Stimulus dreams
Bensblurb #507 11/18/09
Stimulus dreams:
The infusion of gov’t bucks has really helped, creating a questionably sturdy number of jobs and immeasurably saving others. But wait. New housing construction has suddenly dipped, nearly as low as our president’s oriental bow, and heralding a double-dip recession?
Let’s hope not, at least until after our traditionally happy holidays and the closing of Gitmo, someday. Except:
“...[I]t is most likely that the unemployment rate will peak close to 11% and will remain at a very high level for two years or more. The weakness in labor markets and the sharp fall in labor income ensure a weak recovery of private consumption and an anemic recovery of the economy, and increases the risk of a double-dip recession...[thus]
we can expect weak recovery of consumption and economic growth; larger budget deficits; greater delinquencies in residential and commercial real estate and greater fall in home and commercial real estate prices; greater losses for banks and financial institutions on residential and commercial real estate mortgages, and in credit cards, auto loans and student loans and thus a greater rate of failures of banks; and greater protectionist pressures The damage will be extensive and severe...”--Nourel Roubini, professor of economics and Chairman of Roubini Global Economics.
There’s more:
“At some point, probably before the end of 2010, the bubble will burst. The deflationary effect on the U.S. economy of $150 plus oil will overwhelm the modest forces of genuine economic expansion. The Treasury bond market will collapse, overwhelmed by the weight of deficit financing. Once again, the banking system will be in deep trouble. The industrial sector, beyond the largest and most liquid companies and the extractive industries, will in any case have remained in recession – it is notable that, in spite of the Fed's frenzy of activity, bank lending has fallen $600 billion in the last year. Unemployment, which will probably enter the second downturn at around current levels, will spike further upwards. The dollar will probably not collapse, but only because it will have been declining inexorably in the intervening year...In the next downturn, the Fed will not be able to cut interest rates, because inflation will be spiraling, as in 1980. Instead it will need to raise them while dealing with a profound crisis in the bond markets. Capital in the U.S. will become still more difficult to come by, and unemployment will approach 15%.”. --Martin Hutchinson, in PrudentBear.
Why such gloom? Maybe Fort Hood set the stage:
"After 9/11, we fought back, hit hard, rolled up the Afghan camps; [but]after the [Danish] cartoons, we weaseled and equivocated and appeased and signaled that we were willing to trade core western values for a quiet life... I think in years to come Fort Hood will be seen in a similar light. What happened is not a 'tragedy' but a national scandal, already fading from view." --columnist Mark Steyn 1/
But not all the news has been gloomy. It‘s been cool on the climate front:
"'Now is the time to confront this challenge once and for all,' President-elect Obama said of global warming last November. ‘Delay is no longer an option.’...Mr. Obama bowed to reality and admitted that little of substance will come of the climate-change summit in Copenhagen next month. For the last year the President has been promising a binding international carbon-regulation treaty a la the Kyoto Protocol, but instead negotiators from 192 countries now hope to ...sign such a treaty when they meet in Mexico City in 2010. No doubt... Of course, the pointlessness of Copenhagen will now become part of Mr. Obama's argument that the Senate must inflict cap and tax on the U.S., as well as a justification for the EPA's nondemocratic carbon crackdown via clean-air regulation. If he and we are lucky, however, the Senate will fail to act too, the EPA will get tied up in court, and the economy will recover faster without the looming burden of higher energy taxes.”--Wall Street Journal
1/ Footnote on Fort Hood: “The wife of one of the wounded soldiers certainly understood the implications of disarming service personnel (on U.S. military posts). When asked how she felt about her husband's upcoming deployment to Afghanistan, she replied, ‘At least he's safe there and he can fire back, right?’"--The Patriot blog
* * *
Stimulus dreams:
The infusion of gov’t bucks has really helped, creating a questionably sturdy number of jobs and immeasurably saving others. But wait. New housing construction has suddenly dipped, nearly as low as our president’s oriental bow, and heralding a double-dip recession?
Let’s hope not, at least until after our traditionally happy holidays and the closing of Gitmo, someday. Except:
“...[I]t is most likely that the unemployment rate will peak close to 11% and will remain at a very high level for two years or more. The weakness in labor markets and the sharp fall in labor income ensure a weak recovery of private consumption and an anemic recovery of the economy, and increases the risk of a double-dip recession...[thus]
we can expect weak recovery of consumption and economic growth; larger budget deficits; greater delinquencies in residential and commercial real estate and greater fall in home and commercial real estate prices; greater losses for banks and financial institutions on residential and commercial real estate mortgages, and in credit cards, auto loans and student loans and thus a greater rate of failures of banks; and greater protectionist pressures The damage will be extensive and severe...”--Nourel Roubini, professor of economics and Chairman of Roubini Global Economics.
There’s more:
“At some point, probably before the end of 2010, the bubble will burst. The deflationary effect on the U.S. economy of $150 plus oil will overwhelm the modest forces of genuine economic expansion. The Treasury bond market will collapse, overwhelmed by the weight of deficit financing. Once again, the banking system will be in deep trouble. The industrial sector, beyond the largest and most liquid companies and the extractive industries, will in any case have remained in recession – it is notable that, in spite of the Fed's frenzy of activity, bank lending has fallen $600 billion in the last year. Unemployment, which will probably enter the second downturn at around current levels, will spike further upwards. The dollar will probably not collapse, but only because it will have been declining inexorably in the intervening year...In the next downturn, the Fed will not be able to cut interest rates, because inflation will be spiraling, as in 1980. Instead it will need to raise them while dealing with a profound crisis in the bond markets. Capital in the U.S. will become still more difficult to come by, and unemployment will approach 15%.”. --Martin Hutchinson, in PrudentBear.
Why such gloom? Maybe Fort Hood set the stage:
"After 9/11, we fought back, hit hard, rolled up the Afghan camps; [but]after the [Danish] cartoons, we weaseled and equivocated and appeased and signaled that we were willing to trade core western values for a quiet life... I think in years to come Fort Hood will be seen in a similar light. What happened is not a 'tragedy' but a national scandal, already fading from view." --columnist Mark Steyn 1/
But not all the news has been gloomy. It‘s been cool on the climate front:
"'Now is the time to confront this challenge once and for all,' President-elect Obama said of global warming last November. ‘Delay is no longer an option.’...Mr. Obama bowed to reality and admitted that little of substance will come of the climate-change summit in Copenhagen next month. For the last year the President has been promising a binding international carbon-regulation treaty a la the Kyoto Protocol, but instead negotiators from 192 countries now hope to ...sign such a treaty when they meet in Mexico City in 2010. No doubt... Of course, the pointlessness of Copenhagen will now become part of Mr. Obama's argument that the Senate must inflict cap and tax on the U.S., as well as a justification for the EPA's nondemocratic carbon crackdown via clean-air regulation. If he and we are lucky, however, the Senate will fail to act too, the EPA will get tied up in court, and the economy will recover faster without the looming burden of higher energy taxes.”--Wall Street Journal
1/ Footnote on Fort Hood: “The wife of one of the wounded soldiers certainly understood the implications of disarming service personnel (on U.S. military posts). When asked how she felt about her husband's upcoming deployment to Afghanistan, she replied, ‘At least he's safe there and he can fire back, right?’"--The Patriot blog
* * *
posted by Ben Blankenship at
12:28 PM
