Meltdown

[CaughtintheGaze]

I have heard a good number of journalists making similar quotes.  Have I violated some patent or copyright in making the same quote?  My apology if I have offended some folks who used to work for the government.

If those journalists had any scruples, or anyone likewise, they would give credit where it is due.

[Florestan]

You used someone else's words and presented them as your own. 

Hey, that's what the current Romanian Prime Minister did in his doctoral thesis no less --- and he really feels fine about it, ie doesn't care at all being exposed as a plagiator by the Ethics Committee of the University of Bucharest. 

[drogulus]

For Keynesians, yes, however, there are alternative theories, and it is essential to point out that monetary policy is only ineffective in Keynesian theory under certain circumstances, rather like the liquidity trap we are in or close to being in now.  It is also essential to point out that "spending" can and does take the form of both direct federal expenditures and tax cuts and rebates.  It is clear what you would prefer, but policy makers will hopefully keep a broader mix in mind.  We don't need another NRA, or anything like that. 

     I think the alternative theories have pretty much shit the bed at this point. We've tried contraction, and what a surprise! All of the pain and suffering that was supposed to be good for us was purely destructive. The long term decline in output and employment is textbook perfect macroeconomics confirmed. No alternative theory can stand up to a confirmation like this. You can argue all you want, but the failure to enact a proper fiscal rescue was the worst economic decision of a lifetime, a forseeable blunder that was actually foreseen.

     It is clear what I would prefer, and unclear why you think some weaker, less "New Deal"-ish version would be better. Personally, I'm half-measured out. I'm sick of the weak response and think it's time to go all out.

     Here's my program:

     A Trillion dollar infrastructure and local government employment bill designed to take us all the way to Hillary's inauguration.

     Delay the fiscal cliff, then go over it. Maybe phase in the tax increases so they act to cool off the economy overdriven by the stimulus.

     As the deficit shrinks find new items to spend money on (fix Medicare and SS?) so we don't have a balanced budget. IMO Federal budgets should never be balanced without a damn good reason, and there aren't many of those.

[Todd]

I think the alternative theories have pretty much shit the bed at this point.

A Trillion dollar infrastructure and local government employment bill designed to take us all the way to Hillary's inauguration.  Delay the fiscal cliff, then go over it. Maybe phase in the tax increases so they act to cool off the economy overdriven by the stimulus.

As to your first point, well, even America's most vocal Keynesian, Paul Krugman, pointed out in a recent column (last Friday's, I believe) that eventually all economies recover.  Yes, there is lower output, employment, etc, but there are tradeoffs for all policies.  You're confusing your preferred approach for the approach.  They are not the same thing.  I will concede that the "government" responded to the 2008 crisis in a series of half-assed measures, including at the state level in most judicial foreclosure states by restricting the ability of asset owners to foreclose on properties, which has the socially useful benefit of reducing overall debt burden.  This isn't the same as the Mellon Liquidate! approach, and lefties fail to understand that such policies are in fact necessary in this kind of environment.  But just as it wins votes to talk about the deficit, it wins votes to pretend that all people will be able to retain their homes.

Any additional trillion dollar project is doomed, irrespective of who is in office.  The earlier stimulus, TARP, and continuing $1 trillion deficits make that politically impossible.  The US is in a tough-ish position on fiscal policy.  The debt burden is significantly higher now that it was in 1929, or any time other than 1946, and while interest rates are low now, and will remain so for years, they will not forever, and when they start to rise on 16, 18, 20, 25 trillion in debt, interest will start to consume a larger proportion of federal spending, causing another fiscal crisis.  Republicans and serious, responsible Democrats should extract as the price for any stimulus – small or medium – some significant long-term spending cuts and restructuring.

[DavidRoss]

The debt burden is significantly higher now that it was in 1929, or any time other than 1946, and while interest rates are low now, and will remain so for years, they will not forever, and when they start to rise on 16, 18, 20, 25 trillion in debt, interest will start to consume a larger proportion of federal spending, causing another fiscal crisis.  Republicans and serious, responsible Democrats should extract as the price for any stimulus – small or medium – some significant long-term spending cuts and restructuring.

