Tuesday, January 05, 2010

This Is Going To Be A Barnburner Of A Recovery: Recovery Will Be 2X Bigger Than Experts Predict

The Great Panic of 2008 may have destroyed blind optimism. But if excessive optimism was the near-fatal pose in 2008, blind pessimism has emerged as the reflexive post-bust crouch. And it has led the economic establishment to miss yet another inflection point. While we were wringing our hands about America's financial and industrial crisis, we ignored a parallel narrative that was emerging: the repairing of balance sheets, an embrace of reality, a nascent recovery. The same folks who chased the recession down now are likely to chase the recovery up.

For all the advances of information technology, big economic turns always take us unawares. In 2007, all indicators flashed green—until the bottom suddenly fell out. In this environment, things can look awful, until a new order unexpectedly comes in or a few deals break in your firm's favor. All of a sudden, things seem much better. We're in a Missouri economy now, one in which recovery has to be shown, not told. Economic conditions may be improving, but it still may take more than a few quarters of growth before people fully commit to recovery, both financially and psychologically. If credit means belief, since the credit crisis began two years ago, belief has been in short supply. Maybe it's time for a little blind faith.

~Daniel Gross in Slate Magazine


13 Comments:

At 1/05/2010 8:20 PM, Anonymous Benny The Man said...

And here is a link to the hyper-conservative, libertarian CATO think tank, that advocates cutting military outlays in half.

http://www.cato.org/pub_display.php?pub_id=10152

My guess is that the right-wing will ignore this sage advice.

Imagine a rip-snorting economy and military outlays cut in half! We could balance the federal budget!

Sunset the Ag Department too!

Make the USA a global economic leader again...or watch us become a debt-soaked Third World backwater nation.

 
At 1/05/2010 9:12 PM, Anonymous Ralph Short said...

I have no idea who Gross is and frankly do not care. The reality to me is this will be a very unsteady recovery as the commiecrats try to figure which brackets to tax to finance their pitiful schemes without losing elections.

As someone said recently, modern democrats are nothing but crooks and commies. At least republicans are only crooks.

 
At 1/05/2010 9:39 PM, Blogger Colin said...

I hope Gross is right, but I am also mindful that his next prescient column will be his first. Here's some previous nonsense he has peddled:

http://www.cato-at-liberty.org/2009/02/12/a-simple-way-to-enrich-everyone-instantly/

http://togetrichisglorious.blogspot.com/2009/08/daniel-gross-follies.html

http://togetrichisglorious.blogspot.com/2009/10/daniel-gross-defends-stimulus.html

 
At 1/05/2010 10:58 PM, Blogger Bill said...

While I applaud his optimism, Gross is a sarcastic leftist whose newfound confidence in the economy appears to be actually based on the fact that a Dem is in the White House.

 
At 1/06/2010 1:20 AM, Anonymous Anonymous said...

Benny,

What do you have against the federal government spending money on defense? It's one of the only items it SHOULD be funding, per the Constitution, and yet it represents just 20% of the budget's bloated pie.

Now imagine if we cut out all of the UN-Constitutional crap from the budget (a.k.a. just about everything else). We could balance the budget AND slash taxes big time!

 
At 1/06/2010 8:18 AM, Blogger James Fraasch said...

There has NEVER been an economic recovery in an environment of ever increasing taxes. It's really that simple.

Health care reform, cap and trade, more Fannie and Freddie bailouts are still on the radar. You cannot borrow your way to prosperity and cannot tax your way out of a recession.

 
At 1/06/2010 8:28 AM, Anonymous Machiavelli999 said...

There has NEVER been an economic recovery in an environment of ever increasing taxes. It's really that simple.

Health care reform, cap and trade, more Fannie and Freddie bailouts are still on the radar. You cannot borrow your way to prosperity and cannot tax your way out of a recession.


James,

Whenever you are ready to come back from your world of delusion and ideology, we'd love to have you back in the world of reality.

