Posted on 01/04/2010 7:12:33 AM PST by SeekAndFind
Here’s what’s coming in economic news: The next employment report could show the economy adding jobs for the first time in two years. The next G.D.P. report is likely to show solid growth in late 2009. There will be lots of bullish commentary — and the calls we’re already hearing for an end to stimulus, for reversing the steps the government and the Federal Reserve took to prop up the economy, will grow even louder.
But if those calls are heeded, we’ll be repeating the great mistake of 1937, when the Fed and the Roosevelt administration decided that the Great Depression was over, that it was time for the economy to throw away its crutches. Spending was cut back, monetary policy was tightened — and the economy promptly plunged back into the depths.
This shouldn’t be happening. Both Ben Bernanke, the Fed chairman, and Christina Romer, who heads President Obama’s Council of Economic Advisers, are scholars of the Great Depression. Ms. Romer has warned explicitly against re-enacting the events of 1937. But those who remember the past sometimes repeat it anyway.
As you read the economic news, it will be important to remember, first of all, that blips — occasional good numbers, signifying nothing — are common even when the economy is, in fact, mired in a prolonged slump. In early 2002, for example, initial reports showed the economy growing at a 5.8 percent annual rate. But the unemployment rate kept rising for another year.
And in early 1996 preliminary reports showed the Japanese economy growing at an annual rate of more than 12 percent, leading to triumphant proclamations that “the economy has finally entered a phase of self-propelled recovery.” In fact, Japan was only halfway through its lost decade.
(Excerpt) Read more at nytimes.com ...
"Congress should have enacted a second round of stimulus months ago, when it became clear that the slump was going to be deeper and longer than originally expected. But nothing was done — and the illusory good numbers we’re about to see will probably head off any further possibility of action."
“Congress should have enacted a second round of stimulus months ago...”
The “second round” is already on its way! The “first round” was not dispersed...the “second round” (actually the undispursed “first round”) was neatly timed to start falling from the sky just in time to try to bail the Dems out in the midterms! Let the graft and thievery begin in earnest, get the SEIU Thugocracy moving and start paying out to the Dem faithful...they have not yet begun to steal!
krug the commie.
LLS
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
~~Ludwig Von Mises
$1.75T more than they brought in ($17,500 per household) is not enough federal spending? Either Krugman is a moron or he wants to see capitalism collapse. He’s like the “romantic” who sends a woman 30 dozen roses and when that doesn’t get her back with him tries sending 60 dozen roses - clueless.
That he has. This will surely be dollar positive. LOL
As a Freeper once posted, The recession is not the problem but the solution.
Is it so suprising that such sewage advice is comming from a “Nobel Laureate”?
Wouldn't surprise me a bit if the government released numbers indicating the above and it wouldn't surprise me if many financial editors "sympathetic" to this regime were given a "heads up" to the coming report. This is the second time in as many days I read something like this.
I wonder if they will break out the temp holiday jobs in the coming report. My guess is no. so many will believe these people have real long term jobs when in fact they are already laid off. It is little wonder the public has no confidence in this government any longer
Krugman is a liberal socialist nutjob. Jobs will be added? Yeah, a temporary blip upward due to government hiring little like-minded socialists for the census; no doubt idiots like Krugman will point to yet another temporary government intervention as “signs of a recovery”, which will subsequently evaporate a month later.
Secondly, nitwits like Krugman are always claiming that when their Keynesian idiocy fails miserably, as it has every time its attempted, its only because they government didn’t spend enough, smart enough. As always, the libtard call is always for more of the same, netting the same results... nada.
Krugman is such a moron. Everything he says is wrong.
My advice - continue investing heavily in foreclosure signs.
The Next Major Bull Market Will Be In…
Economic nonsense. Paul Krugman is just one of those peddling it.
I am not trying to be flippant, nor humorous.
Indeed, we in the US will very likely see a
massive escalation of propaganda, phony
economic data, massaged labor statistics,
and the like in 2010.
Whether it’s GDP numbers, housing
data, unemployment claims, or retail numbers,
virtually every economic metric the Government
or state department publishes these days is massaged
or adjusted to paint a picture that is far rosier that
the real economic realities facing the US.
Let’s take US GDP Growth numbers, for instance.
The most common manipulations used to overstate
this number are:
1) Understating inflation
2) Overstating production of various segments of the economy
3) “After the fact” revisions lower
Virtually every one who takes things seriously on the planet realizes that the Fed’s CPI (measure of inflation)
is a joke. For those who are new to this little game,
first off you need to know is that the Government
has altered its measure of inflation several times
in the last 100 years.
The original measure was to simply keep track of
how much it costs to buy a particular basket of
goods (say meat, milk, eggs, gasoline, etc). However,
the problem with using this measure is that it quickly
demonstrates that the cost of living has gone up in
the US dramatically as a result of US Dollar devaluation.
if you’re trying to pump an economy higher on credit to cover up the fact that incomes have fallen 40% or so in 30 years (while simultaneously forcing consumers into financial speculation in order to maintain the illusion of wealth), the last thing you want is for Joe America to realize “hey, wait a minute, back in the ‘60s or early ‘70s only one parent worked and people were able to get by… why are both parents now working and still in debt up to their eyeballs?”
Consequently, the Feds changed their inflation measure to remove the costs of food and energy (after all, how many consumers actually need to buy items from those sectors?). The beauty of this is that it not only hides the fact that a gallon of milk now costs $4 or so vs. $1.15 in 1970 (and milk is DEFINITELY not three times as awesome now as then) but it also allows GDP to appear larger.
