"It's the economy, stupid"

[Iangould]

No new president since Franklin Roosevelt has seen a bigger rally than Obama. The S&P 500 climbed 32 percent since he was sworn in as economists lifted estimates for third-quarter growth almost sixfold to 2.9 percent. Forecasts for next year’s gross domestic product rose to 2.4 percent from an average estimate of 2.1 percent on Inauguration Day, according to Bloomberg data.

...

Investors are returning to stocks faster than in the last bull market. They’ve added $15.8 billion to domestic-equity funds since March, compared with outflows of $18.6 billion during the first five months of the bull market that began in October 2002, data from ICI shows.

...

The Fed said on Sept. 23 that it anticipates keeping the benchmark interest rate “exceptionally low” for an “extended time.” Labor Department reports this month showed prices of goods imported into the U.S. tumbled 15 percent in August from a year earlier and consumer prices dropped 1.5 percent.


Link (http://www.bloomberg.com/apps/news?pid=20601087&sid=aoiQ9k29OK1s)

Of course they also note: "The S&P 500 has climbed 57 percent since March 9 as the U.S. government and Federal Reserve lent, spent or guaranteed $11.6 trillion and the central bank held interest rates near zero to fight the longest recession in seven decades. "

But the bulk of that is in guarantees which have not and now almost definitely will not be called upon.

And most of the rest of it is in the form of loans which are being repaid and which are fully secured.

[Iangould]

Case in point: the US government guaranteed Money Market accounts. The potential liability was several trillion dollars and that amount was dutifully included in all the tallies of how much the Federal government had "spent".

The guarantee has now been withdrawn - and the Gvoernemnt made a profit of $1.2 billion.

link (http://www.financialstability.gov/latest/tg_09182009.html)

[Black Vespa]

No new president since Franklin Roosevelt has seen a bigger rally than Obama. The S&P 500 climbed 32 percent since he was sworn in as economists lifted estimates for third-quarter growth almost sixfold to 2.9 percent. Forecasts for next year’s gross domestic product rose to 2.4 percent from an average estimate of 2.1 percent on Inauguration Day, according to Bloomberg data.

...

Investors are returning to stocks faster than in the last bull market. They’ve added $15.8 billion to domestic-equity funds since March, compared with outflows of $18.6 billion during the first five months of the bull market that began in October 2002, data from ICI shows.

...

The Fed said on Sept. 23 that it anticipates keeping the benchmark interest rate “exceptionally low” for an “extended time.” Labor Department reports this month showed prices of goods imported into the U.S. tumbled 15 percent in August from a year earlier and consumer prices dropped 1.5 percent.


Link (http://www.bloomberg.com/apps/news?pid=20601087&sid=aoiQ9k29OK1s)

Of course they also note: "The S&P 500 has climbed 57 percent since March 9 as the U.S. government and Federal Reserve lent, spent or guaranteed $11.6 trillion and the central bank held interest rates near zero to fight the longest recession in seven decades. "

But the bulk of that is in guarantees which have not and now almost definitely will not be called upon.

And most of the rest of it is in the form of loans which are being repaid and which are fully secured.

oh really?

and yet the unemployment rate reaches a 26-year high of 9.8%.

If we keep refusing to allow the economy to experience a REAL recession, we will never have the chance of a REAL recovery. Instead, we get the "jobless recovery"

[Iangould]

oh really?

and yet the unemployment rate reaches a 26-year high of 9.8%.

If we keep refusing to allow the economy to experience a REAL recession, we will never have the chance of a REAL recovery. Instead, we get the "jobless recovery"

Unemployment is a lagging indicator.

Incidentally, the last tiem unemployment was this high, Saint Ronnie was in the whtie house, do you blame him for that?

Was he failing to let america experience a "REAL recession"?

And what the Hell is a "REAL recession" anyway?

Give me an example of a "real recession" and explain to me how it differs from the current one.

[mikekerr3]

Unemployment is a lagging indicator.

Incidentally, the last tiem unemployment was this high, Saint Ronnie was in the whtie house, do you blame him for that?

