In Nancy Pelosi and Harry Reid’s hallucinatory world, their head long rush to have everything in Marxist heaven in its place…especially the American people, annoying creatures that we are, ISN’T WORKING. Nancy and Harry ideologues, that they are by the nature of what they are, aren’t real deep thinkers. They had this one chance to push this country into Leninist Nirvana, behind wave after wave of Democrat-manufactured crises and engineered panic, while surfing the historically mesmerizing Presidency of Barack Hussein Obama. After the euphoria cleared many of the moon-eyed came back to earth and realized the whole game was rigged and Camelot was in fact a massive shell game. Then something changed…something happened along the way. A few conservative Republicans found their testicular fortitude and said, ‘hey wait, let’s just slow down and read this thing’. Of course, they had just finished having a 700 billion dollar enema rammed up them by George Bush, who was putting aside his ‘conservative principles’ to save (Wall Street) “the economy” from a disaster which Ralph Nader for one had predicted eight years before…and I’m no fan of Nader. In fairness to former President Bush, he too had tried repeatedly, along with other Republican leaders, to have Fanny Mae and Freddie Mac scrutinized and their freewheeling practices regulated. They were stonewalled in these attempts time after time by such fiscal stalwarts as Chris Dodd, John ‘Swiftboat’ Kerry, Barack Hussein Obama, Spencer Bachus, Rahm Emanuel, Hillary Clinton and the in-all-ways-deviant Barney Frank. When the predictable result occurred, which some may be led to believe was carefully planned and engineered for precisely this purpose, it became Bush’s issue. Fast forward to Barack Hussein’s love fest Democrat wish-list budget pork feast and the debt had just been tripled. The nation was staggering from the shock of the recession with job losses in the hundreds of thousands. A rate not seen since the Great Depression of the 1930’s. Still…voices began to be heard…the PEOPLE…those insignificant gnats that are always such an annoyance to the Democratic elites and (shame on us) no too few Republicans began to stir…and stir and stir… The resultant Conservative revival began to drag even some of the weak-at-heart Republican ‘centrists’ and moderate Democrats with them when they began to hear the message loud and clear. We’ll see you at the ballot box… What should have been a slam dunk agenda for Obama’s Demarxists has become a quagmire in which nothing gets done and even Democrats can’t agree. Enter the Conservative Patriot Movement… Pelosi-Reed and associates are floundering, changing terms, coming up with fanciful interpretations of what is, or is not, in the UNHEALTHY FOR AMERICA bill. Changing the count and the amount as though it was a 1960’s television game show, which is where they probably belong. But it’s too damn late…the proverbial kittycat is out of the bag. The grassroots movement of Conservative Republicans, Independents and Conservative Democrats is sweeping the national landscape. It has not slowed and in fact just keeps gaining momentum. Hey Nancy…Hey Harry… You can run but you can’t hide!
Remember this ad? Various versions of this were run against McCain, as well as Republican Congressmen like Chris Shays. And were quite effective I may add,
When he took office Obama used the old doom and gloom approach to railrod passage of his trillion dollar "stimulus" plan even though some observers suggested it would backfire.
But at least it was consistent with his campaign rhetoric that the prior administration had ruined everything.
Words have consequences, and it's hard to improve consumer confidence with doom and gloom (my read on the minimal improvement here and the stock rally is people expected Bank of America and Citi to have failed already, and are relieved that they didn;t).
So, now
If we are keeping focused on all of the fundamentally sound aspects of our economy, all the outstanding companies, workers, all of the innovation and dynamism in this economy then we're going to get through this," Obama said. "I'm very confident about that."
See, whn John McCain said the economy was fundamentally sound he was clueless. When Barack Obama says it--well it's because he's optimistic.
Even Obama's 2008 supporters think he's selling fake sunshine . Hope is a free good; money and credit, alas, are not.. Nor are credibility and consistency of much value in ObamaWorld.
In taking in to account the recent statistics on unemployment dating back to the lowest rates of the Bush administration (4.4% in October 2006) and the data since that point, I have come to the conclusion that we will experience depression level unemployment (10% or more) in October 2009. A depression will likely be eminent and will become official (10% or more over two consecutive economic quarters) in March 2010.
