Stimulus Package: Tax Cuts Versus Spending

[jimotis4heisman]

Originally Posted by Southpaw Stone

I believe the free markets have cast their vote so far on Obama's spending bill.

to early to tell.

i will say the market tends to dislike uncertainty. likely that is more of what is at play. you might have the bill signed but you have lots of uncertainty surrounding it and the homeowner bailouts, detroits bailouts, etc...

[Southpaw Stone]

Originally Posted by jimotis4heisman

to early to tell.

i will say the market tends to dislike uncertainty. likely that is more of what is at play. you might have the bill signed but you have lots of uncertainty surrounding it and the homeowner bailouts, detroits bailouts, etc...

I agree it's too early to tell but we do know the early sentiment to the "stimulus" bill is quite poor.

I read in an academic journal that a study of countries that have gone through a "financial crisis" such as ours typically have to endure 2.8 years before there is a recovery. The study went back 30 years I think and also looked at the impact of currency crises. I will post the link when I find it....looked everywhere last night.

[Gatorubet]

Originally Posted by Southpaw Stone

I believe the free markets have cast their vote so far on Obama's spending bill.

Have to lots of other factors affecting the market than the one issue of the passage of the stimulus bill.

[MaxBuck]

Originally Posted by Gatorubet

Have to lots of other factors affecting the market than the one issue of the passage of the stimulus bill.

At the very least, its passage has not been enough to counteract other negative influences.

[Gatorubet]

Originally Posted by MaxBuck

At the very least, its passage has not been enough to counteract other negative influences.

Well, the numbers have to make you beleive that we are in for at least a couple years more bad news and freefall before we start back up. All those jobs lost will not be replaced in the twinkling of an eye.

I expect a long recession and then bad inflation to follow.

[OSUsushichic]

Recovery.gov

[DaytonBuck]

Cheering for Obama Stimulus Buys Into 1930s Myth: Amity Shlaes

Feb. 18 (Bloomberg) -- It takes only a few seconds to make history new again.


Leaders around the world are talking up economic stimulus, channeling U.S. President Barack Obama, who in turn is channeling Franklin Delano Roosevelt.



Obama bases his confidence on an old story line with some appealing parallels to today:



A disastrously high stock market caused by excessive faith in the private sector generated an epic crash. A Republican, Herbert Hoover (George W. Bush), let us down. A new president, FDR (Obama), knew that action was imperative and understood the value in ?bold persistent experimentation.?



FDR stimulated the Dow back up, and unemployment down, saving America and democracy. Massive wartime spending solidified the recovery in the 1940s, proving that when it comes to stimulus, more is better.



So, celebrating the $787 billion stimulus bill Obama signed yesterday depends on ramming through this version of history -- and dismissing dissent. That is what Obama did at a news conference when he said those who criticize FDR?s New Deal are ?fighting battles that I thought were resolved a pretty long time ago.?



In fact, this battle is far from resolved. Economists are arguing more now about the quality of the Roosevelt programs than they were a decade or two ago.



Nor did FDR?s maneuvering cause a speedy bounce-back. The Dow waited until the mid 1950s to regain its 1929 peak. You can?t imagine Obama suggesting that his New Deal would be successful if it got the Dow back to its autumn 2007 high in 2030.


What about FDR?s Public Works Administration and his promise to put millions to work by the autumn of 1933?
With two or even three men in 10 unemployed during the early 1930s,



FDR?s spending was even more welcome than that of Obama and Congress today. Americans know the stories about how government jobs on the Civilian Conservation Corps and the PWA meant the difference between hunger and meals.
Roads and Bridges


FDR?s job results were, to put it politely, disturbing. Yes, there was an increase from the abominable lows of the early 1930s. Parks, roads, New York City?s Triborough Bridge -- many of these projects did, arguably, help our economy. But not always productively.
Bureau of Labor Statistics data show joblessness in the 1930s bumping around in the teens and moving back up toward 20 percent later that decade -- years after the New Dealers first spoke of ?bold, persistent experimentation.? These numbers include long-term public-sector jobs (tax collector, school teacher) but not the short-term or part-time jobs generated by the New Deal?s alphabet agencies.



The inference from all this is that more pro-growth strategies, especially low taxes on business, less aggressive labor law and consistent regulation, would have brought recovery sooner in the 1930s, and would likewise do so today.


