Economic Reality

[we vs us]

Economics is a social science, not a physical one . . . .

etc

etc

Or we can ignore all that folderol and listen to Bill Gross, the head of PIMCO (the bond traders!) in his July letter to investors (bolds are his):

http://www.pimco.com/EN/Insights/Pages/School-Daze-School-Daze-Good-Old-Golden-Rule-Days.aspx

Solutions from policymakers on the right or left, however, seem focused almost exclusively on rectifying or reducing our budget deficit as a panacea. While Democrats favor tax increases and mild adjustments to entitlements, Republicans pound the table for trillions of dollars of spending cuts and an axing of Obamacare. Both, however, somewhat mystifyingly, believe that balancing the budget will magically produce 20 million jobs over the next 10 years. President Obama's long-term budget makes just such a claim and Republican alternatives go many steps further. Former Governor Pawlenty of Minnesota might be the Republicans' extreme example, but his claim of 5% real growth based on tax cuts and entitlement reductions comes out of left field or perhaps the field of dreams. The United States has not had a sustained period of 5% real growth for nearly 60 years.

Both parties, in fact, are moving to anti-Keynesian policy orientations, which deny additional stimulus and make rather awkward and unsubstantiated claims that if you balance the budget, "they will come." It is envisioned that corporations or investors will somehow overnight be attracted to the revived competitiveness of the U.S. labor market: Politicians feel that fiscal conservatism equates to job growth. It's difficult to believe, however, that an American-based corporation, with profits as its primary focus, can somehow be wooed back to American soil with a feeble and historically unjustified assurance that Social Security will be now secure or that medical care inflation will disinflate. Admittedly, those are long-term requirements for a stable and healthy economy, but fiscal balance alone will not likely produce 20 million jobs over the next decade. The move towards it, in fact, if implemented too quickly, could stultify economic growth. Fed Chairman Bernanke has said as much, suggesting the urgency of a congressional medium-term plan to reduce the deficit but that immediate cuts are self-defeating if they were to undercut the still-fragile economy.

By all means, read the whole letter.

So one of the US's major bondholders is calling for additional and immediate deficit spending.  In the Keynesian mode, I might point out.  

In other words, one of our creditors is asking us to borrow-n-spend.  Awful, isn't it?

[Gaspar]

My credit card company does the same thing.  They even send me checks.

Crazy!

BTW, I know who Gross is.  He acted as a lobbiest for the government takeover of Fannie and Freddy.   In the deal he made something like $1.74 billion dollars.

Like Soros, he is a champion of economic failure and makes his fortunes betting on it.

[Teatownclown]

Government is no longer the coach, it is the referee.


 

Sorry Buster, but you got it backasswards.
The other posties are spewing trickle down thinking as usual....except Nate and We vs Us.


Given the current climate, what can Obama do? The FDR template is not even slightly likely. If for no other reason than that direct hiring by the USGovt has been demonized by the Right and the Left as another Bailout or wasteful spending or picking winners and losers or wrong priorities or some other whine...it's exactly what has happened to every direct injection of funding into government projects that would hire people.
And it does no good to point out that Obama's programs saved upwards of 2 million jobs so far or that he prevented the crash from being worse, those details get glossed over. He has to magically create 10 million jobs this year, by somehow bumping the private sector (since that's the only acceptable source of "Real Jobs").
And the Corporatist private sector has a vested interest, clearly stated, in removing Obama and the Democrats from power and installing Republicans. So they bide their time, sit on their cash reserves and complain about the lousy business climate and how Obama is anti-business, anti-jobs, anti worker, anti-American. And all of this is trumpeted and echoed incessantly, by the Corporate Media.


How does Obama counter that? How do the Democrats turn that around?

read up:The White Working Class: The Group That Will Likely Decide Obama's Fate
http://www.tnr.com/article/politics/90241/obama-election-2012-working-class-kerry

[we vs us]

My credit card company does the same thing.  They even send me checks.

Crazy!

Trust me.  PIMCO ain't about to extend you, me, or anyone we know a line of credit. And they will not be sending you checks, either.  

So, we've established that you won't listen to or have hostility towards the ideas of:  economists, politicians, capitalists, investors, and academics.  Who's left?  

[Gaspar]

Trust me.  PIMCO ain't about to extend you, me, or anyone we know a line of credit. And they will not be sending you checks, either.  

So, we've established that you won't listen to or have hostility towards the ideas of:  economists, politicians, capitalists, investors, and academics.  Who's left?  

On the contrary, I admire the opinions of these people.

BTW, I know who Gross is.  He acted as a lobbiest for the government takeover of Fannie and Freddy.   In the deal he made something like $1.74 billion dollars.

Like Soros, he is a champion of economic failure and makes his fortunes betting on it.

[Teatownclown]

On the contrary, I admire the opinions of these people.

BTW, I know who Gross is.  He acted as a lobbiest for the government takeover of Fannie and Freddy.   In the deal he made something like $1.74 billion dollars.

Like Soros, he is a champion of economic failure and makes his fortunes betting on it.

Interesting. His brain thrust is one ex Tulsan: Bob Greer an ex TU research analyst.

I think you have Gross confused with Paulson. Soros made his fortune and seems more devoted to giving others a hand up.

