Krugman: Third Depression Watch

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I got news for ya - we were losing trillions before the stimulus, and would have continued to lose trillions, and we would have owed that as much as we owe the stimulus back. I know you don't agree w/ Keynes, but I do, and I disagree vehemently that a few tax cuts would have gotten us out of the woods in '09.

The problem with most Keynesian today is that they only pay attention to HALF of what Keynes said. He was in favor of deficit spending when economic output was NEGATIVE (or there was a glut in production capacity). On this I agree. He was in favor of the government spending the extra money on INFRASTRUCTURE (a point most modern Keynesians forget). On this I agree. Because it takes future spending on infrastructure and shifts it forward to supply jobs at a time when the private sector job market is weak.

I agree that such spending was necessary in 2009.... but unfortunately that is not what we got... despite the 'fact' that we had shovel ready jobs.

You & yours always have to shift the argument & ridicule when it comes to the economy. I can't say that economic indicators are trending up - which they have been for over 6 months now - without you & yours telling me that I'm also saying the economy is fantastic. Could Krugman be right? Of course - but there is just as much chance, imo, that he is wrong, and that growth will continue & even flourish in the years ahead.

Again... wrong... prior to the recent release, that would have been correct. But now most leading indicators are pointing south again. Obviously one month does not make a trend, but the direction has indeed shifted.

 

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Uh, Keynes said it doesn't matter how the money is spent, hence, paying one man to dig a hole and another to fill it in.

Do show us where Keynes said that.

 

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I rarely agree with someone and commend him for his accolades in one breath (while acting incredulous that someone called me a fool for agreeing with him) and in the next breath call him a fool. That's what's weird and Damo's posts: "How dare you call me a fool for agreeing with Krugman! Krugman is a fool!"

uh huh....like i said...saved

 

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E=Onceler;818668]Googling all that time, and you still couldn't find anything?

and here we go into onceler's dishonest rants....i never said i was googling...i said YOU have not produced on link, whereas i have and so have others. so nice try lying that i am googling anything.

It's funny you mentioned SF, because he added in that thread the other day that indicators HAVE been trending up for over 6 months. And since he knows so much, I would think you would agree.

Since you say you know, you must know that they have been trending up...

like i said the other day....you're looking at it this way:

you climb the top of the peak and are on your way down. on your descent, you are telling others that the trend of your path is upwards, because you have been ascending longer than your downward trend.

if you want to keep harping on that, have at it. but don't act like you know everything because you clearly don't. and really, it is telling you won't produce a single a link, whereas others have given you multiple links showing you're wrong.

 

[Onceler]

and here we go into onceler's dishonest rants....i never said i was googling...i said YOU have not produced on link, whereas i have and so have others. so nice try lying that i am googling anything.




like i said the other day....you're looking at it this way:

you climb the top of the peak and are on your way down. on your descent, you are telling others that the trend of your path is upwards, because you have been ascending longer than your downward trend.

if you want to keep harping on that, have at it. but don't act like you know everything because you clearly don't. and really, it is telling you won't produce a single a link, whereas others have given you multiple links showing you're wrong.

Nothing has shown I am "wrong," because I'm not. My contention was that economic indicators have been trending up. Ask SF, who you keep referencing, and he will agree, because he understands what "trending" means.

The link you were able to desperately google didn't talk about leading indicators, or trends w/ regard to them. I fail to see how this could have proven me "wrong."

 

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Damo, my understanding of Keynes is that it does not have to specifically be infrastructure; if he wrote that somewhere, I don't agree w/ that. For me, the most important part is that outstide stimulus is needed when the private sector is caught in a cycle of constriction.

Keynes did use infrastructure as his primary example of where the government should spend money in such times. The reason he used it is that it is a perfect example of taking a future cost (or spending need) and transferring it to the present. It is a cost we are going to incur one way or another, it is simply a matter of the timing. By transferring it to a time when the labor market is weak, it beefs up the labor market and the economy in such time.

