Meanwhile…The Economy Is Recovering Nicely
By Justin Gardner | Related entries in Barack, Economy, Obama
There’s been a lot of chatter about how Obama isn’t focusing on the economy, how his plans have failed, etc.
Want to know the real story? Well, read on my friends, read on…
Yes, unemployment hasn’t dropped as quickly as we had hoped, but if the economic growth that has happened in the past quarter is any indication…if we hadn’t acted then the unemployment rate would have been MUCH worse. So while you can grouse about the administration’s inaccurate assessment about how high it would rise…I think some credit needs to be given to them for helping turn our economy around in such a dramatic fashion.
One year after U.S stocks hit their post-financial-crisis low on March 9, 2009, the benchmark Standard & Poor’s 500 Index has risen more than 68 percent, and it’s up more than 41 percent since Obama took office. Credit spreads have narrowed. Commodity prices have surged. Housing prices have stabilized.“We’ve had a phenomenal run in asset classes across the board,” said Dan Greenhaus, chief economic strategist for Miller Tabak & Co. in New York. “If he was a Republican, we would hear a never-ending drumbeat of news stories about markets voting in favor of the president.”
The economy has also strengthened beyond expectations at the time Obama took office. The gross domestic product grew at a 5.9 percent annual pace in the fourth quarter, compared with a median forecast of 2.0 percent in a Bloomberg survey of economists a week before Obama’s Jan. 20, 2009, inauguration. The median forecast for GDP growth this year is 3.0 percent, according to Bloomberg’s February survey of economists, versus 2.1 percent for 2010 in the survey taken 13 months earlier.
“You have to give them — along with the Federal Reserve – - a lot of credit,” said Joseph Carson, director of economic research at AllianceBernstein LP in New York. “A year ago, there was panic, as well as concern. And a lot of the expectations were not only that we were going to have declines in activity but they would stretch all the way to 2010, if not 2011.”
And about unemployment…
Since then, monthly job losses have abated, from 779,000 during the month Obama took office to 36,000 last month. Corporate profits have grown; among 491 companies in the S&P 500 that reported fourth-quarter earnings, profits rose 180 percent from a year ago, according to Bloomberg data. Durable goods orders in January were up 9.3 percent from a year earlier. Inflation is tame, and long-term interest rates remain low. [...]While jobs have been slow to come back even as GDP is growing, the gains in productivity during the past year will strengthen the economy, said Greenhaus of Miller Tabak. Productivity grew at a 6.9 percent annual pace in the fourth quarter, capping the biggest one-year gain since 2002.
So…profits are rising and productivity is going up…but employers aren’t hiring? Well, Obama can’t force companies to hire people. But it’s only a matter of time before they start adding people again…well, let’s hope.
Still, most Americans don’t think he’s handling the economy very well. Gallup reports that his approval on the issue has gone from 59% favorable in Feb 2009 to 61% unfavorable in Feb 2010.
So, is this more of a communications challenge than anything? Can rhetoric turn the “reality” around? What do you think?
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March 11th, 2010 at 10:53 am
I’ve always thought of it like this:
This big jumbo jet of an economy suddenly takes a nose dive with GWB at the controls. Obama gets voted in as the new captain by some petrified passengers. He steps in and grabs the joy stick while we’re in full free fall – like a Buggs Bunny cartoon, we’re zoomin head first toward a forest. Obama starts to pull us out in a big arc, and says “don’t’ worry, if I do this we’ll just miss the tops of the trees, everybody hold on”. Everyone is plastered to their seats, as the jet strains under about 4 G’s as it pulls out of the free fall. Right at the bottom of the arc, the plane skims the tops of some trees, a few branches break, the fuselage gets scraped, people get bumped in their chairs. The jet starts to gain altitude for the first time, and levels out just above the tree line. Obama gets on the intercome and says, “Well, folks, we went a little deeper into the trees than I thought, but it looks like we’re stable.” And the Republican’s response? They start a screamin, “A little deeper? Why, you’re the rootinest, tootinest, Danged old fin-flappin’ failure! Scratchin up the plane thata way! Whhhyyy I auttta… You needs to GET OUTTA that a captain’s chair, YA RACKIN’ FRACKIN’ NAZIT-TRAP OR I’m a gonna….” and on…and on….and on…
What a maroon.
