Ten Predictions for the US Economy

[QUINNSCOMMENTARY]

Keep this posting and save it for future reference and we can then debate in a few months who was right.

1. The economy left on its own will recover without the massive federal spending we see now, albeit with more pain and a bit slower. (This does not mean that I believe that nothing should have been done, just that it should have been structured differently to focus on the key and immediate issues).

2. The number of jobs claimed to be created by the bill will not occur and in fact the people who made those calculations acknowledge they really don’t know what will happen.

3. The structure of the stimulus does very little in the short run to create jobs or get people to spend within the next six months and thus it will be impossible to differentiate the value of the stimulus from the natural recovery.

4. Many of the spending portions of the bill intended to be one time and temporary will not be and we thus have created a massive increase in the sizes of government and the extent to which the states and individuals are dependent on the federal government.

5. States and towns will face mini crisis in the years ahead as the ongoing costs created by the stimulus become a burden, additional police, new buildings to maintain, more teachers hired, etc. Most of this burden will be in the form of higher property taxes.

6. Interest rates will rise significantly within the next three years both to control growing inflation and because of the massive borrowing by the federal government.

7. The spending in the stimulus is largely focused on areas that are heavily unionized and there should be no mistake that this is payback for union support for the Obama campaign and in anticipation of the next congressional election.

8. Lending will occur when there is sufficient demand from qualified buyers regardless of the amount of money we invest in banks.

9. The tone set by this legislation assures that any hope of transparency or bipartisanship is dead. Stealth legislation will be more the norm.

10. With the massive debt created by this stimulus solving the other major problems facing the country will be that much more difficult in the years ahead.



What say ye?

[Kindle]

Excellent checklist for us to monitor our decline into Socialism.

[mikeinie]

On the other hand:

1. Your bridges are about to collapse because no one has been spending any money on infrastructure.

2. There has been little spending on anything that does not give a year on year growing return on investment.

3. You public schools (in some areas) are in bits.

Maybe it is time that some good old spending happened on fixing things up again so the country will be ready for the next boom.

[spot]

QUINNSCOMMENTARY;1133034 wrote: Keep this posting and save it for future reference and we can then debate in a few months who was right.


1. The economy left on its own will recover without the massive federal spending we see now, albeit with more pain and a bit slower. (This does not mean that I believe that nothing should have been done, just that it should have been structured differently to focus on the key and immediate issues).Umm... I'm sat here wondering what test you'll apply to see whether that prediction came true or not. Can you think of one? I can't.

2. The number of jobs claimed to be created by the bill will not occur and in fact the people who made those calculations acknowledge they really don’t know what will happen.Would you like to put the actual number into the thread so we know what to compare back to? "The number of jobs claimed to be created by the bill"?



3. The structure of the stimulus does very little in the short run to create jobs or get people to spend within the next six months and thus it will be impossible to differentiate the value of the stimulus from the natural recovery.I'm sat here wondering what test you'll apply to see whether that prediction came true or not. Can you think of one? I can't.

4. Many of the spending portions of the bill intended to be one time and temporary will not be and we thus have created a massive increase in the sizes of government and the extent to which the states and individuals are dependent on the federal government.Are you saying more money will end up being sent after some one-time spending portion of the bill, or are you claiming there will be regular budget allocations to follow some one-time spending portion of the bill. There's a big difference.



5. States and towns will face mini crisis in the years ahead as the ongoing costs created by the stimulus become a burden, additional police, new buildings to maintain, more teachers hired, etc. Most of this burden will be in the form of higher property taxes.That's good, it's testable. Make sure you can justify any claim that additional police, new buildings to maintain or more teachers hired are a result of the spending portions of the bill and then show the states and towns are paying ongoing costs to fund them and you have a winner if property taxes go up locally as well.



6. Interest rates will rise significantly within the next three years both to control growing inflation and because of the massive borrowing by the federal government.What's the Federal Reserve interest rate at the moment? Nominally around 0.01%? Can it go negative? No? I think you picked yourself a no-brainer here, there's only one way it can move and that's upward. Would you like to put a number on "significantly" at least or how high "growing" is, to drive it?



7. The spending in the stimulus is largely focused on areas that are heavily unionized and there should be no mistake that this is payback for union support for the Obama campaign and in anticipation of the next congressional election.This one we can test in four years time, presumably. If we can get an acceptable breakdown of union member voting intentions and compare them to last November's.



8. Lending will occur when there is sufficient demand from qualified buyers regardless of the amount of money we invest in banks.I think perhaps you just stated the obvious here. The banks no longer lend to unqualified buyers because the banks want no more toxic mortgages.



