U.S. Economy Shrinks By Most Since Great Recession in 1Q[W:487:681]

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

Conservative said:

Thank you for the advice, but I make my comments based upon responses that show Progressives/Liberals out of touch with reality....

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Out of touch with YOUR reality, you mean.

and how in a private sector economy they attack wealth creation

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How, by recognizing that banks exploited their customers, because they sold products without keeping any skin in the game themselves, and betting against what they sold? By pointing out that the ratio of CEO pay to other employee pay has skyrocketed from 25:1 in the 1970s to over 200:1 now? How CEO's get huge compensation packages that are disconnected from performance? How CEO's who depart or are fired get massive golden parachutes? How mass layoffs tend to be associated with a boost in stock price? By pointing out how wages have been falling for everyone except the top 1% of earners? By being aware that top earners influence lawmakers to riddle the tax code with loopholes for their advantage, and use them to reduce their effective tax rates? By noticing that a significant portion of the super-wealthy are not "job creators," but rather people in the financial sector who generate their income (which is often taxed at low rates, since it's classified as "carried interest") by engaging in high-speed trading and arbitrage -- i.e. placing bets on obscure economic factors? By noticing that private health insurance in the US has become an abject failure, with insurance premiums and medical costs massively outpacing inflation for well over a decade?

Of course, you're probably going to read that and assume that I'm a commie pinko. But actually, I'm not. I don't hate corporations or CEO's or even hedge fund managers. I don't reject capitalism. I don't want government to nationalize any corporations.

I'm just aware that the super-wealthy have stacked certain systems in their favor, and in their own self-interest, and as a result everyone suffers. CEO's focus on short-term profits and stock prices; hedge funds don't care about potential contagious effects of their work; banks and mortgage brokers are happy to sell off all their interest in MBS's and derivatives; investors don't care about fundamentals or long-term viability. And if the average person's wages keep eroding, then the entire economy ends up suffering. I also don't want to create or perpetuate safety nets that then turn into welfare traps.

I.e. the incentives and the tax system have gotten off track. Acting like nothing is wrong, and that CEO's and hedge funders are the Golden Boys of Capitalism, or that the government should eliminate all oversight, is a huge mistake and will end up damaging the economy.

Now, I will admit there are some on the left who are anti-corporate. But there are plenty of people on the right now who feel the same way, as typified by their rejection of the auto and bank bailouts, and now a desire to shut down the Ex-Im Bank (and they're just getting started).

nothing about the trillions being wasted by the Federal Govt. all in the name of compassion but never generating compassionate results.

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Or, we can recognize that some programs actually do keep people from abject poverty; that not every aspect of a safety net is a welfare trap; and that millions of people who are collecting benefits are in fact being treated compassionately, because they are too old to work.

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

imagep said:

Liberals will be responsible for the bad economy that the next conservative has. Time lag effect you know.:lamo

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Remember the mess liberals claimed Obama inherited? The next Republican President will inherit a bigger mess with huge debt, high unemployment/under employment/discouraged workers, stagnant economic growth, and a much divided country with record numbers dependent on a massive central govt. That is a prescription for disaster.

What liberals want to point out is that Bush lost 750,000 jobs a few months but ignore the reality that Obama had over a million discouraged workers who aren't counted as unemployed thus making the unemployment number look better than it actually is. Last time I checked a million discouraged workers is higher than 750,000 unemployed. Adding unemployed and discouraged workers still has Obama with a worse economic record.

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

Visbek said:

Out of touch with YOUR reality, you mean.



How, by recognizing that banks exploited their customers, because they sold products without keeping any skin in the game themselves, and betting against what they sold? By pointing out that the ratio of CEO pay to other employee pay has skyrocketed from 25:1 in the 1970s to over 200:1 now? How CEO's get huge compensation packages that are disconnected from performance? How CEO's who depart or are fired get massive golden parachutes? How mass layoffs tend to be associated with a boost in stock price? By pointing out how wages have been falling for everyone except the top 1% of earners? By being aware that top earners influence lawmakers to riddle the tax code with loopholes for their advantage, and use them to reduce their effective tax rates? By noticing that a significant portion of the super-wealthy are not "job creators," but rather people in the financial sector who generate their income (which is often taxed at low rates, since it's classified as "carried interest") by engaging in high-speed trading and arbitrage -- i.e. placing bets on obscure economic factors? By noticing that private health insurance in the US has become an abject failure, with insurance premiums and medical costs massively outpacing inflation for well over a decade?

