Weekend Open Thread (2010-08-27)

Here is your open thread for the weekend beginning Friday August 27th, 2010. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.

Be sure to also check out the forums, and get your word in the user-driven discussions there!


About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

180 comments:

  1. 1
    Sniglet says:

    To continue the discussion from our mide-week thread I am re-posting my last comment.

    hoover didn’t do much for the economy and it plunged. it plunged until FDR got into office.

    Actually, Hoover was very aggressive with stimulus, angering not only his secretary of the treasury but much of his Republican base. FDR merely continued with what Hoover had begun (i.e. lots of extra government spending/stimulus).

    Together, Hoover and FDR managed to extend the depression for many years longer than would otherwise been the case if the economy had been allowed to clear out the mal-investments and re-allign labour/investment on it’s own.

    The paralells with Bush and Obama are stunning. Bush was a “conservative” who poured on stimulus when times got tough, just like Hoover. And Obama just carried the stimulus ball forward, just like FDR.

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  2. 2
    Trigger says:

    Scotsman – So the printing did work. The economy is still alive and kicking growing at 1.6%. So now is the time to relax some more and maybe go for a hike.
    http://finance.yahoo.com/news/Stocks-rise-after-better-GDP-apf-173317524.html?x=0&sec=topStories&pos=2&asset=&ccode=

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  3. 3
    Trigger says:

    RE: Sniglet @ 1 – The problem is that economy continues to grow…. I think the economy did not grow like here during depression times.

    Rate this comment: Thumb up 0

  4. 4
    The Tim says:

    Why can’t we all just get along? Like the Jackson 5 and Nirvana. Wait, what?

    Rate this comment: Thumb up 0

  5. 5
    David Losh says:

    The big difference is that Bush dumped money into a war in Iraq, killed the leader’s sons, put them on display, then publicly hung the guy. It was a barbaric set of actions, that by the way, had no military advantage. The shock, and awe, destroyed infrastructure that Haliburton went in to restore on a no bid basis. As an after thought we went into Afghanistan without a clear directive, and are now mired.

    On Bush’s exit from office he promised, and got passed, a massive cash give away, that Obama had to follow with another cash give away.

    Another difference is that the financial sector, globally, all seem to be in the same boat. I don’t view it as the same global recession, but an orchestrated, computer generated, engineered formula, for boosting the price of Real Property. Building skyscrapers in Dubai, on a pile of sand, should be a very good example of something gone wrong in financing.

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  6. 6
    vHatch says:

    RE: The Tim @ 4 – Wow, that clip is genius, thanks Tim.

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  7. 7
    Trigger says:

    And look we are on a roll. If push comes to shove the Fed will buy govt debt and make the debt go down significantly.
    http://finance.yahoo.com/news/Bernanke-Fed-will-take-action-apf-4107566310.html?x=0&sec=topStories&pos=main&asset=&ccode=

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  8. 8
    B&W Nikes says:

    RE: The Tim @ 4 – A great way to start the day! Quite a glimpse into our oncoming collective dementia!

    Rate this comment: Thumb up 0

  9. 9
    David S says:

    Government stimulus stimulus. Or better yet, stimulus^2. That’s it! Bernanke says stimulus squared to the power of two. All is well.

    Rate this comment: Thumb up 0

  10. 10
    Scotsman says:

    RE: David Losh @ 5

    “Building skyscrapers in Dubai, on a pile of sand, should be a very good example of something gone wrong in financing.”

    Those aren’t skyscrapers- they’re convection ovens, just waiting for the a/c to die.

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  11. 11
    Scotsman says:

    RE: The Tim @ 4

    Got skilz? Nice!

    Rate this comment: Thumb up 0

  12. 12
    pfft says:

    Bullish Sentiment Drops to Lowest Levels Since March 2009
    http://www.bespokeinvest.com/thinkbig/2010/8/27/bullish-sentiment-drops-to-lowest-levels-since-march-2009.html

    “Bearishness is definitely not the contrarian view at the moment.”

    you can say that again.

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  13. 13
    pfft says:

    By Sniglet @ 1:

    To continue the discussion from our mide-week thread I am re-posting my last comment.

    hoover didn�t do much for the economy and it plunged. it plunged until FDR got into office.

    Actually, Hoover was very aggressive with stimulus,

    such as what?

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  14. 14
    pfft says:

    By Trigger @ 2:

    Scotsman – So the printing did work. The economy is still alive and kicking growing at 1.6%. So now is the time to relax some more and maybe go for a hike.
    http://finance.yahoo.com/news/Stocks-rise-after-better-GDP-apf-173317524.html?x=0&sec=topStories&pos=2&asset=&ccode=

    for the thousandth time the stimulus was too small.

    it also did work.

    One year after the stimulus, several independent macroeconomic firms including Moody’s and IHS Global Insight estimated that the stimulus saved or created 1.6 to 1.8 million jobs and forecasted a total impact of 2.5 million jobs saved by the time the stimulus is completed.[73] The Congressional Budget Office considered these estimates conservative.[74] The CBO estimated 2.1 million jobs saved in the last quarter of 2009, boosting the economy by up to 3.5 percent and lowering the unemployment rate by up to 2.1 percent.[75]

    http://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009

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  15. 15
    Scotsman says:

    RE: pfft @ 14

    Sure it did. Everything is fine. Walk toward the light. . .

    How about a response to my comment on unemployment at the end of the midweek thread?

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  16. 16
    pfft says:

    By Scotsman @ 15:

    RE: pfft @ 14

    Sure it did. Everything is fine. Walk toward the light. . .

    How about a response to my comment on unemployment at the end of the midweek thread?

    I guess you think that we can spend $700 billion and nothing happens? REALLY?

    1.5

    that’s the stimulus multiplier. deal with it.

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  17. 17
    Ben says:

    RE: pfft @ 13

    I’m wondering why I should spoonfeed you – Google is your friend. Undoutedly, when confronted with a truth that does not fit your paradigm, you will ignore it or attempt some lame response or ad hominem attack. Don’t bother. This reply is really only for those who have genuine curiosity and want to learn.

    http://www.marketwatch.com/story/the-great-fiscal-stimulus-package-of-1929?dist=MostReadHome

    Excerpt:

    “With that in mind, Herbert Hoover — only nine months into his presidency — assembled leaders from the public and private sectors to create an economic-stimulus package. Among the measures, Time magazine reported at the time, was a promise from Congress to offer bipartisan support for a tax-cut package. The proposal called for $160 million in tax relief — only about $22 billion if adjusted against the gross domestic product at the time, and therefore much smaller than the plan under consideration here in 2008. Read Time’s original coverage of the plan. “

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  18. 18
    pfft says:

    By Ben @ 17:

    RE: pfft @ 13

    I’m wondering why I should spoonfeed you – Google is your friend. Undoutedly, when confronted with a truth that does not fit your paradigm, you will ignore it or attempt some lame response or ad hominem attack. Don’t bother. This reply is really only for those who have genuine curiosity and want to learn.

    http://www.marketwatch.com/story/the-great-fiscal-stimulus-package-of-1929?dist=MostReadHome

    Excerpt:

    “With that in mind, Herbert Hoover — only nine months into his presidency — assembled leaders from the public and private sectors to create an economic-stimulus package. Among the measures, Time magazine reported at the time, was a promise from Congress to offer bipartisan support for a tax-cut package. The proposal called for $160 million in tax relief — only about $22 billion if adjusted against the gross domestic product at the time, and therefore much smaller than the plan under consideration here in 2008. Read Time’s original coverage of the plan. “

    $22 billion dollars compared to the drop-off in demand is pitiful. the economy contracted 20%. how is that stimulus? that’s nothing. tax cuts don’t provide nearly the kick that stimulus does.

    even mark zandi, mccain’s economic advisor, said that our stimulus was too small and he said that when it passed.

    EDIT: when you make a claim it’s not up to me to google and do your work. if you claim something happened just tell us about it. don’t turn it on me when I ask for proof.

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  19. 19
    Ben says:

    RE: pfft @ 18

    To our “mini me” Krugman……there is none so blind as those who will not see.

    I guess “pfft” is a fitting handle for the quality of your posts. I’m done for today, so any lame retorts and lies you may post will be read with howls of laughter from the gallery.

    http://mises.org/daily/4197

    “At his popular New York Times blog, Paul Krugman is at it again, offering a very misleading analysis of deficit spending. Without technically lying, Krugman perpetuates the myth that Herbert Hoover insisted on budget austerity in the midst of the Great Depression. Then Krugman interprets a chart with adjectives that show his eyes can only see what his Keynesian theory will allow.”

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  20. 20
    Scotsman says:

    RE: pfft @ 16

    Read slowly and carefully- click on this link:

    http://seattlebubble.com/blog/2010/08/25/mid-week-open-thread-2010-08-25/#comments

    Read comment #63. Then explain to me how the stimulus with it’s glorious 1.5 multiplier managed to result in a 65% increase in the number of people getting unemployment benefits over the last year.

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  21. 21
    Scotsman says:

    Thank God Obama is focused on the economy- like a laser!

    “As of today, according to CBS News White House correspondent and unofficial White House statistician Mark Knoller, the president has played 49 rounds of golf since taking office, including five times on this vacation. That does not include a round of mini-golf he played earlier this month with daughter Sasha.
    President George W Bush played 24 rounds of golf during the first two and a half years of his presidency and then stopped, feeling it was inappropriate for the Commander-in-Chief to be seen playing golf while the nation was at war in Iraq and Afghanistan. His last game of golf as president was on Oct 13, 2003.”

    http://www.cbsnews.com/8301-503544_162-20014930-503544.html

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  22. 22
    Lake Hills Renter says:

    By Sniglet @ 1:

    To continue the discussion from our mid-week thread…

    This same discussion has been going on months now. It’s like the pundits on political shows — everyone’s talking and no one’s listening, and all but a few end up tuning out. Yet it continues on and on for the few that like to bicker. Guess that’s why I read the open threads about as infrequently as I watch those shows, which is to say almost never. It’s become a yawnfest of the same participants on the same topic, over and over and over.

    Unfortunately, it’s started infecting the actual post comments now as well. Aside from Tim’s actual posts, this site seems to be becoming as relevant to Seattle real estate as it is to baseball. Perhaps it should be renamed to something like Seattle Economics Political Entrenchment, or The Scotsman and Pfft Show. =P

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  23. 23
    matsayswhat says:

    RE: Scotsman @ 21

    Bush may have not felt it was appropriate to play golf during a war, but I guess it was appropriate to take a buttload of vacation :http://www.cbsnews.com/stories/2008/03/11/politics/uwire/main3927378.shtml

    The headline:
    “Record Breaker! Bush Takes Most Vacation Days For Sitting President”

    I think it was on here that I heard the “different wings on the same bird flying in the wrong direction analogy”.

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  24. 24

    I suspect that the recent presidents have all put in well over 2000 hours a year, so I don’t really care how much golf they play or how much vacation they take.

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  25. 25
    matsayswhat says:

    So I’ll admit that Planet Money is probably my favorite podcast… They had a piece recently on Keynesian economics, the stimulus, and whether or not is was successful: http://www.npr.org/blogs/money/2010/08/10/129115864/the-tuesday-podcast-the-great-stimulus-experiment#more

    Anyway, I couldn’t help but think of Scotsman and Pfft as I listened to it, so I thought I’d share.

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  26. 26
    Scotsman says:

    RE: Kary L. Krismer @ 24RE: matsayswhat @ 23

    It probably really only matters in terms of public perception. Neither did particularly well in that regard, but at least Bush got a bit of a clue and stopped the golf. Given the attention it’s getting, you’d think Obama might cut back on the golf just to silence his critics.

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  27. 27
    Scotsman says:

    RE: matsayswhat @ 25

    I wasn’t aware of that- thanks for the link!

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  28. 28
    pfft says:

    By Scotsman @ 26:

    RE: Kary L. Krismer @ 24RE: matsayswhat @ 23

    It probably really only matters in terms of public perception. Neither did particularly well in that regard, but at least Bush got a bit of a clue and stopped the golf. Given the attention it’s getting, you’d think Obama might cut back on the golf just to silence his critics.

    he dropped golf for mountain biking…

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  29. 29
    pfft says:

    By Ben @ 19:

    RE: pfft @ 18

    To our “mini me” Krugman……there is none so blind as those who will not see.

    I guess “pfft” is a fitting handle for the quality of your posts. I’m done for today, so any lame retorts and lies you may post will be read with howls of laughter from the gallery.

    http://mises.org/daily/4197

    “At his popular New York Times blog, Paul Krugman is at it again, offering a very misleading analysis of deficit spending. Without technically lying, Krugman perpetuates the myth that Herbert Hoover insisted on budget austerity in the midst of the Great Depression. Then Krugman interprets a chart with adjectives that show his eyes can only see what his Keynesian theory will allow.”

    blind to what? you haven’t told me anything. just tell me what he did and the size relative to the economy and what was needed. the best I can see were a bunch of voluntary programs. big deal.

    the only real thing I can see that he did from a quick google is pass tax increases in 1932.

    http://en.wikipedia.org/wiki/Revenue_Act_of_1932

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  30. 30
    pfft says:

    By Scotsman @ 20:

    RE: pfft @ 16

    Read slowly and carefully- click on this link:

    http://seattlebubble.com/blog/2010/08/25/mid-week-open-thread-2010-08-25/#comments

    Read comment #63. Then explain to me how the stimulus with it’s glorious 1.5 multiplier managed to result in a 65% increase in the number of people getting unemployment benefits over the last year.

    it’s easy the stimulus was too small.

