A Hard Pill to Swallow

Did the stimulus turn around the economy?

Jacob Sullum | August 12, 2009

Last week Christina Romer, chairwoman of the White House Counsel of Economic Advisers, suggested that we think of the $787 billion American Recovery and Reinvestment Act as an extremely expensive course of antibiotics. "Suppose you go to your doctor for a strep throat," Romer said in a speech to the Economic Club of Washington, "and he or she prescribes an antibiotic."

If your fever goes up after you take the first pill, just as unemployment rose after the stimulus bill was enacted, that doesn't mean "the medicine is useless," Romer noted. It could simply be that "the illness was more serious than you and the doctor thought."

But it's also possible that your sore throat and fever are caused by a virus, not a bacterium, in which case the antibiotic will not help. Eventually, though, you will recover on your own, and you may mistakenly conclude that your doctor's prescription did the trick.

Such erroneous causal inferences are always a hazard when it comes to government spending aimed at alleviating a recession. Even if most or all of the money is disbursed after the recession has ended (which is typically the case), stimulus advocates can say the recovery would have been weaker without the spending. Since there's no readily available parallel universe in which to test that counterfactual hypothesis, they can never be conclusively refuted.

Still, Romer seems unreasonably sure that Dr. Obama's medicine is already kicking in. Although she concedes that "the evidence from the path of the economy over time can't settle the issue of what the effects of the Recovery Act have been," her answer to the question posed in the title of her speech—"Is It Working?"—is "absolutely."

I guess that depends on how you define "working." No doubt spending billions of dollars in borrowed money has some impact on the economy. But the idea that the stimulus package had much to do with what looks like an incipient recovery that may have begun in June is belied by a couple of inconvenient facts.

First, since World War II the length of recessions has ranged from six to 16 months, with an average of 10. The current recession officially began in December 2007, so a recovery by the second half of 2009 was always widely expected.

Second, according to ProPublica, only $73 billion of the $580 billion in stimulus spending has been disbursed so far. Another $30 billion or so has gone out in the form of tax cuts.

Romer concedes the latter portion of the stimulus does not seem to be very stimulating. She says "consumption fell slightly in the second quarter after rising slightly in the first quarter," which "could be a sign that households are initially using the tax cut mainly to increase their saving and pay off debt."

Is it plausible to suggest that $73 billion in stimulus spending over five months had a decisive impact on a $14 trillion economy? I say "decisive" because President Obama, back in February, presented the stimulus package as the only alternative to a never-ending recession, and last week he claimed, "We've rescued our economy from catastrophe."

Even if we accept the Obama administration's numbers, taxpayers do not seem to be getting much employment bang for their buck. Romer estimates that "employment is now about 485,000 jobs above what it otherwise would have been." That comes out to more than $200,000 per job, which seems pretty pricey, especially since many of these jobs are temporary.

Here is where the "reinvestment" part comes into play. Administration officials say the stimulus package is all about putting Americans back to work. When asked whether this is an efficient way to do that, they claim all the work needs to be done anyway. Conversely, when asked whether all the projects are really worth the money spent on them, they cite jobs "created or saved" as a backup justification. Stimulus means never having to admit you're wasting money.

Jacob Sullum is a senior editor at Reason and a nationally syndicated columnist.

© Copyright 2009 by Creators Syndicate Inc.

Comments

Fist of Etiquette|8.12.09 @ 7:35AM|#

"We've rescued our economy from catastrophe."

I knew this shameless spin was inevitable regardless of how much worse the economy got after the stimulus, but actually seeing them say the words still pisses me off.

Mike in PA|8.12.09 @ 7:40AM|#

"You must lay all of your gold at the foot of the pyramid or the gods will punish you."

It's amazing how many people still fall for this.

<strike>strike through</strike|8.12.09 @ 7:42AM|#

Christina Romer, chairwoman of the White House Counsel of Economic Advisers

This goes to show you that evil needn't be a mass murderer or slave trader or producer of Broadway revivals. It can be a jolly fat woman.

BruceM|8.12.09 @ 7:54AM|#

So as soon as the economy is fixed, can we all safely assume that whatever money is left over in the stimulus package will be returned to the taxpayers? If it only took 73 billion out of 787 billion, that's over 700 billion left over that is no longer necessary. We can use that to, say, fund healthcare (single payer option fully funded, woohoo!).

