Donklephant » Economic crisis

Rick Perry Not Ready For Primetime

Justin Gardner — Wed, 17 Aug 2011 00:09:42 +0000

What is with you Texans and your Governors? Jeezus…

Here’s the video…

If the vid doesn’t play…here’s basically what he said…

Texas Governor Rick Perry, who entered the presidential campaign on Saturday, appeared to suggest a violent response would be warranted should Federal Reserve Chairman Ben Bernanke “print more money” between now and the election. Speaking just now in Iowa, Perry said, “If this guy prints more money between now and the election, I dunno what y’all would do to him in Iowa but we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treasonous in my opinion.” Treason is a capital offense.

Yes, Ben Bernanke…the guy Bush appointed.

So, is Perry backing down? Of course not. Here’s their official statement…

The Governor was expressing his frustration with the current economic situation and the out of control spending that persists in Washington. Most Americans would agree that spending more money is not the answer to the economic issues facing the country.

Sure, be frustrated. But understand A) how this mess happened and B) how we avoided catastrophic economic downfall due to Bernanke’s so called “treasonous” actions. Perry has no clue.

One thing’s for sure…2012 is going to be absolutely, positively wacky.

David Frum On Conservative Economics: Were We Wrong?

Justin Gardner — Thu, 04 Aug 2011 20:24:19 +0000

A very sobering piece to write, no doubt, but needed nonetheless. Especially when you consider the revised GDP numbers from 2008.

From Frum Forum:

Two years ago, Commerce estimated the decline of the US economy at -0.5% in the third quarter of 2008 and -3.8% in the fourth quarter. It now puts the damage at -3.7% and -8.9%: Great Depression territory.

Those estimates make intuitive sense as we assess the real-world effect of the crisis: the jobs lost, the homes foreclosed, the retirements shattered. When people tell me that I’ve changed my mind too much about too many things over the past four years, I can only point to the devastation wrought by this crisis and wonder: How closed must your thinking be if it isn’t affected by a disaster of such magnitude? And in fact, almost all of our thinking has been somehow affected: hence the drift of so many conservatives away from what used to be the mainstream market-oriented Washington Consensus toward Austrian economics and Ron Paul style hard-money libertarianism. The ground they and I used to occupy stands increasingly empty.

A decline of -8.9%.

Conservatives…let that sink in for a moment.

Anybody now think the stimulus was too big?

This from the Economist:

We can’t know exactly how things would have played out in a world in which key policymakers had better data. If the true scope of the economic disaster in the fourth quarter had been clear, however, it seems certain that Ms Romer’s models would have shown a need for more stimulus, that the White House would have agreed to push for more (and perhaps a lot more), and that Congress would have been much more receptive to a bigger bill. A drop of 8.9% does seem much more terrifying, after all, than a 3.8% decline. Bigger stimulus would have reduced the economic deterioration in subsequent months. The Fed might also have been more aggressive.

Of course, it’s not impossible that knowledge of the dire state of the economy would combine with a bigger stimulus plan to shake faith in American finances. It is unlikely, however. At the end of 2008, America’s net debt-to-GDP ratio was less than 50%. Other large economies were also tanking, and money was flooding into Treasuries. In late December of 2008, yields on 10-year Treasuries fell to near 2%.

America had plenty of room and every reason to borrow and spend heavily. What it didn’t have, unfortunately, was an accurate picture of the economic situation. And that was a crippling limitation indeed.

Frum closes it out with this tribute to Susan Sontag’s famous challenge to her left-wing brethren in 1982:

Imagine, if you will, someone who read only the Wall Street Journal editorial page between 2000 and 2011, and someone in the same period who read only the collected columns of Paul Krugman. Which reader would have been better informed about the realities of the current economic crisis? The answer, I think, should give us pause. Can it be that our enemies were right?

Your thoughts?

GOP and unemployment benefits

donar — Fri, 12 Nov 2010 16:37:53 +0000

“The Economist” defends divided government from attack by hysterical Nobel Prize winning emo economist

mw — Tue, 02 Nov 2010 01:42:04 +0000

This election cycle precipitated a conversation about the virtues and vices of a divided federal government in both new and traditional media. In the last few days before the vote, the amplitude spiked. Much of the most recent attention is in the form of an attack from the left on the foundation of the divided government voting rationale. Recent entries include Ezra Klein (again and again), Matt Yglesias, New York Times, John Sides (and again), Paul Pierson at American Prospect and Anne Lowrey at Slate.

It almost looks coordinated. No matter. The reason is not hard to understand. The biggest erosion of Democratic support from ’08 to ’10 is from the independent, moderate, centrist, libertarianish vote. For the most part, these voters are not choosing to vote Republican in 2010 because they like the Republican candidates or because they suddenly have embraced GOP values. They are voting Republican to divide the government in the hope of reining in the Democratic agenda and restoring some semblance of fiscal rationality (either that or it is because the voters are stupid and gullible and Republicans tell better lies). The only surprise is that it has taken this long for Democrats to understand that their core problem is not apathy in the base. Their core problem is they have lost the center.

