Quotulatiousness

January 31, 2013

Blaming “austerity” for most recent slowdown

Filed under: Economics, Government, Media, USA — Tags: , , , , , — Nicholas @ 09:47

David Harsanyi discusses the named (by the mainstream media) culprits for the unexpected drop in US fourth-quarter GDP:

So, U.S. consumer confidence unexpectedly plunged in January to its lowest level in more than a year. The U.S. economy unexpectedly posted a contraction in the fourth quarter of 2012 — for the first time since the recession — “defying” expectations that economic growth is in our future.

If the economy were as vibrant as President Barack Obama has told us it is, a belt tightening in a single sector of government surely wouldn’t be enough to bring about “negative growth.” But one did. Unexpectedly. No worries, though. Pundits on the left tell us that this contraction was good news — possibly the best contraction in the history of all contractions. The White House blamed Republicans and, I kid you not, corporate jet owners because — well, who else? But mostly, the left is bellyaching about the end of temporary military spending and a brutal austerity that’s enveloped a once great nation.

There’s a small problem with that argument. There is no austerity. In the fourth quarter of 2012, Washington spent $908 billion, which was $30 billion more than it spent in the last quarter of 2011 and nearly $100 billion more than it spent in the third quarter of 2012. Taxpayers took on another $400 billion in debt during the quarter. If this is poverty, can you imagine what robust spending looks like?

As always, for “austerity” to take the blame, there’d actually have to have been some austerity to start with. The US government certainly hasn’t been practicing austerity over the last four years.

January 30, 2013

American fourth quarter GDP down 0.1%

Filed under: Economics, Military, USA — Tags: , , — Nicholas @ 10:29

The optimistic folks at Business Insider assure us that the unexpectedly bad number for the US fourth quarter hides some good news:

People will be stunned to see that today’s GDP report went negative for Q4… the first negative print since The Great Recession.

But the report isn’t that bad. In fact it was arguably good.

For one thing, most of the collapse was due to a stunning fall in military spending. That’s not good for GDP, but it doesn’t reflect the real underlying strength of the economy.

And it’s mostly due to war drawdown. That’s a good thing for everyone!

January 15, 2013

“You kids are screwed”

Filed under: Economics, Education, Government, USA — Tags: , , , — Nicholas @ 00:01

Feeling optimistic about the future? Bryan Goldberg is here to slap that silly optimistic grin off your face:

Hey kids, you’ve all read “The Hunger Games,” right? Almost all young people have read the best-selling books or seen the Hollywood movie about Katniss Everdeen, a smart and ambitious young lady whose life prospects are diminished by historical events that predate her. What little hope she has is seemingly reduced to nil when a bunch of old people drop her into an arena and force her to fight with her fellow children in a battle royale to the death.

But that’s just fiction, right? Your loving parents and grandparents would never screw up their world and then throw you kids under the bus…or would they?

Actually, they already have.

Last week, the economics blog Calculated Risk ran a chart that tells a pretty compelling story. To an economist, this chart means that the magnitude and duration of the 2007 recession’s impact on unemployment outpaces that of any prior post-war recession. To young people, it simply means this…

You kids are screwed.

In fact, teenagers today probably aren’t old enough to remember the “Dot Bomb” recession of twelve years ago. But even at its peak, that really bad recession did not reach a level of unemployment that matched the one we are still currently experiencing. With the Federal Reserve losing its appetite for quantitative easing, the last bullet in their holster, and both political parties deciding to half-ass the fiscal policy debate, it’s safe to say that…

You kids are really screwed.

Pay careful attention to Lesson No. 4: it’s even more important than you think it is.

H/T to Jon, my former virtual landlord, for the link.

December 1, 2012

Tyler Cowen and Andrew Coyne on The Great Stagnation

Filed under: Books, Economics, Media, Technology, USA — Tags: , , , — Nicholas @ 09:35

Tyler Cowen discusses his book The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick and Will (Eventually) Feel Better. Andrew Coyne (National Post) presents a rebuttal and the pair discuss Cowen’s thesis focusing on issues of productivity, innovation and government policy (moderated by Wendy Dobson).

