Financial News

[StrangeSox]

a fair point, thought their stated purpose was to examine a "16 month period around the 2008 US federal elections"

[StrangeSox]

 

Here, you can really see the effects of the Great Depression. In early 1933, G.D.P. was about 40 percent below what it “should” have been based on long-term growth rates. But the economy recovered at a rapid clip over the course of the next decade. In fact, G.D.P. temporarily overshot, exceeding the long-term trend during World War II as America employed all the industry and labor that it could get its hands on to help with the war effort.

 

By this measure, most post-World War II recessions are barely detectable. They look more like reversions to the mean after years of above-average growth.

 

The Great Recession, however, is highly visible. G.D.P. had already been a couple of percentage points below the long-term trend before it began, as the recovery from the 2001-2 recession was not particularly robust. But things got much worse in a hurry.

 

Looked at this way, in fact, not only is the worst not yet over — the situation is still deteriorating. Every quarter that the economy grows at a rate below 3.5 percent, it loses ground relative to the long-term trend. Although the economy grew at a 3.8 annual percent rate from fall 2009 through summer 2010, over the past year growth has averaged just 1.6 percent, putting us farther behind.

 

There's also this graph showing how consistently growth follows an exponential path.

Edited August 4, 2011 by StrangeSox

[Jenksismyhero]

so lets start world war III and get this thing turned around!

 

[StrangeSox]

We could spend equivalent amounts of money on productive projects instead...

[Balta1701]

So, how far does the market have to fall before it gets policy-makers attention?

[southsider2k5]

Stocks are off 340 points and just about back to the lows. Commodities are getting the s*** kicked out of them, while the dollar rallies hard.

 

Most of it is European, though job creation is up there.

 

NEW YORK (CNNMoney) -- Stocks plunged Thursday, after Japanese and European policymakers stepped in with dramatic measures to shore up their financial markets.

 

U.S. markets were already sharply lower on widespread global worries, including the weak job market. The policymakers' moves only exacerbated those concerns.

 

including this from one of my old stomping grounds...

 

"In the last two weeks, we've been through the ringer," said Rich Ilczyszyn, market strategist with futures broker Lind-Waldock. "When we we start looking at the recovery, there's nothing to hang our hats on anymore."

 

If it were purely about what you are implying, the dollar wouldn't be up a handle, and gold would be up like crazy.

[Balta1701]

If it were purely about what you are implying, the dollar wouldn't be up a handle, and gold would be up like crazy.

Then I really need to start my own investment house, because this was pretty darn easy to predict. I believe my exact post was somewhere in the Dem thread saying that I'd have been moving my money to Treasuries/cash late in the spring and early in the summer except for the fact that I was scared Congress would actually figure out some way to default.

[southsider2k5]

Then I really need to start my own investment house, because this was pretty darn easy to predict. I believe my exact post was somewhere in the Dem thread saying that I'd have been moving my money to Treasuries/cash late in the spring and early in the summer except for the fact that I was scared Congress would actually figure out some way to default.

 

I believe Hawk would call this post "Right size, wrong shape"

[Balta1701]

I believe Hawk would call this post "Right size, wrong shape"

Call it whatever you want, this is the exact effect you should get if there's no reason to expect growth anywhere and a high chance for expecting losses, and the moves by the U.S. Congress, Federal Reserve, and ECB have made that reality. High chance for losses, once again a flight to safe assets, and limited expectations for growth anywhere. And since the Debt limit deal was even more contractionary than anyone would have guessed a month ago...well, there you go.

[StrangeSox]

How long does Obama & Co continue to be blue-sky optimists with respect to the economy?

[Balta1701]

How long does Obama & Co continue to be blue-sky optimists with respect to the economy?

I haven't a clue, but they should have been trying to do something for more than a year now. Even if they're completely stymied by Congress, at least get out and say what you'd do.

[StrangeSox]

They have, big tax cuts and big spending cuts!

 

There's a tricky political balance there, admitting that your policies were ineffective but explaining why your new proposals will work and why the other option's ideas are so disastrously wrong.

[southsider2k5]

Call it whatever you want, this is the exact effect you should get if there's no reason to expect growth anywhere and a high chance for expecting losses, and the moves by the U.S. Congress, Federal Reserve, and ECB have made that reality. High chance for losses, once again a flight to safe assets, and limited expectations for growth anywhere. And since the Debt limit deal was even more contractionary than anyone would have guessed a month ago...well, there you go.

