5 ms·

As Economy Turns, Washington Looks Better

19 points by domodomo 17y ago

joe_the_user 17y ago
And perhaps "Cash For Clunkers" will get credit? But seriously, it seems like "success" in economic terms these day means "postponing the day of reckoning till your successor is in office" and failure means the opposite. By that token Greenspan succeeded but Bush II failed.
- jhancock 17y ago
  by "these day" I assume you mean for at least the last 30 or 40 years? A common story... (copied from http://www.wickedlocal.com/milford/news/lifestyle/columnists/x135734224/MARIE-PARENTE-The-envelopes http://www.wickedlocal.com/milford/news/lifestyle/columnists... ) A CEO was being honored at his retirement party. The toastmaster, his successor, called on him for parting remarks and advice. After delivering farewell comments, the outgoing CEO handed his successor two envelopes marked #1 and #2. He said, "Place these envelopes in the top drawer of your desk. When you make your first big mistake, open the #1 envelope and follow the instructions. When you make your second big mistake, open the #2 envelope and likewise follow those instructions." The new CEO was young, handsome and an accomplished public speaker. He and his family were featured in business magazines and were invited to speak throughout the business world at home and abroad. For the first few months, things seemed to go along smoothly in spite of the CEO's frequent criticisms of the company's founders, business practices and employee performances. The new CEO seemed to relish pointing out the company's mistakes and perceived weaknesses. One day, the new CEO committed a huge gaffe that headlined business newsletters and newspapers nationwide! He remembered the two envelopes given to him by his predecessor. He rushed to his desk, seized the #1 envelope, tore it open and read it. The message was printed in bold black letters. "Blame your predecessor." Immediately, he convened a series of press conferences, blamed his predecessor and things seemed to calm down for a few months. About three months later, he made another gaffe of greater significance than the first one. Before meeting with the board of directors, he opened his desk drawer and read the #2 letter. It stated, in bold, black letters, "Prepare two envelopes!"
  - joe_the_user 17y ago
    by "these day" I assume you mean for at least the last 30 or 40 years? I suppose so. But, despite the great difficulty in proving this scientifically and the great risks of this being a mere effect of nostalgia, I strongly believe that the intervals of attention are getting shorter.
    - jhancock 17y ago
      I"m sure the attention intervals are getting shorter. Mainstream media is painful to watch. I only picked the period 30-40 years as I'm 40 years old and it seems our political system has been "passing the buck" through my life.
nazgulnarsil 17y ago
same old story...people manage to keep advancing despite the yoke of heavy taxation, government takes credit for every inch plowed.
- nazgulnarsil 17y ago
  ..is 40%+ taxation not considered heavy? I consider it pretty heavy. taxation is especially harmful to the primary source of economic growth: new small businesses. the tax burden of hiring new employees is so strong (and so risky due to litigation resulting from contract dispute) you'd think the government liked unemployment.
  - Locke1689 17y ago
    You're probably being voted down because you provide little evidence for your claims. It is practically impossible to "logically deduce" the result of certain elements of the economy because it is dependent on so many variables. Consider, for example, the resistance in a wire. One might logically argue that because the power dissipated instantaneously in a resistor is equal to I^2 * R, that a decrease in resistance R leads to lower power (and heat) dissipation. Of course, that would be wrong, as that same resistor relates current to resistance by V=IR. Now, one can see that by decreasing the resistance by a factor of x (R/x), one also increases the current by a factor of x (xI, at a constant voltage). Thus, when the original problem is solved again, P=(xI)^2 * (R/x), so the power dissipation is actually increased by a factor of x. The economy works in the same way. To argue that taxes cause a decrease in first order capital may be true and may be a logical conclusion. However, logically deducing broad statements about the economy through that is a logical fallacy. The solution to this is data, not more reasoning. Remember, the variables you forget never appear in your equations.
    - nazgulnarsil 17y ago
      I thought my claim was pretty conservative. All my experience with small businesses (2 just in my immediate family, friends with lots more) is that dealing with the administrative as well as straight up monetary demands of taxes actively prevents them from hiring as many people as they'd like to. it seems like common sense that if you wanted to encourage employment you'd have like a 3 month moratorium on new payroll taxes when getting new employees up and productive. considering that you're taking someone OFF unemployment and turning them into an active taxpayer...seems like a completely unadulterated win-win for the government...so why is there zero incentive?
mixmax 17y ago
It ain't over till the fat lady sings. The economy is basically a chaotic system that is impossible to predict. It's kind of like the weather: More than a few days out you just don't know since there are so many variables and feedback loops.
- joe_the_user 17y ago
  Uh, that the housing bubble would end was absolutely predictable. It wasn't a matter of butterflies in the Himalaya perturbing the system. When the housing would was hard to predict. That poor policies result in problems is not unpredictable and so it's quite predictable that this "recovery" will end in grief. When it will end is a different matter but your analogy with the weather is misplaced
nostrademons 17y ago
This is one of the fastest media turnarounds I've seen in a recession. IIRC, the 2001 recession didn't end in the media until later 2004 and early 2005, with the sales of Flickr and Del.icio.us and the development of FaceBook and YouTube. I remember that I didn't even look for sumer internships in 2003 because I figured the market was so bad nobody would hire a mere intern, and about half the companies I approached in 2004 said "We liked your resume, but we're not hiring now." In 07 (after this had all ended), I talked with a fellow computer programmer at a fencing class, and found out he was making half what I was because he had graduated into the sluggish job market of 04 instead of the growth market of 05. In the 91 recession, I recall the media being very subdued and depressed right up until Netscape's IPO in 95. I don't remember the 79-82 recession, but to hear my parents tell it, there was a widespread belief that America had permanently lost its technological edge, and things would never get better. This perception didn't change until around 1984, and even through my childhood in the 80s, I remember recurrent fears that we'd lost our economic supremacy to the Japanese. The only recession I can think of where people started proclaiming "We've turned the corner; happy days are here again" a mere year after it started was the Great Depression. If you read http://newsfrom1930.blogspot.com/ http://newsfrom1930.blogspot.com/, it sounds almost exactly like something you could read in the newspapers today. That alone makes me suspicious of this recovery. The point of a recession is so you stop doing what you're doing and find new uses for your labor and capital; that hasn't happened so far. In all the recessions above, that's what brought the country out of it: new markets opened up and absorbed all the workers that were laid off by the old ones. I haven't seen that yet (though there are some interesting developments in mobile and in the revival of hardware hacking); mostly we've seen government attempts to paper over the inefficiencies in old industries with taxpayer dollars.
- Ardit20 17y ago
  well, in the great depression and the recessions you mentioned the government did not give out billions and then went on to print money like there is no tomorrow. I would be more worried about inflation now than really a depression. I just can not see how a depression can occur. The whole problem was that banks lost billions! The economy was fine, what was not was the banks and the banks now are sort of getting fine, so I say on with the champaign.
johnohara 17y ago
We're not done by a long shot. The next wave of mortgage resets -- option ARMs -- comes through late this year and next. http://www.businessweek.com/lifestyle/content/apr2009/bw20090416_103126.htm http://www.businessweek.com/lifestyle/content/apr2009/bw2009...
- sahaj 17y ago
  information that is already known is always already taken into account by the futures/stock market.
  - joe_the_user 17y ago
    It is amazing to me that anyone still believes this after the last two years! But I suppose that a little irrational optimism is good thing in tough times...
timwiseman 17y ago
This is article is interesting, and could in the end be correct in its rosy assessment and its allocation of the credit. However, I find it interesting that this article does not say a word about inflation, the creation of currency, or the increasing national debt and the intermediate to long term affects those will have.

