President Obama Re-Elected - Page 901

On October 19 2012 12:20 jdseemoreglass wrote:
There is a difference between pushing through a recession and fostering excessive government induced artificial growth, which establishes a series of bubbles, dot com bubble, financial bubble, housing bubble... When you have artificial growth, a period of flat or dipping GDP growth is not only inevitable, it is necessary. There is a fine line between recession stimulus and bubble creation, and we leap over it every single time.

On October 19 2012 12:37 jdseemoreglass wrote:

Standard straw man. I challenge a single person in this thread to deny that the federal reserve's excessive credit policies following the 2001 recession directly influenced the housing bubble. It is the consensus among economists of any stripe. And the liberals favorite pseudo-economist, Paul Krugman, was outright advocating it in 2002.
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So did I call for a bubble? The quote comes from this 2002 piece, in which I was pessimistic about the Fed’s ability to generate a sustained economy. If you read it in context, you’ll see that I wasn’t calling for a bubble — I was talking about the limits to the Fed’s powers, saying that the only way Greenspan could achieve recovery would be if he were able to create a new bubble, which is NOT the same thing as saying that this was a good idea. Of course, I know that this explanation won’t keep the haters from pulling up the same quote out of context, over and over.

But did I call for low interest rates? Yes. In my view, that’s not what the Fed did wrong. We needed better regulation to curb the bubble — not a policy that sacrificed output and employment in order to limit irrational exuberance. You can disagree if you like, but that doesn’t make me someone who deliberately sought a bubble.

On October 19 2012 12:44 jdseemoreglass wrote:
So he didn't call for a bubble but he says the only way the fed could achieve recovery is to create a bubble. And that context is supposed to refute my point how? We can't gauge his comments against the backdrop of his imagined ideal utopia.

Will the rescuers arrive in the nick of time? Not necessarily. This movie may not be "55 Days at Peking" after all. It may be "A Bridge Too Far."

A few months ago the vast majority of business economists mocked concerns about a "double dip," a second leg to the downturn. But there were a few dogged iconoclasts out there, most notably Stephen Roach at Morgan Stanley. As I've repeatedly said in this column, the arguments of the double-dippers made a lot of sense. And their story now looks more plausible than ever.

The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

Judging by Mr. Greenspan's remarkably cheerful recent testimony, he still thinks he can pull that off. But the Fed chairman's crystal ball has been cloudy lately; remember how he urged Congress to cut taxes to head off the risk of excessive budget surpluses? And a sober look at recent data is not encouraging.

On the surface, the sharp drop in the economy's growth, from 5 percent in the first quarter to 1 percent in the second, is disheartening. Under the surface, it's quite a lot worse. Even in the first quarter, investment and consumer spending were sluggish; most of the growth came as businesses stopped running down their inventories. In the second quarter, inventories were the whole story: final demand actually fell. And lately straws in the wind that often give advance warning of changes in official statistics, like mall traffic, have been blowing the wrong way.

On October 19 2012 13:03 jdseemoreglass wrote:

No, I don't think that at all. Capitalism has negative externalities and failures, government can patch the holes in those failures. Government can also create failures, and often does. Government can raise costs or mis-manipulate the economy.

No matter how much people want to paint me as an extremist, it's not going to stick.