Ray Lopez

How Much Is a Stimulus Job Worth?

User is largely right, and also this figure is suspect: " Net impact: +$77,000 for each employment-year rescued."

This assumes that the government intervention will not result in market distortions. Also it assumes that "but for" the government intervention you would not have a job. This is plainly Keynesian nonsense, that DeLong is famous for believing.

A better policy is for government, if it wants a Keynesian stimulus, to apply it across the board with a tax cut. Or better yet (in an alternate universe) get out of trying to steer the economy and let nature take its course--just like it did with sharp and swift depressions followed by V-shaped recoveries in the 19th century, before the creation of the 1913 Federal Reserve. As economic historian Angus Maddison has pointed out, growth rates in the late 19th century were largely the same as in the late 20th century (comparing apples to apples, since both periods were untainted by any war boom and you can also argue the open immigration policies of the USA of the late 19th century were essentially libertarian and free-market oriented).


On Nov 01 09:14 AM User 30417 wrote:

> Brad, let me see if I understand our new economics. We borrow money through the sale of treasuries and “create” mostly service economy jobs.

SuperNanke to the Rescue!

Author: "I will concede that without the emergency actions by the Fed and Treasury, our economic system could have fallen much harder (although the crash that we endured was by no means pleasant)."

Don't conceed this point. The late 19th century had similar growth rates to the late 20th century (Angus Maddison's data), and the former was before the 1913 creation of the US Federal Reserve. You can have a "V-shaped" recovery without a Fed. Otherwise, you risk a "U" or "L" shaped recovery, just like in Japan, with their failed Keynesian economics.

tinyurl.com/pdljc9

raylopez99.blogspot.com/

Click on the first link for a graphic that shows uncertainty over TARP was the cause-in-fact of the equities crash of October 2008. This link is from the second link above.

A picture is worth a thousand words.

This figure is from John Taylor's paper on the crash, Critical Review:
A Journal of Politics and Society, Vol. 21, Nos. 2-3, 2009 Economic
Policy and the Financial Crisis: An Emperical Analysis of What Went Wrong – John B. Taylor

Go here: groups.google.com/grou...;

for a discussion of this topic.

SuperNanke to the Rescue!

tinyurl.com/pdljc9

raylopez99.blogspot.com/

Click on the first link for a graphic that shows discussion over TARP was the cause-in-fact of the equities crash of October 2008. This link is from the second link above.

A picture is worth a thousand words.

This figure is from John Taylor's paper on the crash, Critical Review:
A Journal of Politics and Society, Vol. 21, Nos. 2-3, 2009 Economic
Policy and the Financial Crisis: An Emperical Analysis of What Went Wrong – John B. Taylor

Go here: groups.google.com/grou...;

for a discussion of this topic.

Early Look: Mr. Macro Market Waits for No One

"Dr. Copper, one of inflation’s best prognosticators, is trading at $2.71/lb this morning – that’s will be +94% over Q4 of 2008 prices (no more deflation in Q4)."

Good one. I for one anticipate stagflation and have bought the metal Au.

Fed Intervention, Market Response Confirm: We're on the Path to Hyperinflation

S. Patel is talking his book. He does not realize that you cannot predict hyperinflation given the data we have now. We're on the road to inflation though, that's for sure.

I'm long Au as well.

We're on a road to nowhere. Come on inside. Takin' that ride to nowhere. We'll take that ride. HA! - Talking Heads

The Bailouts Are Doomed - All of Them

Good point. And I believe that on the second bailout bill, Shelby, who talked tough about being against the bailout the first time, even walking out from a meeting with the president, actually voted for the bailout the second time. Hypocracy, aka politics as usual. Apparently the pro-bailout forces inserted a provision giving Alabama (Shelby's state) certain benefits, which Shelby took and changed his vote.


On Jan 05 12:18 PM Lets just tell facts wrote:

> Christopher Dodd was NOT the Chariman of the Senate Banking committe
> for the past 8 years, in fact Senator Dod has only been chairman
> since the fall of 2007.
> The Good Republican Senator Shelby of Alabama was the Chairman of
> the Senate Banking Committee prior to Dodd and it should be that
> same Senator you cast your blame on.
>
> Perhaps you have been distracted in the last 8 years, the Republican
> Party has been in total control of the money and how it was spent!
> None of the Major committees had Democratic leadership until November
> 2007.

The Truth About Bailouts

Oh I get it. You didn't get yours, and you want the taxpayers to give it to you.

We'll see about the revolution you ask for. Don't be surprised if you end up in jail.

RL


On Nov 23 12:00 PM The GM kid wrote:

> Very good Mr. Schiff, I agree this may be the only way, however by
> throwing Billions at Wall Street and continuning to throw billions
> at wall street, the stage is set between Blue Collar workers (have
> nots) and the greedy,very well paid, Big Bonus White Collars.

> Oh I get it, punish me and the auto workers for all of the unpunished
> WHite Collar CRIME at AIG.... That Makes sense. NOT
>

This Isn't a Bottom, It's a Disturbance in The Force

Geez this the most literary thread on any finance board I've ever seen! pfffsssttt {Ray passes some gas}. Keep up the good work! Good night and good fight! Here in the Balkans where I'm posting from there was a bank run today (Saturday). Since foreigners usually are contrary indicators, that might be a good thing, though it also could mean the start of a European contagion... As for Star Wars, which frankly I've only seen the first one on TV years ago, I think Greenspan is Yoda ( the song by Weird Al comes to mind).

Bailout Bill Passes; What Happens Now?

I have a theory about the bailout crisis: it's routine--a routine credit contraction caused by overexpansion. Here's how to prove this yourself: Google "The Curve in the Road by John Mauldin". Look at the two graphs for LIBOR over the last year and for commercial paper outstanding since 1990. Two things stand out: LIBOR also spiked in Dec 07 and from Mar-May 08--to 2% from 1%. This past 30 days it spiked from 1% to 3.5%. To me, it doesn't seem unprecedented. I've heard that in the early 1970s a similar spike occurred (can anybody confirm this?). Second, and most damaging: the reduction in commercial paper is not historically abnormal now. From 2000 to 2003, commercial paper dropped 19% (look at the graph: 1600 to 1300). From 2006 to 2008 (today's crisis) commercial paper outstanding dropped 25% (2200 to 1650). Severe yes, but, again, not totally unprecedented.

Can we therefore say that this credit crisis is a 'routine' (albeit severe) response to the credit expansion we've had over the last five years or so? If so, then why did Bernanke and Paulson panic? Could it be that as middle-aged men who have never witnessed a severe credit contraction (such as happened in the early 1970s and early 1980s), they overreacted? Of course, more cynical and sinister theories are possible, but this is the benign theory: they were simply over their heads in responding to a relatively normal credit contraction. And we taxpayers have to pay, as well as setting an extremely damaging precedent for the USA.

U.S. Records Another Huge Current Account Deficit

The below is Post Hoc and wishful thinking logic that armchair economists love to throw about--who can say how productivity will behave if more people move into "export and import-competing industries"? Productivity might even go down as more unqualified people rush into trying to do high-value-added work, with little or no education or marketable skills.

That said, generally spending more than you're making is a bad thing, productivity aside.

RL

"
Were the trade deficit cut in half, the movement of workers and capital into more productive export and import-competing industries would increase by at least $300 billion or more than $2,000 for every working American. Workers’ wages would not be lagging inflation, and ordinary working Americans would more easily find jobs paying higher wages and offering decent benefits.
"

Collapse of the Yield Curve

I agree with 300mph--this is a classic steepening of the yield curve--good for money lenders.