Did the stimulus spending prevent a depression?

I don’t know, the whole situation made me depressed.

But seriously, it probably did help. However, I am not so sure it did avert a depression. The spin doctors called it an extended recession, but I’m not so sure it didn’t cross over into actual depression.

No. It merely prolonged the agony, and laid the groundwork for the next big economic catastrophe. They never learn.

If you guys could provide some background for your reasoning, I’d appreciate that. If I was to accept your position then tried to defend it in a discussion, if challenged I could only say “some dude on a website said that.”

Not trying to be a dick. You get what I’m saying, right?

Yes, it did.

“Perhaps the best-known economic research firms are IHS Global Insight, Macroeconomic Advisers and Moody’s Economy.com. They all estimate that the bill has added 1.6 million to 1.8 million jobs so far and that its ultimate impact will be roughly 2.5 million jobs. The Congressional Budget Office, an independent agency, considers these estimates to be conservative.”

The New York Times

@marinelife thanks, GA.

Economists generally agree that Hoover didn’t move fast enough, and didn’t do enough to avoid the 1929–1939 depression. They say he should have spent more money, and prevented the banks from taking peoples homes so quickly.
Obama and, to a lesser degree, Bush signed a lot of legislation to spend money, and help bouy the economy. A lot of money was wasted, but a lot of it helped prop up pivotal business, like the car companies.

Obama swapped the slide into a serious depression for a few years worth of relative calm before the inevitable hyperinflationary storm. It’s like an infected tooth… the longer you delay getting it fixed, the greater the infection becomes.

@CaptainHarley What information are you basing that on? Also, do you think delaying the inevitable was a good or bad idea?

What inflation?

In my opinion, yes it did stop a depression. The only real way to know it did though would be to go back in time and not do it.

@CaptainHarley @cockswain What Harley is saying (and Harley feel free to correct me if I’m wrong here) is that Obama did in fact stop a Depression from happening, but at the cost of setting up inflation to become just as big of a problem within a few years. I personally disagree, but I can see the argument.

I’d like to know what that argument is.

@cockswain

See my analogy of an infected tooth. The longer you wait to do what is necessary, the more serious the consequences will be.

In the grand scheme it may have prevented an economic depression for right now, but I’m not seeing the country getting any better. IMO the real s*&t has not hit the fan yet. The gov’ment or the powers that be have put blinders on the eyes of the people and when they come off, man! will we be in a world of hurt.

@AmWiser

Agreed! And this is a case of the “cure” being just as bad as, if not worse than, the disease!

I wish you guys would be less vague. I don’t know why you’re thinking the way you are yet. The infected tooth analogy isn’t clear to me in that I don’t see how our economy is infected, and how an economic infection would result in hyperinflation.

@cockswain

Our economy is “infected” with the diseases of entitlement, me-first-ism, and spending other people’s money before it’s even taxed!

And don’t forget greed. When I stop and think about all the jobs lost in this country because big business has sent all most manufacturing jobs overseas to be made by workers being paid penny’s yet the cost of products keep going up and up and corporations are still making millions…...depressing/depression. Of course this is just MHO.;)

@AmWiser

So stop bying their products.

Check to see where the product was made before you buy it. Buy nothing that wasn’t made in America.

@CaptainHarley trust me I do, I am all for made in USA and check and search for products made here or from corporations that make their products in their own country. I know it can’t be 100% but there are just too many USA companies that closed shop (the manufacturing part) here and sent the work overseas.

Once they corrected the misdoings of the Banks that led to the financial meltdown it is impossible to say if things would have leveled themselves out had they simply let things default and correct themselves. Even the CBO says it is impossible to say how many of these said jobs would have been had or lost in absence of the stimulus package. Overall though the consensus seems to be that the stimulus was not enough to be truly effective and Obama bowed to bipartisan pressures.

Before the election, things were in the dumper and heading south fast and I remember “experts” predicting who ever got elected would be a one term President as things were just so bad that there was no one easy way out of the economic mess and no matter whoever the President was he would be blamed for how bad this recession was going to get.

GA, @Cruiser. I agree with “things were just so bad that there was no one easy way out of the economic mess and no matter whoever the President was he would be blamed for how bad this recession was going to get” and have found arguments that don’t consider this to be unfair.

I think the bank bailouts along with the stimulus helped prevent a full-blown depression. People conveniently forget that in an economy that’s rapidly spiraling out of control, just slowing the hemorrhaging can mean the difference between a full-scale economic meltdown (complete with runs on the banks and massive international withdrawal from the US markets) and a major recession. If the Government can buy even an extra few months in a time when the markets are panicked and behaving irrationally, then it will have likely saved vastly more than what was spent.

