September 2, 2010

Christina Romer, mystified.

Saying her good-byes.
When she and her colleagues [on the Council of Economic Advisers] began work, she acknowledged, they did not realize "how quickly and strongly the financial crisis would affect the economy." They "failed to anticipate just how violent the recession would be."

Even now, Romer said, mystery persists. "To this day, economists don't fully understand why firms cut production as much as they did or why they cut labor so much more than they normally would." Her defense was that "almost all analysts were surprised by the violent reaction."
Yes, we've noticed that every damned thing that happens is declared "unexpected."
That miscalculation, in turn...
What miscalculation?
... led to her miscalculation that the stimulus package would be enough to keep the unemployment rate from exceeding 8 percent. Without the policy, she had predicted, unemployment would soar to 9.5 percent. The plan passed, and unemployment went to 10 percent.
Unexpectedly and mystifyingly, it was quite a surprise.
No wonder most Americans think the effort failed. But Romer argued, a bit too defensively, against the majority perception. "As the Council of Economic Advisers has documented in a series of reports to Congress, there is widespread agreement that the act is broadly on track," she declared. 
The act is broadly on track is a helpful thing to believe if you want to experience every bit of bad news as a surprise.
Further, she argued, "I will never regret trying to put analysis and quantitative estimates behind our policy recommendations."
What?! I guess Romer, writing her speech, didn't predict the embarrassing ways those words would could be read. Surprise! Among the negative interpretations available for those words are: 1. They started with the policy preferences, then rustled up the numbers to support it, and 2. They had to choose what to put first, policy choices or professional analysis, and they chose policy choices.
But the problem is not that Romer did a quantitative analysis; the problem is that the quantitative analysis was wrong.
Well, if you did the quantitative analysis in order to support the policy preference you put first, then it's not... surprising that that your quantitative analysis was second-rate.

161 comments:

Dust Bunny Queen said...

We keep telling them what the problem is......they won't listen.

GMay said...

"Well, if you did the quantitative analysis in order to support the policy preference you put first, then it's not... surprising that that your quantitative analysis was second-rate."

Gosh, and what was that other really big global economy-changing issue that used data to support a policy preference?

Keynesian Economics and AGW. Like peas in a pod.

shoutingthomas said...

The solution, Obama idiots, is Reganomics.

Cut taxes.

Reduce government spending.

It worked. Quit trying to re-invent the wheel. It will work again.

ironrailsironweights said...

Economists have successfully predicted 12 of the last 10 recessions.

Peter

Shanna said...

To this day, economists don't fully understand why firms cut production as much as they did or why they cut labor so much more than they normally would."

Things don't happen in a vaccuum. The administration passed more than the "stimulus". Other things happened that have an effect on what business chooses to do. Buy a clue, lady.

LarsPorsena said...

A trillion dollars goes ..POOF!!

"1. They started with the policy preferences, then rustled up the numbers to support it, and 2. They had to choose what to put first, policy choices or professional analysis, and they chose policy choices. ...

The best analysis you will never see in the MSM.

traditionalguy said...

She is eligible to head the National Health System...it takes lots of well meaning mistakes from people like her to smash a free people under the treads of a government monopoly on everything, for their own good.

TMink said...

So she is either an idiot or a liar.

Your votes?

I vote idiot.

Trey

DADvocate said...

With a brain like this no wonder Obamanomics is failing. Refuses to see what it in front of her face, like most libs in this case.

garage mahal said...

When you're handed an economy dropping -700k jobs per month, and Wall Street on fire, you need to do nothing but cut more taxes! That will help the deficit too.

Pogo said...

"To this day, economists don't fully understand why firms cut production as much as they did or why they cut labor so much more than they normally would."

Yes, when you
1) vilify businesses and profits
2) change the rules of business
3) nationalize some industries like in Cuba or Venezuela
4) massively increase taxes
5) massively increase business health costs
6) massively increase business documentation requirements
7) demand to set payscales for private businesses

...it is just soooo amazing and unexpected that firms cut production and labor so much more than they normally would.

A complete surprise, except to those who warned about it, but a surprise nevertheless.

AJ Lynch said...

Ms. Romer- it's all sbout CONSUMER CONFIDENCE which Obama and his brilliant Team of Rivals have destroyed.

jr565 said...

The problem with the stimulus bill is that the only thing stimulating about it is the word stimulus in the bill. Opponents of this pointed out at the time that if Obama wanted to stimulate the economy the bill should do things like actually stimulate the economy and not be a boondoggle of giveaways to unions and things that do not produce economic stimulus.
But no, Obama won and the dems had no problem shutting up and shutting down the opposition, and any such criticisms were simply racism straight up anyway. So now the dems own this "stimulus bill", and because it's the democrats we have to keep hearing how any non stimulus is "unexpected". Only to idiots.

Scott M said...

The act is broadly on track is a helpful thing to believe if you want to experience every bit of bad news as a surprise

Exceptionally well put.

Robin said...

The only things Obama successfully stimulated were guns and ammo sales.

SteveR said...

In the midst of all these unexpected events we can confidently expect two things: First they will henceforth and forever more say it would have been worse had they not acted Secondly the majority of the media will let them get away with it.

Pogo said...

When the state begins to decide the winners and losers in a market, all innovation ceases, except that directed at gaining the ear of the prince.

Which is why the richest counties in the USA are now around Washington DC.

Hoosier Daddy said...

When you're handed an economy dropping -700k jobs per month, and Wall Street on fire, you need to do nothing but cut more taxes! That will help the deficit too.

That's interesting garage because you guys kept saying it was Bush economic policies which got us here and those policies tended to be a whole lot of spending and more spending and even more spending. So now your side wins and were spending and spending and spending and...oh yeah its your guys in charge so thats ok.

Lincolntf said...

Obama would give anything to get the economy back to it's condition under Bush, but he doesn't have the brains to do it. After Nov. 2nd, when the country delivers their verdict on Obamanomics, we'll be able to see the light at the end of the tunnel.

chuck b. said...

Economics is harder than law.

Hoosier Daddy said...

garage since you hate tax cuts with such a passion, can you tell me how much of my paycheck I should be allowed to keep?

Also, is there any government program that you think we spend too much money on?

Serious question.

sunsong said...

Could it be that college professors - so-called experts - don't understand business or 310 million individuals?

Christy said...

Do you wonder if that same stimulus may have had a better outcome under McCain? Would investors and businessmen have had more confidence? Isn't this an important part of the recovery? `

MadisonMan said...

Economists were wrong. Who would have thought that might happen!

PatCA said...

I guess The Road to Serfdom is not on her Berkeley reading list for Econ 101.

jamboree said...

I always started with a bare bones end thesis of some kind just to organize my thinking, but remain open. I meander along looking for the truth of whatever-it-is, and inevitably my conclusion is completely different after that process.

They just tried to cram Reality into their model and it failed - as usual. Regular people understand this. What drives me crazy is the academics who think reality IS the model or can be approximated by the model which is cannot - especially in a non hard "science" like economics and policy. (And these are very smart people.)

In a way, I liked her answer as it showed her - and therefore *their* cluelessness which should be on broad display. It's more honest. I think a guy would have covered his butt better with his words, but at the expense of the truth.

Sixty Grit said...

Trey - the two are not mutually exclusive.

WV: rentu - rentu own - cuz u ain't got enough money to buy.

Larry J said...

I saw a comment yesterday and wished I'd thought of it:

"Obamanomics is trickle up poverty."

