Economy shrinks...

[Larry Gude]

...call me shocked. Not.

GDP Shows Surprise Drop for US in Fourth Quarter

The U.S. economy posted a stunning drop of 0.1 percent in the fourth quarter, defying expectations for slow growth and possibly providing incentive for more Federal Reserve stimulus.

In that single sentence lies both the problem and the solution.

No one, NO ONE should be shocked the economy is sucking. It has been sucking, it is sucking and it will continue to suck because we've fixed NOTHING.

Not TARP, not bailouts, not Stimulus, not Obamacare. NOTHING. Every single one of those things did not and can not improve the economy because they are political machinations, not sound economics.

We will not, we can not recover unless and until energy costs come down, WAY down and debt is written off. HUGE write offs.

I've been saying it because it is simple. And it's the truth. It's like we've been standing next to a blast furnace in the middle of Antarctica and the fuel is sputtering out and we're shocks, SHOCKED it's so ####ing cold outside.

Better get some more fuel (stimulus) so we can fix it some more!

 

[PsyOps]

Dang it Larry, I know you read this:

http://forums.somd.com/politics/264071-president-obama-s-popularity-surges-3-year-high.html

This just can't be true.

 

[FreedomFan]

we will not, we can not recover unless and until energy costs come down, way down and debt is written off. Huge write offs.

qft.

 

[Tilted]

...call me shocked. Not.

GDP Shows Surprise Drop for US in Fourth Quarter



In that single sentence lies both the problem and the solution.

No one, NO ONE should be shocked the economy is sucking. It has been sucking, it is sucking and it will continue to suck because we've fixed NOTHING.

Did you look at the underlying data to see why GDP shrank? Not that we should need to, it should be fairly obvious.

Therein lies the real story - both big picture and little picture.

 

[tommyjo]

...call me shocked. Not.

GDP Shows Surprise Drop for US in Fourth Quarter



In that single sentence lies both the problem and the solution.

No one, NO ONE should be shocked the economy is sucking. It has been sucking, it is sucking and it will continue to suck because we've fixed NOTHING.

Not TARP, not bailouts, not Stimulus, not Obamacare. NOTHING. Every single one of those things did not and can not improve the economy because they are political machinations, not sound economics.

We will not, we can not recover unless and until energy costs come down, WAY down and debt is written off. HUGE write offs.

I've been saying it because it is simple. And it's the truth. It's like we've been standing next to a blast furnace in the middle of Antarctica and the fuel is sputtering out and we're shocks, SHOCKED it's so ####ing cold outside.

Better get some more fuel (stimulus) so we can fix it some more!

You are absolutely wrong. You are so wrong I do not even know where to start.

There is not one thing in your post that is correct other than the report that the advanced report on GDP was -.01. Of course, if you understood the GDP report you would know that this is only the first of 3 reports. There are two more revisions come. Had you bothered to read the actual report, instead of someone else's politically motivated interpretation, you would see that informaton clearly stated in the 1st sentence of the second paragraph. I wonder how your tune will change if the revisions show small, but positive growth????

You ignore the facts from the report (the report you obviously didn't read)...and only concentrate on the headline number...but I guess that is typical of this site...complain about something without making any attempt to understand the "why" before complaining about the "what".

Your 3rd paragraph shows a complete and utter lack of understanding of where we were in 2008/9, the causes of the recession, the historic precendents of recovery from financial crises and general economic theory as it is being displayed worldwide by different attempts to fight and recover from the crisis.

TARP did its job...could have and should have been designed better, but any, ANY data you look at today CLEARLY shows a SIGNIFICANTLY healthier financial system. You assertion that TARP had no effect is ridiculous...utterly ridiculous. Your assertion that TARP COULD NOT have any effect is beyond ridiculous.

The Stimulus also worked. Study after study has shown this (unless of course you only get your news from FOX--the "news" organization that advocates for the failure of the country so republicans can re-take the White House). Your assertion and the assertion of the far right that spending $800 billion can have no effect is ludicrious. You really think spending $800 billion has zero impact?

