bad and out of balance things are getting.
While emerging nation’s are competing for ever larger export markets, their pricing will also continue to be competitive regardless of the dollar’s valuation. But, before the middle of this century, India and China and Malaysia are going to have to cough up a far wider distribution of resources to their citizenry to quell civil unrest over infrastructure, medical, and wage parity needs, and that will mean higher taxation, which will translate into higher producer costs, and the era of cheap imports for Americans will end. Combined with maturing market development and greater acceptance of peak market shares, competition between rivals in these nations will diminsh, and oligopolies will replace competition, which in turn will allow the oligopolies to engage in monopolistic pricing of American imports.
Posted by: David R. Remer at January 22, 2008 05:09 AMd.a.n wrote: There is no net benefit to eroding our currency.
Craig Holmes wrote: Of course there is. It makes our goods cheaper abroad.Short-term only. There is no long-term, net benefit. Especially when the other nations are manipulating their currencies too. It nothing more than another race to the bottom.
Your conclusion is a myopic and true only in the short-term.
If erosion of the currency was good, we would print more money and create more inflation.
There are obvious reasons for not doing that, no?
David R. Remer wrote: d.a.n, Craig is right on the point of the falling currency.I have to disagree.
NOTE, I wrote: There is no net benefit to eroding our currency. When I say “net benefit”, I mean in the long-term.
David R. Remer wrote: In other words, in the short term, the falling dollar has helped mask just how bad and out of balance things are getting.That, I agree with. It is only a short-term benefit.
Of course, while there may be a short-term advantage, there are still more long-term disadvantages.
Long-term, erosion of the currency is a bad thing.
While, in the short term, inflation can make our exports more affordable, it is only temporary and relative.
Therefore, there is no net benefit to eroding our currency.
That is, there is no net benefit to most Americans. That does not meain someone can not ever profit from inflation. Particularly the banks, who receive the interest on loans in which 89% of each loan is new money created out of thin air, and the other 9% is depositors money (9 to 1 ratio). What’s the banks’ risk? Especially when the Federal Reserve bails them out by printing up some more money (i.e. called liquidity). Also, when some people default on their loans, the bank has essentially converted the money created out of thin air into real assets. This is why credit is so easy to get. The bank still wins. The side effect of all this is inflation, but the wealthy do not maintain their wealth in the form of currency. They own land, buildings, corporations, gold, stocks, and other non-cash assets. It’s like playing Monopoly in which one person can print all the money they want. Before long, they own everything, and everyone else is broke or deep in debt. That’s what is happening today. Nation-wide personal debt exceeds $20 Trillion. The National Debt is $9.2 Trillion.
It is a dishonest monetary system, and it is a world-wide problem too, which is part of the reason we are seeing a world-wide slow-down.
I’m not saying we should return to a Gold Standard, but these abuses of monetary system (for nefarious purposes) cause economic instability for most people. It creates vicious circles (by design).
There are many negatives to inflation and erosion of the currency. One obvious indicator is most peoples’ disdain for inflation, but also because of the bubbles and economic instability it causes.
Craig Holmes wrote: That is one reason [i.e. falling U.S. dollar] Airbus is looking at moving here. Talk to Boeing and Airbus. Ask them if there is any benefit to the United States if the greenback falls. It means United States manufacturing jobs.That is a temporary condition.
If erosion of the currency was a good thing, then why not print MORE money and debase the currency even more?
Also, jobs have been leaving the U.S. in droves, and being replaced with lower paying jobs (for decades).
So, it doesn’t seem to be working, eh?
Also, with only 4.5% inflation, unless a working American gets a 4.5% raise every year (like Congress), their income is falling.
And that is what we are seeing for most Americans (especially when you consider more workers per household, higher productivity, increasing personal debt, and National Debt).
All of this toying with currency demonstrates the many major flaws in all of these abused fiat monetary systems. The long-term result is economic instability, bubble after bubble, speculation, inflation, erosion of the currency, and other manifestations of unchecked greed.