How refreshing (and novel!) to see some sense here on such issues for a change, and to see reasoning tied to facts instead of fantasies. You must have studied some economics in college! (Without which no one is educated sufficiently to have a right to an opinion on public policy). Indeed, servicing the existing debt is already all too likely to bankrupt us, even without increasing future obligations for "entitlements."

The time to act in response to the fiscal cliff is before we go over it, not after.

P.S. Remembering Keynes's dictum that in the long run we're all dead, "we" obviously excludes our children and grandchildren, for in the long run they suffer the consequences of our hateful, irresponsible, selfish profilgacy.

[snyprrr]

How refreshing (and novel!) to see some sense here on such issues for a change, and to see reasoning tied to facts instead of fantasies. You must have studied some economics in college! (Without which no one is educated sufficiently to have a right to an opinion on public policy). Indeed, servicing the existing debt is already all too likely to bankrupt us, even without increasing future obligations for "entitlements."

The time to act in response to the fiscal cliff is before we go over it, not after.

P.S. Remembering Keynes's dictum that in the long run we're all dead, "we" obviously excludes our children and grandchildren, for in the long run they suffer the consequences of our hateful, irresponsible, selfish profilgacy.

Make me a sammich!!

[Todd]

P.S. Remembering Keynes's dictum that in the long run we're all dead, "we" obviously excludes our children and grandchildren, for in the long run they suffer the consequences of our hateful, irresponsible, selfish profilgacy.

I know that's a favorite argument against deficit spending - our children and children's children will pay - and while true, it rather minimizes the effect on the here and now.  Whenever a government runs a material deficit, it distorts financial behavior right now; it results in crowding out right now.

[DavidRoss]

I know that's a favorite argument against deficit spending - our children and children's children will pay - and while true, it rather minimizes the effect on the here and now.  Whenever a government runs a material deficit, it distorts financial behavior right now; it results in crowding out right now.

While you're right about deficits distorting behavior right now, noting the long-term consequences of chronic huge deficits does not minimize their effect here and now. It says nothing whatsoever about their effect here and now.

The reason we remind people of the long run is not that there are no more immediate reasons to avoid deficit spending, but rather that some folks are surprisingly short-sighted. I know many people who would recoil in horror if you proposed that they sell their children into slavery tomorrow in exchange for a new car, cell phone, and wide-screen TV today, yet who blithely do exactly that every time they enter the voting booth.

[Coopmv]

As to your first point, well, even America's most vocal Keynesian, Paul Krugman, pointed out in a recent column (last Friday's, I believe) that eventually all economies recover.  Yes, there is lower output, employment, etc, but there are tradeoffs for all policies.  You're confusing your preferred approach for the approach.  They are not the same thing.  I will concede that the "government" responded to the 2008 crisis in a series of half-assed measures, including at the state level in most judicial foreclosure states by restricting the ability of asset owners to foreclose on properties, which has the socially useful benefit of reducing overall debt burden.  This isn't the same as the Mellon Liquidate! approach, and lefties fail to understand that such policies are in fact necessary in this kind of environment.  But just as it wins votes to talk about the deficit, it wins votes to pretend that all people will be able to retain their homes.

Any additional trillion dollar project is doomed, irrespective of who is in office.  The earlier stimulus, TARP, and continuing $1 trillion deficits make that politically impossible.  The US is in a tough-ish position on fiscal policy.  The debt burden is significantly higher now that it was in 1929, or any time other than 1946, and while interest rates are low now, and will remain so for years, they will not forever, and when they start to rise on 16, 18, 20, 25 trillion in debt, interest will start to consume a larger proportion of federal spending, causing another fiscal crisis.  Republicans and serious, responsible Democrats should extract as the price for any stimulus – small or medium – some significant long-term spending cuts and restructuring.

