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Obama XVI: Muslin curtains in the White House!!!

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Re: Obama XVI: Muslin curtains in the White House!!!

WeWantMore said:
Paul Krugman loves spending money, preferably other people's. That's been the point of virtually every column he's written in the past 6 months, whining and moaning about how we aren't spending enough money.

Look at it by the President's own standards. The White House claimed 3.3 million jobs would be created (not saved, created). That didn't come close to happening. By passing the stimulus, they were supposed to keep unemployment below 8%, it rose as high as 10%, and looks like it's pretty stagnant around 9.6% right now.

So, it's fine for people who voted for or supported the stimulus to say, "Without the stimulus, things would have been much worse." But looking at their previous predictions, why should anyone believe them?
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The White House's goals are a political statement, not an analytical one. It was politically stupid for them to release it because they underestimated the overall strength of the recession, but that doesn't mean the underlying policy didn't work. If you are asking if the stimulus worked, then the question is are we better off or worse off because of it?

http://www.economy.com/mark-zandi/documents/End-of-Great-Recession.pdf

Read up from Alan Blinder and Mark Zandi:

The U.S. government’s response to the financial crisis and ensuing Great Recession included some of the most aggressive fiscal and monetary policies in history. The response was multifaceted and bipartisan, involving the Federal Reserve, Congress, and two administrations. Yet almost every one of these policy initiatives remain controversial to this day, with critics calling them misguided, ineffective or both. The debate over these policies is crucial because, with the economy still weak, more government support may be needed, as seen recently in both the extension of unemployment benefits and the Fed’s consideration of further easing.

In this paper, we use the Moody’s Analytics model of the U.S. economy—adjusted to accommodate some recent financial-market policies—to simulate the macroeconomic effects of the government’s total policy response. We find that its effects on real GDP, jobs, and inflation are huge, and probably averted what could have been called Great Depression 2.0. For example, we estimate that, without the government’s response, GDP in 2010 would be about 11.5% lower, payroll employment would be less by some 8½ million jobs, and the nation would now be experiencing deflation.

When we divide these effects into two components—one attributable to the fiscal stimulus and the other attributable to financial-market policies such as the TARP, the bank stress tests and the Fed’s quantitative easing—we estimate that the latter was substantially more powerful than the former. Nonetheless, the effects of the fiscal stimulus alone appear very substantial, raising 2010 real GDP by about 3.4%, holding the unemployment rate about 1½ percentage points lower, and adding almost 2.7 million jobs to U.S. payrolls. These estimates of the fiscal impact are broadly consistent with those made by the CBO and the Obama administration. To our knowledge, however, our comprehensive estimates of the effects of the financial-market policies are the first of their kind. We welcome other efforts to estimate these effects.
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The Obama team estimated the impact of the stimulus just fine, they underestimated the power of the recession.

So, you can look at their predictions and see failure, but you're looking at the wrong part of the prediction - the part about the actual intervention was fairly accurate.

The Heritage Institute-hey, if you can cite Krugman:D - points out some repeated examples of the failure of stimulus.
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Krugman has a Nobel Prize in economics. You may not like his punditry, but I'm having trouble with your source of Heritage being more reliable.
 
Re: Obama XVI: Muslin curtains in the White House!!!

Conservatives hate Krugman so they will never give any of his thoughts or ideas any weight.

Purely partisan.
 
Re: Obama XVI: Muslin curtains in the White House!!!

Krugman's right to the extent that gov't spending is most effective over time when it's put into infrastructure. Hoover Dam and the Interstate system have been boons to the economy, much more so than cash for clunkers and other temporary one-off spending sprees.

Then again, I don't think there's been an administration that thinks about anything other than keeping power and getting re-elected since, what, 1860? Possiblythe early 1900's (Teddy Roosevelt). Maybe even the early FDR years, though once he threatened to pack the court if he didn't get his way, he lost any claim he had to that one.

But the biggest flaw with Krugman (and gov't in general) is that he never advocates the other half of the equation and they never perform the other half, which is reduced spending in good times in order to save up for the next rainy day and/or pay off the debt from the last one.
 