By February 2010, one in eight Americans in the workforce will be unemployed and will be attempting to pursue employment, meeting the definition of “unemployment” according to the Bureau of Labor Statistics. By the end of 2010, the rate will reach 18.1%.
Based on data from the Bureau of Labor Statistics and projections using a polynomial trend-line, these calculations were determined with over 98% certainty that the current recession will become a depression once the summer is over with October 2009 unemployment hitting 10.7%. A depression will become official with an unemployment rate of 13% in March 2010.
By comparison, the unemployment rate from May 1979 to August 1983 increased from 5.6% to 9.5% (an increase of 69.6%). Over the ensuing 52 months (September 1983 to December 1987), unemployment dropped from 9.2% to 5.7%, a drop of 38%.
All of these calculations do not take in to account any economic impacts. The only details taken in to account are the monthly unemployment numbers from the Bureau of Labor Statistics.
This is a repost of an entry I wrote for QandO a few days ago. I'm reposting it here, for a different audience to get a look at it.
It is a lengthy think piece, and it may be completely off base. But the fundamental point I think we should be looking at is this: We are, quite possibly, watching the collapse of the Post-WWII global financial system. The first collapse in the 1930s saw off the Gold Standard. This collapse will probably see off the concept of government-backed fiat currencies.
People claim to be shocked by Mr. Bush’s general fiscal irresponsibility. But conservative intellectuals, by their own account, abandoned fiscal responsibility 30 years ago
Bear in mind that from 2005 to 2007, that is, in the three years before the crisis, the federal deficit averaged only $243 billion a year. Now, during those years, revenues were inflated, to some degree, by the housing bubble. But it's also true that we were spending more than $100 billion a year in Iraq.
Why is it I doubt an apology to Bush for running a budget nearly in balance sans Iraq is going to be offerred. Now what was "general fiscal irrresponsiblity" under a Republican president will be a fraction of the structural deficit Obama will maintain long after the present economic crisis abates. If Obama and Pelosi could propose anything which could generate a 2012 or 2013 deficit within $100 billion of the Bush number I'd be shocked
Why is it "deficit spending" is an Orwellian term for the Democrats; they are always against it, except when they get to do it themselves.
Maybe Paul if you stop sipping the Kool Aid you'll realize that once fed rates return to economically normal levels the US overseas debt load will result in "Buzz Lightyear economics" --- deficits to "infinity and beyond!". And you won;t have George W. Bush, that incurious Texas cowboy to blame. You'll have economic policies generated by the "best and the brightest" American liberal Ivy League colleges have to offer. (It's intentionally ironic I used that phrase; the last time the Ivy League intelligensia were so sure of themselves was during the run up to Vietnam)
The bottom line is that Paul Krugman must know intuitively that the Obama program is going to yield suboptimal economic results, but is cheerleading for it anyway. And if that doesn;t make Krugman a political hack, well. what would?
I'm not going to assume all 2008 Obama supporters are scamming me about the economy. Warren Buffett was honest enough to tell his shareholders
Well, if we believed anything Krugman writes, we'd be worried all the time. Or at least until we have a Democratic administration, when everything will be rosy again
The most eloquent words don;t overcome an ideological driven economic agenda based on improbable assumptions and rosy forecasts. There's no Nobel Prize for propaganda, Paul. If you still want to be treated as a serious academic analyst, stop having your columms read like David Avelrod wrote them.
====UPDATE====
I found this Krugman article from 2000; written prior to his becoming a full time advocate against George W. Bush and for the Democratic party. I will let you reach your own conclusions if the 2009 Paul Krugman fits the definition of "hack" established by the 2000 Paul Krugman
How can you tell the hacks from the serious analysts? One answer is to do a little homework. Hack jobs often involve surprisingly raw, transparent misrepresentations of fact: in these days of search engines and online databases you don't need a staff of research assistants to catch 'em with their hands in the cookie jar. But there is another telltale clue: if a person, or especially an organization, always sings the same tune, watch out.
and why did Krugman think some economist went the hack route?
Love of the limelight, love of the feeling of being part of a Movement, even love of the idea of oneself as a bold rebel against the Evil Empire can be equally corrupting of one's intellectual integrity.
