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Thread: The recession may be over at last — so what now? [edited]

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    re: The recession may be over at last — so what now? [edited]

    Quote Originally Posted by Phoenix View Post
    You forget he inherited this mess {sarcasm}
    I agree with your sarcasm, as a senator pasing every spending bill going through Congress, called to Washington during the Pres campaign and helping to shape the initial uptieth billion dollar bailout.

    What was he doing when in the Senate besides community organizing then if it's a mere inheritance?

    Like getting divorced and splitting the debt and then claiming you somehow inherited it all.

    Why do many so easily permit cop out excuses?
    Last edited by Charles Martel; 10-30-09 at 12:21 PM.
    It was the Austrasians, that hewed on bravely through the thick of the fight, it was they who found and cut down the Saracen King.

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    re: The recession may be over at last — so what now? [edited]

    Quote Originally Posted by Hatuey View Post
    The thread title is all wrong. Fix it.
    Last edited by American; 10-30-09 at 12:29 PM.
    "He who does not think himself worth saving from poverty and ignorance by his own efforts, will hardly be thought worth the efforts of anybody else." -- Frederick Douglass, Self-Made Men (1872)
    "Fly-over" country voted, and The Donald is now POTUS.

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    Re: The recession may be over at last — so what now? [edited]

    Quote Originally Posted by winston53660 View Post
    So this is now a Obama bashing thred
    I am fascinated when Libruls believe that posting the FACTS are somehow "bashing" their hero.

    FACT: Obama's farcical claims that borrowing and spending almost a trillion dollars would save jobs.

    FACT: Obama's budtard Biden and his idiot economic advisor are actually claiming that their porculus bill actually saved or created 650,000 jobs in an economy where over 2.5 million have been lost and unemployment is increasing at a pace that will soon exceed 10%.

    You just can't make up the denial it takes to make such asinine claims while businesses continue to shed jobs, consumers continue to cling to what little cash they have and businesses continue to close their doors.

    Meanwhile, tax revenues will continue to decline, the Democrats who infest the legislature with their rabid stupidity continue to try to spend trillions more they dont have and no one has asked who is going to pay for all this idiotic legislation and spending.

    A climbing debt into the trillions, a climbing deficit into the trillions and the continued loss of jobs in the hundreds of thousands is not bashing; we call this REALITY.

    The most amusing part of this debate is the OBama supporters who desperately keep clinging to the "it's Bush's fault" mantra in a vacuum of the FACT that during the Bush years they claimed that 4.5% and 3.5% annual GDP growth was NOT good enough. Now suddenly, ZERO GDP growth and 9.8% unemployment isn't that bad.

    One can only shake one's head at such stupidity.

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    Re: The recession may be over at last — so what now? [edited]

    First off, these Keynesian theories have long been discarded in the halls of Economic theory. Even back in the 80’s we were taught Keynesian theories as a lesson of what does NOT work.

    Quote Originally Posted by Goldenboy219 View Post
    Because we are considering the moment, and immediate future, it does justice to use a short run analysis where aggregate demand determines output (GDP). Due to the fact that prices in the short run are sticky, we are witnessing a discrepancy in what the market wants (falling demand leading to falling supply), and what reality dictates (people do not want their wages, assets, etc... to fall to equilibrium).
    This is patently false and only looking at things in the short run is one of the fallacies of Keynesian theory and Government intervention which causes such bubbles to occur in markets in the first place.

    No amount of BORROWING and SPENDING by Governments who are already technically bankrupt can force consumers back into the market.

    The discrepancy we are currently witnessing is that in the private markets there is a shedding of the workforce in order to remain profitable with the corresponding effect of consumers fearing for their wellbeing not spending what little they have left.

    When you combine this with the awareness that at some point in time the Government will have to RAISE taxes dramatically in order to pay for all the deficit spending, and to pay for the increased DEBT, confidence continues to go down.

    The other effect that is occurring in states like California is that these State Governments are also witnessing a dramatic decline in tax revenue and in order to balance their bloated programs are raising fees and taxes giving the consumers even LESS to spend.

    The farce that is being offered up by Liberal Obama Economists is this notion that recessions can be “managed” by intelligent Government interventionism; this is an oxymoron as no such entity exists.

    Therefore, the BEST thing Government could have done when it had a chance was to reverse the poorly thought out legislation that helped create the financial mortgage bubble that collapsed, balance its spending and budget and cut as much as possible while allowing businesses and individuals to keep more of their hard earned wealth.

