304 replies to this topic

[ShakeZuma]

lol canadians

[DJ Vu]

#3 (note to Jubi: the following is from strategy)remember this picture? it's a really silly chart that was cut from a rough draft of some promo material for ARRA. attempting to predict job numbers when everyone's doing really out of the ordinary stuff is pretty dumb by itself, but examining the unemployment number applies another filter (work force participation) that makes it even tougher to have any precision at all. so, I can agree that it was really stupid to even draft such a thing. I mention it today because I just heard someone on the news using it to deride Obama, which is at least as stupid. Even if you want to pretend that this chart is Obama's own measuring stick, the timing of the legislation and unemployment data destroy any validity that might have had. here's the unemployment rate, 1/01-1/11 ARRA was signed Feb 17, 2009 unemployment spiked to 9%--what appears to be the prediction chart's "without stimulus" maximum--before almost anything in the legislation was implemented. what adjustments do we make to Obama's chart to compensate for this? it bothers me when people commit to a number of jobs created/saved/destroyed due to factors x, y, and z. it's such a careless position to take, and it hints that you're either dishonest or ignorant of the certainty needed to say such things. it is yet another place where, "if we don't make this claim, it'll look like we're conceding theirs" is the prevailing logic on both sides.

[hblask]

DJ Vu, on Tuesday, January 3rd, 2012, 4:58 PM, said:

unemployment spiked to 9%--what appears to be the prediction chart's "without stimulus" maximum--before almost anything in the legislation was implemented. what adjustments do we make to Obama's chart to compensate for this? it bothers me when people commit to a number of jobs created/saved/destroyed due to factors x, y, and z. it's such a careless position to take, and it hints that you're either dishonest or ignorant of the certainty needed to say such things. it is yet another place where, "if we don't make this claim, it'll look like we're conceding theirs" is the prevailing logic on both sides.

The problem is that if they don't say what they intend to accomplish, they will be forced to admit why they are really doing it, which is to pay back campaign contributors with taxpayer money. Better a stupid lie than an unbearable truth.There is a reason why just announcing such a plan would cause a huge spike in unemployment -- once again as real economists predicted. Business people work to reduce risk, and the legislative uncertainty of an unprecedented pork spree is a huge uncertainty. Who will get the pork? Me or my competitor? Who will pay for it? When? Will they just inflate the debt away, as usual, or "soak the rich"? With that kind of risk hanging over their heads, smart business people go into bunker mode, trying to wait out the storm.

[BaseJester]

strategy, on Friday, December 30th, 2011, 12:59 AM, said:

counter-example from modern times. does anyone doubt the US' ability to win a war with venezuela?

Sometimes there is a repo man; sometimes there is not. Why do you feel confident that in the case of the US that there will not be?

[strategy]

wait, did you really just say that a windfall of government spending--1/3rd of which was tax breaks, none of it offset with any planned tax increases--caused that spike in unemployment?you're welcome to argue that spending is a shitty proposition in the long-term picture, but you've totally lost me here. the "storm" was the unwinding of all of lehman's positions, the very real concern that credit markets would just stop functioning, and the fact that consumer demand was looking to go away for a long time. go back and read the financial news from early to mid 08--it's all still archived and readily available. I did that when I was working on my mini-employment study. it's very interesting to see the story develop in the news and economic indicators, rather than being spun into a narrative and retold after the fact.

BaseJester, on Tuesday, January 3rd, 2012, 7:01 PM, said:

Sometimes there is a repo man; sometimes there is not. Why do you feel confident that in the case of the US that there will not be?

I can only speak to today's realities. no investor today expects to be backed by threat of force when they are wronged by a shady foreign country. this is actually just international finance 101, not my opinion.

[hblask]

strategy, on Tuesday, January 3rd, 2012, 7:03 PM, said:

wait, did you really just say that a windfall of government spending--1/3rd of which was tax breaks, none of it offset with any planned tax increases--caused that spike in unemployment?

You seem to be there was a "windfall" other than higher unemployment and higher debt. I've seen no evidence of any positive, and the results speak for themselves.

[strategy]

hblask, on Tuesday, January 3rd, 2012, 7:20 PM, said:

You seem to be there was a "windfall" other than higher unemployment and higher debt. I've seen no evidence of any positive, and the results speak for themselves.

please, I just want you to say it clearly, you're saying the spike in unemployment was the government's response to the crisis, not the crisis itself?

[hblask]

strategy, on Tuesday, January 3rd, 2012, 7:22 PM, said:

please, I just want you to say it clearly, you're saying the spike in unemployment was the government's response to the crisis, not the crisis itself?

That question isn't very clear. If you are asking if the spike in unemployment was caused at least in part by the government flushing $800B down the toilet, then yes, that was at least part of it. Nobody will ever know what percent, of course, but why should it be surprising that irresponsible and ineffective spending would have a net negative effect on the economy?You can look back at posts in this forum from the time between Obama's election and Obama taking office, and a number of economic indicators had turned positive, and some experts were predicting economic growth.