What about that pro-New Deal academic consensus to which the president refers? About 15 years ago, Robert Whaples of Wake Forest University put the following proposition to economic historians, some of them trained economists, others trained historians: ?Taken as a whole, government policies of the New Deal served to lengthen and deepen the Great Depression.?


Three in four historians disagreed. Economists were split evenly. The consensus just wasn?t there.

Bloomberg




I guess the really confusing thing about this whole situation for me is people who argue against reality. If I believed everything the Democrats/Leftists on this site said and MSNBC Hong Kong would be a smoldering hole right now and the high regulated states of Europe wouldn't be affected by this downturn because they don't buy into "Cowboy Capitalism"


Now if I told someone on here would just adopt the legal system of France because it's more fair people would scoff at me. I say we should adopt France's economic system and sizeable portion of the board would be in agreement.

[fourteenandoh]

Originally Posted by DaytonBuck

Hit & Run > 110 Years to Pay for Those Denver Solar Panels? - Reason Magazine

did you guys hear about the solar company they used. something like they all get paid the same thing and no decision is made without a vote taken by every employee.

Originally Posted by Southpaw Stone

I believe the free markets have cast their vote so far on Obama's spending bill.

Originally Posted by jimotis4heisman

to early to tell.

i will say the market tends to dislike uncertainty. likely that is more of what is at play. you might have the bill signed but you have lots of uncertainty surrounding it and the homeowner bailouts, detroits bailouts, etc...

Originally Posted by Southpaw Stone

I agree it's too early to tell but we do know the early sentiment to the "stimulus" bill is quite poor.

I read in an academic journal that a study of countries that have gone through a "financial crisis" such as ours typically have to endure 2.8 years before there is a recovery. The study went back 30 years I think and also looked at the impact of currency crises. I will post the link when I find it....looked everywhere last night.

I really don't think the markets have reacted one way or the other to the stimulus bill. when it was announced back in december, that is when the market moved. all the infrastructure plays and the healthcare plays rallied, but that has all been sold into now so the effect is nil.

what's been really weighing on the market though is the administrations approach (or lack thereof) to the banks. like JO says, markets hate uncertainty. they are totally mum on the subject, so the market has no choice but to price in the worst. look at the performance of wells fargo, bank of america and fifth third this week (to name a few). it was getting so bad friday afternoon that gibbs called a special presser to say that they don't want to nationalize anything, and that actually helped. if a bank gets nationalized the common and preferredd stock goes to zero. insurance companies own preferreds, so they could go to zero also. there's a lot riding on this thing. i think geithner is supposed to talk again this week. i'm hoping he actually has some specific plans this time around.

as for a recovery time period... without using any figures or models, common sense says this thing has to last at least 4 or 5 years. it took 20 years to happen, so it can't unravel in a year and half. i have to laugh when i hear the analysts calling for a second half recovery. it makes no sense. Like Gator says, the jobs won't come back in a twinkle. it takes months for them to make the decision to make the layoffs, a year or two to evaluate the effects and another few months to decide to rehire. also, you can fire 5000 people with a week's worth of work. it would take months and months to hire 5000 people.

[fourteenandoh]

Originally Posted by DaytonBuck

Bloomberg.

I've heard good things about the author's book, "A forgotten man"

[CookyPuss]

Originally Posted by fourteenandoh

I've heard good things about the author's book, "A forgotten man"

Too bad it's based upon complete B.S.

The Forgotten Man: A New History of the Great Depression by Amity Shlaes - By Eric Rauchway - Slate Magazine

So on the numbers, the U.S. economy improved briskly during the New Deal. Things that are moving quickly and in the right direction, but still haven't reached their destination after a while, are things that have a long way to go--which is true of the U.S. economy recovering from 1932. Historians disagree on which part of the New Deal most encouraged economic growth, but at the least the New Deal did not prevent this recovery.

Shlaes makes a different argument about numbers, because she uses different numbers. She starts each chapter with a rat-a-tat of just-the-facts, but instead of GDP, which represents the overall economy, she quotes the Dow Jones Industrial Average, which represents the maybe 10 percent of Americans who owned stock. And though she quotes an unemployment number, she doesn't quote the figures I've just mentioned. Instead she chooses different estimates of unemployment that (she acknowledges) show a much larger share of Americans out of work during the New Deal.

