My plan for the Republicans to get us out of the recession

[makattak]

Let's see here:  how many banks have failed in the past year? 

What's the drop in stock value over the same period?  What's that, some people were going to retire on that money, and crashing stock values are a bad sign for the economy?

Record numbers of foreclosures?

Yeah, calling this economic situation "mild" doesn't seem to square up with the facts. 

Of course, you can believe the government statistics on employment....but those were the same ones that were telling us there was very little inflation when gas and food tripled in price over a couple of years.  And low unemployment doesn't necessarily mean good economic health-a nation of 10 hour a week part timers is not in good economic shape.

I've seen it pointed out here, and I'm starting to agree with the position that the economic was in such bad shape that without the first bailout of the banks the currency would likely have become worthless.

There are tougher times ahead, and whatever direction this country takes, the people who are proposing "sit back and do nothing" are the surest guarantors of political irrelevance that either of the two parties will find.

Alright, I'll bite: just how many banks did fail over the past year?

And not got bought up by a competitor or re-organized. How many failed?

Second, as to people retiring on that, they should have moved it from risky assets many years before retirement. (I know this because I was telling my parents and in-laws this... not that they listened, though).

Third, as to the government's statistics: you won't trust their ability to measure the economy but you trust them to FIX IT?

If the government is incorrect on the unemployment numbers, what are the correct numbers?

As for there being tougher times ahead, you may be right: it looks like the Senate will be passing that misbegotten travesty of a "bailout". Let's hear it for the failed policies that caused the Great Depression!

[Headless Thompson Gunner]

I've seen it pointed out here, and I'm starting to agree with the position that the economic was in such bad shape that without the first bailout of the banks the currency would likely have become worthless.

The problem wasn't currency becoming worthless, it was just the opposite.  The problem would've been a rapid reduction in the availability of currency.  This would be an increase in the value of currency, a "hyper-deflation" if you will.

Note also that the situation wasn't due to the condition of the economy as a whole, it was due to the condition of the banks.  It was a result of their being heavily over-invested and over-leveraged in real estate.  The rest of the economy maybe could have continued chugging right along if not for the fact that the banking industry is fundamental to every other industry and enterprise within  the economy.

[De Selby]

Here's where I saw that argument:

.

So far we've seen the failure of about 170 banks which have drained about 30% of FDIC's reserves (Indy Mac's failure alone pulled almost 15%).  Had AIG failed, the remains of FDIC's reserves would have been quickly exhausted (covering insured deposits at other banks brought down by AIG), leading to bank runs and further deterioration of the US financial system.  In turn, that lack of confidence in the US financial system would then spread to foreign investors and sovereign wealth funds.  Once that happens and they lose their appetite for US treasuries, the US economic system would look a bit more like that of Mugabe's Zimbabwe.

Very nicely said. 

[makattak]

Here's where I saw that argument:

So far we've seen the failure of about 170 banks which have drained about 30% of FDIC's reserves (Indy Mac's failure alone pulled almost 15%).  Had AIG failed, the remains of FDIC's reserves would have been quickly exhausted (covering insured deposits at other banks brought down by AIG), leading to bank runs and further deterioration of the US financial system.  In turn, that lack of confidence in the US financial system would then spread to foreign investors and sovereign wealth funds.  Once that happens and they lose their appetite for US treasuries, the US economic system would look a bit more like that of Mugabe's Zimbabwe.

Very nicely said. 

Hmm...

http://www.fdic.gov/BANK/HISTORICAL/BANK/2008/index.html

I count 24 bank failures in 2008.

Now, that is a significant increase over preceeding years, but in a mild financial crisis, not surprising.

I wish I could say: I can't believe people are falling for this crap about the "WORST ECONOMY IN SEVENTY YEARS!", but I can.

Most people have no knowledge of the past and no economic training.

This is a MILD financial downturn. The only way it's going to get worse is by screwing around with the economy and trying to "manage" this crisis.

We aren't even NEAR double digit unemployment.

1982, the end of the last major recession caused by money mischief in the 1970's, the unemployment rate was 10.8%

Ten point eight percent.

It is 7.6% right now.

Unless we have a massive contraction of the money supply the economy should right itself fairly soon.

In the 1980s in order to curb the runaway inflation of the 1970's, we had that type of contraction of the money supply. In 1981, the inflation rate was 10.1%. The Fed's actions to lower that rate is what led to the high unemployment rate in 1982. It caused some pain for a while, but the US economy finally got back on its low inflation, low unemployment rate track.

The circumstances to cause that kind of inflation or unemployment do not yet exist. Government removing $1 trillion from the private sector may create those circumstances, though. ("Crowding out" is what happens when the government spends money. This occurs whether the government taxes or borrows to finance their spending- either way the economy has lost the same amount of money- it is now unavailable for private investment.)

[Nitrogen]

You do realise the current way the govt calculates jobless numbers is pretty much male bovine excrement, right?

[makattak]

You do realise the current way the govt calculates jobless numbers is pretty much male bovine excrement, right?

Hmmm....

I checked to make sure but as I see, you're one of the members touting the "science" of global warming.

When I argue against that poor science, I use analysis of their conclusions, data, sampling, or statistical models.

Your argument here is "It's just BS".

Any actual economists you can cite?

I ask because there's a MASSIVE "consensus" on unemployment....

[Nitrogen]

This is one.

I'm at work, but I will find my source for this when time permits.

