Saturday, June 06, 2009

Stimulation? FAIL

The blue lines are White House projections which were used to demonstrate the Wonderful World of Stimulation.
The red dots are.......ahhhh.........actualities.


Deekaman said...

I'm surprised the government and media would report unemployment honestly. With the Obamalove running strongest and deepest in the MSM and a Czar running every aspect of government/private operations, I'd expect something resembling 1984-type double-speak on this one.

J. Strupp said...

The administration underestimated the impacts of financial crisis. Plain and simple. The idea that (6 months ago) the unemployement rate would eventually top out around 8% was insane.

....and that would also be the reason that the administration's stimulus plan ended up being too small in the end.

Likewise, the Obama administration continues to call for a strong recovery in late 2009. This is also insane. Obama needs to stop overpromising people and tell them the truth: The economy will be in bad shape for a long time and recovery will take years to gather any sort of momentum.

Deekaman said...

It's not that it was too small. It was too large. This kind of federal spending is doing npothing to stimulate the economy. Other than taking over banks and automakers, most of the money has yet to be spent. And I can see no tangible benefit to any of it.

Dad29 said...

Evidently, Strupp, you don't plan on being around for long enough to have to pay off the US bonds and notes that Obama's running up...

With the Treasury sucking up investment capital, there WILL be 'crowding out'.

Fed can't monetize forever.

J. Strupp said...


How do you come to the assumption that stimulus is doing nothing when the package is rougly 5 months old and almost no funding has been distributed? Seems like you are running the experiment to fit a conclusion you have already assumed to exist. Saying that government stimulus hasn't worked is premature to say the least.

Dad, I see you are signing on to the popular conservative myth of "Ricardian equivalence". Capital markets are not, and never have been, perfect. Who, exactly, is the government crowding out right now with high unemployement, collapsing consumer demand and massive slack in global output which is currently tracking worse than the first few years of the Great Depression?

I agree that the Treasury cannot monetize forever. So does the market.

Dad29 said...

Struppster, when bond-interest rates rise, it is clearly a signal of one of two things--either the risk is greater than before, or there is less available cash to buy them.

In addition, when USbond prices fall, all corporate bond prices tend to fall, as well.

Maybe it's not 'crowding out,' but it certainly is "pricing out."

J. Strupp said...

I don't disagree with your statements.

However, USbond prices have not fallen off the face of the Earth and, likewise, yields have not blown through the roof. Have they gone up in recent months? Yes. But it's not a cause for alarm at this point in time.