Look at the ISM reports, look at jobless claims, look at the market that you love so much. They are all saying recovery.

I know, I know. The economy is supposed to listen to your ideology and fail. I know it sucks that facts, evidence and the real world don't want to go along with your moral story. But the economy is recovering anyway.

 
At 1/06/2010 8:37 AM, Anonymous Machiavelli999 said...

It's one of the only items it SHOULD be funding, per the Constitution, and yet it represents just 20% of the budget's bloated pie.

BS. Find me where it says in the Constitution that funding the military is Constitutional. See how many times the word "Army" appears in the Constitution. It appears only once. Right here:

The President shall be Commander in Chief of the Army and Navy of the United States, and of the Militia of the several States, when called into the actual Service of the United States

This implies that a constant standing army during peace time is unconstitutional. And as per the Constitution, if Congress has not declared War it is peace time.

Now, I am not a strict Constitutionalist. I understand the need for a constant standing army. But if you are going to wrap yourself in the cloak of the Constitution, you have to be consistent in your ideology.

Also, speaking of the Constitution. It gives power to only one body to interpret what is and what is not constitutional. And that body is not you Anonymous. That body is the US Supreme Court. If you don't like that, then you don't like the Constitution.

 
At 1/06/2010 9:43 AM, Anonymous Anonymous said...

If the economy is recovering, how come tax receipts of every kind are plummeting. This just doesn't happen if an economy is growing. Government statistics (regardless of which party is in power) are worthless, designed to get our optimism back, which in turn will cause us to keep them in power.

 
At 1/06/2010 10:03 AM, Blogger Alexei said...

"Find me where it says in the Constitution that funding the military is Constitutional."

Article 2, Section 8: The Congress shall have power to.....To raise and support armies, but no appropriation of money to that use shall be for a longer term than two years.

"Also, speaking of the Constitution. It gives power to only one body to interpret what is and what is not constitutional. And that body is not you Anonymous. That body is the US Supreme Court. If you don't like that, then you don't like the Constitution."

In point of fact, it does not. The Constitution establishes the Supreme Court in Article 3, but no where does it say that the Court is the sole authority to decide what is or is not Constitutional. The Court assumed that power itself, starting with Marbury vs Madison. Then President Jefferson was troubled by this and considered opposing the ruling, but in the end didn't. That effectively left the court's power grab in place. And it's stayed that way. It is up to ALL members of government to ensure that the government complies with the limits set on it in the Constitution (all oaths of office are oaths to support and protect the Constitution, after all). Thus, it is up to ALL citizens to do the same, since the citizens select the government.

Abdicating this duty to a bunch of un-elected and un-accountable judges is a sure step to selling to tyrants.

 
At 1/06/2010 10:29 AM, Blogger James Fraasch said...

Machiavelli999,

I hope there is a recovery. I don't want there to be 10% unemployment for the next 1-2 years.

I am a former optimist on the economy. But now I just don't see a driver for jobs and/or growth. Housing construction is done. Commercial construction is done. Those were huge drivers for job growth the last 8-10 years.

We are not yet ready for a green job explosion (at least I don't see it replacing all those lost construction jobs). The only explosion in jobs is at the government level- which while adding to GDP, takes away from more productive uses of the resources (private investment).

In all seriousness, I ask what you see as the driver for sustained economic growth?

I read this blog to learn as much as I can and give thoughts when I think they contribute to the discussion.

Back to my original post, when has there been a serious economic expansion in a time of rising taxes? At best we might muddle through for the next 20 years, Japanese style, imho.

James

James

 
At 1/06/2010 10:50 AM, Anonymous Anonymous said...

The engine for growth will be bankruptcy law. We are going to need a lot of them. And maybe pitchfork manufacturers

 
At 1/06/2010 11:07 AM, Blogger James Fraasch said...

Alright, Mr. Glenn Beck, stop posting anonymously!

 

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