Basically, the numbers I look at are the BLS U6 numbers that were pretty much deleted from the unemployment numbers.  Clinton did this to make his unemployment numbers look better.

[makattak]

This is one.

I'm at work, but I will find my source for this when time permits.

You mean, the 2001 recession, which had, at its worst, a 6.3% unemployment rate didn't have as many job losses as where we are right now at 7.6% unemployment!?

[Nitrogen]

You mean, the 2001 recession, which had, at its worst, a 6.3% unemployment rate didn't have as many job losses as where we are right now at 7.6% unemployment!?

I trust total job loss numbers more than these "adjusted" unemployment percentages, as the way those percentages are calculated.  Again, i'm no economist, but with what little I know, that's the feeling I get.

[makattak]

I trust total job loss numbers more than these "adjusted" unemployment percentages, as the way those percentages are calculated.  Again, i'm no economist, but with what little I know, that's the feeling I get.

US Population (estimated), 2001: 278,058,881

US Population (estimated), 2009: 305,529,237

Raw numbers have a problem. Care to guess what it is?

[Nitrogen]

Apparently I was wrong about something, I thought how u3 was calculated changed twice since 2000, but I can't find confirmation of that.

[MechAg94]

I think you need to go a lot further back than 1990 to get an objective comparison with past downturns.

[Nitrogen]

I think you need to go a lot further back than 1990 to get an objective comparison with past downturns.

I am curious what the graph would look like if you take 1984 into account.

[Logos]

We should also keep in mind that a lot of people who show up as "unemployed" are doing a couple of small business things off the books and truly do have employment.

That skews the figures in the other direction.

There's quite a lively off books economy going on out there.

[Manedwolf]

We should also keep in mind that a lot of people who show up as "unemployed" are doing a couple of small business things off the books and truly do have employment.

That skews the figures in the other direction.

There's quite a lively off books economy going on out there.

And what do you think might cause that?

Oh, yeah. Raping peoples' wallets if they dare try to make some money with their own hard work.

[Logos]

There are many causes.

All I was addressing is the fact that the shadow economy of off-the-books transactions skews the figures in the other direction.

[roo_ster]

Here is a Pelosi-free chart comparing the relative severity, in terms of unemployment, of the last four recessions:


The only way the current recession becomes a depression is if our gov't works hard and makes it a depression.

No....they better start doing something.....like following people with a clue.  America voted for change.....not the same old Republican plan.

Oh, you think dumping nearly a trillion dollars on the recession is a change from previous administration?

Were you alive & conscious the last six months?

[Nitrogen]

I'm pretty sure that anything before the mid to late 90's and now is comparing apples to oranges, as the unemployment calculation method DID change during Clinton.  Wether it significantly affects the above chart is another matter.

[Waitone]

Two citations which give the nature of suspicion about official federal unemployment statistics.

Discussing latest figures
http://www.marketoracle.co.uk/Article8607.html

John Williams has made a pretty good living second guessing federal economic statistics.  He is the "go to guy" for counter-arguments regarding key governmental statistics.  I find it interesting how the federal government has changed over time how its statistics are generated.  Curiously enough the changes seem to favor the government.
http://www.shadowstats.com/

And here is the unemployment statistics portion of his primer
http://www.shadowstats.com/article/54

[Nitrogen]

As usual, someon else put in much better terms what I was trying to.  That marketoracle article was very good, and very sobering, too.

[De Selby]

Hmm...

http://www.fdic.gov/BANK/HISTORICAL/BANK/2008/index.html

I count 24 bank failures in 2008.

Now, that is a significant increase over preceeding years, but in a mild financial crisis, not surprising.

I wish I could say: I can't believe people are falling for this crap about the "WORST ECONOMY IN SEVENTY YEARS!", but I can.

Most people have no knowledge of the past and no economic training.

The guy who posted that is on wall street dealing with this right now.

Most economists did not warn their clients about the crash that was coming...might want to remember that when you rely on the "science" of economics to formulate your theories about how the economy is actually doing.

[Jamisjockey]

The economy is so bad and this recession is so awful that our company had an 11% profit increase this January over last January.

[makattak]

The guy who posted that is on wall street dealing with this right now.

Most economists did not warn their clients about the crash that was coming...might want to remember that when you rely on the "science" of economics to formulate your theories about how the economy is actually doing.

First of all, economists tend not to have "clients." Stockbrockers do.

Secondly:

http://online.wsj.com/article/SB1014169323358510560.html?mod=Extra

http://online.wsj.com/article/SB109684359646434797.html?mod=Extra

http://online.wsj.com/article/SB1016494105312486320.html?mod=Extra

As an example of economists warning of the problems that led to this crisis. (I chose Fannie Mae, economists have been warning about derivatives since the 90's)

Third, what does it matter what we economists say? People won't listen to economists.

(Edit: For example, http://townhall.com/columnists/PatrickJBuchanan/2009/02/10/buy_american_--_or_bye-bye_america
Economists have been fighting for free trade for 232 years- which, not coincidentally, is as long as the study of economics has existed.)

[Manedwolf]

The economy is so bad and this recession is so awful that our company had an 11% profit increase this January over last January.

Our last quarter was awesome. I am getting angrier every day with Obama talking down the economy like this.

[Racehorse]

Our last quarter was awesome. I am getting angrier every day with Obama talking down the economy like this.

He needs a depression to be able to fully implement his socialist policies. If there isn't one available, he'll do his best to create one.