[Conan71]

Or we can ignore all that folderol and listen to Bill Gross, the head of PIMCO (the bond traders!) in his July letter to investors (bolds are his):

http://www.pimco.com/EN/Insights/Pages/School-Daze-School-Daze-Good-Old-Golden-Rule-Days.aspx

By all means, read the whole letter.

So one of the US's major bondholders is calling for additional and immediate deficit spending.  In the Keynesian mode, I might point out.  

In other words, one of our creditors is asking us to borrow-n-spend.  Awful, isn't it?

You know why balanced budgets and reducing the debt and deficit spending is important?

It's a confidence issue.  How much confidence do you have in a country which ostensibly went from projected surpluses to being $14 trillion in debt?  Anecdotally, there's trillions of dollars in money and assets sitting on the sidelines right now which belongs to corporations and individuals.  Who in their right mind wants to invest when the government is creating unfriendly regulatory and taxation issues?  Why would you invest when you don't see responsible spending on the part of the government?  Why not just shelter the money in other havens around the world who are business friendly and who do have their financial house in order?

[Teatownclown]

I have no confidence in the political party that forced us into this corner.....you sound like a broken record.

[Gaspar]

Interesting. His brain thrust is one ex Tulsan: Bob Greer an ex TU research analyst.

I think you have Gross confused with Paulson. Soros made his fortune and seems more devoted to giving others a hand up.

Nope, no confusion. 

[Conan71]

I have no confidence in the political party that forced us into this corner.....you sound like a broken record.

By your logic, apparently U.S. business doesn't care for the party in the White House or the majority in the Senate, it would appear.

Was it a political party or an entirely corrupt political system?  Take a closer look at who (Dodd, Frank, et al) was looking the other way while accepting hefty campaign donations and sweet mortgages from those they purported to regulate.

By and large the big Wall Street donors are (D).  Weren't they the ones who drove us off into this mess in the first place with their screwy maze of derivatives?

[Gaspar]

You know why balanced budgets and reducing the debt and deficit spending is important?

It's a confidence issue.  How much confidence do you have in a country which ostensibly went from projected surpluses to being $14 trillion in debt?  Anecdotally, there's trillions of dollars in money and assets sitting on the sidelines right now which belongs to corporations and individuals.  Who in their right mind wants to invest when the government is creating unfriendly regulatory and taxation issues?  Why would you invest when you don't see responsible spending on the part of the government?  Why not just shelter the money in other havens around the world who are business friendly and who do have their financial house in order?

But Conan,
In the Keynesian model this would not matter, because there is no variable for "confidence".

[Conan71]

But Conan,
In the Keynesian model this would not matter, because there is no variable for "confidence".

As I've always said, Keynes never created a job either.  Economic theory doesn't take into account human behavior.  Theory doesn't create inertia.

[nathanm]

It's a confidence issue.  How much confidence do you have in a country which ostensibly went from projected surpluses to being $14 trillion in debt?  Anecdotally, there's trillions of dollars in money and assets sitting on the sidelines right now which belongs to corporations and individuals.  Who in their right mind wants to invest when the government is creating unfriendly regulatory and taxation issues?  Why would you invest when you don't see responsible spending on the part of the government?  Why not just shelter the money in other havens around the world who are business friendly and who do have their financial house in order?

The irony, of course, being that the vast majority of the deficit is due to the stagnant economy and that regulatory and taxation issues are mostly in the heads of people who can't bother to read the newspaper.

And who, pray tell, has their fiscal house in order (aside from China and BRIC)? Pretty much nobody, because the economy is in the toilet. Spain was running a surplus before 2008, yet they're having to beg for German money. The Germans appear to have their fiscal house in order, but that's only because of the Euro's implicit transfer from the periphery to France and especially Germany. When the Euro fails, as it's looking increasingly likely to do, the Germans will not be looking so great. They know this, hence the billions of Euros they have dumped into other members of the currency.

When the Chinese have enough domestic demand to prevent a mass revolt if they stop selling us smile, I'll buy your argument. Until then, the Chinese have little choice but to keep giving us their goods in return for absolutely nothing. It's sad, but our smile sandwich is the only one in town right now. As long as that remains the case, we can spend anything we like and it simply won't matter.

People keep making the claim that deficit spending will destroy us in the near term, but if that's the case, why is our cost of funds still so low? If that view was correct, we'd be seeing a consistent upward trend in the federal government's borrowing cost. Of course, if the Republicans don't pull their heads out of their asses, they could do a fantastic job of blowing up the whole thing by not raising the debt limit.

[Teatownclown]

By your logic, apparently U.S. business doesn't care for the party in the White House or the majority in the Senate, it would appear.

Was it a political party or an entirely corrupt political system?  Take a closer look at who (Dodd, Frank, et al) was looking the other way while accepting hefty campaign donations and sweet mortgages from those they purported to regulate.

By and large the big Wall Street donors are (D).  Weren't they the ones who drove us off into this mess in the first place with their screwy maze of derivatives?

WRONG you are AGAIN! By and large, WS donors are (R)...and YES, they were the one's who rubber stamped everything warlike Bush propositioned the citizens into. Not that the dims aren't complicit....

"Was it a political party or an entirely corrupt political system? "  Yes, it is....my point exactly. Must be difficult to come to the realization you as a citizen have become.....well.....MEANINGLESS!

[nathanm]

Wait, Conan, you seriously think Barney Frank, who was in the minority party until 2007 had anything to say about regulation? Perhaps you should look more closely at the regulators...