[egoldhyip]

What crap.

[gtyruzzel]

Super-Hussein

[BqTyG9eS]

What crap.

See? Republicans like to see their fellow Americans suffer.

You should be happy.

[AAAESLLESO]

Yet more evidence that the stimulus failed.

[Vznvtthq]

The topic of the article itself is obviously uninteresting. The NBER "recession committee" is a backward-looking organization, with more interest in not being wrong than offering timely analysis of the state of the national economy or (gasp) predictions. This is no knock against them; to paraphrase, "there are two types of economists: those who predict the direction of interest rates on TV and real economists".

However, it does provide an interesting place to stop and think about the government's interventions/attempted interventions. I will restrict my discussion to the US economy and the actions of various facets of American government

In order of importance, there's been:

1) TARP/AIG bailout
2) "Quantitative easing" of various flavors
3) Auto bailouts
4) Finreg (to now, the political process leading to it)
5) Standard monetary policy
6) "Stimulus" of various flavors. I include, e.g. the extension of unemployment benefits etc

Some of these are offsetting.

For example, (2) and (5) injected a large amount of capital into banks by driving down the yield of various assets. Through the magic of fractional reserve banking, this turned into a large multiple of the actual cash injected. TARP injected a large amount of capital into all large banks and many smaller banks. Those which were already sufficiently capitalized voluntarily redeemed the additional capital as soon as feasible. Weaker banks retained the capital for longer, and arranged secondary equity offerings in order to eventually the redeem the government's capital. The AIG bailout injected capital into banks which had unhedged counterparty exposure/credit exposure to AIG and may have saved the markets from a systemically critical bankruptcy (I think that far too much has been made of this). (3) was most noteworthy because of the effective expropriation of auto debtholders in favor of less senior claimants (mostly the auto unions). This was a straightforward transfer between one politically favored group (organized labor) at the expense of a group of disorganized/dispersed stakeholders (small investors) and a disfavored group (financial firms of all stripes). A clearer demonstration of classic public choice theory is harder to envision. It also had the effect of tightening corporate credit markets, an effect which is likely to persist long after the current crisis. As far as I can tell, this consideration was independent of the actual bailout (for example, while the government was busy tearing up contracts, it could at least have done so in a way which preserved the priority of claimants while achieving the goal of continuing the Detroit gang as a going concern). (4) has led to increased liquidity preferences in banks (and thus economy-wide), though it's difficult to assign a number here (liquidity preferences had already gone up due to market experiences).

Straight-up "stimulus" is regulated to last place mostly because it's unclear to me if it had any effect at all. I have no way to judge this.

I think the most interesting of these are (2) and (5). The key thing to bear in mind here is how limited the "normal" monetary policy response to macro events is. Quantitative easing is exactly like standard monetary policy except in that it targets variables other than short-term interest rates. Open market operations are open-market operations. And the difference between a repo and a purchase is negligible when you're talking about short-dated Treasury paper (the preferred open-market instrument). Why did it take so long for the Fed to drive down the long end of the yield curve? How ****ing hard is it to go out and buy 2-30 yr treasuries until the yield curve is a flat 1%? How hard is it to go out and sell credit protection on the CDX until spreads hit 75 bps? Bear in mind that you own the ****ing printing press.

The major problem with the attempted monetary policy was a failure of imagination and testicular fortitude.

[Suvuseh]

The topic of the article itself is obviously uninteresting. The NBER "recession committee" is a backward-looking organization, with more interest in not being wrong than offering timely analysis of the state of the national economy or (gasp) predictions. This is no knock against them; to paraphrase, "there are two types of economists: those who predict the direction of interest rates on TV and real economists".

However, it does provide an interesting place to stop and think about the government's interventions/attempted interventions. I will restrict my discussion to the US economy and the actions of various facets of American government

In order of importance, there's been:

1) TARP/AIG bailout
2) "Quantitative easing" of various flavors
3) Auto bailouts
4) Finreg (to now, the political process leading to it)
5) Standard monetary policy
6) "Stimulus" of various flavors. I include, e.g. the extension of unemployment benefits etc

Some of these are offsetting.

For example, (2) and (5) injected a large amount of capital into banks by driving down the yield of various assets. Through the magic of fractional reserve banking, this turned into a large multiple of the actual cash injected. TARP injected a large amount of capital into all large banks and many smaller banks. Those which were already sufficiently capitalized voluntarily redeemed the additional capital as soon as feasible. Weaker banks retained the capital for longer, and arranged secondary equity offerings in order to eventually the redeem the government's capital. The AIG bailout injected capital into banks which had unhedged counterparty exposure/credit exposure to AIG and may have saved the markets from a systemically critical bankruptcy (I think that far too much has been made of this). (3) was most noteworthy because of the effective expropriation of auto debtholders in favor of less senior claimants (mostly the auto unions). This was a straightforward transfer between one politically favored group (organized labor) at the expense of a group of disorganized/dispersed stakeholders (small investors) and a disfavored group (financial firms of all stripes). A clearer demonstration of classic public choice theory is harder to envision. It also had the effect of tightening corporate credit markets, an effect which is likely to persist long after the current crisis. As far as I can tell, this consideration was independent of the actual bailout (for example, while the government was busy tearing up contracts, it could at least have done so in a way which preserved the priority of claimants while achieving the goal of continuing the Detroit gang as a going concern). (4) has led to increased liquidity preferences in banks (and thus economy-wide), though it's difficult to assign a number here (liquidity preferences had already gone up due to market experiences).

Straight-up "stimulus" is regulated to last place mostly because it's unclear to me if it had any effect at all. I have no way to judge this.