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Re: Obama XVI: Muslin curtains in the White House!!!

blockski said:
Krugman has a Nobel Prize in economics. You may not like his punditry, but I'm having trouble with your source of Heritage being more reliable.
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Oh, I didn't mean to imply that the Heritage Foundation (don't know why I called it the institute) was any more reliable. I'm just saying, if you can cite Krugman, who's totally in the tank for Keynesian economics, then it's equally valid to cite a conservative think tank arguing the other view.

Congrats to Krugman on winning his Nobel Prize. But keep in mind that Friedrich Hayek and Milton Friedman have also won Nobel Prizes in Economics. So, his status as a Nobel Prize winner carries no weight with me.

Binder and Zandi think the stimulus worked, shocking.
 
Re: Obama XVI: Muslin curtains in the White House!!!

WeWantMore said:
Oh, I didn't mean to imply that the Heritage Foundation (don't know why I called it the institute) was any more reliable. I'm just saying, if you can cite Krugman, who's totally in the tank for Keynesian economics, then it's equally valid to cite a conservative think tank arguing the other view.

Congrats to Krugman on winning his Nobel Prize. But keep in mind that Friedrich Hayek and Milton Friedman have also won Nobel Prizes in Economics. So, his status as a Nobel Prize winner carries no weight with me.
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Ok, so cite someone with some actual expertise from a different economic school of thought. rather than some Heritage hatchet-job political talking points piece.

Binder and Zandi think the stimulus worked, shocking.
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Again, show me some analysis to the contrary. What I'm looking for is basically the same set-up and Blinder and Zandi - that the economy is at X now, and the stimulus did +/- Y to it.
 
Re: Obama XVI: Muslin curtains in the White House!!!

blockski said:
Ok, so cite someone with some actual expertise from a different economic school of thought. rather than some Heritage hatchet-job political talking points piece.

Again, show me some analysis to the contrary. What I'm looking for is basically the same set-up and Blinder and Zandi - that the economy is at X now, and the stimulus did +/- Y to it.
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That's not really what Blinder and Zandi did though is it? The second paragraph you quoted has them talking about what could have happened if the administration didn't take those steps. It's pretty hard to prove or disprove something like that. If you freely admit Obama and company underestimated the recession, why should people believe their estimations of anything else?

As Tad DeHaven writes:
That the stimulus did create jobs isn't in question. The real question is whether it created any net jobs after all the negative effects of the spending and debt are taken into account. How many private-sector jobs were lost or not created in the first place because of the resources diverted to the government for its job creation?
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Re: Obama XVI: Muslin curtains in the White House!!!

ScoobyDoo said:
Conservatives hate Krugman so they will never give any of his thoughts or ideas any weight.
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Any? That's misleading. The man only has one thought reflecting a solitary idea. Which hasn't become any more effective since the 30's.
 
Re: Obama XVI: Muslin curtains in the White House!!!

ScoobyDoo said:
:rolleyes:

One thought? Please.
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Read any single one of Krugman's columns.... congrats, you've just read everything he's ever written. The regularity of his work is astonishing, from a proctological view of what he produces every week.
While I (used to) admire the Nobel and all, there comes a time after massive failure and humiliation when it's not shameful to re-think your prescriptions for economic growth. :p
 
Re: Obama XVI: Muslin curtains in the White House!!!

WeWantMore said:
That's not really what Blinder and Zandi did though is it? The second paragraph you quoted has them talking about what could have happened if the administration didn't take those steps. It's pretty hard to prove or disprove something like that. If you freely admit Obama and company underestimated the recession, why should people believe their estimations of anything else?

As Tad DeHaven writes:
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Ok, so you've asked the question. Care to provide an actual answer? It would obviously be in the form of a hypothetical, but I still don't think you'll find much there. We had (and still have) a huge output gap. Government spending crowding out the private sector is only something we need to fear when the economy is humming along, which it clearly is not:

http://www.economist.com/blogs/freeexchange/2010/09/fiscal_policy_4

But what if an economy isn't running at capacity? What if there are millions of workers sitting around without jobs and hundreds of billions in capital sitting around earning almost nothing in the safest securities firms can find? Well obviously, in that case, expanded government activity would not crowd out private activity. On the contrary, increased government demand should actually increase private activity, because the dollars spent by the government will be recycled as workers use their wages to buy private goods and services.

