Long time recession plus recession

• queencitybuckeye

  Paladin;457159 wrote:I've mentioned this before, but bears repeating........ had a Prof in college who made a lasting impression on all when he talked about the U.S. capitalistic system being a giant Monopoly game.......i.e., one or few winners and everyone else lost. Thats true with todays system. Those who think that business is always right and business must be accomodated are in for some major surprises in the future. People will not accept a Monopoly game as the system. But thats what we currently have.
  
  Watch out !

  
  Did the professor suggest a different game in which the results are more to everyone's liking?
• Bigdogg

  BGFalcons82;457087 wrote:I sure do as it is part of my profession. I have to project costs, sometimes to the hundreths of cents within unit pricing, in order for my organization to remain in business. If they were so unsure about it, then they should have used a range of percentages. Although that doesn't sell as well as, "Pass my plan by tomorrow or we'll all go to hell in a handbasket. Check out this graph...see if we don't do this, then unemployment will go above 9%. Don't bother reading the thousand+ pages, just trust me that it will work." OK, I paraphrased a little, but that was the message.
  
  You posted it was an opinion and not factual, when in reality, it was presented as factual. Americans were somewhat extorted into standing down against the Stimulus package and now people are mindfully upset that it didn't work. The defenders of the faith are now saying it was too small, it didn't go far enough, and we need to do it again x 2. There is no money left to spend. There are no bullets left in Keynes' gun. The answer to this stagnation and malaise is to turn capitalism and free market enterprise loose, get government the hell out of the way, stop dreaming up new taxes and regulations with each breath, and let Americans go to work to turn this around. The ellitists in Washington are stopping growth, not inspiring it.

  
  If you can project better then within 2% considering the size of the US economy you must bet a special person. Why are yon not raking in millions on Wall Street?
• CenterBHSFan

  

  Paladin;457159 wrote:I've mentioned this before, but bears repeating........ had a Prof in college who made a lasting impression on all when he talked about the U.S. Federal Government system being a giant Monopoly game.......i.e., one winner and everyone else lost. Thats true with todays system. Those who think that government is always right and business must be accomodated are in for some major surprises in the future. People will not accept a Monopoly game as the system. But thats what we currently have.
  
  Watch out !

  
  Revised.
• Paladin

  The Prof in question challenged the elitists with the money who wanted to control the politics of the system and avoid "regulations", "rules" and "oversite", much like today where the Rs virtually destroyed and did away with the banking oversite, permitted the gambling casinos that financial firms became, killed Glass-Steegal and promote deregulation everywhere they went . Those systems served purposes to control the system and avoid the meltdown we had . Rules for companies have taken away many shareholder rights and left the elitists in control at the top. Leaving the system without major checks & balance from the people and allowing a free for all with no oversite permits a giant Monopoly game that he discussed. In the end, most of us are losers in that game. We are there now.
• BGFalcons82

  

  Bigdogg;457175 wrote:If you can project better then within 2% considering the size of the US economy you must bet a special person. Why are yon not raking in millions on Wall Street?

  
  If they missed it by that much then they should have kept their mouths shut and their graphs in the trash. But that didn't serve their agenda nor purpose now did it? Snake oil salesmen and they got caught selling the crap. Now what do they do?
  
  I am not a Wall Street tycoon, a banker, a financier nor like any of those fat cats. But I do have to predict costs to the highest precision and accuracy possible. I wish I was raking in millions, but then I'd have to pay +60% in total taxes to governments, so what's the point, eh?
• CenterBHSFan

  

  BGFalcons82;457258 wrote:I wish I was raking in millions, but then I'd have to pay +60% in total taxes to governments, so what's the point, eh?

  
  That IS the point! :mad:
• Writerbuckeye

  

  queencitybuckeye;457162 wrote:Did the professor suggest a different game in which the results are more to everyone's liking?

  
  Oh no doubt -- and it was likely that unfunny Marx brother.
• gut

  Paladin;457210 wrote: Rs virtually destroyed and did away with the banking oversite, permitted the gambling casinos that financial firms became, killed Glass-Steegal and promote deregulation everywhere they went . .

