Predict jobs in a double dip recession...or worse Forum

[dogmatic slumber]

mec30, I'll get the ball rolling because I am bored and not running, though there's a distinct possibility that ravens9111 is a troll (no profile information, not too bright). What the hell, it's fun to talk about anyway, and also a non-troll says he thinks the post was alright, so let's go.

Stick with talking about law, not economics. Most of you have no clue what's really going on

So by implication you must think you have a clue, since you're continuing the economics conversation. Let's see about that.

It is a proven fact that government spending is inefficient and wasteful.

Go ahead, prove it (including your definitions of "inefficient" and "wasteful"). Also, what's your point? Governments should stop spending? See how far that argument gets you with people who have a clue what's really going on.

The stimulus package was opposed by the majority of economists because the money to be spent did not have a multiplier effect for the private sector.

A majority of economists? Really? I remember hearing a number of economists argue--with Krugman--that the stimulus was not large enough to be effective. That was a pretty standard criticism from the Keynesian crowd. Also, of course there is a multiplier effect for the private sector: that's the whole point of stimulus spending ("multiplier effect" was Keynes' term for the gift-that-keeps-on-giving nature of consumption). If a new road is built with stimulus money, the government isn't building that road; a private construction firm is. That firm takes its stimulus money and pays its workers, who go out and buy some stuff they wouldn't have ordinarily, and the people who sold them that stuff take the proceeds and go buy stuff of their own...and the original firm may also buy stuff it wouldn't have otherwise, and so on...and there's your multiplier effect.

When you take into account for social security and pensions, the real debt our country faces is over $100 TRILLION.

I don't know what arbitrary time frame you're using, but whatever, suppose you're right; so what? That's like saying "When you take into account the next 50 years, the total defense spending our country faces is $30 TRILLION!" Fortunately budgets take things one year at a time. Check back in a few years and see how our debt-to-GDP ratio is doing. It's been increasing since Bush II took office; the key is to turn that trend around before we turn into Japan.

The worst is not behind us folks. Just look at the stock market today and compare it to the Great Depression of the 1930's. Both had an initial crash and then a short lived recovery before falling further into the abyss.

Yes on the first count (we haven't had a 2010 double-dip yet), but why did the US fall further into the abyss in 1937? Arguably because New Deal stimulus spending was rolled back, cutting off part of the economy's air supply just as its lungs were coming back online. It's a complex story, but that's part of it.

Spending your way out of a recession/depression will prove disastrous as our national debt to GDP will approach 90% in a few short years. That is when the shit will really hit the fan. If you don't believe me, look it up.

It's projected to hit 100% by 2015. Like I said, the key is to get that ratio headed back the other way. However, Japan's ratio is over 200%, I believe, and even so, Japan hasn't exactly spontaneously combusted. Also, our ratio was 117% when Truman took office. Hey, it's great to be China right now--running crazy surpluses and buying up the world--but we can't get there overnight (and probably won't ever get there given that the US is a democracy). Getting the economy going again has to be job #1, and the austerity route is pretty clearly not the short-term cure for what ails us.

Also, @Posner--you know you're a Keynesian now, right?

[D Brooks]

http://www.nytimes.com/2010/06/30/busin ... dt.html?hp

http://www.nytimes.com/2010/02/17/busin ... hardt.html

hth.

[ravens9111]

mec30, I'll get the ball rolling because I am bored and not running, though there's a distinct possibility that ravens9111 is a troll (no profile information, not too bright). What the hell, it's fun to talk about anyway, and also a non-troll says he thinks the post was alright, so let's go.

Stick with talking about law, not economics. Most of you have no clue what's really going on

So by implication you must think you have a clue, since you're continuing the economics conversation. Let's see about that.

Yes, I do apologize if I offended anyone. I did not mean to. I just thought that we should stick to talking about law. I offered my two cents to keep it going. I probably should not have responded. I admit that was my mistake.

It is a proven fact that government spending is inefficient and wasteful.

Go ahead, prove it (including your definitions of "inefficient" and "wasteful"). Also, what's your point? Governments should stop spending? See how far that argument gets you with people who have a clue what's really going on.

All you have to do is google inefficient government spending. There is plenty of proof to support that claim. I'm also sure you can find proof that discredits that claim. It is just a matter of which side of the coin you're on. Look at the $787 billion stimulus plan that was passed to keep unemployment from going over 8%. Was that money spent efficiently? Did the government spend that money to provide goods and services that would allow the private sector to recover? I think it was wasteful. I don't think the government did a good job in allocating its resources. You're entitled to your opinion. The most recent jobs report said there were 431k jobs created in May. As I am sure you already know, 411k of those jobs were temporary census workers created by the government. The rest were from the private sector. The stimulus bill has not efficiently created jobs as intended. The government has by far hired more workers than the private sector. That is not real growth. We need the private sector to get back on track. Instead of spending money the government can't afford, they should be giving incentives to companies so they can hire workers.

No, I don't think the government should stop spending completely. I do think the government needs to get its spending under control. The government can't afford to keep providing goods and services at this level. We are becoming more and more dependent on the government. Again, food stamps, welfare, unemployment benefits (and extensions) are all well intended services. People are becoming more and more dependent on the government to survive. We can't afford it. While I am sure you may think these are not socialistic policies, I disagree. The government in the past two years has spent $700 billion on TARP, $787 billion on the stimulus, $1.25 trillion on mortgage backed securities, $140 billion on Fannie Mae and Freddie Mac (expected to hit $1 trillion when it's over), cash4clunkers (unsure of dollar amount), home buyer tax credit, and I am sure there are others I am leaving out. Oh yes, the healthcare bill and the government takeover of student loans.

You may like a bigger and more powerful government, but I don't. Spending over $2.877 trillion has done what? I am sorry, but I think that money could have been well spent on other things.

The stimulus package was opposed by the majority of economists because the money to be spent did not have a multiplier effect for the private sector.

A majority of economists? Really? I remember hearing a number of economists argue--with Krugman--that the stimulus was not large enough to be effective. That was a pretty standard criticism from the Keynesian crowd. Also, of course there is a multiplier effect for the private sector: that's the whole point of stimulus spending ("multiplier effect" was Keynes' term for the gift-that-keeps-on-giving nature of consumption). If a new road is built with stimulus money, the government isn't building that road; a private construction firm is. That firm takes its stimulus money and pays its workers, who go out and buy some stuff they wouldn't have ordinarily, and the people who sold them that stuff take the proceeds and go buy stuff of their own...and the original firm may also buy stuff it wouldn't have otherwise, and so on...and there's your multiplier effect.