9. The tone set by this legislation assures that any hope of transparency or bipartisanship is dead. Stealth legislation will be more the norm.That's US politics in the 21st century for you, nobody's disagreeing.



10. With the massive debt created by this stimulus solving the other major problems facing the country will be that much more difficult in the years ahead.We're back where we started. I'm sat here wondering what test you'll apply to see whether that prediction came true or not. Can you think of one? I can't.

[Kindle]

mikeinie;1133042 wrote: On the other hand:

1. Your bridges are about to collapse because no one has been spending any money on infrastructure.

2. There has been little spending on anything that does not give a year on year growing return on investment.

3. You public schools (in some areas) are in bits.

Maybe it is time that some good old spending happened on fixing things up again so the country will be ready for the next boom.


Yes these things need to be done,

not in stealth,

but in the open manner,

not disguised as "stimulus".

[Galbally]

Its interesting.

You have a test case.

In Ireland we have no money to stimulate our economy, and we cannot afford to borrow money like you can, so we have to face this recession/depression with no money and no stimulus, so you can watch what happens to us and see if you would have been better or worse off withouth the keynesian stimulation package your getting.

To be honest right now, I wish we did have some money to get ordinary hard-working people through the tidal wave thats about to hit them and their nation, but we don't.

Brilliantly, the bit of money we do have, we are busily wasting on trying to prop up failed private banks with taxpayers money.

So its corporate socialism, while the population that pays for this party sees its jobs, pensions, incomes, and savings decimated in our morally, ethically, ideologically bankrupt governments' pursuit of neoliberal market Capitalism off the cliff its fast approaching, its disgusting.

[spot]

Kindle;1133045 wrote: Yes these things need to be done,

not in stealth,

but in the open manner,

not disguised as "stimulus".


Who would ever allow it to be federally funded otherwise? And who allowed bridges and schools to get so run down if not the individual States? There seems little chance of getting local funding for public works on that scale.

[QUINNSCOMMENTARY]

mikeinie;1133042 wrote: On the other hand:

1. Your bridges are about to collapse because no one has been spending any money on infrastructure.

2. There has been little spending on anything that does not give a year on year growing return on investment.

3. You public schools (in some areas) are in bits.

Maybe it is time that some good old spending happened on fixing things up again so the country will be ready for the next boom.


Yes, generally true, but thtat spending needs to come from cutting the massive amount of waste, plus we need to address the issues directly and not bury them into a massive "stimulus" as if we had an unlimited checkbook.

Hey, you forgot that we still have to address both Social Security and Medicare that are on the verge of bankruptcy.

[QUINNSCOMMENTARY]

spot;1133056 wrote: Who would ever allow it to be federally funded otherwise? And who allowed bridges and schools to get so run down if not the individual States? There seems little chance of getting local funding for public works on that scale.


Who allowed the bridges and schools to be run down and who is accountable?

Good questions, the same people who are now in charge of spending nearly a trillion dollars with the same lack of accountability.

I just heard on the radio that a program set up by the federal government two years ago to provide specialized loans to stimulate one thing or another has yet to approve it first loan.

Twenty years ago our utilities began putting hundred of millions of dollars each year dinto a federal fund to be used for the storage of nuclear waste from electric generation, today there is still no place to put it and not one ounce had been moved from the sites at all of our nuclear generating stations.

The simple fact is that by its very nature, government is never the most efficient entity to do anything at any level, but rather is only a necessity to coordinate things that must be done a broad level such as roads, infrastructure, defense and the like. There simply is no accountability and no consequences for failure or inefficiency.

[Bryn Mawr]

Galbally;1133046 wrote: Its interesting.

You have a test case.

In Ireland we have no money to stimulate our economy, and we cannot afford to borrow money like you can, so we have to face this recession/depression with no money and no stimulus, so you can watch what happens to us and see if you would have been better or worse off withouth the keynesian stimulation package your getting.

To be honest right now, I wish we did have some money to get ordinary hard-working people through the tidal wave thats about to hit them and their nation, but we don't.

Brilliantly, the bit of money we do have, we are busily wasting on trying to prop up failed private banks with taxpayers money.

So its corporate socialism, while the population that pays for this party sees its jobs, pensions, incomes, and savings decimated in our morally, ethically, ideologically bankrupt governments' pursuit of neoliberal market Capitalism off the cliff its fast approaching, its disgusting.


We'll have to keep an eye on the amount of EU regional development funding you receive to make sure you aren't getting a back door stimulus :wah:

[spot]

QUINNSCOMMENTARY;1133648 wrote: Who allowed the bridges and schools to be run down and who is accountable?