 

To be fair, I have been using the term "double-dip" for a while now. Much longer than this "debt crisis" has been going on. Mostly because none of what has been done by the Obama administration has actually fixed any of the problems. Once the band-aids have fallen off, everything has gone back to where it was before the band-aids were applied. Until the housing problems fix themselves, most everything done to try to "fix" things is going to fail. That and the system has no confidence, though I bet a large portion of that is directly tied to the housing issues. Even with the stimulus effort, the underlying economic problem of confidence in a recovery never was instilled. So everyone viewed the stimulus as a temporary thing, and as it passed through, no real economic changes were made because of it. It was pretty much the financial equal of bailing out your druggie brother, only to have him relapse, just like you knew he would.

 

[southsider2k5]

How long does Obama & Co continue to be blue-sky optimists with respect to the economy?

 

As long as they are in office, just like the Bush people were. They pretty much have to be.

[Rex Kickass]

To be fair, I have been using the term "double-dip" for a while now. Much longer than this "debt crisis" has been going on. Mostly because none of what has been done by the Obama administration has actually fixed any of the problems. Once the band-aids have fallen off, everything has gone back to where it was before the band-aids were applied. Until the housing problems fix themselves, most everything done to try to "fix" things is going to fail. That and the system has no confidence, though I bet a large portion of that is directly tied to the housing issues. Even with the stimulus effort, the underlying economic problem of confidence in a recovery never was instilled. So everyone viewed the stimulus as a temporary thing, and as it passed through, no real economic changes were made because of it. It was pretty much the financial equal of bailing out your druggie brother, only to have him relapse, just like you knew he would.

 

So I guess I don't understand, short of letting the economy freefall, what can a government do to encourage growth?

[southsider2k5]

So I guess I don't understand, short of letting the economy freefall, what can a government do to encourage growth?

 

A good start would be to quit looking for quick fixes everywhere. Stabilizing the system is one thing. Trying to spend it back to healthy is not. Another great idea is to quit threatening and villianizing job creators.

[StrangeSox]

Businesses Job Creators are so scared of Obama's mean words that they are refusing to spend any of the record-setting piles of cash they have, paradoxically sabotaging the very economy they rely on.

 

An alternative view is that the Job Creators have taken such a gigantic share of the wealth gains of the past three decades that the entire economy had to be propped up on credit spending by the other 95% in order to sustain its usual exponential growth rates.

[southsider2k5]

Businesses Job Creators are so scared of Obama's mean words that they are refusing to spend any of the record-setting piles of cash they have, paradoxically sabotaging the very economy they rely on.

 

An alternative view is that the Job Creators have taken such a gigantic share of the wealth gains of the past three decades that the entire economy had to be propped up on credit spending by the other 95% government in order to sustain its usual exponential growth rates.

 

[Balta1701]

Wait, did 2k5 just acknowledge that the "Job creators" have taken up such a large fraction of the income over the past 30 years that it has caused a problem?

[southsider2k5]

Wait, did 2k5 just acknowledge that the "Job creators" have taken up such a large fraction of the income over the past 30 years that it has caused a problem?

 

I acknowledge that the system has become utterly dependent on the government. That is 100% obvious when you view this "recovery" along the stimulus time line.

[StrangeSox]

I think saying it's become dependent on credit spending fits the same data. The economy kept growing, but most people never really saw that growth. Their spending kept increasing, though, largely in the form of housing and then using their inflated home values as an ATM since that's where almost all of the wealth for most of the country is held. Housing collapses, credit disappears, incomes disappear and demand plummets.

 

Not sure how Obama not saying mean, nasty things (examples?) about Job Creators (Praise Be Unto Them) would suddenly restore confidence and spur demand.

[StrangeSox]

I acknowledge that the system has become utterly dependent on the government. That is 100% obvious when you view this "recovery" along the stimulus time line.

 

You also realize that this condemns the last 30 years of Republican economic ethos, going back to the start of Reaganomics, right?

[Balta1701]

I acknowledge that the system has become utterly dependent on the government. That is 100% obvious when you view this "recovery" along the stimulus time line.

But you didn't edit out the phrase that says it has become dependent on the government because the Job Creators have taken up such a large share of the country's wealth and income.

[southsider2k5]

But you didn't edit out the phrase that says it has become dependent on the government because the Job Creators have taken up such a large share of the country's wealth and income.

 

OMG NO, NOW I AM A COMMIE TOO!

[Balta1701]

OMG NO, NOW I AM A COMMIE TOO!

Once you accept that premise, then the logic that they're not investing because Obama wasn't nice enough to them becomes the object of ridicule that we keep treating it as.