The debt sickens me, particularly because we could have been paying it down during the 2000’s if we’d been putting that stimulus to good use instead of giving it away in tax breaks to the top 1%, but back then all conservatives could talk about was how ”Reagan proved that deficits don’t matter”. Now when it actually makes good economic sense to run a deficit (to crawl out of this clusterfuck that deregulation and “small government” has gotten us in), they are finally starting to complain about deficits. The saddest part is that the proposed solutions include many things that may save a few bucks in the short term, but will actually make things much worse for the debt down the road.

Now when it actually makes good economic sense to run a deficit (to crawl out of this clusterfuck that deregulation and “small government” has gotten us in), they are finally starting to complain about deficits.

Exactly!

So just to be clear, the evidence presented so far that the stimulus did not prevent a depression is… an analogy involving a tooth.

@Qingu Not that I agree with all of CaptainHarley’s thoughts on the subject, but quite the opposite… He is saying it did prevent a depression, but he fears it prevented it at the cost of pushing inflation over the edge and sending us to that disaster.

@tedd

Precisely. Thank you.

@Qingu

I’m sorry you don’t understand analogy and logic, but perhaps you should take that up with your teachers. Would that be in Wisconsin, by the way? : )

@CaptainHarley Perhaps @Qingu didn’t understand your logic because it was vague. How is it that accruing debit is going to be such a problem now, but wasn’t when Reagan, Bush 1 & Bush 2 did it? Or do you disagree with their fiscal policies? What is the mechanism that will cause the inflation? Be explicit.

It would have been impossible for the government to sit back and do nothing and it is likely the stimulus package did keep the economy from sliding into a depression. We can never be sure though there have been attempts to analyse the effects. Inflation looks likely to increase but it will be driven in my view by increases in the price of oil and food and other commodities rather than the stimulus package.

I don’t think it stopped a depression. The 2009 slump was only not a depression by a definition that was by fiat anyway, a fiat which rather ignores people who can’t find jobs and give up. (I’m sort of one of those, but I get by on freelancing…and get to pay a lot more taxes than employees for working harder.) It definitely stopped the crisis from being deeper than it could have been, and likely kept the American auto industry from shrinking into near irrelevancy.

Austerity measures really are the last thing we need right now. And the Republikan budget is now apparently pushing making everyone under 55 (the people least responsible for this mess) suffer while those over 55 keep getting their gravy. The time to start looking for austerity is when the economy is heating up again – and what savings are found should be used to pay down the Reagan-Bush debt. And the reason you want austerity measures at that point is to keep the economy from heating up more than it should, not because some shriveled right-wing choads don’t want to pay for the police state they demand or the roads they drive on.

@CaptainHarley, I don’t know what your teachers taught you. Mine taught me to support my claims with data, rather than vague analogies.

@gorillapaws Reagan, the Bushes and Clinton, did not print money to buy our own debt, at least not to the extent Obama’s Treasury Department is.

When you print money to ‘buy’ your own debt, it can lead to hyperinflation. Zimbabwe tried it and went from one of the most stable currencies in Africa to one of the least stable. Germany tried it between WWI and WWII.

At worst you have to spend your money the day you get it because it will be worth so much less the next day that you can’t buy a loaf of bread.

This is actually a good question. What you have to keep in mind is that there were several programs with varying affects. The initial bailouts (TARP) may have saved us. The financial institutions were melting down and immediate action was recommended. I’m still on the fence about this one but since it was intended to be a loan and would be paid back, it seems the safe route to insure we didn’t come apart at the seams.

Stimulus is a different matter. The idea though plausible was horribly implemented. The tax cuts at about $7.50 a week were too small to make a difference. The infrastructure projects were neither timely nor beneficial (way too many Frisbee parks and the like). The measurement criteria was pathetic. Jobs created or saved is an impossible number to measure and was used to allow the administration to claim anything they wanted. I see stimulus as a total failure.

I know everyone wants to look at this recession as unique. It is hard to determine if it really is unique or if the actions taken were merely unique. The stock market crash was certainly not unique. If you recall we dropped to 7200 on the DOW back in 2001 as well. Bailouts? Well we bailed out savings and loans, we bailed out Chrysler, we bailed out the Airlines, bail outs don’t seem to be unique. The $2.5 – $3 Trillion spending is however unique. Well beyond anything previously done.

The price of gas pushed us over the brink back in 2008. People that were already struggling simply couldn’t make ends meet anymore. That exposed all the other problems that were lurking (financial institutions, auto companies, housing bubble, etc.). We dropped like a rock. Gas prices however came down and helped to stabilize the recovery. If you look at any past recession, we spike down then spike back up. Sometimes recovering all the loss, sometimes only part of it. The spike back up is missing in this one. If the stimulus was working we should have seen a spike back up even if it wasn’t to the same level as where we were. We’re lingering.