Somehow I doubt we'll be getting a refund. But why is nobody asking such an obvious question?

Gilbert Martin|8.12.09 @ 8:00AM|#

"last week he declared, "We've rescued our economy from catastrophe." Christina Romer, his chief economic adviser, said the stimulus package "absolutely" is working as intended."

Not a one of them is the least bit capable of proving their democrat-consitituent-lard-spending-program had anything to do with actually improving the economy in any way.

<strike>strike through</strike|8.12.09 @ 8:06AM|#

Somehow I doubt we'll be getting a refund. But why is nobody asking such an obvious question?

What are you, some kind of nazi birther teabagging rabble-rouser?

|8.12.09 @ 8:10AM|#

"We've rescued our economy from catastrophe."

Isn't their humility so endearing?

You see, Bush and the Republicans almost brought catastrophe to the economy (apparently, by cutting taxes on the wealthy, understand?). But Team Blue jumped in, rolled up their sleeves, and have brought us back from the brink!

The only thing missing is a photo of Papa Stalin up late in the Kremlin, a single window illuminated, showing that he's working night and day for the people.

Tricky Prickears |8.12.09 @ 8:25AM|#

"We've rescued our economy from catastrophe."

That's about as ridiculous as Bush saying the tax cuts stimulated the economy and "paid for themselves".

But I don't blame Obama and the Democrats. They did the same thing Bush and the Republicans did when he was first elected. It's all just political payback. They can put whatever name tag they want on it. But please, don't insult my intelligence and say it actually helped anything, except themselves.

|8.12.09 @ 8:26AM|#

Sorry, but that lady just doesnt look very bright to me dude!

RT
www.anon-web-tools.net.tc

|8.12.09 @ 8:27AM|#

Their entire claim is non-falsifiable. They may as well be attributing recovery to intelligent design.

Anyone see that Krugman is also crediting the stimulus with this apparent recovery--he of the "we're not spending enough on the stimulus to work" school? He's a fucking goalpost mover.

|8.12.09 @ 8:35AM|#

Anon-tard has finally hit his stopped clock moment.

Alan Vanneman|8.12.09 @ 8:43AM|#

Jacob says that the economy was expected to recover by the middle of 2009 on its own, linking to an article written by Anthony Karydakis back in December 2008. I guess Jake forgot to read Tony's last two paragraphs:

"To be sure, this is a major recession and its downside risks in the midst of a highly volatile financial market environment shouldn't be underestimated. There are reasons, though, to believe that its severity and length will ultimately be contained by an unprecedented array of economic policy measures, some already in place, others in the pipeline.

Despite a series of false starts with some of those measures by the Treasury, the Fed's seemingly limitless reserve of innovative actions and the incoming administration's commitment to put in place a particularly aggressive fiscal stimulus package should gradually gain some traction that will help stabilize the economy within the next three quarters or so."

Yeah, that sounds about right.

Art-P.O.G.|8.12.09 @ 8:44AM|#

Anon-tard has finally hit his stopped clock moment.

I think he hit that moment when he copped to smoking opium on a daily basis, but he's been showing a degree of prescience for some time.

Kyle Jordan|8.12.09 @ 8:46AM|#

"Anon-tard has finally hit his stopped clock moment."

I don't know man. There have been some damn spot on comments from the bot/tard over the past month or so.

|8.12.09 @ 8:47AM|#

Art,

Once he's trained and they download him in Predator drones, we are good and thoroughly fucked.

Art-P.O.G.|8.12.09 @ 8:50AM|#

In fact, anonymity guy is a better contributor than Lonewacko or Lefiti, but then again that's not saying much.

OK, maybe not prescience, but at least insight.

Art-P.O.G.|8.12.09 @ 8:52AM|#

Sugarfree, I agree

"LOL, I'm shooting you, dude!"

Fist of Etiquette|8.12.09 @ 9:04AM|#

How much do tax cuts cost? Sounds like they're pretty expensive.

Spoonman|8.12.09 @ 9:13AM|#

Damn it, somebody beat me to bringing up the anon-tard opium post.

I sometimes crack up when driving to work when I think of that.