March 11th, 2010 at 10:59 am
Greenhaus is smoking something if he really believes that the media gives Republican presidents better economic headlines than it gives Democratic ones. I can’t recall very many “good news” economic headlines during the Bush Administration. They were more along the lines of “no employment gains, even though stocks improved some.”
The economy will almost certainly continue to improve. If President Obama is fortunate, it will be clearly moving in a positive direction in the Fall of 2012, and he will get the credit for it, though no President really deserves the amount of either credit or blame they receive for the economy’s performance.
But a “jobless” recovery isn’t going to help the President any. “Rich” people, the kind with investments and 401(k) plans and such, aren’t his biggest fans, necessarily. Certainly they are his favorite foil and target. If the “recovery” doesn’t lead to employers hiring more workers by 2012, and in substantial numbers, then he will not be reelected. It’s the employment numbers which will drive public opinion on the economy, not any “messaging” or rhetoric coming from the President’s PR operation.
The President needs to be very careful with his policies right now. The weakened dollar, caused by our massive deficit (which has increased dramatically since President Obama took office), is a functional tax on our businesses and one of the reasons they aren’t hiring new workers. If the Obama Administration imposes more barriers to hiring, in the form of greater DOJ investigations into “disparate impact” employment discrimination claims, greater OSHA investigations, stronger backing of unions, greater employer costs for health insurance, then businesses aren’t going to reenter the hiring world anytime soon, because it won’t make economic sense to do so.
March 11th, 2010 at 11:05 am
By the way, here are some numbers [pdf] to demonstrate the bias in media coverage of the economy, in favor of Democrats.
March 11th, 2010 at 11:34 am
@ Pat HMV “our massive deficit (which has increased dramatically since President Obama took office)”
IOW – “Can you believe the amount of fuel Obama used to pull us out of our death spiral??”
Your points are valid, Pat, but seriously, you wanna go back and try it again without the spending?
March 11th, 2010 at 11:54 am
Unemployment is way too high, and regular folks are not spending much at all. The real estate market is a disaster, a is related construction. .
That part of “the economy” is quite awful. Most regular folks really care about that part, and that part is doing awfully poorly. People are afraid, because they are looking at the economy as they perceive it, and are demoralized by what they see when they look at my economy.
Now, There’s another part of “the economy” which corresponds to GDP and the stock market. That’s the “real” economy in the eyes of economists. This economy is beginning to stiffen at a bottom and begin to slowly climb into growth. Most folks don’t give a shit about this economy except insofar as it connects to their personal economy. Folks won’t acknowledge a recovery as genuine until it shows job growth and makes people comfortable spending.
Personally, i still think we are in the process of establishing a new normal. This new normal has higher costs for things like healthcare, and lowered expectations for wage growth and asset appreciation. So, we are going to see less personal discretionary spending. The back end of the boomer generation is going to spend more on healthcare and retirement planning, and less on indulgent crap.
This is IMO a normal “once burned twice shy” response to the depth of the economic changes we are undergoing.
March 11th, 2010 at 12:01 pm
michael, I didn’t support passage of either TARP I or TARP II. As for whether the massive federal spending at the end of Bush’s term and the beginning of Obama’s actually “pulled us out of our death spiral,” I don’t think there’s solid evidence to support that proposition, and certainly no evidence which would force one to conclude that other, far cheaper, interventions wouldn’t have worked as well or better. We’re not dead. Whether that has any correlation with the spending spree and financial bailouts is very open to debate. I sure don’t buy the Administration’s “jobs created or saved” numbers.
As for deficits, here’s a chart showing projected deficits (both the CBO’s and the White House’s) over the next 10 years, compared to the actual deficits during the Bush Administration.