Posted by: d.a.n at January 22, 2008 11:10 AMDavid:
Obama and Clinton are far, far closer to grasping this concept than McCain. Though it is highly debatable whether Obama or Clinton have any clue as to what the constraints of our future economic revenue capacity are, and what is required in knowledge and education by themselves to understand and manage to sustainable levels our national debt.
I agree with you on that issue. I liked the way they verbalized themselves. SS has problems but medicare is in crisis. At least they see the problem.
Hillary I think has a process in mind. She acknowledges that we have to work together on a solution. Neither party can solve the issue. However either party can facilitate the solution.
Assuming Iraq continues to “calm” (admitedly a relative term), your key issues could be right at the top. If I were forced to vote today with only financial issues on the table, I would vote for (holding my nose here, and hoping no one can see) Hillary. But only if she could get a newpaper and smack Bill across the nose and tell him to sit. I have huge constitutional issues with a spouse running for the presidency. If Bill doesn’t shut up, we could see a constitutional amendment move in this country.
Posted by: Craig Holmes at January 22, 2008 11:32 AMIf I were forced to vote today with only financial issues on the table, I would vote for (holding my nose here, and hoping no one can see) Hillary.: (
If Bill doesn’t shut up, we could see a constitutional amendment move in this country.It would have to be proposed by Congress (instead of the states), since Congress has chosen to flagrantly violate Article V. Posted by: d.a.n at January 22, 2008 12:45 PM
Craig, truth be known, several First Spouses have run the White House in the past.
I find nothing unusual about Bill’s role. Every President in modern times has brought their advisor, or nag, as the case may be, to the White House with them, and been subject to the subtle blackmail of a spouse’s threat to divorce them in their first term depriving the President of a reelection bid. There are many roles Presidential spouses can play, I rather think we know to a large degree and better than most, what role Bill will play. And Hillary appears to me to be quite capable as CIC of training Bill to keep his place when he attempts to overstep his role as Spouse, though he surely will not like it much.
Posted by: David R. Remer at January 22, 2008 01:55 PMDavid:
We will have to disagree about Bill Clinton. I don’t think he will make a good first husband because he will need to toot his own horn too much. Spouses should not overshadow the candidate. Staff should not wonder who to take direction from.
Posted by: Craig Holmes at January 22, 2008 06:43 PMHence, the only recession and inflation fighting efforts will fall again exclusively on the Federal Reserve Committee and Banking system. (The very Federal Reserve system presidential candidate Ron Paul calls for eliminating.)Which forms the crux of the debate over whether the Federal Reserve should lower interest rates, by how much, and how fast? Business advocates want rapid, steep, and sustained interest rate cuts placing a higher priority on the recession today than tomorrow’s inflationary consequences. Consumer advocates are raising red flags over such a course of action due to the potential for even greater inflation down the road which could reignite another recession, in what is termed stagflation, or rising prices in a receding economy.
The fractional banking system (i.e. Federal Reserve, a privately owned bank) actually is little more than a pyramid scheme.
For example, when the Federal Reserve makes a new loan, 90% of each loan is money created out of thin air (see this 47 minute video).
For example, an initial loan of $10,000.00, the borrower uses that $10,000 loan to pay for something (a car) and the person(s) receiving that $10,000.00 deposits it back into the bank system (a closed loop monopoly bank system). Or, that person buys something else, but someone deposits it back into the bank system.
Then, 90% of each deposit can then be used for another loan of money created out of thin air …
(001) 90% of that $10,000.00 can be loaned out again, to create a new loan of $9,000.00 consisting of money created out of thin air.
(002) 90% of that $9,000.00 can be loaned out again, to create a new loan of $8,100.00 consisting of money created out of thin air.
(003) 90% of that $8,100.00 can be loaned out again, to create a new loan of $7,290.00 consisting of money created out of thin air.