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  31. 31
    Scotsman says:

    RE: pfft @ 30

    “it’s easy the stimulus was too small.”

    So, it really was a failure- it may have softened the fall, but in the final analysis it was and remains a failure. Who cares if your fall was to concrete or a mattress if you don’t get up.

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  32. 32

    Good news. Agents can do statistics on Matrix now. The sample size has to be under 2500.

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  33. 33
    pfft says:

    By Scotsman @ 31:

    RE: pfft @ 30

    “itâ��s easy the stimulus was too small.”

    So, it really was a failure- it may have softened the fall, but in the final analysis it was and remains a failure. Who cares if your fall was to concrete or a mattress if you don’t get up.

    it wasn’t a failure, the politicians failed. if a patient doesn’t take all of his or her medicine it’s not the medicine that’s a failure.

    we know that the stimulus did save many jobs. also, without tarp, fannie/freddie and other measure the government would be in debt even more to the tune of $2.7 trillion dollars from 2010-2012 than we already are.

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  34. 34
    anon says:

    Oh, my, this discussion is really going nowhere.

    I find it noteworthy that Canada and Germany (which cut back spending) are seeing better results than the US is (which burned money like crazy). There is quite a bit of material for comparisons between these counterpoints (counter to the cliche, even Germany today is less regulated and more sensibly regulated than the US).

    I’d theorize that the same attributes that make for good parenting – a secure and safe environment with room to explore, and a good regulatory climate (clarity, consistency, consequence) make for great economic conditions. Unfortunately the US is currently lacking on all fronts.

    My preferred plan to get the economy going again is to (a) create a baseline security system to make sure everyone in the US feels reasonably secure about not having to die of starvation, sickness of lack of shelter so that people can focus on creating value and (b) reduce taxes and regulatory overhead to ensure that economic action accelerates. I am not confident that either party could do so – both Republicans and Democrats love to add to existing regulation, and while at least Democrats do lip service to social security type initiatives, the actual legislation that eventually happens turns out to be inefficient nightmares that don’t do squat.

    Ok, I’ll stop ranting.

    Back to Seattle and housing – is it just me or do you guys feel like about 10% of the houses in every neighborhood are up for sale with no takers (I keep seeing the same signs month after month after month)?

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  35. 35
    Scotsman says:

    RE: anon @ 34

    Well stated. I especially like:

    “I’d theorize that the same attributes that make for good parenting – a secure and safe environment with room to explore, and a good regulatory climate (clarity, consistency, consequence) make for great economic conditions. Unfortunately the US is currently lacking on all fronts.”

    Non business types of both parties fail to give full weight to the impact of a seemingly capricious and often conflicting muddle of regulation and tax policies. Many years ago I owned a business in Woodinville as it was first becoming incorporated. As a new city they came up with a host of new taxes, fire regulations, EPA concerns, etc. My business (autobody parts refinishing) handled regulated chemicals and consequently had to deal with a great deal of government oversight. Unfortunately the city, county, state, and federal regulations often conflicted leading to interesting and ultimately expensive solutions. In the end we first moved the business out of Woodinville, then closed it. Too much trouble. But the unpredictability of government actions as they affect investment decisions is even more of an issue. there are simply too many distortions in the system in an attempt to serve too many special interests.

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  36. 36
    David Losh says:

    RE: pfft @ 30

    Do you read the financial news or just harp on government action?

    Number one is my first assertion from over a year ago, maybe two years ago; you can’t “lose” money. Banks didn’t “lose” money, they know where the money is. We all know where the money is. I think there is $27 trillion in derivative accounts that are insuring against losses. Let the losses begin, and let’s free up that money.

    Today’s report said that we imported more goods, like 63% of the growth in GDP was with imported goods, or some such thing. If we bought more that was manufactured here we would have higher velocity, and a greater job multiplier.

    But wait, we can’t.

    Let’s say we all stop buying from China, and China’s manufacturing sector falters. That’s a lot, a whole lot, of a billion, and a half consumers, who won’t be buying our products.

    Private business enterprises need to get off the money they have “invested” and start spending to create the jobs to have consumers. Government can’t do it.

    As a matter of fact, has any one really checked who has more money? Government or Multi National Corporations? A government may be able to print, but business has the ability to extend credit, consumer credit.

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  37. 37
    David S says:

    RE: Lake Hills Renter @ 22 – Or, it is the realization of how closely the housing market is tied to the economy. And yes, the Scotsman pfft show too. lol

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  38. 38
    David S says:

    RE: Kary L. Krismer @ 32 – That is huge Kary. I personally know two agents who have been fuming over the new system. I’ve been through it a few times myself with Manufacturing and CAD systems that were new once.

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  39. 39
    Hugh Dominic says:

    Here is an economist diving into the policies of Hoover vs FDR. It’s a good podcast. At 60 minutes, it required the listener have the patience to go into depth on the topic, rather than simply scanning for the talking points.

    http://www.econtalk.org/archives/2010/08/kennedy_on_the.html

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  40. 40
    pfft says:

    By anon @ 34:

    Oh, my, this discussion is really going nowhere.

    I find it noteworthy that Canada and Germany (which cut back spending) are seeing better results than the US is (which burned money like crazy). There is quite a bit of material for comparisons between these counterpoints (counter to the cliche, even Germany today is less regulated and more sensibly regulated than the US).

    canada’s stimulus size is 2.8% of GDP. germany’s is 3.4% of GDP. there are other factors too. germany and canada didn’t have as big housing bubbles. germany has work sharing which lessons unemployment.

    How do stimulus size and economic growth compare internationally?
    http://voices.washingtonpost.com/ezra-klein/2010/06/research_desk_responds_how_do.html

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  41. 41
    Hugh Dominic says:

    By pfft @ 16:

    1.5

    that’s the stimulus multiplier. deal with it.

    Sweet. Why do it just once? A 1.5 ROI in two years is amazing. We should make it government policy to make an extra trillion dollars of centrally managed discretionary investment EVERY YEAR. After ten years our economy will have added $57 trillion to our GDP. We’ll own everything in the world!

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  42. 42
    2kt says:

    RE: David Losh @ 36

    When you start talking about money and derivatives, you are out to lunch. Banks can not free up money due to higher capital requirements and tight underwriting guidelines. That, as well as the fact that during recessions there are fewer creditworthy borrowers.

    As to your comments about job creation, that makes even less sense.

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  43. 43
    Scotsman says:

    RE: Hugh Dominic @ 41

    Dang, why didn’t I think of that? You’re brilliant!

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  44. 44
    Triger says:

    RE: Scotsman @ 21 – Scotsman – You underestimate the power of relaxing. People just need to relax to take in the news in the right way and have energy to tackle difficulties. Apparently Obama is trying to optimize.

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  45. 45
    Blurtman says:

    WAMU Option ARM
    Today’s featured property was purchased for $815,000 on 1/18/2007. The owner used a $652,000 Option ARM from WAMU and a $163,000 down payment. That has got to hurt….

    She has squatted for about 18 months so far, so I suppose she is getting some of that value back.

    Foreclosure Record
    Recording Date: 05/10/2010
    Document Type: Notice of Default

    Foreclosure Record
    Recording Date: 08/12/2009
    Document Type: Notice of Rescission

    Foreclosure Record
    Recording Date: 05/06/2009
    Document Type: Notice of Default

    She has not received her notice of trustee sale yet, so she will likely get to drag this out for quite some time.

    The real story with this property is the dramatic price reduction.

    Date Event Price Appreciation
    Aug 20, 2010 Price Changed $499,000 —
    Jun 18, 2010 Price Changed $625,000 —
    May 27, 2010 Listed $650,000 —
    Jan 18, 2007 Sold (Public Records) $815,000 0.0%/yr

    This has been for sale since May, and apparently it has not attracted the kind of bid the holder of WAMUs trash wants to see. I imagine the seller hopes this will start a bidding war. At $499,000 with low interest rates, no HOAs and no Mello Roos, the price is attractive. The total cost of ownership is less than $2,000 per month. Surely this would rent for that much. To be honest, an updated 3/2 with a pool at less than $500K piques my interest (Did you see the cool home theater?)

    http://www.irvinehousingblog.com/blog/comments/frightened-sellers-who-missed-the-market-lower-prices-in-a-panic/?source=patrick.net#blogtitle

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  46. 46

    On the trade balance issue, it would be nice if there were some sort of data that would indicate how many jobs went with the trade. With automation, many products don’t produce much in the way of jobs. The problem with such data though, if it existed, is that you couldn’t assume that the same number of jobs would occur here as elsewhere. Most likely it would be less due to greater efficiencies (e.g. more automation).

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  47. 47

    RE: Blurtman @ 44 – Putting down that much money and then getting an option arm seems strange.

    Around here for a given sum of money you could probably get a nicer house with a pool than without a pool, at least if the pool is outside. There aren’t many pools around here for a reason: They’re not that popular due to the expense & hassle in comparison to the benefit. Even a hot tub is probably a negative, but only a slight negative.

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  48. 48
    Yaj says:

    Hey Pfft:

    Since you’re a Keynesian theorist of the highest order, I have a challenge for you.

    In the midst of this recession suppose that the government decides to stimulate the economy by paying farmers $100,000 per acre to embed rock salt and long-acting herbicide into 50% of the nations most productive farmland. In order to optimize the economic stimulus, they further stipulate that each grain of rock salt must be individually embedded by hand, and the herbicide must be dispensed by hand via eye-droppers that hold a maximum volume of 0.1ml of liquid at any one time.

    Make an argument *against* doing so that is consistent with your understanding of the Keynesian remedy for recessions.

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  49. 49
    David Losh says:

    RE: 2kt @ 42

    Oh, Gees, you caught me, but we don’t want credit worthy borrowers, we want banks to default. I personally want banks out of business, because it has proved to go nowhere.

    You betcha banks have reserves. Banks have fat reserves that are only getting fatter on the backs of credit worthy borrowers.

    Let the banks default. Let governments default.

    As far as employment, Kary made the good points about where the jobs may do the most good.

    I’m fascinated by the economic theory mumbo jumbo here, on these threads. pfft wants the government to give more money to the banks. Trigger wants to create massive inflation, and sorry, sniglet wants to compare this stimulus to Hoover, and FDR.

    We are in a whole different time of computer generated business models. The theories look great on paper, but once you look up, and look around, people, real people, need the money more than banks do.

    Banks lent on over priced assets. They should be taking the lumps, rather than tax payers, on a global scale. Governments turned a blind eye, took in tax dollars, blew it all on whatever they wanted, and now there is no more.

    I’m sorry that markets need to correct, but they do, it’s the only way I see it.

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  50. 50
    Blurtman says:

    RE: Kary L. Krismer @ 46 – Yeah. Losing the down payment. Ouch!

    I’ve toyed with the idea of getting a hot tub, but I guess if you don’t use it often, it is a waste.

    Instead we are going to splurge on irrigation and landscaping, not because we expect to add re-sale value, but because we want to add more beauty.

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  51. 51

    RE: Blurtman @ 49 – Google “Krismer Hot Tub” and you’ll find my piece entitled: “Greatest Blog Piece . . ..” It’s the story of getting rid of the one that came with our house. Unfortunately the company in the piece apparently went out of business.

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  52. 52
    pfft says:

    By Hugh Dominic @ 41:

    By pfft @ 16:

    1.5

    that’s the stimulus multiplier. deal with it.

    Sweet. Why do it just once? A 1.5 ROI in two years is amazing. We should make it government policy to make an extra trillion dollars of centrally managed discretionary investment EVERY YEAR. After ten years our economy will have added $57 trillion to our GDP. We’ll own everything in the world!

    snarky!

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  53. 53
    pfft says:

    By Yaj @ 47:

    Hey Pfft:

    Since you’re a Keynesian theorist of the highest order, I have a challenge for you.

    In the midst of this recession suppose that the government decides to stimulate the economy by paying farmers $100,000 per acre to embed rock salt and long-acting herbicide into 50% of the nations most productive farmland. In order to optimize the economic stimulus, they further stipulate that each grain of rock salt must be individually embedded by hand, and the herbicide must be dispensed by hand via eye-droppers that hold a maximum volume of 0.1ml of liquid at any one time.

    Make an argument *against* doing so that is consistent with your understanding of the Keynesian remedy for recessions.

    no.

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  54. 54
    Yaj says:

    Wait! All spending is stimulative. A 1.5 multiplier – remember! Surely you remember the canonical example of paying people to dig ditches and refill them – a policy recommendation straight from the oracle!

    Paying untold billions to till rock salt and herbicide into half the nation’s best cropland not only has the normal Keynesian benefits that come along with using indiscriminate government spending to boost aggregate demand, but comes with a bonus. That is, a dramatic increase in food prices that will generate increased revenue for farmers, that will cycle back as even *more* aggregate demand.

    It’s clear that you won’t put forth a Keynesian argument against spending as much as possible to destroy half of the country’s prime-cropland as a recession-fighting measure because….hint………there isn’t one. That is – you won’t, because you can’t. That’s like believing in a model of physiology that can’t distinguish between the effects of ingesting food or cyanide.

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  55. 55
    pfft says:

    By Yaj @ 54:

    Wait! All spending is stimulative. A 1.5 multiplier – remember! Surely you remember the canonical example of paying people to dig ditches and refill them – a policy recommendation straight from the oracle!

