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Title: Please You Kenyan Asshole. Please STOP “Helping” The U.S. Economy
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URL Source: http://ppjg.wordpress.com/2010/08/1 ... -stop-helping-the-u-s-economy/
Published: Aug 10, 2010
Author: Lynn Swearingen
Post Date: 2010-08-10 13:53:00 by no gnu taxes
Keywords: None
Views: 708
Comments: 1
For those of us who have been waiting for the “train” to leave the station on the United States Economy, I’ve got news for you. There is nothing barreling down the tracks waiting to hit the proverbial blockage on the tracks and explode our Economy into the largest Depression ever. Instead, QE2 is waiting at the docks “ready to sail”. “Quantitative Easing” part deux (QE2) was first publicly bandied about in debate last month spurred by St. Louis Fed President James Bullard’s comments: …who suggested the Fed may have to buy more Treasurys as he warned about Japan-style deflation. The idea gained momentum, but expectations for a quantitative easing move at this Fed meeting really took off after Friday’s surprisingly weak July employment report. Actually the debates have been spurred by a paper written by Mr. Bullard titled Seven Faces of “The Peril” in which his comparison of the United States and Japanese economic “similarities and differences” dance around one another in squares and circles with fancy charts, analysis of Seven Case Studies and numerous esoteric comparisons which fill 24 pages of the pdf in a mind-numbing conflagration of confusion. The opening paragraph should advise one of this reality: In this paper I discuss the possibility that the U.S. economy may become enmeshed in a Japanese-style, deflationary outcome within the next several years. To frame the discussion, I rely on an analysis that emphasizes two possible long-run outcomes (steady states) for the economy, one which is consistent with monetary policy as it has typically been implemented in the U.S. in recent years, and one which is consistent with the low nominal interest rate, deflationary regime observed in Japan during the same period. Sprinkled among the pages are little tidbits such as: The idea that U.S. policymakers should worry about the nonlinearity of the Taylor-type rule and its implications is sometimes viewed as an amusing bit of theory without real ramifications. Linear models tell you everything you need to know. And so, from this denial point of view, we can stick with our linear models and ignore the data from Japan, as in Figure 2. and The global economy continues to recover from the very sharp recession of 2008 and 2009. During the recovery, the U.S. economy is susceptible to negative shocks which may dampen inflation expectations. This could possibly push the economy into an unintended, low nominal interest rate steady state. Escape from such an outcome is problematic. Of course, we can hope that we do not encounter such shocks, and that further recovery turns out to be robust— but hope is not a strategy. The U.S. is closer to a Japanese-style outcome today than at any time in recent history. One would think after 932 days of “Obamanese” style governance “officials” would have figured out that policy setting through “Hope” is not a workable concept no matter how many “faces” are placed upon it. A prime example is the latest Obamaistic policysetter head rolling “resigning” after her flawed analysis led to the Administration sticking the proverbial “foot in mouth” on unemployment and the great $800 million dollars Obama Stimulus that would keep the numbers below 8%. Personally I believe she was asked to leave based on a paper co-Authored with her husband released in June in which she states: Our estimates suggest that a tax increase of 1 percent of GDP reduces output over the next three years by nearly three percent. The effect is highly statistically significant. What does that mean in terms that most of us can understand? I turn to this mornings “Seeking Alpha” article in relation to the discussion: In other words, for every dollar of additional taxes that the government collects, there is approximately $3 of lost economic output for the U.S. economy. Oh my. One certainly cannot have the handpicked “Chair of the Council of Economic Advisors” indicating that raising taxes (fees, bailouts, etc.) would therefore depress the Economy even further! And especially not right now. The word about the street is that the QE2 is about to sail. Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011. Even if the QE2 doesn’t pull out of port, there will be some event that sinks the economy. Why? Because our economy operates almost instantaneously through the web. The most profound quote this week comes from Mallory Factor over at Forbes The immediate cause of our demise will be a single event–one of our creditor nations dumping U.S. dollars on the world market, the oil nations switching away from dollar-based contracts, a political crisis, another natural disaster, even a large trading error that inadvertently causes dislocation in our markets. But if the tipping point is reached and the downward spiral begins, our economic collapse will be over before we can take steps to address our weaknesses. One certainly does not need a PhD, an advanced degree in Economic Theory or extensive Financial Experience to piece together and recognize bad economic policy. It is quite easy to dismiss as “denial” or parse the reality of our situation with theoretical concepts that are strung together with just enough glue to carry them to the next “failure point”. At that point more heads roll and the cycle of confusion begins again. If the QE2 is launched (and I’d dearly like to see who is brave enough to christen this one with the proverbial bottle of bubbly at launch) the true QE2 is not even in service. She languishes in Port Rashid, Dubai as she has since March 2010 “awaiting an uncertain future” much as the United States economic stability “awaits” an uncertain future in the hands of inept public officials and our debtors. So please Mr. President – could you please stop “Helping” our economy? Either just deliver the Coup de Grace, issue chains with our stimulus checks, or get out of the way of the People.
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#1. To: no gnu taxes (#0)
So the rest of us are supposed to pick up the fookin tab? If I wanted to live in a socialist shithole I'd move to one!
An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion.
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