Rolling US Economy Into The Shitbin Thread

I mean, ^^ that's all crazy redundant and obv, but it's why no one questions the utility of private sector expenditures (garbage products offered for sale, etc). Being useful in the sense you suggest just isn't the point.

Right. So how is it that private spending - which by definition has only the goal of making more money - is valorized and held up as a kind of pinnacle of legitimate and productive activity, and public spending - which by definition must at least be attempting to produce somthing socially useful - is routinely shitcanned as "pork", "earmarks", "burning money", "waste", etc?? (with the obvious exception of military spending of course)

Cuz private spending stands at least some slim chance of making you, the freely enterprising private individual, richer, while public spending only empoorens (deriving as it does from your Hard Earned Tax Dollars). The voice that shitcans public spending extends from the idea that the government is inept and inefficient, and that while the private sector may not be a bed of roses, it at least has a brutal, manly sort of red-in-tooth-and-claw integrity.

OK. I guess there's also the sort of private spending in which I buy a new flat-screen TV - this sort of private spending is also valorized, cf. Bush's pleadings to the nation after 9/11.

Individual purchases are the way that even you, the not-so-enterprising private individual, can participate in the sytem that makes our country great! I mean, it has to trickle up before it can trickle back down, right?

As far as the earlier discussion goes, Lamp OTM. I have a great deal of faith in Obama's intelligence, integrity, and honorable intentions. (Or, well, at least some faith, more faith than I had in Bushco.) I have faith in his abililty to assemble a competent team and to attack the problem rationally. But I don't have much faith in the political process through which it must channel its efforts, or in the short-term solubility of this mess. It's foolish to pretend too much understanding of or control over these matters. So, without casting aspersions, I am a bit concerned by the seeming inevitability of this explosion of deficit spending. I think you'd be foolish not to be at least a little bit worried about how it will play out and how well it will be managed/overseen.

Some People are indeed that foolish

I have faith in Obama to try to change things but almost none in Congress (i.e. the political process). Ergo, I choose to be very dubious of Reid/Pelosi et al.

Thanks to contenderizer for being less cynical (and thus, less antagonistic) than I.

http://baselinescenario.com/2009/01/07/overweight-fiscal-the-obama-economic-plan/

his point 3 is the same as my point 1 but I really disagree with the idea that trying to encourage further inflation would help
which prices are going to be drop/plateau? gallon of milk or iphone? house? FUCK a house, that shit already left.

This, from the linked WSJ article:

Third, none of these problems are limited to the United States. In fact, it is hard to find any country where people are not trying to increase their savings and strengthen their balance sheets, or where the banks truly have enough capital. Most of the world was running a major credit boom, although it took different forms in various places. The difficulties of dealing with the end of this boom are particularly acute in the euro zone, where some governments have become overindebted (including Greece and Italy) and in emerging markets, where firms and households overborrowed in foreign currency (including Russia and most of East Central Europe). Most of the signs point to Europe, broadly defined, as being the epicenter of a second wave of crisis in 2009 — potentially more serious than what we saw in 2008.

Expanded version of the forced inflation argument, also from the WSJ article:

First and most important, there should be substantial further easing of monetary policy. The Federal Reserve is already heading in this direction but it needs to pick up the pace, and the president needs to get on board. The Fed should announce that it will create inflation in 2009, i.e., it will do whatever it takes to make sure that wages and prices rise, rather than fall, in the next 12 months. And it should back that up with more aggressive monetary expansion, buying even more government and private securities. We cannot wait for a deflationary death spiral to take hold; this was a key mistake in 1990s Japan. At that point, it would be far too late. Nothing in the Fed policy or the Obama Plan has yet turned the corner on this issue. In fact, expectations implicit in inflation swaps indicate prices are expected to fall over the next several years.

And so on, for several paragraphs.

linked from within the post DDW linked, I mean

xpost

Reid/Pelosi are not likely to be the main problem, so much as committee chairpersons.

I have seen it written by a longtime congressional insider (I can't recall who) that congressional reps and senators tend to fall into a few categories, in terms of how they get things done. Most of them tend to be the go along to get along types who network extensively and trade favors. A few become master parlimentarians and milk the rules like a farmer milks a cow.

But a signifigant number of reps choose to be utter bastards to everyone, essentially throwing tantrums, backstabbing at every turn, and demanding favors as the price of not being a pure pain in the ass. A disproportionate number of these bastards become committee chairs.

But YES! to TBot, if only in this sense: a certain amount of the inflation that resulted from high gas prices over the past couple years does need to taper back off, and probably will no matter what. So maybe the best any pro-inflation scheme could hope for over the next couple years is a flat line.

