It's Official: The Stimulus Didn't Help

[Bonam]

You guys predicting doom and gloom are way too pessimistic. The recession is over, we are in recovery. Jobs are being created and GDP is growing. The US remains the world's largest economy, and though it experiences a trade deficit, it still exports $1.5-$2.0 trillion worth of goods annually. Every time there is a recession, even a relatively mild one such as this, there are people prophesying doom, the end of capitalism, the fall of the West, or other such nonsense. Not gonna happen. Even the great depression was but a blip in our otherwise continuous exponential economic growth, which will continue over the coming decades.

[sharkman]

First of all you dont even have the faintest idea of whether it worked or not.

And second... The nations buying up US debt and bailing our America are not going to stop in the next couple of years. Theres no reason for them to abandon the greenback while they still have large trade surpluses with the US.

Yes I do and second I am suggesting the stock market will take a dive, which it has done 4 or 5 times while nations still buy up American debt. There are more indicators and stressors involved than the greenback.

[dre]

You guys predicting doom and gloom are way too pessimistic. The recession is over, we are in recovery. Jobs are being created and GDP is growing. The US remains the world's largest economy, and though it experiences a trade deficit, it still exports $1.5-$2.0 trillion worth of goods annually. Every time there is a recession, even a relatively mild one such as this, there are people prophesying doom, the end of capitalism, the fall of the West, or other such nonsense. Not gonna happen. Even the great depression was but a blip in our otherwise continuous exponential economic growth, which will continue over the coming decades.

I agree that predictions that talk about "a couple of years" are unrealistic, but theres no question that the status quo cannot go on indefinately and at some point the rest of the world will get sick of being on the wrong end of the biggest bail-out of all time.

[sharkman]

You guys predicting doom and gloom are way too pessimistic. The recession is over, we are in recovery. Jobs are being created and GDP is growing. The US remains the world's largest economy, and though it experiences a trade deficit, it still exports $1.5-$2.0 trillion worth of goods annually. Every time there is a recession, even a relatively mild one such as this, there are people prophesying doom, the end of capitalism, the fall of the West, or other such nonsense. Not gonna happen. Even the great depression was but a blip in our otherwise continuous exponential economic growth, which will continue over the coming decades.

But there are several troubling developments which indicate the US economy could sink back down. This recession is like none other, what about the over one trillion spent on it between Bush and Obama thus far? You have to look at the whole picture, not just the one the American media is spoon-feeding.

Oh, wait a sec, by your characterization of this recession as being "a mild one", I will instead leave you to your devices.

[dre]

Yes I do and second I am suggesting the stock market will take a dive, which it has done 4 or 5 times while nations still buy up American debt. There are more indicators and stressors involved than the greenback.

Yes I do

No you dont. Its completely impossible to accurately measure the effects of stimulus on an economy. Economists that believe in stimulus will claim things would have gotten much worse without it, and economists that dont will claim that things would have gotten better faster without it. And its completely impossible for them prove each other wrong.

[bush_cheney2004]

I agree that predictions that talk about "a couple of years" are unrealistic, but theres no question that the status quo cannot go on indefinately and at some point the rest of the world will get sick of being on the wrong end of the biggest bail-out of all time.

Oh really....and what part of "the rest of the world" would that be? Would that include IMF bailout recipients like Sri Lanka, Greece, Ukraine, Thailand, Indonesia, Russia, Mexico, Korea, or Brazil? Or maybe you mean a different planet entirely?

[dre]

Oh really....and what part of "the rest of the world" would that be? Would that include IMF bailout recipients like Sri Lanka, Greece, Ukraine, Thailand, Indonesia, Russia, Mexico, Korea, or Brazil? Or maybe you mean a different planet entirely?

I mean the countries and people purchasing US treasuries instruments.

[bush_cheney2004]

I mean the countries and people purchasing US treasuries instruments.

