It's the Economy, stupid - Languishing & Lingering after the Great Recession

Some of my assumptions are arbitrary, not all - be specific.

Define the context. Pricing is a subject in many text books, but that doesn't mean there is not doctoral level discussions on the issue. If you want to discuss macro-economic policy without a rudimentary review and agreement of the concepts in question it is a waste of your time. So, when I suggest various factions supporting their individual agendas in this regard and conclude that at any given time policy is "working" for some and you write as if everyone has the same goals - there is a need to address the fundamental concepts.

Right I am rigid. I must of forgot. Thanks for the reminder. Hey, I am an arrogant a$$ on occasion too. Wanna discuss more about my issues or do you want to talk economics? I can do either. I love economics and as T.O. would say and I as I would say:


--- merged: Apr 10, 2013 at 5:38 PM ---

I challenge the notion that consumer demand is weak. I think the issue is more specifically related to the growth in demand. I think there is an organic demand curve but I think our international economic malaise is due to a failure to shift the demand curve. we have touched on our different views many times, but I believe innovation leads to shifts in the demand curve. Innovation comes from efficient capital allocation or efficient investment. In my short-hand I say business creates demand. In the past your positions has been the consumer demand drives business investment or business activity. Either way if government is consuming the investment resources in a inefficient manner slower growth would occur relative to efficient capital investment. In total we are discussing marginal activity or areas where government policy can have a disproportional impact.

 

i notice that you dodged the article i linked, ace dear.
this does not surprise.
that is why i find discussions with you to be a waste of time.

 

A Different Perspective:

Consumer demand can be measured in various ways, if the unit of measure is dollars we have to be careful on how we interpret actual consumer demand. For example it is clear that if the demand for heating oil goes down but the demand for natural gas for heating goes up, all other things being equal, we would not conclude the demand for heat changed. However, if there is the same heat output per comparable unit but natural gas is less expensive, measured in dollars on could conclude that the demand for heat is less because fewer dollars are being spent. I would argue this conclusion is incorrect and that the consumer demand was constant. And so it goes, if the consumer demand for cars is down but the demand for scooters is up - it is possible that the demand for A to B transportation did not change but that fewer dollars are being spent.

I do not equate consumer demand with dollars being spent.

It depends. For example there is a demand for haircuts. If the commercial demand for haircuts goes down because people are cutting their own hair, there has been no shift in demand. However, if people let their hair grow longer in order to save money or because of a new fashion trend - this would result in a shift in consumer demand.

On an overall basis in the world economy I think we are seeing changes in demand, in manner illustrated rather than shifts in demand.
--- merged: Apr 11, 2013 at 11:53 AM ---

I think there is a more pressing issue that needs to be clarified. The opening in the article cited says something about Japan's "lost decade". I have no issue with openings intended to draw the reader in, however, I think the underlying premise held by the author is similar to my impression of your point of view on these issues. There is no doubt by some measures the Japan economy did not live up to expectations held by some people. As I try to clarify with you, not all would view the success or failing of the Japan economy in the period in question the same way. For some the 10 year period did exactly what they wanted it to do. When we measure success or failure we have to be specific. I question the use of broad generalities in this regard.

As it specifically relates to one aspect in the article, many believe housing costs are too high and that housing deflation is a goal. I would think those who advocate for low income people would support policy that would lower the costs of housing. and of course this is at odds with those who would want to profit from increases in prices. What side are you on? If you own a home(s) currently and you hold social equality concerns I think you would be conflicted.

 

read past the first page and get back to me, ace.
jesus christ.

 

There is a point on the table that has yet to be clarified. Reams of material won't change the key question. You and the author hold the premise that everyone agrees on the measures of success. This is a false premise. If you want to address this we can then move on. Or am I to assume that you don't even understand the point? And fail to see the weakness in your point of view.

Perhaps I can put in a way that most men can understand - let's say a guy buys his wife some sleep ware. Her response is "this does not work, I get cold". But the guy responds with a spark in his eye - "oh, but it is working for me!" So in terms of economic stimulus we can do things to make party A happy or we can do things to keep party B happy - caeteris paribus, of course. Should I include a picture?

 

ace, dear, if you read the fucking article you'll see that the case being made is quite simple: monetarist policies don't work in the context of anything like a balance sheet recession. what they do, however, is drive recession to depression. the historical basis for this claim is outlined pretty clearly. the explanations for the ineffectual-to-distastrous outcomes of persisting in monetarist policies out of political and intellectual simple-mindedness are presented pretty clearly.

obviously, you have nothing to say against the substance of these demonstrations, and prefer to bullshit around.

i have other stuff to do.