Yes, there were economists who argued that the stimulus package was not large enough. The thing is though that it is not the amount of money that has been spent, but rather what that money was spent on. The whole point of the stimulus was to spend the money so the private sector could get back on their feet again. Many of these infrastructure projects you speak of did not get the funding they needed. Sure, some construction has been completed. However, most of these construction projects are still on hold. A nice portion of the money went towards local and state governments so they would not have to lay off workers. The private sector was not a major recipient of these funds. If that were the case, then the unemployment rate would still not be 9.7% (it's really 17%).

When you take into account for social security and pensions, the real debt our country faces is over $100 TRILLION.

I don't know what arbitrary time frame you're using, but whatever, suppose you're right; so what? That's like saying "When you take into account the next 50 years, the total defense spending our country faces is $30 TRILLION!" Fortunately budgets take things one year at a time. Check back in a few years and see how our debt-to-GDP ratio is doing. It's been increasing since Bush II took office; the key is to turn that trend around before we turn into Japan.

No, that is not the same as saying in the next 50 years defense spending in our country faces $30 trillion. As you said, that defense spending is part of the budget. That is accounted for on the books. These unfunded liabilities are not on the books. They are unaccounted for. But you're right. We will see how that plays out. I hope you're right. Unfortunately, I don't see it that way.

The worst is not behind us folks. Just look at the stock market today and compare it to the Great Depression of the 1930's. Both had an initial crash and then a short lived recovery before falling further into the abyss.

Yes on the first count (we haven't had a 2010 double-dip yet), but why did the US fall further into the abyss in 1937? Arguably because New Deal stimulus spending was rolled back, cutting off part of the economy's air supply just as its lungs were coming back online. It's a complex story, but that's part of it.

Yes, I do agree that many believe we fell deeper in the abyss because of the cut in spending. At the same time, others believe that had we kept spending on social programs, the situation would not have improved. What got us out of the Great Depression was WWII. That is how we became the worlds largest creditor. Now, we are the worlds largest debtor. It is difficult to predict the future, but our circumstances now are not the same as they were then. Sure, we don't want to repeat history. But is it possible the answer today is not the same answer as then?

Spending your way out of a recession/depression will prove disastrous as our national debt to GDP will approach 90% in a few short years. That is when the shit will really hit the fan. If you don't believe me, look it up.

It's projected to hit 100% by 2015. Like I said, the key is to get that ratio headed back the other way. However, Japan's ratio is over 200%, I believe, and even so, Japan hasn't exactly spontaneously combusted. Also, our ratio was 117% when Truman took office. Hey, it's great to be China right now--running crazy surpluses and buying up the world--but we can't get there overnight (and probably won't ever get there given that the US is a democracy). Getting the economy going again has to be job #1, and the austerity route is pretty clearly not the short-term cure for what ails us.

Yes, I agree we need to get the ratio headed the other way as well. Japan has had their lost decade. Some would even argue they have had two lost decades. Their economic growth is anemic. They still have not been able to get out of it. Sure, they are still functioning. They have not imploded or defaulted on their debt. But their standard of living certainly has diminished.

The reason China is running a surplus is simple. They are the new leader in manufacturing. Our manufacturing jobs have been shipped overseas. Why? Because the cost to produce goods here are far more costly than abroad. That is also why our exports are running a trade deficit. Countries are not able to afford our goods because they are cheaper elsewhere. You can't compete with China when they pay their workers $100 per month. I don't see that changing anytime soon, unless they start setting minimum wage standards like we do here. We are at a competitive disadvantage.

Getting the economy back on track should be top priority as you say. I agree. How we get there is the question. I can tell you, one of the problems we have is looking at a short term solution. We can't keep fixing our economy with a band aid. We need a long term solution. The austerity measure you speak of is not a short term fix. Instead, it will lead to long term economic growth and recovery. We can't create bubbles, let them pop, create other bubbles, and repeat the process. That is exactly what has happened and we still have not learned from our mistakes. We have the savings and loan crisis, the internet bubble, and housing bubble just to name a few. To fix the economy for the long term, we will have to accept more pain. There is no easy solution. I just disagree with you and don't think out of control spending is the solution.

[mec30]

It's too soon to accurately evaluate the efficacy of the stimulus, and even with time it will be difficult to separate the natural recovery from recovery spurred by government. Krugman likes big government, that's why he wanted a larger stimulus package.

This is the thing many people miss about stimulus and why the Austrian school of thought really can't be contrasted with the Keynesian school on this point. It doesn't matter where the money goes. You could pay a guy to dig a hole and fill it back up, regardless of what the project is the payment the guy receives is going to have a measurable impact on the economy. Efficient resource allocation really isn't the short run goal in a recession. Of course the best stimulus is that which invests in good projects (digging wholes to aid the building of a new highway which makes it cheaper to ship goods). In fact the austerity measures in Europe are whats holding the global recovery back. If you look at Australia, they nearly escaped the recession because of a decisive interest rate cut and smart stimulus. They were in recovery when the US was feeling the worst of it.

Unemployment barely touched 6% then it started dropping mid-2009.


Big spending is not necessarily big government. In fact if the stimulus came all from tax cuts it would be an absurd argument to say that would not have an effect.

Rather than focusing upon the economy, the stimulus bill was used, in part, to push the agenda of the left. Additionally, politically it can't be labeled a failure when it's held to amorphous standards (read: http://gregmankiw.blogspot.com/2009/02/ ... -save.html).

That's just not right. Here's a picture showing where the stimulus was sent. A lot went to unemployment, highway construction/repair, food stamps, school repair/construction and tax cuts. Much of it is still being allocated. If fact one of the big (and justified) conservative critisisms is that it's not being sent out fast enough (too much bureaucracy).

[Merr]

Well with interest rates low and inflation low despite lots of government spending (though the latter is showing signs of recovery) I have to say I don't have the slightest clue what will happen. If I had to guess and status quo continued I could see a double dip recession potentially happening ala 1990s Japan (only we are working with other people's savings so that could be very off). If not then maybe were out of the woods...only time will tell.

This is called deflation. It sucks unless you are landed aristocracy with enormous amounts of money that increases in value. All other assets become bad. It's what you expect with a credit contraction - less money, so money is more valuable is the short version - but the falling wages/falling prices spiral is supremely destructive.

