The Republican Thread

[southsider2k5]

Somehow, I'm not surprised at this point that the concept of the BLS publishing "annualized" GDP numbers is a major scandal. Or at least something I'm covering up.

 

I don't know how to make this clearer.

 

1930 ~8% drop in GDP over the full year

1931 ~6% drop in GDP over the full year

1932 ~10% drop in GDP over the full year

 

By the time FDR took office, GDP had decreased by over 25%. Add error bars if you want since the data is old, but they're no more than 1-2%.

 

In 2008, the Economy collapsed. It began collapsing at a ~5 % annual rate in Q3 of 2008 and at an 8.9% annualized rate in Q4 of 2008.

 

Over the full period from the peak in December 2007 to the bottom in March 2009, GDP declined by 5%.

 

You'll notice a couple things here. First, the 5% GDP drop is much less than the 25% GDP drop. However, the pace from Q4 of 2008 was, on an annualized basis, worse than the economic performance of 1930.

 

However, unlike 1930, the government did something. TARP happened. The auto bailouts happened. Citigroup and BofA received special bailouts. The Federal Reserve pumped out several trillion in cash to prevent the money supply from declining. And there was a significant stimulus package passed.

 

Because of all these things, instead of that -8.9% rate for 1 quarter repeating itself, the collapse stopped cold. The total GDP drop stopped at 5%, rather than continuing to march on. The economy instead resumed slow but nonzero growth, and at present, GDP sits just about 1% under the 2007 peak.

 

Here is one of your exact quotes.

 

The idea that we are on the exact same path right now is incorrect by an order of magnitude. We are currently 1% below peak GDP. In 1931, the U.S. was about 13% below peak GDP and collapsing fast, and would be 25% below within a little more than a year.. The U.S. has grown slowly, but non-zero since the financial industry imploded. The U.S. in 1931 was imploding by the day.

 

You've danced around the issue by trying to say that unemployment statistics are counted differently, so I switched to employment to population. You then said jobs aren't really jobs in the same way. Fine, you're right...but that also undermines any claim that unemployment now is close to 20% (what do you think underemployment, which is counted in U6, was doing during the depression? Counting that would double the Depression's unemployment rate).

 

Pick your statistic. You can't tell me that unemployment is close to 20% right now by using the U6 number which counts underemployment and then laugh off the unemployment estimates from the Depression which don't include underemployment in their count.

 

The idea that we're on the 1931 path and that the stimulus failed is laughable. We were on the 1929 path at the end of 2008, but then we did something, and we diverted to a very different path.

 

Actually I can pretty easily. Think about it. A guy who works a side job today is considered "employed" even if it is just for a few hours. One hour of labor in a week and you aren't considered unemployed anymore. In 1930 he was "unemployed". The thinking is consistent. The statistics have changed. U6 of today is "unemployment" of 1930.

 

And again, if the stimulus actually "worked" we wouldn't be looking at handing out another half of a trillion dollars. Instead of the lines of your charts mirror each other, and we have to go the well again, because it didn't actually get the private sector going again. Which is exactly what will happen with this if it passes.

 

[CrimsonWeltall]

And again, if the stimulus actually "worked" we wouldn't be looking at handing out another half of a trillion dollars.

 

So anything less than a quick flip back to great growth counts as a failure?

[southsider2k5]

So anything less than a quick flip back to great growth counts as a failure?

 

The whole point of a stimulus plan is to spur the economy back to recovery, so if it doesn't go into growth on its own, then yes it failed. This economy is still on lifesupport, which is why we are talking about spending another half of a trillion dollars.

[Balta1701]

I'm sure the quibble will be with the author's identity rather than the methodology, but here is a different take on U6/Depression unemployment.

 

It's also worth noting again that U6 started at ~9% at the start of this recession, so it has less than doubled, while by any reasonable calculation "Unemployment" went up by a factor of >5 during the depression.

 

If "Depression era unemployment" = U6, then the 1920's produced U6 values of 3-4%. That's more than a little hard to believe.

[Balta1701]

The whole point of a stimulus plan is to spur the economy back to recovery, so if it doesn't go into growth on its own, then yes it failed.

Then why did you oppose crafting a stimulus that could have done that?

[southsider2k5]

Then why did you oppose crafting a stimulus that could have done that?

 

There is no real proof that an even bigger stimulus plan would have worked. There also wasn't the revisionist effort that we have seen since the stimulus plans failure to make it seem as such.