Your statement that spending "can not" improve an economy is disproven by both current and historical facts from both here and abroad.

Your constant whinning about energy costs is amazing. Energy costs, both in real and nominal costs are lower than they were 5 years ago. Energy prices are unlikely to drop much lower (why you fail to understand the geopolitical and geoeconomic reasons for this is beyond me)...unless of course we take your other "solution" of " HUGE" write offs.

That would be a wonderful idea if you want to cause another severe recession or a potentially depressionary downward spiral...THEN you could get your low energy prices...and maybe your blessed Republicans could retake the White House...

We did have huge writedowns at the banks back in 2007-2009...don't you recall the impact of that? Or is that just old news and not important anymore? Or is it because those occurred under the Bush adminsitration and they just don't count? Christ...your post is infuriating. You need to read, learn and obtain at least a rudimentary understanding of macro economics before you should post on this topic again.

 

[Gilligan]

Christ...your post is infuriating. .

Just as a friendly aside, sweetie....I've never yet seen anyone post anything that didn't obviously infuriate you.

 

[philibusters]

Did you look at the underlying data to see why GDP shrank? Not that we should need to, it should be fairly obvious.

Therein lies the real story - both big picture and little picture.

My understanding is there would have been a tiny bit of growth as the private sector had a small amount of growth, except gov't decreased spending

 

[PsyOps]

You are absolutely wrong. You are so wrong I do not even know where to start.

There is not one thing in your post that is correct other than the report that the advanced report on GDP was -.01. Of course, if you understood the GDP report you would know that this is only the first of 3 reports. There are two more revisions come. Had you bothered to read the actual report, instead of someone else's politically motivated interpretation, you would see that informaton clearly stated in the 1st sentence of the second paragraph. I wonder how your tune will change if the revisions show small, but positive growth????

You ignore the facts from the report (the report you obviously didn't read)...and only concentrate on the headline number...but I guess that is typical of this site...complain about something without making any attempt to understand the "why" before complaining about the "what".

Your 3rd paragraph shows a complete and utter lack of understanding of where we were in 2008/9, the causes of the recession, the historic precendents of recovery from financial crises and general economic theory as it is being displayed worldwide by different attempts to fight and recover from the crisis.

TARP did its job...could have and should have been designed better, but any, ANY data you look at today CLEARLY shows a SIGNIFICANTLY healthier financial system. You assertion that TARP had no effect is ridiculous...utterly ridiculous. Your assertion that TARP COULD NOT have any effect is beyond ridiculous.

The Stimulus also worked. Study after study has shown this (unless of course you only get your news from FOX--the "news" organization that advocates for the failure of the country so republicans can re-take the White House). Your assertion and the assertion of the far right that spending $800 billion can have no effect is ludicrious. You really think spending $800 billion has zero impact?

Your statement that spending "can not" improve an economy is disproven by both current and historical facts from both here and abroad.

Your constant whinning about energy costs is amazing. Energy costs, both in real and nominal costs are lower than they were 5 years ago. Energy prices are unlikely to drop much lower (why you fail to understand the geopolitical and geoeconomic reasons for this is beyond me)...unless of course we take your other "solution" of " HUGE" write offs.

That would be a wonderful idea if you want to cause another severe recession or a potentially depressionary downward spiral...THEN you could get your low energy prices...and maybe your blessed Republicans could retake the White House...

We did have huge writedowns at the banks back in 2007-2009...don't you recall the impact of that? Or is that just old news and not important anymore? Or is it because those occurred under the Bush adminsitration and they just don't count? Christ...your post is infuriating. You need to read, learn and obtain at least a rudimentary understanding of macro economics before you should post on this topic again.

All you did here was provide your own baseless opinion. Rather than provide any facts to back it up, you simply said, in a whole bunch of words, ‘you’re wrong’.

Why don’t you actually specify these facts Larry left out?