Since most of the US and the world do not actually have significant amounts of money (and do have large amounts of debt), deflation is potentially pretty disastrous. Deflation also screws up every core tax and finance assumption there is.

Again, this is no fun unless you have very large amounts of net worth. Otherwise, you want to hope that countries aren't so stupid as to enact dis-inflation policies (austerity) when the real issue is deflation.

First, let me say I agree with you about austerity measures, and am surprised at just how many hyper inflation chicken littles are running around these days. My confusion is more in regards to why we are experiencing deflation, or close to it, at the same time as the government is spending so much money relative to what it has spent in the past. That is the paradox that makes this so hard to predict from my perspective.

We are facing deflation because we have asset bubbles. Prices for all assets, particularly housing, rose to unprecedented prices. These assets are still overvalued. Commodity prices rose because of a weaker dollar from low interest rates. The government knows these assets are overvalued. But instead of allowing the free market to work, the government is only trying to re-inflate the bubble. The government is creating another bubble... Treasuries.

The real estate bubble has been temporarily stabilized because of the home buyer tax credit. Before the tax credit was enacted, real estate values were falling 20% or more per year. The credit was a government incentive so people would buy homes. The banks are still drowning. Foreclosures are at an all time high. Every government policy this administration has attempted has been a complete failure. There are over 5 million homes in "shadow inventory". These are homes that are in foreclosure, but have not been put on the market yet. The banks have limited the supply of homes on the market to keep prices from falling further. The problem is that by doing so, this will continue to delay any sustainable recovery. Many analysts are predicting that this foreclosure crisis will take between 5 to 8 years to pass. We won't have any recovery until the housing market is fixed. The housing market will not be fixed until the free market is allowed to take over. We need home values to continue falling so people can actually afford to repay.

We need to cleanse the system. Let these people who can't afford to pay foreclose or file BK. The quicker they go through the system, the better. Instead, these people are living in their homes for two years mortgage free. That extra money they are saving is also contributing to consumer spending, which accounts for roughly 70% of GDP. Housing values went up 20% plus in the majority of the states for 7 years. Many home prices doubled or tripled. House values are suppose to be correlated to inflation, which is usually around 3% per year. When house values get in line with what they should be, you will see a recovery.

The housing market is just the tip of the iceberg but it is definitely a start. Will it be painful? Sure. But it is needed to get things back on track. Banks aren't lending because they are afraid prices will keep going down. Once prices have really hit bottom, banks will start lending again. Once banks start lending again, then you will see massive inflation. Those excess reserves will have to go to work at some point.

The problem with the view of "cleansing the system" and allowing the market to take over is it does not address contagion issues which can kill a great deal of healthy businesses during a financial crisis. As much as I disliked it when it came out TARP ended up saving our collective asses by very successfully stopping the hemorrhaging of bank generated capital into thin air. You have to remember that at the time capital was becoming so scare that was that banks were beginning to try to accelerate long term loans that otherwise solvent businesses had floated to help manage their cash follow. One person I know who runs a substantial multinational was telling me about how back in late 2008 he had banks trying to call in $500k 10yr loans left and right in an effort to suck up enough capital to cover their bad assets and avoid insolvency. Had the market been left to its own devices a great deal of stable and profitable businesses would have fallen to contagion in this manner. Austrian theory tends to view contagion as acceptable losses which from what I can tell tends make a bad situation much worse without needing to.

On a side note I think you are too grim about asset bubbles. They are painful, but even the worst ones we have seen such as those in Indonesia and Thailand had signs of recovery in about 2 or so years.

[D Brooks]

WTF? TL;DR.

[mec30]

To correct a few errors.

The fact is that unemployment is really 17%. U6 is the real unemployment rate.

The measure your referring to includes people who are underemployed and people who don't need to work but would like to supplement their income. One of the main reasons this isn't a reliable measure to look is because this number, as a percentage of the ILO unemployment rate, will continue to rise as the baby boomers retire and become underemployed and/or seek to find a low paying job to supplement their SS/retirement income. It's not a good indicator of the health of the economy.

The stimulus package was opposed by the majority of economists because the money to be spent did not have a multiplier effect for the private sector.

The stimulus package was not opposed by the majority of economists, nor was it opposed by the ones that did for that reason.

We have to cut spending, raise the retirement age for social security (or cut it completely)

The retirement age (the age at which you can start receiving benefits) is already raised for each successive generation depending on your date of birth.

repeal the Healthcare Bill

Per the CBO the bill reduces government spending over a ten year period, and more after that.

Instead, he will keep spending and raise everyone's taxes.

The way this is worded suggests that Obama has already raised taxes, which is not the case. In fact they are the lowest they have been in decades. And other than the sunset provisions of the 2004 tax cuts, the effective tax rates will remain (as of the latest news) the same.

Just look at the stock market today and compare it to the Great Depression of the 1930's. Both had an initial crash and then a short lived recovery before falling further into the abyss.

Contrary to popular belief, stocks are not good economic barometers. It represents the value people expect of the future worth of the company at any given moment. They are highly volatile and reactive to the news of the day.

The government is putting in place policies that force businesses not to hire. Higher taxes, more regulation, healthcare mandates, etc. force businesses to realize how much this costs them to hire a new worker. If the cost to bring in a new work is greater than their productivity, they won't hire.

If anything future adverse regulation would cause a company to pick up cheap labor while the gettin is good. Not the other way around. The lip service about taxes is plainly false. Revenue from corporate taxes dropped nearly 100 billion dollars, in part because of rate cuts.

The government can't fire workers because of their contracts. Even if the local, state, and federal government can't afford to pay their workers, they can't just fire them to cut costs.

State governments have already lost nearly 10% of their people to attrition. With the increase in demand for governemnt services, the need for public workers has gone up, not down.

our national debt to GDP will approach 90% in a few short years. That is when the shit will really hit the fan. If you don't believe me, look it up.

I assume you mean GDP as a percentage of the debt. Which is a meaningless number really. The United States has one of the highest production capacities in the world. It's a leader in almost every service field (medical tech, bio tech, communications, microprocessing, finance, accounting, consulting, materials research and application, consumer goods, and software); the US can comfortably support a debt that is much more than it's current GDP.

[mec30]

This is called deflation. It sucks unless you are landed aristocracy with enormous amounts of money that increases in value. All other assets become bad. It's what you expect with a credit contraction - less money, so money is more valuable is the short version - but the falling wages/falling prices spiral is supremely destructive.

