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Friday, June 03, 2011

Crisis Economics Per Jimmy J.

Jimmy J:
Another daily dose of crisis economics. Egad, I think I know now what it must have been like in Rome when Nero fiddled while the city burned. The President and Congress keep delaying necessary fiscal policy while the economy tumbles back into the ditch.

Roubini, in his book, "CRISIS ECONOMICS," says the recovery could be U shaped or, with stupid policy, W shaped.

I keep repeating to myself, "We're not Argentina!" Do I believe it? It's getting harder.
Yes, sir, it is.

Goolsbee, deep in the Land of Denial.

Note that it is not the increase in the unemployment rate alone that it of such concern - it's an increasing unemployment rate with no increase in participation that's a problem! You EXPECT to see the unemployment rise a bit in recovery when jobs show up and people head out to get them.

But that is NOT what we are seeing!

Look at that. The number of total employed has barely risen since last year. Because the population has increased, the employment/population ratio has fallen from 58.7 to 58.4.

The only reason the unemployment rate is dropping is because of retirements, which makes our fiscal problem loom larger and larger.

Our real problem is not a split between conservatives and liberals, but the split between fantasists and realists, and unfortunately the current administration is tipped toward the fantasists. There are fantasists among conservatives and among liberals, and realists among conservatives and among liberals.

We need to rally the realists and fight off the fantasists before we can conquer our problems.

"Nero fiddled while the city burned. "

They hadn't invented golf yet.
Here's a chart to go with your commentary with a bit of Princess Bride gallows humor thrown in for good measure.

The Inconceivable Employment Report
With $1 trillion deficits as far as the eye can see, and a completely open-ended contingent liability against the mass of American corporations ( Obamacare ), private investment and the animal spirits that drive the economy will not recover.

Fiscal policy cleverness may get the corpse to jump off the litter, but it will not last.
The current crisis was created by the accretion of 50 years, roughly, of anti-growth legislation which
was enacted with the childish and sophmoric belief that fiscal cleverness will always trump the supply disincentives enacted by craven politicians, egged on by the prevailing Keynesian clerisy.
The repeal of the policies that have created disincentives to private investment will require the repeal of essentially the last 50 years of economic policy, save Reagan's. Given the present ruling class, 20+ years of stagnation is by far the more likely scenario.
Anonymous @ 7:30pm.

Well put! The thing that is astounding is that we have done as well as we have in spite of all the anti-growth legislation.

Things did perk up a bit under good old RR and his pro-growth approach. There are so many areas of our economy that could be revved up with just a tip of the hat from Congress and the Executive. I'm not talking about financial schemes. I'm talking resource extraction (oil, gas, rare earths, etc.), nuclear power, fishing, lumbering, airplane manufacture (NRLB is blocking that), and many others with which I'm not as familiar.

"We need to rally the realists and fight off the fantasists before we can conquer our problems."

There is no chance of this MOM. Both POTUS and Congress are filled with MORONS and it's been this way for many years. As long as no term limits are imposed for Senators who are more interested ingetting elected; and as long as financial laws & regulations are written by the Corporatist lobby, we're doomed. I see absolutely NOTHING which remotely indicates we'll be able to salvage the unsalvageable.

I'm resigned to the fact that we'll be in Greece or Ireland's position before long. All I do now is prepare myself for the inevitable.
Given the present ruling class, 20+ years of stagnation is by far the more likely scenario.

I happen to think that that is the best case scenario, if we get really lucky.

I don't believe we
will be lucky.
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