    Paying untold billions to till rock salt and herbicide into half the nation’s best cropland not only has the normal Keynesian benefits that come along with using indiscriminate government spending to boost aggregate demand, but comes with a bonus. That is, a dramatic increase in food prices that will generate increased revenue for farmers, that will cycle back as even *more* aggregate demand.

    It’s clear that you won’t put forth a Keynesian argument against spending as much as possible to destroy half of the country’s prime-cropland as a recession-fighting measure because….hint………there isn’t one. That is – you won’t, because you can’t. That’s like believing in a model of physiology that can’t distinguish between the effects of ingesting food or cyanide.

    infrastructure projects help the economy grow. police and firefighters help keep the economy secure. teachers are an investment for the future. tax cuts allow some relief in a down economy even though the multiplier isn’t nearly the same. it’s not even close to your example of spending.

    “Wait! All spending is stimulative. A 1.5 multiplier – remember!”

    the multiplier effect is well-known. economics 101.

    the stimulus worked all around the world, deal with it. some of the money was inevitably wasted but it’s not like the private sector never makes bad investments.

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  56. 56
    Scotsman says:

    Keynes is dead. Really. Even Pfft knows it. He’s just dug in too deep to admit it.

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  57. 57

    RE: Yaj @ 54 – Are you really trying to deny there’s a multiplier to spending? What do you think happens to the money spent?

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  58. 58
    Blurtman says:

    RE: pfft @ 55 – Economics 101 is not hard science. I recall being forced to reiterate at UC Berkeley that full employment leads to inflation. That turned out to be untrue. In fact, many things in economics seemed to be but plausible explanations, lacking predicitve capability, kind of like what medieval scientists did before the scientific method caught on.

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  59. 59

    RE: Blurtman @ 58 – Thanks for keeping that short. It allows me to say: “I agree.” ;-)

    Rate this comment: Thumb up 0

  60. 60

    By Kary L. Krismer @ 47:

    RE: Blurtman @ 44 – Putting down that much money and then getting an option arm seems strange.

    Around here for a given sum of money you could probably get a nicer house with a pool than without a pool, at least if the pool is outside. There aren’t many pools around here for a reason: They’re not that popular due to the expense & hassle in comparison to the benefit. Even a hot tub is probably a negative, but only a slight negative.

    The one thing I remember from appraisal class is that around here, you subtract the cost of filling in the swimming pool to reflect market value.

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  61. 61
    Scotsman says:

    RE: Blurtman @ 58

    In theory, reality and theory are the same.
    In reality, they are often very different.

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  62. 62
    pfft says:

    By Scotsman @ 56:

    Keynes is dead. Really. Even Pfft knows it. He’s just dug in too deep to admit it.

    in Asia they are bragging about stimulus.

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  63. 63
    pfft says:

    By Blurtman @ 58:

    RE: pfft @ 55 – Economics 101 is not hard science. I recall being forced to reiterate at UC Berkeley that full employment leads to inflation. That turned out to be untrue. In fact, many things in economics seemed to be but plausible explanations, lacking predicitve capability, kind of like what medieval scientists did before the scientific method caught on.

    stimulus is not one of them though. it’s worked all around the world.

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  64. 64

    RE: Ira Sacharoff @ 60 – I know of at least one pool that was filled in. I’m not sure if they took out the concrete & plaster, or just made it into a very large deep planter. What would the appraisers recommend? ;-)

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  65. 65
    Lake Hills Renter says:

    By David S @ 37:

    RE: Lake Hills Renter @ 22 – Or, it is the realization of how closely the housing market is tied to the economy. And yes, the Scotsman pfft show too. lol

    I have no problem with discussion of the economy, in fact I encourage it. But there’s been little discussion around here as I’ve seen it. The open threads these days are dominated by partisan bickering and link wars — i.e. just another run-of-the-mill Internet forum with little new to offer. Sad, because they used to offer value in addition to the blog.

    But I seem to be the only one that cares and I’ve said my peace, so I’ll return to lurking and waiting for Tim’s posts to offer some substance.

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  66. 66
    Yaj says:

    @Kary:

    Yes.

    There is no “multiplier effect” that applies indiscriminately to all government spending in the aggregate. If there were, then activities that are transparently wealth destroying – like paying people to demolish every other house with sledgehammers, salting croplands, dismantling railways, tearing down bridges, and dropping bunker-busters on every-other mile of highways would result in a net-increase in economic output via the magic of the multiplier effect. Even Keynesians are smart enough to admit that, although they can’t seem to make an argument why they’re economically destructive in a way that’s consistent with their understanding of Keynesian remedies for recession.

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  67. 67

    RE: Yaj @ 66 – How about using some real examples, instead of absurd ones. Like say building a highway, where not only does that keep the construction workers employed, but they build a road that improves transportation for business, and spend their money on things that keep other people employed.

    Again, where do you think the money spent goes?

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  68. 68
    Yaj says:

    By Scotsman @ 61:

    RE: Blurtman @ 58

    In theory, reality and theory are the same.
    In reality, they are often very different.

    Yes. The map is not the territory. The representation is not the reality.

    Watching Keynesians and orthodox general equilibrium theorists perturb variables in a staggeringly oversimplified mathematical model of the economy and looking on in confusion when the real world fails to respond in a manner that’s consistent with the said models is a wonder to behold. “But…..Y = C + I + G + (Ex – I)…just increase G and Y goes up….it says right here….”

    It’s like a four year old playing Stratego and expecting real armies to march in accordance with his moves.

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  69. 69

    RE: Yaj @ 68 – The reason it doesn’t follow with the model isn’t necessarily that the model is wrong. It could simply be that the model doesn’t have enough variables.

    For example, lower interest rates mean house prices will tend to be higher than what they would be with higher interest rates. It does not mean that house prices will be higher with lower rates. Other variables can override the impact of the interest rates.

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  70. 70
    Scotsman says:

    RE: Lake Hills Renter @ 65

    If you’re unhappy with the content how about instead of “continuing to lurk” you jump in and offer some content of your own?

    Whether the stimulus and similar efforts actually work in the U.S. and our current economic environment (i.e., we are not Asia or Norway) is an important topic. Are we going to continue to “invest” $billions of borrowed foreign dollars with no results, or are we going to suck it up and try something else? First we have to confirm whether such “investments” actually work. If they don’t, we have to decide on an alternative path. Continuing to do the same thing while expecting the results to change is one definition of insanity. But maybe we are insane. Reality is such a flighty mistress.

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  71. 71
    Scotsman says:

    RE: Yaj @ 68

    Exactly.

    The debate is misrepresented- it’s not so much “do stimulus dollars end up in the economy, supporting jobs and GDP?” as it is “does the multiplier effect really work, is it taking hold under the current conditions?”

    Are the dollars spent real? Yes. Do they temporarily boost the economy? Yes, of course. Do they boost the economy out of proportion to the burden/cost of the debt that funded them? Unknown at this time, but it doesn’t look good. Does the multiplier effect really work given the current status of the U.S. economy, or is the return to debt funded stimulus zero or less? The data suggests it is indeed zero or less, and thus of little net short term benefit and a drag on real future growth.

    Numbers, courtesy of KD. Debt goes up, GDP goes up, Net GDP, the real, ongoing, reality of the economy and what it is producing- continues to fall. The stimulus is nothing more than “the hair of the dog that bit you,” that morning shot that temporaily puts off the hangover you know you have to have.

    http://tickerforum.org/akcs-www?get_gallerynr=13

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  72. 72
    Yaj says:

    By Kary L. Krismer @ 67:

    RE: Yaj @ 66 – How about using some real examples, instead of absurd ones. Like say building a highway, where not only does that keep the construction workers employed, but they build a road that improves transportation for business, and spend their money on things that keep other people employed.

    Again, where do you think the money spent goes?

    Those examples are only marginally less absurd than the “Cash for Clunkers,” program and the 8,000 dollar tax credit for homebuyers, not to mention the Corn Ethanol subsidies, particularly when combined with a punitive tariff against cane ethanol imports. I’d be happy to go on.

    The whole point of my argument is that people who self-identify as Keynsians aren’t able to explain why not all government spending constitutes an economically beneficial response to a recession. There are a number of reasons for this, the most important of which is that there *is* no difference between building a highway or blowing one up in the framework that they use to understand how the economy operates.

    Now – on to your example. Your highway example depends on a whole host of other factors. Highway spending that alleviates congestion may result in an increase in economic output. It may generate more resources over it’s working life than it required to build it. It may not. The odds are good that a 10 lane superhighway in the middle of Alaska would consume many orders of magnitude more resources than it would generate over the entirety of its working life. If you think I’m straying off into absurd hyperbole once again, consider the Bridge to Nowhere. Drop in the Alaskan pork bucket.Or public works spending in rural Japanese prefectures. Et…..cetera.

    Mind you, all of the above is true without even delving into the efficiency of resource allocation via congressional seniority on the appropriations committee, the net output per-dollar of public works spending under prevailing wage laws, etc, etc, etc, etc, etc. Even without these confounding factors, it’s not clear that spending tax revenues on such projects results in economic outcomes that have a higher net return than whatever private uses the said funds might have been spent on or invested in by the people who actually earned the money.

    “Where does the money go” is the wrong question unless you believe that doubling the number of dollars in circulation would double the real wealth in this country. Money is not wealth. If it was then we’d all be marveling at the economic miracle in Zimbabwe. We aren’t.

    Malinvestment – via whatever the mechanism, public spending emphatically included – represents a stock of wealth that has been squandered and is lost forever, no matter how many hands it passes through on the way to the black hole that it’s eventually chucked into, or what symbolic units are used to represent it.

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  73. 73

    RE: Yaj @ 72 – I wasn’t a fan of cash for clunkers or the ethanol thing (which isn’t a stimulus program, it’s too old). As to the house credit, I see its purpose having been saving the banks and what’s left of Freddie and Fannie. I don’t think the purpose was to increase GDP directly.

    But where the money goes is exactly the question, because that’s where the multiplier comes from. $1000 is paid to Joe and he spends more than he would have without having received the $1000 (ie his spending won’t necessarily be a full $1,000). That employs others, who spend. Repeat with diminishing returns each cycle.

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  74. 74
    pfft says:

    By Yaj @ 66:

    @Kary:

    Yes.

    There is no “multiplier effect” that applies indiscriminately to all government spending in the aggregate. If there were, then activities that are transparently wealth destroying – like paying people to demolish every other house with sledgehammers, salting croplands, dismantling railways, tearing down bridges, and dropping bunker-busters on every-other mile of highways would result in a net-increase in economic output via the magic of the multiplier effect. Even Keynesians are smart enough to admit that, although they can’t seem to make an argument why they’re economically destructive in a way that’s consistent with their understanding of Keynesian remedies for recession.

    I don’t understand what you’re saying. are you saying that the government can spend $700 billion dollars and not have an impact on the economy. I’ve posted numerous studies that show the stimulus worked all around the world.

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  75. 75
    pfft says:

    By Scotsman @ 70:

    RE: Lake Hills Renter @ 65

    If you’re unhappy with the content how about instead of “continuing to lurk” you jump in and offer some content of your own?

    Whether the stimulus and similar efforts actually work in the U.S. and our current economic environment (i.e., we are not Asia or Norway) is an important topic. Are we going to continue to “invest” $billions of borrowed foreign dollars with no results, or are we going to suck it up and try something else? First we have to confirm whether such “investments” actually work. If they don’t, we have to decide on an alternative path. Continuing to do the same thing while expecting the results to change is one definition of insanity. But maybe we are insane. Reality is such a flighty mistress.

    yes, while the economy collapses we’ll “study” to see if stimulus works even though we’ve studied for 70 years.

    “Whether the stimulus and similar efforts actually work in the U.S. and our current economic environment (i.e., we are not Asia or Norway) is an important topic.”

    don’t forget europe!

    overseas only matters if it’s dubai or greece is having problems. when the rest of the world is used as an example and you don’t like it you ignore it. I see a pattern.

    ” Are we going to continue to “invest” $billions of borrowed foreign dollars with no results, or are we going to suck it up and try something else? ”

    we are borrowing most of the money from ourselves. posted that the other day.

    if we did nothing we’d be $2.7 trillion dollars more in debt over the next 3 years. I already posted that too.

    “Continuing to do the same thing while expecting the results to change is one definition of insanity.”

    already posted studies that said the stimulus worked.

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  76. 76
    pfft says:

    By Scotsman @ 71:

    RE: Yaj @ 68The data suggests it is indeed zero or less, and thus of little net short term benefit and a drag on real future growth

    no it doesn’t.

    just how much do you we’re paying in interest.

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  77. 77
    pfft says:

    By Kary L. Krismer @ 73:

    RE: Yaj @ 72 – I wasn’t a fan of cash for clunkers or the ethanol thing (which isn’t a stimulus program, it’s too old). As to the house credit, I see its purpose having been saving the banks and what’s left of Freddie and Fannie. I don’t think the purpose was to increase GDP directly.

    But where the money goes is exactly the question, because that’s where the multiplier comes from. $1000 is paid to Joe and he spends more than he would have without having received the $1000 (ie his spending won’t necessarily be a full $1,000). That employs others, who spend. Repeat with diminishing returns each cycle.

    exactly.

