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Mar 6th 2011, 20:01 by R.A. | WASHINGTON

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bampbs wrote:
Mar 6th 2011 8:19 GMT

The saddest thing of all about the Five Good Emperors is that it was Marcus Aurelius, of all people, who allowed his real son to succeed him, instead of adopting the man he judged would make the best emperor, as his four predecessors had done. But none of them had sons, so it was all no doubt luck far more than wisdom.

bampbs wrote:
Mar 6th 2011 8:41 GMT

That sure is one hell of a set of IMF questions to answer.

So long as economics tries to dodge the centrality of Knightian uncertainty, it will fail to account for change. Equilibrium is a fantasy, and the structure of economic reality in the minds of its actors varies with the speed of thought.

bampbs wrote:
Mar 6th 2011 8:58 GMT

We were doing fine fiscally until the Republican nonsense of tax cuts without the slightest attempt to bring expenditures in line with revenues.

This is not rocket science. This is an irresponsibility unprecedented in US history that has continued since 1981. So long as the GOP rejects tax increases, they are putting ideology - and the raw interests it masks - ahead of the well-being of their country. I used to vote Republican, but I have come to loathe them since 1995; I look forward to their death and replacement by an adult center-Right party.

bampbs wrote:
Mar 6th 2011 9:17 GMT

Lockhart of the Atlanta Fed sounds right to me. Too bad we didn't put a lot of those construction workers unqualified for jobs in healthcare back to work repairing roads and bridges back in 2009.

Higher unemployment than necessary is going to make Fed disengagement from monetary ease more difficult than it had to be.

hedgefundguy wrote:
Mar 6th 2011 10:54 GMT

Yglesias is under the belief that people actually care or count their assets to debts. If this were true, people would curb thier spending when Assets < Debts, and we would have few bankruptcies by individuals.

Up until the Great Recession people kept borrowing and spending, as long as they could make the minimum payments and still enjoy the lifestyle they grew accustomed to.

It wasn't until the Great Recession that the Ivory Tower guys - with much help from media stories - began to dwell on Assets vs. Debts.

Case in point:
A renter buys a $20,000 car. So his assets = debts.
(Sign and drive, no money down.)
But as soon as he drives it off the lot, let's say it asset loses 10%. Does the renter now stop buying things because he's has $2,000 less wealth?

Reality:
A few years back one of the neighbors fell behind in their house payments and it went into forclosure. Why they fell behind I'm not sure, I just followed the court records, but the occupants of the house had newer cars than the rest of us in the neighborhood.

The forclosure process lasted almost 2 years.
They tried the bankruptcy routine during the first 12 months, and I guess they couldn't work out a deal to avoid forclosure.

About 4 months before they lost and were forced to move they bought new furniture from Levin Furniture. I'll guess the furniture store didn't check on thier credit.

So did the loss of wealth stop them from buying more wealth on credit?

Of course, some people will argue that cars and furniture are not "wealth" to begin with. But they are assets and they do depreciate over time, which is something all businesses have to look at when they make purchases.

But that is the difference between businesses and households. Businesses purchase items in order to create more wealth, households spend thier wealth on items that generally don't. (Yes, a car can create wealth by transporting its owner to a job, but a lower priced car will give a better return.)

Regards

hedgefundguy wrote:
Mar 6th 2011 11:24 GMT

Re: Fiscal illusion

Mr. Cowen falls into the same trap, and perpetuates the same myth on Americans as Mr. Yglesias when he writes:

Say that you have $20,000 in Treasury bills. You probably believe that you own $20,000 in wealth. This will encourage you to spend and come up with ambitious plans.

Why would I spend? I have $20k in Treasuries because I didn't spend. So why would I not continue to save and try to get $25k, $30k, $35k....

The problem is that the person (gov't in this case) borrowing is a gun-nut crack addict. They keeps borrowing money in order to buy new guns (military hardware). Sure they borrow to buy other things, but the people I lend money to are flag-waving, pin wearing, gun-nuts. They need to be gun nuts, else they lose thier job - fearful the other candidate will paint them as un-American.

Keynes: "In the long run we are all dead." (People but not the gov't)

Hedgefundguy: "In the long run we are all broke." (Gov't, not the people, because they are dead.)

So now Cowen wants the US to take a page out of the Kirchners' playbook and raid the pensions - Social Security.

Too late! It's already been raided, so let's give the people a haircut. (Now we know how the American Indians feel.)

Sure, right AFTER the Wall Street banks get a haircut on thier pay, benefits, etc.
--

Medicare, fine. The military, fine.
But don't touch Social Security.
Productivity is growing a rate better than the SSTF's dismal forcast.
I would suspect that population growth will be better than the SSTF's dismal forecast.

Under those growth rates, the Social Security Trust Fund will never go broke.

I haven't even looked at the 10 year bond, nor inflation, both used in their "model".
---

See what happens when one starts with a false premise?
They can come up with the answer they are paid to come up with.

Regards

hedgefundguy wrote:
Mar 7th 2011 12:24 GMT

Re: Employment picture

I posted another piece of info - late - under The New Normal blog entry.

Forget Gahdafi, the Bureau of Labor Statistics killed off 326,000 people between the January and February report.

http://www.economist.com/comment/851156#comment-851156

Regards

Mar 7th 2011 3:16 GMT

Nice article by Cowen. Mises used to say that the man in the street is much better at short term thinking than are economists because they're closer to the situation. The economists job is to occasionally persuaded the man in the street to at least consider the long wrong.

So what is the man in the street supposed to do when all of the economists become short term thinkers as well?

Had Keynes been right, then short term spending for the guv would boost wealth that could be taxed in good times and pay down debt. Instead we have found is that the Keynesian multiplier doesn't exist. The guv's spending doesn't boost wealth, though it can boost gdp. So there is no wealth increase to tax during good times. All that happens with the guv's spending is the debt burden grows.

Destroying the economy is a high price to pay to prove a dead economist wrong.

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