Today's followers have warped it into 'spend on anything (domestically)' and it will work. This is not the case as we have found.

Keynes also stated than in GOOD economic times, you pay down debt. This is the other half of the equation that the vast majority of today's followers conveniently forget. Hence the non-stop 'deficit reduction' plans rather than 'deficit ELIMINATION' plans. To be clear, this is something both parties like to do.... just in different manners.

 

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and here we go into onceler's dishonest rants....i never said i was googling...i said YOU have not produced on link, whereas i have and so have others. so nice try lying that i am googling anything.

Onceler is essentially correct. The TREND has been UP. The most recent report came out with the leading indicators as negative (overall). But that doesn't shift the overall trend. It is a warning shot across the bow if you will, but the trend itself remains positive. Another couple of months of negative and the trend will shift.

like i said the other day....you're looking at it this way:

you climb the top of the peak and are on your way down. on your descent, you are telling others that the trend of your path is upwards, because you have been ascending longer than your downward trend.

if you want to keep harping on that, have at it. but don't act like you know everything because you clearly don't. and really, it is telling you won't produce a single a link, whereas others have given you multiple links showing you're wrong.

the above is not a correct analogy. Anyone who has climbed a mountain knows that you don't just climb straight up. The terrain does not permit it. Overall you are working your way up, but there will be periods where you reverse course and go down. The trend is still up towards the top, but you have to go down a bit to continue up.

right now, it is too early to tell if we peaked and are headed back down or if this is just a blip on the path up.

My OPINION is that we are heading south, but the trend does not show it yet.

 

[Bonestorm]

Keynes did use infrastructure as his primary example of where the government should spend money in such times. The reason he used it is that it is a perfect example of taking a future cost (or spending need) and transferring it to the present. It is a cost we are going to incur one way or another, it is simply a matter of the timing. By transferring it to a time when the labor market is weak, it beefs up the labor market and the economy in such time.

I'm with you here, but pretending that spending only on future expected needs such as infrastructure is the only way to make it work is nonsense. It just makes good sense to do it that way. Take WWII, for example. Spending lots of money to build things that get blown up of blow up other things isn't the best way to spend money, but it can generate robust economic growth.

Today's followers have warped it into 'spend on anything (domestically)' and it will work. This is not the case as we have found.

But that isn't a warping of anything. You've warped it to spending on infrastructure only. And it does indeed work but you have to spend commensurate with the output gap. What we have found is that half measures don't cut it.

Keynes also stated than in GOOD economic times, you pay down debt. This is the other half of the equation that the vast majority of today's followers conveniently forget. Hence the non-stop 'deficit reduction' plans rather than 'deficit ELIMINATION' plans. To be clear, this is something both parties like to do.... just in different manners.

Which is why the Bush tax cuts were stupid and people like me (and Krugman) argued against them.

 

[tinfoil]

Bushes tax cuts were a direct attempt to overcome the end of the tech bubble and the supposed irrrational exuberance. How does that fit the quote you have attached?

 

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I'm with you here, but pretending that spending only on future expected needs such as infrastructure is the only way to make it work is nonsense. It just makes good sense to do it that way. Take WWII, for example. Spending lots of money to build things that get blown up of blow up other things isn't the best way to spend money, but it can generate robust economic growth.

There is a difference. By entering the war, the US's CURRENT needs were to build up the tools to win the war. The theory works in those situations as well. You have a current need that leads to job creation in a weak job market and the theory once again holds. The problem is that the idiots in DC since WWII continued building defense year after year despite the fact that many of those years we were not involved in war. The key is 'does it create jobs'? Hence the nonsense we have gotten into about 'jobs saved'. Yes, tossing money consistently into the market is going to save jobs, but if it isn't done correctly then you simply have a never ending need to continue as it won't lead to hiring. Which is why our unemployment rate is still at 9%.

