And there are monsters under my bed!

I see that even the Nutty Pervessor, Booby Nasalsound chimed in! (0.00 / 0)

How, Booby, did you MISS the part where bush stacked all the government agencies with people whose SOLE purpose is to undermine the O'Bama administration?  How COULD you?  You're the Nutty Perv!  You should know better.  The bush crime family along with the fascist repubbies have been undermining EVERY Democratic administration since  Kennedy!  Like  the old song says, don't know much bout history, do ya, Pervy?  BTW, coward boy, when you gonna appear on a site other than Smitty's?  Got nuts?  Easy answer.  Nope.  Flush Limpballs said it best.  You morons WANT the country to fail.  For you see,  you guys are NOT  the loyal opposition, just garden variety traitors!  

---

by: Larry Kralj, Environmental Rangers! @ Sun Feb 08, 2009 at 04:56:47 AM UTC

Maybe a better historical view... (0.00 / 0)

Might assuage your dyspepsia.

http://granades.com/2008/12/05...

---

by: Dave Budge @ Sun Feb 08, 2009 at 16:56:55 PM UTC

Useful perspective (0.00 / 0)

Except that the trendlines on the graph above are why people are nervous. By this point in the '90 and '01 recessions, things seemed to be coming together, job market was stabilizing. Monthly job numbers are giving less indication that this is happening right now.

Macroeconomic decisions are obviously made with incomplete information. That's why DC only recently learned of our recession.

The author of the post you link admits that if things keep going this way for another couple months that we'll soon be way deeper than '90 and '01 -- and that's what has folks nervous. It looks like things are continuing to trend down.

---

by: Matt Singer @ Sun Feb 08, 2009 at 18:35:38 PM UTC

[ Parent ]

No argument here. (0.00 / 0)

I just know that I've been through much worse (so far) in my lifetime as a working adult.  But I also have to say the the recessions of '90 and '01 were pretty mild.

That's not say we're not in for a doozy.  You'll find no Pollyanna here.  In fact, I don;t think we get out of this one until late '10.  

---

by: Dave Budge @ Sun Feb 08, 2009 at 19:58:52 PM UTC

[ Parent ]

Lest you try to draw any conclusions (0.00 / 0)

with stale data from the December report you linked to above, Dave, you should at least have the intellectual honesty to point to the most updated version of the report:

http://granades.com/2009/02/06...

In the Feb. 6th update, "Stephen" has this to say:

"The US job market is definitely still sliding. Back in December I crunched some numbers to see how bad the job losses were as a percentage of the total number of jobs. Here's what it looks like now that we have two more months of bad news."

He goes on further in his updated article to say the following:

"What a difference two months makes... On sheer number of jobs alone, we're in our worst run since 1960."

And the kicker finale:

"I'd still rate the 1974-1975 recession worse, based on this list and the fact that the job losses there were sustained over a mere 6 months. But the situation's bad, and not getting any better. Two months ago I said, "While we've experienced worse recessions, given another four or five months of this and we could move into the top spot across the board." It may not take four months at the rate we're going."

Why don't you bring Stephen's updated analysis back in a few more months, and we can talk about how a "historical perspective" might just initiate some more "dyspepsia."

Time to put you back in your disinformation monkey cage, Dave. But thanks for the link. If Stephen's analysis and projections are correct, we're really fucked.

---

by: JC @ Sun Feb 08, 2009 at 18:42:00 PM UTC

[ Parent ]

Intellectual Honesty? (0.00 / 0)

STF, all I did was point to data that shows we're not yet in the worst economy in recent memory. I didn't make any other conclusions.

---

by: Dave Budge @ Sun Feb 08, 2009 at 19:55:38 PM UTC

[ Parent ]

Conclusions, no. (0.00 / 0)

But "assuage your dyspepsia" is not an accurate way to describe the way that Stephen's analysis will make people feel. Particularly in a few more months. And it mocks the concerns we have today for the plight of our friends who have been laid off. Yes I have dyspepsia over the pain many people I know are experiencing. And I don't need you to "assuage" it by attempting to discredit Jay's having supplied the Bureau of Labor stats graph that is getting widespread media attention.

You were trying to minimize the depth of the current contraction in jobs by referring to stale data, when there was current data available. So we should always be analyzing the current situation and legislative actions by last year's data? I think not. You're smarter than that. And we're not that dumb.