Krugman's conclusion
Of course, honest men can disagree, and they can also make mistakes. But it's still a good idea to tune out supposed experts whose minds are made up in advance. Or at least that's what they told me to say.
We all remember 9/11. We know exactly where we were when the first and second towers were attacked. But how many of us remember the particular events of 9/15? Where were you and I the morning when the American economic system was struck?
In response to consistent claims by Democrats that the Republicans caused this economic crisis, I developed a rough sequence of events which I thought lent themselves to helping us understand the bipartisan involvement in this recession. It turns out I was missing a most significant event. This event came to light in an interview between Rep Paul E. Kanjorski (D-PA) and C-SPAN's Washington Journal in which Kanjorski was explaining his support of the first bailout of Wall Street. Here's a portion of that transcript, h/t Townhall.com:
"I was there when the Secretary (of the Treasury Hank Paulson) and the Chairman of the Federal Reserve (Ben Bernanke) came those days and talked to members of Congress about what was going on. It was about Sept. 15. Here's the facts, we don't even talk about these things.
"On Thursday at about 11 o'clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to the tune of $550 billion, as being drawn out in the matter of an hour or two.
"The Treasury opened up its window to help. It pumped $105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks. They decided to close the operation, close down the money accounts and announce a guarantee of $250,000 per account so there wouldn't be further panic out there, and that's what actually happened."
Kanjorksi continued:
"If they had not done that, their estimation was that by 2 o'clock that afternoon, $5.5 trillion would have been drawn out of the money market system of the United States, would have collapsed the entire economy system of the United States and within 24 hours the world economy would have collapsed.
"Now we talked at that time about what would happen if that happened. It would have been the end of our economic system and our political system as we know it. And that's why when they made the point we've got to do things quickly, we did."
Townhall's Diana West goes on to say that these are staggering revelations. Given their sudden appearance out of the blue, you have to wonder, first, could they possibly be true? If so, why weren't we the people told about this $550 billion electronic run on the banks? The Google archive has retained some news about the money market run, but it was seriously downplayed in this article from Boston.com:
The panic sweeping the world's financial system hit Boston stalwarts Putnam Investments and State Street Corp., yesterday while the mutual fund industry struggled with billions of dollars in withdrawals from money market funds by investors worried about losing their cash.
The article describes the frenzy of withdrawals, but describes the amounts much differently than Kanjorski.
"There's a crisis of confidence in the system," said Putnam chief executive Robert Reynolds.
On Wednesday, investors pulled nearly $90 billion out of money market mutual funds -among the largest single-day withdrawals - and as much as was pulled out during the entire preceding week. Analysts said most of the withdrawals were from corporations and other institutions. The sellers are trying to replace those money market fund holdings with even safer securities such as US Treasury bills, even though they are now paying interest rates as low as 0.071 percent.
While often treated like bank accounts, money market mutual funds are investment vehicles, and therefore can lose money. They also do not have the $100,000 per account FDIC insurance coverage provided to savings, checking, and so-called money market demand accounts available at banks. In addition to paying interest, money market funds attempt to keep their share prices steady at $1, so the value of the deposits remains intact.
Because of the run on money market mutual funds, the Bush administration is now proposing to provide them with FDIC-like insurance protection, The Wall Street Journal reported.
Kanjorski goes on to describe how the Fed and the Treasury dealt with this run by implementing just such an FDIC-like protection on that very day, September 15, when Paulson came to discuss the tremendous drawdown with members of Congress because they realized that was the only way to "stem the tide".
The key in Kanjorski's interview is the "electric run on the banks" to the tune of $500 Billion within an hour. If they hadn't taken action, by 2 pm that afternoon, $5.5 Trillion would have left the banks and the entire global economy would have completely collapsed. The implications of that are truly staggering.
On October 20, nearly a month later, Daniel Gross at Newsweek wrote an article called The Anatomy of Fear in which he described a panic-worthy act by James Cramer, CNBC star, ex-hedge-fund manager, mascot of the 1990s tech boom and the recent bull market, fond of saying "There's always a bull market somewhere". On October 6, 3 weeks after the run on money market accounts, Cramer admitted to the "Today" show's Ann Curry that "somewhere" was now nowhere to be found. "Whatever money you may need for the next five years, please take it out of the stock market right now, this week," he pleaded. "I do not believe that you should risk those assets in the stock markets."