Unless, of course, you're one of his favored ones (political insiders, public employees, union members), then you'll do quite well. That's the Chicago way.

I'm still looking for evidence that support the claims of Obama's intelligence and ability to govern.

Pogo said...

When Christina Romer stabbed her pet dog 'Brie' several times, to this day she doesn't fully understand why Brie bled as much as she did or why she quit moving as much as she normally would.

Romer stabbed Brie again, and was mystified when Brie died; news which came as a complete surprise.

edutcher said...

They can't understand why it didn't work because, at Haavahd, Communism works and free markets don't. They still believe the New Deal ended the Depression, not WWII.

These people, who think they're so smart have never held a real job. They have no clue how money really works if you aren't on some subsidy or grant.

The only sense Romer seems to have is to leave the sinking ship while there's still room in the lifeboats.

jr565 said...

The problem with the stimulus bill is that the only thing stimulating about it is the word stimulus in the bill.

The stimulus was intended to stimulate the unions and the politicians who were supposed to make sure the welfare vote and the graveyard vote got to the polls. It did about as much for this economy as Willie's bike paths in Sausalito and midnight basketball did in '93.

Turtledove said...

I'm still mystified why anybody voted for these idiots.

GMay said...

garage mahal said: "When you're handed an economy dropping -700k jobs per month, and Wall Street on fire, you need to do nothing but cut more taxes! That will help the deficit too."

Man it gets really tiring schooling you on economics every day. Do you even have the first inkling as to why the economy was doing what it was doing?

downtownlad said...

Actually her quantitative analysis said that a stimulus at least twice as large was needed. And she advocated for that. But she lost that argument to Rahm and Summers, who looked at what was politically feasible (a smaller stimulus). This is all well documented.

She's just being deferential to Obama in this speech. But she's not telling the truth. Even Romer knew that a stimulus twice the size was needed.

Marshal said...

shoutingthomas said...
The solution, Obama idiots, is Reganomics.

Cut taxes.

Reduce government spending."

We need to reduce spending and leave taxes alone. As we're finding out with the Bush cuts reducing taxes leads to higher taxes. Every reduction makes it easier for the Democrats to respond with an increase. And every change, up or down, results in more special interest gimmies.

We need to be convincing that the terms people face when starting a business venture are the same terms they face all the way through.

Richard Dolan said...

"Well, if you did the quantitative analysis in order to support the policy preference you put first, then it's not... surprising that that your quantitative analysis was second-rate."

She was an economist in a political job (like Summers and a long line of predecessors). Is it really a surprise that the "political" tended to trump the "economist" in her public pronouncements? Presumably she was a bit more candid with the WH politicos in private. It would be interesting if anyone could name even one of her predecessors that didn't fit that description.

Joe said...


She's just being deferential to Obama in this speech. But she's not telling the truth. Even Romer knew that a stimulus twice the size was needed.


You mean we should ahve spent 1.6 TRILLION DOLLARS, instead? *WOW* Just *WOW*

info said...

Typical liberal academic response ...CLUELESS...

garage mahal said...

Man it gets really tiring schooling you on economics every day. Do you even have the first inkling as to why the economy was doing what it was doing?

You've yet to school me on anything.

shoutingthomas said...

When you're handed an economy dropping -700k jobs per month, and Wall Street on fire, you need to do nothing but cut more taxes! That will help the deficit too.

Let me explain this to you. It's been done, once in my life by President Reagan, and it worked. I know that such things as whether it works is of little interest to leftists, but I'll try.

Cutting taxes increases the amount of money in the pockets of investors and consumers, which encourages them to spend more on capital investment and consumer products.

Increased business and consumer activity results in increased tax revenues.

Got it?

Bushman of the Kohlrabi said...

The stimulus didn't work because it's main goal was not to help the economy. It was to fulfill a Democrat spending wet dream.

I've listened to Democrats vilify the private sector my whole life. Now the goose is on life support and they have no idea how to revive it. We couldn't be in worse hands.

downtownlad said...

And the smaller stimulus did work partially. After all - the recession is OVER and the economy is growing.

Something Ann will never acknowledge. Her last post on GDP was from Q2 2009 (under Obama) when it shrank. Her prior post before that was from Q2 2008 when she talked about how fast the economy was growing (under Bush).

Ann never posted a GDP number under Bush when it was crashing and she never acknowledge that the economy has started growing again under Obama.

Hoosier Daddy said...

Actually her quantitative analysis said that a stimulus at least twice as large was needed.

That's interesting because George W. Bush stimulted the economy with an extra $5 trillion in additional government spending (hence the doubling of debt) during the course of his regime and I keep being reminded by the left that the recession is Bush's fault.

GMay said...

"Even Romer knew that a stimulus twice the size was needed."

No, she thought it was needed. What we got wasn't even a stimulus, it was a payout. The reason her estimate was doubled is because she's not completely ignorant of how money flows from our government.

I haven't checked in a few months, but I don't think Obama's "stimulus" is even completely spent. It certainly didn't go out to very many useful places at all. Simply doubling down on that is just tripling down on Bush's first misguided attempt at infusing cash.

Pogo said...

Next up, Christina Romer explains how to re-inflate punctured balloons, by blowing twice as hard next time.

GMay said...

garage mahal: "You've yet to school me on anything."

Because you have no aptitude or retention. I'll keep trying though.

When are you going to answer easy questions garage?

TosaGuy said...

"To this day, economists don't fully understand why firms cut production as much as they did or why they cut labor so much more than they normally would."

Perhaps a few more folks on the team who have run businesses could have provided some insight.

Ask a GM or Chrysler bond holder who had their contractually and legally obligated place in line jumped by Uncle Sam and the UAW what they think of the economic policies of the administration. Business rightly saw that the administration was going to arbitrarily change the rules and responded by hunkering down.

Meanwhile, at the individual level millions of middle class people like me are drawing down our spending so we can pay for next year's local, state and federal tax hikes.

ricpic said...

The anti-business set is always surprised that the business set hunkers down whenever the anti-business set gets its hands on the reins of power.

Pogo said...

"After all - the recession is OVER and the economy is growing."

Yes, recovery is "just around the corner".

GMay said...

"Next up, Christina Romer explains how to re-inflate punctured balloons, by blowing twice as hard next time."

That right there is win.

Joe said...

Wow DTL, the economy is growing at an annualized rate of 1.6-2%...thanx for that...unemployment is still nearly 10%, but I guess we know who to thank now.

downtownlad said...

No - the stimulus was only $600 million. I'm not counting the stupid AMT extension, which they extend every year anyway - and will keep extending. That's not stimulus.

it should have been $1.2 trillion. You actually needed a $2.1 trillion stimulus to return to full employment.

That was almost every quantitive model (including Romer's) by every mainstream economist showed.

The media never reported this though (that almost every mainstream economist thought the stimulus was too small), so you only saw one side of the story.

That's what happens when you have a media that is dominated by conservatives.

Enjoy your decade long slump suckers. You deserve it. And you've asked for it.

GMay said...

"Ask a GM or Chrysler bond holder who had their contractually and legally obligated place in line jumped by Uncle Sam and the UAW..."

This pisses me off everytime I even think about it. Flagrant violation of the law and it was barely a blip on the media's radar.

downtownlad said...

It's going to be at 9-10% for a long time. Unless Republicans insist on cutting government spending. Then it will be even worse. Because none of the parties is actually advocating what is needed. A second round of stimulus.