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  78. 78
    Scotsman says:

    RE: Kary L. Krismer @ 73

    Kary, you’re only looking at one side of the equation- “the multiplier” as you explain it also comes with a cost that has the same effect (eponential growth) but is a negative in the equation That is the interest expense on the borrowed money. Keynes with his “multiplier” never expected anyone to be using borrowed money. The stimulus funds were to come from savings, essentially cost free (except for the opportunity cost). To be effective the multiplier/impact has to be greater than the cost. It hasn’t been so far.

    Also, not to be too picky, but you seem to be confusing the velocity of money- how quickly it changes hands from one person to another- with the return or increase it generates each time it changes hands. To have a multiplier effect it has to do more than just change hands- it has to lead to an increase in wealth or productive capacity each time it does. Just spending isn’t the same as investing or multiplying. Just spending doesn’t count. See post #71.

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  79. 79
    Scotsman says:

    RE: pfft @ 77

    No. that’s not a multiplier. It’s a velocity question. Spending is not investing or multiplying if it doesn’t generate wealth- not income, wealth, with an increase in productive capacity.

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  80. 80

    By Scotsman @ 78:

    RE: Kary L. Krismer @ 73 – Kary, you’re only looking at one side of the equation- “the multiplier” . . ..

    That’s because I was dealing with someone who seemingly didn’t think the multiplier existed.

    In the past I have commented on the other side, such as when I’ve said that I think stimulus needs to be large and quick, because people don’t have the long term stomach for stimulus (they want instant results), and doing too little and then quitting leaves you with not enough benefit and in a position where you are worse off because of the debt.

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  81. 81

    RE: Scotsman @ 79 – I’ll have to think about that, but I think the two are interrelated. The more velocity you have the greater the impact on GDP in a given cycle. Each time the money changes hands, that does typically increase GDP. So if the government spends $1M, GDP should increase more than $1M.

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  82. 82
    Scotsman says:

    RE: Kary L. Krismer @ 81

    You’re right, it does increase GDP- but GDP isn’t a measure of wealth, it’s a measure of income, or conversely, spending.

    For a stimulus to work it has to generate more wealth, or an increase in assets, that exceeds the cost of the stimulus. If I borrow $50k and spend it on a vacation lots of people are temporarily employed, but my wealth doesn’t increase, and the likelihood that I can afford to take a similar vacation the next year actually decreases thanks to the interest I now have to pay. If I buy a $50k rock crusher and start making gravel for the highway department after a couple of years I’ll have it paid for and then continue to make some additional amount of income every year thereafter- which I can spend- on an ongoing basis- on vacations. It’s a significant difference- one is investment with a net positive return, the other is just spending with an income effect that must continually diminish with time as accumulating interest expense continually eats into the income stream until it goes negative.

    In our current situation some of the investment or stimulus probably does end up as investment, but most is just spent. the net cumulative effect appears to be zero, leaving us with only a huge debt/interest burden that we didn’t have before. this is exactly what Pfft doesn’t get. . . yet.

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  83. 83
    David Losh says:

    RE: pfft @ 77RE: pfft @ 76RE: pfft @ 75

    You’re not following the thread. You’re repeating your own assertions.

    The stimulus is best explained by Asia bragging about the stimulus. Asia can dump in all of the money they want, or that they need to dump in, because they can’t stop. Let’s include my favorite of India in this, because that’s another billion people.

    People have to eat, maybe three times a week, maybe more. With billions of people to feed you have a massive velocity of money in circulation, until it runs out.

    Before it runs out you brag about how much money you have, because if you don’t there will be panic. Billions of people in panic will create chaos.

    Now chaos, anarchy, and revolution are something Asia is very familiar with.

    Come to think of it we could discuss the chaos theories just as well as Keynesian.

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  84. 84

    RE: Scotsman @ 82 – I don’t see why you think wealth needs to increase. Unemployed people are more concerned with income, and the purpose of stimulus is to reduce unemployment by getting people working and spending. If the money for stimulus is borrowed from another country, then the net wealth of the country would decline, but I’m not really sure that’s a critical concern when it comes to stimulus.

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  85. 85
    Herman says:

    By Kary L. Krismer @ 67:

    Again, where do you think the money spent goes?

    Evidently most of it goes to sustain underwater medicare programs. Meaning, it goes to either a medicare swindler or to a nurse to change a bedpan. From there it goes to China, in exchange for plastic candleholders, and off to Canada for oil, for the drive to the store to get those candleholders.

    It might change hands once or twice before that, for some number of Americans to give each other backrubs and haircuts.

    It’s a wonderful economy; just a few turns of the crank supply us with public debt and plastic candleholders.

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  86. 86
    Blurtman says:

    RE: Scotsman @ 82 – Increasing GDP is not incompatible with increasing unemployment and decreasing standard of living. Shiller says the USG should consider something like the public works programs enacted during the last great depression.

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  87. 87
    Scotsman says:

    RE: Kary L. Krismer @ 84

    By wealth wealth economists really mean productive capacity. If stimulus spending doesn’t increase productive capacity, hence paying for its self, then it becomes nothing more than an increasing burden on the economy through it’s interest expense. You can’t have an effective ongoing stimulus anymore than you can borrow your way out of debt. Stimulus is supposed to be the gas that lights the fire, not the eternal source of fuel. Keeping people artificially employed, in the sense that their employment just continues to exacerbate unproductive capital allocations, isn’t a long term solution. In our current economy stimulus has only been an expensive band-aid, not the surgery we really need, another hit for the crack addict, not rehab.

    A long discussion on the marginal productivity of debt would make it clear the U.S. is boxed into a corner right now, but would also bore everyone to death. So you can Google it, or trust me, but the current marginal productivity is now negative. More debt funded stimulus is closer to poison than a solution. Sit back, watch the base (minus stimulus) economy continue to contract, and come to believe. ;-)

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  88. 88
    Yaj says:

    By pfft @ 77:

    By Kary L. Krismer @ 73:
    RE: Yaj @ 72 – I wasn’t a fan of cash for clunkers or the ethanol thing (which isn’t a stimulus program, it’s too old). As to the house credit, I see its purpose having been saving the banks and what’s left of Freddie and Fannie. I don’t think the purpose was to increase GDP directly.

    But where the money goes is exactly the question, because that’s where the multiplier comes from. $1000 is paid to Joe and he spends more than he would have without having received the $1000 (ie his spending won’t necessarily be a full $1,000). That employs others, who spend. Repeat with diminishing returns each cycle.

    exactly.

    Money changing hands doesn’t automatically result in a real increase in wealth or economic output. What the person *does*( with the real resources that they acquire with the money is critical. Someone can easily use money to acquire resources that they convert into an output that has less value than the sum of all of the resource-inputs required to create it. This is precisely what happened with a hundreds of billions of dollars worth of resources that were converted into structures that were less valuable than the resources required to create them.

    Ergo there is no stimulus effect in the aggregate. The actions that people take with the real resources that the money allows them to secure either creates or destroys real wealth. It’s what they do with the real resources between the transactions that matters, not the transactions themselves.

    Were it otherwise, paying a crackhead $20 to hop on on on foot for ten seconds would generate an increase in real wealth. Ditto for his subsequent use of the funds to secure and consume his favorite resource. Crack. They don’t.

    Make a closed loop to infinity where the guy paying the crackhead to hop on one foot is the dealer and the only real economic effect – the net change in the total store of resources available to society – will be in reducing the dealer’s stock of crack to zero.

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  89. 89
    Blurtman says:

    Interesting recap:

    What Can Be Done to Cure the Ailing Economy?

    http://www.nytimes.com/2010/08/29/weekinreview/29goodman.html?pagewanted=1&_r=1

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  90. 90
    pfft says:

    By Scotsman @ 78:

    RE: Kary L. Krismer @ 73</aTo be effective the multiplier/impact has to be greater than the cost. It hasn't been so far.

    prove it.

    I ask this question again. just how much do you think we’re paying on interest.

    whatever you do don’t try to answer the fact that if we did nothing the government would be even more in debt, try $2.7 trillion more, than if the government didn’t do tarp, fannie/freddie and etc.

    you harp on debt yet your reset strategy would have us in more debt.

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  91. 91
    pfft says:

    By Scotsman @ 82:

    RE: Kary L. Krismer @ 81
    In our current situation some of the investment or stimulus probably does end up as investment, but most is just spent. the net cumulative effect appears to be zero, leaving us with only a huge debt/interest burden that we didn’t have before. this is exactly what Pfft doesn’t get. . . yet.

    how about you prove that? again, just how much in interest do you think we are paying? I think you see numbers like billions and trillions and you just can’t wrap you mind around them so you default to a doomsday scenario.

    either that or you just hate anything government does so nothing will prove you wrong.

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  92. 92
    David Losh says:

    RE: pfft @ 90

    That’s ridiculous. If we start asking for people to prove stuff you would have to prove that the stimulus is working, globally, as you claim. Germany is the only country you have been able to point to. What was the other one, Iceland?

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  93. 93
    pfft says:

    By David Losh @ 83:

    RE: pfft @ 77RE: pfft @ 76RE: pfft @ 75

    You’re not following the thread. You’re repeating your own assertions.

    The stimulus is best explained by Asia bragging about the stimulus. Asia can dump in all of the money they want, or that they need to dump in, because they can’t stop. Let’s include my favorite of India in this, because that’s another billion people.

    People have to eat, maybe three times a week, maybe more. With billions of people to feed you have a massive velocity of money in circulation, until it runs out.

    Before it runs out you brag about how much money you have, because if you don’t there will be panic. Billions of people in panic will create chaos.

    Now chaos, anarchy, and revolution are something Asia is very familiar with.

    Come to think of it we could discuss the chaos theories just as well as Keynesian.

    the situation I have been talking about is korea and that is not china or india.

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  94. 94
    pfft says:

    By Blurtman @ 86:

    RE: Scotsman @ 82 – Increasing GDP is not incompatible with increasing unemployment and decreasing standard of living. Shiller says the USG should consider something like the public works programs enacted during the last great depression.

    unemployment has already peaked. before people get all worked up the employment population ratio has bottomed.

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  95. 95
    pfft says:

    By Scotsman @ 87:

    RE: Kary L. Krismer @ 84

    By wealth wealth economists really mean productive capacity. If stimulus spending doesn’t increase productive capacity, hence paying for its self, then it becomes nothing more than an increasing burden on the economy through it’s interest expense. You can’t have an effective ongoing stimulus anymore than you can borrow your way out of debt. Stimulus is supposed to be the gas that lights the fire, not the eternal source of fuel. Keeping people artificially employed, in the sense that their employment just continues to exacerbate unproductive capital allocations, isn’t a long term solution. In our current economy stimulus has only been an expensive band-aid, not the surgery we really need, another hit for the crack addict, not rehab.

    A long discussion on the marginal productivity of debt would make it clear the U.S. is boxed into a corner right now, but would also bore everyone to death. So you can Google it, or trust me, but the current marginal productivity is now negative. More debt funded stimulus is closer to poison than a solution. Sit back, watch the base (minus stimulus) economy continue to contract, and come to believe. ;-)

    stimulus isn’t supposed to be a long-term solution. it’s supposed to bridge the gap and provide a boost.

    “In our current economy stimulus has only been an expensive band-aid”

    your way would be reset. the only problem is your reset adds even more debt. $2.7 trillion more according to a republican economic advisor.

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  96. 96
    pfft says:

    By David Losh @ 92:

    RE: pfft @ 90

    That’s ridiculous. If we start asking for people to prove stuff you would have to prove that the stimulus is working, globally, as you claim. Germany is the only country you have been able to point to. What was the other one, Iceland?

    it’s more than germany.

    How do stimulus size and economic growth compare internationally?
    http://voices.washingtonpost.com/ezra-klein/2010/06/research_desk_responds_how_do.html

    in the US:

    One year after the stimulus, several independent macroeconomic firms including Moody’s and IHS Global Insight estimated that the stimulus saved or created 1.6 to 1.8 million jobs and forecasted a total impact of 2.5 million jobs saved by the time the stimulus is completed.[73] The Congressional Budget Office considered these estimates conservative.[74] The CBO estimated 2.1 million jobs saved in the last quarter of 2009, boosting the economy by up to 3.5 percent and lowering the unemployment rate by up to 2.1 percent.[75]

    http://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009

    if the stimulus and other spending is so onerous why is the bond market plunging? we all know that if the bond market were spiking interests rates you’d be going wild. you’d say that proves the stimulus didn’t work. it doesn’t say what you want so you ignore it.

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  97. 97
    pfft says:

    For the last time:

    If Washington had not reacted as quickly and as forcefully as it did, the two economists write, “the costs to U.S. taxpayers would have been vastly greater.”

    With no special government intervention, the 2010 deficit would have passed $2 trillion, according to their model. It would have reached $2.6 trillion in fiscal 2011 and $2.25 trillion in 2012.

    http://www.creators.com/liberal/froma-harrop/washington-saved-our-economic-hide.html

    to put this into perspective the deficit this year will be about $1.3 trillion. that’s $700 billion dollars of less debt this year.

    a plunging economy=less demand=less tax revenue=more debt.

    if you cut government spending it doesn’t matter.

    less demand=less tax revenue=more debt=austerity spiral

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  98. 98

    This wealth argument seems to be something that is just designed to prove the stimulus failed. Even unemployment benefits are seen as stimulus, and they don’t produce squat.

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  99. 99
    pfft says:

    By Scotsman @ 78:

    RE: Kary L. Krismer @ 73 Keynes with his “multiplier” never expected anyone to be using borrowed money. The stimulus funds were to come from savings, essentially cost free (except for the opportunity cost).