Todd, you are exactly right.  The US is not a saver nation.  The Japanese national debt is over 100% of its GDP, yet the Yen has not sunk into the abyss.  Why?  I think the prodigious savings rate of the Japanese citizens probably prop up the Yen.  OTOH, most Americans spend $1.20 or every dollar they earn.  To be sure, major exporting countries like China love the American consumers.  We only have ourselves to blame for our profligacy. 

[Todd]

OTOH, most Americans spend $1.20 or every dollar they earn.  To be sure, major exporting countries like China love the American consumers.  We only have ourselves to blame for our profligacy.

If you are referring to the oft vaunted savings rate, there are a few problems with using it in the context of fiscal policy discussions.  First, the US only briefly tipped over into "negative" savings and no longer is negative.  Second, it is a derived value, and not a direct measure of private wealth generating assets, so it offers a distorted, incomplete picture of spending and investment patterns.  Third, the US savings rate is higher than Japan's currently, not lower.  People have been warning about a pending problem in Japan for a while.  (Martin Feldstein wrote an article in 2010 about it, for instance.)  Japan does not offer a model for the US, or any nation, to follow, in my estimation.  (More recent data is available for up through at least 2010, but the trend is clear here.)

I know many people who would recoil in horror if you proposed that they sell their children into slavery tomorrow in exchange for a new car, cell phone, and wide-screen TV today, yet who blithely do exactly that every time they enter the voting booth.

Yawn.

[Todd]

But you can't touch granny's transfer payments!

[snyprrr]

Greece, Portugal, now Ireland...

Spain next?

Then what?

...tick tock, tick tock...

[Coopmv]

Greece, Portugal, now Ireland...

Spain next?

Then what?

...tick tock, tick tock...

Maybe China?  They have the mother of all real estate bubbles over there - massive overbuilding of commercial buildings, airports, you name it.  But with some $3T in foreign reserves/investments, they can always dump all the US treasuries ...

[DavidRoss]

Greece, Portugal, now Ireland...

Spain next?

Then what?

California, unless the self-absorbed, self-seeking idiots who populate our state come to their senses in time and throw the venal hucksters out in November. Fat chance. The arc of empires' ascendecy and decline is amazingly time-compressed in our age!


Edit: typo

[Karl Henning]

There's no other place on the planet quite like California.

[Coopmv]

California, unless the self-absorbed, self-seeking idiots who populate our state come to their senses in time and throw the venal hucksters out in November. Fat chance. The arc of empires' ascendecy and decline is amazingly time-compressed in our age!


Edit: typo

And one of your US Senators originally came from Brooklyn, NY.  Wasn't she also the biggest check kiter when she was a member of the House? 

[Daverz]

But you can't touch granny's transfer payments!

Yeah, put granny on an ice floe.  Selfish old biddy.

[Todd]

My takeaway: find a job in healthcare.  (It's not really a "meltdown" topic, nor is it specifically political, but it does cover some challenges coming our way.)

[Coopmv]

My takeaway: find a job in healthcare.  (It's not really a "meltdown" topic, nor is it specifically political, but it does cover some challenges coming our way.)

I saw an article titled "70% of Doctors in the US feel like quitting" in the aftermath of ObamaCare a while back, though I did not bother to read the article ...

[Scarpia]

I saw an article titled "70% of Doctors in the US feel like quitting" in the aftermath of ObamaCare a while back, though I did not bother to read the article ...

ObamaCare has not yet taken effect to any great extent, so if 70% of doctors feel like quitting it is presumably because of the environment before ObamaCare.   I recall reading an article in the NY Times, which described a large fraction of doctors experiencing "burnout," meaning they feel frustrated and ineffective.  The reason suggested was that rigid rules and cost controls from public and private insurers (HMO's, etc) made them feel like they were working on an assembly line.

http://well.blogs.nytimes.com/2012/08/23/the-widespread-problem-of-doctor-burnout/

The article describes this trend as developing over the last 10 years, but if you wish to attribute it to Obamacare, be my guest.