: : : : : :
(088) 90% of that $1.16 can be loaned out again, to create a new loan of $1.045 consisting of money created out of thin air.
(089) 90% of that $1.45 can be loaned out again, to create a new loan of $0.94 consisting of money created out of thin air.
: : : : : :
(131) 90% of that $0.013 can be loaned out again, to create a new loan of $0.011 consisting of money created out of thin air.
(132) 90% of that $0.011 can be loaned out again, to create a new loan of $0.01 consisting of money created out of thin air.
Thus, from that first $10,000 loan, another $90,000 in more new loans can be created, for a total of $100,000 in new loans (all from an initial reserve of only $1,111.11 ; 1.11% of the total $100,000 loaned; that is, 98,888.89 of new money created out of thin air).
Not only that, but:
- (1) The bank receives the interest on all of those loans.
- (2) And if someone defaults, the bank confiscates their property (house, car, business, etc.), converting money created out of thin air into real property and assets.
Therefore: MONEY = DEBT
However, banks only create and loan PRINCIPAL.
Therefore (PRINCIPAL + INTEREST) is always greater than (MONEY_IN_EXISTENCE).
Therefore, the money supply must keep increasing, and borrowing creates MORE debt.
But all money in existence is debt.
Strangely, in this system, since money is created by debt, if there was NO debt, there would be no money.
Thus, the only limit to the total MONEY in existence is the limit on DEBT.
It’s a pyramid scheme that can not be sustained (only managed to some degree for a while).
It’s like playing the game of Monopoly where one person (the bank) can print and loan all the money they want.
Before long, the bank owns everything, and everyone else is broke or deep in debt.
How is it that all the people that create and produce are all in debt to the bank that simply sits back and collects interest and creates money out of thin air?
That is partly why we currently have over $20 TRILLION personal nation-wide DEBT, and $9.2 TRILLION National DEBT, the PBGC pension system is $450 BILLION in the hole, massive credit card debt, and banks trying to get everyone possible into debt; because the banks make interest on money created out of thin air, and banks then confiscate real property from foreclosures and defaulted loans; completing the conversion of money printed out of thin air into real property and assets. The wealthy aren’t stupid, and consequently don’t maintain their wealth in eroding U.S. Dollars. They have property, land, gold, corporations, etc. But for those living on a salary, fixed incomes, and savings, their income is shrinking daily as the currency is steadily eroded.
At any rate, the eroding U.S. Dollar is just one of many 10 Regressive / Oppressive systems that did not all come about by mere coincidence.
This is not some wild-eyed conspiracy theory.
This is how it works.
Anyone that thinks different, research it and you’ll see it is all true.
At any rate, one thing should be obvious to most of us by now: Rewarding irresponsible incumbent politicians in Do-Nothing Congress with 95%-to-99% re-election rates is not working.
Craig, I have to admit, you may be proved right. I don’t think so at this point, but, only time and Hillary’s election could decide this issue.
Posted by: David R. Remer at January 23, 2008 09:58 PMd.a.n said: “The fractional banking system (i.e. Federal Reserve, a privately owned bank) actually is little more than a pyramid scheme.”
Not true. It is a pyramid scheme, but also much more, a somewhat independent regulatory body for the economy, and as current events demonstrate, a needed regulatory body. Though not always competent.
In the 1990’s Congress passed legislation requiring the Federal Reserve to implement mortgage regulations insuring the soundness of equity for homeowners in the wake of ever more predatory and hidden mortgage securitization sales schemes. Greenspan and his governors never got around to it. Hence, Bernanke’s Fed is responding to a crisis Greenspan’s Fed could have, and should have, prevented, but didn’t.
Incompetence however, is not justification for dismissing the need for oversight and regulation. Whether one argues for against centralized banking, the fact remains, the world is governed and regulated in part by them. They are a fact of reality. Which seems to me to indicate that the people of the world must decide how they are going to acquire oversight and accountability of these centralized banking governors and power wielders.