And those are "bailouts" is what context? Certainly not that which is defined as real "bailouts" in the IMF context. Americans also buy US Treasuries, so are they "bailing" themselves out? US public debt is still majority held by Americans last time I checked.

[Bonam]

Oh, wait a sec, by your characterization of this recession as being "a mild one", I will instead leave you to your devices.

Of course it's a mild one. Only someone trapped in a viewpoint incapable of looking more than a few years into the past would argue otherwise. We've been through much worse recessions. Especially in Canada, if not for news coverage, one could have easily failed to notice the so called recession, unless one happened to be an auto worker in Ontario.

[maple_leafs182]

You guys predicting doom and gloom are way too pessimistic. The recession is over, we are in recovery. Jobs are being created and GDP is growing. The US remains the world's largest economy, and though it experiences a trade deficit, it still exports $1.5-$2.0 trillion worth of goods annually. Every time there is a recession, even a relatively mild one such as this, there are people prophesying doom, the end of capitalism, the fall of the West, or other such nonsense. Not gonna happen. Even the great depression was but a blip in our otherwise continuous exponential economic growth, which will continue over the coming decades.

The dollar is what is in trouble. Having interest rates near zero encourage people to get loans to help stimulate the economy, all these new loans equal new money entering the system, along with the trillion from stimulus, the U.S is just flooding the market will dollars. Inflation is inevitable. No country will want to US bonds because they will lose more and more of purchasing power the longer they hold on to them. Not to mention the UN is telling people to ditch the dollar as the world reserve currency.

The dollar is doomed.

As for the economy there is no growth in the real economy. America needs to start producing goods, right now it is just running off artificial spending that can't last forever.

There is no recovery.

[Pliny]

Of course it's a mild one. Only someone trapped in a viewpoint incapable of looking more than a few years into the past would argue otherwise. We've been through much worse recessions. Especially in Canada, if not for news coverage, one could have easily failed to notice the so called recession, unless one happened to be an auto worker in Ontario.

Actually, in the manufacturing industry in Ontario.

[Pliny]

Its completely impossible to accurately measure the effects of stimulus on an economy. Economists that believe in stimulus will claim things would have gotten much worse without it, and economists that dont will claim that things would have gotten better faster without it. And its completely impossible for them prove each other wrong.

One of them is right and one is wrong.

Economic stimulus is the act of injecting money and credit into the economy. The concept is that government spending and injecting money will give resources to the private sector that will create spending and thus production in the private sector creating jobs and prosperity.

So the measure of success of a "stimulus" is increased economic activity in the private sector and lower unemployment numbers.

Take a look at those two factors and you decide.

It is impossible for both claims regarding success to be right.

In my view, to say the stimulus worked one must be selective in what he calls a success. GM is still alive. Wall street is still there. Is that what is meant by success? Success would also preclude any necessity for further stimulus. I know you like to quote Paul Krugman who suggests more is better but success would not mean further stimulus was needed.

[bush_cheney2004]

....So the measure of success of a "stimulus" is increased economic activity in the private sector and lower unemployment numbers.

Irrespective of such measures (employment does not correlate 100% with growth), we can measure the "velocity of money", which is what the government is really trying to achieve with economic stimuli.

[sharkman]

Of course it's a mild one. Only someone trapped in a viewpoint incapable of looking more than a few years into the past would argue otherwise. We've been through much worse recessions. Especially in Canada, if not for news coverage, one could have easily failed to notice the so called recession, unless one happened to be an auto worker in Ontario.

The recession this thread, and I, am referring to is not the one in Canada. Further, I referenced Bush and Obama, and yet you still come back with defending the Canadian economy. Please stay on topic. This thread is about the US economy and the OP was discussing the stimulus bill that Obama signed. If you want to talk about the Canadian economy there are threads for that.

[msj]

Of course it's a mild one. Only someone trapped in a viewpoint incapable of looking more than a few years into the past would argue otherwise. We've been through much worse recessions. Especially in Canada, if not for news coverage, one could have easily failed to notice the so called recession, unless one happened to be an auto worker in Ontario.