March 11th, 2010 at 12:04 pm
At any rate, michael, the point I was making remains valid regardless of whether one “blames” President Obama for it or “credits” him with it. The increased deficit HAS led to the weakening of the dollar, and that weaking DOES act as a functional tax on business, and because of that, other policies the President might wish to enact or pursue which might, in good times, have only modest effects on hiring practices, would in the current environment likely have far more severe negative impacts.
March 11th, 2010 at 12:36 pm
Pat – I agree to your main point. Trusted economists attest that the increased deficit has weakened the dollar, and that the weakening acts as a functional tax. Similar economists attest that about a year ago the economy was on the brink of a catastrophic seizure, and that Keyseian mechanisms were our best solution. My problem is that so many folks cherry pick the data to prove their partisan points of view. Are trusted economists only right when it serves your point of view?
But you’re absolutely right – we’re not dead. The mechanisms of the economy didn’t seize completely. Thank goodness, right? Why do you think that is??
I’m sorry, it just hackles my bones when I read how Obama has caused our enormous deficits. That’s a bald faced lie. Yeah, he used a charge card to prevent a catastrophe, which was the responsible thing to do. The problem is that we can’t go back it time and run the simulation and test the alternative. So, it’s easy to second guess, which, in my opinion, is all you’re doing.
To Kranky’s point – I agree there are two economies. One is rigged for the big moneyed interests. The other economy is left to its own devises. Economic growth for the middle class (the local economy) compared to the grown for the rich (the big economy) decreased under Bush. That’s because Bush allowed the big economy to be rigged against the little one. The bailout WAS a part of the rig. But Obama didn’t have time to fix the entrenched shell game that he inherited. He had to save the patient. So the big dogs got theirs, and main street got stiffed, and the people are pissed. But they’re not really that pissed I guess, because when Obama steps up to reform this mess so it never happens again, he gets called a socialist. So, again, which is it??
March 11th, 2010 at 1:11 pm
The media has a personal interest in giving a positive spin on the economy regardless of president.
March 11th, 2010 at 2:53 pm
What interest is that, Chris? The general consensus among reporters I know is that bad news sells more papers than good news. The corporate powers-that-be over Big Media don’t control the headlines that directly, so even if GE wants good news about an economic recovery, that doesn’t mean that NBC and all of its anchors and editors and producers and opinionators are going to toe the company line.
March 11th, 2010 at 3:09 pm
PatHMV translated, “I would have let the market correct itself, thus causing a second Great Depression.” Because that’s what would have happened. That’s why you had people people like Greenspan saying that TARP was the right way to go.
Pat…also, the AEI? Come on…
Chris, I completely disagree. If it bleeds, it leads and people only tune in if they think they have to pay attention…in other words, only if they’re in danger.
Overarching…I do like how, when I share positive news about the economy, all of the critics then focus on those things that are negative and, as mentioned, out of control of the President. He has done what he can, but he can’t force employers to hire more workers. If companies are collectively deciding that they’re not going to staff up and pour more work on their current employees’ backs, the POTUS can do nothing about it.
About the deficit…Obama has appointed an independent panel to take a look at this. But the one thing you don’t want to do when you’re trying to pull the economy out of death spiral is focus on the deficit. But now it’s recovering and it’s a priority on his list. We’ll see what he actually does from this, but it’s not like Cheney say, “Reagan proved deficits don’t matter.” Again folks…some perspective is needed.
However, to kranky’s point…
Agreed. But let’s have the coverage mirror that and acknowledge that the signs are pointing in the right direction and that our economy didn’t just fix itself.
March 11th, 2010 at 3:58 pm
Well, Justin, I don’t particularly trust many “experts” who claim to be able to predict with some certainty exactly what will happen in something as complex and (mathematically speaking) chaotic as our economy, whether that person is Alan Greenspan, Ben Bernanke, or anybody else. We just don’t know, it’s not knowable, what would have happened had we not passed TARP I. Maybe it would have been worse, maybe better. Maybe it would have been worse for a brief period of time, but then gotten much better much faster. Maybe some different approach would have been even better; I’m not aware of many experts saying that TARP was the ONLY possible approach.