[Balta1701]

There is no real proof that an even bigger stimulus plan would have worked. There also wasn't the revisionist effort that we have seen since the stimulus plans failure to make it seem as such.

Do I really need to go back and drag up the posts where I said it should be larger and less tax-cut-heavy again? I did that about a month ago.

[StrangeSox]

There is no real proof that an even bigger stimulus plan would have worked. There also wasn't the revisionist effort that we have seen since the stimulus plans failure to make it seem as such.

 

"Revisionist" in the sense that they traveled through time and planted editorials and papers before, shortly after and continually since the ARRA passed, as has been pointed out to you several times.

Edited September 12, 2011 by StrangeSox

[southsider2k5]

I'm sure the quibble will be with the author's identity rather than the methodology, but here is a different take on U6/Depression unemployment.

 

It's also worth noting again that U6 started at ~9% at the start of this recession, so it has less than doubled, while by any reasonable calculation "Unemployment" went up by a factor of >5 during the depression.

 

If "Depression era unemployment" = U6, then the 1920's produced U6 values of 3-4%. That's more than a little hard to believe.

 

Why? The participating workforce was much smaller. So much smaller that mass migration was needed to sustain the economy.

[southsider2k5]

Do I really need to go back and drag up the posts where I said it should be larger and less tax-cut-heavy again? I did that about a month ago.

 

Unless you work for the President, it doesn't matter. He and his party are the ones who told us we needed this.

[southsider2k5]

"Revisionist" in the sense that they traveled through time and planted editorials and papers before, shortly after and continually since the ARRA passed, as has been pointed out to you several times.

 

 

Unless you work for the President, it doesn't matter. He and his party are the ones who told us we needed this.

 

[StrangeSox]

Unless you work for the President, it doesn't matter. He and his party are the ones who told us we needed this.

 

Ah, this slight of hand again. Never mind what all those economists were actually saying, it only counts if it came from the White House!

[Balta1701]

Unless you work for the President, it doesn't matter. He and his party are the ones who told us we needed this.

And since it was effective in stopping the slide, as demonstrated clearly in the GDP graph, but wound up being small due to the fact that the slump was larger than initially thought, I'm happy to have your support for the American Jobs Act.

[southsider2k5]

And since it was effective in stopping the slide, as demonstrated clearly in the GDP graph, but wound up being small due to the fact that the slump was larger than initially thought, I'm happy to have your support for the American Jobs Act.

 

And since it didn't actually do anything for the private sector, I'm glad to see you won't be supporting it.

[StrangeSox]

And since it was effective in stopping the slide, as demonstrated clearly in the GDP graph, but wound up being small due to the fact that the slump was larger than initially thought, I'm happy to have your support for the American Jobs Act.

 

Don't even give his argument that much credit. It's just a way for him to conveniently ignore all of the economists who actually were saying "this is too small" and focus only on what the WH was saying. Of course the WH isn't going to come out and say that their proposed plan won't be enough, either because they believe it will work or because they know its the best that can pass and talking down their own plan is bad politics.

[southsider2k5]

Ah, this slight of hand again. Never mind what all those economists were actually saying, it only counts if it came from the White House!

 

The White House doesn't have economists working for it? So did Obama either ignore them, or does he just have idiots working for him?

 

It also reflects on this bill. If he was wrong last time, what makes you believe he will be right this time?

[southsider2k5]

Don't even give his argument that much credit. It's just a way for him to conveniently ignore all of the economists who actually were saying "this is too small" and focus only on what the WH was saying. Of course the WH isn't going to come out and say that their proposed plan won't be enough, either because they believe it will work or because they know its the best that can pass and talking down their own plan is bad politics.

 

So the White House is spineless, but that makes everything OK? really?

[StrangeSox]

So did Obama either ignore them, or does he just have idiots working for him?

 

Any of those are possible, this WH did shift from jobs pretty quickly and very prematurely at Geithner's push. The other issue is politics and that the WH can't just come out with a bunch of technical papers and wonkish analysis to present policy to a public, it has to sell it and sell it hard. Even if they didn't believe it was the ideal package, they wouldn't talk down their own plan as not enough if they knew it was the best they could get.

 

 

 

It also reflects on this bill. If he was wrong last time, what makes you believe he will be right this time?

 

Maybe we should listen to those economists you keep ignoring who have been right a hell of a lot more than the WSJ-strain of economists over the past decade or so?