Since the OP is referring to the US I assume that you are talking about the US having a "mild" recession.

There is a reason that this is called the "Great Recession" and it is still called that whether or not the US has a double dip.

Just because you and I have done fine through this recession doesn't mean that others are not going to be set back years, even decades, and even have their lives altered terribly for the rest of their lives because of this. (I've done fine during the recession because I'm Canadian and Canada hasn't faced what the US has - not yet, anyway)

Yes, we are all just blips on this planet and in the long run we're all dead.

Doesn't make it any less painful for millions of people.

Edited July 7, 2010 by msj

[bush_cheney2004]

....Just because you and I have done fine through this recession doesn't mean that others are not going to be set back years, even decades, and even have their lives altered terribly for the rest of their lives because of this. (I've done fine during the recession because I'm Canadian and Canada hasn't faced what the US has - not yet, anyway)

But therein lies the problem with characterizing this "Great Recession" as the worst in 60 years. The amount of actual "suffering" and setbacks pales in comparison to several severe US recessions that found people without the safety net that Americans (or Canadians) now take for granted. Just because one's stock portofolio or mutual fund(s) incurred huge losses does not make for a stupendous recession. Foolish leveraging and debt must not be rewarded with sympathy or trophies for the most severe suffering.

....everyone's still getting fat except Mama Cass. I'll take this over the '81-'82 recession and previous Carter years any day.

[Pliny]

Irrespective of such measures (employment does not correlate 100% with growth), we can measure the "velocity of money", which is what the government is really trying to achieve with economic stimuli.

Since the extra money and credit has ballooned bank reserves and is not speeding around in the economy, I would suggest a measure of the "velocity of money" still indicates a lack of success.

Actually, the "velocity of debt" would be more appropriate considering today's fiat paper currencies. I think people are a little skittish about storing their wealth in that form - which would have a definite impact on the velocity of "money?". How fast can you dispose of it may be the question of velocity.

I think the plan of the Obama administration is to enter into a period of stagflation mirroriong the economy of Japan. If that is not the case he may be wishing to help the merging of central banks in North America by bringing in the "Amero". These are possible scenarios but the will of the American people will prevail and I think they are becoming a little more wary of the policies of the Obama administration. All conjecture, of course. But, nevertheless, you have an interesting election coming up and an interesting couple of years from the political perspective.

[Pliny]

But therein lies the problem with characterizing this "Great Recession" as the worst in 60 years. The amount of actual "suffering" and setbacks pales in comparison to several severe US recessions that found people without the safety net that Americans (or Canadians) now take for granted. Just because one's stock portofolio or mutual fund(s) incurred huge losses does not make for a stupendous recession. Foolish leveraging and debt must not be rewarded with sympathy or trophies for the most severe suffering.

....everyone's still getting fat except Mama Cass. I'll take this over the '81-'82 recession and previous Carter years any day.

Carter was done in 1980. Obama isn't finished yet. 2013 and 2014 may prove just as rough.

[bush_cheney2004]

Carter was done in 1980. Obama isn't finished yet. 2013 and 2014 may prove just as rough.

..if you say so....Obama will have to really hose things up to achieve Carter's Misery Index of 20+

http://en.wikipedia.org/wiki/Misery_index_(economics)

[dre]

One of them is right and one is wrong.

Economic stimulus is the act of injecting money and credit into the economy. The concept is that government spending and injecting money will give resources to the private sector that will create spending and thus production in the private sector creating jobs and prosperity.

So the measure of success of a "stimulus" is increased economic activity in the private sector and lower unemployment numbers.

Take a look at those two factors and you decide.

It is impossible for both claims regarding success to be right.

In my view, to say the stimulus worked one must be selective in what he calls a success. GM is still alive. Wall street is still there. Is that what is meant by success? Success would also preclude any necessity for further stimulus. I know you like to quote Paul Krugman who suggests more is better but success would not mean further stimulus was needed.