    Quote Originally Posted by Goldenboy219 View Post
    So we have a couple options. The first is that we allow prices to fall and the market to self correct. Sounds good, but what does that encompass exactly? High unemployment (not 10%, more like 20%-30%) where firms downsize, capital investment diminishes (high savings and interest rates), assets devalue (to attract buyers); which will cause the dollar to appreciate leading to greater purchasing power (it cost less dollars to purchase the same goods).
    I am amused by these farcical exaggerations also coming from Liberal Obama economists that if they do nothing, unemployment MIGHT reach 20 – 30%. Are these the same morons who claimed that by passing an almost trillion dollar pork laden bill we would keep unemployment from exceeding 8%.

    The FACT is, and it is well known to anyone not wallowing in denial, that by allowing the markets to do what they need to do and correct, and getting their own political house and budget in order, the pain we would feel would be dramatically shortened.

    The ONLY thing that can happen now is that the pain will be stretched over a far greater period of time resulting in even higher double digit unemployment rates.

    All this will result in lower tax revenue which ends in a self destructing cycle where politicians who are economically challenged then attempt to squeeze more revenue from the taxpayers.

    If you do not believe me, just look at the pathetic state Michigan is in and their programs and history. Instead of encouraging investment and job growth, their policies chased it away with the end result of double digit unemployment, declining tax revenues and a cycle of poverty that will not end until the citizens of that state get smart and vote the Democrat morons ruining their state out of office.

    California is following the model of Michigan with the identical disastrous results.

    Quote Originally Posted by Goldenboy219 View Post
    To put it simply, everyone will suffer.
    Everyone will suffer far more from this Keynesian disaster than they would if Government did the right thing.

    Quote Originally Posted by Goldenboy219 View Post
    The alternative? The government runs deficits and begins to apply policies that will positively shift demand (stimulus, specifically government spending not tax rebates).
    Government policies will do NOTHING to shift the demand curve; what they are doing is moving the curve even further out into the future.

    The FACT is that attempts to “manage” recessions lead to greater recessionary pressures that extend the recession, not shorten them. At some point, the American people will have to pay down the deficit and the national debt. The current cost to do that; $13.5 trillion dollars and growing by millions every minute.

    If you want to see an extreme example of this type of Government intervention, take a look at Zimbabwe. That is where we are headed.

    Quote Originally Posted by Goldenboy219 View Post
    In accordance, central banks go against market sentiment and begin flooding the financial system with liquidity thereby lowering interest rates and preventing a race to the bottom in asset prices (money is not scarce now). Inflation (higher prices) is sought as a way to cure falling asset prices (deflation) because costs in the short term are "fixed". As the psychology of markets leans towards optimism, prices will begin to rise (a signal of naturally improving demand) and these higher prices will attract producers to hire more workers which is necessary to increase production, in accordance with increasing capital spending (business investment) which is interest rate sensitive.
    This is amusing in that there is currently little or zero demand for liquidity as no one whishes to risk capital building stores or businesses where there IS NO DEMAND for products. Interest rates have never been lower and yet the money is not readily available and there is little or no demand for such liquidity in a market where there are fewer consumers.

    Quote Originally Posted by Goldenboy219 View Post
    Once we see consecutive quarters of positive GDP growth, higher employment, greater lending, more monetary velocity; central banks will begin the necessary steps in draining excess liquidity, thereby raising rates (carefully). In accordance, the federal government (with careful timing and consideration) begins raising taxes on in a temporary fashion (to ensure the Ricardian equivalence holds).
    As debated here, the future suggests that there will be little to NO GDP growth for the next few years; especially if the Government keeps borrowing, taxing and printing money to spend it on partisan programs intended to make the citizens of the State dependent wards.

    In order to declare a recession over, you have to have job creating, currently non-existent, you have to have consumer demand, currently non-existent, and you have to have at least three quarters of positive GDP growth.

    Now I know this threads premise is that the recession is over; but anyone with a brain and their eyes open know what a farcical effort that is.

    The only thing more laughable about Obama supporters attempts to argue that what has happened so far is good, is the irony of how they claimed it was so bad the last 8 years.

    Quote Originally Posted by Goldenboy219 View Post
    All in the short run. We are now beginning to see real signs of improvement. There might be some more bumps in the road, but that is to be expected when "animal spirits" are released.
    One can only make such a claim in a vacuum of any reality or the facts; or, through the willful suspension of disbelief.