The first stimulus got us from 6% contraction to 2% growth. Not bad. But not enough.

Watch Britian. Their economy is doing ok. But they are about to slash government big time. It won't end nicely. . .

This is standard economics. Not that hard to get right actually.

Bushman of the Kohlrabi said...

I guess we just need to learn how to sit back and enjoy our recovery summer.

downtownlad said...

Somehow Joe thinks if we fired half a million more teachers, 300 thousand cops, 100 thousand firemen and two million "bureaucrats", that the unemployment rate would drop.

Explain the economic theory behind that one . . .

Lincolntf said...

If we had twice the deficit we have now (the immediate and unavoidable consequence of doubling the "stimulus"), the country would be on a direct path to economic collapse. As it is, we're barely hanging on to that precipice Barry was so excited about.
The problem is that we are even buying the notion that "economists" are the ones making all these decisions. Look at Obama's track record. He judges a persons suitability for a post in his Administration based on their ideology, not their competence. It's no surprise that people who have never earned a private dollar or met payroll for a single employee would be so utterly baffled by the basics of commerce.

downtownlad said...

Oh I forgot - the Republican policy is to abolish unemployment insurance. Because the unemployed are just a bunch of lazy bums.

lemondog said...

Rather than academics why didn't Obama add actual business persons to his advisory board?

I believe Roosevelt first started with the academics for advice and finally turned to business.

Business owner commenters here can address this better than I can, but business and the stock market do not like uncertainty.

New broad and expensive legislation, constantly changing regulations, credit crunches, uncertain health care regulations, uncertain tax climate, huge budget deficits and an out of control national debt do not create confidence in future outlook and all contribute to businesses taking drastic action to cut costs to remain in business.

Pogo said...

"This is standard economics. Not that hard to get right actually."

Gosh, if gummint spending grows the economy, why not just print a trilliondy trillion bucks for every citizen and hand it out tomorrow?

It worked for the Weimar Republic, why not us??!

GMay said...

downtownlad said: "The media never reported this though (that almost every mainstream economist thought the stimulus was too small), so you only saw one side of the story."

Where do you get this stuff? You have some sort of cite that backs up your claim, or is this like the IPCC's bogus consensus?

(Again, AGW and Keynesians - peas, pod, and all that)

"That's what happens when you have a media that is dominated by conservatives."

Oh shit, I thought you were making a serious post. Nevermind, you got me.

Good one!

Joe said...


Somehow Joe thinks if we fired half a million more teachers, 300 thousand cops, 100 thousand firemen and two million "bureaucrats", that the unemployment rate would drop.


Funny I don't recall anyone suggesting we fire them or at least that many of them...I mean if they'd take a pay cut and raein in their pension demands we wouldn't have to let any of them go...

Bushman of the Kohlrabi said...

I'm waiting for the accusation that businesses are trying to "destroy the Obama presidency". We're getting close. I expect us to get there soon as the desperation continues to grow.

downtownlad said...

The deficit would not be twice as large. It's 1.3 trillion now. An extra $600 billion over two years would only increase spending by $300 billion and that would generate economic activity, likely resulting in $150 billion in revenue. So it would increase the deficit by $150 billion.

$1.3 billion now vs. $1.45 billion with a stimulus. And long-term rates are at 2.5% so it is very cheap for the government to borrow money.

No - that would NOT bankrupt us or lead to economic collapse. And it would lower the unemployment rate and start to restore confidence, which would enable the economy to grow further and the deficit to come down.

Scott M said...

@DTL

Explain the economic theory behind adding that much more to the debt when we already live far beyond our revenue. Are you of the opinion that we're already fucked as it is so another few hundred billion of funnymoney won't matter?

How do you feel about hyperinflation and the collapse of the t-bill market? The collapse of the dollar?

Lincolntf said...

"It worked for the Weimar Republic, why not us??!"

No fair using historical parallels that none of these pea-brain Libs have ever heard of, never mind studied.

lemondog said...

O/T

Uh....oh......

Coast Guard responding to possible rig blast in Gulf

Scott M said...

An extra $600 billion over two years would only increase spending by $300 billion and that would generate economic activity, likely resulting in $150 billion in revenue. So it would increase the deficit by $150 billion.

"Likely". Unless, of course, something unexpected happens or we get unexpectedly bad news or the economic numbers come back unexpectedly worse than "we" thought they would.

You people never learn. You plan for the best and never want to think about what will happen in the worst-case scenario. Consumer confidence is in the tank right now and there is ebbing demand in a lot of sectors as people hunker down and either sit on their money or pay off existing debt.

We need to be planning for the worst, not trying to reach for the stars with our asses still stuck in the mud.

Fen said...

Business rightly saw that the administration was going to arbitrarily change the rules and responded by hunkering down.

Spot on.

And I don't understand why you guys respond to the Libtards here. Their only purpose is to spike the thread and get you arguing that water is wet.

I just skip them now.

garage mahal said...

shoutingthomas speaking of Reagan..
"Cutting taxes increases the amount of money in the pockets of investors and consumers, which encourages them to spend more on capital investment and consumer products"

You might be interested in this:

It’s conservative lore that Reagan the icon cut taxes, while George H.W. Bush the renegade raised them. As Stockman recalls, "No one was authorized to talk about tax increases on Ronald Reagan’s watch, no matter what kind of tax, no matter how justified it was." Yet raising taxes is exactly what Reagan did. He did not always instigate those hikes or agree to them willingly–but he signed off on them. One year after his massive tax cut, Reagan agreed to a tax increase to reduce the deficit that restored fully one-third of the previous year’s reduction. (In a bizarre bit of self-deception, Reagan, who never came to terms with this episode of ideological apostasy, persuaded himself that the three-year, $100 billion tax hike–the largest since World War II–was actually "tax reform" that closed loopholes in his earlier cut and therefore didn’t count as raising taxes.)

Faced with looming deficits, Reagan raised taxes again in 1983 with a gasoline tax and once more in 1984, this time by $50 billion over three years, mainly through closing tax loopholes for business. Despite the fact that such increases were anathema to conservatives–and probably cost Reagan’s successor, George H.W. Bush, reelection–Reagan raised taxes a grand total of four times just between 1982-84.


link.

downtownlad said...

I believe Pogo was predicting massive inflation after the first stimulus was passed.

How's that prediction working out for you fellow?

here's my prediction. Since the government has now decided to do nothing, we are going to come awfully close to zero growth in the second half of this year. But we won't have a double dip. The economy will be barely better next year as the housing market supply/demand slowly returns to normal. Growth will pick up in 2012. But unemployment will stay high over the next few years and then trend down only slightly. We'll get perilously close to having deflation, but the Fed will do Quantitative Easing 2 which will buffer us a little. If we have deflation - all bets are off - then we are royally fucked for another decade.

And trust me - Republicans will do everything in their power to bring about deflation.

jr565 said...

Robin wrote:
The only things Obama successfully stimulated were guns and ammo sales.

Well that and the thrill that ran up Chris Mathew's leg. At least Chris got a boner out of the deal.

Chase said...
This comment has been removed by the author.
downtownlad said...

Um Scott - YOU caused this disaster by voting for Bush.

I believe he cut taxes - just iike you wanted. And then we had ZERO job growth over 8 years.

The economy is doing way better under Obama than it did under Bush.

Businesses aren't spending because there is no DEMAND. Ever here of DEMAND? Oh that's right - you didn't. Because they don't teach about that anymore.