And just perhaps the moral hazard we created by bailing out the people who (in part) caused this mess will lead in the future to even greater risk-taking by even worse villains, causing us to enter into a new boom-and-bust cycle, wherein we will once again be forced to bail out private, profit-seeking firms.
Meanwhile, until just the other day Charlie Rangel, who played a major role in the financial melt-down by his defense of Fannie Mae and Freddie Mac and their risky lending ventures, was in charge of the Congressional committee overseeing the entire federal budget, while Chris Dodd, who also supported risky lending practices (which led to the crash) by Fannie Mae, Freddie Mac, and purely private companies like Countrywide, wasn’t even censured for accepting financial favors from those mortgage behemoths.
Sell the lie that the Democrats give a damn about the private economy or the budget deficit to folks who are ignorant of the real facts. I’ll grant you that Republicans also failed to do a lot of things they should, but much of their failures (such as their failure to increase regulatory oversight over Fannie and Freddie) stemmed from their refusal or inability to overrule Democratic objections to needed reforms.
And again with the “death spiral”? I’m assuming you’re now ok with the “politics of fear”?
March 11th, 2010 at 4:00 pm
Oh, and if you don’t care for AEI, perhaps you can find some other study, from a source you consider more reliable, that addresses the same question and comes to a different conclusion.
March 11th, 2010 at 5:34 pm
Take a look back a year or twoat all of the financial talking heads, everyone was laughing at the doomsayers because their parent companies have a vested interest in keeping people believing in the house of cards. I’m betting the media companies and all of their string pullers lost way more money in the markets collapsing than they would by losing minor ratings from having a cheery disposition in regards to finances.
March 11th, 2010 at 9:16 pm
Still smoking that Hopium, Justin? Things will not really turn around until the admin/Congress quits kicking the can down the road and addresses the underlying fundamental problems.
But no point in my wasting typing time when someone else has already done a fair job of it.
March 12th, 2010 at 1:20 pm
It’s rather amusing that you think that Justin doesn’t understand anything about macroeconomics, Tully, yet you think that libertarians have a clue. While they might understand the system they are basically sociopaths. Not once did that article you praise address the human costs of what his favored solution would do. Why? He doesn’t care about anything but his core ideological beliefs about government bad, government evil and the private sector will work it all out. Yet you use “Hopium” as an opprobrium to Justin. You and Randazzo are the ones believing in something that has no proof behind it.
March 12th, 2010 at 3:16 pm
Jim , which of Randozzo’s solutions in particular do you feel ignores human costs?
I think that the opening of Randozzo’s article is spot on in pointing out that the government is in a catch-22 where they can only mitigate the depth of the pain by extending the length of time until a genuine recovery occurs.
Sooner or later, we need growth that is sustainable without being propped up by massive government spending and subsidies. There’s really no way around this, no matter how much each one of us cares about human costs.
We need jobs that come from self-sustaining enterprises that are offering products that others want and are willing and able to pay for on their own. Wish there were a clever way around that. There isn’t.
March 12th, 2010 at 4:07 pm
World War II was temporary (thankfully) and credited with reving the economic engine out of the Great Depression. What’s the difference? Scale? So, we need more stimulus?
March 12th, 2010 at 4:20 pm
Tully…
Brought to you by the same folks who said “Let the market correct itself” in 2008. Sorry, but I’m really down on libertarian economists at this point. Their blind adherence to what they consider to be virtually infallible market forces is divorced from the realities of what we faced then and what we’ll continue to face in the future.
As with anything, different circumstances call for different solutions and over the past couple years the government was the spender of last resort. And everybody acknowledges that’s not a sustainable path, but you’ve gotta put gas in the engine if you want it to start up again.
Last, everybody knows that employment is a trailing indicator. Those green shoots people were talking about last fall are now bearing fruit and job gains are just around the corner. So I don’t think a double dip is in the offing and you have to give at least some credit to the economic policies of the Obama administration for that.