    1. why don’t we have any savings? bush, whom you voted for, gave it to the rich in the form of tax cuts. you talk a lot about debt, but you said you’d extend the tax cuts and add trillions to the debt. the tax cuts won’t pay for themselves so it’s even worse than stimulus spending.

    2. the multiplier is not some new invention. it’s economics 101. there is one for private spending too. one for tax cuts. didn’t you ever take an economics class?

    3. the stimulus is coming from savings. the savings rate has sky-rocketed and americans are pouring money into bond funds. we are the majority buyers of newly issued debt.

    Fund Flows Show An Enormous Panic
    http://www.businessinsider.com/yep-investors-have-panicked-for-three-straight-months-2010-8

    edit

    4. we can easily calculate and project repayment so that can easily be calculated into the multiplier.

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  100. 100
    Scotsman says:

    RE: pfft @ 95

    “your way would be reset. the only problem is your reset adds even more debt. $2.7 trillion more”

    I’m sorry, but your level of understanding is so low it’s not even worth trying to have a discussion with you. Do you know the difference between static and dynamic analysis? If so, move from static to dynamic. In a reset situation the deficit would not grow. . because the government would have to spend less, maybe even. . . only what it collects. That would be a zero deficit. Would it hurt for a while? You betcha, but it’s a reset, not a vacation. And whether you believe it or not, you will soon enough be living it.

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  101. 101
    pfft says:

    By Kary L. Krismer @ 98:

    This wealth argument seems to be something that is just designed to prove the stimulus failed. Even unemployment benefits are seen as stimulus, and they don’t produce squat.

    the stimulus is highest for unemployment benefits because all the money is usually spent because the need is so great. putting food on the table or keeping the heat on is squat.

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  102. 102
    Scotsman says:

    RE: Kary L. Krismer @ 98

    Yeah, that’s it! If you don’t understand, blow it off. Your unemployment example is all the proof you need, but you don’t see it. How long can we continue to pay unemployment to an ever increasing percentage of the population that produces nothing? What happens when the government finally runs out of other people’s money because there is no productive capital left, all of it having been given to the unemployed?

    Stick with selling houses. ;-)

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  103. 103
    pfft says:

    By Scotsman @ 100:

    RE: pfft @ 95

    “your way would be reset. the only problem is your reset adds even more debt. $2.7 trillion more”

    I’m sorry, but your level of understanding is so low it’s not even worth trying to have a discussion with you. Do you know the difference between static and dynamic analysis? If so, move from static to dynamic. In a reset situation the deficit would not grow. . because the government would have to spend less, maybe even. . . only what it collects. That would be a zero deficit. Would it hurt for a while? You betcha, but it’s a reset, not a vacation. And whether you believe it or not, you will soon enough be living it.

    you couldn’t cut fast enough. the drop in demand caused by austerity would cause an austerity spiral. like what is happening in greece and ireland right now.

    doing nothing would have sunk gdp even more and hence revenue. this would mean more debt. you couldn’t cut fast enough. government debt would be $2.0 trillion in 2010, $700 billion higher than w/o all the measures.

    do you really think we could cut $2 trillion from the budget?

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  104. 104
    pfft says:

    By Scotsman @ 102:

    RE: Kary L. Krismer @ 98How long can we continue to pay unemployment to an ever increasing percentage of the population that produces nothing? What happens when the government finally runs out of other people’s money because there is no productive capital left, all of it having been given to the unemployed?

    Stick with selling houses. ;-)

    unemployment peaked awhile ago. the employment population ratio bottomed awhile ago.

    unemployment benefits weren’t that much. the last extension was less than $30 billion. that’s a rounding error on the national debt but vital for those who need it. unemployment benefits have a huge multiplier effect because the money is quickly spent.

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  105. 105
    pfft says:

    the gist from this blog post seems to be if you want to cut government spending by $2 trillion you need to cut more than that because the cuts lessen revenue.

    Now, a weaker economy means less revenue. Assume that every dollar up or down in GDP means $0.25 in revenue, which is conservative. Then the fiscal austerity reduces revenue by 0.35 percent of GDP; the true saving is only 0.65 percent.

    Now, the government has to borrow those funds; let’s say the real interest rate is 3 percent (it’s actually much lower now). Then the long run impact of the austerity on the fiscal position is to reduce real interest payments by 0.0195 percent of GDP.

    Self-defeating Austerity
    http://krugman.blogs.nytimes.com/2010/07/07/self-defeating-austerity/

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  106. 106
    Scotsman says:

    Robert Shiller, co-creator of the S&P/Case-Shiller price indexes, said that although he doesn’t forecast prices, “I think the scenario of declining home prices for years to come is underemphasized by people.”

    http://www.latimes.com/business/la-fi-petruno-20100828,0,4478303,full.column

    Historically, housing has led the way in recoveries. “But this is a case where housing is going to follow the economy, not lead it,” [said David Crowe, chief economist for the National Assn. of Home Builders].

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  107. 107
    Chris says:

    RE: pfft @ 75

    Since the pro-Krugman crowd refuses to answer the general question of whether using debt to create and then bail out a real estate bubble is a good idea, let’s look at the multiplier effect they think wins any argument:

    Instead of achieving its stated goal of 90% private-sector job creation, ARRA did the exact opposite. More than 95% of any jobs created have been in the government sector (fully outlined on Recovery.gov and confirmed by the Congressional Budget Office).

    http://www.minyanville.com/businessmarkets/articles/american-recovery-and-reinvestment-act-keynesian/8/26/2010/id/29807

    Responding to criticism, Office of Management & Budget Director Peter Orszag drafted a memo on December 18, 2009, explaining that the new definition of a job retained was “an existing position that is now funded by the Recovery Act.”

    From that point on, any notion of being able to classify a job “created or saved” by ARRA became meaningless, and Republican Congressman Darell Issa hit the roof. He sent a letter to the board in charge of Recovery.gov, and demanded they clarify “SAVED/CREATED,” now that a memo had just been circulated saying that existing jobs could be counted as “CREATED or SAVED” when they had been neither. Issa then brought Earl Devaney — the man in charge of overseeing compliance with ARRA reporting — in front of Congress to ask him about Recovery.gov. Issa specifically asked if it would be more honest for Recovery.gov to say “we don’t know how many jobs have been created or if recipients are reporting correctly,” instead of “jobs funded under the recovery act.” Devaney, the man most closely associated with the job-creation figures, said “I would agree with that statement.”

    http://www.minyanville.com/businessmarkets/articles/recovery-act-keynesian-economics-private-sector/8/27/2010/id/29808

    So Pfft, the stimulus is a failure by any measure – even by your own inadvertently cooked numbers (at least inadvertent by you). The “multiplier” of phony jobs turns out to be another cover for a government job patronage system that would make Boss Tweed proud. As soon as we stop going into debt to prop up government employment, things will either get a lot worse or will last a lot longer.

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  108. 108
    Macro Investor says:

    To those of you saying the stimulus worked, please explain specifically what outcome you believe was positive.

    First of all, the stimulus was not $700 billion. The ANNUAL deficit is more like $2 trillion, and there is no accounting of how much of that is just being printed by the fed vs “real” investors buying bonds. Nor is there any accounting of the $ trillions the fed continues to pump into banks, insurance companies, fannie/freddie or whom ever they want to. It’s all hidden from public view.

    Why does the stimulus go to banks who pay it out as multi-million $ bonuses, rather than to “more productive” things like fixing/enhancing the infrastructure, or renewable energy? Answer, gov is OWNED by special interests MAINLY the large banks. (PS, this is non partisan, I hate both parties). The banks will never be allowed to go under no matter how stupidly they behave, so unproven scare stories are put out that it would wreck the economy.

    I’ll grant you one positive. Without the trillions in stimulus EACH YEAR, there would be massive homelessness, hunger and untreated illness. Much like we read about the first depression. (Yes, I’m calling this a depression, but please let’s not get stuck on names). The “official” stats are around 10% unemployment. When you add those uncounted for various reasons and include under employment, it’s probably closer to 25%. 40 million are on food stamps. 20 million are direct gov employees who wouldn’t have a job if gov only spent what it took in from taxes. Millions are living rent free in homes that banks refuse to foreclose.

    If you took away that stimulus, all those people would be out in the street. Plus the negative multiplier effect would dump many of the rest of us out of work. The problem is how do we get off this speeding treadmill, where the gov has to borrow/print more and more just to keep half of us from being unemployed? I believe we would have been much better off if we let the banks go under and just sold off the debt to the highest bidders. The $10’s of trillions spent on infrastructure would have created tons of new productive businesses, much like building roads stimulates development in those areas. But again, that will never happen because the banks own both parties in DC.

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  109. 109
    Triger says:

    RE: Scotsman @ 106 – Scotsman – I think it would make sense if the govt could come up with the following business plan:
    – It spends x amount of dollars on sthg
    – The tax revenue exceeds x amount of dollars from the investment on sthg

    So you invest, give jobs and collect more tax revenue.

    This what EU did with countries like Ireland and it is doing so with 3rd world countries that joined EU such as Czech, Hungary or Poland. So it invests some money in infrastructure or innovations and then the economies grow and they contribute more to EU budget. So such a model is sustainable.

    I think Bernake and Obama did not explore this model as of yet. Right now they just keep throwing money at this problem.

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  110. 110
    Trigger says:

    RE: Trigger @ 108 – I think the main problem is that private sector in the US does not know what to invest in to make a lot of money so the govt may have a hard time cracking this problem. Maybe instead of just doing purely financial engineering they could rack their brains to really help the economy. If they do it people will be happy and they will be able to go for a hike to relax.

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  111. 111

    By Scotsman @ 102:

    RE: Kary L. Krismer @ 98

    Yeah, that’s it! If you don’t understand, blow it off. Your unemployment example is all the proof you need, but you don’t see it. How long can we continue to pay unemployment to an ever increasing percentage of the population that produces nothing? What happens when the government finally runs out of other people’s money because there is no productive capital left, all of it having been given to the unemployed?

    Stick with selling houses. ;-)

    I disprove your assertion and you respond with insults? In any case I think welfare would be a better example for your assertion, but that has more to do with other matters than stimulus, because welfare is often not TEMPORARY.

    So, the first failure of your analysis is you think stimulus needs to for some reason create wealth. The second failure of your analysis is you don’t realize stimulus is temporary.

    The thing is, I’m sort of between you and pfft. I would analogize the stimulus 2008-2010 (which includes Bush) as being sort of like the Iraq war run under Rumsfeld. Something that could have worked, but isn’t run correctly. So you’re right that it’s a failure, and pfft is right that it could work.

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  112. 112

    RE: Chris @ 107 – The lack of private sector jobs is part of the “Rumsfeld” factor I was talking about.

    If you want the private sector to provide jobs you do not threaten their owners with tax increases. If you want the private sector to provide jobs you do not create a health care plan affecting current and new employees that they don’t understand and which scares them. If you want the private sector to provide jobs you do not create a lynch mob situation with banks such that banks repay their TARP funds simply to get out from under any government control, instead of making the loans the funds were supposed to allow. Conversely, if you want the private sector to provide jobs you do something so that banks again loan to small businesses. Little or nothing had been done in that area.

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  113. 113

    By Trigger @ 109:

    RE: Trigger @ 108 – I think the main problem is that private sector in the US does not know what to invest in to make a lot of money so the govt may have a hard time cracking this problem. Maybe instead of just doing purely financial engineering they could rack their brains to really help the economy. If they do it people will be happy and they will be able to go for a hike to relax.

    You really think that out of all the people in the U.S., that no one knows what to invest in to make money? That’s the beauty of capitalism over other economies. People will have plans. They might be the wrong plans (i.e. business failures), but they know what they want to invest in.

    The problem is no one wants to do it. The current administration is perceived as being anti-business, and personally I think that perception is correct..

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  114. 114

    This is more of an editorial piece than a news story regarding private business not hiring, and I don’t agree with many of the assertions, but the point is made that the cash businesses are accruing dwarfs the stimulus. If that assertion is correct, that could be a good reason the stimulus is not working. BTW, the piece does mention taxes and health care as possible reasons for not hiring.

    http://seattletimes.nwsource.com/html/businesstechnology/2012735421_hiltzik29.html

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  115. 115

    RE: Scotsman @ 102
    Scotsman actually makes a good point here FOR socialism.
    He’s right. Simply providing unemployment and then extending that to people who don’t produce anything except a little money to take care of their own food and shelter needs isn’t going to result in a robust economy. It’s not compassion. Ultimately, it’s suicide.
    But actually providing jobs? That’s a good idea, and it’s real, not just phantom money created out of debt.
    Back in the 1930’s, agencies like the CCC and WPA built bridges, buildings, hiking trails, and artwork that all endure today.
    Whether it’s worth it or not, I don’t know. But it actually produced stuff.
    Besides, nowadays it’s trendy among conservative historians to point out what a failure Franklin Roosevelt was. But the American public sure didn’t agree with that sentiment at the time. He was elected President four times.

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  116. 116

    RE: Ira Sacharoff @ 114 – And on the public/private sector employment issue, a lot of the stimulus has gone to states to preserve state jobs. But for that, many/most of those people would be on unemployment. Presumably the state jobs have at least some benefit.

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  117. 117
    David Losh says:

    “But funneling corporate wealth to shareholders at the expense of the workers who create that wealth isn’t any smarter today than it was 10 years ago, when it got us into this economic fix, and it sure won’t lead us to a brighter tomorrow.”

    Where to begin….