Of course, as always, the answer begins with Education and collapse will rest upon the lack of insistence upon Education.
Posted by: David R. Remer at January 23, 2008 10:10 PMDavid:
So here I am as a moderate puffing but not inhaling about voting for Hillary. The thought of listening to Bill Clinton for eight more years!!!!! Can’t do it!! Just can’t here him talk non stop for eight more years.
So, hmmm who would be my next choice? I like your article above about every candidate having a flaw.
Posted by: Craig Holmes at January 24, 2008 12:51 AMNeeded? Like an anchor around your neck while swimming up stream?d.a.n said: “The fractional banking system (i.e. Federal Reserve, a privately owned bank) actually is little more than a pyramid scheme.”David wrote: Not true. It is a pyramid scheme, but also much more, a somewhat independent regulatory body for the economy, and as current events demonstrate, a needed regulatory body. Though not always competent.
Perhaps for a while … similar to giving methadone to a heroin addict to avoid the suddenly severe and painful withdrawal?
David wrote: Incompetence however, is not justification for dismissing the need for oversight and regulation. Whether one argues for against centralized banking, the fact remains, the world is governed and regulated in part by them.Yep, they’ve got us by the balls, and it will be painful no matter what, but the longer it goes on, the more painful it will get.
David wrote: They are a fact of reality. Which seems to me to indicate that the people of the world must decide how they are going to acquire oversight and accountability of these centralized banking governors and power wielders.Yes, they must decide.
It won’t be easy when most people are not aware of it. And even if they did know, I’m not sure it would matter … at least, not until they are sufficiently motivated by the painful consequences of widespread apathy and complacency.
David wrote: Of course, as always, the answer begins with Education and collapse will rest upon the lack of insistence upon Education.Yes, the people will get their Education one way or another. Pyramid schemes always collapse. It’s a mathematical certainty.
Craig wrote: The thought of listening to Bill Clinton for eight more years!!!!! Can’t do it!! Just can’t hear him talk non stop for eight more years.Well, there is another thing we agree on.
Whoever becomes the next president, they will be ineffective if saddled with the same incompetent, bought-and-paid-for clowns in Congress, who enjoy 95% re-election rates.
Congress doesn’t care about the voters.
Most in Congress only care about their own cu$hy, coveted incumbencies, giving themselves another raise, benefits, cu$hy pensions, healthcare, and any other perk$ they can dream up.
And they are very aware that the two-party duopoly in Congress has enjoyed a cu$hy 96.5% seat-retention rate since year 1980.
Craig wrote: So, hmmm who would be my next choice? I like your article above about every candidate having a flaw.“a” flaw ?
More than “a” single flaw. More than a few.
People should look closely at their voting records (see: OnTheIssues.org), but it seems too many voters base their opinions on the few sound-bites they see on the boob-tube.
At any rate, we’ll get our education one way or another, and we’ll have the government that we deserve.
Posted by: d.a.n at January 24, 2008 06:57 AMDan:
You asked me earlier why I would not sign on that we are in a recession. I want to make a case to you that it is too early to say if we are in recession or not.
Of course all of these factors could change quickly.
Fact 1: Employment is still growing admitedly at a tepid rate.
Fact 2. Unemployment claims are declining not rising.
Fact 3. Inventories are very low not high.
Fact 4. The head of the CBO testified as late as yesteday that they did not see a recession in 08.
The risk of a recession has risen. I agree with the consensus that a slow down is upon us. Looking at facts verses opinions, and it is too early to say we are in a recession.
Next step in this process to look for is an unexpected positive event.
The train of public opinion and consensus has left the station. Most believe we are in or are heading into a recession. There are several facts that do not support this. This is very much like the run up to the war in Iraq. There are facts that are blurry. Commiting to the recession now is like committing to the war then. Facts like the ones I presented are hidden under the surface. Watch for an irrefutable fact to come to the surface. “We can’t find any WMD”.