Marshal said...

DTL says "No - that would NOT bankrupt us or lead to economic collapse. And it would lower the unemployment rate and start to restore confidence, which would enable the economy to grow further and the deficit to come down."

Confidence already seems high in FantasyLand, why do you need a stimulus at all?

Hoosier Daddy said...

Watch Britian. Their economy is doing ok. But they are about to slash government big time. It won't end nicely. . .

I have a better idea. Watch Germany. They did the complete opposite of what Obama did and their unemployment is at pre-crisis levels and GDP is kicking along at 9%.

Again, please explain why an additional $5 trillion in Federal spending under Bush was bad but now its ok under Obama.

Garage is still in school and can't answer obviously. Anyone else?

downtownlad said...

Chase - Clinton balanced the budget by raising taxes. Something that every single Republican in Congress voted against.

Clinton also had his own stimulus as well.

Maybe you need to study economic history a little more.

And Clinton held spending in line too. Something Republicans are incapable of doing (see 2000-2006 when republicans controlled all 3 branches and spending boomed).

MadisonMan said...

I'm still mystified why anybody voted for these idiots.

When --in the recent past -- has their been a non-idiot on a ballot for a position in DC?

Hoosier Daddy said...

I believe he cut taxes - just iike you wanted. And then we had ZERO job growth over 8 years.

The economy is doing way better under Obama than it did under Bush.


Seriously did you move to another country or another parallel universe?

Chase said...

dtl,

where were you on Clinton in 1993-96, when he had no intention of balancing the budget?

Remember the famous TV ad showing Clinton waffling on "I think we can balance the budget in 4 years", "I think we can balance the budget in 10 years", "I think we can balance the budget in 6 years"?

The Democrats - including Clinton - believed the same as this San Francisco Chronicle editorial from 1996:

The administration argued convincingly during the first term that -- while working toward a balanced budget was essential -- a constitutional mandate for a zero deficit could have devastating results, including worsening a recession, forcing extreme spending cuts and tax increases and reducing public investment.

And yet - the exact opposite of what the Democrats and Clinton believed is what actually happened

Clinton was forced into that balanced budget - and the resulting budget surplus Democrats love to bring up at every possible chance - by a Republican controlled Congress.

And Hoosier (above)is right about Germany.

We need a Republican Congress to correct a Democrat President once again.

downtownlad said...

Actually Hoosier Daddy - you are wrong about Germany.

http://krugman.blogs.nytimes.com/2010/08/28/angela-and-the-fifty-hoovers/

And the difference between Bush spending $5 trillion and a stimulus now is very simple. We are at the lower bound, i.e. interest rates are at zero now. It's a completely different world when that happens. We need a massive stimulus to bring back a little inflation so that interest rates can be positive again. We need to get back to the economic world we are used to (5% interest rates, etc.).

When the economy is growing you should run surpluses - not deficits as Bush was doing. That way when there is a downturn, you have room to run deficits.

Obama's stimulus was almost entirely undone by spending cuts at the state level. There really wasn't much of an overall stimulus. In fact, Germany's was larger as my link shows.

downtownlad said...

And much of Bush's $5 trillion is sitting in Iraq and Afghanistan. Not much stimulus here.

Lem said...

When she and her colleagues began work, she acknowledged, they did not realize "how quickly and strongly the financial crisis would affect the economy." They "failed to anticipate just how violent the recession would be."

This could be the Bush people describing the aftermath of the invasion of Iraq.

Interesting intersection.

downtownlad said...

We need a Republican Congress to correct a Democrat President once again.

Oh right - a government shutdown and the unemployment of 4 million government workers will do wonders. Does Ann get laid off too - she's a government worker. . . .

Banning unemployment insurance entirely will do wonders.

Declaring Medicaid and Social Security unconstitutional should do an amazing job at restoring consumer confidence.

Pogo said...

dtl "I believe Pogo was predicting massive inflation after the first stimulus was passed."
You believe a lot of shit, dtl.


"The economy is doing way better under Obama than it did under Bush."
Like that.
You believe a lot of shit, dtl.

Dust Bunny Queen said...

You've yet to school me on anything

Obviously.

That was too easy.

Dead Julius said...

I sold real estate in bubble zone California until 2005-2006 when my customers started to dry up. Everybody knew what was going to happen-- it was just a question of when the big bad bill would come due, not if.

I was reading Calculated Risk and Barry Ritholtz, and both of them accurately detailed the economic fall and the near-term forecast. C.R. is famous for taunting those who claim they were blindsided because they always seem to say "who could have known?". He shortens it up to "hoocoodanode?" It was the mocking battle cry of his blog for a long, long time.

Folks like Christina Romer were picked for political positions because their views could lean in the correct political direction, not their economic ability. They were wrong. And still they resort to crying "hoocoodanode?", apparently without realizing what a pathetic, overused, empty excuse it really is.

GMay said...

downtownlad floated this one by: "Chase - Clinton balanced the budget by raising taxes. Something that every single Republican in Congress voted against.

And Clinton held spending in line too. Something Republicans are incapable of doing (see 2000-2006 when republicans controlled all 3 branches and spending boomed)."


How many fucking times does this lie have to be debunked on this very blog? So much bullshit posted by one person, I only have time to hit the bigger piles:

(DBQ seems to be slacking on this one as of late.)

The President doesn't balance the budget. The President doesn't control spending.

"Maybe you need to study economic history a little more."

You apparently know very little of economic history or basic civics.

09/30/2009 11,909,829,003,511.75
09/30/2008 10,024,724,896,912.49
09/30/2007 9,007,653,372,262.48
09/30/2006 8,506,973,899,215.23
09/30/2005 7,932,709,661,723.50
09/30/2004 7,379,052,696,330.32
09/30/2003 6,783,231,062,743.62
09/30/2002 6,228,235,965,597.16
09/30/2001 5,807,463,412,200.06
09/30/2000 5,674,178,209,886.8
09/30/1999 5,656,270,901,615.43
09/30/1998 5,526,193,008,897.62
09/30/1997 5,413,146,011,397.34
09/30/1996 5,224,810,939,135.73
09/29/1995 4,973,982,900,709.39
09/30/1994 4,692,749,910,013.32
09/30/1993 4,411,488,883,139.38
09/30/1992 4,064,620,655,521.66

For more "Economic History", check out treasurydirect.gov.

Original Mike said...

Even now, Romer said, mystery persists. "To this day, economists don't fully understand why firms cut production as much as they did or why they cut labor so much more than they normally would."

Frankly, I don't believe her. They know. Just like health care (and their health care bill is, of course, a major contributor to our economic doldrums) they didn't care. They were going to do what they were going to do and cross their fingers that the economy would recover anyways.

Lem said...

They were not tax increases garage.. they were revenue enhancements ;)

Shame on you talking about a dead president like that.

Hoosier Daddy said...

Actually Hoosier Daddy - you are wrong about Germany.

http://krugman.blogs.nytimes.com/2010/08/28/angela-and-the-fifty-hoovers/


Um.. no actually I'm right. Krugman has been wrong on well pretty much everything for the last decade.

If Krugman told me the sky was blue I'd still ask for a second opinion.

Lem said...

"We need to padlock the Department of Education and fumigate the place".. Pat Buchanan

I think that still funny btw.

knox said...

Well, if you did the quantitative analysis in order to support the policy preference you put first, then it's not... surprising that that your quantitative analysis was second-rate.