So the measure of success of a "stimulus" is increased economic activity in the private sector and lower unemployment numbers.

Not really, and thats the problem. Employment numbers could be in freefall, and stimulus could merely dampen the losses as opposed to "resulting in lower unemployment numbers". If we lose 100 thousand jobs in a month with stimulus you can only claim the stimulus didnt result in a net increase in jobs. You CANT be certain that the market would not have lost 200 thousand jobs instead of 100 thousand had the stimulus not been there.

In my view, to say the stimulus worked one must be selective in what he calls a success. GM is still alive. Wall street is still there. Is that what is meant by success?

What would be called success is if the stimulus limited how deep a recession goes and how long it lasts. And this is impossible to say with any certainty because we dont know how bad the recession would have gotten without stimulus.

[Bonam]

The recession this thread, and I, am referring to is not the one in Canada. Further, I referenced Bush and Obama, and yet you still come back with defending the Canadian economy. Please stay on topic. This thread is about the US economy and the OP was discussing the stimulus bill that Obama signed. If you want to talk about the Canadian economy there are threads for that.

Note the term "especially". That means that while my statement that the recession was mild applies *especially* to Canada, it applies also to the USA.

The amount of actual "suffering" and setbacks pales in comparison to several severe US recessions that found people without the safety net that Americans (or Canadians) now take for granted. Just because one's stock portofolio or mutual fund(s) incurred huge losses does not make for a stupendous recession.

Exactly. Though, I would not necessarily attribute the relative mildness of the recession to the social safety nets.

[bush_cheney2004]

....Exactly. Though, I would not necessarily attribute the relative mildness of the recession to the social safety nets.

Some unemployment benefits have been extended to over 100 weeks....nearly two years. Maybe that's considered a right in Canada along with pogey, but not in the USA. Usually it is 26 weeks with one extension and that's it. Using one's house as a piggy bank and interest tax dodge got a lot of people in trouble, so now they will have to live like the rest of us poor bastards!

[Pliny]

Not really, and thats the problem. Employment numbers could be in freefall, and stimulus could merely dampen the losses as opposed to "resulting in lower unemployment numbers". If we lose 100 thousand jobs in a month with stimulus you can only claim the stimulus didnt result in a net increase in jobs. You CANT be certain that the market would not have lost 200 thousand jobs instead of 100 thousand had the stimulus not been there.

The stimulus did indeed slow the rate of unemployment as it kept some businesses in business. Mostly the ones on Wall Street and bailed out corporations like GM. The failure of GM would have meant a few more million jobs lost.

Bailing out businesses is not a reversal of the economy or an indication that unemployment numbers have bottomed. I know Joe Biden likes to confuse the issue and say the stimulus was a great success.

He is obviously not looking at the economy as a whole.

What part of the economy is the next stimulus going to bailout?

If the economy is not growing on it's own and employment is not level or on the rise the economy is in a recession. This is the case after the stimulus so I would have to call it not a success in turning the economy around. Perhaps it is a success in delaying the inevitable full collapse. Continual stimuli to the economy will lead to inflation and not do anything for lowering the unemployment rate. This is known as stagflation. is that a success?

What would be called success is if the stimulus limited how deep a recession goes and how long it lasts. And this is impossible to say with any certainty because we dont know how bad the recession would have gotten without stimulus.

'Limited' as in stopped yes, not slowed. We can guess how bad it would have gotten. Obama guessed about 8% unemployment. Ha! Ha!

[Pliny]

dre:

If you are arguing that it needs more time. I don't think it does. I think the indicators are there already. It's prolonged the actual fall and further stimulus isn't going to pull it out

[maple_leafs182]

I have been saying for a while that the economy will crash again.

It is actually quite obvious that the economy will collapse again.

The people who are saying it wont collapse are probably getting their info from the people who never predicted the collapse in the first place, they truly don't understand that a productive capacity is what makes an economy grow and that going into more debt will not solve the problem of being in too much debt.