My advice is to send in the inspectors. I need more facts before I rush to judgment over this recession. I am expecting the media hype to be wrong. In this case unlike Iraq the majority of advisors are saying not recession, but a slowdown.
Posted by: Craig Holmes at January 24, 2008 11:20 AMCraig,
Under some definitions of recession (e.g. 2 consecutive quarters of decline in GDP), I admit that the conditions for a recession may not have been met yet, but that is not really the most important issue, because there is a MUCH larger problem that is causing economic instability, and eventually collapse.
The problem is getting bigger every year.
It’s a problem that few understand, and those that understand it, avoid the subject.
The problem is a fractional (9:1) banking system that is a pyramid scheme.
90% of each new bank loan is money created out of thin air.
But a Loan = Principal + Interest
But money created for each loan only creates the Principal.
QUESTION: Where’s the Interest come from?
ANSWER: By printing more money.
But printing more money creates inflation.
The only thing stopping the collapse of this pyramid is a short time lag by creating more debt and printing more money.
But that time lag is shrinking every day, as the ability to repay debt becomes more difficult.
All pyramids collapse eventually.
It could take decades.
It could take centuries.
But, eventually, it is a mathematical certainty that it will collapse.
To delay this collapse, the federal government is using other sinister methods to increase productivity, debt, and get back dollars from savings, pensions, Social Security, etc.
Those sinister methods are: massive illegal immigration, increasing population, easy credit, low interest rates, more debt, more excessive money creation.
The results are massive $20 Trillion nation-wide personal debt, $9.2 Trillion National Debt, plundered pensions (PBGC $450 Billion in the hole), rising foreclosures, rising bankruptcies, unemployment, the $150 Billion M3 Money Supply in 1950 is now over $10 Trillion.
It’s the reason for the proposed $140 Billion economic stimulus package. Print more money to prevent the collapse of the pyramid.
But for anyone who thinks it is bad now, they haven’t seen anything yet.
It is going to get much worse, because all pyramid schemes collapse eventually.
Eventually, the debt and inflation will become impossible to deal with.
We will not be able to create more debt to create more money.
We will not be able to print (money) our way out of the collapse (due to inflation).
We will not be able to immigrate our way out of the collapse.
We will not be able to grow our way out of the collapse.
We will not be able to tax our way out of the collapse.
We will not be able to create more debt to create more money.
This isn’t stupid cult rhetoric.
It is the truth, and easy to prove.
Exacerbating all of this is the long, and growing list which you trivialize.
That’s fine.
But I am as certain as the sun rises in the east tomorrow that this pyramid scheme (like all pyramid schemes) will collapse eventually.
Are you going to continue to defend this pyramid scheme, and pretend everything is rosy?
Do you remember writing the following (since year 2005) …
Craig Holmes wrote:
We have never paid off the debt from WWII and we are doing ok.
Craig Holmes wrote:
All were correct in identifying problems. Where they all misjudged our country was in our country’s ability to fix the problems.
How do you fix a pyramid scheme.
Craig Holmes wrote:
You are correct as well in identifying the issues we face.
But, I’m Chicken-little. Remember?
Craig Holmes wrote:
Not that I am bragging as a Republican, since household networth increased by a greater rate in Clinton’s time.
Nevermind that M3 Money Supply (money printing) was vastly increased during Clinton’s two terms, and contributed to a stock market bubble, which was followed by a real-estate bubble in Bush’s two terms.
Craig Holmes wrote:
3. As we go bankrupt, we are getting more wealthy.
Craig Holmes wrote:
Truthfully, the economy is simply fine.
Craig Holmes wrote:
You leave the reader with the imnpression that debt has expanded but the economy has not.
If growth stopped, the pyramid would collapse.