Now gas is once again creeping up over $4. This is a bad omen. We haven’t yet recovered and the price of gas is once again draining all our wallets. Look for difficult times ahead unless we find a new strategy. Spending another few $trillion won’t be possible this time, whether you think it had any positive impact or not.

Overall, those that like the spending will say it worked. Those that didn’t will say it didn’t. The only real measurement we can use is the unemployment data which shows no real recovery. And with the debt crisis looming companies are sheltering for the long run. That means little new hiring. With debt and gas prices rapidly rising, private sector expansion is risky at best. Biden’s summer of recovery is still a ways off.

@WestRiverrat, that is another argument by analogy. There are also cases where printing money did not lead to hyperinflation remotely.

Also, inflation remains very low in America.

Why do you believe, in this particular case, that we will end up with hyperinflation?

@Jaxk Great answer. I was hoping you’d find this question and chime in.

I didn’t say we will, I said we could. It is a very fine line between being a benefit and being a disaster. Up until you hit that line there is no problem, but after you hit the line…

We won’t have an inflation problem until foreign investors stop using US currency as the international standard. Which will happen if China demands more interest on its purchasing of US debt because of the shrinking value of the dollar.

@cockswain

I guess I found it a bit late. I’ve been distracted.

@Jaxk, you are comparing unemployment to a baseline, rather than projected unemployment in the face of doing nothing during an economic disaster. We were losing hundreds of thousands of jobs a month before the stimulus. Once the stimulus took effect, that rate flatlined.

It hasn’t recovered yet—and many economists think it’s because we haven’t spent enough to make up for the economy’s demand slack. But do you honestly think that the job loss rate would have stabilized by itself?

This also applies to the Great Depression. You have to compare unemployment against the rate of loss, not “nothing.” Otherwise, it’s like trying to say that the Japanese earthquake and tsunami preparedness were responsible for killing 20,000 people… instead of saving many more people who otherwise would have died.

And god help you if you try to claim that the concept of a derivative is some kind of liberal spin.

I don’t think that link to derivatives in calculus really compares to mortgage-backed derivatives though. A mathematical derivative is not the same as any use of the term derive. Even though there was some complex mathematics behind the derivative packages.

just sayin. For the sake of accuracy

@Qingu

Actually yes, that exactly what I’m saying. When the recession hit and companies shed jobs at a rapid rate. That accounts for the downward spike you see in any recession. The stimulus did nothing but load us up with incredible debt.

The housing bail outs were a bust. Few actually got the bailouts and those that did still went into foreclosure. The infrastructure projects were so slow to start that the economy had already hit bottom before anything was started. The education spending may seem like a good idea for the future but it certainly didn’t do anything to spur the economy. Cash for clunkers merely moved demand up a month with no long term affect. And the tax relief so so minuscule it couldn’t even keep us even with the state tax increases. Which program exactly do you think had any positive effect on the economy?

@Qingu

I’m sure that your teachers never had to try and introduce a bit of sanity into a hotbed of liberalism either.

What’s causing the inflation? Oh BROTHER! How about too many dollars chasing too few goods? That work for ya?

And yes, I have opposed the fiscal policies of both Democrats and Republicans when they were obviously relying on deficit spending.

@cockswain, I was indeed talking about calculus derivatives. The idea that the line’s rate of change is what’s important, rather than the value at any point on the line.

And it appears that @Jaxk still doesn’t get it. Let me try to illustrate with an example. Let’s say you are in a car going the speed limit. Then you start rolling down a huge hill. Your car’s speed starts rapidly increasing beyond the speed limit. Alarmed, you push the brakes. The brakes succeed in slowing down the car! But you didn’t push them for that long, so by the time you are at the bottom of the hill, you are still going slightly over the speed limit.

In order to determine if the brakes have worked, you cannot simply look at the car’s speed after you’ve applied them. You have to look at whether the brakes slowed—changed the rate—the car’s speed.

We can do the exact same thing with the stimulus. Here are job loss figures for 2008–2009:

January 2008 — 76,000
February 2008 — 76,000
March 2008 — 80,000
April 2008 — 20,000
May 2008 — 62,000
June 2008 — 62,000
July 2008 — 51,000
August 2008 — 84,000
September 2008 — 284,000
October 2008 — 240,000
November 2008 — 533,000 — Obama is elected
December 2008 — 524,000
January 2009 — 650,000
February 2009 — 651,000 — Stimulus bill passed
March 2009 — 663,000
April 2009 — 539,000
May 2009 — 345,000
June 2009 — 467,000
July 2009 — 247,000
August 2009 — 216,000 — 19% of stimulus funds used
September 2009 — 263,000
October 2009 — 190,000
November 2009 — 11,000

That looks like “working” to me. Perhaps Jaxk has some alternate explanation. I suppose it was just a huge coincidence?