Others have said it already, but it bears repeating. This is exactly how we ended up with the terribly flawed and hysterical "consensus science" behind Global Warming.

Leftists see a way to grab the golden ring, and they'll make up shit if they have to in order to get it. The golden ring being state-run, well, everything.

Hoosier Daddy said...

And much of Bush's $5 trillion is sitting in Iraq and Afghanistan.

Actually it was $708 billion which is less then Obama's stimulus.

Pogo said...

If Krugman told me he was Krugman I'd still ask for a second opinion.

Chase said...

Chase - Clinton balanced the budget by raising taxes. Something that every single Republican in Congress voted against.

Clinton also had his own stimulus as well.

Maybe you need to study economic history a little more.


DTL, my friend, I am nowhere near your economic expertise and background. But, I have had not one but 2 University classes on Clintonomics (both taught by somewhat left-leaning professors).

My view is best summarized by this:
The performance of the American economy under Clinton has also been
far more mixed than is acknowledged by boosters of his ‘Third Way’. GDP growth and productivity gains have not exceeded the performance
of previous presidential eras, even after official statisticians have revised national accounts upwards to reflect putative contributions to growth by
computer technology, and genuine acceleration since 1996. Moreover,
while unemployment and inflation have both fallen, the drop has been
in large measure due to the declining ability of workers to secure wage increases even in persistently tight labour markets. Finally, the real economic
gains of the period have rested on a fragile foundation — a stock
market in which prices have exploded beyond any previous historical experience, inducing an enormous expansion of private expenditure on consumption. But because household incomes have not risen to anywhere near as far as fi nancial asset values, the result has been unprecedented borrowing to pay for the spending spree. The springs of economic growth under Clinton have come from a levitating stock market setting off a debt-financed private consumption boom.



Back to dtl: And Clinton held spending in line too. Something Republicans are incapable of doing (see 2000-2006 when republicans controlled all 3 branches and spending boomed).

Can't argue with you there. However, the majority of House seats held by Dems that are in play are now being challenged by Republicans that are more tea party than Republican Party. And you know as well as I that fiscal policy is their main concern.

What is going on now is a certain recipe for disaster. We need a Congressional change.

downtownlad said...

Romer had run simulations of the effects of stimulus packages of varying sizes: six hundred billion dollars, eight hundred billion dollars, and $1.2 trillion. The best estimate for the output gap was some two trillion dollars over 2009 and 2010. Because of the multiplier effect, filling that gap didn’t require two trillion dollars of government spending, but Romer’s analysis, deeply informed by her work on the Depression, suggested that the package should probably be more than $1.2 trillion. The memo to Obama, however, detailed only two packages: a five-hundred-and-fifty-billion-dollar stimulus and an eight-hundred-and-ninety-billion-dollar stimulus. Summers did not include Romer’s $1.2-trillion projection.

http://krugman.blogs.nytimes.com/2010/08/06/the-defining-moment-2/?src=tptw

That quote above is from October 2009 by the way.

Which proves my point. Romer is just being deferential towards Obama. She knew very well the stimulus was too small and she's lying if she says something else today.

GMay said...

"If Krugman told me the sky was blue I'd still ask for a second opinion."

Hell, if Krugamn told me the sky was blue, I'd believe the sky to be any color but.

downtownlad said...

Tea partiers don't give a rats ass about the deficit. All they want are tax cuts for the rich - deficit be damned. Oh and they want to imprison gay people, kick immigrants out of the country, and repeal the first amendment right to freedom of religion.

downtownlad said...

GMay - What has Krugman been wrong about in the last decade. Name one thing.

He predicted the housing bubble. He predicted that Bush's tax cuts would create a deficit. He predicted that deregulation of the financial industry would ultimately lead to a financial crisis. He predicted that interest rates would decline not increase this year and now he's predicting deflation. He also predicted that Obama's stimulus, as it was too small, would lead us exactly to the state we are in today - subpar growth and structurally high unemployment.

But you don't want to listen to him. Your loss. You could have made a lot of money if you did.

GMay said...

dtl: "Tea partiers don't give a rats ass about the deficit. All they want are tax cuts for the rich - deficit be damned. Oh and they want to imprison gay people, kick immigrants out of the country, and repeal the first amendment right to freedom of religion."

Damnit, I got fooled again.

You're one helluva Moby dude. Take that shit on the road to DU, Kos, or HuffPo. You'll have them eating out of your hand.

You're ready!

Lem said...

Well, if you did the quantitative analysis in order to support the policy preference you put first, then it's not... surprising that that your quantitative analysis was second-rate.

Again..

The left charged that Chaney went looking for non-existing intelligence to justify the invasion of Iraq..

And here is a lefty doing much the same thing?

Hilarious.

Marshal said...

downtownlad said...
Tea partiers don't give a rats ass about the deficit. All they want are tax cuts for the rich - deficit be damned. Oh and they want to imprison gay people, kick immigrants out of the country, and repeal the first amendment right to freedom of religion.

Jesus, what an asshole. On the bright side, you can see he knows the crazy left has lost its influence, and it's driving him nuts.

Chase said...

dtl,

You know that isn't true about tea party people in general - and can we not make this about gaybashing, please?

The commenters here - at least most of them - respect that you are an educated economist, that you are not pulling stuff out of your a**, and that you are simply reflecting your views. As someone who knows how to pour it on in anger, please don't let the trash talk deprive us of your opinion.

I believe the best choices lie somewhere in between your views and those of the - yes majority tea party members.

Caveat - I am not a member of the tea party and do not agree with much of their fiscal policy, frankly, at least what I am able to discern. But I believe that having a tea party Republicna is better than an ineffective, go-along-with-Pelosi vote.

Scott M said...

Tea partiers don't give a rats ass about the deficit. All they want are tax cuts for the rich - deficit be damned. Oh and they want to imprison gay people, kick immigrants out of the country, and repeal the first amendment right to freedom of religion.

...and then you jumped yon shark. I don't know any rich tea partiers. In fact, the few rich people I do know (small business owners) are two die-hard republicans and one die-hard democrat. They are all somewhat bemused by the success so far that the tea party has been able to achieve.

The tea partier's MAIN THRUST is fiscal. In fact, if they succeed in taking over the GOP from within, it will be the end of the social conservative's hold on the party. This is net-good for the entire country. As to your other misunderstandings, you're of course welcomed to them, however petty and wrong they may be.

downtownlad said...

Tea partiers don't favor a $3 trillion extension of tax cuts for the rich? Really?????

The Republican platform of Texas doesn't cause for making gay sodomy illegal and punishable by jail terms?? Really????

The tea partiers don't want to kick immigrants out of the country? Really????

The tea partiers favor the right of Muslims to build a muslim community center on private property in downtown Manhattan? Really????

downtownlad said...

The tea partiers ARE social conservatives you dumb fuck.

Pogo said...

dtl flailing about; not a pretty sight.
Ick.
Like watching Krugman double down, or Gore demand his chakra released.

Calypso Facto said...

Romer lied, the economy died.

downtownlad said...

And tea partiers ARE wealthier than average americans. And they favor tax cuts for the rich, vehemently favor tax cuts for the rich, because Fox News (owned by billionaires) has told them to think that way.

And tea partiers are easily brainwashed and not really able to think for themselves.

Look at how Fox News has brainwashed the publisher of this blog.

But brain cells get soft when you get old. So not surprising.

Lincolntf said...