August 13, 2012

After five years, the Great Recession still shows little sign of ending

Filed under: China, Economics, Europe, USA — Tags: , , — Nicholas @ 09:02

For your daily dose of doom, here’s Ambrose Evans-Pritchard at the Telegraph:

The world remains in barely contained slump. Industrial output is still below earlier peaks in Germany (-2), US (-3), Canada (-8) France (-9), Sweden (-10), Britain (-11), Belgium (-12), Japan (-15), Hungary (-15) Italy (-17), Spain (-22), Greece (-27), according to St Louis Fed data. By that gauge this is proving more intractable than the Great Depression.

[. . .]

The original trigger for the Great Recession has since faded into insignificance. America’s house price bubble — modest by European or Chinese standards — has by now entirely deflated. Warren Buffett is betting on a rebound. Fannie and Freddie are making money again.

Five years on it is clear that subprime was merely the first bubble to pop, a symptom not a cause. Europe had its own parallel follies. Britons were extracting almost 5pc of GDP each year in home equity by the end. Spain built 800,00 homes in 2007 for a market of 250,000. Iceland ran amok, so did Latvia and Hungary. The credit debacle was global. If there was an epicentre, it was Europe’s €35 trillion banking nexus.

[. . .]

A study by Stephen Cecchetti at the Bank for International Settlements concludes that debt turns “bad” at roughly 85pc of GDP for public debt, 85pc for household debt, and 90pc corporate debt. If all three break the limit together, the system loses its shock absorbers.

“Debt is a two-edged sword. Used wisely and in moderation, it clearly improves welfare. Used imprudently and in excess, the result can be disaster,” he said.

July 9, 2012

US recovery from the recession still more theory than reality

Filed under: Economics, USA — Tags: , — Nicholas @ 07:54

Greg Mankiw has a graphical refutation of any claim that the United States has actually seen any recovery from the Great Recession of 2008:

At best, you’d have to call that a “stabilization”, but not a “recovery”.

June 23, 2012

The real ending to Krugman’s favourite example, the Capitol Hill babysitting co-op

Filed under: Economics, Government, Humour — Tags: , , , — Nicholas @ 08:32

Tim Harford recounts the tale of the Capitol Hill babysitting co-op, which Paul Krugman is very fond of using as an example to support his economic prescriptions, but he includes the part that Krugman tends to ignore … the ending:

One of the most renowned parables in economics is that of the Capitol Hill babysitting co-operative. It became famous because of Paul Krugman, a winner of the Nobel memorial prize in economics and a pugnacious columnist for The New York Times.

Long, long ago (the 1970s) in a town far, far away (Washington, DC) there was a babysitting co-op with a problem. The 150 or so families in the co-op, mostly congressional staffers, shared babysitting duties and kept track of who was owed babysitting, and who was owing, with a system of “scrip” – tokens good for a half-hour’s sitting.

Thanks to an administrative misstep, the co-op ended up short of tokens. Most families wanted more, as a buffer in case they had a run of social engagements, and so most families wanted to stay in and sit for others. Of course, if everyone wants to babysit, nobody goes out, and that means nobody babysits either. The co-op suffered a demand-led depression: there was no shortage of people willing to supply babysitting services, but because of a failure of monetary policy, this potential supply was not called into play. [. . .]

Two-and-a-half cheers, then, for Krugman. But something has been nagging at me ever since I read the original story of the Capitol Hill babysitting co-op, published in 1977 by Joan and Richard Sweeney. Paul Krugman’s most recent retelling does not mention how the original story ends: the co-op prints too much scrip, inflationary pressures spring up and are suppressed, and the co-op seizes up again because nobody wants to stay at home babysitting. Krugman is right when he says that economies sometimes suffer from problems that have technical solutions. Perhaps he is too quick to suggest that those technical solutions are simple.

But let me look for compromise. The babysitting co-op was ruined because it was run, incompetently, by a bunch of Capitol Hill lawyers. In this respect I think we can all agree that it remains an important cautionary tale.

