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I am directing the following sort-of-sarcastic comments at the editorial staff of the NYTimes
I'd rather not have a Fed that, apparently, is run alot like FEMA - just hope you get it right the next time!
So, basically he's saying that what he believes about economics is wrong...
...and the culprit? Shadow banking systems?
And so if what the author of this article is saying is an accurate description of the problem and its solution, then this paragraph would be correct.
So would an 11-13% approval rating.
??? ???
I've already taken a slightly more extensive look at the economic period described here, so I'll skip that and go to this: pray tell, what industries? He's talking about the period between the Civil War and World War 1. To get at what I'm saying - look at the weapons, clothes, machines, technology, culture itself during those two wars. Is this guy lamenting the fact that horses were replaced by cars? That the whaling industry took a massive hit after oil and natural gas became widely deployed?
Now we get to this quote, in context. I think the warrants of these claims are highly mitigated by the fact that in this case we DO have the luxury of hindsight.
Oh... but we were wrong about it being stable, after all! Which means... well, sorry folks, extreme ups and downs are just part of the cycle, it's not our fault. And that means that we were wrong about that recession - the economy will crash for six years!
"The biggest difference between Jerome Scuggs and every other human is, he is Jerome Scuggs."
He's a member of the National Bureau of Economic Research's business-cycle committee. Tax money well-spent.
No - for the first time in 50 years, noone can hot-potato the defaulted loans and soured mortgages anymore. Packaging and re-packing loans in order to put off the inevitable - until suddenly, someone looks at housing prices, and sees they've been on the rise - so in order to guarantee that the re-packaged loans would generate value, simply flood the housing market with easy capital, stimulate purchases, drive up prices.... essentially rigging the cards to get rid of debt.
People don't value their homes as much as this guy thinks they do. The government was wagering on... an infinitely expanding housing market? Perhaps they were too far-sighted and didn't see the rise of the renting class, which has shifted the housing market - demand is now far more flexible, because people have alternatives that are economically feasible.
Thankfully, the well-planned government expirement turned out as predicted.
But, if the government was serious about environmental reform - wouldn't those be industries that would see serious limits on their current activities anyways, inevitably crippling production or reducing workforce requirements?
But this shows the author's short-sightedness. So GM subsidizes their losses with government money, padding them from slowly bleeding. And so instead of GM laying off small amounts of employees - or downsizing in other ways over time - they artificially maintained an unsustainable business strategy, and now waves of employees will be released into a market that, at the moment is not exactly ripe for employment. Had employees been slowly laid off, I'm sure many of them could have had ample time to find other jobs or careers.
This is the government trying to enforce an artificial order upon spontaneous forces. By building an economic infrastructure dependent on certain industries to be "immortal", the government's wager was destined to go bad.
coffeeshops and theaters? Is this guy saying that government policy is, at the moment, focusing on saving the potentially volatile coffee and movie industries? I could use a loan...
At least consumers will keep buying things they, you know, need to survive.
Coffeeshops and theaters losing business caused the Great Depression? I know this guy is obviously way more qualified than me... but... ???
"Just because the economy turns gloomy?" How about... "just because they can't afford to stay in business?" or "just because they can't go into infinite debt to pay for anything?"
Wait... these programs were meant to... give people a warm feeling inside? While also serving to curb panic?
"Consumer confidence"... don't even get me started. How bizarre that the Clintons got away with pegging the 90's recession on "faltering consumer confidence", and people accepted this.
"Why? Because so many of them have spent so much time studying the Great Depression and trying to figure out how to react more effectively if things turn really bad again. Take last week, for example."
"I used to give a lecture explaining that the Great Depression could never happen now because of the regulations that emerged from that crisis,” said Barry Eichengreen, an economist at the University of California at Berkeley.
“But we’re learning that there is a shadow banking system, of hedge funds and investment banks, that are outside of those safety nets. What happened to Bear Stearns last week looked a lot like a 19th-century run on the bank. And that’s why the Fed reacted so quickly."