I think the most interesting of these are (2) and (5). The key thing to bear in mind here is how limited the "normal" monetary policy response to macro events is. Quantitative easing is exactly like standard monetary policy except in that it targets variables other than short-term interest rates. Open market operations are open-market operations. And the difference between a repo and a purchase is negligible when you're talking about short-dated Treasury paper (the preferred open-market instrument). Why did it take so long for the Fed to drive down the long end of the yield curve? How ****ing hard is it to go out and buy 2-30 yr treasuries until the yield curve is a flat 1%? How hard is it to go out and sell credit protection on the CDX until spreads hit 75 bps? Bear in mind that you own the ****ing printing press.

The major problem with the attempted monetary policy was a failure of imagination and testicular fortitude.

A lot of fancy words for simple concepts... but what is your conclusion? Did any of those government activities serve to turn around economic growth? Were they just mitigating factors to soften the descent for certain politically expedient groups until the business cycle came back around? What? Obviously, this is complex and there's no data in front of you, but what do you think overall with respect to Asher's original post? Did Obama's policies turn around the economy exogenously?

So monetary policy and TARP good... auto bailouts bad... and everything else whatever? Net?

[nikolapegayyyaasss]

A lot of fancy words for simple concepts... but what is your conclusion? Did any of those government activities serve to turn around economic growth? Were they just mitigating factors to soften the descent for certain politically expedient groups until the business cycle came back around? What? Obviously, this is complex and there's no data in front of you, but what do you think?

Is this some kind of joke? Do you often get meaningful responses when you ask for simple answers to questions so complex that nobody understands them?

If you want that kind of discussion, go read Krugman or Russ Roberts (depending on your preferences).

[dmoiknlasd]

You said...

I promise to spend at least 15 minutes crafting an opinion (assuming the topic is at least moderately interesting). I WANT AN OPINION You didn't have to pick a topic this complex

I saw threads about the Philippines sucking and about flights to South Dakota. Maybe that would have been easier for you

[aAaBecker]

For example, my view on QE is an opinion. My view on the aims and effects of the auto bailout's implementation was an opinion. My view on the paucity of data surrounding "stimulus" is an opinion...

[otheloComRole]

Could you please provide examples of the supposed behavior in question? And do you understand that most of what I post is partly ironic and partly genuine?

[domeffire]

(or consumption) tax.

I am not feeling this one but I suppose you already have answers to the usual charges of consumption taxes disproportionally burdening the poor who spend a greater relative percentage of their incomes on consumables and that consumption taxes have a deleterious effect on consumption and instead incentivize saving (although that's probably a wash anyway)?

[MineOffedOvex]

By the way, through a stunningly retarded tax system design, the US manages to have fairly steep marginal tax rates AND fairly flat average tax rates.

Worst of both worlds.

[SaraKonradtt]

If you had bothered to think for yourself instead of listening to the chattering class' analysis of taxation, you would understand that:

1) It is not important whether or not the tax or benefit systems taken by themselves are "progressive" or not. What matters for welfare is their net effect. How much is redistributed and to whom? What are their marginal utilities (you can phrase this in Rawlsian terms if you'd like)? What are the incentive effects.
2) The claim that the poor "consume more" and therefore a consumption tax "hits them harder" is retarded on its face.

Please refer to any of dozens of posts by myself or others on (2)

I take no issue with #1... #2 though... Because savings are deferred consumption which will be taxed at some point... I'd have to mull over this. It can't be that simple.

[7HlBQS8j]

I would love to expropriate all those suburban middle/upper-middle class ****ers (the most pampered demographic around) and take away the mortgage interest deduction, the health insurance exemption and the personal exemption for dependents Oh no! You can't cut MY subsidies!!!

-Arrian

[VoriEremiagem]

I would love to expropriate all those suburban middle/upper-middle class ****ers (the most pampered demographic around) and take away the mortgage interest deduction, the health insurance exemption and the personal exemption for dependents

I agree. In my admittedly uninformed opinion, the government helped bring about the mortgage crisis by getting banks to give out loans to people with bad credit. The health insurance exemption is also where we get **** like dental insurance.

4) I believe in a redistributionist State, an efficient tax and benefit system, and allowing individuals to make their own production and consumption decisions While this isn't strictly economics, it's extremely important to keep in mind the fact that government spending can be government control. Freedom is antithetical to government control. We've seen some rather alarming examples already during the Obama administration, the most recent one being the Dept of Health threatening to essentially force out of business any insurance company that told customers about costs going up due to the healthcare law.

This is one of the reasons Communism and democracy are mutually exclusive. When the guy you vote for is your boss, he can fire you for speaking out.

[Wrencytet]

That's a first.

[VoriEremiagem]

Uhh maybe if we didn't have the health insurance exemption then people would have dental care bundled into their health insurance? I think that's what he means.

is that why vision is also separated? I don't know I always wondered why that was. Dental and vision are so cheap relative to health insurance. I just assumed they were separated because they were more specialist-oriented but I suppose that's not really a good reason since medical insurance period covers specialist visits usually.

[hieklyintinee]

You guys don't have dental bundled in your health insurance??

I didn't. Dental and vision were separate from medical. Dental and vision combined cost me like $1 a week though compared to ~$50 a week for medical All were the best plans my employer at the time offered.

[Pheddytrourry]

BUT YOU PAY MORE IN TAXES!!! you scream!

My marginal income tax rate in Canada is 36%
My marginal income tax rate in the USA would be 35.65% according to this: http://www.smartmoney.com/personal-f...tax-rate-9546/

[i6mbwwdh]

Yes, the hardest part of reading your posts is sifting through the crap.

There is a lot of it...