Financial News

[southsider2k5]

Except you got your extra trillion+ in the QE's.

[Balta1701]

Except you got your extra trillion+ in the QE's.

 

If you wanted to say that we got it with the continuation of the tax cuts last year, that's one thing. The Fed buying up a trillion or so of paper only has a stimulative effect on the order of $10 billion, maybe up to $20, by slightly lowering interest rates on the market.

 

Of course, I was kinda hoping you'd go with the tax cut one, because I'm trying to find the old posts where y'all tell me that tax cuts are such great stimulus and infrastructure spending stinks.

[southsider2k5]

 

If you wanted to say that we got it with the continuation of the tax cuts last year, that's one thing. The Fed buying up a trillion or so of paper only has a stimulative effect on the order of $10 billion, maybe up to $20, by slightly lowering interest rates on the market.

 

Of course, I was kinda hoping you'd go with the tax cut one, because I'm trying to find the old posts where y'all tell me that tax cuts are such great stimulus and infrastructure spending stinks.

 

not that trillion, a trillion more to the Democratic friendly things...

[StrangeSox]

Except you got your extra trillion+ in the QE's.

 

Except those same damn Keynesian guys say monetary stimulus is ineffective in liquidity traps and you need fiscal stimulus. You can't keep doing exactly what they say won't work and then say "Aha! Your policies are flawed!" when things don't work.

[StrangeSox]

[southsider2k5]

Except those same damn Keynesian guys say monetary stimulus is ineffective in liquidity traps and you need fiscal stimulus. You can't keep doing exactly what they say won't work and then say "Aha! Your policies are flawed!" when things don't work.

 

Here's the hint, don't do what doesn't work.

[StrangeSox]

Here's the hint, don't do what doesn't work.

 

Which is half-assed quasi-stimulus loaded with tax cuts, a "compromise" position doomed to failure from the start. You can't judge a legitimate Keynesian stimulus package based on the results of a bad, non-Keynesian one.

[StrangeSox]

Keynesians: "We need stimulus! $2T or more, or it won't work."

 

Obama/Congress: "Here's a stimulus package!"

 

Keynesians: "This is less than half of what we asked for and full of tax cuts."

 

Obama/Congress: "It'll be a Summer of Recovery!"

 

Keynesians: "No it won't, this is terrible"

 

*stimulus passes anyway, is ineffective at lowering unemployment*

 

Republicans: "See, told you Keynesian economics are wrong! We need moar tax cuts!"

 

Keynesians: "WTF?"

 

Obama/Congress: "Here you go, more tax cuts!

 

Republicans/Obama/Congress: "Now lets move on to massive spending cuts!"

[southsider2k5]

Keynesians: "We need stimulus! $2T or more, or it won't work."

 

Obama/Congress: "Here's a stimulus package!"

 

Keynesians: "This is less than half of what we asked for and full of tax cuts."

 

Obama/Congress: "It'll be a Summer of Recovery!"

 

Keynesians: "No it won't, this is terrible"

 

*stimulus passes anyway, is ineffective at lowering unemployment*

 

Republicans: "See, told you Keynesian economics are wrong! We need moar tax cuts!"

 

Keynesians: "WTF?"

 

Obama/Congress: "Here you go, more tax cuts!

 

Republicans/Obama/Congress: "Now lets move on to massive spending cuts!"

 

Yeah, this makes it official, I am still on another planet today.

 

[bmags]

austerity budgeting in a economic slowdown, on the other hand...would definitely make the economy worse. So we SHOULD do that.

[StrangeSox]

Yeah, this makes it official, I am still on another planet today.

 

I know, one where Keynesians didn't criticize the stimulus back in 2009 as being too small to be effective (even though they did) and where you can use failure of plans people say won't work as evidence that they're wrong.

[southsider2k5]

I know, one where Keynesians didn't criticize the stimulus back in 2009 as being too small to be effective (even though they did) and where you can use failure of plans people say won't work as evidence that they're wrong.

 

No the one where people actually try and avoid things that have failed in the past. Making it bigger doesn't help anything but the deficit and debt. It failed. Period. All of the sectors that were supposed to be helped, haven't had anything in the way of recovery. All of those "shovel ready" projects were supposed to have us back on track by now. The reality is that this hasn't led to any kind of a recovery. In fact all of this lunacy has forestalled the recovery by not allowing ailing institutions to get healthy.

[StrangeSox]

No the one where people actually try and avoid things that have failed in the past. Making it bigger doesn't help anything but the deficit and debt. It failed. Period. All of the sectors that were supposed to be helped, haven't had anything in the way of recovery. All of those "shovel ready" projects were supposed to have us back on track by now. The reality is that this hasn't led to any kind of a recovery. In fact all of this lunacy has forestalled the recovery by not allowing ailing institutions to get healthy.

 

But it wasn't a good stimulus. A bad stimulus package loaded with tax cuts and not enough spending failed, not one with appropriately targeted and sized spending. You keep attributing these claims that it actually would work to the people who said it wouldn't in order to criticize their policies. It makes no sense.

[southsider2k5]

But it wasn't a good stimulus. A bad stimulus package loaded with tax cuts and not enough spending failed, not one with appropriately targeted and sized spending. You keep attributing these claims that it actually would work to the people who said it wouldn't in order to criticize their policies. It makes no sense.

 

Our President said it would work. How does not make sense?

[StrangeSox]

Our President said it would work. How does not make sense?

 

I've been criticizing him and his economic team over their bad policies. Obama and his administration are not the Keynesian economists who said it wouldn't work in the first place, that it needed to be larger and the spending split up differently. I don't understand why you are incapable of separating the two.