In order to illustrate this last point, think of a company that produces staples. Let’s say that in 1970 this company produced $1 million worth of staples. Today, this company produces $5 million in staples. So the company has grown five times larger right?
Not if inflation has risen five fold over the same time period. Instead, all you’ve done is shrink the value of the currency in which sales are denominated (in this case Dollars). Put another way, your company has NOT grown, it’s just that the currency it sells Staples in has lost a HUGE amount of value.
However, if you CLAIMED that inflation only rose three times as high (rather than five) then your company APPEARS to have grown a lot more. In simple terms, by changing the measure used to account for inflation, the Feds are able to make GDP growth appear larger than it really is.
Other GDP accounting gimmicks include overstating various economic segments. For instance, according to the latest GDP numbers, US exports of goods and services increased 17% in 3Q09 vs. 2Q09.
Given the fact that US production facilities are only currently operating at roughly 69% (meaning nearly one full third of industrial production facilities are sitting there doing nothing) AND that the US is not exactly what one would call a “production-based economy” (we haven’t been since we established the “you make cheap junk that we’ll buy with credit” deal with China in the early ‘70s), I find it VERY difficult to believe exports are skyrocketing in the US.
A final GDP gimmick is to post a higher growth number that is then revised much lower in the future. This particular tactic the government doesn’t even try to hide, as evinced by the fact that 3Q09 GDP growth was first published at a 3.5% annualized rate, then revised to 2.8%, and then revised even lower to 2.2%.
Let’s imagine you had a friend who liked to tell you outlandish stories which he then downplayed time and time again until they were plain, ordinary tales. How many times would you fall for this trick? Surely after three or four you’d figure out that this particular friend rarely tells you factually based anecdotes. Amazingly, when it comes to GDP numbers, traders don’t seem to bother.
The above examples only pertain to GDP growth. Virtually EVERY economic metric published these days (whether it’s retail numbers, housing numbers, unemployment claims, inflation, etc) has similarly glaring defects/ issues that cover up just how bad things have gotten in the US.
Indeed, the worse the US economy has gotten, the poorer the economic accounting has become. Consider the following:
§ The US was only officially declared to be in a recession on December 1, 2008: right AFTER the ENTIRE financial system nearly imploded.
§ At that time, the recession was claimed to have begun in December 2007 (so it took a full YEAR before the Feds announced the obvious).
§ The recession was declared “over” by Ben Bernanke and pals in August 2009: a time when one in US eight mortgages were in arrears or foreclosure and one in eight US citizens were un/ underemployed or on food stamps.
§ The US stock markets are thought to be in a new bull market despite posting a 24% loss over the last decade.
§ The Financial Crisis is largely thought to be over (or at least the worst is over) despite the fact that NONE of the real issues plaguing the system have been fixed (not to mention the ongoing problems in the derivatives, commercial real estate, and debt markets).
With mid-term elections coming up in 2010, I believe we are at the beginning of a REAL bull market in economic/ political nonsense. The massaged data, nonsensical proclamations, and other shenanigans we’ve seen over the last decade are JUST the beginning.
After all, no one is going to run on a “we’re in a Depression, not just a Recession, and we’ve spent several trillions of dollars without fixing anything just so Wall Street can get record bonuses again” platform.
Instead, we’re going to see economic data become even MORE divorced from reality, assertions that the economy is back on track, and that at worst there is the specter of a “double-dip” recession looming. Heck, even these fears are sugar-coated… literally (making an economic nightmare sound like an ice-cream sundae is a GENIUS marketing move).
So, I for one, am mega-bullish on economic/ political nonsense for 2010 ( and I am bullish that Paul Krugman will be one of its peddlers together with his enabler the New York Slimes). Put another way, I believe that the worse things get, the better they will sound coming from our nation’s leaders/ pundits.
After all, with a Nobel Peace Prize winner upping troop numbers in a never-ending war, an economist who failed to see two bubbles until AFTER the destroyed more than $11 trillion in wealth winning Time’s Man of the Year, and a CEO who somehow managed to convinced the government to give his firm $13 billion in bailout funds despite allegedly having hedged all its exposure on the very investment that it claimed it needed bailouts for named Person of the Year by The Financial Times, why couldn’t you spin record food stamp usage as a “consumption miracle” or one in eight mortgages being in foreclosure as “careful inventory accumulation” or a Depression as a “jobless recovery”?
Anyone who actually believes what Krugman says is the bigger fool.
Oh Paul, Paul, Paul. Some people said that a massive stimulous wouldnt work, in fact it would only prolong the agony and even potentially deepen the recession. Some people pointed out that FDR's crazy spending just made a bad recession into a 10 year depression and we shouldnt go that route again. But rather than see the deepening recession as confirmation that those voices were correct, you say "No they were wrong! We just didn't do enough!"
There is an old line where a patient complains of pain when he lifts his arm and the doctor tells him that to feel better he shouldnt do that any more. As the phsycian Dr Krugman would say "Do it again and hold it there!"
a turbo-charged printing press has always been part of the Krugmanomics Tool Kit (with “Tool” being the operative word...)
Krugman is a doofus, and his Nobel is as meaningful as Obama’s. I was effectively refuting his stuff as an Econ undergrad.
Other than Barry, Krugman is an idiot stuck on stupid.
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