 

You use the concept of "don't work" - the author of the article cited thinks in those terms as well. It is incorrect. Is De-leveraging a bad thing or a good thing? Is deflation a good thing or a bad thing? Is slow/no economic growth a good thing or a bad thing? In language you use, it fucking depends! So what is his point??? He has no points, he just presents a series of random bits of data intended to support an il-defined point of view. Sounds like you - I see why you like what he wrote.
--- merged: Apr 11, 2013 at 1:48 PM ---

US consumers were highly leveraged. US banks were highly leveraged. Government agencies like Freddie and Fannie were highly leveraged. US government is highly leveraged. The goal of many responsible regulators is to de-lever the economy in a measured fashion. The tools available to the Fed primarily involves managing the money supply. The money supply is secondary to the goal of de-leveraging.

I hope you read what I wrote. I hope you read/listen to the Fed Chair. I hope you do more than recite weak talking points. Right, consumer demand is down and that is why the economy is weak?!? What, is that really it? So all we have to do is spend more money and all will be roses? Is that really it?

 

If only those working class folks ate cheaper lunches (pbj sandwich), they could save more, invest more, and spend more on durable goods.

Those greedy bastards just trying to make ends meet are fucking up the economy for all of us.

 

Here is a better article on the issues in question.

http://www.newyorkfed.org/research/epr/10v16n1/1008gean.pdf

PBJ sandwiches have nothing to do with the leverage problems created by regulators. The money supply is inadequate for controlling the leverage cycle - the root cause is in failed government regulation and so is the solution.
--- merged: Apr 11, 2013 at 2:36 PM ---

I asked you to be specific when referring to "global demand", then if I recall correctly you stated that you meant overall consumer demand. Excuse me for asking for clarification! If I misread what you meant - please correct me, I have no issue with trying to clearly understanding the point of view of others.

I honestly don't get why so many here have so much difficulty with responding to questions. I would love to get an understanding of that.

{added} The expressed goals of the Fed is worth a read also, in particular the question involving conflicting goals.
The Federal Reserve Bank of San Francisco: Economic Research, Educational Resources, Community Development, Consumerand Banking Information

 

If we were in a free market economy - no. The use of leverage is a regulatory issue in our economy. Case in point the regulatory environment controlling Canadian banks relative to the regulatory environment controlling US Banks. US Banks highly leveraged resulting in a financial crisis. Canadian banks did not suffer the same fate.

Don't try to tell me I am against regulation, I am not. I am against bad regulation.

Right, I will get that checked out...

what should I take from looking at these numbers? For example new auto sales measured in units is down from the peak, new auto unit sales go in cycles. conversely used auto sales are up, used car maintenance expenditures are up, alternative transportation option sales are up, new car prices are higher - so what is your point? My point is that demand for transportation is not down. why can't you acknowledge this point and move on? You present your perspective and I present mine - they differ. I understand your perspective and I acknowledge it - I add a point of caution and look for clarity. Even here you say "auto sales" your point of view is narrow or I don;t know what you mean when you say "auto sales" - obviously there are new auto sales, used auto sales, motorcycle sales, public transportation bus/rail sales, truck sales, commercial sales, consumer sales, imports, exports, etc., etc. I look for the net to draw conclusion. What do you do?

 

You use a quantitative approach rather than a qualitative approach? In other words is volume equal or more important than the effectiveness of regulation? And again I look to the objective of regulation in some instances regulation is implemented for reasons other than commonly stated objectives, for example a regulation with the state objective of consumer safety may have no impact on consumer safety but may have the benefit of profiting segments of the economy. This is a type of regulation I would call "bad", would you agree?

I personally think de-leveraging the US economy is a good thing. In the short-run there are some costs, but in the long-run the economy will be better off. I think the notion of the non-government segment of the economy going through a de-leveraging period while the government increases leverage (as the author of Roach's article wants) is counter productive and accomplishes nothing in the long-run. But you folks can go on and assume I did not read the article. As it starts and as I stated initially housing prices in the US were over-extended and required deflation. It will be good for the health of the housing market and good for the up coming generation of buyers. The author begins with the assumption that housing deflation is bad and that everyone is in agreement. This is false.

I don't believe you folks get it and because you folks don't get it, attack the messenger. And then we have little snide comments from DC - as if I am ashamed of where I came from and what I did to get ahead. I can say I tried to stay on the high road. I doubt anything else I write in this thread will be serious - just so you know.

 

Ace, there was no personal attack.

It was a tangent to the discussion (as you so often take discussions), referencing your suggestion that working folks can simply save money (or have more disposal income) by switching to peanut butter sandwiches for lunch.