Of course, you're probably going to read that and assume that I'm a commie pinko. But actually, I'm not. I don't hate corporations or CEO's or even hedge fund managers. I don't reject capitalism. I don't want government to nationalize any corporations.

I'm just aware that the super-wealthy have stacked certain systems in their favor, and in their own self-interest, and as a result everyone suffers. CEO's focus on short-term profits and stock prices; hedge funds don't care about potential contagious effects of their work; banks and mortgage brokers are happy to sell off all their interest in MBS's and derivatives; investors don't care about fundamentals or long-term viability. And if the average person's wages keep eroding, then the entire economy ends up suffering. I also don't want to create or perpetuate safety nets that then turn into welfare traps.

I.e. the incentives and the tax system have gotten off track. Acting like nothing is wrong, and that CEO's and hedge funders are the Golden Boys of Capitalism, or that the government should eliminate all oversight, is a huge mistake and will end up damaging the economy.

Now, I will admit there are some on the left who are anti-corporate. But there are plenty of people on the right now who feel the same way, as typified by their rejection of the auto and bank bailouts, and now a desire to shut down the Ex-Im Bank (and they're just getting started).



Or, we can recognize that some programs actually do keep people from abject poverty; that not every aspect of a safety net is a welfare trap; and that millions of people who are collecting benefits are in fact being treated compassionately, because they are too old to work.

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Again, you seem not to understand whose responsibility the poor and those on welfare belong to? Liberals believe it is Washington but the reality is it is the state and local communities. Further liberals want to blame Bush and the banks for the problem when the reality it was the sub prime loans and abuse of those loans that hurt the economy. I am waiting for you to tell me how this recession affected you and your family? What exactly did you lose?

I don't give a damn about the super wealthy, why do you? What did they do to prevent you from becoming wealthy? You care more about what someone else makes or pays in taxes than the waste, fraud, and abuse in a 3.8 TRILLION Dollar Federal Govt. Why is that?

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

Conservative said:

Aw, no question about it, strong economic growth has been stifled by poor weather for the last 6 1/2 years. ....

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No, even further back than that. You know, the Great Bush Recession was caused by poor weather also.

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

Jack Hays said:

Did OPEC go out of business after RWR took office?eace

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Why don't you post a chart of the price of oil during that era?

Never mind, I found one

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

Conservative said:

Remember the mess liberals claimed Obama inherited? The next Republican President will inherit a bigger mess with huge debt, high unemployment/under employment/discouraged workers, stagnant economic growth, and a much divided country with record numbers dependent on a massive central govt. That is a prescription for disaster....

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That's why I am not partisan. What happened under Bush was a "prescription for disaster", and what is happening under Obama may be a "prescription for disaster" (the jury is out on that). I really don't see much difference in real life implemented policy, just rhetoric.

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

imagep said:

Why don't you post a chart of the price of oil during that era?

Never mind, I found one

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So you think OPEC explains everything?

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

Jack Hays said:

So you think OPEC explains everything?

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From about 1973 to 1980, the price of oil went up 700%. You don't think that the price of oil is a significant contributor to inflation during that time? Then when the price of oil started dropping nearly as quickly, so did inflation. You can't see a significant correlation there? Or is it just coincidental? What's your explanation for double digit inflation?

Every time that this world has seen true hyper-inflation, it has always been accompanied by some sort of reduction in supply of goods. OPEC reduced our supply of oil, this fits the scenario.

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

Jack Hays said:

So you think OPEC explains everything?

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Of course not. You do notice that the price of oil keeps going up even though America is not only producing more oil than ever before, but is now a net oil exporter.