    There is money in the system globally to meet any, and all demand for jobs, or economic growth. We don’t need the governments, except for over sight, and regulation. Regulation is something they should have been doing, and I blame government for allowing this growing mess.

    In Asia, including India, there are billions of consumers who need everything we have. In Africa they need health care, water, and transportation. South America needs cohesion, as does the United States, Canada, and Mexico.

    Europe is a problem that Europeans will never agree on. In my opinion this is where the financial problems started. Europe didn’t need to create a currency, but they did. We’re all still struggling with that, but that’s a topic for another time.

    The important thing is to stop giving money to banks, corporations, and the wealthy.

    We need to cut taxes below, including, or especially FICA, for wage earners below $50K, and all taxes for businesses less than a $1Million.

    Real people need real dollars. Huge multi national investment entities, adding to their cash reserves will do nothing. Giving tax credits, again, for capital expenditures will stimulate growth. Giving tax credits on dividend income will only add more to cash reserves.

    I’m going to make one point about Paul Allen suing for copyright infringement. This is the mentality we all have to put up with. This ignorant slob, like Bill, and Melinda Gates, are sitting on wealth with nothing better to do than play stupid games.

    It doesn’t take intelligence to create, or hold on to wealth, it’s only a fear level.

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  118. 118
    2kt says:

    Oh, Gees, you caught me, but we don’t want credit worthy borrowers, we want banks to default. I personally want banks out of business, because it has proved to go nowhere.

    You betcha banks have reserves. Banks have fat reserves that are only getting fatter on the backs of credit worthy borrowers.

    Let the banks default. Let governments default

    ___________________________________________________

    I think the above roughly sums up what you stand for. Sorry to remind you, this road has been travelled before.

    .We want no condescending saviors
    To rule us from their judgment hall,
    We workers ask not for their favors
    Let us consult for all:
    To make the thief disgorge his booty
    To free the spirit from its cell,
    We must ourselves decide our duty,
    We must decide, and do it well.
    ‘Tis the final conflict,
    Let each stand in his place.
    The international soviet
    Shall be the human race
    ‘Tis the final conflict,
    Let each stand in his place.
    The international working class
    Shall be the human race

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  119. 119
    Blurtman says:

    RE: pfft @ 94 – Correct, but let’s see where we are longer term. The employment population ratio from 2008 to 2010 dropped like a stone. GDP was ostensibly increasing 2009-2010. Wages and benefits are decreasing. So less people are working, and the standard of living is decreasing, while GDP is increasing. Bravo.

    To all of this analysis should be applied a nominal versus real analysis. If the rate of unemployment is decreasing and perhaps stabilizng, but the average employed wages and benefits are decreasing, that is still a big FAIL..

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  120. 120
    Yaj says:

    “Austerity Spiral”

    Fascinating. I’d like to know more about this process. Tell me more. Per your understanding, do wages and prices remain fixed while demand spirals down to zero? Please explain the intertemporal dynamics of the “Austerity Spiral,” with regards to wages and prices.

    Once you’ve accomplished that, coming up with a Keynesian argument against paying people to destroy farmland should be a snap.

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  121. 121
    pfft says:

    By Chris @ 107:

    RE: pfft @ 75

    Since the pro-Krugman crowd refuses to answer the general question of whether using debt to create and then bail out a real estate bubble is a good idea, let’s look at the multiplier effect they think wins any argument:

    Instead of achieving its stated goal of 90% private-sector job creation, ARRA did the exact opposite. More than 95% of any jobs created have been in the government sector (fully outlined on Recovery.gov and confirmed by the Congressional Budget Office).

    http://www.minyanville.com/businessmarkets/articles/american-recovery-and-reinvestment-act-keynesian/8/26/2010/id/29807

    Responding to criticism, Office of Management & Budget Director Peter Orszag drafted a memo on December 18, 2009, explaining that the new definition of a job retained was �an existing position that is now funded by the Recovery Act.�

    From that point on, any notion of being able to classify a job â��created or savedâ�� by ARRA became meaningless, and Republican Congressman Darell Issa hit the roof. He sent a letter to the board in charge of Recovery.gov, and demanded they clarify â��SAVED/CREATED,â�� now that a memo had just been circulated saying that existing jobs could be counted as â��CREATED or SAVEDâ�� when they had been neither. Issa then brought Earl Devaney — the man in charge of overseeing compliance with ARRA reporting — in front of Congress to ask him about Recovery.gov. Issa specifically asked if it would be more honest for Recovery.gov to say â��we donâ��t know how many jobs have been created or if recipients are reporting correctly,â�� instead of â��jobs funded under the recovery act.â�� Devaney, the man most closely associated with the job-creation figures, said â��I would agree with that statement.â��

    http://www.minyanville.com/businessmarkets/articles/recovery-act-keynesian-economics-private-sector/8/27/2010/id/29808

    So Pfft, the stimulus is a failure by any measure – even by your own inadvertently cooked numbers (at least inadvertent by you). The “multiplier” of phony jobs turns out to be another cover for a government job patronage system that would make Boss Tweed proud. As soon as we stop going into debt to prop up government employment, things will either get a lot worse or will last a lot longer.

    the stimulus is not a failure and has worked all around the world.

    mccain’s own economic advisor was for stimulus and his study showed it worked.

    EDIT: the multiplier is not about measuring jobs it’s about measuring GDP.

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  122. 122
    Ben says:

    Lots of enjoyable comments since I left Friday. I’m new to posting here – mainly lurk and read the real estate information. I’m glad to take note of some enlightened folks I could share a virtual beer with (“pfft” excepted).

    I think it is helpful to know that by history of economic thought dating, the multiplier has been formally debunked since at least 1850 with Bastiat’s telling of the broken window fallacy. This is why I may offend some people when I call it believing in “something for nothing”, “magical thinking”, “a free lunch” or “Santa Claus”.

    http://bastiat.org/en/twisatwins.html

    That Which is Seen, and That Which is Not Seen
    by Frederic Bastiat, 1850

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  123. 123
    David Losh says:

    RE: 2kt @ 117

    Making debt slaves to enrich a small, very small segment of the population, is essentially the same as communism. Expecting the ruling wealthy class, to take care of the working class, is the same as communism, and feudalism, neither works.

    A strong working class, In my opinion, in smaller business form, has the velocity, and multiplier effects that are constantly discussed here.

    The recovery has to be in the small business sector, creating living wages.

    A buddy of mine who I see from time to time Jack Fletcher, he owned Farrel’s Ice Cream, has a book, or poem, about letting go. I’ll look for it later. Essentially, we are going to have to let go of this idea that government, and the banks, financial system will take care of us.

    We need to let go, rebuild, and follow a much more basic business model. Cash is King.

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  124. 124
    pfft says:

    By Ira Sacharoff @ 114:

    RE: Scotsman @ 102
    Scotsman actually makes a good point here FOR socialism.
    He’s right. Simply providing unemployment and then extending that to people who don’t produce anything except a little money to take care of their own food and shelter needs isn’t going to result in a robust economy. It’s not compassion. Ultimately, it’s suicide.
    But actually providing jobs? That’s a good idea, and it’s real, not just phantom money created out of debt.
    Back in the 1930’s, agencies like the CCC and WPA built bridges, buildings, hiking trails, and artwork that all endure today.
    Whether it’s worth it or not, I don’t know. But it actually produced stuff.
    Besides, nowadays it’s trendy among conservative historians to point out what a failure Franklin Roosevelt was. But the American public sure didn’t agree with that sentiment at the time. He was elected President four times.

    back then they those same conservatives were calling him worse. things don’t change.

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  125. 125
    pfft says:

    By Yaj @ 119:

    “Austerity Spiral”

    Fascinating. I’d like to know more about this process. Tell me more. Per your understanding, do wages and prices remain fixed while demand spirals down to zero? Please explain the intertemporal dynamics of the “Austerity Spiral,” with regards to wages and prices.

    Once you’ve accomplished that, coming up with a Keynesian argument against paying people to destroy farmland should be a snap.

    you are so obsessed with your cropland scenario and I never talked about demand spiraling to zero. nobody would do that and it’s not deficit spending. it’s keeping cops on the beat or rebuilding our worn infrastructure. stuff we need to do anyway. it’s not the same as destroying cropland.

    read here about the austerity spiral.

    Now, a weaker economy means less revenue. Assume that every dollar up or down in GDP means $0.25 in revenue, which is conservative. Then the fiscal austerity reduces revenue by 0.35 percent of GDP; the true saving is only 0.65 percent.

    Self-defeating Austerity
    http://krugman.blogs.nytimes.com/2010/07/07/self-defeating-austerity/

    this seems to be exactly what is happening in greece and ireland right now. have you seen the bond yields there? it’s not a pretty picture.

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  126. 126
    pfft says:

    By Ben @ 121:

    Lots of enjoyable comments since I left Friday. I’m new to posting here – mainly lurk and read the real estate information. I’m glad to take note of some enlightened folks I could share a virtual beer with (“pfft” excepted).

    I think it is helpful to know that by history of economic thought dating, the multiplier has been formally debunked since at least 1850 with Bastiat’s telling of the broken window fallacy. This is why I may offend some people when I call it believing in “something for nothing”, “magical thinking”, “a free lunch” or “Santa Claus”.

    http://bastiat.org/en/twisatwins.html

    That Which is Seen, and That Which is Not Seen
    by Frederic Bastiat, 1850

    it’s not a broken window situation. we aren’t breaking windows we keeping teachers employed. nobody is forced to buy bonds, they are willingly doing it which is depressing the economy.

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  127. 127
    Ben says:

    RE: pfft @ 125

    You make no sense whatsoever. Besides, I try not to argue with children or morons if I can help it (not always successful – it is a weakness of mine), so I’ll wish you well in your endeavors today.

    My posts are for those who are curious and want to learn.

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  128. 128
    Scotsman says:

    RE: pfft @ 125

    “nobody is forced to buy bonds, they are willingly doing it which is depressing the economy.”

    What?!? I thought you just said those ever lower interest rates were a sign of a healthy bond market?! And of course you realize that lower rates facilitate the stimulus you have so much faith in? But now they’re bad?

    Give it up. You clearly have no idea how all these inter-related pieces fit together to make an economy. And like everyone else, you just ignore the costs and revenue side of the equation. The irony is we will get a nasty downward spiral here soon, facilitated in large part by the very efforts pumped to prevent it.

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  129. 129
    Ben says:

    RE: Scotsman @ 127

    “The irony is we will get a nasty downward spiral here soon, facilitated in large part by the very efforts pumped to prevent it.”

    Game, Set, Match……Amen brother.

    What’s pathetic is that they will always rationalize their failure by claiming the stimulus efforts were “too small”, no matter how ruinously large they may be and NEVER, ever admit that their policies caused the mess in the first place.

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  130. 130
    The Kid says:

    RE: David Losh @ 122

    While I am not advocating it by any stretch of the imagination, feudalism does actually work, and worked for centuries.

    The key with feudalism is that there is a mandate for the ruling class to provide protection and fair treatment for the serfs, lest your serfs and land got poached by a competing lord. I’m simplifying it greatly, of course. There were a dozen other checks and balances, in the feudalistic system, usually resulting in the grisly demise of anyone who threatened the power of the ruling class, even if it was a member of the ruling class. It wasn’t until the rise of the merchant class that feudalism began to decline.

    We’re attempting to apply a form of neo-feudalism, where all the money and power is concentrated in the hands of an elite few, who are nigh immune from the laws everyone else has to follow, without a social contract demanding a code of behavior for the ruling class. However, anytime in history the ruling class has ceased to acknowledge their part of the social contract it has ended badly. Usually in pitchforks.

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  131. 131
    karl says:

    Market uncertainty and volitility force people into bonds also. Was funny friday to her the “day traders” cry foul on the black box traders who can buy and sell their entire portfolio 11 times in 22 seconds. 10 years ago the day traders were the head leaches in the pond.

    Battle of the parasites

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  132. 132
    Macro Investor says:

    RE: Macro Investor @ 108

    Tim, something’s wrong with your site. I sent this noonish on the 29th, not at 5:07 AM. Why would the comments be out of order like this?

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  133. 133
    David Losh says:

    “It wasn’t until the rise of the merchant class that feudalism began to decline.”

    I’m going to, once again, use the super market in Peru as an example. There is also a store called, I think, Super Max for building materials, and equipment, like a Home Depot, which is another example.

    We could, in my opinion, trace back economic problems to the concentration of the merchant class. Super markets taking over the local market system. Goods traded over seas, out of area, with profits sent off shore. It cuts the velocity, and multiplier effects.

    In the feudal system of old it was all concentrated within a community to hold off outside influences.

    All of which is fine in a shrinking global economy, but credit is a whole different scheme that got way out of control.

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  134. 134
    David Losh says:

    RE: Macro Investor @ 108

    Well, my point exactly.

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  135. 135
    Scotsman says:

    A brief refresher on why stimulus is destined to fail, presented as a picture so all can understand:

    http://www.swarmusa.com/vb4/attachment.php?attachmentid=116&d=1269115914

    “The latest U.S. Treasury Z1 Flow of Funds report was released on March 11, 2010, bringing the data current through the end of 2009. What follows is the most important chart of your lifetime. It relegates almost all modern economists and economic theory to the dustbin of history. Any economic theory, formula, or relationship that does not consider this non-linear relationship of DEBT and phase transition is destined to fail.”

    http://www.swarmusa.com/vb4/content.php/282-THE-Most-Important-Chart-of-the-CENTURY

    Macroeconomic DEBT SATURATION occurred causing a phase transition with our debt relationship. This is because total income can no longer support total debt. In the third quarter of 2009 each dollar of debt added produced NEGATIVE 15 cents of productivity, and at the end of 2009, each dollar of new debt now SUBTRACTS 45 cents from GDP!