Provide your facts as to how TARP and stimulus actually worked. Show us these studies.

Provide these historical and proven facts that government spending improves the economy.

Show us your stats that energy costs are lower than 5 years ago.

It’s nice to have folks disagree with others, but your biased opinions are worthless unless you can back them up with facts.

 

[itsbob]

All you did here was provide your own baseless opinion. Rather than provide any facts to back it up, you simply said, in a whole bunch of words, ‘you’re wrong’.

Why don’t you actually specify these facts Larry left out?

Provide your facts as to how TARP and stimulus actually worked. Show us these studies.

Provide these historical and proven facts that government spending improves the economy.

Show us your stats that energy costs are lower than 5 years ago.

It’s nice to have folks disagree with others, but your biased opinions are worthless unless you can back them up with facts.

FACTS?? You want FACTS???


This is only the fourth YEAR and you want to talk about FACTS??

 

[itsbob]

GURP!!

That's all I got..

 

[Tilted]

My understanding is there would have been a tiny bit of growth as the private sector had a small amount of growth, except gov't decreased spending

Decreases in government spending - much of it relating to defense - accounted for more than a percent of GDP shrinkage. If we want to decrease government spending, the reality is that that is going to - at least in the short-term - decrease GDP as compared to what it would otherwise be. As fiscal conservatives, this is supposed to be what we want (and not for the perverse reason on display when so many so-called conservatives seem to take delight in negative economic news because they care more about having rhetorical bullets to criticize the President / government with than the economic condition of the nation).

The reality is that we've, over time, developed to a point where government activity represents a large portion of our economy. When we shrink government activity we shrink our economy (in relative terms), even if the private aspects of our economy are strong. I'm in agreement with shrinking government, but I also acknowledge there's a short-term price to pay for doing so. I'm not going to advocate for smaller government and then criticize the government for hurting the economy (in the short-term) when it gives me what I want.

Consumer spending was pretty strong - even stronger than it was in the 3rd quarter. So, yes, you're right about one piece of this, it relates to reductions in government spending. There's also another piece to the story.

 

[bcp]

I still think Im right when I say that corporations are starting to hoard money instead of investing in their business or hiring new employees.
This could explain why stock prices are going up, companies net worth increases as they stop spending and increase actual available cash, and at the same time, that money is for all purposes out of circulation and not being spent by the company or the employees, causing the economy to shrink at the same time the stock values rise.

 

[MMDad]

Decreases in government spending - much of it relating to defense - accounted for more than a percent of GDP shrinkage. If we want to decrease government spending, the reality is that that is going to - at least in the short-term - decrease GDP as compared to what it would otherwise be. As fiscal conservatives, this is supposed to be what we want (and not for the perverse reason on display when so many so-called conservatives seem to take delight in negative economic news because they care more about having rhetorical bullets to criticize the President / government with than the economic condition of the nation).

The reality is that we've, over time, developed to a point where government activity represents a large portion of our economy. When we shrink government activity we shrink our economy (in relative terms), even if the private aspects of our economy are strong. I'm in agreement with shrinking government, but I also acknowledge there's a short-term price to pay for doing so. I'm not going to advocate for smaller government and then criticize the government for hurting the economy (in the short-term) when it gives me what I want.

Consumer spending was pretty strong - even stronger than it was in the 3rd quarter. So, yes, you're right about one piece of this, it relates to reductions in government spending. There's also another piece to the story.

Okay, so at best the economy is anemic. We have tax hikes this quarter. When you take the anemic economy last quarter and couple it with tax hikes this quarter, then add that defense spending has slowed even more, DoD is already laying off and talking furlough, etc....

Any predictions for what we'll see in April for this quarter?

 

[FreedomFan]

The reality is that we've, over time, developed to a point where government activity represents a large portion of our economy. When we shrink government activity we shrink our economy (in relative terms), even if the private aspects of our economy are strong. I'm in agreement with shrinking government, but I also acknowledge there's a short-term price to pay for doing so. I'm not going to advocate for smaller government and then criticize the government for hurting the economy (in the short-term) when it gives me what I want.