And when you say "recent memory" you must be referring to the memory of those well over 40. As most people under 40 have no memory of the recession of 1974, and this is the worst thing that has hit them in their lifetime.  In fact, most of the other elements of our current downturn weren't even present then: high foreclosure rate; bank failures; illiquidity; CEO bonus scams; trade imbalance. No we had an economy that was mired in the despair of the Vietnam war and a failed presidency that was paranoid, corrupt and on its way out. Wait a minute...

---

by: JC @ Sun Feb 08, 2009 at 20:28:53 PM UTC

[ Parent ]

Give it a rest (0.00 / 0)

Does it always have to be an ideological fight?  

But I guess it is a matter of perspective.  I graduate from college when I was 28, in 1983.  The unemployment rate was 13.1% at that time.  It took me over a year to find a job and, mind you, I had three kids at the time.  Interest rates were through the roof and this was all done intentionally by the Fed to break the back of stagflation.

So those numbers did assuage my emotional response to the current situation.

Now, go have a drink and settle down.

---

by: Dave Budge @ Sun Feb 08, 2009 at 21:07:42 PM UTC

[ Parent ]

Um... I don't know where you got your data, but (0.00 / 0)

the average unemployment rate for 1983 was 9.6%, not 13.1%.. Not that 9.6 is acceptable, but at the rate we're going, that's just a few months off. Doesn't make me feel any better.  

---

by: JC @ Sun Feb 08, 2009 at 21:28:11 PM UTC

[ Parent ]

You're right (0.00 / 0)

It was 10.1% in June of 1983.  That what I get for getting old and senile.  

But isn't that big Keynesian stimulus plan suppose to stop the bleeding?  

Assuming the trend, however, maybe you're right. It took a year to get from 7.6% in 1981 to 10% in 1982.  At least interest rates aren't through the roof - yet.

---

by: Dave Budge @ Sun Feb 08, 2009 at 22:07:51 PM UTC

[ Parent ]

How can you intimate (0.00 / 0)

that interests will go through the roof? We're in a period of deflation, and the Fed rate is near zero. That's a whole lot different scenario than the stagflation that existed in the early '80s.

I don't believe the Keynesian part of the plan is anywhere near robust enough to stop the bleeding. I thought the neo-Hooverians believed that the tax cuts were going to save the day.

---

by: JC @ Sun Feb 08, 2009 at 23:54:28 PM UTC

[ Parent ]

Now I'm a neo-Hooverian? (0.00 / 0)

You don't know anything of the sort.  I haven't, not once, advocated tax cuts in the current environment. I have said that I wouldn't mind a payroll tax holiday - which should be to your liking I would think - especially if it had a phase out at, say, $60,000 in AGI.

What is wrong some liberals who think that any questioning is a direct affront.  It must be tough going through life so pissed of especially in the face of the fact that you now have a commanding control of the government.  Lighten up a thousand.

The reason I think that interest rates will go up, and I'm not calling the timing, is because there will be one of a few scenarios that will eventually play out such as:

A) China will stop funding our debt
B) We will start this week on the largest issuance of Treasury securities in the history of the country.
C) The Fed printed $100 billion in new cash in the 4th qauter
D) We may have to print more cash in the future if the money multiplier doesn't kick back in (such as due to the current debt destruction.)
E) The possibility that there will be significant crowding out in the debt markets exists
F) Keynesian spending could cause stagflation.

Now, I'm no expert (although I make a living trading securities) but eventually I don't see how rates won't go up.  Hell, the spread between corporate bonds and treasuries has never been so high.  There is, of course, several dynamics that make that the case.  But I'll bet you $1,000 right now, right here, that the yield on the 10 year treasury bond will be at least 50% higher within two years.  Do you have the courage to take that bet?

---

by: Dave Budge @ Mon Feb 09, 2009 at 00:35:20 AM UTC

[ Parent ]

I didn't say you were a Neo-Hooverian (0.00 / 0)

So you can lighten up, too. Just thought you might want to expound on the classical nature of the argument in Congress re the stimulus.

So you don't think the tax cuts in the stimulus are a good thing? Even if they are only there so Obama can make good on a campaign pledge? How about letting the Bush tax cuts expire?

As to the interest rates, I don't believe it is as important in the short term what happens to them, as job loss takes priority right now, in my book. It's all a grand experiment, and what happens to the interest rates, why, and what to do about them will remain to be seen. Though I don't particularly like the CHinese having that much control over our future. Sets the stage for a repeat of WWII down the road. Nothing like an economic first strike to push the country to war in SE Asia again.

