What A Few Trillion Dollars Buys You

Got your green shoots right here:

Inflation Dept: Consumer Price Index up 0.2 percent.

Delivery Dept: Freight Transportation Services Index up 0.7 percent.

Real Estate Dept: Highest quarterly foreclosure number since the beginning of time. (Hey, how'd that get in there?)

Your Great-Grandchildren's Debt Dept: U.S. Treasury note prices down, yields up.

Infrastructure Dept: President stands on large mound of dirt and gravel in Fairfax County.

Hardworking American Working Families Working Hard Dept: Stimulus jobs created at $72,408 per. This is not as costly as the $187,000 to $275,000 the Obama Administration's own numbers indicated each new job would cost.  Remember, for every dollar you spend on stimulus you're actually putting $1.55 into the economy, through the help of the multiplier fairies, whose magical effects were explained by Christina D. Romer back in January [pdf].

That January report is worth reading, by the way, for Romer's stunningly prescient calculation that in a nightmare land without a stimulus package, unemployment might peak at 8.8 percent. (How does this crack economic team do it? They're like Cassandra von Nostradamus.)

Comments

[briareus]

Don't forget this lovely picture:

http://research.stlouisfed.org.....s/EXCRESNS

Ramped profits on no loans; liquidity crisis still exists for most small to medium side businesses and individuals, but those bank bailouts sure funded an awful lot of USD-shorting and UST gimmickry. Oh, and stimulus spending counts to GDP, so recession is "over". Suck it, jobless bums.

Gotta love Nu-Perfekt Amerika.

[Tim Cavanaugh]

I think you need to make a Copernican shift to understand the excess reserves issue. If you assume the goal is to provide liquidity, the government's actions do not make sense. But if you assume the goal is to protect bankers, the goverment's actions do make sense.

And I think the idea is that after the bankers are good and rescued, they'll start lending again. In the same way that a corpse will start to leak if you pump in too much embalming fluid.

Keep in mind that a significant portion of reserves have not come from the government but from savings account holders. That trend seems to be ending before it bears fruit, however: After peaking at a laughably low 4 percent in July, the personal savings rate dropped back to 3 percent in August, according to the Bureau of Economic Analysis.

To say the left hand doesn't know what the right is doing would be too small a phrase when we're talking about the 5,000 fingers of Dr. Government.

But try to get your mind around that: They're trying to prevent the savings right from increasing so that consumption can resume. Yet they want the amount of money saved in banks to keep going up, so that the banks can survive to lend another day to people who have negative personal savings.

Unfortunately, no Copernican shift, not even an Einsteinian shift, will make sense out of that.

[briareus]

Oh but I do understand it, perhaps better than you might think. What you are saying the idea is, is what the bankers want the policymakers to think it is. It is and is about full blown system capture.

[Brandybuck]

The trouble with macroeconomists is not that they run the numbers through so many derivations that any resemblance to reality is stripped away, but rather that they believe their results.

"Ooh ooh look at me! I've got a new formula with only three variables! That's two fewer than Wernstrom's. I deserve a Nobel Prize!"

[Attorney]

Are you trying to make us cry?

[briareus]

Stirred to action, perhaps.

[Suki]

Shaken not stirred.

[briareus]

The UST link in the post is broken.

[MattXIV]

No mention of the Dow hitting 10k Tim? Whether it's the rumored green shoots or the fact that when you shove trillions of dollars into the economy it has to go somewhere, stocks are going up.

[Tim Cavanaugh]

I'll wait til we're on the other side of October, and maybe til we're on the other side of Christmas, before getting hot and bothered about the Dow.

[Suki]

Can you get Squirrel hot and bothered about the spambots? I hope he is already concocting a solution.

[Br'er Rabbit]

When is the damn Lat going to collapse and drag the Euro down with it?

[R C Dean]

You might want to check again, MattXIV. Dow not 10K no more.

[hurlybuerhle]

Right. Stock prices are going up in spite of private investment and personal savings going down. Thank God those smart guys on Wall Street have never gambled foolishly on stock prices or I might worry that this would end badly.

[Invisible Finger]

Easy to make any index go up - just replace falling stocks with rising stocks. Instant recovery!

[Craig]

The Dow hits 10,000.... Whoopee. It hit 10,000 a decade ago. We would have been better off putting our cash in CDs.

[Dello]

I recall hearing that Halloween is second only to Christmas in spending, and not by more than about 20% at that.

I'll be curious to see how much gets spent at the end of the month, and then project forward to weep for the holidays.

Lots of businesses won't survive Christmas, I fear. And with the seasonal lay-offs will come the regular lay-offs.

[Pro Libertate]

What would Mao do?

[Miklen]

"And I think the idea is that after the bankers are good and rescued, they'll start lending again. In the same way that a corpse will start to leak if you pump in too much embalming fluid."

Best explaination I've heard yet.

[Andrew_M_Garland]

Let's Counterfeit Our Way to Wealth

Team Obama claims that every dollar in stimulus creates $1.50 in wealth. This is economic fiction. The costs of the stimulus reduce future growth. As we see now, the so-called stimulus isn't even very stimulating in the present, because it has gone/will go to government consumption, and the threat of future taxes puts people out of work now.

The 1.5 wealth multiplier is ludicrous. It is the Keynesian myth of distributing money to promote a recovery. As a counterexample, if it were true, then the government could license counterfeiting and we would all become rich. Actually, the government attitude toward printing money is very close to counterfeiting.

Consider that the government has been spending money wildly for 20 years. If government spending produced lasting prosperity, then we should all be rich already. The housing boom, financed by government borrowing and guarantees, was a period of substantial, increased spending. Where is our lasting prosperity now?

[Vince]

Yeah, the lefties are scary, but how's this for a solution; we can out-breed them. Check out the latest advice on how to attack global warming from MotherJones author Kiera Butler:

http://www.motherjones.com/blu.....s-vs-earth

I think we should support them in this endeavor with all of are hearts!

[Vince]

..our hearts..sorry it's late!

[P Brooks]

http://research.stlouisfed.org.....s/EXCRESNS

"excrescence"?

[robc]

Paraphrasing Tip O'Neill - all real estate markets are local.

Look at the chart of foreclosures.
KY != NV

[Tim Cavanaugh]

I just had an FHFA official threaten to end an interview. When she started in on the line that keeping borrowers in their homes is in everybody's best interest, including me because foreclosures are bad for my neighborhood, etc., I said "Stop! Please stop! I just can't listen to this story again."

[Our simply]

Look at the chart of foreclosures.