19 points by domodomo 17y ago

And perhaps "Cash For Clunkers" will get credit? But seriously, it seems like "success" in economic terms these day means "postponing the day of reckoning till your successor is in office" and failure means the opposite. By that token Greenspan succeeded but Bush II failed.

jhancock 17y ago
by "these day" I assume you mean for at least the last 30 or 40 years? A common story... (copied from http://www.wickedlocal.com/milford/news/lifestyle/columnists/x135734224/MARIE-PARENTE-The-envelopes http://www.wickedlocal.com/milford/news/lifestyle/columnists... ) A CEO was being honored at his retirement party. The toastmaster, his successor, called on him for parting remarks and advice. After delivering farewell comments, the outgoing CEO handed his successor two envelopes marked #1 and #2. He said, "Place these envelopes in the top drawer of your desk. When you make your first big mistake, open the #1 envelope and follow the instructions. When you make your second big mistake, open the #2 envelope and likewise follow those instructions." The new CEO was young, handsome and an accomplished public speaker. He and his family were featured in business magazines and were invited to speak throughout the business world at home and abroad. For the first few months, things seemed to go along smoothly in spite of the CEO's frequent criticisms of the company's founders, business practices and employee performances. The new CEO seemed to relish pointing out the company's mistakes and perceived weaknesses. One day, the new CEO committed a huge gaffe that headlined business newsletters and newspapers nationwide! He remembered the two envelopes given to him by his predecessor. He rushed to his desk, seized the #1 envelope, tore it open and read it. The message was printed in bold black letters. "Blame your predecessor." Immediately, he convened a series of press conferences, blamed his predecessor and things seemed to calm down for a few months. About three months later, he made another gaffe of greater significance than the first one. Before meeting with the board of directors, he opened his desk drawer and read the #2 letter. It stated, in bold, black letters, "Prepare two envelopes!"
- joe_the_user 17y ago
  by "these day" I assume you mean for at least the last 30 or 40 years? I suppose so. But, despite the great difficulty in proving this scientifically and the great risks of this being a mere effect of nostalgia, I strongly believe that the intervals of attention are getting shorter.
  - jhancock 17y ago
    I"m sure the attention intervals are getting shorter. Mainstream media is painful to watch. I only picked the period 30-40 years as I'm 40 years old and it seems our political system has been "passing the buck" through my life.

nazgulnarsil 17y ago

same old story...people manage to keep advancing despite the yoke of heavy taxation, government takes credit for every inch plowed.

