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HomeOur Ongoing Recession
Posted by Larry Doyle on August 31st, 2010 5:56 AM |
I have informed more people than I care to count that I do not believe we are going to have an economic double dip. Am I turning positive on the economy? Do I see blue skies and fair winds on our economic horizon? No, regrettably not. The reason I do not believe we will have an economic double dip is very simply I do not believe that our “real” economy, not the government sponsored version, ever really came out of the initial recession.
People may care to debate or challenge me on my premise, but my ‘sense on cents’ leads me to believe that we have been experiencing one long and ongoing recession. I definitely sense that more people are now coming to accept this reality as well. This ‘walking pneumonia’ economic syndrome is captured in a recent commentary by Rick Davis of Consumer Metrics Institute,
The “Great Recession” that began in 2008 has had many nuances, but among the most important are that many of the observed changes in consumer behavior have begun to linger, much as the recession itself now appears to have done. If a new consumer thrift paradigm becomes endemic — either because of natural demographic processes or scarred generational memories of upside-down loans — the lingering recession might well end up being measured in years, not quarters as commonly expected. (more…)
What Would John Maynard Keynes Do Now?
Posted by Larry Doyle on June 8th, 2010 7:41 AM |
John Maynard Keynes
What now?
As G20 nations around the world retreat from policies of continued coordinated fiscal stimulus, the question begs, what does the future hold for a world awash in crushing levels of overwhelming debt? Is the United States the only nation willing to stick to the script of classic Keynesian economics?
If only we could go back in time and ask John Maynard Keynes, the economic giant amongst economic giants, what he would propose now? Would Keynes stick to his classic Keynesian economics script at this juncture? Could Keynes ever have envisioned a world awash in so much debt? (more…)
Consumer Metrics Institute Projects 3rd Quarter GDP of -2%!! That’s Right -2%!!
Posted by Larry Doyle on June 2nd, 2010 8:25 AM |
Do you hear a grinding sound? Listen a little harder. That sound is the brakes being applied to the U.S. economy.
The current price action in commodities markets (as highlighted in my commentary yesterday, “Commodities Growling Like a Bear”) is very much reflective of this braking process. How do we measure the slowing? Where can we gain evidence? Let’s turn to Rick Davis’ fabulous work at Consumer Metrics Institute.
Recall that Rick has not only been way out in front with his calls on the growth of the U.S. economy, but also very accurate especially given that he is projecting GDP a full 4 months prior to its official release. (more…)
The Reflation Bill Is Outstanding and Growing
Posted by Larry Doyle on April 5th, 2010 11:13 AM |
If we are to believe the markets are predicting a rebound in the economy (I do not blindly accept that to be the case), then it is high time we address the next enormous question facing our country. That is? The bill that has been accruing for the ‘so-called’ saving of our economy.
Whether the economy has been saved or not is a relative question. Please be careful as to how to use that phrase in light of the fact that there are 6.5 million people out of work now for at least 27 weeks (long term unemployed) and close to 17% of our labor force is underemployed.
The biggest question facing our country now is how do we pay for cleaning up this mess that was created over the last number of years? (more…)
The Echo of John Maynard Keynes
Posted by Larry Doyle on November 30th, 2009 1:14 PM |
British economist John Maynard Keynes
When in doubt, increase taxes.
Further taxing of the financial industry seems like an appropriate policy given the bailouts provided over the last few years. Screw Wall Street, right? Yeah, hit them harder!! They deserve it. While I understand and appreciate the current rage directed at the financial industry, increasing taxes strikes me as an overly simplistic answer to a complex problem.
Increasing taxes on the financial industry is not a new idea. In fact, the noted economist John Maynard Keynes promoted this idea back in the 1930s. It was neither put into practice then nor again when resurrected in the 1970s. Will it be implemented currently? Bloomberg addresses this topic in writing, Taxing Wall Street Today Wins Support for Keynes Idea:
John Maynard Keynes proposed a tax on financial transactions in the middle of the Great Depression, and another economist, James Tobin, revived the idea in the 1970s as a way to counter currency market speculation. Neither effort gained much acceptance. Now, a growing number of economists and politicians argue that it’s time for a levy on trading stocks, bonds, currencies and derivatives.
U.K. Prime Minister Gordon Brown said on Nov. 7 that a transaction tax might compensate for the billions of dollars that the public has spent on bank bailouts. Government officials in France, Germany and Austria have voiced their backing. U.S. Treasury Secretary Timothy Geithner answered Brown a day later, saying the tax was not something the U.S. would support. House Speaker Nancy Pelosi, on the other hand, says the idea has “substantial currency” among congressional Democrats.
While on the surface increasing taxes on Wall Street seems reasonable, its success presumes that nothing would change in how Wall Street transacts business. We should not be so naive. (more…)