But that isn't a warping of anything. You've warped it to spending on infrastructure only. And it does indeed work but you have to spend commensurate with the output gap. What we have found is that half measures don't cut it.

Yes, it is warping Keynes. I am not warping anything. That is what Keynes proposed to Roosevelt. That is what Keynes taught. It has been warped by his followers into something he did not intend. Yes, half measures do not cut it, which is why the current system failed. They got the 'spending' half correct, but failed miserably on the 'HOW' half.

Which is why the Bush tax cuts were stupid and people like me (and Krugman) argued against them.

Again, like the strategy used by Obama (and supported by Krugman) the Bush tax cuts worked exactly as they should have. They were both short term stimulus. NEITHER works in the long term. Both are destined to fail.

The tax cuts during a down time (or the extension in a down time) are good for the short term. But in good economic times you either have to re-raise the taxes or cut spending. But like most Keynesians.... they forgot the second half of the equation.... spending cuts (obviously they were not going to choose the option to re-raise taxes)

As for the Obama 'stimulus', it did stop the hemorrhaging and provided short term relief, but as we have seen, it does not work in the long run. All you end up with is idiot after idiot saying 'we need to keep spending'. This, like the Bush tax cuts without spending cuts, is doomed to failure. THAT is why the HOW you spend it matters. When you spend at insane levels with no measurable results in the job market, that means tax increases are mandatory. Businesses know this as do most individuals. Because all you are doing is creating an ever greater tax burden for the future without SOLVING THE PROBLEM. We are following the same stupid path Japan took. We are simply walking it a couple of decades later.... but it is still the same path.

 

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Bushes tax cuts were a direct attempt to overcome the end of the tech bubble and the supposed irrrational exuberance. How does that fit the quote you have attached?

The Bush tax cuts were a direct result of the two parties convincing the naive public that there were trillions of dollars of imaginary surpluses that the government had to spend. They were planned by the Reps long before the recession got into full swing. That said, they did provide short term assistance to the economy.

 

[tinfoil]

You'll notice I used the term "supposed". I agree with you about both parties were working to implement the plan, but I recalled the repub propaganda clearly stating the surplus was not real and was projections based on revenues during the tech boom. Am I mistaken?

 

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You'll notice I used the term "supposed". I agree with you about both parties were working to implement the plan, but I recalled the repub propaganda clearly stating the surplus was not real and was projections based on revenues during the tech boom. Am I mistaken?

Both parties used different numbers for the 'surpluses', but both showed them projected out over a decade. Both parties used them to support their platforms of 'spend spend spend' for the Dems and 'cut taxes' for the Reps.

Yes, I did note the word supposed. There was no 'supposed'. The market was completely irrational in 1999, people bidding up stock prices on companies with NO EARNINGS and pretending it didn't matter because we were in a 'new economy'.

 

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Onceler is essentially correct. The TREND has been UP. The most recent report came out with the leading indicators as negative (overall). But that doesn't shift the overall trend. It is a warning shot across the bow if you will, but the trend itself remains positive. Another couple of months of negative and the trend will shift.



the above is not a correct analogy. Anyone who has climbed a mountain knows that you don't just climb straight up. The terrain does not permit it. Overall you are working your way up, but there will be periods where you reverse course and go down. The trend is still up towards the top, but you have to go down a bit to continue up.

right now, it is too early to tell if we peaked and are headed back down or if this is just a blip on the path up.

My OPINION is that we are heading south, but the trend does not show it yet.

you are being way to literal with the analogy, by it's very nature an analogy is not literal.

the housing trend has been downward for at least the last 3 months and this is a large factor.