Xeones|8.12.09 @ 9:22AM|#

About the picture, i just wanted to note that Dana Carvey has really let himself go.

|8.12.09 @ 9:30AM|#

i just wanted to note that Dana Carvey has really let himself go

[chomp, chomp] Fuck you, it's my glands! [chomp, chomp]

DJF|8.12.09 @ 9:32AM|#

Sure the stimulus saved the economy, just like Fannie Mae, Freddie Mack and Country Wide saved the housing economy. The problem in both cases is that the borrowed money supply will dry up and you are left with an economy that cannot sustain itself since the money spent does not equal what the actual worth of the projects .

|8.12.09 @ 9:36AM|#

Somehow I doubt we'll be getting a refund. But why is nobody asking such an obvious question?

A number of people have called for a stop to further stimulus spending. But they're mostly Republican Congressmen, so nobody cares.

Rich|8.12.09 @ 9:36AM|#

This goes to show you that evil needn't be a mass murderer or slave trader or producer of Broadway revivals. It can be a jolly fat woman.

I must admit, I find it fascinating to watch her being interviewed. Words cannot ....

|8.12.09 @ 9:37AM|#

NO DJF. The money will never run out. We will just keep taxing and borrowing and spending and then printing money forever. There is no reason to have a private sector. The government can do everything and pay for it all by taxing the evil rich. Don't you get it?

Rich|8.12.09 @ 9:38AM|#

Sorry, quote due to strike through.

|8.12.09 @ 9:39AM|#

"A number of people have called for a stop to further stimulus spending. But they're mostly Republican Congressmen, so nobody cares."


Isn't it going to take life four or five years to spend all of the money? If the Republicans took back Congress in 2010 and canceled the rest of the stimulus, I can see the MSNBC cameras filming grandmas being thrown into the street right now.

|8.12.09 @ 9:44AM|#

Or it could be that your doctor prescribed steroids, and that infection that your body was fighting off is about to come roaring back. And this time IT'S PISSED.

|8.12.09 @ 10:04AM|#

We have seen this movie before at the drive in in the 1970s. It is called Stagflation. I guess since Hollywood feels the need to remake every 70s movie and TV show, our government feels the need to remake the economic conditions.

|8.12.09 @ 10:12AM|#

"We've rescued our economy from catastrophe."

And George Bush also declared our victory in Iraq and Afghanistan. What a joke that people fall for this shit.

Nice article Jacob.

Jordan|8.12.09 @ 10:13AM|#

Has anybody ever seen Christina Romer and John Murtha in the same place at the same time?

|8.12.09 @ 10:33AM|#

"And George Bush also declared our victory in Iraq and Afghanistan. What a joke that people fall for this shit."

Maybe Obama can have a press conference at the NYSE and declare "mission accomplished".

NeonCat|8.12.09 @ 10:37AM|#

I don't think Christina is maliciously lying, I think she just knows that if she tells the truth she'll get fired, and in this economy it's really hard to find a job.

Warty|8.12.09 @ 10:41AM|#

That man looks like an old lesbian.

|8.12.09 @ 11:03AM|#

And the backtracking begins. Remember when the stimulus itself was gonna cause untold decades of misery? So is the apparent recovery happening despite the stimulus? Or is it just ineffective and a waste of money? Cuz it seems to me nobody's been spending money except the government, so I don't see where else the recovery could have come from. Of course the 1/3 of the stimulus that is tax cuts doesn't seem to be stimulating anything, as expected by real economists.

|8.12.09 @ 11:05AM|#

"And the backtracking begins. Remember when the stimulus itself was gonna cause untold decades of misery?"

And it still will. We still have to pay off the 700 billion dollars in debt and have to live with the inflation that is going to come from printing off all that money. When the next recession comes, there won't be any credit left to stimulate our way out of it.

|8.12.09 @ 11:14AM|#

Remember when the stimulus itself was gonna cause untold decades of misery?

Tony, please. Try not to lie.

Nobody said the damage caused by the stimulus would show up by August. In fact, most people agreed that stuffing cash into the economy would make the numbers look better, for a little while.

The problem is that stuffing cash into the economy isn't sustainable, and causes damage in the long run. Even the CBO said that.