That one fact should tell you that "drill baby drill" is not and can never be a solution to our gas prices.

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

donsutherland1 said:

Since GDP reports have been compiled on a regular basis, it is true that every quarter in which GDP fell at a 2.9% or greater annual rate either occurred during a recession or just prior to one. The largest drop that did not precede a recession was 1.5%. Still, even as there are some macroeconomic factors involved, there are also temporary factors (including but not limited to weather). Overall, I believe the best narrative for the year as a whole will be generally moderate growth. Rapid growth appears unlikely. Sluggish growth is a possibility, especially if some of the larger headwinds intensify.

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And I am sure you get a nice stipend for having and expressing that belief, but be real for a moment. Do you really think there is no source of trouble in the underlying economy? I admit there is no single sexy culprit to pinpoint as there was with the Dotcom bubble or the housing bubble, but that is a reflection of the overall weakness of the U.S. economy. No noteworthy growth stories exist and thus you have many less prominent bubbles rather than a single dominant bubble.

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

imagep said:

From about 1973 to 1980, the price of oil went up 700%. You don't think that the price of oil is a significant contributor to inflation during that time? Then when the price of oil started dropping nearly as quickly, so did inflation. You can't see a significant correlation there? Or is it just coincidental? What's your explanation for double digit inflation?

Every time that this world has seen true hyper-inflation, it has always been accompanied by some sort of reduction in supply of goods. OPEC reduced our supply of oil, this fits the scenario.

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Seems more to correlate with Carter's time in office than any other trend.eace

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

Glen Contrarian said:

Of course not. You do notice that the price of oil keeps going up even though America is not only producing more oil than ever before, but is now a net oil exporter.

That one fact should tell you that "drill baby drill" is not and can never be a solution to our gas prices.

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There is no "solution" to gas prices. They are what they are.eace

"Drill baby drill" is indeed the answer.

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

Jack Hays said:

There is no "solution" to gas prices. They are what they are.eace

"Drill baby drill" is indeed the answer.

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Technically I mean the US could set its own domestic oil prices for its own oil (OPEC sets Oil prices for the rest of the world) and yes drill baby drill is indeed the answer, because if we use our own OIL we can charge ourselves w/e we want.

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

donsutherland1 said:

Since GDP reports have been compiled on a regular basis, it is true that every quarter in which GDP fell at a 2.9% or greater annual rate either occurred during a recession or just prior to one. The largest drop that did not precede a recession was 1.5%. Still, even as there are some macroeconomic factors involved, there are also temporary factors (including but not limited to weather). Overall, I believe the best narrative for the year as a whole will be generally moderate growth. Rapid growth appears unlikely. Sluggish growth is a possibility, especially if some of the larger headwinds intensify.

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'...according to the latest data from the Bureau of Economic analysis, there has never been a time in history that year-over-year gross domestic income has been at its current pace (2.6 percent) without the U.S. economy ultimately falling into recession. That’s more than 50 years of history, which is about as good as one could ever hope for in an economic indicator.'

This Has Never Happened Without The US Falling Into Recession | Zero Hedge

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

DA60 said:

'...according to the latest data from the Bureau of Economic analysis, there has never been a time in history that year-over-year gross domestic income has been at its current pace (2.6 percent) without the U.S. economy ultimately falling into recession. That’s more than 50 years of history, which is about as good as one could ever hope for in an economic indicator.'

This Has Never Happened Without The US Falling Into Recession | Zero Hedge

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It was one of those " 50 year " winters.

But the Obama apologist have forecasted a 4 percent increase in growth though !!

Nothing to worry about

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

Jack Hays said:

Seems more to correlate with Carter's time in office than any other trend.eace

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So people named Jimmy Carter cause inflation? Anyhow, that graph seems to indicate a big increase in inflation around 1973-1974, right when the price of oil started skyrocketing, carter wasn't prez until 1977.

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

MasterLiberty said:

Technically I mean the US could set its own domestic oil prices for its own oil (OPEC sets Oil prices for the rest of the world) and yes drill baby drill is indeed the answer, because if we use our own OIL we can charge ourselves w/e we want.