And for your bet, I'm no fool, and I don't gamble. I wouldn't touch it with a ten foot pole. But you sure are optimistic if you feel the economy is going to turn around that fast in 2 years. Would be nice if true.

---

by: JC @ Mon Feb 09, 2009 at 01:01:42 AM UTC

[ Parent ]

Now Let's not get ahead of our selves. (0.00 / 0)

[note: I moved this comment up because the thread has gotten so long that it would be nearly impossible to read it if I posted it below JC's last one.]

I think we will be on the road to recovery in two years - but that might mean that we'll be starting from reduced baseline.  What I see is an L shaped recovery once we heit a bottom, which I think is not that far off. But I don;t think we'll see substantive GDP growth until late '10.  That said, if I really know I would lease a seat at the Chicago Board of Trade and make a killing.  But those are the best econometrics I can see with all of the economic analysis I read.

As for tax cuts, the question depends on what one thinks of economic stimulus in general.  I don't have faith in it on any level.  The argument can be made that stimulus will soften the blow in the short term - and I assume it will.  But I don't think it will have the long term systemic effect that will cure the economy. Where the real cure is an increase in products and services provided by the private sector (on which Keynes and I agree.) Hence, being a student of the Austrian School, I'm convinced that any stimulus plan is nothing but resource shifting and, in the long run, will have no positive effect on the creation of wealth for any class.  But that's how I roll.  The trade off is, then, less severe pain now for a smaller cohort or a more less severe drawn out pain for a broader cohort.  Flip a coin. (I will add the caveat that I think corporate income taxes hurt the economy and labor. I would gladly trade those for significantly higher capital gains and taxes on dividends at the personal level - but that's a discussion well beyond our current problems.)

Now that's not to say that we shouldn't provide relief for those who suffer from the imbalance that the government sponsored corporatism has caused. But the jury on Keynes is still out and the empirical evidence of the policies of the '30s leaves us with more questions than answers. For all the analysis of Keynes I don't find any compelling reason to believe demand side economics is valid with continual deficits.  At the same time, I don't think that Say's Law (classical supply side economics) can work in the face of deficit spending. That said, I'm not smart enough to know (nor is anyone else I have read - and I have read much - from Christina Romer to Robert Barro to Stiglitz to Freidman, etc.)

So, all I can think is that we're in uncharted territory here.  On the one hand perhaps the Keynesians are right, but if there wrong the downside could be worse than what we're experiencing now. No matter what it's going to be painful and I would hope that government would work on the stability of the monetary system and tweak the social safety net a bit. Beyond that, we're all just guessing.

What I do think is that we will eventually come out of this and be in a stronger position to really grow.  But we have to go through a huge amount of de-leveraging and people will absorb any positive multiplier effect to reduce debt and/or save.  In the long run that's good.  

What I do encourage is that we become a bit more deliberative about the prospect of spending trillions of dollars.  The rush to put this bill in place scares the shit out of me simply for the mistakes that Congress is likely to make (think TARP I, the Patriot Act or any other legislation that is thrown together under the guise of an emergency.)  A couple of weeks to vet this legislation seems prudent while, in the mean time, we could be dealing with the root causes in real estate and toxic assets. I see the current conversation filled with both hyperbole and demagoguery. A couple of weeks isn't going to make any difference as it pertains to "stimulus."

And one last thing, I don't think it's wise to raise any taxes during an economic downturn. So, to answer your questions about the Bush tax cuts, my answer is: it depends on where we're at at the time.

---

by: Dave Budge @ Mon Feb 09, 2009 at 02:36:08 AM UTC

[ Parent ]

When I was a kid... (0.00 / 0)

FDR was President of the U.S. when I was a kid. BHA is now POTUS. I don't have any charts or graphs to refer to, and I am sure as hell no economic expert, but it seems to me that "shit happens" all the time and keeps on happening all the time. That said, I think the Obama team should have their day, just as FDR had his and the Bush administration had theirs. I'm not comfortable with the idea of the federal government setting salary caps for private businesses, but I am also more than uncomfortable with high-roller financial institutions and investors trying to balance their decrepit books on my back. I sense a popular backlash in the early stages of becoming, not unlike early warnings of a volcanic eruption brewing in the depths of the earth below.

---

by: Bob @ Mon Feb 09, 2009 at 03:00:21 AM UTC

Correction... (0.00 / 0)

"BHO is now POTUS." (Not BHA...whoever that is!)

---

by: Bob @ Mon Feb 09, 2009 at 06:18:37 AM UTC

[ Parent ]