Of course the 1/3 of the stimulus that is tax cuts doesn't seem to be stimulating anything, as expected by real economists.

Pray tell, how do you know that whatever stimulus has occurred is due solely to spending, and none is attributable to tax cuts whatsoever?

Warty|8.12.09 @ 11:17AM|#

Shut the fuck up, Tony.

Sean W. Malone|8.12.09 @ 11:18AM|#

Tony... You are retarded.

We are still massively hemorrhaging jobs to the tune of a quarter-million a month. And the 10th of a percentage point decline in the rate of said losses can be easily attributed to people simply giving up looking for jobs (which aren't counted by the Bureau of Labor Statistics) or being bumped off Unemployment and transitioning into the Welfare system. We're also starting down a long road of massive inflation coming very very soon - and of course, we still haven't exactly figured out how to pay for it all. You may have noticed Geithner calling for yet another increase in the limit of the national debt.

If you're seeing "recovery" right now, are you also seeing rainbows, lollipops & unicorns?

Must be a fun magical world you live in.

As said upthread/by Sullum, of course dumping trillions of dollars into the economy is going to have an "effect". And in the short term somethings are going to go up giving imbeciles some great headline-fodder.

Page 1: "Stock market goes up!"
Page 16: "Dollar steadily losing value against international currencies"

No correlation there, huh?

Your shortsightedness is as unsurprising as it is idiotic. Real Economists are predicting much more trouble ahead. No one here is doing any backtracking Tony, we're mocking the idiots (like you) who actually believe Romer's "mission accomplished" publicity stunt.

Jordan|8.12.09 @ 11:20AM|#

Cuz it seems to me nobody's been spending money except the government, so I don't see where else the recovery could have come from.

Well, no shit nobody else is spending money. This recession was caused by massive overleveraging by everyone under the sun. Of course, just as the personal savings rate starts to approach sane levels the government solution is to burden everyone with a shitload of debt.

Of course the 1/3 of the stimulus that is tax cuts doesn't seem to be stimulating anything, as expected by real economists.

Except the savings rate. Which "real economists" (Keynesian dimwits, or bubble blowers) absolutely abhor.

Douglas Gray|8.12.09 @ 11:29AM|#

The good effects of the stimulus have temporarily showed up, but the bad effects are still to come. Witness the plunge of the dollar against other currencies, etc.

Xeones|8.12.09 @ 11:29AM|#

That man looks like an old lesbian.

This was going to be, almost word for word, my original comment, i shit you not. GET OUT OF MY HEAD WARTY AAAAAAAAAAGH

|8.12.09 @ 11:41AM|#

Really? I don't think s/he looks anything like Chuck Schumer.

|8.12.09 @ 11:46AM|#

Jordan,

I think saving is important. Part of the problem with the economy was that nobody was saving but rather trusting the equity in their homes. Nobody was saving because wages haven't risen with cost of living in a long time. But saying that saving is good for the health of the economy doesn't mean tax cuts that go directly to savings are that useful during a recession. If you're gonna drain the treasury it should at least be for purposes of economic stimulus. Trickle-down theory has never worked as promised and it's still not.

Warty|8.12.09 @ 11:50AM|#

Xeones, I know you best, better than one might think. I know you better than I know myself. It's time for you to make a sacrifice. It's time to die a little. Give it up.

You are a part of me.

|8.12.09 @ 12:07PM|#

It doesn't matter if the medicine gets you better if it increases your chances of getting sicker later. That is exactly what would happen with the stimulus.

jhn|8.12.09 @ 12:12PM|#

There's no way to know one way or the other. Reason is going to spin the stimulus as useless, based on its own beliefs on how the world should work, just as the administration is going to spin it as working. Neither hypothesis can be tested.

Sean W. Malone|8.12.09 @ 12:27PM|#

Tony:

"Trickle-down theory has never worked as promised and it's still not."


Yet strangely, that's exactly what Obama is doing. Or are $700 Billion bank bailouts designed to "stimulate" the economy by eventually increasing available credit so people can keep buying shit with borrowed money not a perfect example of the "trickle down" theory?