  
  The repeal of Glass-Steagal was passed with overwhelming bi-partisan majorities in the House and the Senate and signed into law by President Clinton. And, of course, Clinton and the Dems had their fingerprints all over the meltdown of Fannie Mae and Freddie Mac. And, of course, it was Clinton presiding over the internet bubble, which when burst was the fuse that pushed this delicate balance over the edge as the destruction of wealth and crippling of the economy caused the Fed (and other central banks) to lower rates to never-before-seen levels which ultimately provided the fuel for the future financial meltdown. The Great Recession has its roots firmly in the Clinton era. But no reason to let facts get in the way of an otherwise quality rant.
• believer

  

  gut;457426 wrote:The repeal of Glass-Steagal was passed with overwhelming bi-partisan majorities in the House and the Senate and signed into law by President Clinton. And, of course, Clinton and the Dems had their fingerprints all over the meltdown of Fannie Mae and Freddie Mac. And, of course, it was Clinton presiding over the internet bubble, which when burst was the fuse that pushed this delicate balance over the edge as the destruction of wealth and crippling of the economy caused the Fed (and other central banks) to lower rates to never-before-seen levels which ultimately provided the fuel for the future financial meltdown. The Great Recession has its roots firmly in the Clinton era. But no reason to let facts get in the way of an otherwise quality rant.

  True but it actually goes back as far as Jimmy Carter with his Community Reinvestment Act of 1977 which, of course, was passed by a Dem-controlled Congress.
• isadore

  we need another very much stimulus package.
• Cleveland Buck

  

  isadore;457836 wrote:we need another stimulus package.

  
  This. Just send every American a check for $100,000. Just raise the top tax rate to 100% and seize their homes as well. That would probably come close to the $30 trillion we would need to pay for it. Just borrow the rest.
• BGFalcons82

  

  Cleveland Buck;457855 wrote:This. Just send every American a check for $100,000. Just raise the top tax rate to 100% and seize their homes as well. That would probably come close to the $30 trillion we would need to pay for it. Just borrow the rest.

  
  I'll give you an "A" for the best answer yet!
  
  isadore - don't pussyfoot around the next time, OK? Make it something like a $5 TRILLION dollars stimulus and give each man woman and child a $50,000 check to spend at will. The only drawback is that a loaf of bread might cost $10 and a gallon of gas would be $8, but what the heck, eh?!
• believer

  

  isadore;457836 wrote:we need another stimulus package.

  Obama can start by sending me a check for $500,000. That would make me debt-free, put my kids through college, and give me a jump-start on building a modest but comfortable nest egg for retirement.
  
  I'm still waiting for the stimulus check from the first $800 Billion to arrive in the mail.
• QuakerOats

  “This is a devastating reading on the U.S. housing market,” said Derek Holt, an economist at Scotia Capital Inc. in Toronto."
  
  http://www.bloomberg.com/news/2010-08-24/sales-of-u-s-existing-homes-drop-more-than-estimated-to-3-83-million-rate.html
  
  Change we can believe in ................
• jmog

  Paladin;457159 wrote:I've mentioned this before, but bears repeating........ had a Prof in college who made a lasting impression on all when he talked about the U.S. capitalistic system being a giant Monopoly game.......i.e., one or few winners and everyone else lost. Thats true with todays system. Those who think that business is always right and business must be accomodated are in for some major surprises in the future. People will not accept a Monopoly game as the system. But thats what we currently have.
  
  Watch out !

  
  Capitalism with no rules/regulations is a monopoly game, but the biggest reason we have rules about well...monopolies in business and other regulations (that were not followed well for the last 2 decades), is so that it doesn't turn into 1 big winner and everyone else loses.
• gut

  jmog;460570 wrote:Capitalism with no rules/regulations is a monopoly game, but the biggest reason we have rules about well...monopolies in business and other regulations (that were not followed well for the last 2 decades), is so that it doesn't turn into 1 big winner and everyone else loses.

  
  Well, and a better description of the US economy would probably be a series of monopoly games - not just a few winners but at least a few winners in every industry of every sector. Where you get negative consumer surplus is industries with high barriers to entry that prevent healthy competition. LOL, winners and losers is a necessary component of efficient allocation of capital and resources.
• Belly35

  

  I told everyone .... this is not going to get any better soon.... You vote for this Ass hole and now he's going to put your ass in a hole....
  
  http://www.foxnews.com/us/2010/08/27/snapshot-economy-lot-bleaker/
• gut

  Belly35;463293 wrote:I told everyone .... this is not going to get any better soon.... You vote for this Ass hole and now he's going to put your ass in a hole....
  
  http://www.foxnews.com/us/2010/08/27/snapshot-economy-lot-bleaker/

  
  "overwhelmed by uncertainty" is code for business is scared to death of what hair-brained scheme Obama & Friends come up with next.
• QuakerOats

  http://politics.usnews.com/opinion/mzuckerman/articles/2010/08/26/the-most-fiscally-irresponsible-government-in-us-history.html
  
  Change we can believe in ............
• IggyPride00

  

  QuakerOats;463582 wrote:http://politics.usnews.com/opinion/mzuckerman/articles/2010/08/26/the-most-fiscally-irresponsible-government-in-us-history.html
  
  Change we can believe in ............