We could understand Cramer's comments precipitating a run on all sorts of investements, but what exactly drove the tremendous volume of electronic transfers on September 15? I could find no documented news the week of September 15 that would prompt such a run, with the possible exception of the Lehman Brothers failure. But why the run on money market funds and not CD's, stocks, bonds or mutual funds? Rush Limbaugh discussed his theories on February 10, 2009, including the fact that Kanjorski is a Pelosi loyalist. Rush said:
It's amazing this was said on C-SPAN on Thursday, January 27th, and nobody picked up on it. We got it from a website called LiveLeak. They were rummaging through things, and they found this. Now, let's assume for a second here that elements of this are true. Let's assume that there was a $550 billion run, electronic run on the banks and money market accounts in one to two hours. The question is who was doing this? Who was withdrawing all this money? And the next question is why? That's where my mind starts exploding, and this is dangerous to have these explosions going this way. Could it have been George Soros? Could it have been a consortium of countries -- Russia, China, Venezuela -- countries that are eager to have Barack Obama elected because they know that will make it easier for them to continue their own foreign policies in the world? In the meantime, five-and-a-half billion dollars in one to two hours, that can probably be confirmed. The five-and-a-half trillion is speculation based on the rate at which money was coming out. We could check that the Fed stopped the trading windows, they closed the window. We do know they were pumping money into the system left and right. And remember when the Federal Reserve loaned elements, $2 trillion and we weren't told who got the money? And we still haven't been told who got the money.
No wonder Barack Obama says "You can't just listen to Rush Limbaugh and get things done." Obviously Barack Obama and Nancy Pelosi don't listen to Rush Limbaugh, and they've quite possibly managed to get some astonishing things done.
I've begun to see a meme this week proposing the President's policies are fascist rather than socialist. In 1935, Mussolini wrote the following in The Doctrine of Fascism. Compare and contrast his policies to our current Administration's:
The Fascist conception of the State is all-embracing; outside of it no human or spiritual values can exist, much less have value. Thus understood, Fascism is totalitarian, and the Fascist State--a synthesis and a unit inclusive of all values--interprets, develops, and potentiates the whole life of a people. (p. 14)
The Fascist State lays claim to rule in the economic field no less than in others; it makes its action felt throughout the length and breadth of the country by means of its corporate, social, and educational institutions, and all the political, economic, and spiritual forces of the nation, organised in their respective associations, circulate within the State. (p. 41)
In 1935 Mussolini wrote the following in Fascism: Doctrine and Institutions:
The Corporate State and its Organization (p. 133)
The corporate State considers that private enterprise in the sphere of production is the most effective and usefu [sic] [typo-should be: useful] instrument in the interest of the nation. In view of the fact that private organisation of production is a function of national concern, the organiser of the enterprise is responsible to the State for the direction given to production.
State intervention in economic production arises only when private initiative is lacking or insufficient, or when the political interests of the State are involved. This intervention may take the form of control, assistance or direct management. (pp. 135-136)
Last but not least, here's Paul Kanjorski's interview with C-SPAN on January 26, 2008:
So I happened to come across this graph from Speaker Pelosi's website. It represents the aggregate job losses from the point at which employment started to decline ("the peak") for the past two recessions and for our current recession. At first glance it looks pretty scary - job losses going off the cliff. But a moment's thought reveals that this graph represents an invalid comparison, as our economy now is bigger than what it was in 1991, or even in 2001. So comparing total job losses makes no sense - losing 500,000 jobs is much worse if it is lost from an economy with a total employment of 50 million, as opposed to 150 million. Really what should be compared is the percentage of total employment from the peak.
So I dug through the BLS statistics and I came up with this graph. Still looks pretty scary, even compared on a percentage basis. But we all know already that this recession is worse than the previous two. How about comparing it to the 1981-82 and 1974-76 recessions? So when I did that, I got this graph.