@CaptainHarley, I think you’re lying. I would bet a large sum of money that you never said a single word about scary inflation during Bush or Reagan’s deficit spending sprees.

@Qingu My bad, I didn’t gather that was your point. Thanks for getting that table of data too.

Oh, that’s ok. I think you’re lying too. : )

What am I lying about?

@Qingu Your points on your table are incomplete and only show time stamps of the stimulus implementation. What is sorely missing is the Government buying up all the bad debt of the banks in the last quarter of 2008 and then printing $600,000,000,000 and restocking the vaults of the banks of the Federal Reserve. Let’s not forget the Government bailouts of major Finanacial Corporations and of course GM which preserved thousands of jobs.

Take all this into consideration and those steps alone (IMO) could have very well prevented this depression everyone whispers about…and this so called stimulus you champion was poorly executed and woefully inadequate at best. Again even today hind sight is NOT 20/20 as you just can’t tell what Obama did or didn’t do really made a difference. All I do remember is it took him far too long to make a G-Damn decision one way or another. 2 years later he is still a deer in headlights.

@Qingu
And why are you messing with @CaptainHarley ?

Hmm. I think Obama supporters are far more likely to find the stimulus was effective than non-supporters. This is where bias convolutes things. I wish there was a way to tell how people would respond to this had McCain been elected. My guess is that many (not all) of us would have the exact opposite view we currently do. Interesting to consider.

“The US budget deficit is a manifestation of the decline of America, its Executive, House and Senate 95% controlled by interests from behind the scenes. The agenda is not for the American people, the constituents, who put these people in power, but for the moneyed few who totally control them via campaign contributions, lobbying and other various nefarious means. We presently are being offered up a budget cut in a $1.7 billion budget deficit. What can the people behind the scenes be thinking of unless they want the government debt structure to implode? Virtually no change in out of control spending. The deficit is accelerating not decelerating. It is obvious that these intelligent elitists and politicians know exactly what they are doing and that is destroying the financial system and the American economy. By the end of the year and perhaps sooner the deficit will be more than 100% of GDP, a role reserved for Banana Republics and there is no end in sight.”

@Garebo‘s link from Bob Chapmans blog

@Garebo Logical. Valid if the premises are all true.

or maybe I mean “cogent. sound if the premises are all true.” I forget.

@Garebo

You know, an honorable man would respresent the interests of his constituents and not accept the bribes and blandishments of camptaign contributors, lobbysts, etc. Perhaps what’s missing is that old fashioned concept called “honor.”

@Cruiser, to some extent I agree with you. The stimulus wasn’t the only thing going on, and the bailouts did do a lot to stabilize the economy.

But the bailouts cannot be the whole story. The economy was still shedding jobs after they happened. Also the timeline doesn’t match up for GM. GM was bailed out in July (iirc), but job losses had already started to decline. And GM only has ~200k employees. (Granted other industries depend on the, but still).

Again: the stimulus isn’t the whole story, it didn’t exist in the vacuum. But it’s really hard not to look at that data and come to the same conclusion as the CBO and most economists that government spending does actually help save and create jobs when there’s demand slack.

And I think your’e exaggerating Obama’s indecisiveness. It’s greatly magnified by our modern news ecosystem. He takes his time to think things through (unlike, for example, Bush) but these policies were still implemented very quickly. The delay wasn’t on him, it was on Congressional negotiations. Compare it to the speed of the New Deal; compare his Libya response to the UN’s response to Bosnia.

@CaptainHarley, when did this old-fashioned concept exist, exactly? You think politicians didn’t take bribes when you were a kid? There is much more transparency and accountability in our government now than there was even 10 years ago, let alone 50 years.

@Qingu

Interesting analogy. Unfortunately you ignore some variables. Such as, when you check to see if the car slowed, you might want to know if you’ve reached the bottom of the hill. If so the car would be slowing with or without the brakes. Try again.

@Qingu

Here is a chart that shows the historical unemployment rates during recessions. As you can see they typically spike to a peak and then recover at about the same rate. This has not happened during this recession and one has to ask why. The unemployment spiked up at the beginning just as it did in every other recession but has been painfully slow coming back down. Hell, it’s not clear that it has come down at all, or if people have just stopped looking for a job.

You think the peak was a result of the Obama stimulus. Unfortunately history shows that this peak was typical. Only the recovery is unique. And not in a positive way.

@Jaxk your graph leaves out the great depression. We were facing a crisis on a similar scale with a globally networked banking system that nearly collapsed completely. The S&P dropped 45% from it’s high and total home equity dropped by 9 trillion since the beginning of the crisis and is predicted to continue falling (source). It’s peak was $13 trillion in 2006.