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Not really. "We" don't own the oil, the oil companies do, and they will price it according to the world wide market. Why would US oil producers chose to sell oil to anyone other than the high bidder?

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

DA60 said:

'...according to the latest data from the Bureau of Economic analysis, there has never been a time in history that year-over-year gross domestic income has been at its current pace (2.6 percent) without the U.S. economy ultimately falling into recession. That’s more than 50 years of history, which is about as good as one could ever hope for in an economic indicator.'

This Has Never Happened Without The US Falling Into Recession | Zero Hedge

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There has never been very long without a recession, so you could say the exact same thing about any gdp growth rate.

Anyhow, 2.6% isn't far below the average.

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

imagep said:

Not really. "We" don't own the oil, the oil companies do, and they will price it according to the world wide market. Why would US oil producers chose to sell oil to anyone other than the high bidder?

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-_- another dolt who thinks the oil companies control the price of oil.... wrong buddy so wrong... OPEC controls the price of oil (Which is like the Middle East +Some countries that hate us). If we naturally produced our own oil our country could set the price of oil per barrel in the US.

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

MasterLiberty said:

-_- another dolt who thinks the oil companies control the price of oil.... wrong buddy so wrong... OPEC controls the price of oil (Which is like the Middle East +Some countries that hate us). If we naturally produced our own oil our country could set the price of oil per barrel in the US.

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The entire market controls the price of oil. It's supply and demand, and an occasional runup due to a lack of supply (which is still supply and demand - even if that is caused by OPEC).

Anyhow, so you claim to be a libertarian, yet you are advocating for the US government to set prices. Wow.

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

imagep said:

So people named Jimmy Carter cause inflation? Anyhow, that graph seems to indicate a big increase in inflation around 1973-1974, right when the price of oil started skyrocketing, carter wasn't prez until 1977.

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We both know Presidents don't cause inflation all by themselves, but their policies obviously have an impact. But in fairness you're the one who started all this by trying to pin it on RWR. For myself, I think the graph plainly shows Carter was the least successful POTUS of that era in dealing with inflation.eace

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

Conservative said:

Again, you seem not to understand whose responsibility the poor and those on welfare belong to? Liberals believe it is Washington but the reality is it is the state and local communities.

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Actually, I'd say it is "whoever has the best idea."

Unfortunately, turning TANF into block grants for the states indicates that state control isn't necessarily the best idea (How States Have Spent Federal and State Funds Under the TANF Block Grant — Center on Budget and Policy Priorities).

Also, few municipalities (aside from big urban centers) have the resources to really deal with providing safety nets, let alone designing them to avoid welfare traps.

Further liberals want to blame Bush and the banks for the problem....

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I've said several times in this thread that I don't blame Bush much for the bubbles. He had a little bit of responsibility, as did Clinton; both of them failed to uphold or implement regulations that would have reduced the contagion, though neither really could have eliminated the bubble. Greenspan had more responsibility, since low interest rates were one factor, and Greenspan held a hard line against any financial or mortgage regulations.

The banks bear more responsibility than the politicians. To make a long story short: There was a ton of capital (US and international) looking for a home, and the Dot Com implosion shifted capital away from equities and into real estate. Real estate rarely has a multi-regional decline; in most cases, one region will decline while others do fine. So, money starts pouring into real estate.

New financial innovations wound up pouring tons of fuel on the fire. Mortgage brokers misused risk modeling software, which masked the risks. Mortgage originators started selling mortgages to Wall Street, and had no incentives or requirements to hold onto any of the mortgages, so they had no skin in the game. Wall Street banks used CDOs and MBSs to slice and dice the mortgages, which increased the obscurity and disguised the risks, and also resulted in the banks not caring if the borrowers defaulted. Not only did the banks shovel the derivatives at an uneducated market, they also in some cases bet against their own products with CDS's.