I don’t think this flurry is going to help short term, and in the longer term will be problematical for these scribblers. In two years they will all be making the argument for divided government. It won’t look good.

As a consistent advocate for a divided government voting heuristic, I am of the view that all publicity on this topic is good publicity. Over the four+ years I have been blogging about divided government, this election is the first time I have seen it discussed as if it is a conscious decision, rather than some inchoate, subconscious voter preference that mysteriously shows up periodically in the electoral results.

In any case these posts have kept me busy on my blog offering rebuttals to some of their arguments (for any interested, you can find my responses here, here and here).

Here at the Donk we’ll feature just one attack from liberal darling Paul Krugman. This – an awe inspiring, world class hysterical hissy fit from the lofty platform afforded him by the New York Times:

Divided We Fail – Paul Krugman

“Barring a huge upset, Republicans will take control of at least one house of Congress next week. How worried should we be by that prospect?.. This is going to be terrible. In fact, future historians will probably look back at the 2010 election as a catastrophe for America, one that condemned the nation to years of political chaos and economic weakness… The economy, weighed down by the debt that households ran up during the Bush-era bubble, is in dire straits; deflation, not inflation, is the clear and present danger. And it’s not at all clear that the Fed has the tools to head off this danger. Right now we very much need active policies on the part of the federal government to get us out of our economic trap… So if the elections go as expected next week, here’s my advice: Be afraid. Be very afraid.”

Whoa. Somebody get that man a Prozac.

The Economist responds:

Krugman’s Prophecy of Doom – The Economist

‘Mr Krugman’s attempt to raise the stakes fails utterly. He spends most of his column-inches noodling about the ways in which our imminent divided government will not resemble the one that reigned in the fondly-remembered Clintonian golden age. In his last paragraphs, Mr Krugman finally arrives at the only really pertinent question: How would the Democrats’ holding their House majority save us from the terrible fate he now foresees? Here’s what he says:

“Right now we very much need active policies on the part of the federal government to get us out of our economic trap.

But we won’t get those policies if Republicans control the House. In fact, if they get their way, we’ll get the worst of both worlds: They’ll refuse to do anything to boost the economy now, claiming to be worried about the deficit, while simultaneously increasing long-run deficits with irresponsible tax cuts — cuts they have already announced won’t have to be offset with spending cuts.”

Mr Krugman implies that if Democrats continue to control the House, we’ll get the expensive “active policies” that will save us and avoid the expensive tax cuts that will prolong our woes. Of course, Democrats control the House now. This has not spared us Mr Krugman’s vein-popping fits over the current Democratic government’s disinclination to enact a second budget-busting stimulus.’

The money quote:

“It’s a little sad, isn’t it, when even our most eminent public intellectuals waste so much of their time, and ours, on baseless partisan freakouts?”

I think that pretty much sums it up. Except for what Nike Gardiner at the Telegraph had to say:

Paul Krugman and the last gasp of America’s liberal elites – Nike Gardiner

“Not only is Krugman’s article one of the most ridiculous pieces of scare-mongering in the history of modern American journalism, but it is the pathetic whimper of a decaying liberal Ancien Regime that is spectacularly crumbling. It also illustrates just how out of touch liberal elites are with public opinion, as well as economic reality. The tired old blame Bush line no longer works, and as a recent poll showed, the former president’s popularity is rising again.”

That first sentence above being the other money quote. That really says it all. Well, except for…
Krugman: The Only Think We Have is Fear Itself - Ed Driscoll

So what does it say when Krugman is sounding doomsday reports that the GOP winning Congress on Tuesday condemn America “to years of political chaos and economic weakness?” Let’s ask Krugman himself, circa 2000. In his essay “How to Be a Hack,” he sagely warned that it’s “still a good idea to tune out supposed experts whose minds are made up in advance.” I hope I’m not jumping the gun myself when I say that for once, Krugman’s advice sounds spot-on.

Paul Krugman says “This is going to be terrible” – Ann Althouse

“Hey, wait, I thought it was Democrats who liked to say Republicans are trying to scare us. Now, it’s just Republicans are scary, and we hope you believe that they’re scary to everyone, and not just to Democrats.”

When Paul Krugman says the 2010 election means disaster, you can bet on the opposite happening – Mark Hemingway

“But far be it from me or anyone else to suggest that Krugman’s off his rocker when he says a Republican House of Representatives portends disaster. Birds gotta fly, fish gotta swim and Krugman’s gotta make terrible predictions. As we speak, he’s probably stroking his Nobel Prize and staring wistfully out the window — the leaves are pretty on Princeton’s campus this time of year — and contemplating the Xanadu we could have had if only we’d coughed up another trillion in stimulus. Let him indulge his fantasies. It’s better that way.”