The stimulus started with Bush and pursued by Obama. It did prevent something but not a full blown depression but more of an impending or expected depression. If Im not mistaken I read in one of the posts here something about we have to go back in time and do it differently to get an accurate answer as to whether TARP was really needed or not. Agree!
Yet, with regards to Bush and Obama exercising command responsibility, it is an example that no captain in his right mind would not plug a hole in a ship with bodies of his own crew if that means delaying the ship’s sinking into the abyss, killing hundreds of passengers. And even before then, a few other things might take place before the supposed inevitable disaster. A compromise on taxes, deficit management and just plain steering this ship of a country into safer shores.

@gorillapaws

Yes it did leave out the great depression. Unfortunately I’m locked into using graphs created by others and finding one that shows everything is difficult. Here is a graph of the great depression. Remember that Hoover made the mistake of raising taxes significantly on everyone, which compounded the problem. Otherwise the graph is representative. The recovery was prolonged by the same policies we are now pursuing. What a coincidence.

Whether this recession is even close to what happened in 1929 is highly speculative. I know most in this administration want us to believe that but the numbers don’t support it.

Your “source” seems to agree with my thoughts that the job market is the critical piece to solving this problem. Nothing we have done over the past couple of years has had any noticable impact on jobs. It may be time for a new strategy. Or maybe we should just keep doing what hasn’t worked.

@Jaxk First of all, tax cuts don’t have the same stimulative effect as government spending. Tax cuts may be used for personal spending which may stimulate the economy, but (during a crisis especially) much of that money may be spent on other things—especially foreign investment to hedge against a plummeting dollar. Government spending is actually 100% GDP so that’s directly creating (or slowing the loss of) jobs which allows more Americans to continue paying their mortgages, which prevents people on the brink from falling into foreclosure, which keeps properties values from sinking as quickly, which maintains more equity in everyone else’s house, thereby preventing them from going under, etc.

Tax cuts aren’t magic, and aren’t nearly as stimulative as conservatives would have us believe. Tax and spend is much more effective in a crisis situation. I’m disappointed that Obama was pressured into even wasting resources on more tax cuts due to conservative political pressure.

“Nothing we have done over the past couple of years has had any noticable impact on jobs” This is simply false. If someone is bleeding to death in the street and you bandage them up, they may still be loosing blood, but they are loosing blood more slowly than they were had you not bandaged them. You can’t say that bandaging the wound had no “noticeable impact” simply because the person continues to bleed. That’s pure partisan bullshit.

“Or maybe we should just keep doing what hasn’t worked.” Are you referring to the conservative policies of Voodoo economics, slashing regulators, and letting the free market decide? or the stimulus spending that has dramatically slowed job losses, saved the auto industry, prevented the banks from toppling and creating a massive global financial meltdown of unprecedented scale, improved the financial markets? I’m just confused, are you living in the same reality as everyone else?

@gorillapaws

Well, I’m certainly not living in your world. You seem to have constructed a fantasy land where raising taxes has a stimulative effect. And where do you come up with the idea that government spending is 100% of GDP. Or is that the typical liberal sentiment that since the government did take it all, they gave it to you.

I always get a chuckle out of the statement that the government “Saved the Auto Industry”. Hell, they pumped billions into it to insure it didn’t go bankrupt and it went bankrupt anyway. They could have done that without the government. And they’d certainly be better off with out the crippling union costs.

And just for the sake of your analogy, if the patient is still bleeding, it’s time to move to something other than a bandaid.

Bottom line, is it’s time to create jobs. Real private sector jobs. Measurable job growth. The old line that ‘the recession is worse than we thought’ doesn’t hold up. The real answer is that ‘the current solution is worse than we thought’ (which is remarkable since I thought it was pretty bad to begin with).

The government doesn’t produce anything. The private sector does. If we want a recovery we need to spur the private sector not government. The government only drains the resources of private enterprise. The bigger the government, the more it drains. Your utopia where the everyone works for the Government is a pipe dream. And frankly a dream I’d just as soon, not be a part of.

@Jaxk Government spending is included in GDP BY DEFINITION. I didn’t say it was 100% OF GDP, I said that 100% of the spending (not including repayments) goes towards the bottom line of GDP. In other words, if you have a fictional country with 1 billion dollars of GDP, and then that country’s government spends 500 million, their GDP would be 1.5 billion. Now if that country had decided to give that 500 million away in tax breaks, and the billionaires decided to invest that money in swiss bank accounts, or to buy foreign cars, foreign yachts and foreign houses, then GDP would necessarily be considerably LESS than 1.5 billion in that country, and have fewer jobs created as a result.