More to the point Tony, you've still confused cause & effect and your lack of understanding of something as basic as savings is a right failure. We've not been saving precisely because rates were held exceedingly low and the entire thrust from government was (and is) SPEND SPEND SPEND! A recession is *exactly* the time when we need people to start saving again to make up for their capriciousness in the last 6-7 years. If people take 100% of the stimulus money and actually *did* save it, and that money somehow miraculously avoided simply causing a ton of inflation (which it will), then we'd be much much better off than we will be in 2 years.

All credit & investment has to come from underconsumption (savings) and can't just be printed if you want the damn thing to be sustainable. Credit born out of the Federal Reserve leads to booms & busts as we've got a perfect example of right now.

|8.12.09 @ 12:34PM|#

Christina Romer, his chief economic adviser, said the stimulus package "absolutely" is working as intended.

I think she's 100% correct, but only because I believe the stimulus package was intended to:

(1) Position the administration to take credit for any economic improvement, and insulate it against criticism for continuing decline.

(2) Send boatloads of pork to favored constituencies.

(3) Desensitize Americans to levels of spending and debt that would have been previously unthinkable.

Mission accomplished, indeed.

Sean W. Malone|8.12.09 @ 12:38PM|#

jhn - you don't get to test things like this, no... which is why you need to view economics not through the lens of empirical positivism (statistics), but through deduction & mathematics. As George Koether put it in his article "Economics of Oblivion" yesterday;

"Economics does have great exactitude, but it is a qualitative, not a quantitative exactitude. The economist cannot know the number or size of all the cakes in the world, or when they will be eaten, but he is dead certain that whoever eats his cake no longer has it."

Lowdog|8.12.09 @ 1:25PM|#

My girlfriend was listening to NPR this morning, and some nit-wit actually said that Romer and Bernanke are 'students of history', and so are obviously qualified to make these important statements/decisions on the economy. My gf got a laugh when I began ranting as to how they are obviously not 'students of history' if they think that all this meddling is good for the overall health of the country.

Barry Loberfeld|8.12.09 @ 1:34PM|#

RE "empirical economics":

Emma: Look, you know what blows all this talk out of the water? There have been a number of studies that found that they raised the minimum wage and it wasn't followed by any mass unemployment like predicted.

Adam: I'm not saying an increase in the minimum wage would destroy all or even a majority of low-end jobs, though it might a significant minority. Again, an increase in the cost of living is the main result of the increase in the cost of labor. But the bigger point here is, empirical studies prove nothing -- not in economics.

Emma: Theorizing around a table is science, but actually measuring the real-world impact of those theories isn't?

Adam: Couldn't have said it better myself!

John: Adam, seriously. What do you mean?

Adam: Science is about nothing if not controls. But the economy isn't a laboratory, and it doesn't allow for controls. Do you realize just how many factors other than the wage increase were responsible for the employment rate? We would have to keep all those factors as a constant in order to isolate and gauge the effects of the wage increase. But that's exactly what we can't do with the real world. These "studies" aren't tests that prove or disprove a hypothesis. At best, they're surveys. Presenting them as experiments demonstrates only the inability to distinguish correlation from causation -- the post hoc ergo propter hoc fallacy.

Emma: So what are we supposed to do with the actual data -- dismiss it completely because it contradicts your theory?

Adam: No, not at all. We evaluate it in light of the theory. It simply means that the depressing effect of the wage increase was obviously overcome by the uplifting effect of other, beneficial factors. Of course we should also keep in mind the many below-minimum-wage workers of the "underground" -- off the books -- economy, who aren't measured by these studies. Their wages purchase, among other things, the labor of workers in the conventional economy, who are measured.

John: It seems to me that since you have theory as the basis of everything, we have to ask what is the basis of this theory.

Adam: Economic science proceeds from theorems, or "axioms," as some prefer -- I already gave you one: Lower the price, you sell more; raise it, less -- that themselves proceed from knowledge that is available to all people everywhere. A man has five dollars: It's easier for him to buy the one dollar widget than the four dollar one -- and impossible for him to buy the six dollar one. Theory is no more an arbitrary construct in economics than in mathematics. One-plus-one-equals-two isn't merely a "logical" proposition, but something we've observed from the result of putting one rock together with another.

John: And it's by applying these theorems to "economic" questions of production and distribution that we engage in real science?

Adam: Exactly.