  The United States simply seems to lack a system that can fund the government that the people say they want. We are good at crises, but we do not seem to be good at tackling chronic problems. If we wait until a crisis happens, it will be too late. It is simply not possible to close the gap entirely with the tax increases on the rich that Democratic liberals so desperately believe in. Nor can we close the gap with spending cuts, as the Republicans would like. The liberals will have to concede that benefits and spending ought to be reduced. Conservatives will have to concede the need for higher taxes.

  I read that article on Zero Hedge this morning. Mort was dead on with the above passage, and it is why we can continue to expect more of the same regardless of what party is in power.
• gut

  Yep, reduce benefits and spending AND raise taxes. Only way out of this mess. But I don't think increasing corporate taxes and fleecing the wealthy more is the solution. Yeah, you can eliminate some cuts and bump the top income brackets a bit, but that won't be enough. I'd expect some form of consumption tax at some point, most likely a VAT. A federal sales tax (excl. food, energy ad housing) would go a long way, but I can't imagine 5% on top of state sales taxes that are already as high as 9%. A VAT will probably see most of those taxes passed on to the consumer, but it will lack transparency in the form of higher prices. Govt likes taxes lacking transparency, and especially a lot of little taxes because it's far less noticeable and objectionable. Behavioral economics 101.
  
  I don't oppose a bit higher taxes because the alternative is alarming: higher interest rates and steep inflation (inflate our way out of debt). But at the same time I don't want to pay higher taxes just to see an expansion of entitlements and govt handouts.
• Belly35

  

  Ben Bernanke, the Federal Reserve chairman, called the economic outlook “unusually uncertain”. The Fed has lately been a source of a lot of that uncertainty. Its officials maintained an upbeat outlook for the economy as the news in recent months went from bad to worse, then on August 10 they seemed to abruptly embrace the opposite view by announcing new steps to stimulate the economy. Matters have not been helped by the public airing of divergent views from officials.
  
  Mr Bernanke cleared up a lot of the confusion with a long speech to the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming today. In a nutshell, Mr Bernanke said the economy has, indeed, underperformed, but it will get better. And if it doesn’t, the Fed will do more unconventional things.
  
  The same morning Mr Bernanke spoke, the Commerce Department was reporting that the economy grew at a miserable 1.6% annual rate in the second quarter, down from its initial estimate of 2.4%. The betting is that the current quarter won’t be much better.
  
  Mr Bernanke admits this is unexpected and disappointing, but it’s not a double dip. The economy will “continue to expand in the second half of this year, albeit at a relatively modest pace [and] the preconditions for a pickup in growth in 2011 appear to remain in place.” Though puzzled that consumption has been so weak, Mr Bernanke notes several developments that bode well for a pickup: the household saving rate was recently revised up to 6% from 4%, suggesting households have made brisk progress in deleveraging, setting the stage for more robust consumption (if only employment and incomes can pick up). Second, financial markets are loosening up, especially since European policy makers got their sovereign debt crisis under control.
  
  Given this constructive view, what to make of the Fed’s decision on August 10 to reinvest the proceeds of maturing mortgage backed securities in its portfolio into Treasury bonds? The Fed had previously bought over $1 trillion of MBS as part of its original programme of quantitative easing to bring down long-term interest rates. The goal of the policy, in part, was to encourage banks and other investors to buy something else more risky, such as corporate loans, thereby boosting investment. But as the economic outlook worsened, mortgage rates plunged, spurring millions of homeowners to pay off their loans and take out lower-rate mortgages. Left alone, this rapid pace of repayments would have led the Fed’s portfolio to contract by some $400 billion by the end of 2011, representing an unplanned but serious tightening of monetary policy. By reinvesting those proceeds into an equivalent amount of Treasury debt, the Fed neither increases or decreases its level of monetary stimulus.
  
  Having explained the past, Mr Bernanke then turned to the future: under what conditions would the Fed do even more? First, if today’s low inflation seems about to turn to deflation. Deflation fears are on the rise, with TIPS bonds forecasting a 10% to 15% probability over the next five years. But Mr Bernanke thinks deflation is pretty unlikely, and in fact doesn’t seem to think inflation will go lower than its current, underlying rate of around 1%.
  