“Hell, they pumped billions into it to insure it didn’t go bankrupt and it went bankrupt anyway.” but they delayed the failure, if that had occurred earlier when the market was in a free fall, the devastation would have been compounded with the housing and banking collapse.

How the FUCK did you arrive at the conclusion that my utopia involves everyone working for the government? I’m a card-carying capitalist, who believes in the free market. I’m also a student of history (and current events), who remembers that if there are no checks on the private sector, then they tend to do very bad things (like forming monopolies, buying media organizations and pumping gullible fools with pro-corporate propaganda, buying politicians, squelching innovation, depressing wages for people who actually work for a living, creating expensive environmental catastrophes that gets expensed to the taxpayer, push for lax safety standards, getting special tax kickbacks etc). Conservatives often forget that the majority of Americans are employed by small and medium businesses, not the mega-corps who can afford to buy favorable legislation, positive media coverage, and PR campaigns. They also like to throw around terms like communist to anyone who doesn’t want to return to the Guilded age policies. Perhaps you would like to return to the days of The Company Store?

So you do acknowledge that you were full of shit when you said that there was “no noticeable impact on jobs”? The bandaid is working, it has slowed the bleeding to the point that we will soon see jobs being created again. Look at the trend in @Qingu‘s chart. I’m not sure how anyone could possibly have done things faster (especially with Republicans creating as many obstacles as possible, after they had just been responsible for the meltdown).

“The old line that ‘the recession is worse than we thought’ doesn’t hold up.” I’m actually astonished that the recession isn’t worse than it is. I’m getting the sense that you don’t have a clue how bad things could have been (especially if the government had just “let the free market sort things out for itself”). Mankind has never faced a potential collapse of this magnitude ever before.

“The government only drains the resources of private enterprise. ” Bullshit. The government is responsible for much of the innovation that private businesses rely upon (e.g. the internet, GPS, funding for the first computers, etc.). The government educates our workers so we can outthink the competition, it funds top-level research, it regulate abusive practices so companies can compete on a level playing field and the free market can work it’s magic, it backs financial institutions enabling confidence in investments so people are comfortable depositing money in banks and enabling credit to flow at relatively low rates, thereby enabling entrepreneurship.

I do agree that government stimulus spending isn’t a sustainable practice, but I know it was necessary to avert financial catastrophe. I look forward to seeing the government re-implement PAYGO that Bush2 allowed to expire, once we’re out from the shadow of the mess he got us into. I think taxes need to be raised to the levels under Clinton so we can begin to repay the debt. We need to evaluate the cost of programs based on their LONG TERM fiscal consequences and not just slashing things that may save money in the very short run.

@Qingu I am going disagree with your point that the CBO even remotely established the stimulus as the vehicle that turned around the recession. They merely provided analysis over the mechanics and effect of the infusion of the money had on the economy and jobs created or saved. What is missing is the same analysis of the corporate bailouts and financial institutions. Saving the banks and buying up of all the bad debt kept people at work and people fed and in their homes as opposed to the hundreds of thousands who would be out of work and homeless. That is the untold story here. IMO had our Government let the natural process of bad financial and economic decisions take their course of default, this recession would have been over a year ago. But instead it took trillions of our tax dollars we never had to pay for a disjointed and rapid fire of shots in the dark by the Obama administration focused on creating jobs out of thin air and saving votes from folks who otherwise would have had to suffer the consequences of very bad financial decisions.

Face the facts, saving Fannie Mae and Freddie Mac and the other bailouts had the greates effect on preventing further collateral damage of Bush’s failed financial policies. But again when Obama took ownership of this countries direction he did what he had to do but IMO the stimulus was nothing more than a politically motivated plan to appease a very stressed public more so than to really accomplish anything and I refer to your CBO report that admits it is impossible to say in the absence of the stimulus that the jobs reports would not have been similar in scope.

These new and or saved jobs in a large part are just jobs….not the careers and high pay executive jobs that were shed in 2007 and 2008 that was the tipping point that sent this country into recession. Many of these jobs are Government jobs and what else is missing is that so many are still underemployed and until people get back to doing the work they were trained and educated to do we are still floundering as a country.

I talk with my customers everyday and not one has yet to hire back any of the employees they laid off. Those are the jobs that will signal a true recovery and we just aren’t there yet.

@Cruiser, I’m confused as to what exactly you’re arguing.

I agree with you that bailouts were necessary to stabilize the economy. Are you arguing that the bailouts, solely, were the reason why job loss slowed?

That doesn’t seem to fit the models or the data. It strikes me as an ad hoc assertion.

And most economists agree that the stimulus, while large enough to successfully slow job loss, was not large enough to recover from the hole created by job loss.