Good questions, the same people who are now in charge of spending nearly a trillion dollars with the same lack of accountability.Go on, don't stop there. Try to explain why the local responsibility for failure has suddenly become, in your eyes, the responsibility of your new national Democrat Administration. Bridges and schools were city, county and state responsibilities. Cities, counties and states have failed to maintain them - that's the "allowed to run down" bit. If Federal funding can finance mass employment to do the job at a time when private enterprise has no way of employing them then that's a responsible and accountable step to take. Or do you think someone else is magically going to start employing the people or repairing the infrastructure?

I asked a number of questions about your OP, you seem not to want to expand on any of them.

[QUINNSCOMMENTARY]

spot;1133044 wrote: 1. The economy left on its own will recover without the massive federal spending we see now, albeit with more pain and a bit slower. (This does not mean that I believe that nothing should have been done, just that it should have been structured differently to focus on the key and immediate issues).Umm... I'm sat here wondering what test you'll apply to see whether that prediction came true or not. Can you think of one? I can't.

Ah, the test of time as we always recover from these type of events, but the beauty is that we will never know now that we have "stimulated" the economy.

2. The number of jobs claimed to be created by the bill will not occur and in fact the people who made those calculations acknowledge they really don’t know what will happen.Would you like to put the actual number into the thread so we know what to compare back to? "The number of jobs claimed to be created by the bill"?



Depending on the time of day and who is speaking it it between 3.5 and 4 million saved or added, but there is more beauty, how will we know how a job was saved?

3. The structure of the stimulus does very little in the short run to create jobs or get people to spend within the next six months and thus it will be impossible to differentiate the value of the stimulus from the natural recovery.I'm sat here wondering what test you'll apply to see whether that prediction came true or not. Can you think of one? I can't.

That's why it is impossible, but most experts say it will take at least 18 months to get money from the spending on major projects into the economy so by then the recovery will be underway.

4. Many of the spending portions of the bill intended to be one time and temporary will not be and we thus have created a massive increase in the sizes of government and the extent to which the states and individuals are dependent on the federal government.Are you saying more money will end up being sent after some one-time spending portion of the bill, or are you claiming there will be regular budget allocations to follow some one-time spending portion of the bill. There's a big difference.



I am saying that if you have a one time allocation to spend and you spend it on what will be a recurring expense when the money runs out you either have to find more money somewhere or cut the expense you created. In New York City, they typically hire thousands of new police when they have a year with a surplus and then lay them off when they are in a deficit position rather than spending the surplus on a non-recurring item such a infrastructure repair that has a lasting value.

5. States and towns will face mini crisis in the years ahead as the ongoing costs created by the stimulus become a burden, additional police, new buildings to maintain, more teachers hired, etc. Most of this burden will be in the form of higher property taxes.That's good, it's testable. Make sure you can justify any claim that additional police, new buildings to maintain or more teachers hired are a result of the spending portions of the bill and then show the states and towns are paying ongoing costs to fund them and you have a winner if property taxes go up locally as well.



6. Interest rates will rise significantly within the next three years both to control growing inflation and because of the massive borrowing by the federal government.What's the Federal Reserve interest rate at the moment? Nominally around 0.01%? Can it go negative? No? I think you picked yourself a no-brainer here, there's only one way it can move and that's upward. Would you like to put a number on "significantly" at least or how high "growing" is, to drive it?



Well, I am guessing 6-7% eventually.

7. The spending in the stimulus is largely focused on areas that are heavily unionized and there should be no mistake that this is payback for union support for the Obama campaign and in anticipation of the next congressional election.This one we can test in four years time, presumably. If we can get an acceptable breakdown of union member voting intentions and compare them to last November's.

[/

Virtually every union supports the democratic party and unions are strongest in the public sector, especially in the states, in heavy industry and construction. I think this is a no brainer.

8. Lending will occur when there is sufficient demand from qualified buyers regardless of the amount of money we invest in banks.I think perhaps you just stated the obvious here. The banks no longer lend to unqualified buyers because the banks want no more toxic mortgages.



I did, but Congress wants to require banks to lend, if they are good loans why do we have to require them to do anything? Shouldn't we be glad they are acting more prudently?

9. The tone set by this legislation assures that any hope of transparency or bipartisanship is dead. Stealth legislation will be more the norm.That's US politics in the 21st century for you, nobody's disagreeing.



Probably right.

10. With the massive debt created by this stimulus solving the other major problems facing the country will be that much more difficult in the years ahead.We're back where we started. I'm sat here wondering what test you'll apply to see whether that prediction came true or not. Can you think of one? I can't.