Was he failing to let america experience a "REAL recession"?

And what the Hell is a "REAL recession" anyway?

Give me an example of a "real recession" and explain to me how it differs from the current one.

I think he's talking about 1929 and Hoovers response to it.:smile:

[Paradox]

Kosmopolit listens to economists:

Unemployment is a lagging indicator.

Yes, except it's dependent on corporate altruism to recover. Once they get more money in their pocket, they don't necessarily trickle it down on us, especially in this global economy where they can get cheaper employees elsewhere.

Incidentally, the last tiem unemployment was this high, Saint Ronnie was in the whtie house, do you blame him for that?

To a degree (as far as a President can affect the economy), YES!

Corporations were doing better...the guy on the ground, not so much.

That's where the whole "trickle down" BS came from.

[Fenris]

One of the prerequisites of a big rally is a big drop, so it's not too surprising that no one since FDR has had such a rally. How could they?

I certainly hope that the economy is all better, and that the rest of Obama's administration will be an age of prosperity for everyone. That will be marvelous news.

But all the same, I'm not going to bet my paycheck on the stock market just yet.

õ
It seems premature!

[mikekerr3]

One of the prerequisites of a big rally is a big drop, so it's not too surprising that no one since FDR has had such a rally. How could they?

I certainly hope that the economy is all better, and that the rest of Obama's administration will be an age of prosperity for everyone. That will be marvelous news.

But all the same, I'm not going to bet my paycheck on the stock market just yet.

õ
It seems premature!

I am not either but I wish I had right after the crash:redface:

[Iangould]

Speaking of jobs:

http://4.bp.blogspot.com/_4jIlyJ10uJU/Ss3388NJzFI/AAAAAAAAErg/xJ09z22fPks/s400/showimage.asp.gif

I agree that there are still significant problems ahead for the US and world economies.

But everyone seems to be focusing on the negatives when the US economy is actually recovering faster than almost anyone expected 6-12 months ago.

Remember the predictionms of a new Great Depression? Hyperinflation? 20%+ unemployment? Massive devaluation of the US dollar?

[Shellhead]

Remember the predictionms of a new Great Depression? Hyperinflation? 20%+ unemployment? Massive devaluation of the US dollar?

I voted for Obama, but I'm still nervous about how much money he has spent this year. We should be seeing some serious inflation in the coming months, because of all the money that the Fed pumped into the economy this year. Likewise, we can reasonably expect a continuing decline in the value of the dollar. As for unemployment, it's 12.2% in California, nearly 1 out of 8 working adults. Michigan, Nevada and Rhode Island have it even worse.

And keep in mind that official unemployment figures are lower than reality, because they only count people who are currently getting unemployment. Some people are denied unemployment, because they used up their allotment for now, or even because the former employer successfully challenged their claim. One common reason for denying an unemployment claim is to say that the employee was terminated "with cause," (like maybe stealing a coke). So I wouldn't be surprised if the real unemployment figure in Michigan is more like 20%.

[o1pickleboy]

I voted for Obama, but I'm still nervous about how much money he has spent this year. We should be seeing some serious inflation in the coming months, because of all the money that the Fed pumped into the economy this year. Likewise, we can reasonably expect a continuing decline in the value of the dollar. As for unemployment, it's 12.2% in California, nearly 1 out of 8 working adults. Michigan, Nevada and Rhode Island have it even worse.

And keep in mind that official unemployment figures are lower than reality, because they only count people who are currently getting unemployment. Some people are denied unemployment, because they used up their allotment for now, or even because the former employer successfully challenged their claim. One common reason for denying an unemployment claim is to say that the employee was terminated "with cause," (like maybe stealing a coke). So I wouldn't be surprised if the real unemployment figure in Michigan is more like 20%.

I wouldn't say denied claim factor into are as much. Since the bulk of our unemployed are union auto workers. As for running out definitely, but some of those fall into TAA with gives 2 year of unemployment benies and paid retraining.

Of course with all the extensions you get about 2 years of unemployment now.