Yes, Arnold Kling is a conservative but this is an interesting look at numbers/multipliers
http://econlog.econlib.org/archives/2009/01/lectures_on_mac_10.html

obligatronic ritholtz repost on why pro-tip suckas missed this shit

http://www.ritholtz.com/blog/2009/01/why-economists-suck/

So maybe the best any pro-inflation scheme could hope for over the next couple years is a flat line.

the only place where inflation needs to happen in america is in wages imo. that can be a combination of increasing employment along with increasing compensation overall, or it can just be the latter with unemployment decreasing only a slight amount while productivity goes up, but at some point the real buying power of the middle class has got to be restored.

so another thing we should have learned over the past twenty years, write this on your hands: CREDIT DOESN'T COUNT

http://politicalticker.blogs.cnn.com/2009/01/07/porn-industry-seeks-federal-bailout/

http://www.bloomberg.com/apps/news?pid=20601110&sid=aE7U91bSVSew

"Americans are more concerned about making state governments account for taxpayer dollars to be spent on infrastructure than they are about creating new jobs, according to a poll to be released today by a coalition of state and local officials"

Sixty-one percent of registered voters want every project to be measured to guarantee the money is spent wisely, the survey found. That was almost double the number of those who say creating jobs should be the highest priority. The survey was obtained by Bloomberg News."

Oh, those zany blue dogs with their monopoly on the news. They've brainwashed 61% of those surveyed!

I'm pretty sure more than 61% of the population doesn't know shit about the economy.

http://online.wsj.com/article/SB123137373330762769.html?mod=todays_us_page_one

Do agree with DD Weins. Super-tight, anal-retentive accountability in government expenditures vs. measurable returns should be A#1 priority for at least the next decade.

Because it's impossible for Congress or the EOP to hijack the shit out of their own numbers. Just look at that BLS data for the past eight years. Accurate like a stormtrooper.

Apply those same standards to the private sector, esp. wrt tax havens and hedge funds and money market bullshit and we may have a deal

xpost

Super-tight, anal-retentive accountability in government expenditures vs. measurable returns

Can we get those standards applied to private capital too, I heard some banks and brokers may have been involved in raping my country as well.

also frankly don if you think about it that's a really pathetically low number to answer "yes" to that question

plus nobody here knows who the fuck you're arguing with

"do you think the government should measure new spending projects to ensure that yarble bargle zot pik garble flib *applause* wisely?"

"Hmmm, no."

I don't know who the fuck you are arguing with either Tombot.

Nor did I post anything like "super-tight, anal-retentive accountability in government expenditures vs. measurable returns." But god forbid we have high standards anymore. Or dare put dissonance in the echo chamber.

Krugman: Not enough.

http://www.nytimes.com/2009/01/09/opinion/09krugman.html?ref=opinion

Mr. Obama’s prescription doesn’t live up to his diagnosis. The economic plan he’s offering isn’t as strong as his language about the economic threat. In fact, it falls well short of what’s needed.

...To close a gap of more than $2 trillion — possibly a lot more, if the budget office projections turn out to be too optimistic — Mr. Obama offers a $775 billion plan. And that’s not enough.

Now, fiscal stimulus can sometimes have a “multiplier” effect: In addition to the direct effects of, say, investment in infrastructure on demand, there can be a further indirect effect as higher incomes lead to higher consumer spending. Standard estimates suggest that a dollar of public spending raises G.D.P. by around $1.50.

But only about 60 percent of the Obama plan consists of public spending. The rest consists of tax cuts — and many economists are skeptical about how much these tax cuts, especially the tax breaks for business, will actually do to boost spending. (A number of Senate Democrats apparently share these doubts.) Howard Gleckman of the nonpartisan Tax Policy Center summed it up in the title of a recent blog posting: “lots of buck, not much bang.”

The bottom line is that the Obama plan is unlikely to close more than half of the looming output gap, and could easily end up doing less than a third of the job....

http://www.nytimes.com/2009/01/09/opinion/09brooks.html

"Unfortunately, Obama also plans another tax scheme with a very dubious record: a $3,000 tax credit for businesses for each new job created."

http://www.forbes.com/opinions/2009/01/08/obama-stimulus-income-oped-cx_bb_0109bartlett.html

seems he wuz elected on more than those $50 populist contributions huh

Summers in, garbage out

u realize that the low multiplier he talks about is actually an implicit argument in favor of tax cuts over infrastructure spending, right? the one cited is bogus but cutting payroll taxes on the working poor is hardly "garbage"

Can we get those standards applied to private capital too, I heard some banks and brokers may have been involved in raping my country as well.

― TOMBOT

Pipe dream. Expecting government-enforced accountability WR2 government spending = semi-reasonable. Expecting the government to track and enforce accountablility in the private sector = not gonna happen.

Aside from this little collection of statutes and rules and custom known as "the law".

That's not the point. We can reasonably expect the government to, A) know where its own money goes, and to, B) track what's done with it. That's a sane goal.

But expecting the government to track and account for all private sector dollarses in any but the most cursory sense is insanity. There's too much money involved, too many transactions, too many entities and sub-entities. Sure, rules and accountability are GREAT, but the kind of dollar-for-dollar ROI tracking we ought to expect regarding government expenditures just isn't feasable WR2 all private sector everything.