The problem of Social Security and Medicare will not be solved and as a consequence the American standard of living will continue to decline as people cope with higher taxes, higher interest rates, higher inflation and the need to save more for their own retirement.

[QUINNSCOMMENTARY]

spot;1133694 wrote: Go on, don't stop there. Try to explain why the local responsibility for failure has suddenly become, in your eyes, the responsibility of your new national Democrat Administration. Bridges and schools were city, county and state responsibilities. Cities, counties and states have failed to maintain them - that's the "allowed to run down" bit. If Federal funding can finance mass employment to do the job at a time when private enterprise has no way of employing them then that's a responsible and accountable step to take. Or do you think someone else is magically going to start employing the people or repairing the infrastructure?

I asked a number of questions about your OP, you seem not to want to expand on any of them.


By the same people I meant government officials at all levels, all political parties and the people who work for them. Many roads and bridges are the responsibility of the federal government in that it provides the funds to the states. Our entire interstate highway system is federally funded.

I am saying that the work created by investment infrastructure will take 18 months or more to get going (not my estimates the government) and thus will have little or no impact on the immediate problem and even when it does it will affect a very small part of the population. The idea was to get the most money into the hands of the most people in the shortest period of time so they can spend.

[spot]

QUINNSCOMMENTARY;1133961 wrote: By the same people I meant government officials at all levels, all political parties and the people who work for them. Many roads and bridges are the responsibility of the federal government in that it provides the funds to the states. Our entire interstate highway system is federally funded.Do you seriously think that the maintenance costs of Interstates is a significant fraction of the maintenance costs of roads and bridges in general? Like, perhaps, even as high as 10%? I'd be amazed if that were true. I'm sure it's checkable.

[Galbally]

spot;1134028 wrote: Do you seriously think that the maintenance costs of Interstates is a significant fraction of the maintenance costs of roads and bridges in general? Like, perhaps, even as high as 10%? I'd be amazed if that were true. I'm sure it's checkable.


The cost of maintenance is known for any large structure for its given lifecycle. So for instance, the maintenance cost of a bridge over say the 70-year lifetime of that structure will be known (as a percentage of the initial cost). Of course over time the figures change because of inflation.

Also of course, you can have misjudged the stresses or problems a structure will face, so for a road for instance you might have built it in 1970, and since then the amount of vehicles on the road is much greater than was anticipated, and of course the weight of individual vehicles is much greater now than in 1970 with the large trucks etc, so you do get costs you didn't expect.

Then there are those once in 70 year events that could badly damage or even destroy a structure, but you can't really engineer for everything, as the Twin Towers Attacks so terribly demonstrated.

Anyway, this is all a bit boring and technical, so back to the philosophical debate with Quinn!

[QUINNSCOMMENTARY]

spot;1133694 wrote: Go on, don't stop there. Try to explain why the local responsibility for failure has suddenly become, in your eyes, the responsibility of your new national Democrat Administration. Bridges and schools were city, county and state responsibilities. Cities, counties and states have failed to maintain them - that's the "allowed to run down" bit. If Federal funding can finance mass employment to do the job at a time when private enterprise has no way of employing them then that's a responsible and accountable step to take. Or do you think someone else is magically going to start employing the people or repairing the infrastructure?

I asked a number of questions about your OP, you seem not to want to expand on any of them.


Much of the funding has always come from the federal government. Much of the stimulus is going to state and local officials who all have long shopping lists and ultimately will spend the money just as they have in the past. I'm not blaming the new administration I am blaming all those in Congress and government who think they can spend money more efficiently than the private section and the fact is they cannot and never have.

[spot]

QUINNSCOMMENTARY;1134703 wrote: Much of the funding has always come from the federal government. Much of the stimulus is going to state and local officials who all have long shopping lists and ultimately will spend the money just as they have in the past. I'm not blaming the new administration I am blaming all those in Congress and government who think they can spend money more efficiently than the private section and the fact is they cannot and never have.


Wherever the Obama Administration allocates public money to the private section, the private section will in my opinion syphon a significant fraction of it to their shareholders and upper management rather than applying it to job creation or the alleviation of public debt. Unlike much of your OP my claim is actually testable.

Surely you recognize by now that "trickle down economics" is a total travesty and most definitely did nothing at all that it was claimed it would do by the Bushites.

[QUINNSCOMMENTARY]

spot;1134707 wrote: Wherever the Obama Administration allocates public money to the private section, the private section will in my opinion syphon a significant fraction of it to their shareholders and upper management rather than applying it to job creation or the alleviation of public debt. Unlike much of your OP my claim is actually testable.