[Black Vespa]

Speaking of jobs:

http://4.bp.blogspot.com/_4jIlyJ10uJU/Ss3388NJzFI/AAAAAAAAErg/xJ09z22fPks/s400/showimage.asp.gif

I agree that there are still significant problems ahead for the US and world economies.

But everyone seems to be focusing on the negatives when the US economy is actually recovering faster than almost anyone expected 6-12 months ago.

Remember the predictionms of a new Great Depression? Hyperinflation? 20%+ unemployment? Massive devaluation of the US dollar?

nice graph, - but who's to say that the drop in reported claims of unemployment isn't due to a numerical manifestation of exhaustion of unemployment benefits?

consider a scenario where the worker will drop out of the continuing claims number NOT because they have found a job and are going back to work, but because things are so bad that they have used up their benefits and will no longer be counted in the statistics.

[Iangould]

"nice graph, - but who's to say that the drop in reported claims of unemployment isn't due to a numerical manifestation of exhaustion of unemployment benefits?"

It's a graph of NEW jobless claims.

It measures the number of people filing initial state unemployment claims with the states.

Initial claims are often regarded as a better indicator of trends in US unemployment than total beneficiaries for exactly the reason you mention.

Meanwhile unemployment rates are now falling in both Canada and Australia.

Canada is America's largest trading partner and while it won't be enough by itself to life the US out of recession growth in the Canadian economy will assist the US to start growing again.

[Black Vespa]

Unemployment is a lagging indicator.

Incidentally, the last tiem unemployment was this high, Saint Ronnie was in the whtie house, do you blame him for that?

Was he failing to let america experience a "REAL recession"?

And what the Hell is a "REAL recession" anyway?

Give me an example of a "real recession" and explain to me how it differs from the current one.

a real recession is one that isn't manipulated by artificial means...in other words a recession that isn't manipulated by the Federal Reserve. They increased the money supply to raise output and employment. it's applied theory of Keynesian economics.

[Iangould]

So, give me an example of a "real" recession so we can assess your claim that recovery would be faster in such a scenario.

Of course to do so you'll likely need to go back to the 19th century.

[Black Vespa]

So, give me an example of a "real" recession so we can assess your claim that recovery would be faster in such a scenario.

Of course to do so you'll likely need to go back to the 19th century.

just because we'd have to go back to the 19th century to show an example of a "real" recession doesn't refute the fact that we are not allowing a "real" recession to happen now.

of course you'd have to go back to 19th century, - because the fed was created in 1913. The Federal Reserve was given the power to expand the money supply in times of economic expansion and reduce it during times of economic contraction. <---------------------------setting the stage for not allowing "real" recessions.

[Iangould]

So then, give me the 19th century example that you think proves your assertion.

[Black Vespa]

So then, give me the 19th century example that you think proves your assertion.

it's 7:18 am here, - i have to be at work at 8:00 am, - we're going to have to pick this up again once i'm home and settled this evening. good bye for now.

[Iangould]

You might also want to exlain why monetarist economic policy in the Uk and New Zealand in the 80's and 90's which seems to approximate your preferred policy resulted in esspcially severe and extended recessions.

Edited to add: Missed your last post. Happy to continue this later.

As a starting point you might want to look here.

http://en.wikipedia.org/wiki/Long_Depression

In the United States, economists typically refer to the Depression of 1873–79, which followed the Panic of 1873. The National Bureau of Economic Research dates the contraction following the panic as lasting from October 1873 to March 1879. At 65 months, it is the longest-lasting contraction identified by the NBER, eclipsing the Great Depression's 43 months of contraction.[4] [5] Following the end of the episode in 1879, the U.S. economy would remain unstable, experiencing recessions for 114 of the 253 months until January 1901.[4]

[mikekerr3]

nice graph, - but who's to say that the drop in reported claims of unemployment isn't due to a numerical manifestation of exhaustion of unemployment benefits?

consider a scenario where the worker will drop out of the continuing claims number NOT because they have found a job and are going back to work, but because things are so bad that they have used up their benefits and will no longer be counted in the statistics.

Read the chart again. itd NEW claims.