Craig Holmes wrote: America as a whole has never been this rich, and it’s getting richer all the time. It’s a great time to be an American
Craig Holmes wrote:
2. You have no proof the current system has done any harm to us currently.
Craig Holmes wrote:
Of course they have added some debt, but we are a net 12 trillion more wealthy as we are going broke.
Craig Holmes wrote:Commiting to the recession now is like committing to the [Iraq] war then.
Not hardly? Terrible comparison.
Craig Holmes wrote: My advice is to send in the inspectors. I need more facts before I rush to judgment over this recession.
Yeah, like they’ll give an honest answer?
Sorry folks, but this pyramid is becoming more and more unstable.
David wrote: No wonder your [Craig Holmes] arguments on the topic never make sense.
Agreed.
Are you a broker, banker, or member of the Bilderberg Group and/or Trilateral Commission by any chance?
Posted by: d.a.n at January 24, 2008 06:08 PMDan:
I am a part of the Trilateral Commission. We read your mail.
Posted by: Craig Holmes at January 25, 2008 01:35 AMDan:
Are you going to continue to defend this pyramid scheme, and pretend everything is rosy?
I’m not sure of your point. Every economy can be accused of being a pyramid scheme, so your premise has no meaning. I have never said the economy is rosy, that is your term.
The economy is currently not “fine” as it is below the mean in growth. It is normal. The economy is usually either above the mean, near the mean or below the mean. Right now the economy is growing a below the mean.
No worries,
Oh and we still as we have always had in this country problems!! I don’t have to keep track of them as you do that well!!
Craig, Do you really understand the monetary system?
If you did, you might be more concerned.
Do you not realize the all PYRAMID schemes collapse eventually?
It is a mathematical certainty.
To avoid the inevitable consequences, it will have to change.
And we’d all better hope that change comes BEFORE it collapses.
Perhaps the government should nationalize the banking system?
Then it could print the money it needs (interest free), and use taxes to remove excessive money (inflation), and use spending to control deflation.
Eventually, the debt and inflation will become impossible to deal with.
We will not be able to create more debt to create more money.
We will not be able to spend our way out of the collapse.
We will not be able to print (money) our way out of the collapse (due to inflation).
We will not be able to immigrate our way out of the collapse.
We will not be able to procreate our way out of the collapse.
We will not be able to increase productivity enough to avoid the collapse.
We will not be able to tax (or untax) our way out of the collapse.
We will not be able to maintain exponential growth (you do understand what exponential means?)
Look at our current situation and the inevitable results of this PYRAMID scheme:
- $20 Trillion nation-wide personal debt,
- $9.2 Trillion National Debt,
- plundered pensions (PBGC $450 Billion in the hole),
- rising foreclosures,
- rising bankruptcies,
- rising unemployment,
- pressure to raise taxes for those that have money (i.e. the wealthy),
- pressures to increase illegal immigration to increase productivity and growth (cheap labor),
- stock market and real-estate bubbles and volatility,
- the M3 Money Supply $135 Billion in year 1950 to $10.15 Trillion by year 2005.
- inflation; a 1950 U.S. Dollar is now worth less than 11 cents,
- the pressure to spend and borrow (i.e. numerous credit card applications in the daily mail),
- bank fees (i.e. to increase reserves for more loans; the banks receive the interest),
- the U.S. Dollar falling against all major international currencies,
- and now, the recently proposed $140 Billion economic stimulus package; printing more money to increase the time-lag to prevent the collapse of the PYRAMID scheme.
The major reason is that the current monetary fractional banking system is a PYRAMID scheme.
This system is being used to systematically fleece the United States.
Don’t believe it if you like. After all …
Do you think all of these people have no idea what they were talking about? …
- “The government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the tax payers will be saved immense sums of interest. The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government’s greatest creative opportunity. - Abraham Lincoln, assassinated President of the U.S.