    This is mathematical PROOF that debt saturation has occurred. Continuing to add debt into a saturated system, where all money is debt, leads only to future defaults and to higher unemployment.

    This is the dilemma created by our top down debt backed money structure. Because all money is backed by a liability, and carries interest, it guarantees mathematically that there will be losers and that the system will eventually reach the natural limits, the ability of incomes to service debt.

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  136. 136
    Macro Investor says:

    RE: Scotsman @ 135

    Your chart backs up what I’ve believed for many years. We have overcapacity in every business that doesn’t have a monopoly protecting it. That overcapacity has driven down profits to nearly nothing. It is no longer worthwhile to start businesses. All risk and no return. Just ask yourself what business would be worth starting now. Okay… pawn shop and bankruptcy attorney.

    Debt is only worth taking on if you can earn more profit than the interest payment. Instead we have debt chasing 0% returns. Or in the case of consumers, debt pulling forward a lifetime of work and savings into “today”.

    I’m afraid times are going to be tough for 10 or more years. This could all be worked off quickly if uncle sam would let banks fail, instead of bailing them out. But gov won’t do that because gov the banks own the politicians.

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  137. 137
    Blurtman says:

    Why We Need a Second Stimulus
    by Laura Tyson, PhD

    http://www.nytimes.com/2010/08/29/opinion/29tyson.html

    I am not sure if this is actually correct: “The supply of college graduates is not keeping pace with demand.”

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  138. 138
    Blurtman says:

    RE: Scotsman @ 135 – Time for The National Debt Jubilee!

    Rate this comment: Thumb up 0

  139. 139
    pfft says:

    By Ben @ 127:

    RE: pfft @ 125

    You make no sense whatsoever. Besides, I try not to argue with children or morons if I can help it (not always successful – it is a weakness of mine), so I’ll wish you well in your endeavors today.

    My posts are for those who are curious and want to learn.

    I am glad you know I don’t want to learn. I learned about broken window from Economics in One Lesson and mises.org. this is not that situation. nobody broke a window. the government issued bonds to stimulate the economy and people bought them of their own free will. they weren’t forced. in the broken window scenario people had money diverted unnecessarily from savings or from purchasing something else. this is not the case.

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  140. 140
    pfft says:

    By Scotsman @ 128:

    RE: pfft @ 125

    “nobody is forced to buy bonds, they are willingly doing it which is depressing the economy.”

    What?!? I thought you just said those ever lower interest rates were a sign of a healthy bond market?! And of course you realize that lower rates facilitate the stimulus you have so much faith in? But now they’re bad?

    Give it up. You clearly have no idea how all these inter-related pieces fit together to make an economy. And like everyone else, you just ignore the costs and revenue side of the equation. The irony is we will get a nasty downward spiral here soon, facilitated in large part by the very efforts pumped to prevent it.

    only what, 3 1/2 months or so till your massive downturn?

    I don’t really know what point you are trying to make but mine is this. people are saving which has caused a recession. the government is simply borrowing that money and spending it. that’s the stimulus simplified.

    “And like everyone else, you just ignore the costs and revenue side of the equation.”

    no I haven’t, I posted all of that above. you are the one making vague notions of ever-increasing spiraling interest payments and whatnot.

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  141. 141
    pfft says:

    By Ben @ 129:

    RE: Scotsman @ 127

    “The irony is we will get a nasty downward spiral here soon, facilitated in large part by the very efforts pumped to prevent it.”

    Game, Set, Match……Amen brother.

    What’s pathetic is that they will always rationalize their failure by claiming the stimulus efforts were “too small”, no matter how ruinously large they may be and NEVER, ever admit that their policies caused the mess in the first place.

    not doing anything would have made the deficits $2.7 trillion dollars higher over 2010-2012.

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  142. 142
    pfft says:

    By Scotsman @ 135:

    A brief refresher on why stimulus is destined to fail, presented as a picture so all can understand:

    http://www.swarmusa.com/vb4/attachment.php?attachmentid=116&d=1269115914

    “The latest U.S. Treasury Z1 Flow of Funds report was released on March 11, 2010, bringing the data current through the end of 2009. What follows is the most important chart of your lifetime. It relegates almost all modern economists and economic theory to the dustbin of history. Any economic theory, formula, or relationship that does not consider this non-linear relationship of DEBT and phase transition is destined to fail.”

    http://www.swarmusa.com/vb4/content.php/282-THE-Most-Important-Chart-of-the-CENTURY

    Macroeconomic DEBT SATURATION occurred causing a phase transition with our debt relationship. This is because total income can no longer support total debt. In the third quarter of 2009 each dollar of debt added produced NEGATIVE 15 cents of productivity, and at the end of 2009, each dollar of new debt now SUBTRACTS 45 cents from GDP!

    This is mathematical PROOF that debt saturation has occurred. Continuing to add debt into a saturated system, where all money is debt, leads only to future defaults and to higher unemployment.

    This is the dilemma created by our top down debt backed money structure. Because all money is backed by a liability, and carries interest, it guarantees mathematically that there will be losers and that the system will eventually reach the natural limits, the ability of incomes to service debt.

    there are no hints of any of that being true. lots of people are still paying of their debt. if ti were true bond yields would be sky-rocketing and you’d be telling everyone about it.

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  143. 143
    Cheap South says:

    Is there any way to know the public school attendance in the region for the new year (student gain and loss per school/county)? Are the numbers out already?

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  144. 144
    Ben says:

    RE: Scotsman @ 135

    You nailed it!

    Moron Keynesians totally ignore the level debt in the system and will happily recommend spending the country into national bankruptcy, completely oblivious to the fact that stimulus only *appears* to work until the debt level is too high to be serviced.

    Formula to make a Keynesian: add broken window with a dose of Ponzi. Shake well.

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  145. 145
    corncob says:

    By Ben @ 144:

    Moron Keynesians totally ignore the level debt in the system and will happily recommend spending the country into national bankruptcy, completely oblivious to the fact that stimulus only *appears* to work until the debt level is too high to be serviced.

    Do you honestly believe we are even anywhere close to that point? Other advanced economies have shown that we are not, Japan has much higher debt and is still able to sell it for extremely low rates. Our rates continue to fall despite ever higher borrowing. Our deficit is a very easy problem to solve if our country really felt like doing so, the problem is not the deficit or borrowing it is that politicians and most voters don’t want to actually fix the issue. The “third rail” in the budget is not social security, it is our bloated military spending. We need some submarines and our nuclear missile stash and really not much else, the other $900B is a total waste. Since you believe government spending has no stimulus effect, we should be able to cut it immediately with only minimal consequence. Raise a few taxes and our new, enormous deficit is solved. If the economy happens to start growing again, which is inevitable due to technological advancement, we will be paying down the accumulated debt. Problem solved.

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  146. 146
    Macro Investor says:

    RE: Ben @ 144

    The Keynesians are right. You do want to stimulate a slow economy. However, the stimulus is SUPPOSED to be paid back when the economy (and tax revenues) recovers again. It’s the politicians and their special interests (both parties) that screw that up. They wanted to spend, spend, spend throughout good and bad times, because it buys votes — and that’s all they care about. It is wrong to blame the economic theory, when that theory was totally perverted for personal and corrupt gains.

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  147. 147
    Macro Investor says:

    RE: corncob @ 145

    “Since you believe government spending has no stimulus effect, we should be able to cut it immediately with only minimal consequence.”

    Please read what I posted in 108. It would be very bad for all of us if gov spending was cut immediately. However, we don’t have to spend it bailing out billionaire bankers. We COULD spend it productively, but that would take a political system that currently doesn’t exist.

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  148. 148

    RE: Ben @ 144 – Here’s a tip: Making false claims about others, while simultaneously calling them morons, isn’t really a very good way to be convincing.

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  149. 149
    Ben says:

    RE: Kary L. Krismer @ 148

    There are many that believe Krugman is an economic moron in the field of economics. This is not news. What I find interesting is that so many have such a religious devotion to his dangerous dogma.

    The following Google search yields about 84,000 results:

    http://www.google.com/search?sourceid=ie7&q=krugman+is+a+moron

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  150. 150
    Ben says:

    RE: corncob @ 145

    I agree this country has not reached the event horizon YET. Every day our “leaders” choose to kick the can down the road makes the inevitable choices that much more painful.

    More people need to see through the baloney they are being fed and demand accountablility for the damages. How many have gone to jail thus far for the banking and mortgage fraud?

    There is still time to fix the system IF there is the political will. I haven’t seen that yet.

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  151. 151
    pfft says:

    By Ben @ 144:

    RE: Scotsman @ 135

    You nailed it!

    Moron Keynesians totally ignore the level debt in the system and will happily recommend spending the country into national bankruptcy, completely oblivious to the fact that stimulus only *appears* to work until the debt level is too high to be serviced.

    Formula to make a Keynesian: add broken window with a dose of Ponzi. Shake well.

    so why aren’t bond yields sky-rocketing? where has austerity worked? greece? ireland?

    doing nothing would mean $2.7 trillion more in debt.

    “Moron Keynesians totally ignore the level debt in the system and will happily recommend spending the country into national bankruptcy”

    actually no they don’t. revenue gained through stimulus is more than the debt incurred. it’s posted above in sef-defeating austerity.

    Now, a weaker economy means less revenue. Assume that every dollar up or down in GDP means $0.25 in revenue, which is conservative. Then the fiscal austerity reduces revenue by 0.35 percent of GDP; the true saving is only 0.65 percent.

    Now, the government has to borrow those funds; let’s say the real interest rate is 3 percent (it’s actually much lower now). Then the long run impact of the austerity on the fiscal position is to reduce real interest payments by 0.0195 percent of GDP.

    for the 100th time, just how much in interest do you think we’re paying?

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  152. 152
    pfft says:

    By Ben @ 150:

    RE: corncob @ 145

    I agree this country has not reached the event horizon YET. Every day our “leaders” choose to kick the can down the road makes the inevitable choices that much more painful.

    the bond market totally disagrees so for now you are wrong. very wrong.

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  153. 153
    pfft says:

    By Scotsman @ 71:

    RE: Yaj @ 68

    Exactly.

    The debate is misrepresented- it’s not so much “do stimulus dollars end up in the economy, supporting jobs and GDP?” as it is “does the multiplier effect really work, is it taking hold under the current conditions?”

    Are the dollars spent real? Yes. Do they temporarily boost the economy? Yes, of course. Do they boost the economy out of proportion to the burden/cost of the debt that funded them? Unknown at this time, but it doesn’t look good.

    I should point out that you said the stimulus does work accept you don’t know if debt servicing costs more than the increased benefit in tax revenue.

    just how much in interest do you think we are paying? interest rates range between 0% and 5%. you can’t be saying stimulus only boosts tax revenue by less than 3%.

    Now, a weaker economy means less revenue. Assume that every dollar up or down in GDP means $0.25 in revenue, which is conservative.

    http://krugman.blogs.nytimes.com/2010/07/07/self-defeating-austerity/

    sounds like we’ve resolved that.

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  154. 154
    Macro Investor says:

    RE: Kary L. Krismer @ 148

    “Making false claims about others, while simultaneously calling them morons, isn’t really a very good way to be convincing.”

    Thanks for trying to keep the thread on an adult level. I’d like to comment on what I believe is a growing trend. Outright fraud and shills are the oldest forms of deception. Notice sometime that whenever a discussion turns to politics or corporate misdeeds, “new” contributors will come and change the subject. They’ll turn the conversation to democrats vs. republicans, young vs. old, race/religion vs. race/religion, name calling, etc… It’s divide and conquer.

    There is no way to prove who has what agenda, but the main stream media is all owned by a half dozen large corporations and you’ve got to believe they don’t like losing their power to a bunch of bloggers. They hate blogs and would like nothing more than portraying them in a poor light. The political parties and large corporations have huge PR budgets and lots of that has to be directed at the internet.

    Ask the average person what they think of Ron Paul or Ralph Nader. I guarantee you 99% will say “crazy” without having one shred of evidence. It is all due to the attacks they took simply by daring to run against the 2 political parties.

    Here is an anecdote from the last election. I had a co-worker who was enthusiastically for Ron Paul. He came to me one day all excited because Paul took second place in a primary. I did an internet search to try to confirm that. It was hard to do. Several newspapers ran stories listing the winner and third place, but never mentioned Ron Paul’s name, nor who took second place. It was like he didn’t exist.

    I think we need to keep that in mind when we see a thread turn into name calling.

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  155. 155
    Scotsman says:

    RE: pfft @ 151

    “for the 100th time, just how much in interest do you think we’re paying?”

    Proof you don’t get it. It’s not how much we are paying, it’s “are we getting more back than we are paying out?” And the current answer, as shown in the chart I linked, is no. Not my numbers by the way, but treasury/OMB. It’s not theory, it’s fact, hard numbers from our own government. Deal with it, as you say.

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  156. 156
    Chris says:

    RE: pfft @ 121
    Pfft – Employment is part of the positive feedback loop the Keynesians see with stimulus spending.