Or maybe that's not what yr saying?

This one's for you, Tracer:

"And the cost of issuing a huge amount of public debt will be trillion-dollar budget deficits this year and next, which eventually is going to have a crowding-out effect on private demand. So either we issue a huge amount of public debt to finance it, and that's going to push up interest rates, or we print a lot of money that eventually is going to be inflationary and again damaging to the economy. We have no choice but to have an aggressive policy response, but it's not a free lunch."

http://www.rgemonitor.com/roubini-monitor/255056/business_week_roubini_interview_with_maria_bartiromo

thanks Don, forilz!

contenderizer, i think there must be compromises between the hands-off approach of the last 10 years and "expecting the government to track and account for all private sector dollarses" - a concept i have never even imagined

like, requiring that companies themselves track and account their own dollarses and debts - who owns what tranche of what - and holding them to fixed capitalization ratios. if the companies lie, they go down

i know that beating up on henry paulson is easy and that this is a change in subject ... but this Bloomberg article deserves a mention.

remember, henry paulson was running Goldman Sachs before he came to Treasury.

http://www.nytimes.com/2009/01/11/business/economy/11view.html?_r=1&partner=permalink&exprod=permalink

People don’t usually spend their money buying things they don’t want or need, so for private transactions, this kind of inefficient spending is not much of a problem.

uh

On that stupid article:
http://www.fivethirtyeight.com/2009/01/intellectual-dishonesty-gasp-from.html
http://gregmankiw.blogspot.com/2009/01/importance-of-being-exogenous.html

His response to Silver is pretty telling.

Mankiw's article is a classic example of what I mentioned above: simply assuming that private spending is inherently efficient and productive - "People don’t usually spend their money buying things they don’t want or need" - with the converse assumption about public spending: that governments actually make a habit of spending their money buying things they don't want or need. (He actually uses the phrase "bridges to nowhere").

If that's the starting point - the grounds upon which you begin your argument - then the argument becomes very circular, and very easy.

Mankiw's argument is essentially that private spending is inherently more efficient and more productive than government spending. It's a widely supported place to begin an argument, which is why Silver isn't disputing the multiplier effect discussed in Ramer's paper. Silver is a smart guy but he's no economist.

After all these years of being Bush's economic adviser I would kindly ask Mankiw to step off and shut up, frankly. I have to wonder if his students laugh at him.

He advised Bush from 2003 to 2005.

And given that he's written two very popular college textbooks that are widely used, I doubt they are laughing at him all that much.

Suggest new textbooks.

One of many troublesome passages from that Mankiw piece:

Rahm Emanuel, the incoming White House chief of staff, has said, “You don’t ever want to let a crisis go to waste: it’s an opportunity to do important things that you would otherwise avoid.”

What he has in mind is not entirely clear. One possibility is that he wants to use a temporary crisis as a pretense for engineering a permanent increase in the size and scope of the government. Believers in limited government have reason to be wary.

Yes, and maybe he wants to use a temporary crisis as a pretense for engineering cheese farms on the moon. Maybe. Also, his response to Silver was disappointing. Not invalid, but less than convincing as support for the point Silver was rebutting:

Essentially, Silver says that the Romers study exogenous tax changes, the tax changes now being contemplated in DC are not exogenous, and therefore the multipliers estimated by the Romers do not apply to thinking about current policy.

Though Silver wildly overstates his case (w the bogus Whopper-cholesterol analogy), the potentially valid underlying argument is that exogenous and non-exogenous tax changes may not be precisely equivalent in effect - that the benefits of tax cuts enacted under "perfect" circumstances may not be achieved under other circumstances. Would have liked to see more response from Manikew on this point.

Mankiw's argument is essentially that private spending is inherently more efficient and more productive than government spending. It's a widely supported place to begin an argument...

― Dandy Don Weiner

I don't think this is what Mankiw is doing at all. In making his points about trading ditches, "bridges to nowhere," and the idea that "people don’t usually spend their money buying things they don’t want or need," Mankiw is making a passive, lazy attack on government itself. He's merely playing to a widely accepted stereotype regarding government's inherent ineptitude, rather than making a reasoned argument of any sort.

contenderizer, i think there must be compromises between the hands-off approach of the last 10 years and "expecting the government to track and account for all private sector dollarses" - a concept i have never even imagined.

― Tracer Hand

Wasn't suggesting that you had imagined such. Just looking for clarification. And yeah, 100% aggreance WR2 the need for a hands-on approach.

What he has in mind is not entirely clear. One possibility is that he wants to use a temporary crisis as a pretense for engineering a permanent increase in the size and scope of the government. Believers in limited government have reason to be wary.

Any former member of or adviser to the Bush administration who can utter these sentences without irony should be keelhauled.