June 21, 2012

Canada’s recession, in one Tweet

Filed under: Cancon, Economics, Europe, USA — Tags: , , — Nicholas @ 12:16

June 8, 2012

A Gen-X lament: “none of these “experts” … even agree on when we were born”

Filed under: Media, Randomness — Tags: , , , — Nicholas @ 09:46

By any reckoning, I just missed being in Gen-X, as the earliest date anyone seems to use is 1961 (so my sister is a Gen X’er, but I’m a very-very-very-late boomer, apparently). In spite of that, most of my friends seem to identify much more with Gen X than the plutocratic fat cats of the early Baby Boom generation. Kathy Shaidle explains the three biggest myths about Generation X:

… the term “Generation X” was popularized by our contemporary Douglas Coupland’s titular 1991 novel. (And Coupland swiped his title from the name of Billy Idol’s old pop-punk band; my fellow ex-punk Kinsella should know that, too.)

There are lots of things “great minds” got wrong about Generation X since they started writing and worrying about them. (I mean, us.)

After Coupland’s novel — about over-educated, underemployed pop culture addicts who’ve formed an ad hoc “family” of friends – swept the planet, countless “consultants” (including, briefly, Coupland himself) started marketing themselves as experts on my demographic.

These consultants made a whole lot of money, keynote-speaking to job-for-life CEOs about why we Gen-Xer’s were all so broke and unemployed.

And the most irritating (and yeah, ironic) thing is, none of these “experts” (“X-perts”?) even agree on when we were born.

[. . .]

The takeaway for pundits and other “experts” is:

“Generation X” isn’t synonymous with “young people today.”

I’m gonna be 50 soon. Dammit.

[. . .]

Like the Y2K “experts” who came after them, all those demographic gurus and futurists who got rich theorizing about Generation X ended up looking pretty foolish. (But never had to give their money back.)

When we Gen-Xers were trying to get our first jobs out of college or high school, we did indeed contend with an economy burdened by a triple-feature of double digit horrors: inflation, unemployment and interest rates were all way over 10%.

We blamed those damn yuppie Baby Boomers. They’d beaten us to all the good jobs and were never gonna give them up.

(In the same way hippies had used up all the safe-ish drugs and free sex, and left us with crack and AIDS.)

May 31, 2012

QotD: A plague on both your houses!

Filed under: Economics, Government, Politics, Quotations, USA — Tags: , , , , — Nicholas @ 00:02

Protestations from the Obama side that this is all just proof that recession/depression was so much worse than any of us knew that it’s a goddamn great and good thing that Obama is helming the ship of state because if it had been one of those idiot Republicans like George W. Bush we wouldn’t have had bailouts and a stimulus that was too small to really effect the economy — even smaller than the $150 billion tax thingamajig that Bush tried in early 2008 that was really pathetic because we now know that even Obama’s $800 billion attempt was obviously too small christ it should have been two or three or even four times bigger and for god’s sake can’t we just prepare for the alien invasion that Paul Krugman — he won a Nobel Prize so just shut up already! — says will create enough of a multiplier effect to finally restart the economy and screw the debt because we’ll have thousands of years to pay that down, especially now that thank Zardoz we’ve got universal health care that will be awesome if the d-bags on the SCOTUS don’t FUBAR it and Dodd-Frank means there won’t be any fraud or dumb lending!

And of course the Republicans will counter with: See, none of this would have happened if we’d only followed George W. Bush’s disastrous big-government spending ways and expansion of major entitlements and a defense buildup because sharia law is taking over whole hamlets in Oklahoma and our plan to increase annual spending over the next decade by just $1 trillion is so much better than the Prez’s to spend $2 trillion more, especially after increasing federal outlays by 60 percent or more over the previous decade when we controlled things is exactly the tonic the economy needs right now! But seriously folks, what do you expect when you let gay marriage happen? No economy can recover from that!

Nick Gillespie, “Is the Obama Recovery Over? Or Has it Not Really Started Yet?”, Hit and Run, 2012-05-30

May 5, 2012

Rick Santelli goes to the white board

Filed under: Economics, Media, Politics, USA — Tags: , , , — Nicholas @ 08:59

H/T to Kate at Small Dead Animals.