    According the the White House the first thing notable about the ARRA is the use of the stimulus to supposedly increase employment:

    – The President signed the American Recovery and Reinvestment Act, which has been responsible for about 3 million American jobs and brought the economy back from the brink of another depression.
    http://www.whitehouse.gov/issues/economy

    The Speaker of the House also lists the top reason for the stimulus to be creating jobs:

    -The American Recovery and Reinvestment Act will: Create and save 3.5 million jobs, rebuilding America, making us more globally competitive and energy independent, and transforming our economy.
    http://www.speaker.gov/newsroom/legislation?id=0273

    In fact every pro-stimulus source touting the multiplier effect lists jobs at or near the top as a priority of the stimulus:

    Give us money, and we’ll give you jobs. That was the promise President Barack Obama made when he asked Congress for a $789 billion stimulus bill. The cash, he said, would create millions of jobs during the next two years. Without the stimulus, the administration warned in a January report by economic advisers Christina Romer and Jared Bernstein, unemployment by the end of 2010 would reach as high as 9 percent.

    http://reason.com/archives/2009/10/19/the-myth-of-the-multiplier#commentcontainer

    If the stimulus worked like a positive feedback loop is there any way private sector employment could remain stagnant when hundreds of billions are dropped into the economy in a few months? I doubt it and it is obvious if there really is a “multiplier” effect as contemplated by Keynes, the funds have been misapplied for political patronage. The more likely answer however is it doesn’t work. You have to create something of value and the government doesn’t do that.

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  157. 157
    pfft says:

    By Chris @ 156:

    RE: pfft @ 121
    Pfft – Employment is part of the positive feedback loop the Keynesians see with stimulus spending.

    According the the White House the first thing notable about the ARRA is the use of the stimulus to supposedly increase employment:

    – The President signed the American Recovery and Reinvestment Act, which has been responsible for about 3 million American jobs and brought the economy back from the brink of another depression.
    http://www.whitehouse.gov/issues/economy

    The Speaker of the House also lists the top reason for the stimulus to be creating jobs:

    -The American Recovery and Reinvestment Act will: Create and save 3.5 million jobs, rebuilding America, making us more globally competitive and energy independent, and transforming our economy.
    http://www.speaker.gov/newsroom/legislation?id=0273

    In fact every pro-stimulus source touting the multiplier effect lists jobs at or near the top as a priority of the stimulus:

    Give us money, and we�ll give you jobs. That was the promise President Barack Obama made when he asked Congress for a $789 billion stimulus bill. The cash, he said, would create millions of jobs during the next two years. Without the stimulus, the administration warned in a January report by economic advisers Christina Romer and Jared Bernstein, unemployment by the end of 2010 would reach as high as 9 percent.

    http://reason.com/archives/2009/10/19/the-myth-of-the-multiplier#commentcontainer

    If the stimulus worked like a positive feedback loop is there any way private sector employment could remain stagnant when hundreds of billions are dropped into the economy in a few months? I doubt it and it is obvious if there really is a “multiplier” effect as contemplated by Keynes, the funds have been misapplied for political patronage. The more likely answer however is it doesn’t work. You have to create something of value and the government doesn’t do that.

    revenue growth is also a part of the postives.

    “I doubt it and it is obvious if there really is a “multiplier” effect as contemplated by Keynes, the funds have been misapplied for political patronage. ”

    it’s funny you put the mulitiplier effect in quotes. it’s not some new economic theory. you learn it very early in economics. it’s economics 101. cops, road, firefighters and teachers all are of value.

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  158. 158
    David Losh says:

    RE: Macro Investor @ 136

    Services. Elder care, lawn care, maintaining property, cleaning, painting, power washing, cash business, all employment based, with equipment secondary to the cost of labor.

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  159. 159
    Scotsman says:

    RE: pfft @ 151

    “doing nothing would mean $2.7 trillion more in debt”

    You keep repeating this as though it’s some kind of hard fact. It’s not. It was a projection based on static analysis, and probably not much better than this one:

    http://michaelscomments.files.wordpress.com/2009/06/stimulus-vs-unemployment-may-corrected.gif

    If we are going to have this discussion, let’s at least agree to stick to hard numbers detailing past performance, not just b.s. projections. There’s plenty of real data out there.

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  160. 160
    Scotsman says:

    The way ahead- a new nuclear power tech? I say go for it!

    “There is no certain bet in nuclear physics but work by Nobel laureate Carlo Rubbia at CERN (European Organization for Nuclear Research) on the use of thorium as a cheap, clean and safe alternative to uranium in reactors may be the magic bullet we have all been hoping for”

    http://www.telegraph.co.uk/finance/comment/7970619/Obama-could-kill-fossil-fuels-overnight-with-a-nuclear-dash-for-thorium.html

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  161. 161
    Chris says:

    RE: pfft @ 157

    Pfft – I put “multiplier” in quotes because I considered it an ironic word to use when nothing was multiplied. The sources I quoted claimed the “stimulus” spending would stimulate the economy and raise employment in the private sector. When that didn’t work out they changed the definition of employment. Thus nothing (or very little) “multiplied” from going in debt.

    Of course multiplier is a concept in economics (quite a few multiplier theories) but to imply that Keynesian Multiplier Theory (and its offshoots) is gospel and above the use of ironic quotations does not fairly state basic economics (Economics 101 as you state it).

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  162. 162
    Chris says:

    RE: pfft @ 157
    And as to my complaints of the government not creating value you caught me on a bad night. I saw an open parking spot in Ballard and grabbed it at about 8pm on Friday. I came back out an hour later and the whole line of cars I parked with were ticketed (including mine). I walked up the street about 50 meters and saw an ambiguous no parking sign (I had parked off a turn). All the other drivers ticketed with me didn’t see it or didn’t understand it either. There was nothing inherently dangerous about the place we parked. If it was about safety the proactive ticket generating energy could be used for making unambiguous signs and placing them.

    When there are fines to be had against people who need to renew their licenses, the government springs from behind its counter and works all hours of the night. But if you want something from them you will have to wait in line during your working hours. Maybe tomorrow I can handle a talk about how the government adds value to my life.

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  163. 163
    Macro Investor says:

    RE: Scotsman @ 160

    “…cheap, clean and safe…”

    Where have we heard that before? Oh yeah. Everywhere, and for our entire lives. That is what the PR department of every special interest is selling. DDT was cheap, clean and safe. Food additives and coloring. Cigarettes at one point in time. GM plants. Oil and dispersants. The list goes on for an entire library.

    How long has the gov been trying to open a nuclear waste depository? I know the answer. Do you?

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  164. 164
    Macro Investor says:

    RE: Chris @ 162

    Perhaps it’s a policy to get people to take public transit. Often times it’s to reserve parking for residents or businesses on the street. Take the bus, walk or pay for parking. Whining is annoying.

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  165. 165
    Chris says:

    RE: Macro Investor @ 164 – As I said in the post, it looked like a legal parking spot (as did everyone ticketed). There is no street car service from downtown to Ballard.

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  166. 166
    David Losh says:

    RE: pfft @ 151

    We paid, I think $375 billion in interest this year. Seems like a lot to me.

    http://www.federalbudget.com/

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  167. 167
    Scotsman says:

    RE: Macro Investor @ 163

    “How long has the gov been trying to open a nuclear waste depository?”

    Don’t know. Did you read the article? Thorium actually absorbs and neutralizes conventional nuclear waste, as well as being relatively harmless in a natural state. Does that moderate your cynicism? Like Dear Leader says, “keep hope alive” or something.

    ;-)

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  168. 168

    RE: Chris @ 156 – I will give you the point that government spending tends to be less productive than other spending, but to argue it’s not productive at all is difficult/impossible. That’s similar to trying to claim that the stimulus didn’t create any jobs. It’s impossible to spend billions of dollars without creating a job or something that was productive.

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  169. 169
    Matthew says:

    We should just keep interest rates low, have the Fed and Treasury buy all the assets in the U.S., keep an easy monetary policy at all times, and just have the Government our way even further in the hole, even during the good years, because obviously it’s works so well at creating prosperity!

    Why don’t we just expand the quadruple the Fed balance sheet, and double the national debt! Then Americans can be extra fabulous!

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  170. 170
    Matthew says:

    The G spending didn’t “create” any jobs. It may have helped “save” some jobs (disputable), but the unemployment rate is basically the same if not worse than when the stimulus spending began. And if you consider creating a “FED job” as a net positive for our economy, well, I can’t help you.

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  171. 171

    RE: Matthew @ 170 – So tell me. If we gave you even $1M to spend (not invest), how would you spend it in a manner that wouldn’t create any jobs?

    Looking at the net number of employed does not give you the answer to how many jobs were created or saved. To know that with certainty you would have to go back in time, change some decisions on the stimulus, and then measure the number of employed today with those decisions.

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  172. 172
    Matthew says:

    I see it every day! Just because budgets go up and more money is thrown into the .gov coffers doesn’t mean that federal agencies or the private sector are employing more people. It is pretty obvious right now that corporate America is merely holding cash and padding their profit margins and not hiring more employees. Look at the current worker productivity numbers right now, the American employee is being asked to do more for less. Most companies are not hiring right now, and the ones that are, are not hiring many folks.

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  173. 173

    RE: Matthew @ 172 – I’ve complained about the lack of private hiring in this very thread, blaming it on tax policy, health care policy and just the general anti-business attitude repeatedly expressed by the Obama administration. That doesn’t mean thought that the stimulus didn’t create jobs. The link I posted yesterday indicated that the amount of cash being sat on by private industry exceeds the stimulus. If you’d had the same anti-business government policies without the stimulus things would have been worse. If you’d not had those same anti-business policies, and no stimulus, things would be largely the same. If you’d not had those anti-business policies, and the stimulus, we would have been much better off than we are today.

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  174. 174

    RE: Macro Investor @ 108

    No Dust Bowl Today Either

    Meaning the extra food that would be trashed today, gets distributed through food banks [assuming they get enough diesel fuel donations], instead of thrown in the trash or didn’t exist anyway [Great Depression].

    There’s a limit though, if untrashed food isn’t selling in our grocery stores, the supply of throw away food for the food banks dries up. It just doesn’t magically appear.

    To say America could never get to that point is not being pragmatic, IMO.

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  175. 175

    RE: Trigger @ 110

    Nice Thought Trigger

    But except for the American Space and Military Development [which are being severely butcher axed], where’s the beef? Even money spent to keep government workers employed is short-term and failure moded without an industrial tax base.

    Green industries are a joke too IMO, low waged non-union and dinky job pool…..with massive outsourcing, slamdunk too.

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  176. 176

    Step One To America’s Rebuilding

    Stop calling real environmentalists for population controls “haters”.

    I’d add:

    Learn to live and be happy in this country with political differences [even significant political differences], and stop calling people “hateful names”, just because they aren’t your political clone.

    Once we get over this “thin skinned” neurosis to be politically correct, a lot of folks suffer from lately [and blame their political opponents for their neurosis, instead of looking in the mirror] and learn to agree to disagree….we’re on the road to unity and survival.

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  177. 177
    Chris says:

    RE: Kary L. Krismer @ 168
    Kary – I agree there are some things of value created by the government when viewed in isolation. However I would suggest looking at housing. The government got involved in housing ostensibly to help people get into house they otherwise wouldn’t be able to afford by making financing a purchase more affordable. They created a secondary market and created an insurance program that was self funding. That metastasized into a program to keep home prices artificially high (and go deeply in debt to do so) thus discouraging buying houses, making them more expensive and putting anyone who bough at greater risk of default (or at least being under water).

    With the military the government did a good job of defending us but then changed into a Keynesian spending program that gets into wars driving us deeply in debt. I still don’t understand what we were doing in Vietnam, Somalia and Iraq.

    Then at the city level the government went from protecting us from bad guys and making sure restaurants don’t poison us into a scam artist that raises money by working all hours of the night to ticket people who they know have a way of paying them back (ie they have a car). Here’s a video: http://www.youtube.com/watch?v=CnoGi_Vba1Q

    I don’t think anyone can explain the public safety reason these cars were ticketed.

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  178. 178

    By Chris @ 177:

    <I still don't understand what we were doing in Vietnam, Somalia and Iraq..

    Not to justify or condemn it: (1) We were in Vietnam because we didn’t like the North’s politics; (2) We were in Iraq because we didn’t like their leader; and (3) I’m not sure we were ever really in Somalia, and probably whatever our involvement was there was close to humanitarian.

    I think Somalia may come back and bite us though because those millions in ship ransoms almost certainly are not going to good uses.

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  179. 179
    One Eyed Man says:

    RE: softwarengineer @ 176

    So SWE, for my personal edification and without openning the pandora’s box caused by uttering the “A” word, would you generally ascribe to being the world wide poster boy for planned parenthood? I think that just sounds better to the politically correct and the paranoid who rightly or wrongly might associate the term “population control” with genocide.”

    I know that your reasoning is broader than what is viewed as the mission of “planned parenthood” but I assume that the general methodologies you would promote are essentially the same.

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  180. 180

    RE: One Eyed Man @ 179

    We Agree

    I’m an old fashion Democrat from the mid-90s and older….I support giving the UN money for planned parenthood facillities all over the world, America too.

    You’re right though, countries like Japan got so densely populated, even one kid a family will take that country a couple centuries to get down to an environmental 20-30 million on that dinky island country. For America to get down to a sustainable 150 million [most of our country is desert, mountains or the world’s food/farm/water requirements] or less will take quite a few decades too….but if we don’t start now, we can let disease, starvation and wars do it for us. That route is much more painful.

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