dagblog - Comments for "Our Great Economic Disconnect or Recession Part Deux"

Will this bad news impact the

Resistance — Sat, 04 Jun 2011 04:35:23 +0000

In reply to Our Great Economic Disconnect or Recession Part Deux

Will this bad news impact the talks, on raising the debt ceiling?

Republicans are you nuts?

If the economy tanks anymore, who'll get the blame for not spending; hopefully the bankers and their Republican friends?

States and cities are in trouble, with no sales tax revenues coming in, what other source of revenue do they have available?

IMHO the more the economy tanks the more the public outcry for increased Government Spending,

Maybe they'll have no choice, but to Tax those most able to afford it.?

The tea party folks will be

cmaukonen — Sat, 04 Jun 2011 02:32:09 +0000

In reply to Yes, the fund-raising emails

The tea party folks will be the only way Obama gets re-elected.

Yes, the fund-raising emails

Dan Kervick — Sat, 04 Jun 2011 02:27:08 +0000

In reply to the problem is, that it's not

Yes, the fund-raising emails are telling me my life is better. So it must be true!

If the Republicans manage to keep the tea party folks under control and nominate Romney, my guess is we're looking at President Mitt in 2012.

the problem is, that it's not

cmaukonen — Sat, 04 Jun 2011 02:04:52 +0000

In reply to I believe Obama is in major

the problem is, that it's not just about jobs. It's about the whole stinking economy. The administration keeps say we're coming out of the woods but fails to grasp that where trees end, is where the cliff is.

I believe Obama is in major

Dan Kervick — Sat, 04 Jun 2011 02:00:37 +0000

In reply to Our Great Economic Disconnect or Recession Part Deux

I believe Obama is in major political trouble. Ultimately, people are going to vote for an incumbent based on their answer to the question, "Are you better off now than you were four years ago?" If the election were held today, I believe the percentage of Americans who would say they are better off now than they were three years ago is miniscule. And Obama is running out of time to turn things around.

Right now, Obama's election strategy is based on arguing, "Things might suck; but they don't suck as badly as they would have sucked if it weren't for some of the things I did." But this kind of speculative counterfactual campaign is a very hard sell, and I doubt it will work in the end. Maybe it will work in Detroit - but not in too many other places.

He's also going to argue, "Things might suck; but I didn't make them suck. Bush made them suck." There is truth enough in that, but it's a lame argument. No matter who caused a shitty situation, people expect a president to do what is necessary to turn things around. After three years, an administration owns the economy. And after three years we are still going in the wrong direction. Trying to blame the previous administration at this late date is passing the buck.

Unfortuantely, Obama is in a poor position to make the necessary changes. He's fighting a ridiculous political battle with Congress on right-wing territory, and is still sucking up to Pete Peterson forces and the deficit hysterics. Because he has conceded so much to the austerity mongers and deficit-hacking camp, he hasn't positioned himself to be able to pivot to an argument for dynamic action and fiscal activism.

You wonder if eventually the crappy job reports, the crappy housing market reports, the growing and infectious economic disaster in Europe and other bad news will finally sink in on Obama and his economic team, open their eyes to what is happening, make them realize that no real recovery has "taken hold" and spur them to change direction.

IMO it depends on who is

Donal — Sat, 04 Jun 2011 01:47:07 +0000

In reply to I will reiterate what

IMO it depends on who is without jobs. If the people without jobs would never have voted anyway, it doesn't matter. If the people without jobs would never have voted for Obama anyway, it doesn't matter. If the people that would never vote Republican (like me) lose jobs, the worst that could happen is that they'll vote third party or not at all. But if job losses eat into Obama's independent and youthful voters, that will matter.

I will reiterate what

cmaukonen — Sat, 04 Jun 2011 01:36:38 +0000

In reply to In his A Weakening Economy

I will reiterate what Startdust recommended in her news blog. Read Yevs.

The New York Times yesterday made the an observation that seems to be lost on Team Obama, that high unemployment levels and second Presidential terms do not go together. We’ve predicted that the Osama bin Laden bounce won’t last long. Bush I, after all, had 91% approval ratings right after the invasion of Iraq and he still lost the reelection thanks to the state of the economy.

Another factor weighing on the collective psyche, and thus voter attitudes, is the inability of most people to get ahead in real economic terms. Reader Francois T pointed out an article in Investors Business Daily that highlighted that real wage gains in the last ten years are even worse than during the Great Depression:

In his A Weakening Economy

Donal — Sat, 04 Jun 2011 01:10:16 +0000

In reply to Our Great Economic Disconnect or Recession Part Deux

In his A Weakening Economy post James Hamilton doesn't see signs of a recession, but many of his commenters differ. Kopits lays out these scenarios:

1. Oil prices go down Possibly for a while. Our estimate of China's carrying capacity for oil is $100-105; that's still above tolerance levels for the US. So if prices ease, the narrative calls for China and the emerging markets to quickly take up the slack. I don't see any durable relief on this front, and I don't see the oil supply improving materially.
2. We get used to high oil prices. But oil is consuming 3% more of GDP than it did two years ago. This is unlikely to hold; so we're going to be shedding oil consumption at these prices. And if we do get used to it, the Chinese will acclimate even faster. Current oil consumption expenditure is unlikely to sustain.
3. Growth limited to increase in US oil use efficiency. Could be. Need to run some numbers on this compared to China, etc. It should be possible to estimate this analytically. But this depends on a reasonable amount of price elasticity in the demand for oil--something not normally seen historically during times of economic growth.
4. Stop-start growth. The US porpoises between periods of growth and stagnation, but no recession. This is a variant of 3 above, where the oil price is a weight pressing down on a loaded spring of a depressed US economy looking to bounce back. Could be, but again, no real historical precedent for it and it assumes no tipping points.
5. Oil shock and recession. This is the standard means of adjusting. Plenty of historical precedent. The period for such a shock would occur 30-180 days post the increase in oil price. If we put the oil price spike at February, then we're in recession by September.
Of all these alternatives, the easiest to defend is an oil shock-induced recession.