February 21, 2012

First it was the “he-cession”: now it’s the “she-cession” in Ontario

Filed under: Bureaucracy, Cancon, Economics, Government — Tags: , , , , — Nicholas @ 11:47

Frances Woolley in the Globe & Mail Economy Lab says that the next phase of Ontario’s recovery from the 2008 recession will disproportionally fall on women:

Men were hit hard by the 2008-9 economic downturn, with losses of construction jobs (98 per cent male), transport jobs (90 per cent male), and manufacturing jobs (70 per cent male). Male unemployment rose so quickly that people began to talk about a “he-cession.”

Three years on, a tenuous “he-covery” seems to be under way – male unemployment rates fell last year, and the percentage of men with jobs rose.

Now it’s the ladies’ turn. Ontario’s Drummond Report calls for deep cuts to financial, administrative and secretarial jobs throughout the public service. Strictly speaking, the report recommends cutting costs; automating, streamlining and consolidating the delivery of services. Yet administrative costs equal administrative jobs — jobs that are, 8 times out of 10, held by women.

The bulk of Ontario government spending goes to MUSH — Municipalities, Universities, Schools and Hospitals. Overall spending cannot be reduced substantially without making cuts in these areas. There are about 280,000 teachers and professors in Ontario, and 65 per cent of them are female. The Drummond report recommends larger class sizes for elementary and secondary school teachers, and “flexible” teaching loads for university professors. Yet more students per teacher mean fewer teaching jobs. Just as a downturn in the construction sector leads to male unemployment, a downturn in the teaching sector leads to female unemployment.

September 6, 2011

Stephen Gordon: no case for stimulus in Canada (yet)

Filed under: Cancon, Economics, Government — Tags: , , — Nicholas @ 12:15

As he points out in the article, Canadians who are calling for the federal government to indulge in US-style stimulus spending are not paying attention to the Canadian economy:

Employment in the U.S. is far below its pre-recession levels, and employment in the construction sector has been hit particularly hard. So there is a strong case to be made for a U.S. program of infrastructure spending — and many U.S. observers are making that case.

Neither of these conditions holds in Canada. Although unemployment rates have yet to return to pre-recession levels [. . .], the number of jobs lost during the recession has been recovered, and July employment levels were 1 per cent above their pre-recession peak.

August 24, 2011

What the US economy really needs

Filed under: Economics, Government, USA — Tags: , , , , , — Nicholas @ 09:22

What it really needs is less interference from the government, which is why Michael Tanner is asking them to stay on vacation:

As the economy continues to teeter on the precipice of a double-dip recession, there is a growing demand for the president and Congress to rush back from their vacations and do something. But why?

What is it that we really think the president can do?

While the president’s latest economic plan remains a deeply held secret until after his vacation, pretty much everyone in Washington expects him to call for . . . drumroll please . . . a stimulus plan.

Now why haven’t we thought of that before? Oh, that’s right. We have.

In fact, we have now had at least five — or is it six? — stimulus plans since this recession started.

May 10, 2011

“The recent recession was probably the last nail in the coffin of the proposal for a common Canada-U.S. currency. “

Filed under: Cancon, Economics, USA — Tags: , , , — Nicholas @ 10:22

Stephen Gordon explains how the Canadian economy has benefitted from the independent Canadian dollar:

Let’s think about what would have happened over the past few years if a monetary union had already been in place. Instead of generating an appreciation of the Canadian dollar, the commodity boom would have drawn in larger and destabilizing flows of investment. As it was, the appreciation of the Canadian dollar tempered the flow of capital, and kept inflation under control.

When the recession hit and commodity prices fell, our floating currency gave us a 20 per cent exchange rate depreciation in the space of five months. This sort of stimulus would have been unavailable under a monetary union — as Spain is now finding out, to its great cost.

For reasons that Paul Krugman explains here, Canada has always been an interesting case study in international monetary policy. Canada’s decision to adopt a floating exchange rate in 1950 — several decades before the post-war Bretton Woods system of fixed exchange rates collapsed — was an unorthodox reaction to a situation with which we’ve become familiar: sharply fluctuating commodity prices.

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