I wonder why so many self-described citizens of the "reality-based community" — generally, the "progressive" left — remain so stubbornly blind to the reality of the current downturn, as explained today by Alan Reynolds. Here's a sample paragraph:
With one exception – the steep 45 percent drop in the S&P 500 stock
index since October 2007 – few other indicators of economic distress
could support this being the worst postwar recession. Thanks to low
inflation, for example, real disposable income rose every month during the fourth quarter – at an annual rate above 6 percent.
index since October 2007 – few other indicators of economic distress
could support this being the worst postwar recession. Thanks to low
inflation, for example, real disposable income rose every month during the fourth quarter – at an annual rate above 6 percent.
Share
{ 6 comments }
In my humble opinion, neither side in this economic stimulus debate really knows what they're doing. This issue is too complex. It is also interconnected with the economies of other nations, over which we have no control. To fix most things, you have to put it in a state of suspension, at least for a short period of time. The economic is constantly in flux, and waits for no one or nothing. If we as a society actually knew what worked, and could establish a cause and effect relationship with any certainty, we would have done it by now.
A question: With the fed keeping the benchmark rates so low and the dollar dropping, aren't we sort of keeping inflation artificially low? The idea is to keep inflation low long enough that we can allow the "recovery" to absorb interest rate hikes, but doesn't that just prolong the recession and slow the recovery? (Sort of a "We can press in on the balloon in one spot, but it will expand in other directions." kind of argument?)
Because they are looking for proof that capitalism is broken and want to move to a socialist system.
This isn't about the facts, it's about the agenda.
Reggie,
"If we as a society actually knew what worked…"
"Society" will figure out what works. The trick is to get the people who think that they are society to stop screwing around.
real disposable income rose every month during the fourth quarter
Yes. Let me think… when was the last time that deflation outran declining employment, so that real income rose even as the economy shrank? Sometime in the early 1930s?
I've heard other arguments about how things aren't really that bad, but they're almost all based on a grabbag of statistics we've collected *to this point* and not on any sort of effort to figure out how this plays out going forward. If existing exposure to bad suprime mortgage debt was enough to drive many banks to their knees, what happens when the same story plays out in commercial real estate and the corporate bond markets? What happens when the shock of unemployment combined with the moral hazard that delayed foreclosures bring results in a second, more devastating round of mortgage defaults? How will the mountain of debt that has been created be unwound?
Regarding bbartlog:
The mountain of debt will not be unwound by Treasury TARP schemes intended to push banks to lend more.
The last "devastating round of mortgage defaults" was highly concentrated in four states, as were the biggest home price declines and the biggest percentage of underwater mortgages. The data are in The New York Post Feb. 22.
Yes, the future is always uncertain (things could get better or worse), but that's no excuse for not revealing the facts we have right now.