To be fair, all the comments quoted in response to Krugman’s column are from right-of-center columnists and bloggers. OTOH, Google could not find anyone of note from the left trumpeting or even defending Krugman’s column.

Methinks even his liberal brethren are embarrassed about this particular Olbermannesque screed.

X-posted from “Divided We Stand United We Fall“

Poll: Americans Still Blame Bush More For Economic Troubles

Justin Gardner — Wed, 21 Apr 2010 22:22:06 +0000

The gap has shrunk a bit, but the economy is turning around so in a year’s time it’s unlikely we’ll have the problems we’re having today. Basically, the question will then be… “Who is responsible for the economic growth in this country?”

Gallup has more on that…

Obama has stated that he “inherited the most profound economic emergency since the Great Depression.” And while some of his critics dispute the extent of the crisis, there is little debate that he arrived in Washington amid rising unemployment, struggling equity and housing markets, distressed banking and auto industries, and a rapid retreat in consumer spending. Americans in July 2009 clearly recognized that the nation’s economic problems preceded Obama’s term; at that time, close to half of Republicans (43%) — in addition to most independents (63%) and nearly all Democrats (92%) — believed Obama bore little or no responsibility for them.

And here are the numbers…

Sidenote…currently Obama’s approval rating is averaging about 48%. If this is as low as he goes as we’re pulling out of the recession…wonder what it’ll be this time next year.

Care to make any guesses?

Comparing post WWII recessions

mw — Sun, 14 Mar 2010 05:00:49 +0000

We do requests:

“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.” – FH

Frank is leaving and I am just getting back from vacation, so I’ll take the baton. The following screenshots are from a nifty tool on the Minneapolis Federal Reserve Bank website. The red line is the current recession.

Post-WWII Recessions Tracked by Changes in US Output:

Post-WWII Recessions Tracked by Changes in Employment:

This is not the first time we’ve made these comparisons. A year ago, on the eve of a partisan passage of the trillion dollar stimulus package stampeded through Congress, we were also comparing recessions. Up to that point, this recession looked to be similar in depth and duration to the ’81 recession. Since then, coincident with the passage of the “stimulus” bill, this recession got worse. Is there a connection between the passage of the stimulus bill and the recession getting worse? Unlikely. Is there a connection between the passage of the stimulus bill and recession getting better now? Unlikely. You can read the charts and draw your own conclusions, but I’ll offer a few observations of my own…

First and foremost is the exact same point I made a year ago, which echos Frank’s sentiment:

“The graphic points out an interesting aspect of recessions. They all end. And, surprisingly, they didn’t all need a trillion dollar stimulus bill from the Feds to end them. In fact, all of them combined up to now did not need a trillion dollar stimulus to end.”

This is worth repeating. If you pass a stimulus bill, recessions end. If you don’t pass a stimulus bill, recessions end. If you pass a small stimulus bill, recessions end. If you pass a large stimulus bill, recessions end. Recessions end. Full stop.

In terms of US Output, the graphs show the 2007 recession to be comparable to the ’53, ’57, and ’81 recessions (slightly worse than ’81, not as bad than ’57). In terms of employment, this is the worst recession since WWII. By any measure, this recession is lasting longer than any recession since WWII.

In terms of output, the recovery is underway. In terms of employment, it is not. Justin asserts that “…credit needs to be given to [the administration] for helping turn our economy around in such a dramatic fashion.” I am not sure what is so dramatic about the longest recession and slowest recovery of any recession since WWII, nor am I sure why any administration would want credit for it. Still, Justin is the voice of moderation compared to the hero worshiping fantasy found in the comments.

Given that this is the slowest recovery from the deepest recession in the modern era, any argument on what impact the stimulus package or the Obama administration did or did not have on the duration or strength of the recovery can only be made on a counterfactual basis – “expressing what has not happened but could, would, or might under differing conditions”. Despite the massive expenditures, you cannot say this recovery is more robust than any that has gone before. The only case that can be made in defense of administration policy is speculation that the recovery would have been even more tepid without the stimulus.

Problem being, a case can also be made that the uncertainty created by this administration’s wild spending, insane deficits, threatened increases in health care taxes, likely increases in health care insurance premiums on employers, an energy tax (cap & trade), repeal of the Bush tax cuts, increases in the minimum wage, uncertainty created in the health care, financial, and energy industries with the imposition of radical government mandated top down changes in industrial policy – all contributed to increasing uncertainty in the private sector and made the recession worse.

Both are counterfactual scenarios. Neither can ever be proven with certainty.