It is important to note that while CDOs can be a good product, they were certainly abused by the investment banks. The entire structure was flawed; the top-rated tranches were not typically specified based on the risks of the mortgages, but who gets paid first. Some banks would also take the lowest (riskiest) tranches, repackage them into another CDO to further obscure the risks. Other products like synthetic CDOs were so complex that I don't know why anyone would buy them.

Another factor is that banks abused their own VAR systems, and failed to assess the risks to their own existence. They also heavily pressured the ratings agencies to give their products higher ratings than they deserved, with the threat of pulling business (talk about a flawed incentive system).

Of course, none of this works without buyers, of both the homes and the derivatives. Lots of people bought homes they knew, or should have known, they couldn't have afforded. Investors bought financial products they didn't fully understand, which is never a good idea.

Subprime was as much a symptom than a cause. They only really became a big force well into the bubble, when the mortgage brokers and banks were running out of borrowers with decent credit histories and decent jobs. In 2003, subprimes were still only 8% of the market; it leaped to 18% in 2004, then 20% in 2005 and 2006. There were also lots of issues with option ARMs, interest-only mortgages, 80-20s and so forth:



So yeah, the banks do hold a fair amount (if not the bulk) of responsibility for the crisis and subsequent recession, and were not sufficiently taken to task yet for their role.

I am waiting for you to tell me how this recession affected you and your family? What exactly did you lose?

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Not only are my personal affairs none of your business, my own experiences have nothing to do with how the bubble formed, perpetuated and burst.

I don't give a damn about the super wealthy, why do you?

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Because they're distorting both the political system and the economy, and some of the choices they're making have a negative effect on the entire country.

What did they do to prevent you from becoming wealthy?

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Again, it's not about me.

What they do that potentially harms the entire economy is that some of the super-wealthy want to cut functions that are critical for the nation as a whole (e.g. education, regulation, safety nets). Their enormous wealth also gives them significantly more influence over politicians, via contributions and lobbying -- now more than ever, since the SCOTUS unleashed nearly-unlimited campaign spending.

You care more about what someone else makes or pays in taxes than the waste, fraud, and abuse in a 3.8 TRILLION Dollar Federal Govt. Why is that?

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*sigh* Again, since you repeatedly insist on excluding SS and Medicare, it's a $2.5 trillion projected deficit for 2015.

I never said "I don't care about waste." In fact, we haven't really discussed waste very much. The topic of this thread is the slightly ridiculous claim that one quarter of negative growth is somehow supposed to be an indicator that the entire economy is going down the tubes, which is not the case.

So, to that end: Government spending, revenue collections, high deficits and high debt actually are not a problem for the US economy. Deficits are roughly back in line from the past ~40 years. Despite a slow grinding recovery, things are getting better, so debt as a percentage of GDP is likely to fall, especially if we cut defense spending to a reasonable level and keep health care spending in check. In the short and medium term, the US is more than capable of paying what it owes, and the funds it's using are not a detriment at a time when lenders are still reluctant to lend.

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

imagep said:

The entire market controls the price of oil. It's supply and demand, and an occasional runup due to a lack of supply (which is still supply and demand - even if that is caused by OPEC).

Anyhow, so you claim to be a libertarian, yet you are advocating for the US government to set prices. Wow.

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Actually I am calling for the US government to lower gas prices which they have the power to do by manipulating the federal gas reserve (If supply increases and demand stays the same then prices go down.) You yourself just said that supply and demand play a factor, so if the US has a greater supply and the same demand then they can naturally lower prices.

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

Jack Hays said:

Seems more to correlate with Carter's time in office than any other trend.eace

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He answer you pretty well, but this is the trouble with causal relationships. Correlation doesn't mean causation. Too often people think because something happen during a presidency that the president was responsible, when in fact there may well be other causes.

Re: U.S. Economy Shrinks By Most Since Great Recession in 1Q

Boo Radley said:

He answer you pretty well, but this is the trouble with causal relationships. Correlation doesn't mean causation. Too often people think because something happen during a presidency that the president was responsible, when in fact there may well be other causes.

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Linking inflation to specific presidents was his contribution, not mine.