Since most of the US and the world do not actually have significant amounts of money (and do have large amounts of debt), deflation is potentially pretty disastrous. Deflation also screws up every core tax and finance assumption there is.

Again, this is no fun unless you have very large amounts of net worth. Otherwise, you want to hope that countries aren't so stupid as to enact dis-inflation policies (austerity) when the real issue is deflation.

First, let me say I agree with you about austerity measures, and am surprised at just how many hyper inflation chicken littles are running around these days. My confusion is more in regards to why we are experiencing deflation, or close to it, at the same time as the government is spending so much money relative to what it has spent in the past. That is the paradox that makes this so hard to predict from my perspective.

We are facing deflation because we have asset bubbles. Prices for all assets, particularly housing, rose to unprecedented prices. These assets are still overvalued. Commodity prices rose because of a weaker dollar from low interest rates. The government knows these assets are overvalued. But instead of allowing the free market to work, the government is only trying to re-inflate the bubble. The government is creating another bubble... Treasuries.

The real estate bubble has been temporarily stabilized because of the home buyer tax credit. Before the tax credit was enacted, real estate values were falling 20% or more per year. The credit was a government incentive so people would buy homes. The banks are still drowning. Foreclosures are at an all time high. Every government policy this administration has attempted has been a complete failure. There are over 5 million homes in "shadow inventory". These are homes that are in foreclosure, but have not been put on the market yet. The banks have limited the supply of homes on the market to keep prices from falling further. The problem is that by doing so, this will continue to delay any sustainable recovery. Many analysts are predicting that this foreclosure crisis will take between 5 to 8 years to pass. We won't have any recovery until the housing market is fixed. The housing market will not be fixed until the free market is allowed to take over. We need home values to continue falling so people can actually afford to repay.

We need to cleanse the system. Let these people who can't afford to pay foreclose or file BK. The quicker they go through the system, the better. Instead, these people are living in their homes for two years mortgage free. That extra money they are saving is also contributing to consumer spending, which accounts for roughly 70% of GDP. Housing values went up 20% plus in the majority of the states for 7 years. Many home prices doubled or tripled. House values are suppose to be correlated to inflation, which is usually around 3% per year. When house values get in line with what they should be, you will see a recovery.

The housing market is just the tip of the iceberg but it is definitely a start. Will it be painful? Sure. But it is needed to get things back on track. Banks aren't lending because they are afraid prices will keep going down. Once prices have really hit bottom, banks will start lending again. Once banks start lending again, then you will see massive inflation. Those excess reserves will have to go to work at some point.

The problem with the view of "cleansing the system" and allowing the market to take over is it does not address contagion issues which can kill a great deal of healthy businesses during a financial crisis. As much as I disliked it when it came out TARP ended up saving our collective asses by very successfully stopping the hemorrhaging of bank generated capital into thin air. You have to remember that at the time capital was becoming so scare that was that banks were beginning to try to accelerate long term loans that otherwise solvent businesses had floated to help manage their cash follow. One person I know who runs a substantial multinational was telling me about how back in late 2008 he had banks trying to call in $500k 10yr loans left and right in an effort to suck up enough capital to cover their bad assets and avoid insolvency. Had the market been left to its own devices a great deal of stable and profitable businesses would have fallen to contagion in this manner. Austrian theory tends to view contagion as acceptable losses which from what I can tell tends make a bad situation much worse without needing to.

On a side note I think you are too grim about asset bubbles. They are painful, but even the worst ones we have seen such as those in Indonesia and Thailand had signs of recovery in about 2 or so years.

To echo what Merr said, you can't look at defaults in isolation. Banks become insolvent, and of the mortgages that banks moved off their books in the form of securities, those affect investment firms (and others) that rely on the cash flows from those payments. And the shadow banking system provides a ton of money to worthwhile projects. Also, you get the strange effect of people who can afford their house leaving because it makes more economic sense to default on those loans. For some people the hit to their credit rating and the loss of the property do not justify paying the rest of a 30 year loan. These housing programs don't re-inflate the housing bubble, they buy the banks time to reallocate their assets to smart investments. A bank can handle a steady slow flow of BKs, but they will run into liquidity problems if defaults happen all at once.

A cynical man may think Obama knew some of his home renegotiation programs would keep people in their home long term. Instead the point of the program was to slow the rate of foreclosures to a manageable level.

[ravens9111]

[/quote]

The problem with the view of "cleansing the system" and allowing the market to take over is it does not address contagion issues which can kill a great deal of healthy businesses during a financial crisis. As much as I disliked it when it came out TARP ended up saving our collective asses by very successfully stopping the hemorrhaging of bank generated capital into thin air. You have to remember that at the time capital was becoming so scare that was that banks were beginning to try to accelerate long term loans that otherwise solvent businesses had floated to help manage their cash follow. One person I know who runs a substantial multinational was telling me about how back in late 2008 he had banks trying to call in $500k 10yr loans left and right in an effort to suck up enough capital to cover their bad assets and avoid insolvency. Had the market been left to its own devices a great deal of stable and profitable businesses would have fallen to contagion in this manner. Austrian theory tends to view contagion as acceptable losses which from what I can tell tends make a bad situation much worse without needing to.[/quote]

Here's a question for you. Do you think the banks are solvent today? I don't think they are. What has really made the difference is the change in accounting rules. Mark to market accounting is no longer required by the banks. Instead, banks are able to write off loan losses as they are incurred. Many of the banks had to raise sufficient capital to preserve liquidity. I don't think TARP really had as much an impact as you may think. As you may recall, many of the TARP recipients paid the money back much earlier than expected.

I do agree that many businesses could have failed if nothing was done. If businesses did fail, they would have been forced into bankruptcy. Chapter 11 or Chapter 7, take your pick. Either way, these businesses would have been picked up by healthier companies for a cheap price. Many companies have come out of Chapter 11 successfully. It definitely was a scary time, and it still is.

If you look up excess reserves from banks today, you will see banks are hoarding cash. They aren't lending to businesses. Instead, they are putting their money in Treasuries to earn interest and compensate for their loan losses. They make money on the spread. The problem still has not been solved. The banks are still insolvent.