nazgulnarsil 17y ago
..is 40%+ taxation not considered heavy? I consider it pretty heavy. taxation is especially harmful to the primary source of economic growth: new small businesses. the tax burden of hiring new employees is so strong (and so risky due to litigation resulting from contract dispute) you'd think the government liked unemployment.
- Locke1689 17y ago
  You're probably being voted down because you provide little evidence for your claims. It is practically impossible to "logically deduce" the result of certain elements of the economy because it is dependent on so many variables. Consider, for example, the resistance in a wire. One might logically argue that because the power dissipated instantaneously in a resistor is equal to I^2 * R, that a decrease in resistance R leads to lower power (and heat) dissipation. Of course, that would be wrong, as that same resistor relates current to resistance by V=IR. Now, one can see that by decreasing the resistance by a factor of x (R/x), one also increases the current by a factor of x (xI, at a constant voltage). Thus, when the original problem is solved again, P=(xI)^2 * (R/x), so the power dissipation is actually increased by a factor of x. The economy works in the same way. To argue that taxes cause a decrease in first order capital may be true and may be a logical conclusion. However, logically deducing broad statements about the economy through that is a logical fallacy. The solution to this is data, not more reasoning. Remember, the variables you forget never appear in your equations.
  - nazgulnarsil 17y ago
    I thought my claim was pretty conservative. All my experience with small businesses (2 just in my immediate family, friends with lots more) is that dealing with the administrative as well as straight up monetary demands of taxes actively prevents them from hiring as many people as they'd like to. it seems like common sense that if you wanted to encourage employment you'd have like a 3 month moratorium on new payroll taxes when getting new employees up and productive. considering that you're taking someone OFF unemployment and turning them into an active taxpayer...seems like a completely unadulterated win-win for the government...so why is there zero incentive?

mixmax 17y ago

It ain't over till the fat lady sings. The economy is basically a chaotic system that is impossible to predict. It's kind of like the weather: More than a few days out you just don't know since there are so many variables and feedback loops.

joe_the_user 17y ago
Uh, that the housing bubble would end was absolutely predictable. It wasn't a matter of butterflies in the Himalaya perturbing the system. When the housing would was hard to predict. That poor policies result in problems is not unpredictable and so it's quite predictable that this "recovery" will end in grief. When it will end is a different matter but your analogy with the weather is misplaced

nostrademons 17y ago

This is one of the fastest media turnarounds I've seen in a recession. IIRC, the 2001 recession didn't end in the media until later 2004 and early 2005, with the sales of Flickr and Del.icio.us and the development of FaceBook and YouTube. I remember that I didn't even look for sumer internships in 2003 because I figured the market was so bad nobody would hire a mere intern, and about half the companies I approached in 2004 said "We liked your resume, but we're not hiring now." In 07 (after this had all ended), I talked with a fellow computer programmer at a fencing class, and found out he was making half what I was because he had graduated into the sluggish job market of 04 instead of the growth market of 05. In the 91 recession, I recall the media being very subdued and depressed right up until Netscape's IPO in 95. I don't remember the 79-82 recession, but to hear my parents tell it, there was a widespread belief that America had permanently lost its technological edge, and things would never get better. This perception didn't change until around 1984, and even through my childhood in the 80s, I remember recurrent fears that we'd lost our economic supremacy to the Japanese. The only recession I can think of where people started proclaiming "We've turned the corner; happy days are here again" a mere year after it started was the Great Depression. If you read http://newsfrom1930.blogspot.com/ http://newsfrom1930.blogspot.com/, it sounds almost exactly like something you could read in the newspapers today. That alone makes me suspicious of this recovery. The point of a recession is so you stop doing what you're doing and find new uses for your labor and capital; that hasn't happened so far. In all the recessions above, that's what brought the country out of it: new markets opened up and absorbed all the workers that were laid off by the old ones. I haven't seen that yet (though there are some interesting developments in mobile and in the revival of hardware hacking); mostly we've seen government attempts to paper over the inefficiencies in old industries with taxpayer dollars.

Ardit20 17y ago
well, in the great depression and the recessions you mentioned the government did not give out billions and then went on to print money like there is no tomorrow. I would be more worried about inflation now than really a depression. I just can not see how a depression can occur. The whole problem was that banks lost billions! The economy was fine, what was not was the banks and the banks now are sort of getting fine, so I say on with the champaign.

johnohara 17y ago

We're not done by a long shot. The next wave of mortgage resets -- option ARMs -- comes through late this year and next. http://www.businessweek.com/lifestyle/content/apr2009/bw20090416_103126.htm http://www.businessweek.com/lifestyle/content/apr2009/bw2009...

sahaj 17y ago
information that is already known is always already taken into account by the futures/stock market.
- joe_the_user 17y ago
  It is amazing to me that anyone still believes this after the last two years! But I suppose that a little irrational optimism is good thing in tough times...

timwiseman 17y ago

This is article is interesting, and could in the end be correct in its rosy assessment and its allocation of the credit. However, I find it interesting that this article does not say a word about inflation, the creation of currency, or the increasing national debt and the intermediate to long term affects those will have.