FROM HERE

Sean W. Malone|8.12.09 @ 1:51PM|#

I saw that one once before Barry. How socratic of you.

Sean W. Malone|8.12.09 @ 1:54PM|#

Incidentally though Mr. Loberfield, in the specifics - most studies *have* in fact found that increases in the minimum wage have been accompanied by increases in the unemployment rate, (I know that's not what you're really arguing) but I shall direct you Minimum Wage: 50 years of Fail

Barry Loberfeld|8.12.09 @ 2:00PM|#

Sean,

I was referring to such things as Card-Krueger. BTW, interesting site you've got there.

|8.12.09 @ 2:52PM|#

The antibiotic-for-a-viral-infection metaphor is a good one, but it only works if we're actually healthy a year or two from now. I've got a better metaphor for you:

The economy is like a car with a dead battery, and stimulus is like trying to start the car with jumper cables. You're going to see some response from this: you'll hear the starter and maybe actually hear the engine turn over once or twice. But if there's no gas in the car, you're wasting your time on the wrong problem.

We can kick money into the economy at any time, but without reducing the deficit and Americans having real savings, there's no point. It's all wasted effort. This recent "recovery" is nothing more than the engine of our economy turning over once on the remaining fumes in our empty tank - the same way we had a 40% "recovery" in 1930 before a decade of depression.

Sean W. Malone|8.12.09 @ 3:28PM|#

Yeah, the thing with Card-Kreuger is that it's the only study that came up results where employment wasn't decreased. And frankly, if you look at the study a little more closely, their methodology was a nightmare.

They only looked at who was "employed" and didn't bother to look at niggling little details like how many hours people were actually working.

So, instead of firing people outright (which I don't think any sensible person would expect as a consequence of a minor increase like happened in 1992-94) companies just scaled back on hours... Duh.

Obama|8.12.09 @ 4:28PM|#

"Mission Accomplished"

|8.12.09 @ 5:36PM|#

Yeah, the thing with Card-Kreuger is that it's the only study that came up results where employment wasn't decreased. And frankly, if you look at the study a little more closely, their methodology was a nightmare.

They also did a lot of survey data instead of using payroll data.

IIRC, they also had the problem of doing a before-and-after study where the "before" was after the bill was already passed but before it took effect.

Sean W. Malone|8.12.09 @ 6:17PM|#

Yeah... Look, the thing is... the Card study has also been rejected by virtually everyone else who studies unemployment and minimum wage.

The fact that guys like Krugman are still referencing it as some kind of proof is asinine. But... It's Krugman and friends, so go figure. When that study came out anyway, it was supposed to be this big "gotcha" moment refuting 200 years of economic observations & of course the basic mathematical logic that says that X/5.75 > X/7.15.

It's astonishing to watch people who can (or so I've been told) do amazing things with calculus and statistics fail to get their arithmetic right.

Sean W. Malone|8.12.09 @ 6:18PM|#

eh... html fail. my bad.

|8.12.09 @ 6:28PM|#

I think a good case can be made that the stimulus DID hurt the economy at first, and this could have accounted for the worse-than-forecast results in the first half of the year.

The stimulus could have had an initial negative effect for the following reasons:

1. When it was first announced, it created a lot of uncertainty for businesses, which caused them to wait on major investments until they understood the impact.

2. State level projects which would have started at the beginning of the year were delayed to wait for stimulus funds.

3. Under the permanent-income hypothesis, once the stimulus passed I would expect the savings rate to increase as people discount their future incomes because of the higher taxes needed to pay for the stimulus.

4. The money had to be borrowed before it could be spent. This created additional competition for private debt, driving up interest rates. I believe mortgage rates went up a point because of this.

From the beginning, I assumed that the stimulus would initially hurt the economy, then as the money started to be spent it would help somewhat, then after the money was gone it would hurt even more as the temporary jobs were lost and the market had to adapt to all the dislocations and distortions of government policy. Over the long term, the added debt from the stimulus would be a drag on growth.

If you look at the timing of the stimulus, it has one major beneficiary - Democratic encumbents. The stimulus is timed to have the bulk of the money hit the economy just before the mid-term elections. Expect to see lots of crowing next year about all the jobs created, and lots of articles published by a compliant media extolling the virtues of the various stimulus projects that will be then be roaring along. That will get the Democrats elected again - before the hangover starts.