Surely you recognize by now that "trickle down economics" is a total travesty and most definitely did nothing at all that it was claimed it would do by the Bushites.


You know by most standards I was upper management having been and in still am a VP for a Fortune 200 company and it seems to me this talk about upper management and the relative impact their salaries have on the economy and other people is just a tad overdone as populist rhetoric. Surely there are people out there who have been paid far more than they earned or deserve, but that is not the norm and added together all their pay is insignificant in the scheme of things and the economy.

I don't know what you mean by syphon off. Yes, there will be profit and perhaps dividends to shareholders, so what. Millions and millions of people benefit from those things, millions upon millions depend on stocks doing well to fund their pensions.

I am far more worried about the government syphoning off money for the bureaucracy than I would be for the private sector to compete and get things done with some profit motive.

[spot]

There are so many measures over which we disagree. I'd evaluate the wellbeing of a country by the standard of living of its bottom ten percent, for example. Raising that would be the sole and permanent object of any effort I put into economic reform and as it rises so it will bring up the middle bracket in turn, by definition.

I'd happily place a ceiling on wealth and income too. I don't mind whether it's, say, four times higher than that of the lowest ten percent or whether it's ten times. I'd prefer four. All on the basis of justice and nothing else. The capability of a person to generate a high income doesn't correlate in the slightest with his right to enjoy it, if anything (since he's had the pleasure of doing something he enjoyed doing) the reverse would be true.

You want to encourage growth, I want to enforce contraction. I want to minimise consumption and you want to maximize it. We really have very different objectives. You claim to be doing in the interests of all Americans? I'd go further, I claim to be doing it in the interests of humans everywhere including all those in America. You have to bear in mind that, by my earlier definition of wellbeing, the USA is a primitive uncivilized backwater with little prospect of improvement.

Now find me a US political party prepared to implement that and you'll be getting some place worthwhile.

[QUINNSCOMMENTARY]

spot;1135558 wrote: There are so many measures over which we disagree. I'd evaluate the wellbeing of a country by the standard of living of its bottom ten percent, for example. Raising that would be the sole and permanent object of any effort I put into economic reform and as it rises so it will bring up the middle bracket in turn, by definition.

I'd happily place a ceiling on wealth and income too. I don't mind whether it's, say, four times higher than that of the lowest ten percent or whether it's ten times. I'd prefer four. All on the basis of justice and nothing else. The capability of a person to generate a high income doesn't correlate in the slightest with his right to enjoy it, if anything (since he's had the pleasure of doing something he enjoyed doing) the reverse would be true.

You want to encourage growth, I want to enforce contraction. I want to minimise consumption and you want to maximize it. We really have very different objectives. You claim to be doing in the interests of all Americans? I'd go further, I claim to be doing it in the interests of humans everywhere including all those in America. You have to bear in mind that, by my earlier definition of wellbeing, the USA is a primitive uncivilized backwater with little prospect of improvement.

Now find me a US political party prepared to implement that and you'll be getting some place worthwhile.


Sounds like a plan to establish a truly mediocre place to live, little incentive to achieve anything or create progress in any area (and I don't define progress as additional consumption or merely tangible wealth).

[spot]

QUINNSCOMMENTARY;1136147 wrote: Sounds like a plan to establish a truly mediocre place to live, little incentive to achieve anything or create progress in any area (and I don't define progress as additional consumption or merely tangible wealth).


You would, I hope, at least concede that the bottom ten percent would have a better standard of life in such circumstances.

[QUINNSCOMMENTARY]

spot;1136195 wrote: You would, I hope, at least concede that the bottom ten percent would have a better standard of life in such circumstances.


Sorry, no can do. It seems to me that if you lower the overall standard of living, the standard for the lowest income people will be even worse. How are you going to support all the programs targeted at the poor, how are you going to make progress to raise the standard for all?

What you are suggesting sounds a lot like what has been tried in many countries under various names and I am not aware of any that have worked.

The key is opportunity, that is society making sure that each person has a fair and equal chance to achieve what they deem important. Contrary to popular opinion all people are not created equal some have more talent and initiative and are simply smarter and their opportunities which generally benefit us all should be unlimited. That of course, is not to say that the less endowed should be left to fester in the gutter, those that need a helping hand should receive it.

But no matter what any society has done or will do there will always be the bottom, the middle and the top weather measured in wealth, education, status and just about anything else.

Poverty has been around for a very long time and I believe it is not a condition of economics but of the innate structure of humans. In other words, it is an unsolvable problem for all of society because if that was not true surely in the last many thousdnads of years it would have disappeared.