  The second condition, and one more likely to trigger action, is if the economy makes no progress in closing the gaping gap between today’s GDP and potential GDP. As a practical matter, that means growth has to move above 2.5% and unemployment has to drop. Mr Bernanke doesn’t seem to think that will happen until 2011, which implies a willingness to wait a few more months for evidence on the prospects for that 2011 pickup. That the Fed is not ready to do more quantitative easing yet is arguably disappointing. It could easily have justified more action a full year ago given what even then was its lacklustre outlook, and the downside risks (which seem to be coming to fruition). That’s the path the Bank of England, facing similar circumstances, chose. But that’s uncharitable. That Mr Bernanke has not moved as quickly as many of us would have preferred is less important than the fact that his views are still diametrically opposed to the Bank of Japan credo that monetary policy can’t and shouldn’t be used aggressively in a deleveraging, post-crisis economy.
  
  What would additional action consist of? Mr Bernanke cites four possibilities. One, raising the Fed’s inflation objective (now around 2%), he dismissed out of hand: it would “squander” the Fed’s “hard won credibility”. Another, hardening its commitment to zero rates for a long time, would have marginal benefits and run up against the market’s well known tendency to wrongly assume that such commitments are unconditional. A third, lowering the rate the Fed pays on commercial bank reserves at the Fed from its current 0.25%, would have almost no impact on the interest rates that people actually pay.
  
  That leaves buying more bonds. Mr Bernanke points out the benefits of more QE are uncertain and the costs are growing, as the public might worry that the Fed will fail to keep all the money it printed to buy those bonds from producing inflation. Such fears are largely unfounded—the Fed has many more tools for tightening monetary policy than for easing it further. But even unfounded fears can affect reality, for example by boosting long-term rates.
  
  Mr Bernanke made it clear that if either of his two conditions are met, these misgivings would not get in the way:
  
  It is worthwhile to note that, if deflation risks were to increase, the benefit-cost tradeoffs of some of our policy tools could become significantly more favorable...Because a further significant weakening in the economic outlook would likely be associated with further disinflation, in the current environment there is little or no potential conflict between the goals of supporting growth and employment and of maintaining price stability.
  
  Fed officials gathered under a hail of criticism for communicating badly. The accusations are off base. The Fed doesn’t have a communications problem, it has a policy problem. The recovery has stumbled and the central bank isn't sure why. Having long ago used up its conventional monetary ammunition, it’s not sure how effective more unconventional ammunition will be. The 17 members of the Federal Open Market Committee, like the outside world, are divided and unsure about what to do. That their divisions have spilled out into the open dismays many at the Fed, but that ultimately doesn’t matter. The Fed is not the Supreme Court. What the chairman wants, the chairman gets. When Mr Bernanke has decided that one of his two conditions will be met, there will be more quantitative easing. Judging from Friday’s speech, he’s not there yet.
• gut

  Interesting spin from Bernanke.....How is an huge uptick in savings from 4% to 6% a positive? While I agree that a savings rate in the 4-6% range provides for a solid economic foundation, in this case it's also indicative of waning consumer confidence. More troubling, with a struggling economy, this suggests the consumer is not spending. While technically correct this means the consumer is "deleveraging", in reality that is not the case. The positive effects from that would be actually paying down your debt so you aren't wasting money on interest, which - please correct me if I'm wrong - would show as an expenditure and not savings? The relevant number is the amount of average household debt. Although I would agree that consumers saving more can provide the fuel for a more robust, sustained recovery without the aid of artificial juice from more debt.
  
  That said, cheap money (i.e. the "punch bowl") left out too long last time really helped provide the juice for the housing bubble. Hopefully the Fed has learned its lesson. I think the Central Banks are struggling with a systemic deflationary force that is globalization. Capitalism relies on controlled inflation in order to provide incentive to invest and markets really deal in nominal returns. So deflation is very bad, but then you have too much easy credit which invites another set of problems.
  
  The Fed has historically (well, call it the last 20 years or so) been targeting inflation averaging 2-3% a year. I'm firmly in the camp that this number is going to creep up - it almost has to (part of the solution to our debt is to inflate our way out). I think that number rises to 4-5%, but they're having a hell of a time just keeping that number positive. There are several powerful reasons for this logic: 1) home values have historically tracked inflation 2) in about 16 years this would halve the present value of govt debt and 3) by not increasing entitlements commensurately you have the politically viable outcome of reducing those expenditures without physically cutting benefits.