I love people giving Clinton credit (and Bush blame) for the economy. Bill C. and the Dems deliberately engineered the system that produced the massive collapse in housing prices and led to foreclosure on millions of Americans. Those of us who understood basic economics back when the the "Community Reinvestment Act" was being smuggled through Congress were called racist for pointing out the inevitable failure of the scheme. Jesse Jackson was in high dudgeon over the "red-lining" practices he claimed were preventing blacks from owning homes at an identical rate to whites. All of those families disrupted, lives ruined, and properties lost are a direct result of the ignorance and rigid ideology that characterizes all Lefty economics.

downtownlad said...

As I said - Pogo predicted massive inflation this year.

Where is it?

Would be so much fun to dig up comments from Pogo to show how massively wrong he is.

Can't do that with me. My predictions have been spot on.

Lem said...

Speaking of Hillary (hilarily)

Remember the much laugh at 3 am phone call commercial by Hillary..

Well it looks like Obamas people cant even pick up a 3 pm phone call.. let alone...

There goes photo op Obama, shaking hands with the Israeli PM and the Palestinian mujahideen, just because they promised to start talking again for the 3,457th time?

I dont get it.

Freeman Hunt said...

Gee, you'd almost think an economy couldn't be planned.

GMay said...

Let me help you hone those Moby skillz dtl.

dtl asked: "GMay - What has Krugman been wrong about in the last decade. Name one thing."

I'll name a few for ya Tiger!

"He predicted that Bush's tax cuts would create a deficit."

No, Bush's increased spending exacerbated the existing deficit. Actually it also exacerbated the issue because you can cut taxes and keep spending at the same level and still achieve growth.

(Then again, I already corrected you about who controls government spending. Look at who's controlled congress and how much spending increased toward the end of Bush's 2nd term. Go ahead, scroll up, the data is there.)

That's one.

"He predicted that deregulation of the financial industry would ultimately lead to a financial crisis."

It contributed, but did not lead to it. What led to it was government involvement in the mortgage industry. Then home buyers making dumb choices, and then questionable derivatives.

That's two.

"He predicted that interest rates would decline not increase this year and now he's predicting deflation."

Can you explain to me how interest rates work? (We'll come back to this if you choose not to ignore it too)

"He also predicted that Obama's stimulus, as it was too small, would lead us exactly to the state we are in today - subpar growth and structurally high unemployment."

Unemployment has fuckall to do with the stimulus. Just because "Krugman says so" doesn't mean it's true. Care to explain this one in a little more detail?

Ok, so I named two right off the bat, from your examples even, with two on hold getting ready to add to the count.

Ok, I answered your questions, you can answer mine now. Unless you want to pull a garage, or Alpha, or FLS and just duck the thread when your argument starts to come unravelled.

traditionalguy said...

Lem...The show negotiation is a trap for Netanyahu to surrender the rule of Jerusalem to a proposed international Peace Force or be abandoned by the USA now instead of later.

Lem said...

Gee, you'd almost think an economy couldn't be planned.

Maybe her predictions were based on a five year plan.

Scott M said...

Unless you want to pull a garage, or Alpha, or FLS and just duck the thread when your argument starts to come unravelled.

Actually, from what I've noticed recently, FLS has been tacking a bit right of left and seems to be as engaged as anyone else hearabouts in direct back and forths.

GMay said...

"Actually, from what I've noticed recently, FLS has been tacking a bit right of left and seems to be as engaged as anyone else hearabouts in direct back and forths."

I thought that too a little while back, but the last week or so he seems to be falling back into the same old patterns.

Lem said...

Five-Year Plans for the National Economy of the Soviet Union.. for the young people in our community of commenters ;)

Dead Julius said...

What has Krugman been wrong about in the last decade.

Krugman was wrong in claiming that Keynsian stimulus makes sense in today's world. In the early part of the last century, it might have made sense to spend money to keep "skilled" mostly-unionized "middle class" people employed, and it might have been more easy to do without encouraging corruption.

But now those "skilled" mostly-unionized "middle class" people need a new line of work, not a new job. And money thrown in their direction is intercepted by K Street and directed toward the politically-connected. Note, for instance, how well public employees are doing compared to private-sector workers... and in particular how secure their pension money is compared to everyone else's.

For instance-- why didn't the stimulus money go to ensuring Korea-quality internet access for all of urban and suburban America? We could (mostly) all have fiber-optic 50Mbps connections, and that would be a great basis for future economic growth. Even net neutrality wouldn't matter anymore with a pipe that fat. Other countries are doing it.

But no, sadly no. Instead Krugman and his cronies insisted that the stimulus be directed like it were 1935. Public projects of roads and policemen, and shoring up the retirement accounts of those essential public-sector people (who reliably vote Democrat!).

In short: Krugman hates technology and loves the public-sector worker and loves giving the public-sector worker a political payoff.

Lem said...

Lem...The show negotiation is a trap for Netanyahu to surrender the rule of Jerusalem to a proposed international Peace Force or be abandoned by the USA now instead of later.

I didnt mean to go off on a tangent, but again.. all of these examples go to show amateur hour at the White House.

Roux said...

" A physicist, a chemist and an economist are stranded on an island, with nothing to eat. A can of soup washes ashore. The physicist says, "Let's smash the can open with a rock." The chemist says, "Let's build a fire and heat the can first." The economist says, "Let's assume that we have a can-opener..." "

Lem said...

the moderator read a question submitted by a member of the audience: "You seem like you'd be a lot of fun at parties. Are you?"

The economist blushed. "You'll have to just take it for granted," she said
.

There is video of the presentation.

pst314 said...

"Even Romer knew that a stimulus twice the size was needed."

In other words, "We bled the patient and yet he's still sick. Let's bleed him some more!"

Original Mike said...

Krugman: Romer had run simulations of the effects of stimulus packages of varying sizes: six hundred billion dollars, eight hundred billion dollars, and $1.2 trillion. The best estimate for the output gap was some two trillion dollars over 2009 and 2010. Because of the multiplier effect,"

That's when you know you can stop reading the piece. The multiplier effect :rollseyes:

Original Mike said...

" A physicist, a chemist and an economist are stranded on an island, with nothing to eat. A can of soup washes ashore. The physicist says, "Let's smash the can open with a rock." The chemist says, "Let's build a fire and heat the can first." The economist says, "Let's assume that we have a can-opener..." "

Actually, I believe the physicist would say, "Don't waste your energy. The can's empty."

Chip Ahoy said...

A stranded dtl would say, "lets order 800 billion more cans of soup delivered to this island and let somebody else's kids and grandkids worry about paying for it."

edutcher said...

downtownlad said...

It's going to be at 9-10% for a long time. Unless Republicans insist on cutting government spending

It's at 22 - 24%. The U-6 (long-term) is 16.5 and there's another 5+ % of underemployed (tracked by FDR) (scraping by with a part-time job when they need a full time one) which this administration counts as employed.

10% would be an improvement.

Chase - Clinton balanced the budget by raising taxes. Something that every single Republican in Congress voted against.

The Hell he did. He cut the military by 40% to give the Lefties a 'peace dividend' (stimulus by another name) and was dragged kicking and screaming (and pouting, no doubt) into welfare reform and a balanced budget by Gingrich and a Republican Congress prepared to override Willie's veto.

exhelodrvr1 said...

downtownlad,
"Look at how Fox News has brainwashed the publisher of this blog."

But she voted for Obama.

Pogo said...