- “Whoever controls the volume of money in our country is absolute master of all industry and commerce … and when you realize that the entire system is very easily controlled one way or another, by a few powerfu men at the top, you will not have to be told how periods of inflation and depression originate.” - James A. Garfield, assassinated President of the U.S.
- “The process by which banks create money is so simple that the mind is repelled.” - John Kenneth Galbraith, Economist
- “Permit me to issue and control the Money of a nation, and I care not who makes the laws.” - Mayer Anseim Rothschild, Banker
- “Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of sovereignty of Parliment and of democracy is idle and futile … Once a nation parts with control of its credit, it matters not who makes the nation’s laws … Usury once in control will wreck any nation.” - William Lyon MacKenzie King, former Prime Minister of Canada (who also succeeded in nationalizing the Bank of Canada).
- “We are grateful to the Washington Post, the New York Times, Time Magazine, and other great publications whose directors have attended our meetings and respected the promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during those years. But the world is now more sophisticated and prepared to march towards a world-government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the National auto-determination practiced in past centuries.” - David Rockefeller, in an address to the Trilateral Commission meeting, 1991.
- “Only small secrets need to be protected. The big ones are kept secret by public incredulity.” - Marshall McLuhan, media “guru”
- In 1913, the struggle for a better monetary system was lost when President Woodrow Wilson signed the Federal Reserve Act, giving the privately owned international banking cartel the power to create the United States money. Later, Woodrow Wilson stated: “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world, no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men. - Woodrow Wilson, President of the U.S. 1913-1921.
- “Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of something. They know there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when the speak in condemnation of it.” - Woodrow Wilson, President of the U.S. 1913-1921.
Craig said: “No worries,”
Yeah, there is one big one. Taking care of today’s needs by constantly deficit spending is a huge, huge worry. You recently bragged about 165 billion deficit being way down. You may have to revise that back up to 1/4 trillion by the mid-Feb. if the stimulus plan passes the Senate. Your rosy optimism keeps getting clouded over by reality Craig. When will you quit listening to these people with a vested interest in duping the public with rosy rhetoric and join the other side that says, “we have had enough of the lies and deceptions; our future is being compromised, and I ain’t voting for an incumbent until it is UNcompromised”.
If enough Craig’s out there take this position, the future may indeed find a rosy footing.
Posted by: David R. Remer at January 25, 2008 03:13 PMCraig wrote: No worries, Oh and we still as we have always had in this country problems!! I don’t have to keep track of them as you do that well!!Sure, no worries, as long as the rose colored glasses aren’t removed.
Craig, you acknowledge the list, and surely you know the monetary system is a pyramid scheme.
Instead of pooh, poohing all that is not rosy, and drawing totally unsubtantiated conclusions such as “no worries” and “we have always had [problems]”, why not try to explain why things can’t get worse?
After all, they have been getting worse for 30 years.
If you don’t think so, then you need to re-examine my list.
- National Debt is higher.
- Social Security could be in trouble (77 million baby boomer bubble).
- Medicare is in trouble.
- Illegal immigration is worse.
- Lawlessness is worse.
- $20 Trillion Personal nation-wide debt is worse.
- Foreclosures are getting worse.
- The U.S. Dollar is falling drastically (lower than the Canadian Dollar for the first time ever).
- And the weatlh owned by 1% of Americans has never been since the Great Depression.
- And the electorate may be more apathetic, complacent, and dependent on government than ever before.
- Lower paying jobs are replacing previous jobs; median incomes are falling.
- And the monetary system is a pyramid scheme.
- … more …
There was no single cause for the Great Depression.
In the other thread, you are predicting a good jobs report. Never mind that the replacement jobs pay less than the previous jobs. Also, several companies are reporting that they are planning job cuts.
If you think all of these problems, growing in number and severity is merely like all the problems “we have always had in this country”, be my guest. But be careful when you are sticking your head in the rosy colored sand that it isn’t actually a bucket of setting concrete.
Other than that, everything is rosy!
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