    Quote Originally Posted by Goldenboy219 View Post
    However in the long run, real growth is primarily a function of increased productivity via technological progress. In the long run, it is aggregate supply that determines real output (GDP).
    This is patently wrong; it is DEMAND that determines real output NOT supply. I am not sure which university you attended that taught such upside down economics; where did you attend college again?

    SUPPLY has never driven an economy; it is always demand and consumers spending their hard earned wealth will determine what products and services will be produced. Supply can only attempt to keep up with demand and balance their inventories with that demand.

    Carry on. Here’s a great economist you may wish to read so that you can become better informed:

    Walter Williams Home Page

    A few great articles written by this BLACK Conservative economics professor who is one of the most brilliant minds of our day:

    Hillsdale College - Imprimis Issue
    The Geography of Recession | STRATFOR

  5. #105
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    Re: The recession may be over at last — so what now? [edited]

    Quote Originally Posted by reefedjib View Post
    This was very interesting. I have a couple of questions.

    First is that you say that in the short run, aggregate demand determines output, but in the long run, aggregate supply that determines real output. Could you talk about that difference a little bit?
    Certainly.

    We first have to define the short run. Lets consider something simple such as oil production within the US. Every day an oil firm is in operation, they have a specific amount of production. The ability for them to shift production (regardless of demand) has some timing restrictions, fixed costs (contracts and such), and therefore it is quite unrealistic to think a firm could double their production capacity, much less put it into practice in a short period of time. So, supply in the short run is more or less constant, hence only fluctuations in consumer demand typically will effect output (revenue = price x quantity). For example, if a firm was producing/selling 100 units per day, with a price of $5 per unit, the firm revenue would be $500/day. Say that "something" causes demand to spike (weather, future expectations, etc...) which drives the price up to $6 per unit, revenue is now $600/day, etc....

    It is also very important to note that supply shocks do exist (war, major discovery of commodity, etc...) but are heavily reliant on future expectations to altar market sentiment.

    But in the long run, the firm will be able to double, triple, quadruple their productive capacity, and quite possibly put it into practice (the slope of the supply curve is bigger in the long run than in the short run). In the very long run, the slope of the supply curve is undefined (vertical line) due to the fact that throughout the operation of a business, they will have produced a "set" amount. For example, if an oil firm produced 100 million "units" in their existence, only demand will determine equilibrium price (where they intersect). Note, the slope of the demand curve does not matter, all that is important is where it achieves equilibrium.

    Second is that while we have deficit spending and stimulus, my understanding is that most of the stimulus is yet to be spent. So how much deficit spending and stimulus has there been so far and how much impact has it had supporting demand (I think that is what you said it does).
    Stimulus spending will have two very real effects. The first is increased spending will have a positive effect on demand, but how much is primarily dependent on transactions 2 through infinity. Secondly, US stimulus requires deficits which require debt to finance the purchases. So, if the stimulus is not adequate, a second stimulus will only by more costly with the compound of time and transaction costs to issue debt for such a thing.

    Let us assume that $80 billion has been spent so far. Consumption (C) minus Savings (S) equals Income (Y) (income can either be spent or saved), we can re arrange the equation to state C=Y-S. To make this a bit more simplistic, assume all income is consumed, C=Y. It is also helpful to keep in mind the equation for GDP; Y=C+I+G+NX. The amount of consumption
    spent on the domestic economy is the amount that will be kept in the domestic economy, hence is the amount that will create subsequent income for firms and their employees. So what we are essentially deriving is the fiscal multiplier. Assuming half of consumption is domestic, and $80 billion has been spent;

    The initial boost to GDP will be $80 billion (step 1). Steps 2 through infinity play out similar to this: (1/(1-MPCDG)=(1/1-.5)= 2; 2 x $80 billion = $160 billion; steps 2 through infinity equal the difference between the multiplier effect and step 1, therefore steps 2 through infinity equal $80 billion, although GDP has went up $160 billion on $80 billion in stimulus. Of course, we left out savings/debt repayment, assumed the multiplier, and assume "leakages equal injections".

    My point is how much of this "market recovery" (not unemployment recovery yet) is due to govt spending and how much is natural cycle correction?
    Without concerning ourselves with great accuracy, (C-ΔC)-(G-ΔG)/Y-ΔY= the % makeup of non governmental consumption (based on all of our assumptions).

    Thanks!
    No problem.
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    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: The recession may be over at last — so what now? [edited]

    Quote Originally Posted by Truth Detector View Post
    A few great articles written by this BLACK Conservative economics professor who is one of the most brilliant minds of our day:

    Hillsdale College - Imprimis Issue
    This is an excellent article. I would suggest some Thomas Sowell also.
    From the ashes.