I’ve forgotten that I once decided not to talk to Jaxk on here. He deserves credit for making an effort to interact with us in this liberal echo chamber, but his arguments are so intellectually dishonest and based on bullshit assumptions (a magical free market) that it just makes me too angry to try to formulate a response.

I shall leave it to others to deal with him.

@gorillapaws

Let’s get back to reality here. I didn’t have a problem with TARP. I’m not 100% convinced that it was necessary but it seemed like cheap insurance to insure we didn’t have a financial meltdown. I’ve already said that. Since it was originally designed to be loans, paid back with interest, it really wouldn’t cost us anything (any defaults aside). And the financial markets did stabilize. Hell, if the truth be told I didn’t have a problem with the GM bailout. Since I didn’t have a problem when we bailed out Chrysler, or the airlines, or the savings and loans, I didn’t see this as much different. Unfortunately we made it different by buying ownership of GM and constructing a bankruptcy to benefit some at the expense of others in direct contradiction to established bankruptcy procedures.

As for Stimulus, No I don’t see any benefit to job creation in it. If you go back and look at the graph I linked, it was created in Jan 2009. The estimate, based on history and the unemployment rate at the start of the recession, was that we would peak between 10% and 11%. That was before stimulus, before the Omnibus,, before Cash for Clunkers, before Mortgage bailouts, before unemployment extensions, before the entire mess. And as it turns out we peaked between 10% and 11%. Just as predicted at the start.

I would think that any reasonable person would agree that a peak with or without Stimulus would occur. The question becomes when and how high. Even Obama’s advisers predicted unemployment without stimulus would rise to 9%-11%. Guess what it did even with stimulus. So if all the predictions made without stimulus have come to be, is it unreasonable to say stimulus didn’t help. Your argument that this is the worst financial disaster in the history of mankind, not withstanding. And no, I don’t acknowledge that all your speculation has any merit.

The argument is always couched as current policy or nothing. Either do what Obama says or do nothing. Either regulate everything or regulate nothing. There is middle ground. I am not in favor of no regulation nor do I know anyone that is. When you make those arguments it is intended to stifle the debate rather than add anything substantial to it. Hell, I’m all in favor of putting the teeth back into Glass-Steagal but I’m absolutely opposed to Sarbanes-Oxley. I don’t have a problem with agency enforcement of regulation but I’m opposed to creating new agencies just because the old one didn’t do their job. I would like to see some cost/benefit analysis on regulation rather than cheap political capital. And I’m opposed to regulatory agencies having free reign to create regulations with no oversight.

I deal with government regulation every day. Some is beneficial and some is obviously politically motivated. The good regulation is typically reasonable and carries a reasonable cost. The political regulations carry enormous cost and are typically handled by several different agencies all with conflicting views of compliance. You want to argue for the small business but the regulations we’ve been creating for the past few decades give the advantage to large corporations. They are typically way too complex, way too costly and require a team of lawyers to analyze. Large corporations find the holes and small corporations pay the bill. And it all comes back to this old, do this or do nothing argument. How about we do something sensible for a change and stop this knee-jrk reaction to every problem we see or think we see.

@Jaxk so you want to return to the graph, that is not at all representational of the scale of the disaster we faced and then use it to prove that the stimulus was ineffective because it didn’t recover as quickly as the smaller recessions we’ve faced over the years. That’s like using historical charts totaling damage caused by 5.0 earthquakes to evaluate the efficacy of the japanese mega-quake. There’s another term for this: intellectual dishonesty.

That’s great that you want to claim that this crisis wasn’t nearly as bad as everyone else is making it out to be, but I’m going to need to see something more substantial than the opinion of one right-wing radical who has a propensity for hyperbole and misrepresenting the facts. Perhaps you can explain why all of these economists are wrong when they claim how bad this crisis was, after all, never before in the history of mankind was so much wealth allowed to be leveraged in such a way, all intertwined with other international banks. What you’re forgetting is that the stimulus created confidence in wall street that the Government wasn’t going to let the economy to free fall. This confidence prevented stocks from continuing to slide and ultimately prevented more banks from failing and precipitating a further downward spiral.

I suspect you have very little formal education in the area of economics, because your comments reveal a certain macroeconomic naivety with regards to how the markets function. It’s one thing to claim things weren’t that bad, but it’s quite another to understand the potential for how much worse it could have been. Perhaps you should read one of these or are all of them “liberally biased”?

As far as me favoring all regulations, I’m not sure where that came from. I think that reasonable regulations are an important safeguard to protect the citizens of a nation from the potential crimes that large corporations can commit. I don’t trust the private sector to self-regulate, or to do the right thing. One need only turn to recent events to find ample proof.