[Paradox]

Kosmopolit wants stats:

It's a graph of NEW jobless claims.

It measures the number of people filing initial state unemployment claims with the states.

Initial claims are often regarded as a better indicator of trends in US unemployment than total beneficiaries for exactly the reason you mention.

Actually, a better indicator would be an actual jobless statistic, but that's awfully hard to get without estimating. People losing minimum wage jobs, part time work, etc, don't even show up on the unemployment stats for the most part.

[o1pickleboy]

Actually, a better indicator would be an actual jobless statistic, but that's awfully hard to get without estimating. People losing minimum wage jobs, part time work, etc, don't even show up on the unemployment stats for the most part.

but who cares about them they were probably immigrants and drug addicts anyways. It is all about Wall Street baby

[Black Vespa]

You might also want to exlain why monetarist economic policy in the Uk and New Zealand in the 80's and 90's which seems to approximate your preferred policy resulted in esspcially severe and extended recessions.

Edited to add: Missed your last post. Happy to continue this later.

As a starting point you might want to look here.

http://en.wikipedia.org/wiki/Long_Depression

regarding UK and NZ, i don't know as much about what occurred during the 1980's--with their enonomy..

i'd say you'd want to rethink your stance on the "Long Depression" if you consider Rothbard's History of Money and Banking in the United Stateshttp://mises.org/Books/historyofmoney.pdf

specifically pages 132 thru 159



It should be clear, then, that the “great depression” of the 1870s is merely a myth—a myth brought about by misinterpretation of the fact that prices in general fell sharply during the entire period. Indeed they fell from the end of the Civil War until 1879.Friedman and Schwartz estimated that prices in general fell from 1869 to 1879 by 3.8 percent per annum. Unfortunately,most historians and economists are conditioned to believe that steadily and sharply falling prices must result in depression: hence their amazement at the obvious prosperity and economic growth during this era. For they have overlooked the fact that in the natural course of events, when government and the banking system do not increase the money supply very rapidly, freemarket capitalism will result in an increase of production and economic growth so great as to swamp the increase of money supply. Prices will fall, and the consequences will be not depression or stagnation, but prosperity (since costs are falling, too) economic growth, and the spread of the increased living standard to all the consumers.


Yet what sort of“depression” is it which saw an extraordinarily large expansionof industry, of railroads, of physical output, of net national
product, or real per capita income? As Friedman and Schwartz admit, the decade from 1869 to 1879 saw a 3-percent-per annum increase in money national product, an outstanding real national product growth of 6.8 percent per year in this period, and a phenomenal rise of 4.5 percent per year in real product per capita. Even the alleged “monetary contraction” never took place, the money supply increasing by 2.7 percent
per year in this period. From 1873 through 1878, before another spurt of monetary expansion, the total supply of bank money rose from $1.964 billion to $2.221 billion—a rise of 13.



i know it may be asking much, but i just re-read it myself, - and would like to see what your thoughts are on that chapter.

I've not found an example after the Civil War where we've had a true free-market. Maybe we should try that again some time.

[Black Vespa]

Read the chart again. itd NEW claims.

kosmopolit already established that - way back in the thread way before you decided to apply the "peanut gallery" clause.

[Iangould]

Rothbard is pretty much the economics equivalent of Emanuel Velikovsky.

Edited to add: Now, it's my turn to go to work. I will respond in more detail later.

[Black Vespa]

Rothbard is pretty much the economics equivalent of Emanuel Velikovsky.

Edited to add: Now, it's my turn to go to work. I will respond in more detail later.

Comparing Murray N. Rothbard to a guy that reinterpreted world events out of thin air is a bold claim that you're not going to be able to back up.

His background concentrated on capital and interest, money and banking, utility and welfare science, economic history, comparative economic systems, the theory of law, and the history of economic thought.

He provided extensive footnotes for source material on everything he wrote. Initially rejected, twenty years later his work on economic history was accepted by the academic community.

Rejecting what i posted about the Long Depression w/ a dismissive wave of your hand (i.e. discrediting Rothbard's work without any evidence or proof) isn't going to come that easy.