They won't be solvent until the foreclosure crisis is over. That is the real key. We need to get the housing market back on its own two feet. Prices are still too high. If prices go down, the buyers will come. There is too much supply. The only way to sell the excess inventory is for prices to go down. Unfortunately, the banks can't afford to lower the price on homes. This is why it may take at least 5 more years to work through the system. The banks are limiting the supply of homes on the market. Once this passes, we should see a real recovery. Housing is what caused this mess. Personally, I think the only real way out is for the housing crisis to be resolved. Now, I am sure there are many out there who disagree with me and that is fine.

[dogmatic slumber]

I don't know what arbitrary time frame you're using, but whatever, suppose you're right; so what? That's like saying "When you take into account the next 50 years, the total defense spending our country faces is $30 TRILLION!" Fortunately budgets take things one year at a time. Check back in a few years and see how our debt-to-GDP ratio is doing. It's been increasing since Bush II took office; the key is to turn that trend around before we turn into Japan.

No, that is not the same as saying in the next 50 years defense spending in our country faces $30 trillion. As you said, that defense spending is part of the budget. That is accounted for on the books. These unfunded liabilities are not on the books. They are unaccounted for.

True, that was a bad analogy. My point was that there's no reason to get our panties in a bunch about absurdly long-run viewpoints when there are pressing needs in the here and now. For some reason--maybe you can enlighten us--people are fixating on Social Security when the damn thing's solvent till what, 2040? With no changes? I'm not saying we should put it off till 2039 (and that 2040 estimate will of course be revised; at one point under Clinton, SS was solvent till 2055 I think), but ummm, we're kind of in a depression? Maybe an entitlement program that's set for the next three decades can wait a little while?

By the way, I don't see how it helps anyone to call anything going on in this country "socialist." It just makes you look like you don't know what the word means. Does the US government control the means of production in any significant way? No? Good, let's stop calling it "socialist" then.

our national debt to GDP will approach 90% in a few short years. That is when the shit will really hit the fan. If you don't believe me, look it up.

I assume you mean GDP as a percentage of the debt. Which is a meaningless number really.

I think s/he means the debt-to-GDP ratio, which provides crucial context (as I'm sure you'd agree). Trillions in debt will sound overwhelming if you don't (1) know how it compares to GDP, and (2) understand that the US ratio has been higher in the past, that Japan's is way higher than ours, etc., etc.

[ScaredWorkedBored]

First, let me say I agree with you about austerity measures, and am surprised at just how many hyper inflation chicken littles are running around these days. My confusion is more in regards to why we are experiencing deflation, or close to it, at the same time as the government is spending so much money relative to what it has spent in the past. That is the paradox that makes this so hard to predict from my perspective.

Basically, the deflationary forces of tremendous wealth destruction - most people's only equity asset of note is their homes - and credit contraction are really just that strong. High unemployment (unemployed tend to drop to subsistence levels of consumption) and massive wealth destruction in the stock market don't help either.

[mec30]

I don't know what arbitrary time frame you're using, but whatever, suppose you're right; so what? That's like saying "When you take into account the next 50 years, the total defense spending our country faces is $30 TRILLION!" Fortunately budgets take things one year at a time. Check back in a few years and see how our debt-to-GDP ratio is doing. It's been increasing since Bush II took office; the key is to turn that trend around before we turn into Japan.

No, that is not the same as saying in the next 50 years defense spending in our country faces $30 trillion. As you said, that defense spending is part of the budget. That is accounted for on the books. These unfunded liabilities are not on the books. They are unaccounted for.

True, that was a bad analogy. My point was that there's no reason to get our panties in a bunch about absurdly long-run viewpoints when there are pressing needs in the here and now. For some reason--maybe you can enlighten us--people are fixating on Social Security when the damn thing's solvent till what, 2040? With no changes? I'm not saying we should put it off till 2039 (and that 2040 estimate will of course be revised; at one point under Clinton, SS was solvent till 2055 I think), but ummm, we're kind of in a depression? Maybe an entitlement program that's set for the next three decades can wait a little while?

By the way, I don't see how it helps anyone to call anything going on in this country "socialist." It just makes you look like you don't know what the word means. Does the US government control the means of production in any significant way? No? Good, let's stop calling it "socialist" then.

our national debt to GDP will approach 90% in a few short years. That is when the shit will really hit the fan. If you don't believe me, look it up.

I assume you mean GDP as a percentage of the debt. Which is a meaningless number really.

I think s/he means the debt-to-GDP ratio, which provides crucial context (as I'm sure you'd agree). Trillions in debt will sound overwhelming if you don't (1) know how it compares to GDP, and (2) understand that the US ratio has been higher in the past, that Japan's is way higher than ours, etc., etc.

Right. Not meaningless, but you've got to put that number in context with a number of other factors to really glean anything from it. There is no hard and fast danger limit, but it's definitely not a good long term fiscal position to let it rise.

[ravens9111]

To correct a few errors.

The fact is that unemployment is really 17%. U6 is the real unemployment rate.

The measure your referring to includes people who are underemployed and people who don't need to work but would like to supplement their income. One of the main reasons this isn't a reliable measure to look is because this number, as a percentage of the ILO unemployment rate, will continue to rise as the baby boomers retire and become underemployed and/or seek to find a low paying job to supplement their SS/retirement income. It's not a good indicator of the health of the economy.

That's not entirely accurate. U6 unemployment includes laid off workers, temp. workers, discouraged workers (those that have given up looking for work because they believe no work is available for them), "marginally or loosely attached workers", those who have not looked for work recently, and the underemployed (those who would like to work full time, but are only able to work part time). Your example of the baby boomers is valid, but most retirees who live on SS/retirement income don't seek a full time job. When supplementing income, they would seek a part time job. That would not make them underemployed. They would be considered part time workers. Of course, I am sure some of the baby boomers could work part time while seeking full time employment. I don't think that is in the majority. Maybe I am wrong. One more thing, those that give up and decide to go to school are no longer included in the labor force. They are completely off the rolls.

The stimulus package was opposed by the majority of economists because the money to be spent did not have a multiplier effect for the private sector.

The stimulus package was not opposed by the majority of economists, nor was it opposed by the ones that did for that reason.

You may be right that the majority of economists did not oppose the stimulus. There are more Keynesian's out there than I thought. I am more of an Austrian School type myself. I will give you that one.

We have to cut spending, raise the retirement age for social security (or cut it completely)

The retirement age (the age at which you can start receiving benefits) is already raised for each successive generation depending on your date of birth.