[FCP Bob]

I think the chart below will shed some light on the stimulus issue.The reality is that the recession was far deeper than anybody thought when the chart that Strat posted was made public. It was really stupid politics to post something predictive like that.Eventhough the stimulus was large in money terms it was far smaller than the drop in Aggredate Demand caused by the recession so in fact a lot of Economists argue and some like Krugman argued at the time that it was too small to replace the loss in demand and had to be larger if unemployment wasn't going to continue to be very high.Henry is probably laughing at that but the economic analysis of that argument can't be argued with in the short term. The long term consequences of even more deficit spending and whether that price is worth it is where I would mainly differ from somebody like Krugman on his stimulus analysis.

[strategy]

hblask, on Tuesday, January 3rd, 2012, 7:31 PM, said:

That question isn't very clear. If you are asking if the spike in unemployment was caused at least in part by the government flushing $800B down the toilet, then yes, that was at least part of it. Nobody will ever know what percent, of course, but why should it be surprising that irresponsible and ineffective spending would have a net negative effect on the economy?

OK, I can live with this answer.

hblask, on Tuesday, January 3rd, 2012, 7:31 PM, said:

You can look back at posts in this forum from the time between Obama's election and Obama taking office, and a number of economic indicators had turned positive, and some experts were predicting economic growth.

I don't think I followed this forum much back then, other than to rant about the debt occasionally. I'm an alarmist hipster... I was talking about the debt when it was 50% GDP, WAY before it was mainstream.but, when you say 'experts', you mean to insult some posters, yes?

[strategy]

I just take issue with the way krugman presents the argument, like it's just self-evident to anyone who has done their homework. if there was some easy, simple answer, we'd be off talking about something else right now.

[FCP Bob]

strategy, on Tuesday, January 3rd, 2012, 8:53 PM, said:

I just take issue with the way krugman presents the argument, like it's just self-evident to anyone who has done their homework. if there was some easy, simple answer, we'd be off talking about something else right now.

He is a raging douchbag but I understand why he would be that way at times since so many of the attacks against his positions are pretty vicious and often are of the talking point variety and without any economic basis or analysis.

[BaseJester]

strategy, on Tuesday, January 3rd, 2012, 8:03 PM, said:

I can only speak to today's realities. no investor today expects to be backed by threat of force when they are wronged by a shady foreign country. this is actually just international finance 101, not my opinion.

I think that investors were backed by actual force very recently in Libya.

'Gaddafi 2009' said:

The oil-exporting countries should opt for nationalisation because of the rapid fall in oil prices. We must put the issue on the table and discuss it seriously. Oil should be owned by the State at this time, so we could better control prices by the increase or decrease in production.

'Obama 2011' said:

Mindful of the risks and costs of military action, we are naturally reluctant to use force to solve the world's many challenges. But when our interests and values are at stake, we have a responsibility to act. That is what happened in Libya over the course of these last six weeks.

[hblask]

strategy, on Tuesday, January 3rd, 2012, 7:50 PM, said:

but, when you say 'experts', you mean to insult some posters, yes?

Uh... I don't think so, but was there someone that needed insulting in there?Economics is tough, so if I come off too strong on this stuff it's just because I have to actually type this stuff, and starting every sentence with "there are many possible answers, but the theory I read that I am leaning toward believing is....". So instead I just say it.One thing I'm pretty confident, though, people like Krugman who act like all this stuff takes place in a vacuum are way, way wrong. I guess theoretically a stimulus *could* work in the short term if nobody knew that it was happening so that nobody compensated for the future costs it would impose but at the same time everyone felt richer for no apparent reason and DID act on that, and all the money was printed out of thin air and nobody knew about that. If any of those conditions fail, so will debt-driven stimulus.EDIT: Oh, and all the money would have to be spent on things that at least make *some* net positive contribution to the well-being of society, enough to outweigh the harm caused to businesses that are harmed by the competition and reallocation of resources.

[strategy]

BaseJester, on Tuesday, January 3rd, 2012, 8:31 PM, said:

I think that investors were backed by actual force very recently in Libya.

maybe my understanding is naive, but I thought the arab spring was something that basically happened on its own, only slightly supported by outsiders? was that an american soldier that Gaddafi'd Gaddafi in that video?if you want to discuss various examples of governments destroying international investors without any military response, I could probably find quite a few. russia in the 90s (LTCM, anyone?) immediately comes to mind, iceland and greece more recently. I don't mean to be a rude, but like I said, this is a very uncontroversial position.

[BaseJester]

strategy, on Tuesday, January 3rd, 2012, 9:53 PM, said:

maybe my understanding is naive, but I thought the arab spring was something that basically happened on its own, only slightly supported by outsiders? was that an american soldier that Gaddafi'd Gaddafi in that video?

