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News & ArtsFriday, August 5, 2011
Panic Here It Comes: The Double-Dip Recession
Posted by Dominic Holden on Fri, Aug 5, 2011 at 2:39 PM
Slog tipper Joe Szilagyi sends this depressing news:
A government official tells ABC News that the federal government is expecting and preparing for bond rating agency Standard & Poor’s to downgrade the rating of US debt from its current AAA value.
While the tea-baggers will be first to claim that this is the predictable result of those tax-'n-spenders who have been, well, taxing and spending, the truth is the opposite. The NYT has calm and rational analysis today on the prospect of a double-dip recession. It's not that we spent too much in the stimulus—it's that we may not have spent enough. Now that Washington, DC's mindset is fixated on cuts to spending and a refusal to consider new revenue, we may not be able to revive the economy. It may be too late.
1
Krugman's the one to watch now more than ever:
To turn this disaster around, a lot of people are going to have to admit, to themselves at least, that they’ve been wrong and need to change their priorities, right away.http://www.nytimes.com/2011/08/05/opinio…
Of course, some players won’t change. Republicans won’t stop screaming about the deficit because they weren’t sincere in the first place: Their deficit hawkery was a club with which to beat their political opponents, nothing more — as became obvious whenever any rise in taxes on the rich was suggested. And they’re not going to give up that club.
But the policy disaster of the past two years wasn’t just the result of G.O.P. obstructionism, which wouldn’t have been so effective if the policy elite — including at least some senior figures in the Obama administration — hadn’t agreed that deficit reduction, not job creation, should be our main priority. Nor should we let Ben Bernanke and his colleagues off the hook: The Fed has by no means done all it could, partly because it was more concerned with hypothetical inflation than with real unemployment, partly because it let itself be intimidated by the Ron Paul types.
Well, it’s time for all that to stop. Those plunging interest rates and stock prices say that the markets aren’t worried about either U.S. solvency or inflation. They’re worried about U.S. lack of growth. And they’re right, even if on Wednesday the White House press secretary chose, inexplicably, to declare that there’s no threat of a double-dip recession.
2
"It's not that we spent too much in the stimulus—it's that we may not have spent enough."
duh.
Duh a thousand times over. Never ceases to amaze me how the republicans get away with calling themselves the party that's good for bizness and the economy. Bunch a clueless freaks who believe in the tooth fairy and free lunch.
duh.
Duh a thousand times over. Never ceases to amaze me how the republicans get away with calling themselves the party that's good for bizness and the economy. Bunch a clueless freaks who believe in the tooth fairy and free lunch.
4
The Republicans have managed to do exactly what they wanted to do all along: slash taxes on the rich and destroy government. Their plan is working beautifully.
6
The old saw goes, "A conservative under thirty has no heart; a liberal over thirty has no brain."
I went through a balanced-budget/the-whole-world-is-better-off-with-unfettered-trade phase in my early twenties, beliefs now long buried. So either I have no heart AND no brain (shaddup!), or it's possible to learn why government deficit spending on things other than wars and featherbedding the richest of the rich is not only morally correct but economically necessary.
I went through a balanced-budget/the-whole-world-is-better-off-with-unfettered-trade phase in my early twenties, beliefs now long buried. So either I have no heart AND no brain (shaddup!), or it's possible to learn why government deficit spending on things other than wars and featherbedding the richest of the rich is not only morally correct but economically necessary.
7
it doesn't matter whether it is too late to turn things around now or not. no matter how much time we have (or don't have) there is absolutely ZERO evidence available that even suggests we will do anything different wo/ another crash. and even then, i wouldn't bet on it.
10
CBC news had a few economists on last night. They gave the US a 50 per cent chance of a double-dip recession.
The drop in bond rating means the Deeply Borrowed Tunnel bond rating will be at a Baa rating instead of our former AAA rating, so add another couple of BILLION dollars to the cost of that, plus the 520 bridge.
The drop in bond rating means the Deeply Borrowed Tunnel bond rating will be at a Baa rating instead of our former AAA rating, so add another couple of BILLION dollars to the cost of that, plus the 520 bridge.
11
the downgrade will occur because
(repeat with us, gang!....)
the Federal Government borrows 40¢ of every dollar it spends!
raising the debt ceiling
so the Federal government can continue to
(repeat with us, gang!....)
borrow 40¢ of every dollar it spends!
won't fix that,
it makes it worse.
the cold hard unpleasant fact is that
spending must be reduce
(unless you Libs grow a brain and half a ball
and decide to tax the Moocher50%.....)
(repeat with us, gang!....)
the Federal Government borrows 40¢ of every dollar it spends!
raising the debt ceiling
so the Federal government can continue to
(repeat with us, gang!....)
borrow 40¢ of every dollar it spends!
won't fix that,
it makes it worse.
the cold hard unpleasant fact is that
spending must be reduce
(unless you Libs grow a brain and half a ball
and decide to tax the Moocher50%.....)
12
no doubt the girls will squeal than the second dip is Bush's....
but the voters will know the truth
but the voters will know the truth
13
So, realistically, what could the average person expect here as far as interest rates go? Let's say that today, a person with decent credit could get a car loan at 0.04%. What would this change for them?
14
Let the downgrade begin!
There's scant evidence that Treasury markets would be affected by S&P ratings.