That maybe true, but the life expectancy has also continued to increase. We can't afford to pay SSI for 10 or 20 years per individual. About 25% of our population will be eligible for SSI within the next 10 to 20 years. The baby boomers are coming to retirement age. The whole system is a ponzi scheme. Someone is going to be left holding the bag when the money runs out. I suppose if you really want to keep the system in place, we can raise the payroll taxes and create another problem all together.

repeal the Healthcare Bill

Per the CBO the bill reduces government spending over a ten year period, and more after that.

Yup, can't dispute what the CBO said BEFORE the bill was passed. Unfortunately, the CBO also did their analysis based on increased taxes for four years before services would begin. In other words, the first ten years of passage, the system will collect ten years of taxes while only providing six years of services. The real problem will occur after the first ten years when you pay ten years of taxes and provide ten years of services.

Instead, he will keep spending and raise everyone's taxes.

The way this is worded suggests that Obama has already raised taxes, which is not the case. In fact they are the lowest they have been in decades. And other than the sunset provisions of the 2004 tax cuts, the effective tax rates will remain (as of the latest news) the same.

The healthcare bill is pretty much a tax on everyone. That has already passed. We will be paying for that very soon, no? Also, the tax cuts are due to expire after this year. Not to mention, cap and trade is next on the agenda. As Obama put it, "gas prices will necessarily skyrocket". The cap and trade may not go through. Time will tell.

Just look at the stock market today and compare it to the Great Depression of the 1930's. Both had an initial crash and then a short lived recovery before falling further into the abyss.

Contrary to popular belief, stocks are not good economic barometers. It represents the value people expect of the future worth of the company at any given moment. They are highly volatile and reactive to the news of the day.

I agree with you on this. The stock market is not a clear indicator of the economy. Instead, you have to look at trends. When you have a complete sell off, it doesn't matter which stock you own. They all go down. In good times, they all go up (mostly). Stocks recently have gone down because investors are buying Treasuries. That is an indication that the economy is on the edge and there is fear. Again, I am not a financial guru. But I think I have a decent grasp how the market works.

The government is putting in place policies that force businesses not to hire. Higher taxes, more regulation, healthcare mandates, etc. force businesses to realize how much this costs them to hire a new worker. If the cost to bring in a new work is greater than their productivity, they won't hire.

If anything future adverse regulation would cause a company to pick up cheap labor while the gettin is good. Not the other way around. The lip service about taxes is plainly false. Revenue from corporate taxes dropped nearly 100 billion dollars, in part because of rate cuts.

I'm not quite sure what you mean by future adverse regulation. Most regulation hurts businesses. There really is no such thing as cheap labor in the U.S. This is why factories and manufacturing has moved overseas. Our wages are too high to compete. We produce much less today. Just look at our trade deficit. Yes, rate cuts may have played a role in lowering corporate taxes. I'm not disputing that. In fact, companies today have the highest gross profit margin in history (34%). This was mainly achieved by cutting the labor force and increased work productivity. The private sector is very efficient. The problem is they are not hiring because they are uncertain what lies ahead due to regulation, taxes, etc.

The government can't fire workers because of their contracts. Even if the local, state, and federal government can't afford to pay their workers, they can't just fire them to cut costs.

State governments have already lost nearly 10% of their people to attrition. With the increase in demand for governemnt services, the need for public workers has gone up, not down.

I am not sure if that 10% figure is accurate. Even so, those that were laid off were not part of the labor union. You can't just lay off teachers, police, firefighters, etc.

our national debt to GDP will approach 90% in a few short years. That is when the shit will really hit the fan. If you don't believe me, look it up.

I assume you mean GDP as a percentage of the debt. Which is a meaningless number really. The United States has one of the highest production capacities in the world. It's a leader in almost every service field (medical tech, bio tech, communications, microprocessing, finance, accounting, consulting, materials research and application, consumer goods, and software); the US can comfortably support a debt that is much more than it's current GDP.

I disagree. I don't think it is meaningless at all. As the total national debt to GDP increases to 100% by 2015, foreign investors will demand a higher rate of return on their money. We can only spend what other countries loan us. This means that Treasury yields could skyrocket. This would create an even bigger problem as interest payments on the debt would become insurmountable. What happens if these foreign countries stop buying Treasuries? How are we going to be able to continue the spending if the spigot is turned off? To say we can comfortably support a debt that is much more than our current GDP, I think is false.

[ravens9111]

I don't know what arbitrary time frame you're using, but whatever, suppose you're right; so what? That's like saying "When you take into account the next 50 years, the total defense spending our country faces is $30 TRILLION!" Fortunately budgets take things one year at a time. Check back in a few years and see how our debt-to-GDP ratio is doing. It's been increasing since Bush II took office; the key is to turn that trend around before we turn into Japan.

No, that is not the same as saying in the next 50 years defense spending in our country faces $30 trillion. As you said, that defense spending is part of the budget. That is accounted for on the books. These unfunded liabilities are not on the books. They are unaccounted for.

True, that was a bad analogy. My point was that there's no reason to get our panties in a bunch about absurdly long-run viewpoints when there are pressing needs in the here and now. For some reason--maybe you can enlighten us--people are fixating on Social Security when the damn thing's solvent till what, 2040? With no changes? I'm not saying we should put it off till 2039 (and that 2040 estimate will of course be revised; at one point under Clinton, SS was solvent till 2055 I think), but ummm, we're kind of in a depression? Maybe an entitlement program that's set for the next three decades can wait a little while?

Yes, it has been said the SS Fund is solvent until 2040. I have read the same thing. The problem is that the estimate always changes, as you have said yourself since it was estimated to be solvent until 2055. The government is not the best at being correct in their "estimates". Also, their assumptions and forecasts are often miscalculated by a wide margin. The problem today is that with high unemployment, less money is going into the fund. The social security issue is really only a small segment of the unfunded liabilities. The major problem is the pension of government employees. Paying civil servants 70% of their salary for 20 years is what will hurt us most. We can't afford it. Social security is a problem, but not early as major as the need for pension reform.

By the way, I don't see how it helps anyone to call anything going on in this country "socialist." It just makes you look like you don't know what the word means. Does the US government control the means of production in any significant way? No? Good, let's stop calling it "socialist" then.

Well, the government does own Fannie Mae and Freddie Mac. They just finished buying $1.25 trillion in mortgages that they have guaranteed. Sure, they may not produce goods in the sense of running a factory and manufacturing goods. But, they do have their hands in the financial market. I think you may be interested in the new Fannie Mae patent... check it out. I'll let you do your own research on that one. It is very interesting to say the least.

our national debt to GDP will approach 90% in a few short years. That is when the shit will really hit the fan. If you don't believe me, look it up.