It was not an American soldier and that in no way diminishes the point I'm making. I'm asserting that the British and Americans intervened in Libya (specifically in Libya, not in the Arab springs in general) to protect oil interests. The NATO involvement was significant. I daresay significant enough to earn promises that the oil assets will not be nationalized.

Quote

if you want to discuss various examples of governments destroying international investors without any military response, I could probably find quite a few. russia in the 90s (LTCM, anyone?) immediately comes to mind, iceland and greece more recently.

I'm confident you're bringing up valid examples.But again, I'm not saying that countries always experience foreign military intervention when they fail to honor economic commitments. I think there's a cost-benefit analysis, a question of the relevant companies' government connections, and a question of military power. I think it's dangerously optimistic to assume that we'll continue to be immune to those forces indefinitely.

Quote

I don't mean to be a rude, but like I said, this is a very uncontroversial position.

You should have no problem coming with good arguments for that position then.

[strategy]

BaseJester, on Tuesday, January 3rd, 2012, 9:37 PM, said:

It was not an American soldier and that in no way diminishes the point I'm making. I'm asserting that the British and Americans intervened in Libya (specifically in Libya, not in the Arab springs in general) to protect oil interests. The NATO involvement was significant. I daresay significant enough to earn promises that the oil assets will not be nationalized.I'm confident you're bringing up valid examples.But again, I'm not saying that countries always experience foreign military intervention when they fail to honor economic commitments. I think there's a cost-benefit analysis, a question of the relevant companies' government connections, and a question of military power. I think it's dangerously optimistic to assume that we'll continue to be immune to those forces indefinitely. You should have no problem coming with good arguments for that position then.

I don't mind the cost-benefit idea. As long as the US is the dominant economic/military power in the world, that equation will be mostly skewed to the peaceful side. It's definitely possible that Libya is a valid modern counter-example; I have no idea what kind of private interest was at stake with the threat nationalization. Arguments for why it is not common practice to invade a nation that defaults on private investment: Frivolous wars are bad. Keeping trade as open and free as possible has shown tangible benefits. You're a libertarian, right? Why am I listing these for you? The impact of bankruptcy laws and the abolishment of debtors' prison probably serve as a decent comparison here. I just thought of that and felt very clever.

[mk]

hblask, on Tuesday, January 3rd, 2012, 8:33 PM, said:

I guess theoretically a stimulus *could* work in the short term if nobody knew that it was happening so that nobody compensated for the future costs it would impose but at the same time everyone felt richer for no apparent reason and DID act on that, and all the money was printed out of thin air and nobody knew about that. If any of those conditions fail, so will debt-driven stimulus.

Jeff, please ask hblask the following:Does he believe that "everyone" shares the same opinion of inflation that he and the far right libertarians do, i.e. that it is ABSOLUTELY harmful in every way it can rear its head and negatively drives all business decisions? If he believes this, does he also believe the opposite to be true, i.e. that "everyone" would wholeheartedly CHEER consistent deflation because their dollars would just be RISING IN VALUE ALL THE TIME!!!! ?

[DJ Vu]

#4Strategy says:bill gross's jan investment outlook, which contains almost everything he wrote for FT.com (for those of you who missed his piece on cheap money)

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A new duality – credit and zero-bound interest rate risk – characterizes the financial markets of 2012, offering the fat left-tailed possibility of unforeseen policy delevering or the fat right-tailed possibility of central bank inflationary expansion.

pretty good summary of the article. I don't think the risk of inflation vs deflation theme is new or unique to 2012... it started in the financial crisis and continued when Europe came to the forefront.

Quote

Even if reflation is successful it will only be because the Fed and other central banks keep policy rates low for an “extended period of time.” Financial repression depends on negative real yields and until inflation moves higher for a period of at least several years, central banks will hibernate at the zero bound

I love his writing style. a bit from tyler cowen on international trade in the midst of WWI

Quote

My favorite section details how the British responded when it turned out they had a drastic shortage of binoculars, which at that time were very important for fighting the war. They turned to the world’s leading manufacturer of “precision optics,” namely Germany. The German War Office immediately supplied 8,000 to 10,000 binoculars to Britain, directly intended and designed for military use. Further orders consisted of many thousands more and the Germans told the British to examine the equipment they had been capturing, to figure out which orders they wished to place.

really interesting.

[strategy]

mk, on Wednesday, January 4th, 2012, 8:51 AM, said:

Jeff, please ask hblask the following:Does he believe that "everyone" shares the same opinion of inflation that he and the far right libertarians do, i.e. that it is ABSOLUTELY harmful in every way it can rear its head and negatively drives all business decisions? If he believes this, does he also believe the opposite to be true, i.e. that "everyone" would wholeheartedly CHEER consistent deflation because their dollars would just be RISING IN VALUE ALL THE TIME!!!! ?

this is SO META for this thread