There are statements about administration policy on the economy that can be made with certainty. Clearly, administration policy has cushioned the pain of the recession for many who were hit hardest. Realistically and practically, this is a legitimate and necessary function of the federal government. Another certainty is that only about one third of the stimulus package allocation has been spent, and a significant percentage of that was in the form of pork for congressional districts that was not focused on creating new jobs (but may have arguably saved government jobs at the expense of the private sector). Unsurprising, since the bill was written by Nancy Pelosi’s House of Representatives, slightly trimmed by the Senate, and rubber stamped by the President. Based on the percentage of the bill spent to date, it is unarguable that a focused bill 20-30% the size of the one that passed would have had the exact same effect of “turning the economy around in such a dramatic fashion” to this point – without further inflaming the deficit and currency fears the stimulus package produced.

So should we applaud the administration for the economic performance of a bloated, politics-as-usual, pork-filled stimulus package that passed a year ago on a strong-armed partisan vote? It did provide one valuable service. In a single stroke it disabused independents of any illusion that the Obama administration would be vaguely centrist, post-partisan, fiscally responsible, more transparent, or agents of change in Washington D.C. We were immediately back to old-style back-room dealing, partisan politics and favoritism pushed by a classic borrow, tax and spend liberal. It set the tone and became the template for everything that the administration has done since. Credit for turning the economy around? I remain unconvinced.

Poll: Bush Still To Blame For Economic Woes

Justin Gardner — Tue, 03 Nov 2009 19:44:34 +0000

As I’ve said numerous times before, voters aren’t stupid. They know who piloted our economic collapse last year and it’s going to be extremely hard for Republicans to convince them otherwise.

Still, it is kind of telling that Republicans blame Obama more for the economy than Bush, even though it’s by a very small 6 point margin. I mean, come on folks…we’re 10 months in and you REALLY believe that Obama is the reason why we’re still only treading water?

Also note how the number of Republicans is skewing the total to be 7 points more than what Independents think. Because that number is really what you should be looking at since they’ll determine whether or not Republicans make serious gains in 2010. And since the economy is bound to be the #1 issue at that time, this doesn’t bode well for the GOP.

Still, I predict that if the economy doesn’t get better by this time next year Obama and Bush will be even. At least among Indies. Because at that point it’ll be about 20 months in and, fair or not, Obama will own it.

But what do you think? When will Obama own the economy in swing voters’ minds?

If You Only Read One Post About A Sculpture Featuring Bernie Madoff, A Flying Bull & The Wall Street Crisis, Make It This One

Justin Gardner — Wed, 30 Sep 2009 19:56:01 +0000

Bernie Madoff being pinned to the wall by a huge, farting bull…which is supposed to represent Wall Street.

All from the mind of Chinese artist Chen Wenling.

I mean, come on…that is AWESOME!

A question…if you had to create a sculpture that summed up what happened last year…what would it look like and why?

(Photo: BBC)

Quote Of The Day – Miserable Choices

Justin Gardner — Sun, 13 Sep 2009 18:50:39 +0000

“Sometimes you have to make the tough decisions. If you think this has to be done, you have my blessing. But someday you guys are going to need to tell me how we ended up with a system like this. I know this is not the time to test them and put them through failure, but we’re not doing something right if we’re stuck with these miserable choices.”
- George W. Bush on September 16, 2008

That’s from an upcoming 19,000 word piece in The New Yorker entitled, “A Reporter at Large — Eight Days: The battle to save the American financial system piece.” It will be a must read for anybody interested in seeing how things went so horrible, terribly wrong, but as the Bush quote hints at…deregulation is why we were stuck with miserable choices.

If this raises your conservative/libertarian hackles, well, tough. It’s time to accept the fact that markets are not self regulating and never can be due to the very nature of capitalism itself.

Why do I bring this up? Well, this fall Obama is set to propose much tougher regulations on banking and the marketplace. So I want everybody to remember why we find ourselves in the economic situation we’re in and why we need to never let it happen again.

Until then…

Vacation, all I ever wanted

Jacob — Sun, 09 Aug 2009 15:18:48 +0000

Here’s an interesting gambit from an hard up resort.

The Rancho Bernardo Inn, a San Diego luxury resort, is offering rooms for $19 a night. But there’s a catch — you have to sleep in a tent and bring your own toilet paper.

The promotion runs for 2 weeks. The idea is to get “heads in beds”, as they say in the business. Once there, the resort hopes guests will pay to use other amenities like the spa, golf course and restaurants.

Call me a hippie but if I’m sleeping in a tent I want a fire … and a lake and some hiking trails.

And call me a yuppie but if I’m playing golf and having pedicures … I’d like a bed.

That’s just me, though. I bet a lot of families will use it as an inexpensive getaway – swim in the pools all day with the kids and bring flashlights and sleeping bags for the evenings.

With a little luck some of those people will like it so much they’ll come back and pay full price.