I assume you mean GDP as a percentage of the debt. Which is a meaningless number really.

I think s/he means the debt-to-GDP ratio, which provides crucial context (as I'm sure you'd agree). Trillions in debt will sound overwhelming if you don't (1) know how it compares to GDP, and (2) understand that the US ratio has been higher in the past, that Japan's is way higher than ours, etc., etc.

[allidoiswin]

Paul Krugman is a leftist jackass. He skews examples, analogies and data to ram his leftist ideology down the throats of his readers. It's generally safe to ignore his opinion.

There may be a double-dip recession, but I wouldn't read Paul Krugman with the hopes of learning why it may occur or the chances of its occurrence.

+100000

wish friedman was still here

[allidoiswin]

i blame keynes and always will. the fact that his ideas are being used to govern fiscal policy and we have an economy with more uncertainty than religion and more ups and downs than cedar point is not coincidental

[dogmatic slumber]

Paul Krugman is a leftist jackass. He skews examples, analogies and data to ram his leftist ideology down the throats of his readers. It's generally safe to ignore his opinion.

There may be a double-dip recession, but I wouldn't read Paul Krugman with the hopes of learning why it may occur or the chances of its occurrence.

I still want to know if Posner realizes he converted to Keynesianism.

[badwithpseudonyms]

Stick with talking about law, not economics. Most of you have no clue what's really going on, or has been going for quite some time for that matter. The fact is that unemployment is really 17%. The stimulus package, if you want to call it that, has not been effective. It is a proven fact that government spending is inefficient and wasteful. If you take out government spending, GDP growth is still negative. The stimulus package was opposed by the majority of economists because the money to be spent did not have a multiplier effect for the private sector. Obama promised if the $787 BILLION stimulus was passed, unemployment would not go over 8%. Well, guess what? It is still 9.7% for U3 unemployment. U6 is the real unemployment rate. Welfare and food stamps are going at the fastest pace EVER.

Obama is spending this country into bankruptcy. The only difference between us and Europe is that they are a few steps ahead of us. Think about what our unfunded liabilities are. When you take into account for social security and pensions, the real debt our country faces is over $100 TRILLION. How is that ever going to be repaid? It won't. The sad truth is that spending is NOT the answer. We have to cut spending, raise the retirement age for social security (or cut it completely), repeal the Healthcare Bill, and stop giving away pensions for government workers. That would be a good first step, but surely, Obama will not do it. Instead, he will keep spending and raise everyone's taxes. The worst is not behind us folks. Just look at the stock market today and compare it to the Great Depression of the 1930's. Both had an initial crash and then a short lived recovery before falling further into the abyss. When Treasuries fall, that is a signal that all is NOT well. The 10 Year Note is now under 3%. Some financial analysts are even predicting the 10 Year will fall under 2%. What do you think that means for the stock market? I am not a financial genius by any means, but investors will sell stocks and buy Treasuries for that measly guaranteed return from the Treasury. We could very well see the stock market test the lows from April of '09 of 6,500.

Did anyone really think the stock market rally of 50% from the low really a recovery? How is that sustainable? What has really gotten better? A "jobless recovery" is really happening after we have spent $787 BILLION to create jobs? Really? And they want more stimulus spending? It all has to stop. You want to know the real reason why jobs aren't coming back? The government is putting in place policies that force businesses not to hire. Higher taxes, more regulation, healthcare mandates, etc. force businesses to realize how much this costs them to hire a new worker. If the cost to bring in a new work is greater than their productivity, they won't hire.

Oh, and let's not forget that the Unions are playing their part in this too. The government can't fire workers because of their contracts. Even if the local, state, and federal government can't afford to pay their workers, they can't just fire them to cut costs. The whole system is a joke. Things are not getting any better. It is getting much worse. Spending your way out of a recession/depression will prove disastrous as our national debt to GDP will approach 90% in a few short years. That is when the shit will really hit the fan. If you don't believe me, look it up.

FTFY

[jplayer]

Paul Krugman and his Neo-Keynesian gravy train have just about reached the end of the line. The "stimulus" made things worse, as predicted by the Austrian economists, along with every other negative consequence of the policies advocated by Krugman and the only slightly better Friedman.

The more interesting question is whether we will throw off the parasites and recover, or go Weimar.

[Merr]

Here's a question for you. Do you think the banks are solvent today? I don't think they are. What has really made the difference is the change in accounting rules. Mark to market accounting is no longer required by the banks. Instead, banks are able to write off loan losses as they are incurred. Many of the banks had to raise sufficient capital to preserve liquidity. I don't think TARP really had as much an impact as you may think. As you may recall, many of the TARP recipients paid the money back much earlier than expected.

I do agree that many businesses could have failed if nothing was done. If businesses did fail, they would have been forced into bankruptcy. Chapter 11 or Chapter 7, take your pick. Either way, these businesses would have been picked up by healthier companies for a cheap price. Many companies have come out of Chapter 11 successfully. It definitely was a scary time, and it still is.

If you look up excess reserves from banks today, you will see banks are hoarding cash. They aren't lending to businesses. Instead, they are putting their money in Treasuries to earn interest and compensate for their loan losses. They make money on the spread. The problem still has not been solved. The banks are still insolvent.

They won't be solvent until the foreclosure crisis is over. That is the real key. We need to get the housing market back on its own two feet. Prices are still too high. If prices go down, the buyers will come. There is too much supply. The only way to sell the excess inventory is for prices to go down. Unfortunately, the banks can't afford to lower the price on homes. This is why it may take at least 5 more years to work through the system. The banks are limiting the supply of homes on the market. Once this passes, we should see a real recovery. Housing is what caused this mess. Personally, I think the only real way out is for the housing crisis to be resolved. Now, I am sure there are many out there who disagree with me and that is fine.

I honestly think with current reserve requirements, bank capital rules and the ability of banks FDIC banks to be part of "securities companies" that in a panic banks will never be solvent without federal support. The problem with contagion is not with unhealthy banks becoming insolvent by rather insolvent banks taking down otherwise healthy businesses during a crisis.

[romothesavior]

TL;DR. And I don't know jack about economics.

Somebody please just tell me if we are all screwed?

[Posner]

It's too soon to accurately evaluate the efficacy of the stimulus, and even with time it will be difficult to separate the natural recovery from recovery spurred by government. Krugman likes big government, that's why he wanted a larger stimulus package.