Now, one should be somewhat cautious in ramping up government spending. The increase should be temporary; as private sector activity ramps up, government spending should pull back. And one should be careful to minimise negative knock on effects (war is costly, etc). But generally speaking, crowding out isn't a problem when there is massive slack in the economy.
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We've got slack, that's for sure.
 
Re: Obama XVI: Muslin curtains in the White House!!!

blockski said:
http://www.economist.com/blogs/freeexchange/2010/09/fiscal_policy_4



We've got slack, that's for sure.
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What's causing the slack, though? Is it simply a timid business culture now, licking its wounds from a few years ago? Or is there gov't decisions/in-decisions leading the way? I think it's more the latter than the former.

I know many banks are foregoing loans to businesses because of the increased risk over lending to the gov't. The Feds are lending money to banks at near zero rates, and then going on to borrowing that same money at ~2.5% back from the banks. The banks make an easy, supposedly risk free 2%. Why lend to the private sector?
 
Re: Obama XVI: Muslin curtains in the White House!!!

St. Clown said:
What's causing the slack, though? Is it simply a timid business culture now, licking its wounds from a few years ago? Or is there gov't decisions/in-decisions leading the way? I think it's more the latter than the former.

I know many banks are foregoing loans to businesses because of the increased risk over lending to the gov't. The Feds are lending money to banks at near zero rates, and then going on to borrowing that same money at ~2.5% back from the banks. The banks make an easy, supposedly risk free 2%. Why lend to the private sector?
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That doesn't really have anything to do with the output gap.

outputgap.jpg


The slack in this case is a lack of GDP growth. Simply put, that cap is way too large to be the result of businesses sitting on the sidelines for fear of some new government regulation. And as far as banking goes, to be brutally honest, they deserve much more regulation - their poor assessment of risk is a major reason we're in the mess we're in.
 
Re: Obama XVI: Muslin curtains in the White House!!!

Foxton said:
Clearly he snuck in and took all the stamps off the envelopes.
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This is not funny. The Department of "Justice" is responsible for enforcing the law and the department answers to the president. Grow up just a little, will ya?
 
Re: Obama XVI: Muslin curtains in the White House!!!

unofan said:
Krugman's right to the extent that gov't spending is most effective over time when it's put into infrastructure. Hoover Dam and the Interstate system have been boons to the economy, much more so than cash for clunkers and other temporary one-off spending sprees.

Then again, I don't think there's been an administration that thinks about anything other than keeping power and getting re-elected since, what, 1860? Possiblythe early 1900's (Teddy Roosevelt). Maybe even the early FDR years, though once he threatened to pack the court if he didn't get his way, he lost any claim he had to that one.

But the biggest flaw with Krugman (and gov't in general) is that he never advocates the other half of the equation and they never perform the other half, which is reduced spending in good times in order to save up for the next rainy day and/or pay off the debt from the last one.
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I have to agree with everything you said. probably should add railroad to that. right of way and government contracts allowed corporations to build it and make profit after it was built. best of both world. kinda like the Internet (super highway or super railroad).

There is a problem major problem looming at the Federal Reserve BANK. when they keep interfering in the market place to allow excessive risk taking by their bank comrades by bailing them out and at the same time calling for less effective regulation to control that risk.

$1.7 trillion spent on buying the toxic assets under Federal Reserve bank instead of the Treasury TARP program. not to mention the $1Trillion or whatever short term loans that major banks are getting.

http://finance.yahoo.com/news/Feds-...3.html?x=0&sec=topStories&pos=1&asset=&ccode=
The new effort is expected to be smaller than the $1.7 trillion launched during the recession. Under that program, the Fed bought mostly mortgage securities and debt, although it did buy some government bonds, too.

The Fed has held its key interest rate at a record low near zero since December 2008. Because it can't lower that rate any more, it has turned to other unconventional ways to pump up the economy.
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Re: Obama XVI: Muslin curtains in the White House!!!

blockski said:
We've got slack, that's for sure.
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because they won't spend money it is then OK to take from them... I get it now.

You understand they aren't spending money because they don't think they'll make money, right? Why is that?
 
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