Thursday, March 26, 2009

The Lazy Economists Act

The economy shrunk at 6.3% last quarter, and corporate profits were down to a 55 year low last quarter.

One economist says these bad numbers are going to happen again in the first quarter. However, the numbers are probably going to be a bit worse:
Economists predict that the impact of the $787bn government stimulus package will not be felt until the second half of this year and that the economy could contract by another 6 per cent in the second quarter before flattening. The US government’s 10-year budget outline unveiled last month projected that the economy would contract by 1.2 per cent in 2009 before rebounding to 3.2 per cent growth in 2010. The Congressional Budget Office, however, found those estimates to be exceedingly hopeful.

“All the incoming data suggest that the economy will contract by a staggering 7 to 8 per cent in the first quarter, before the economy begins to stabilise,” said Nariman Behravesh, chief economist at IHS Global Insight.
(Financial Times, emphasis added). We have been into a decade of play pretend growth, or a bubble economy, some would say.

The cost of the Iraq and the Afghanistan wars which produces nothing but costs staggering amounts is surely to blame for much of this. We know that much of it has been waste and graft.

The new administration does not want to begin to think it is immune if it does exactly the same thing:
The United States risks repeating the same mistakes in Afghanistan that have led to billions of dollars being squandered in Iraq on its reconstruction, US auditors warned Wednesday.

The warnings come just days before President Barack Obama is due to unveil his new strategy for Afghanistan, which is expected to include an increase in reconstruction aid and civilian assistance.
(AFP). When did economists become too lazy to look ahead so that economic catastrophe could be avoided?

Do they think acting in catastrophe movies is really where it is at, or are they mentally cruising on a virtual SS Californian watching the Titanic go down?

1 comment:

  1. In an email I sent to my Senator Kay Bailey Hutchison, of Texas, I said the following:

    Dear Senator Hutchison:

    You said,"History teaches that excessive spending may prolong a recession." This is not true while liquidity is tight, credit is tight and we are still hemorrhaging jobs. We had to defibrillate the economy with the stimulus package. This would be true IFF only if there is no offset of income for every output of expenditure and there is no plan to accelerate the payback of the deficit after the economy eases and is back to slow, sound, gradual lasting path of growth and we are still not even paying yet the interest on our national debt to the IMF and the countries who are our debtors, while all three factors persist at the same time. This is not the case with regard to Obama's budget plan and we are not even paying on the principle of our loans yet.

    Doesn't anyone in the GOP realize that to spend money on the reduction of future enormous costs is a wise use of money?

    When I studied economics in college, for my business degree in accounting, and post-graduate courses, I learned that some things are far cheaper when we as a nation purchase what we need as a group so that the law of "economies of scale" takes effect. This is obviously going to be true with regard to healthcare, energy, education, etc., etc., etc., in fact, almost every item of the national budget. We can bring the cost per person way down by group purchasing power, as is already done, for example, in some cases, with regard to the Veterans' Administration prescription buying. Where the V.A. gets the same drugs that Medicare recipients get, but for a measured 800% higher cost for Medicare ( me). Just ask your colleague Sen. Claire McCaskill of Illinois when she used actual statistics and poster-sized charts that were entered into the Congressional Record to explain this. I'll bet she would be happy to explain it to you. As a former State Comptroller of Illinois, she understands the law of economies of scale and the powerful financial advantage of group purchasing very well, as one of the best tools we have available for getting more for less money per capita.

    I think it should be required that all members of Congress take, at minimum, two full years of university level economics and finance before serving their term. Some of you obviously don't know how bereft of logic and reason some of your remarks to the public are. Furthermore, you expect that the voters are too "unsophisticated" to understand these and other budget issues. I find this not to be true. Voters understand a great deal more than Congress gives them credit for, as evidenced by the 2 to 1 vote for Obama and the landslide votes for a Democratic majority in both houses of congress, mainly because of the poor handling of monitary issues by the GOP, and their tendency to have a very short memory regarding facts that the voters live out day-by-day so they will not forget.

    Our economy is in such a state that it has become a national security risk. We are endangering the relationships with our allies because of it, especially China, and others are suffering. Global climate change is becoming so dire that the future costs of major weather related catastrophies looks more and more daunting. For example, while North Dakota shovels sand like crazy to escape the flooding which could wipeout their towns; while everyone along the delta of the Missouri and Mississippi Rivers are endangered by the coming flooding when this weather front reaches them; while Senator Inhoffe of Oklahoma, amazingly, still believes that global climate change is the biggest hoax ever played on mankind, how can anyone deny it? What an idiot! Someone needs to take him to Antarctica and show him the undeniable science. In fact, it seems that the entire GOP, lately, needs to be reschooled!

    I am an independant voter who has had my fill of the disingenuous frothing, the misinformation and dementia of the GOP! We Americans have some dire problems to solve and time is of the essence. These problems will only become more expensive over time. The GOP is wasting our time. Doesn't anyone in the GOP believe in honesty and owning up to what they have done to our country anymore? Don't you realize that most, and I do mean most of the world sees right through these fruitless GOP tactics and blathering? If you want to get re-elected or to run for governor of Texas you'd better start seeing the realities and telling the truth!

    Christie Xxxxx