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    Re: The recession may be over at last — so what now? [edited]

    Quote Originally Posted by Phoenix View Post
    This is an excellent article. I would suggest some Thomas Sowell also.
    Sowell is another wonderful intellect in a world so full of educated derelicts.

    I especially liked this article and include this excerpt:

    The memory of that long-ago episode has come back more than once while observing both the actions of the Obama administration and the fierce reactions of its supporters to any questioning or criticism.

    Almost never do these reactions include factual or logical arguments against the administration's critics. Instead, there is indignation, accusations of bad faith and even charges of racism.

    Here too, it seems as if so many people have invested so much hope and trust in Barack Obama that it is intolerable that anyone should come along and stir up any doubts that could threaten their house of cards.

    Among the most pathetic letters and e-mails I receive are those from people who ask why I don't write more "positively" about Obama or "give him the benefit of the doubt."


    Thomas Sowell

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    Re: The recession may be over at last — so what now? [edited]

    Quote Originally Posted by Truth Detector View Post


    This is patently wrong; it is DEMAND that determines real output NOT supply. I am not sure which university you attended that taught such upside down economics; where did you attend college again?

    SUPPLY has never driven an economy; it is always demand and consumers spending their hard earned wealth will determine what products and services will be produced. Supply can only attempt to keep up with demand and balance their inventories with that demand.
    Since your post is nothing short of opinionated drivel, no matter how effectively i dispute your opinions, you are still going say i am wrong (because reality is colliding with your ideology).

    Aggregate Supply... in the long run... has a slope that is undefined, hence the AD curve is vertical. This is not Keynesian economics, instead this is classical stance, of which is the basis of supply side economics. Hence, in the long run, supply (and not demand) determines output.



    Hopefully you understand the demand curve is downward sloping. No matter where the demand curve intersects a vertical line (AS), it will still lead to a constant amount of output (y) in regards to long run aggregate supply. Go ahead and try it for yourself. Make up any type of demand curve to intersect long run supply, and tell me what happens to the output When you are done, you can either PM me and tell me you are sorry for your mistake, or continue to make yourself look foolish by attempting to dispute simple mathematics. The choice is yours.

    Ill even help you out.



    Now move the demand curve anywhere on the graph and explain to me in your logic how output is changed (in regards to long run AS).

    You might want to further dislodge your foot from your mouth, as demand (in the long run) is what determines price, not output.

    Carry on. Here’s a great economist you may wish to read so that you can become better informed:

    Walter Williams Home Page

    A few great articles written by this BLACK Conservative economics professor who is one of the most brilliant minds of our day:

    Hillsdale College - Imprimis Issue
    The Geography of Recession | STRATFOR
    I can care less about your opinions, as they are based on phantom foundations.
    Last edited by Kushinator; 10-30-09 at 04:42 PM.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: The recession may be over at last — so what now? [edited]

    Quote Originally Posted by American View Post
    The thread title is all wrong. Fix it.
    That was the title when I posted it.
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    Re: The recession may be over at last — so what now? [edited]

    Quote Originally Posted by Goldenboy219 View Post
    Since your post is nothing short of opinionated drivel, no matter how effectively i dispute your opinions, you are still going say i am wrong (because reality is colliding with your ideology).

    Aggregate Supply... in the long run... has a slope that is undefined, hence the AD curve is vertical. This is not Keynesian economics, instead this is classical stance, of which is the basis of supply side economics. Hence, in the long run, supply (and not demand) determines output.



    Hopefully you understand the demand curve is downward sloping. No matter where the demand curve intersects a vertical line (AS), it will still lead to a constant amount of output (y) in regards to long run aggregate supply. Go ahead and try it for yourself. Make up any type of demand curve to intersect long run supply, and tell me what happens to the output When you are done, you can either PM me and tell me you are sorry for your mistake, or continue to make yourself look foolish by attempting to dispute simple mathematics. The choice is yours.

    Ill even help you out.



    Now move the demand curve anywhere on the graph and explain to me in your logic how output is changed (in regards to long run AS).

    You might want to further dislodge your foot from your mouth, as demand (in the long run) is what determines price, not output.



    I can care less about your opinions, as they are based on phantom foundations.

    What happens to this model if supply is not static. IOW, what happens if we were to explore, and flood the market with our own supply?


    j-mac
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