March 12th, 2010 at 11:07 pm
Well, here’s an anecdote — or, if you prefer, a data point:
I’m working for a small start-up company. You know, the kind that generally create the most jobs in the economy. We too on employees 2 and 3 back in 2007 (including me). This past week, we added employees 4 and 5. Won’t show up in the statistics for months, but….
In short, not only is business picking up (which for us it has been doing for 3-4 months now). But hiring is getting going again.
March 13th, 2010 at 1:06 am
I think that the opening of Randozzo’s article is spot on in pointing out that the government is in a catch-22 where they can only mitigate the depth of the pain by extending the length of time until a genuine recovery occurs. Sooner or later, we need growth that is sustainable without being propped up by massive government spending and subsidies. There’s really no way around this, no matter how much each one of us cares about human costs. We need jobs that come from self-sustaining enterprises that are offering products that others want and are willing and able to pay for on their own. Wish there were a clever way around that. There isn’t.
Kranky gets it. Aspirin can reduce your fever for a time but won’t (can’t) cure your flu. And too much aspirin can make you sick in other ways, even kill you. And when you do recover from the flu, it won’t be because the aspirin cured you.
Jim and Justin are apparently too busy shooting the messenger with ideological ad hominems to actually grapple with the content of the message. But snark doesn’t create real jobs, nor make the underlying problems go away. Such as the looming crash of a few million underwater mortgages, a number that is growing, not shrinking. Or the persistence of unemployment and the increase in those still employed but reduced to part-time work. If J & J are interested in reviewing the actual current employment data, they can find it here, at that nasty old libertarian Bureau of Labor Statistics. I do not think it says what they think it says. But I’ll throw in a big broad hint — when consumer demand rises substantially AND employment starts creeping up, THEN we’re doing better.
But it won’t be because we upped the aspirin dosage. It will be despite it.
Good luck, wj. Glad it’s picking up somewhere.
March 13th, 2010 at 1:56 am
I’m leaving on vacation or I would do it, but can someone do an overlay chart of the post-WWII recessions and the subsequent recovery? I suspect we’ll see a pattern. Recessions tend to end after a certain number of months, depending on the depth of the recession, whether Congress spends money or not.
The bank bailout during Bush’s last days in office averted disaster in financial markets, but the stimulus package passed in 2010 has had very little measurable effect (except on bailing out state and local governments). Obama was involved in the crisis during the campaign, conferring daily with Paulson and Bush’s team, according to the book “Game Change” (McCain was less interested, and not in contact every day). That’s why Obama’s financial gurus look a lot like Bush’s.
Government can be effective in acting when a true crisis is imminent, mainly because government is the only thing large enough to make a difference. So Tarp probably had the right effect, even if it had its problems (forcing non-endangered financial institutions to take money, etc.) Messy, but probably necessary.
But the recession continues. Unemployment may be high for a few more years, especially if companies fear uncertainty and don’t want to invest. Uncertainty comes not just from market conditions, but also the regulatory arena. As some of the overheated rhetoric about massive new regulations fades after November, we may see some improvement. I would be very surprised if unemployment dips below 6% in 2010; most economists I’ve read say we could be in for a long period of relatively high unemployment.
We may see the market re-gain all that it has lost by mid-2010. We will be back to 2008 levels. But the unemployment problem will cause things like housing start to remain low. And a second wave of mortgage defaults could cause a double-dip recession. That would not be good at all.
March 13th, 2010 at 8:38 pm
Sorry, Tully, but you and KK are the ones who don’t get it. The messenger is a moron blinded by his ideology, like most writers for Reason, the libertarian rag of choice. The really hard core truth is that the old system just doesn’t work any more. The people who have the money to make a difference in reviving the American economy have absolutely no interest in doing so. The difficult, slogging work of building a solid foundation for an ongoing economy just doesn’t make them enough money fast enough to interest them. Why else do you think all of these wonderfully “innovative” financial instruments and systems were created? Not to help the rest of the economy or any human beings other than investors and traders (Especially the traders.). And the old saw about retirement funds being among those investors doesn’t cut it when they are being ripped off left and right.