If you want to know how the New Deal treated ordinary Americans, this choice really matters. Let's look at a figure Shlaes gives twice in her book and again in her Wall Street Journal editorial: She has unemployment at 20 percent in the 1937-38 recession. That's appalling--almost as bad as 23 percent in 1932. Based on such a statistic, you could think the New Deal wasn't alleviating the Great Depression. But that number hides something: A third of the people Shlaes counts as unemployed had a job that the New Deal gave them through its relief programs.

Now, you may say, wait: Those people really shouldn't count as employed--we're not interested in government make-work, we're interested in the real economy. Fair enough--and if you look again at Historical Statistics of the United States, you'll see another measure of unemployment--private, nonfarm unemployment--measuring the real, industrial economy. And on that measure, unemployment again runs markedly lower under Roosevelt than under Hoover. John Maynard Keynes might have explained that the New Deal wasn't just offering make-work, it was stimulating the economy--and Shlaes in fact at one point says the same: "[i]t functioned as Keynes ... hoped it would." Yet of all the possible ways to measure unemployment, Shlaes chooses the only way that hides the effect of New Deal relief programs and makes it look as though the economy performed as poorly under Roosevelt as under Hoover.

[fourteenandoh]

i'm sure there is a wide margin of error in anything pre 1950. this site has unemployment at 19pct in 1938 which is only 1pct from the 20 that your piece says is garbage. just as the book is an opinion, your piece is an opinion as well. and its from slate... FWIW I haven't read the book.

Overall Unemployment Rate in the U.S. Civilian Labor Force, 1920–2007 — Infoplease.com

[CookyPuss]

Originally Posted by fourteenandoh

i'm sure there is a wide margin of error in anything pre 1950. this site has unemployment at 19pct in 1938 which is only 1pct from the 20 that your piece says is garbage. just as the book is an opinion, your piece is an opinion as well. and its from slate... FWIW I haven't read the book.

Overall Unemployment Rate in the U.S. Civilian Labor Force, 1920–2007 — Infoplease.com

For what it's worth, the person who penned the Slate article is a history prof who also wrote a book on the Great Depression and got his PhD in history from Stanford. Shales who wrote "The Forgotten Man" has a BA in English and has been a conservative columnist and author.

Here's another point-by-point rebuttal of her thesis:
Hale "Bonddad" Stewart: The Great Depression, Part IV

[fourteenandoh]

Originally Posted by MuckFich06

For what it's worth, the person who penned the Slate article is a history prof who also wrote a book on the Great Depression and got his PhD in history from Stanford. Shales who wrote "The Forgotten Man" has a BA in English and has been a conservative columnist and author.

Here's another point-by-point rebuttal of her thesis:
Hale "Bonddad" Stewart: The Great Depression, Part IV

i think i've said this before. it really brings down your argument when you cite huffington post or daily kos or other sites of that ilk. i tried to read your link, but tuned out when i got to this gem

"and has generally fed at the RW noise machine trough ever since"

How am I supposed to take someone seriously when they are that blatanly biased?

[CookyPuss]

Originally Posted by fourteenandoh

i think i've said this before. it really brings down your argument when you cite huffington post or daily kos or other sites of that ilk. i tried to read your link, but tuned out when i got to this gem

"and has generally fed at the RW noise machine trough ever since"

How am I supposed to take someone seriously when they are that blatanly biased?

Well, you didn't seem much interested in the more neutral Slate article, written by an academic. I guess I could have linked to Krugman's take on Shales, but he's a well-known left wing hack. Amity Shlaes strikes again - Paul Krugman Blog - NYTimes.com

As far as citing biased sources from the left, I'll continue to do it as long as I continue to see biased sources from the right such as Shales posted. I find that if you read enough different biased sources, you get a little closer to the elusive truth. But, then again, I don't think absolute truth is knowable because we are imperfect beings. To be totally honest, I don't think posting those links will convince you of anything or "win" me any debate points, I do it to further the discussion so I post things I find interesting or that express a differing point of view.

[Tresselbeliever]

Is this the same Krugman that's calling for the erasing of tier 1 capital so that the USG can nationalize the banks and induce insolvency in the insurance industry? Like losing your insurance policy that you've been paying premiums for is a big deal....