There's abundant evidence that S&P ratings of public debt are overly pessimistic.
Real interest rates on Treasuries are negative or near-negative; there's no market signal suggesting unsustainable debt.
A downgrade might force many players to buy more T-bills& bonds (to achieve the targeted mix of low-risk and high-yield components in their investment products).
Will public entities lower on the food chain get burned? Maybe yes - or maybe S&P gets laughed out of the court of public (debt market) opinion.
There's scant evidence that Treasury markets would be affected by S&P ratings.
There's abundant evidence that S&P ratings of public debt are overly pessimistic.
Real interest rates on Treasuries are negative or near-negative; there's no market signal suggesting unsustainable debt.
A downgrade might force many players to buy more T-bills& bonds (to achieve the targeted mix of low-risk and high-yield components in their investment products).
Will public entities lower on the food chain get burned? Maybe yes - or maybe S&P gets laughed out of the court of public (debt market) opinion.
15
that the low information voters reps (tea party affiliated house members) have held any sway at all is so facepalming stupid it defies any reality;
then there are the trolls that are so out of touch on financial matters, truly it all does not bode well at all...
astroturfed misinformed rage is not sound fiscal policy.
then there are the trolls that are so out of touch on financial matters, truly it all does not bode well at all...
astroturfed misinformed rage is not sound fiscal policy.
16
It wasn't bad enough the Republicans destroyed the economy the first time. They, of course, never took responsibility for that. But then they stupidly, and because they are blinded by their hate for Obama, caused a second economic crash. And John Boehner is arguably the most hated speaker in the history of this country. Good job you Republican pieces of dung!
17
Oh, and let me add, WHY THE HELL aren't the gawdam
Democrats demanding John Beohner's resignation???
C'mon, play the Republican's game and FIGHT BACK!!!
Democrats demanding John Beohner's resignation???
C'mon, play the Republican's game and FIGHT BACK!!!
18
@17 they are afraid if they act boldly and succinctly fox news will be mean to them in front of "independent voters".
21
@19 -- The S & P press release was very clear about the policies at fault, too. Must be a secretly liberal organization. Or else reality has a liberal bias.
22
@1, gloomy gus, first of all Krugman is a politician, and has been repositioning himself these last few years, but has long been an evangelist for offshoring all the jobs in America, which was why he was inducted into the Group of Thirty and awarded the Nobel Boob Prize for Economics, which IS only awarded to political sttooges posing as econs.
(Exception: Elinor Ostrom, the first woman awarded that prize is a sociologist)
While Stiglitz has evolved and is now in the ranks of the good guys, when he was a stooge for the World Bankster, he too was awarded the Nobel Boob prize, which historically never goes to the top econs.
Secondly, any recovery is arithmetically impossible (so we're not even approaching real math here, it's at the simple arithmetic stage) because one has to live in an actual economy before an actual "recovery" can take place.
It's sad there are so many mindless commenters here incapable of thinking for themselves --- some newsy stenographer moron preaches at them from the boob tube, and they simply accept whatever they hear.
If you wish to ever ratchet up your knowledge level, try paying attention to those real economists who have proven track records: Prof. Michael Hudson, Prof. James Galbraith, Prof. Ha-Joon Chang, Dean Baker, etc. and not some politician like Krugman or that (although a nice guy) lightweight Reich.
(Exception: Elinor Ostrom, the first woman awarded that prize is a sociologist)
While Stiglitz has evolved and is now in the ranks of the good guys, when he was a stooge for the World Bankster, he too was awarded the Nobel Boob prize, which historically never goes to the top econs.
Secondly, any recovery is arithmetically impossible (so we're not even approaching real math here, it's at the simple arithmetic stage) because one has to live in an actual economy before an actual "recovery" can take place.
It's sad there are so many mindless commenters here incapable of thinking for themselves --- some newsy stenographer moron preaches at them from the boob tube, and they simply accept whatever they hear.
If you wish to ever ratchet up your knowledge level, try paying attention to those real economists who have proven track records: Prof. Michael Hudson, Prof. James Galbraith, Prof. Ha-Joon Chang, Dean Baker, etc. and not some politician like Krugman or that (although a nice guy) lightweight Reich.
23
@2, gnossos, again you repeat everything you hear without any cognitive reflection or without the context of knowledge.
Yes that stimulus was too low, but even higher, while all the central planning of the US originates from Wall Street, and with a portion of that paltry federal stimulus going offshore (Remember: Commerce Secretary Gary "offshore" Locke spent a considerable amount of time signing waivers to allow just for that -- offshoring a portion of the stimulus, and now he's going to be ambassador to China....funny how it always works out that way???), and with the US economy having been dismantled over the past 35 years, it would still only have a most temporary effect.
There MUST be an economics engine to add the gas to, sonny!
Yes that stimulus was too low, but even higher, while all the central planning of the US originates from Wall Street, and with a portion of that paltry federal stimulus going offshore (Remember: Commerce Secretary Gary "offshore" Locke spent a considerable amount of time signing waivers to allow just for that -- offshoring a portion of the stimulus, and now he's going to be ambassador to China....funny how it always works out that way???), and with the US economy having been dismantled over the past 35 years, it would still only have a most temporary effect.
There MUST be an economics engine to add the gas to, sonny!
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