Randozzo had no solutions. Didn’t you notice that, kranky? Where was one proposal? First, he never explicitly proposes anything. He goes on and on about how current government actions are just exacerbating the problem because they fail to address the root problems. His explanation of what those causes are seem to inevitably vanish into criticism of the government. From this I have to assume that he blames it all on the government. I actually just couldn’t find anything in the whole article that seemed to propose anything to address any root causes. Implicitly his solution appears to be for the government to do nothing no matter what. Millions out of work? Let benefits expire because government shouldn’t be spending money. Thousands of people losing their homes and businesses losing their locations? His solution is the same. Just let it play out no matter what happens to anyone. Yes, I think that his only “proposal” would cause immense suffering. And like pretty much every other libertarian, he doesn’t care. He isn’t even very good at digging out facts. He spouts the typical conservative line about the “cash for clunkers” program. Of course it’s wrong. It’s always the same. Government bad. Government evil. Corporations good. Free enterprise perfect. Was there anything I missed in his article that didn’t fit into that mold?
It seems that conservatives still buy into a supply side concept that says that businesses can be encouraged to create jobs when there just isn’t consumer demand. What’s really funny is that none of them gave a damn about unemployment before. Why do I say this? Simple. Where was any criticism of the fact that every single time a business fired thousands of people Wall Street cheered them? It didn’t matter if they weren’t losing money. It didn’t matter if they’d just announced record profits. Firing employees was always something to celebrate. It was an action that was easy to take to boost stock prices and never, ever punished. When Abbott Labs announced record profits and the firing of thousands of employees the same day there wasn’t any disconnect. A pharmaceutical company gutting their research division? Why, that made perfect sense.
March 13th, 2010 at 11:28 pm
Jim S.
Although perceptive, what you describe has been ongoing for the last 15 years. Name one computer company that manufactures in the US? Name one cell phone company? In this arena, people will talk about how the US has priced itself out of competition, but will ignore the realities that nations with costs of living comparable to ours, strategically focus on research, development and manufacturing. We grouse about how our nation does not produce enough scientists and engineers, but we ignore the fact that there are decreasing opportunities for them due to our desire to outsource anything that’s not nailed down. Our nation (aka Wall Street) focuses on quarter to quarter growth and profits, ignoring the strategic need to invest in the ability to manufacture real goods. Over the last 10 years, we’ve educated China in what took us decades to learn. In another decade or two, China will not need our intellectual property to grow….I’ve experienced this first hand.
To those in this forum whose livelihood does not depend on producing tangible goods, this may seem like a radical rant. After 15 years of working in this sector, my opinion is that our nation has been sold out for pennies per unit of profit. The sad part is..I don’t see this changing.
On our current trajectory, here’s what I believe. In 20 years, the US’s major exports will be cultural: sports, music, movies and pop. (We’ve recently ruined the hopes that our financial capabilities are world-class).
March 14th, 2010 at 12:43 am
This does not make anything he says incorrect. The thesis of his article is that the economy is not recovering in the way that the cheerleaders are saying.
Really? What’s this based on? I guess I don’t know what the “old system” is. If you were to have asked me, I would have siad that it’s the new system of the 1990s and 2000′s that didn’t work. The old system where you needed a down payment for a mortgage and lenders could not make risky loans and sell them to suckers was IMO a system that was pretty sound. Presuming you are actually against the current iteration (derivatives, collateralized debt obligations, etc) of the system, what’s your prescription for repair?
While elements of what you say here hold some truth, this still feels like you changing the subject. I am not going to get sucked into defending traders or derivatives, I didn’t defend them to start with. I don’t think Rendozzo did either.
This does not strike me as a particularly logical argument. I think it’s sound to support regulations to curb future investment abuses and it’s also sound to avoid policy actions which will further damage institutional investors. These ideas encompass a whole host of sophisticated ideas. It’s not legitimate for you to dismiss a seriously valid point by citing unscrupulous behavior that, again, no one here is defending. Surely you don’t actually disagree that the majority of institutional investors like unions, pension funds, and so on deserves protection?