"downtownlad said...
As I said - Pogo predicted massive inflation this year.
Where is it?
"

Nah, I complained that socialism would drive the economy into a wall, which happened.

Inflation or deflation, I've seen both discussed since 2008. Both have their fans still. I dunno.

Sorta don't matter when the economy's shit.

PatCA said...

What is a "recession" anyway? A period of slow growth and high unemployment brought on by any number of causes, including the normal business cycle. This recession was caused by government mismanagement of the housing markets.

How in hell can increasing aggregate demand (income redistribution from our grandkids to today's unemployed) even begin to solve that??

And Pogo, I think Brie's death is going to be announced tomorrow: Bad Numbers Coming

E Buzz said...

They had to implement the Keynseian policies so we could find out what was in, uh, them.

AllenS said...

Go ahead, Obama. Announce that you and the Democrats are going to spend another trillion dollars on more stimulus.

Do it for the children.

Comrade X said...

I understand what you're saying dtl. Keynsianism, like Communism, has never really been tried.

Michael said...

Downtownlad: Fox News is owned by NewCorp which is a publicly owned and traded company. A billionaire may own a controlling interest, but if he is so smart and so slick and so rich you have the chance to invest alongside him by buying shares. Unless, of course, you don't believe in making money.

Bruce Hayden said...

And the smaller stimulus did work partially. After all - the recession is OVER and the economy is growing.

Something Ann will never acknowledge. Her last post on GDP was from Q2 2009 (under Obama) when it shrank. Her prior post before that was from Q2 2008 when she talked about how fast the economy was growing (under Bush).

Ann never posted a GDP number under Bush when it was crashing and she never acknowledge that the economy has started growing again under Obama
.

First, and this should be obvious, but recessions end, even if the government doesn't do anything. So, you really cannot say that the stimulus worked because the recession may be ending (or, we may be getting ready for a double dip when the Bush tax cuts expire at the end of the year). You might as well stand on your head and then credit that when a recession ends.

Secondly, this recession was inevitable. The government cannot prevent them, and they are necessary for the health of the economy. There was a huge housing bubble that needed to burst, and a lot of bad loans out there thanks to Dodd, Franks, et al.

Thirdly, you also have to look at which party was in power in Congress, when, because they are the ones who control government spending. And, guess what? For both Bush (43) and Reagan, the times when the economy was not booming happen to coincide with Democrats in control of Congress.

Michael said...

Comrade X: You could ask a couple of hundred million people about the communist experiment if they hadn't been eliminated in its cause or whisked to the gulag.

Bruce Hayden said...

here's my prediction. Since the government has now decided to do nothing, we are going to come awfully close to zero growth in the second half of this year. But we won't have a double dip. The economy will be barely better next year as the housing market supply/demand slowly returns to normal. Growth will pick up in 2012. But unemployment will stay high over the next few years and then trend down only slightly. We'll get perilously close to having deflation, but the Fed will do Quantitative Easing 2 which will buffer us a little. If we have deflation - all bets are off - then we are royally fucked for another decade.

It will be interesting to see how we would get to deflation. The Fed has been printing money like crazy to compensate for reduced velocity, and if, and when, velocity picks up (by banks lending again), they are going to have to suck all that money back out of the system without triggering another recession. Should be interesting.

But I will agree that I don't see much chance for growth for the rest of the year, which should be advantageous to the Republicans come the November elections.

rdkraus said...

There won't be any double dip recession because we've never come out of the first. The Feds borrowing a trillion dollars and spending it gave a false impression that we were recovering. In reality, just kicked the can down the road.

Not surprising. He is Captain Kickass after all.

c3 said...

But the problem is not that Romer did a quantitative analysis; the problem is that the quantitative analysis was wrong.

It must be said, this sounded eerily like what was said after no WMD were found. but everyone believed...

Knowing what you don't know is damned hard!

Bruce Hayden said...

I think what is scary in retrospect were all the liberal economists who were assuming this Keynesian multiplier, or that multiplier. And policy was based on these multipliers. All those jobs "created or saved" were based on these multipliers.

But HTF could anyone halfway connected to reality believe that giving a bunch of government employees raises would stimulate anything. Worse, it ignores that government employees don't create wealth, but rather consume wealth. And now, they make more money (esp. when you include benefits) than their counterparts in private industry. So, we find ourselves taking money out of the pockets of those making much less than the government employees whom are being supported in the style that all of us would like to be supported (but can't be, because our money is going to the government).

Back to Keynesian multipliers. They are based on a manna from heaven theory, that the money just appears like magic. And, it might work for the very short run. But inevitably, recessions last longer than a very short time, and the fiscal spending comes at the expense of the rest of the economy. The money has to come from somewhere, and inevitably, it comes out of the productive sector. And, it inevitably is misspent. Why? Primarily because much of the spending is politically, not economically motivated. But even if it were economically motivated, a finite number of bureaucrats and politicians cannot hope to out-predict the market. Not even close. No matter how many Ivy League degrees they have.

So, what we ended up having was the Democrats not wanting a crises to go to waste, and instead spent money wastefully in order to benefit their primary constituents, at the expense of everyone else. And, they tried to hide that by calling it Keynesian stimulus. But it wasn't Keynesian stimulus, and the real Keynesian multiplier is less than one (likely less than 1/2 for the "stimulus" bill), instead of the predicted 1.5 to 2.

Joe said...

Thank you Bruce Hayden....

madawaskan said...

DTL-

The economy will be barely better next year as the housing market supply/demand slowly returns to normal.

Ghee DTL how many ways has the Obama Administration screwed that up?


The bail out of Freddie and Fannie Mae-which the cost of that to the taxpayer is still unknown?

The tax rebate for home buyers?

[does anyone know what that's going to add up to?]

Then there is this according to nuwireinvestors;

The Federal Housing Agency (FHA) went on making mortgages with 3% down payments when nobody else was, thus very likely landing taxpayers with another bill for some large fraction of $1 trillion.

What do you think all of that did-for the return of "normal" to the housing market?

The Drill SGT said...

Ann,

You missed the best Milbank para:

She had no idea how bad the economic collapse would be. She still doesn't understand exactly why it was so bad. The response to the collapse was inadequate. And she doesn't have much of an idea about how to fix things.

Good description Bruce. The short version of their quant analysis?

1. correlate GDP growth with employment based on past history
2. do some normalization magic
3. Figure out what you want employment to be
4. add that much government spending to the expected normal GDP
5. a miracle occurs

How to prove you saved or created jobs?

6. calculate the GDP cost of each job created
7. take the money spent in the stumulus and divide by the value calculated in step 6
8 declare that number as jobs saved/created.

Ignorance is Bliss said...

downtownlad said...

Watch Britian

Bushman of the Kohlrabi said...

I guess we just need to learn how to sit back and enjoy our recovery summer.

I think the suggestion is more like lie back and think of England

Eric said...

So she is either an idiot or a liar.

Your votes?

I vote idiot.


Nope. She made her academic bones pointing out FDR's programs didn't actually do much to end the Great Depression. She was really the wrong person for the job, in that her academic work doesn't support the president's policies.

I think she believed that, having a title like "economic adviser", people in the administration would actually pay attention to what she had to say. In that she was maybe a bit naive.

Robin said...

downtownlad, it is pretty amusing that you are repeating Krugman's claims about how he predicted more stimulus would be needed.

However, Krugman's claims have been rebutted - Krugman's own columns of the time approved of the magnitude of the Democrats faux stimulus.