[Balta1701]

And since it didn't actually do anything for the private sector, I'm glad to see you won't be supporting it.

I think I've already derided it as "More of the same" in the other thread. Clearly it was undeserving of a joint Congressional address, I can't deny that. It would at least push the bond market in the right direction again.

 

Way too much of it is tied up in payroll tax cuts, once again. Way too much. That's just going to go in the bank, just like this year's version. The aid to the states in it would be effective if that part survived.

 

If the payroll tax cut were taken and actually used on infrastructure and things like building energy efficiency systems, it would be much more effective, even if it was just slammed out as fast as possible.

 

One thing I haven't pointed out here...the slump in unemployment has been much larger and more persistent than the slump in GDP. That is directly reflecting the style of stimulus we chose. We saved the corporate sector and now its more profitable than ever, we kept the top tier tax cuts, but we took very limited effort on unemployment directly. We hired only a small number of people. By dealing with the corporate and financial sectors, we ensured GDP recovery, but we left the resources out there idled.

[StrangeSox]

So the White House is spineless, but that makes everything OK? really?

 

The White House is spineless. What does that have to do with the validity of basic macroeconomics or whether or not macroeconomists were saying "it's too small" before, during and after the ARRA's passage?

[Balta1701]

The White House doesn't have economists working for it? So did Obama either ignore them, or does he just have idiots working for him?

He did not listen to the advisors who were calling for a much larger stimulus. This is entirely true. Some portion of that motivation may have been political, in that who knows what could have gotten through Congress if a larger one was asked for.

 

The political advisors...such as Larry Summers and former Chief of Staff Rahm Emmanuel (name-dropping!) didn't wannt to push for too large of a stimulus because it would have been politically difficult.

[southsider2k5]

Any of those are possible, this WH did shift from jobs pretty quickly and very prematurely at Geithner's push. The other issue is politics and that the WH can't just come out with a bunch of technical papers and wonkish analysis to present policy to a public, it has to sell it and sell it hard. Even if they didn't believe it was the ideal package, they wouldn't talk down their own plan as not enough if they knew it was the best they could get.

 

Maybe we should listen to those economists you keep ignoring who have been right a hell of a lot more than the WSJ-strain of economists over the past decade or so?

 

We haven't exactly done things the conservative way either since Obama took office, so it is kind of hard to just blow them off during this recession. How do you know the problem isn't backwards here?

 

The biggest mistake made has been the handling of the housing issues. All of the tactics which delay the move of housing prices to a recovery point are going to continue the weigh down the economy no matter what trillions you throw at it. And everything that has been thrown at housing has been of the nature to lengthen the process instead of moving it along. We still haven't gotten the housing market moving again, and we still haven't fixed it so that Freddie and Fannie don't incentivize and reward risk.

[southsider2k5]

The White House is spineless. What does that have to do with the validity of basic macroeconomics or whether or not macroeconomists were saying "it's too small" before, during and after the ARRA's passage?

 

There were also plenty of economists who said the plan wouldn't work for reasons other than being too small. I don't see their plans being forwarded here. My impression that instead of having one massive plan, we should make sure there is more that can be spent just in case the plan failed, just like it did.

[StrangeSox]

We haven't exactly done things the conservative way either since Obama took office, so it is kind of hard to just blow them off during this recession. How do you know the problem isn't backwards here?

 

Because their predictions have been wrong, over and over and over?

 

The biggest mistake made has been the handling of the housing issues. All of the tactics which delay the move of housing prices to a recovery point are going to continue the weigh down the economy no matter what trillions you throw at it. And everything that has been thrown at housing has been of the nature to lengthen the process instead of moving it along.

 

I will agree 100% that housing is still a concrete block dragging everything under water.

 

We still haven't gotten the housing market moving again, and we still haven't fixed it so that Freddie and Fannie the derivatives markets don't incentivize and reward risk.

 

[StrangeSox]

There were also plenty of economists who said the plan wouldn't work for reasons other than being too small.

 

But their models haven't matched reality, unlike the Kenyesian guys. Those bond vigilantes are right around the corner...

 

I don't see their plans being forwarded here.

 

We're undertaking big austerity measures. Europe's tried that and failed, predictably.

 

My impression that instead of having one massive plan, we should make sure there is more that can be spent just in case the plan failed, just like it did.

 

We own the presses, there's always more money to spend, which is exactly what this new plan does. But yeah, that's still basic Keynes and why we shouldn't have run deficits under Bush.