What you seem to be missing is that there is an inherent catch-22 involved in government mitigation efforts, as I alluded to earlier. Again, no deep concern for human costs provides us with an escape route for these ruthless economic conundrums. When you jump to your feeling that Rendozzo is saying it’s all the government’s fault, you’re missing the point. I don’t think he’s saying it’s all (whatever “all’ is) the gov’t's fault. What he is saying is that many of the governments mitigative actions are delaying unavoidable reckonings. Reckonings that we will need to get past before we can really see sustainable growth.
Getting through those reckonings is precisely the “difficult, slogging work of building a solid foundation for an ongoing economy” that you have implied is of the utmost importance. If you really want to see all this difficult, necessary, slogging work happen, then you need to face the truths that Rendozzo points out.
You can bemoan the very legitimate human costs of ruthless labor force management by big corporations all you want, as you did in your lengthy closing rant. That rant isn’t inaccurate per se. It’s just that it doesn’t provide us with any insight into a supposed better way forward in the 21st century global economy. We’re stuck in a global economy now, and we have diminishing power to dictate terms to multinational companies. It’s not realistic to try to force companies to keep more employees than they need, but we can revise our social safety net for the 21st century: better unemployment benefits financed by companies, portable affordable health insurance not linked to employers, more robust job retraining. I’m OK with that stuff.
Personally, i support some of the gov’t mitigation efforts, especially things like unemployment benefits and subsidies for cobra. Those are direct ways of mitigating the pain for folks who have borne it directly via job loss. I am less supportive of instances of alleged economic stimulus, especially things which delay unavoidable pain.
Just to name a few: States who are still spending at levels that are no longer tenable based on post-crash revenue projections can’t expect fed subsidies to insulate them from budget cuts. Programs that just shift spending behavior around in time (like cash for clunkers and home-buying subsidies) are also suspect.
And the real estate market will not reach a sound stable basis for new growth until unsustainable loans have been wound out. So for example if someone has a seriously underwater loan and insufficient income to make payments, those situations have to be resolved. I am not at all opposed to also going after lenders who blithely made crappy loans, as well as all the other banking folks who profited on the subsequent risk packaging. But the crappy loans can’t be propped up. Fact is, the portion of bad loans that are close enough viability to be saved is not the lion’s share of the bad loans.
March 14th, 2010 at 10:25 am
kranky,
My rant was about the fact that Randozzo doesn’t want that safety net. He was including the safety net in his list of things that contribute to the problems and should be eliminated. Didn’t you catch that? As I said, Randozzo and his compatriots are the purest of ideologues, dismissive of the real world costs of their ideas.
March 15th, 2010 at 11:44 pm
What I said about Rendozzo is that he was right about the catch-22s and reckonings, and that there is no way around them. I stand by that.
Jim, because you claimed this, I went back and skimmed Rendozzo’s entire 4 page article even though I had already read it once.
As near as I can tell, you’re completely wrong. Rendozzo doesn’t say this at all. The vast majority of his article talks about TARP and the bank bailout, and how they are delaying the settling down of the housing market. At no point is there a “list” of bad government policies that should stop.
I challenge you to cite a quote from Rendozzo’s article which suggests the dismantling of the government’s various safety net programs for individual americans, like unemployment benefits and medicaid for the poor, and welfare, and aid to families with dependent children and so on.
You seem determined to totally mischaracterize Rendozzo’s article. I encourage anyone else reading this thread to read Rendozzo’s article and judge for yourself.
March 21st, 2010 at 1:48 pm
Just in case you might still catch this, kk. Show me someone at Reason who doesn’t support elimination of the social safety net. It is one of the basic tenets of libertarianism.
That’s how I interpret this quote from his article, not as just referring to his earlier mention of cash for clunkers, which was an incorrect characterization, in any case. And again, this is Reason Magazine we’re talking about here. Have they ever acknowledged the necessity of social safety nets? Good ones, not just something for the sake of appearance?
Maybe this article. No? In all of the ones I could find even if there was acknowledgement of the necessity, it was half hearted, contemptuous of it and tended to ignore the realities of our times and what job prospects are really like for many people.