Not quite so scary now, eh? In terms of job loss, our current recession is about as severe as the 1974-76 recession, and not even as bad as the 1981-82 recession. In fact if you look carefully at the data, by this point in the 1981-82 recession, jobs continued to be lost for 4 more months until things started to turn around. And at least according to one source, "most professional economic forecasters are now predicting a moderate recession that will last until the middle of 2009" - which is, coincidentally, about 4 months from now.
Bottom line: Nancy's scary graph notwithstanding, we aren't on the verge of disaster. Don't let the Democrats' fearmongering get to you.
The other night I went to a Hockey game in Dallas. Seeing as how I didn't want to drive the same day (and that I wanted to drink), I decided to get a Hotel room for the night.
Seeing as how this was downtown Dallas, there were only high-end business hotels around. The only cheap motels around were over ten miles away (which would have required driving and thus negated drinking during the game). Normally, high end hotels would be out of my price range. However, given the "recession," I could afford a discounted high-end room.
My experience Friday night is a microcosm of how (multiplied by 300 million Americans) we get out of recessions in a free-market economy. Merchants and retailers lower their prices, bargain hunters (like me) come out, and eventually demand picks up and you have a recovery. No government action necessary.
We now live in a climate gripped with fear. It's the worst economic times since the Great Depression, we are told. Government must act swiftly, boldly, and decisively if we are going to survive the coming maelstrom. We have Depression countdown clocks and the like.
But, is the fearmongering justified? Here are a few facts to illuminate the discussion.
Let's look at unemployment. The most recent statistics from December 2008 reveal that the national unemployment rate is 7.2%. That's bad, but is it the worst it's been since the Great Depression? Hardly. It is worse than the 2001 recession, but we are still below the peak of 7.8% set in June 1992 for the most recent recession since then. We are still far below the peak of 10.8% experienced during the 1980-82 recession. In fact the unemployment rate was at or above 7.2% all the way from December 1974 to March 1977. They were bad times, sure, but definitely not a Second Great Depression. Did you know that the unemployment rate was above 7.2% for most of 1958? You normally don't think of the 1950's as a time of great economic peril. So, to put in perspective: The unemployment rate is high, but not even as high as it was in the 1980-82 recession, and definitely not approaching Great Depression levels of 15-25%.
Let's look at GDP. The data for 4th quarter of 2008 isn't out yet but one group has forecasted that it will fall at an annual rate of 2.9%. But, that was way back in November. A more recent forecast is that it will fall at an annual rate of 6.0%. Six percent! That's huge, right? Well, yes and no. The last time GDP fell by this magnitude was in 2nd quarter 1980, and then in 1st quarter 1982, when GDP fell by 7.8% and 6.4%, respectively. But, suppose the forecast is wrong - suppose GDP falls by more? Well, from 1930-32 GDP fell by 8.6%, 6.4%, and 13.0%, respectively. But this was because we were in a deflationary spiral (see below), and things could only get as bad as the Great Depression if GDP were to fall by similarly large amounts for three consecutive years. If this were to happen, the Democrats' economic stimulus wouldn't do a damn thing about it anyway. To put it in perspective: Right now the US GDP is about $14.5T. If it were to fall by the same amounts as it did from 1930-32, by time we were done, the GDP would be at $10.8T, or a loss of $3.7 trillion dollars. So based on $800B of spending, you'd need a Keynesian multiplier of about 4.5 in order to generate economic activity of that magnitude. So quibbling over multipliers of 1.2's and 1.3's would thus be ridiculous.
Finally, inflation. Are we in, or on the verge of, a deflationary spiral? Deflation is caused when there is a simultaneous contraction of the money supply and expansion of the supply of goods. Because there's less money around, the price of goods falls, and the deflationary spiral starts when the price is lowered below a company's profitability margin. The result? Disaster, as companies cannot afford to stay in business, leading to bank failures as the companies cannot repay their loans... and the spiral begins. But in order to have a deflationary spiral, there's gotta be a contraction in the money supply. One perusal of this graph should convince you that there isn't. The money supply has increased beyond all historical precedent. What we have to fear most is devaluation of the currency via inflation, rather than a deflationary spiral.
So, to sum up: Things aren't as bad as the fearmongers would have us believe. Our most recent historical precedent for when things were this bad was the 1980-82 recession. And, did we need massive economic stimulus to get out of that one? No, I think this man had other ideas.