Housing – this represents one of the larger potential headwinds from our analysis. Not only have existing home sales trended downward on a year-over-year basis over the last three months but pending home sales (often viewed as a leading indicator within the real estate market) have experienced negative year-over-year readings for eleven of the past twelve months.
Employment – while the widely reported U-3 unemployment rate has essentially moderated, recent upticks in jobless claims pose a concern to us as the confidence and spending ability of those currently employed is critical to economic growth. If people become concerned with their own future job prospects, their willingness to spend, in our opinion, will likely diminish.
Inflation – we keep hearing from the Federal Reserve that inflation is not a concern to them at this stage as they remain more concerned on economic stimulus. However, a review of the data shows that CPI and Core CPI (which strips out often volatile food and energy prices) have been trending higher over the last six months.
GDP Growth – both nominal and real (i.e. including the impact of inflation) GDP have trended lower over the last six months on a year-over-year basis which suggests that either the recovery was either significantly impacted by recent events such as the earthquake in Japan and the unrest in the Northern Africa and the Middle East, is taking a pause or, perhaps, is starting to slow down as the Private Sector shows that it is not ready to take the “stimulus baton” effectively from the Public Sector just yet.

http://seekingalpha.com/article/271209-what-the-economic-indicators-are-now-indicating

what indicators are you referring to?

 

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you are being way to literal with the analogy, by it's very nature an analogy is not literal.

No, I am correcting your analogy so that you understand why you are wrong.

the housing trend has been downward for at least the last 3 months and this is a large factor.

Housing is important, but now you are cherry picking ONE indicator. In GENERAL, the LEI's have been trending UP.

http://seekingalpha.com/article/271209-what-the-economic-indicators-are-now-indicating

what indicators are you referring to?

I am referring to the very indicators in that article. AS I stated, the most recent month's data is negative. So what is your point?

Side note yurt: I know a lot more about the economy than you do too.

 

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No, I am correcting your analogy so that you understand why you are wrong.



Housing is important, but now you are cherry picking ONE indicator. In GENERAL, the LEI's have been trending UP.



I am referring to the very indicators in that article. AS I stated, the most recent month's data is negative. So what is your point?

Side note yurt: I know a lot more about the economy than you do too.

no, you're being too literal with an analogy. in general terms, you go UP the mountain and then DOWN the mountain. you're being anal by talking about switchbacks. i mean, hell, what about a white out where you have to stall the climb....

seems to me, there were as many bad trends as good and since housing is large, i would say the overall trend is downward the last few months. i didn't cherry pick one, go back and read what i underlined. and you may think you know more, but you don't. i guess you have an onset of onceleritis....hope you find a cure for that.

 

[Onceler]

You really have a terrible time admitting it when you're wrong...

 

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You really have a terrible time admitting it when you're wrong...

and he is talking about switchbacks for some reason. apparently the mountains he drives up have them.... those I hike don't have 'trails'.... stupid lawyer.

 

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no, you're being too literal with an analogy. in general terms, you go UP the mountain and then DOWN the mountain.

Good, you made it that far. Now answer the question... when you are headed up in general, do you ever go down momentarily even though in general you are going up?

seems to me, there were as many bad trends as good and since housing is large, i would say the overall trend is downward the last few months. i didn't cherry pick one, go back and read what i underlined. and you may think you know more, but you don't. i guess you have an onset of onceleritis....hope you find a cure for that.

ok.... so it seems to YOU.... great, glad we got that resolved. I will go with the OVERALL numbers. Yes, you cherry picked a few... thanks... you got me, it was more than one. But in general they have been TRENDING (you know... that GENERAL direction you were talking about) UP.

My economics degree vs. your ambulance chasing skills.... yeah... I would put money on the fact that I understand more about economics than you.

 

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and he is talking about switchbacks for some reason. apparently the mountains he drives up have them.... those I hike don't have 'trails'.... stupid lawyer.

"drives" up? we were talking about walking up...mr. arm chair outdoor guy

Anyone who has climbed a mountain knows that you don't just climb straight up. The terrain does not permit it. Overall you are working your way up, but there will be periods where you reverse course and go down

stupid bean counter...you're describing switchbacks....be it a marked trail or a blazed trail

you don't get out much do you