I think Obama is one of the best presidents this country has ever seen. His biggest shortcoming is that he tries too hard to accommodate the radical right, and is “above” stooping to their level to fire back. He inherited 2 massive wars with no exit strategy; the largest budget deficit in history; a massive financial clusterfuck; plummeting home prices; rising joblessness; a prison full of terrorists that should have been tried, convicted and executed years ago; an aging population with no financial preparation for paying for the foreseeable swell in benefits obligations; a crumbling infrastructure; a poorly regulated oil industry that lead to the BP disaster; failing schools; and an ultraconservative movement hellbent on seeing him fail that threw up a constant barrage of patently false lies and misinformation. So yeah, I’m impressed with what the guy has managed to accomplish given all of the shit he’s had to deal with.

@gorillapaws

The graph I presented agreed with the projections from both Obama and his financial adviser’s. In addition if you read the article (you can read I hope) it accounts for the severity of the recession. Your panic driven hysteria does not add credibility to your argument. I have explained my point so that even a grade school child could understand. Yet you still miss the point.

I find it interesting that you list all the problems Obama faced and none of them has been fixed. Yet you applaud his accomplishments. What exactly has he accomplished. After spending $trillions, all the problems not only still exist but there is no solution on the horizon. And he’s driven the country to the brink of Bankruptcy. So no, I’m not impressed.

@Jaxk as your brilliant deductive skills and keen intellect have discovered, I cannot in fact read. I’m not actually typing these words, but am a liberal figment of your imagination, existing only to be crushed by your superior conservative mind.

I’m not sure if this has occurred to you, but Obama’s administration was highly incentivized to downplay the severity of the crisis in order to reduce panic. The fact that their numbers were excessively conservative in estimating the impact does not surprise me in the least. As far as him not solving any of the problems he walked into, the fact that I still have a job, a car, and was able to recently purchase my first home begs to differ.

As far as the severity of the crisis, I back my statements up with expert opinion not right-wing talking points.

@gorillapaws

I have no way of knowing if your mother is reading this to you. I can only hope that you are in fact figment of my imagination. What is clear however is that you have a very short memory.

Obama did not downplay the recession in fact he constantly told us it was the worst recession since the great Depression. This is a sample from Jan. 2009, “Whether it’s retail sales, manufacturing, all of the indicators show that we are in the worst recession since the Great Depression,” Obama said on ABC. All before his stimulus, etc., etc. In fact even the comments you linked were from before his spending spree. How can you now say it was worse than he thought?

The truth is he was incentivized to make the recession sound worse not better. The worse he made it look, the more spending he could get through congress. ” You never want a serious crisis to go to waste”, we’ve all heard that line.

I find it amusing, nay even laughable, that you would say you back up your arguments with expert opinion and at the same time say they were wrong and underestimated the problem.

It’s good to hear that your able to buy a house. The depressed economy has made them more affordable. Maybe now we can move forward and try to fix it rather than letting it continue to flounder.

I have no way of knowing if your mother is reading this to you. I can only hope that you are in fact figment of my imagination.

ouch

@Jaxk let me make it easier for you to grasp. You claim that something rises only to a level of say 2, I provide expert opinion that states it was at least a 6 while simultaneously believing that it could have been as bad as a 8 or 9. There is no logical inconsistency, and remains supported by evidence, as opposed to your vapid ramblings.

Obama did downplay the disaster’s impact on things like the job market to reduce panic during the early days of the crisis, while simultaneously making statements that indicate the gravity of the situation and making the case to the public for the need for government intervention to the public. This was done to calm the anxiety in the markets.

I was also able to buy a house because the credit market has been loosened and allowed my loan to go through.

@gorillapaws

I must admit I’m growing a bit weary of your inconsistent and fallacious banter. You say this is the worst financial crisis in the history of mankind. As proof you cite ‘experts’. Except the experts don’t really say that. They say this is the worst recession since the depression (a much narrower field). As it turns out Obama said the same thing in pretty much the same words. But you say Obama was down playing the severity. I can only assume you think your experts were down playing it as well. I can’t even imagine what good an expert would be if they aren’t giving us the facts. I’ll let you come up with another stupid analogy to explain that.

But if this is the worst recession since the great depression (a debatable premise) then comparing recessions that occurred in that period is valid. Sorry, if the facts don’t support your argument. I’ll give you credit, you obviously believe you’re theory is right and no amount of logic will sway you. Which is coincidental because no amount of logic went into the theory to begin with.

The situation should have been dealt with in 1991, and let the economy crash and burn, purge the system, but they went on the extended plan, again and again and again. There is only so many Goldman Sachs’s Treasury Secretary’s.
Obama the anointed, is your puppet and he will be re-elected, so don’t worry about your man going down.