Indeed, when the government moved last weekend to help save Bear Stearns, the fifth-largest securities firm on Wall Street, from bankruptcy, policy makers were motivated by concerns that the investment bank’s failure could start a chain reaction of collapses at other investment houses. Stopping those dominoes was such a priority that the Federal Reserve helped broker the sale of Bear Stearns to its rival JPMorgan Chase.
A century ago, such government hustle would have been unthinkable.
Even the distinction between a recession (a significant decline in economic activity that lasts more than a few months) and a depression (a decline that is much longer and deeper) didn’t really matter, because turmoil in the economy was often taken for granted.
Between 1857 and 1929, while regulators largely stood idle, the American economy swung through 19 national boom-and-bust gyrations that sometimes threatened to wipe out whole industries within months.
But in the wake of the Great Depression, American policy makers began actively managing the economy with a handful of tools, including adjusting interest rates and using massive government spending to spur growth. Since 1945, there have only been 10 boom-and-bust cycles, most of them much shallower than earlier ones, and the unemployment rate has never topped 9.7 percent.
Much of that stability, economic historians say, stems from reforms designed to calm consumers during downturns, like the Federal Deposit Insurance Corporation, which guarantees most checking and savings accounts up to $100,000 if a bank fails.
Much of that stability, economic historians say, stems from reforms designed to calm consumers during downturns, like the Federal Deposit Insurance Corporation, which guarantees most checking and savings accounts up to $100,000 if a bank fails.
But as the Internet boom and recent housing bubble demonstrate, even relatively stable periods can be part of a cycle of extreme ups and downs. The prolonged expansion that just ended had an unusually long run of more than six years. As a result, some are speculating that the crash will be equally drawn out.
“The biggest difference with this recession is that it’s starting in the housing market,” said Victor Zarnowitz, an economist at the Conference Board who is also a member of the National Bureau of Economic Research’s business-cycle committee.
He's a member of the National Bureau of Economic Research's business-cycle committee. Tax money well-spent.
For the first time in more than 50 years, the nation faces a broad risk “that people’s most important asset, their home, will lose value,” he said.
People don't value their homes as much as this guy thinks they do. The government was wagering on... an infinitely expanding housing market? Perhaps they were too far-sighted and didn't see the rise of the renting class, which has shifted the housing market - demand is now far more flexible, because people have alternatives that are economically feasible.
Thankfully, the well-planned government expirement turned out as predicted.
As homeowners see the value of their homes decline, they become more likely to delay purchases of the big items — like automobiles, electronics and home appliances — that are ballasts of the American economy. When those purchases decline, large manufacturing firms, suddenly short on funds, could begin laying off employees.
But this shows the author's short-sightedness. So GM subsidizes their losses with government money, padding them from slowly bleeding. And so instead of GM laying off small amounts of employees - or downsizing in other ways over time - they artificially maintained an unsustainable business strategy, and now waves of employees will be released into a market that, at the moment is not exactly ripe for employment. Had employees been slowly laid off, I'm sure many of them could have had ample time to find other jobs or careers.
This is the government trying to enforce an artificial order upon spontaneous forces. By building an economic infrastructure dependent on certain industries to be "immortal", the government's wager was destined to go bad.
Those workers, uncertain about the future, might in turn stop buying Starbucks lattes and movie tickets, and in a worst-case scenario, that could spur coffee shops and theaters to begin layoffs of their own.
At least consumers will keep buying things they, you know, need to survive.
Such a chain reaction was one reason unemployment during the Great Depression was so persistent and widespread.
But today, say economists, fundamental changes make such contagion unlikely. For one thing, incomes are more stable. Many more Americans hold jobs in service sectors, like medicine or education. And more Americans work for the government, which is less inclined to fire people just because the economy turns gloomy.
Moreover, there are safety nets that can be traced to the Great Depression, like Social Security, unemployment benefits, food stamp programs. These “give people a sense of security even when they’re out of work,” said the Harvard economist Benjamin Friedman. “That establishes a floor for how panicked consumers become.”
Even if consumer confidence hit rock bottom, that most likely would not be enough, by itself, to cause a depression. For things to become really dire, the nation’s financial institutions would have to fail at the same time that unemployment began significantly rising. Only if banks suddenly closed, or it became impossible for companies to access short-term lines of credit, would things begin spiraling out of control.
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