Good thoughts. And to steal from Sam Spade in another thread (hope I'm attributing correctly) with respect to libertarian influence, "do they want to make a point or make a difference"?

Which of course brings me to Ron Paul. Having had a bit of time to chew on this, I now realize Ron Paul wanted to make a point (whether or not he could have or would have made a difference is irrelevant for now). I sort of see him has calling his fellow Republicans to the carpet and saying, basically, "Hey. It's great you guys want to call for fiscal conservatism, and smaller government and all that. But has anyone really thought about how we got to where we are today?"

I for one do not call for a return for the gold standard, but when you have a currency backed by a hard commodity like gold, deficit spending is by definition impossible. And THAT is the point Ron Paul was trying to make with respect to government spending. We cannot effectively deal with today's fiscal and structural budgetary problems unless we understand the path we traveled to get here.

Of course this leads directly to Keynesianism and the role of government spending in growing an economy. In short, I simply don't think that government spending, even on infrastructure projects, has the same effect today that it did back then due to the globalization of the economy. I think we need to move in another direction, but this stuff is the bread and butter of an econ Ph.D. today.

 

[abcxyz]

Your assertion and the assertion of the far right that spending $800 billion can have no effect is ludicrious. You really think spending $800 billion has zero impact?

You are correct about that, it had a HUGE impact- about to surpass $16.5T!!

U.S. National Debt Clock : Real Time

 

[FreedomFan]

I still think Im right when I say that corporations are starting to hoard money instead of investing in their business or hiring new employees.

Oh, they most certainly are hoarding money. Corporate balance sheets are as swelled as they have ever been.

But I am not sure I blame them. Cash is king when the economics are uncertain. I am not sure how a CEO or a CFO make a decision to invest in plant and equipment when consumers just aren't consuming. So they either sit on cash or they sit on unsold inventory.

I know what my decision would be.

 

[GWguy]

Well, no kidding. It's been really cold out the past few weeks. You know what happens to things when they get cold.



:majorshrinkage:

 

[GURPS]

Did you look at the underlying data to see why GDP shrank? Not that we should need to, it should be fairly obvious.

Therein lies the real story - both big picture and little picture.

?

all the spending for the election is over ?

 

[Tilted]

I still think Im right when I say that corporations are starting to hoard money instead of investing in their business or hiring new employees.
This could explain why stock prices are going up, companies net worth increases as they stop spending and increase actual available cash, and at the same time, that money is for all purposes out of circulation and not being spent by the company or the employees, causing the economy to shrink at the same time the stock values rise.

Corporations, for various reasons, are indeed holding on to large sums of money. A lot of that money remains overseas and the U.S. government does not want them to bring it here to put it to domestic use (either by distributing it to shareholders who can then inject it into the economy in a number of ways or by the corporations putting it to work themselves). The U.S. insists on sticking with this ridiculous policy of punishing people for bringing capital to the U.S. - it wants to tax them on the money they bring here rather than encourage them to (or just let them) bring it here. We still have this terribly arrogant idea that the U.S. government is entitled to tax income made in other parts of the world - mind-boogling from both an ethical and practical standpoint.

And yes, as I pointed out somewhere else, part of the solid earnings is the result of lowered (relative) costs. Margins have increased in part due to getting more productivity out of fewer employees.

 

[bcp]

Oh, they most certainly are hoarding money. Corporate balance sheets are as swelled as they have ever been.

But I am not sure I blame them. Cash is king when the economics are uncertain. I am not sure how a CEO or a CFO make a decision to invest in plant and equipment when consumers just aren't consuming. So they either sit on cash or they sit on unsold inventory.

I know what my decision would be.

Does it stand to reason that if the corporations sit on the cash, the cash cant be out stimulating the economy?
If a consumer does not have the money, he wont consume, or cant consume I should say.