This is the thing many people miss about stimulus and why the Austrian school of thought really can't be contrasted with the Keynesian school on this point. It doesn't matter where the money goes. You could pay a guy to dig a hole and fill it back up, regardless of what the project is the payment the guy receives is going to have a measurable impact on the economy. Efficient resource allocation really isn't the short run goal in a recession. Of course the best stimulus is that which invests in good projects (digging wholes to aid the building of a new highway which makes it cheaper to ship goods). In fact the austerity measures in Europe are whats holding the global recovery back. If you look at Australia, they nearly escaped the recession because of a decisive interest rate cut and smart stimulus. They were in recovery when the US was feeling the worst of it.

Unemployment barely touched 6% then it started dropping mid-2009.

Big spending is not necessarily big government. In fact if the stimulus came all from tax cuts it would be an absurd argument to say that would not have an effect.

Rather than focusing upon the economy, the stimulus bill was used, in part, to push the agenda of the left. Additionally, politically it can't be labeled a failure when it's held to amorphous standards (read: http://gregmankiw.blogspot.com/2009/02/ ... -save.html).

That's just not right. Here's a picture showing where the stimulus was sent. A lot went to unemployment, highway construction/repair, food stamps, school repair/construction and tax cuts. Much of it is still being allocated. If fact one of the big (and justified) conservative critisisms is that it's not being sent out fast enough (too much bureaucracy).

Forget it, Donny, you're out of your element.

It CERTAINLY matters where the money goes because there is the potential for a multiplier. Economists have argued whether tax cuts or direct government spending has a higher multiplier on GDP (read http://gregmankiw.blogspot.com/2008/12/ ... liers.html). You can argue either side (personally I think Romer's work is most convincing), but to argue that it doesn't matter how the money is spend is plain ignorant.

Your response to my create-or-save link does not make sense - you missed the mark. Do you realize that I was merely pointing out that the President cannot be pinned down after the fact on how effective the stimulus was? No matter what, he can always say "well it would have been worse without the stimulus." Job "saving" is extremely difficult to quantify. Your image is irrelevant.


Finally in response to another poster, I do realize Posner has modified his views. It doesn't mean that I agree with him.

[mec30]

Forget it, Donny, you're out of your element.

It CERTAINLY matters where the money goes because there is the potential for a multiplier. Economists have argued whether tax cuts or direct government spending has a higher multiplier on GDP (read http://gregmankiw.blogspot.com/2008/12/ ... liers.html). You can argue either side (personally I think Romer's work is most convincing), but to argue that it doesn't matter how the money is spend is plain ignorant.

Whoa, now you're changing your argument completely from stimulus doesn't work (presumably because of the potential for malinvestment) to stimulus needs to be targeted effectively to be most efficient (a much more defensible position). And effective stimulus (regardless if it inflates a bubble or keeps bad companies solvent) always comes in the form of tax cuts.

To get the most bang for your buck, yes, stimulus needs to be targeted. But it's ALWAYS going to depend on the state of the economy and the health of each sector. Giving a bank with balance sheet problems a few million dollars isn't going to stimulate anything, since they will hold those funds to cover thier other liabilities.

The CBO has already done an analysis of this:

Your response to my create-or-save link does not make sense - you missed the mark. Do you realize that I was merely pointing out that the President cannot be pinned down after the fact on how effective the stimulus was? No matter what, he can always say "well it would have been worse without the stimulus." Job "saving" is extremely difficult to quantify. Your image is irrelevant.

I'm responding to your ridiculous talking point assertion that the stimulus was full of pet projects for the left. If anything allocation was biased toward regionalism, not politics. I'd hardly call highway construction and infrastructure projects a leftist agenda. You keep trying to bring this back to politics when it’s always been a question of economics.

Asking an economist whether stimulus works is a bit like asking a physicist if gravity makes things go down. It going to always depend on what you mean by down and where you are in the universe. Of course dumping billions of dollars into an economy will have an effect, it’s lunacy to say it won’t. But if you goal is something other than just stimulus (something political) it’s not really relevant to the question of whether stimulus works.

Finally in response to another poster, I do realize Posner has modified his views. It doesn't mean that I agree with him.

Aren’t you Posner?

[mec30]

TL;DR. And I don't know jack about economics.

Somebody please just tell me if we are all screwed?

Well we're seeing reduced Fed emergency aid to the big financial firms (http://research.stlouisfed.org/publicat ... /page7.pdf), industrial production has been up since March, and payrolls have seen a steady increase, and unemployment has halted its rise (and fall).

On the bad end, GDP growth has been trending negative since late-2009, interest rates on 10 year and 3-month treasury notes has fallen (which means investors are fleeing to safe investments because they suspect a down economy), the CPI has returned to the negative (http://research.stlouisfed.org/publicat ... /page9.pdf)- the last time we saw deflation like this was Q2 of 2009, and banks are still not lending (http://research.stlouisfed.org/publicat ... page20.pdf). The CPI number is weird because we're seeing increased capacity utilization.

So I would say there is a measurable lack of confidence in the recovery by capital (this may be due to the issues in Europe and China) but the measures of US business wellbeing are OK (not great, but good considering all the other information).

Either we are on a rocky recovery or on the verge of another serious downturn, depending on how you want to read the tea leaves.

[romothesavior]

TL;DR. And I don't know jack about economics.

Somebody please just tell me if we are all screwed?

Well we're seeing reduced Fed emergency aid to the big financial firms (http://research.stlouisfed.org/publicat ... /page7.pdf), industrial production has been up since March, and payrolls have seen a steady increase, and unemployment has halted its rise (and fall).

On the bad end, GDP growth has been trending negative since late-2009, interest rates on 10 year and 3-month treasury notes has fallen (which means investors are fleeing to safe investments because they suspect a down economy), the CPI has returned to the negative (http://research.stlouisfed.org/publicat ... /page9.pdf)- the last time we saw deflation like this was Q2 of 2009, and banks are still not lending (http://research.stlouisfed.org/publicat ... page20.pdf). The CPI number is weird because we're seen increased capacity utilization.

So I would say there is a measurable lack of confidence in the recovery by capital (this may be due to the issues in Europe and China) but the measures of US business wellbeing are OK (not great, but good considering all the other information).

Either we are on a rocky recovery or on the verge of another serious downturn, depending on how you want to read the tea leaves.

So in the words of Shakespeare... to killself, or not to killself? That is the question.