And if the economy has started to recover on its own, then the stimulus will be timed such that it's pro-cyclical, contributing to an overheating of the next business cycle while making the recession worse. And that has always been the classical argument against fiscal stimulus - it can't be timed accurately.

|8.12.09 @ 11:18PM|#

obama's experience is filled with red flags indicating economic illiteracy, which is bad enough. the fact that his advisor believes this sort of nonsense and explains it with a piss-poor analogy is fucking scary.

then, add the fact that larry summers has huge sway and you've sure got a disaster dream team.

|8.12.09 @ 11:28PM|#

Looks like the green jolly elf wants to spread the 2009 economic cheer...or schmear?!

Lee Cruz|8.12.09 @ 11:48PM|#

The Economy has begun to recover. This is just the kind of blind nonsense that gives people like Paul Krugman an audience. The crash of 29 didn't bottom until 32. Bill Bonner, someone who was right for over a decade, put it like this:

"Taking the period of the bubble years, in 2000 total debt in the United States came to $26 trillion. Now, it's twice that amount - $52 trillion, of which $38 trillion is private…or more than two and-a-half times GDP. At this level, the private debt absorbs roughly one out of every seven dollars in consumer earnings - in interest and principal payments.

If the private sector undertook to reduce debt back to 2000 levels, it would mean eliminating all the debt accumulated during the bubble years - or about $19 trillion. How long will it take to pay down, write off, inflate away and otherwise shuck $19 trillion? Well, inflation is running below zero - so that is not now a source of debt reduction. Between write-offs and pay-downs, about $2 trillion has already been cut - over, very roughly, the last 2 years. At least the math is easy. At that rate, it will take 19 years.

Now, let's go back and look at the Japanese. How long have they been deleveraging? Gosh all mighty…19 years. From 1990 to 2009."


Keep living Keynesian wet dream: "A penny spent is a penny earned."

|8.16.09 @ 3:25AM|#

"My girlfriend was listening to NPR this morning, and some nit-wit actually said that Romer and Bernanke are 'students of history', and so are obviously qualified to make these important statements/decisions on the economy. My gf got a laugh when I began ranting as to how they are obviously not 'students of history' if they think that all this meddling is good for the overall health of the country."

What's really funny is the thought that you might possibly think that you contributed anything even remotely intelligent to the discussion with that post.

|8.16.09 @ 3:36AM|#

"Warty | August 12, 2009, 11:17am | #
Shut the fuck up, Tony.

Sean W. Malone | August 12, 2009, 11:18am | #
Tony... You are retarded."

Wow! Is this kind of mental-midgetry common around here?

I admit that the original article writer had some good points, and the idea that it is due to the stimulus that things have stopped declining so quickly is silly (there are many factors, some which are much more important - the White House adviser makes an easy target). But it seems like the majority you commenters on this board are incapable of thinking, much less thinking for themselves.

Libertarianism has a lot of good points: government tends to be inefficient, free-markets tend to be efficient, government tends to screw things up. However, Libertarians suffer from a lack of common sens and an over abundance of IDEALISM. It isn't just government that screws things up - it's people in general. Things aren't perfect. You guys all need a heavy dose of pragmatism.

Dan H. | August 12, 2009, 6:28pm | #
I think a good case can be made that the stimulus DID hurt the economy at first, and this could have accounted for the worse-than-forecast results in the first half of the year.

"The stimulus could have had an initial negative effect for the following reasons:

1. When it was first announced, it created a lot of uncertainty for businesses, which caused them to wait on major investments until they understood the impact."

LOL!! You obviously aren't a business man. Or at least not a good business man.

|8.16.09 @ 3:40AM|#

"John | August 12, 2009, 9:37am | #
NO DJF. The money will never run out. We will just keep taxing and borrowing and spending and then printing money forever. There is no reason to have a private sector. The government can do everything and pay for it all by taxing the evil rich. Don't you get it?"

Yes, the slippery slope argument. It NEVER gets old. Obviously everyone (including Obama) agrees that there needs to be some moderation and that the silly straw-man argument you pose is not a workable solution. Yes, let's all go read Atlas Shrugged, because obviously it is the infallible holy bible, full of no holes.