LouieK

What if World Governments Had Washed Their Hands of the Financial Crisis?

To continue my comments regarding DeLong's predictions, I found one by him in Aug'2008 which says the recession may start soon. Well, the recession already started around Dec'07, one which Nouriel Roubini predicted. So we were well into the recession, but DeLong missed it and by a wide margin. I am not trying to say it is not worthwhile to listen to and read DeLong, just that a reader should always think about these guys with more skepticism and attention to their track records in making predictions.

What if World Governments Had Washed Their Hands of the Financial Crisis?

When Brad DeLong can make a set of predictions about the future and then have those predictions compared to that of other economists and financial analysts, then we can see just how smart Dr. DeLong is. Writing smart critiques looking backwards can fool some people, but not all people. From his piece written here, I am of the impression he is a Liberal ideologue masquarading as an economist. Did he predict the housing bubble? He showed how a housing bubble could be in play in 2004 (I looked this up), but as far as I can tell, made no predictions. And if he would have predicted that a housing bubble would pop in 2004, or, say in the following three years, then we would have lost money by following his advice. If we ask our economists to actually predict events; that is, to make predictions from which we will either make money or lose money, then we can give credit or discredit where it is due. The real test is the ability of an economist to make predictions about the future that are correct and consistently correct. Otherwise, all their intellectual meanderings are just so much blowhearted pop.

Market Cycles: A Look at the Historical Evidence

The author David Van Knapp asks for a definition of a bull and bear market. Good question, and one I too have seen no one adequately define. Here is my take: There is some level of economic value to the economy and some trajectory it is following toward the future value. This is objective to the markets subjective assessment of that value and trajectory now. When markets subjectively underassess this objective value, then we are in a bull market and when markets subjectively overassess this objective value, then we are in a bear market. Concurrently, there is an interplay between the subjective assessments and the objective values and trajectory, so each of them affects the other and complicates the actual future outcome of the economy. Equity markets do not simply follow economics, they also have an impact on the economy (and its trajectory).

Cash for Clunkers May Cost Up to $45,354 Per Vehicle

What we are talking about is the marginal boost in the economy due to a government program: the marginal boost is 22,000 vehicles and the cost of that boost is $20K to $45K per vehicle to the government. AND, those 22,000 vehicles would have been replaced over a period of time anyway. I have a 1999 Windstar that is past its prime because we are out of our soccer mom phase, so the program just subsidizes what I would have done soon anyway. And when they destroy the Windstar, those going into that phase will be faced with a higher price for used mini-vans, forcing more people to pay more precious, personal resources for their family needs on a mini-van. Even if they buy a new van, the increasing price of the old ones will dampen their ability as consumers to negotiate with the auto dealerships for lower prices on the new ones. So the program helps me and hurts the new families. Those incoming families probably voted for Obama, the saps.

What Keynesian Actions Should the Government Take?

By the way, a tax-cut would be a Keynesian stimulus too. But it would be a supply side stimulus.

What Keynesian Actions Should the Government Take?

How do you add $400 million to the space shuttle program and thereby sop up the unemployment in retail now? Such spending employs engineers and technicians over a period of time (say, 10 years), but does nothing for the unemployed now. This is the problem with Obama's spending plans in the stimulus bill recently passed. That bill was, it seems to me, more designed to pay off constituents who helped him get re-elected than designed to stimulate the economy in a Keynesian strategy. If you don't understand that point, then maybe you are the "poodle."

The Bubble of Uncertainty Is About to Burst

g.pincheot writes about,

"the rise of "Ineptomania" personified by Rush Limbaugh - the pied piper of the uninformed."

I listen to Rush Limbaugh from time to time. Do you? My guess is you don't listen to him very often, if at all.

In any case, I would rather have my brain than your brain any day, even it is older.

The Bubble of Uncertainty Is About to Burst

The markets are reacting to the uncertainty surrounding Obama (which remains an uncertainty---just how ideologically motivated is this guy), to the policy prescriptions so far (why did they spend approx 900 billion for fiscal stimulus on a plan which seems overtly not meant to be stimulating and will hamper the economy in the long term--doesn't this make one suspicious of the ideological agenda; and what economic theory supports this spending?), and to the changes in the investment climate. And yes, markets can go lower because they are assessing day by day the new evidence for and the risks to earnings.

Wall Street Breakfast: Must-Know News

Eddie64: greed is a problem only to the extent the financial structure and the productive structure allow government largesse instead of markets to make all economic decisions. When politicians see how they can provide constituencies (such as subprime markets) as promises to get elected, then we always have moral hazard. The problem is not primarily greed, but socialism. Think GSEs like Fannie and Freddie and government policy to support and encourage sub-prime lending.