[southsider2k5]

I've been criticizing him and his economic team over their bad policies. Obama and his administration are not the Keynesian economists who said it wouldn't work in the first place, that it needed to be larger and the spending split up differently. I don't understand why you are incapable of separating the two.

 

I don't know why you think I am referring to them the whole time. I think you are placing too much reading on your own into what I am trying to say here.

[StrangeSox]

I don't know why you think I am referring to them the whole time. I think you are placing too much reading on your own into what I am trying to say here.

You are trying to claim that the entire idea of Keynesian stimulus is a failure and are pointing to the 2009 stimulus as evidence, correct?

[StrangeSox]

Ah yes, hindsight.

 

Paul Krugman's time-traveling hindsight from January 2009.

 

Brad Delong, more time-traveling hindsight from February 2009.

 

Hell, here's a whole list of people with time-traveling hindsight saying it was too small from Jan to March 2009.

Edited July 25, 2011 by StrangeSox

[Balta1701]

I've been criticizing him and his economic team over their bad policies. Obama and his administration are not the Keynesian economists who said it wouldn't work in the first place, that it needed to be larger and the spending split up differently. I don't understand why you are incapable of separating the two.

They actually had economists in their group who were saying that it needed to be 1.5-2x as large. The President chose instead to listen to the concerns of people like Larry Summers, who worried that too large of a stimulus package would lead to...guess what...inflation!

[StrangeSox]

They actually had economists in their group who were saying that it needed to be 1.5-2x as large. The President chose instead to listen to the concerns of people like Larry Summers, who worried that too large of a stimulus package would lead to...guess what...inflation!

 

This is proof-positive that those calling for a larger, better package from the start are wrong and their ideas are failures.

 

Ezra Klein:

The real problem wasn't that it wasn't big enough to start, when we didn't know the size of the recession, but that it wasn't made bigger when we did know the size of the recession. Indeed, the underpowered stimulus ended up discrediting itself, and instead of realizing we needed more, the fact that we were still seeing tremendous joblessness gave the opposition party an opportunity to argue that we needed less. It's as if we took too few antibiotics, and finding the disease still present, decided to give up on antibiotics altogether.

Edited July 25, 2011 by StrangeSox

[StrangeSox]

How on earth is that talking in circles? My "it's routine" argument is that I don't understand why Wall St would all of the sudden freakout just because the decision for the terms of raising the ceiling is being kicked another 6 months. Has the market been freaking out the last 6 months because of uncertainty? No. But that doesn't mean we don't have a deficit problem that needs to be addressed.

 

 

It's not a democrat me-first f*** the country move, it's Obama. Reid was on board with the two step plan. And i'm fine kicking it for 6-8 months because that gives them more time to negotiate a good deal going forward. At this point we don't have the time. And i know, i know, those soulless republicans could have just agreed to Obama's plan weeks ago!

 

Klein with some commentary on a potential compromise between Boehner's and Reid's plans, but I'd like to highlight this:

 

Once we get to 2012, either the new congressional committee reports out a plan that Congress approves or the debt ceiling isn’t raised. That is to say, either we strike the sort of grand bargain that proved impossible this year during an election year, or we’re back to threatening the full faith and credit of the country — and this time, we’ll be doing it in the most politically polarized of all possible worlds.

 

I still don't see how anyone could believe that we won't be right back in the same spot 6-8 months from now, or why Republicans insisting on this being a campaign issue is "Country First" but Obama insisting that it not is "Me First"

[bmags]

Because when republicans make a grandstanding political move holding the country hostage, if the democrats don't submit to their demands and the country defaults on it's debt, they were playing politics. Meanwhile, letting the debt ceiling raise while letting the republicans vote on a message of disapproval? That is policy at it's finest.

[Cknolls]

Lets ask this in a different way.

 

The debt to GDP ratio in the U.S. is close to unity right now. That's not the highest its been in U.S. history, but it's getting close.

 

However, Japan is facing a debt to GDP ratio of 230% and that will shoot up while paying to rebuild from the tsunami. The Japanese however are paying a whopping 3% interest on their 10 year bonds.

 

Why should the U.S. debt risk be so much higher at 100% of GDP than Japan's is at 230% of GDP?

 

Because ffor the most part, Japan self finances it's debt. we do not.

 

[Cknolls]

Lets ask this in a different way.

 

The debt to GDP ratio in the U.S. is close to unity right now. That's not the highest its been in U.S. history, but it's getting close.

 

However, Japan is facing a debt to GDP ratio of 230% and that will shoot up while paying to rebuild from the tsunami. The Japanese however are paying a whopping 3% interest on their 10 year bonds.

 

Why should the U.S. debt risk be so much higher at 100% of GDP than Japan's is at 230% of GDP?

 

Because ffor the most part, Japan self finances it's debt. we do not.

 

[Jenksismyhero]

Klein with some commentary on a potential compromise between Boehner's and Reid's plans, but I'd like to highlight this:

 

 

 

I still don't see how anyone could believe that we won't be right back in the same spot 6-8 months from now, or why Republicans insisting on this being a campaign issue is "Country First" but Obama insisting that it not is "Me First"

 

We might. We might not. Like I said, at this point I don't think there's an option. I don't think they could draft a bill, get it through all the various committees and then vote on it in under a week. So, blame the GOP or Obama or whoever, but some short-term measure is gonna have to come out of this. I'm a fan of the one that doesn't take another year to or more to figure out.