Your claims about Clinton's budgets have already been well shredded by GMay.

It is amusing how many things Democrats believe that simply are not so - Krugman's the prime example since he can't even remember his lines from one column to another.

Whiskey Jim said...

If you totally reject Keynes, and instead view the economy as a large complex system which periodically must re-adapt to changing market forces (all exacerbated by the fractional reserve banking multiplier effect) then any stimulus is unlikely to do any good.

Even a well formed stimulus (as opposed to one that shores up medicaire, green energy, and education salaries) during re-alignment of the economy only props up a status quo and prices that will eventually find their new levels. Some of those old jobs and companies will never return.

So why stimulate to preserve a status quo? You just end up poorer when the dust settles. Keynes is dead. The rest of us should be allowed to be free of his ghost. He's haunting us.

ampersand said...

President "Bobby": Mr. Gardner, do you agree with Ben, or do you think that we can stimulate growth through temporary incentives?

Chance the Gardener: As long as the roots are not severed, all is well. And all will be well in the garden.

President "Bobby": In the garden.

Chance the Gardener: Yes. In the garden, growth has it seasons. First comes spring and summer, but then we have fall and winter. And then we get spring and summer again.

President "Bobby": Spring and summer.

Chance the Gardener: Yes.

President "Bobby": Then fall and winter.

Chance the Gardener: Yes.

Benjamin Rand: I think what our insightful young friend is saying is that we welcome the inevitable seasons of nature, but we're upset by the seasons of our economy.

Chance the Gardener: Yes! There will be growth in the spring!

Benjamin Rand: Hmm!

Chance the Gardener: Hmm!

President "Bobby": Hm. Well, Mr. Gardner, I must admit that is one of the most refreshing and optimistic statements I've heard in a very, very long time.

President "Bobby": I admire your good, solid sense. That's precisely what we lack on Capitol Hill.

george said...

Only an economist would be foolish enough to think that economics is a science where you can predict the outcome of massive government intervention in the markets.

It takes a particular type of miseducation to believe such nonsense.

Obama did everything he could possibly do to stick a knife in the economy and then is surprised at the result. The press will cover for him as long as they can just like they covered up the fact that the Dems and their policies caused the mortgage meltdown.

The English had a good idea about sending the dregs of their society to some far away place like Australia. We need some sort of journalist/professor resettlement plan where we send them all to Venezuela to oversee the burgeoning utopia there. I know meth addicts with more common sense than these people.

John Lynch said...

Hey, lots of people fail at predicting the future.

Sometimes reality doesn't make sense. Can someone explain to me why the stock market is doing as well as it is, considering how much smaller the economy is and how many fewer jobs there are?

John Lynch said...

Hey, lots of people fail at predicting the future.

Sometimes reality doesn't make sense. Can someone explain to me why the stock market is doing as well as it is, considering how much smaller the economy is and how many fewer jobs there are?

zombie said...

Everything should be unexpected in the Obama administration. When you ask a community organizer whose only claim to fame is two autobiographies about himself to run the nation, what do you expect?

Bruce Hayden said...

Even a well formed stimulus (as opposed to one that shores up Medicare, green energy, and education salaries) during re-alignment of the economy only props up a status quo and prices that will eventually find their new levels. Some of those old jobs and companies will never return.

I don't think that this can be emphasized enough. One of the reasons that we invariably have recessions is that there is a need to get rid of the deadwood. Resources need to be reallocated towards more productive uses, and recessions tend to do so. Usually.

Most everyone whose salary was supported by the Democrats fighting the recession really needed to have his salary reduced. Ditto for the numbers employed in these areas. This includes the auto workers and the government employees. They were, and continue to, earn more than they are worth, especially when you include benefits.

As for Medicaid, keep in mind that money, especially when the government is involved, is fungible. That means that calling it one thing doesn't really mean that much. It is better to view it as just going into a big pot.

What "supporting" Medicaid did was to free up other money that could be used to hire more government employees at the state and local level, and, even more, give those already employed raises. That was the real intent all along. The Medicaid angle was just cover for paying off the Democrats' most powerful constituency - government employees.

What gave away the game were the official guidelines that giving raises to government employees was to be counted as "jobs saved", despite the fact that none of those government workers would have been the least bit willing to give up their gold plated salaries and benefits in the midst of a major recession, even if they hadn't received those raises.

WarnerME said...

Even now, Romer said, mystery persists. "To this day, economists don't fully understand why firms cut production as much as they did or why they cut labor so much more than they normally would." Her defense was that "almost all analysts were surprised by the violent reaction."

After the slashing and burning that the administration did with the Chrysler bondholders, no business wanted to be in the situation that over took Chrysler .. too little demand, too much supply.
Obama instilled fear into the investment community and the corporate staffs took defense measures like cutting jobs.
Bottomline, the roughshod manner the administration dealt with economic challenges made matters worse.

madawaskan said...

Paul Krugman is Thomas Friedman's beard.

madawaskan said...

The NYT's Tweedles.

jr565 said...
This comment has been removed by the author.
jr565 said...

Eric wrote:
So she is either an idiot or a liar.

Your votes?

WHy not both? After all that was a standard the left applied to George Bush. Not only was he the biggest liar, he was also the biggest idiot. If it's good enough for W it's good enough for Romer and Obama (and did I mention that they are both also the biggest nazis and racists).

jr565 said...

Downtown lad wrote:
"He also predicted that Obama's stimulus, as it was too small, would lead us exactly to the state we are in today - subpar growth and structurally high unemployment


Did you ever think that he was wrong simply because he was expecting a stimulus, the size of which could never possibly be lived up to? Putting us in a hole with half the stimulus is probably going to cause the democrats to lose the house. Imagine if we doubled our debt or tripled our debt (and hey, why stop at double our current stimulus plan, why not ten times more spending? Wouldnt' that lead to ten times more stimulus?)?
In other words, his reasonable proposal was completely unworkable. Why not just have the govt print up all the money we need to pay off our debts, and buy health care for everyone. And while we're add it give everyone a million dollars. That sounds like agreat plan that would solve all our problems. Is that a workable plan?
It would be like those saying we need to cut our carbon emissions to fight global warming and someon proposes that we shrink all our economies and cap our emissions and 10% of what they are now. And, in ten years we get completely off oil and change our economy to run completely on windmills. While that might solve the problem could that ever happen in a real world? (though that sounds awfully close to what global warming zealots are actually proposing).

Andrew_M_Garland said...

Fred: How many stimulus jobs have we created?
CBO: Just a second (runs computer program model) 2,343,458 jobs.
Fred: Did this scan a detailed database of collected information?
CBO: No. It always says that.

CBO Creates Jobs On Paper
03/17/10 - Cato@Liberty - Daniel J. Mitchell [edited]:
========
Doug Elmendorf is Director of the Congressional Budget Office (CBO). He basically agrees with me, that their employment model simply spits out pre-determined numbers, regardless of what happens in the real economy. The CBO recently estimated that so-called stimulus spending generated jobs and growth.

Someone asked if the CBO model would be unable to detect whether the stimulus failed. After hemming, hawing, and a follow-up question, he confessed "that’s right".

(See this at 39:00 on the C-Span video at the link.
========

AMG: Our economic future is being analyzed by CBO models that are entirely theoretical and are not compared to the reality that they are supposed to predict. It is the CBO that "scores" Congressional legislation, telling us what it will cost and how much we will save by "reducing the deficit".

Does this inspire in you a warm feeling of trust?

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