Are Bernanke and Geitner trying to solve the GDP Problem Instead of the Economic Prob

Discussion in 'Economy' started by Neubarth, Aug 2, 2009.

  1. Neubarth
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    Neubarth At the Ballpark July 30th

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    Are Bernanke and Geitner trying to solve the GDP Problem Instead of the Economic Problem?

    I am trying to put my thoughts on this as I write this morning and will probably be done just in time to drive over to the early Catholic mass. I know I am not a Catholic but once or twice a year I feel compelled to worship with them. I still never know when to kneel down, stand up and sit down and then repeat the process in inverse order. Didn't know it as a kid on the rare occasion when Grandpa took me along with him. A man of faith he went to church on almost every day. I did not start into religion until I was 27.

    Back on to my rant on a Sunday morning.

    We are in a horrific economic mess that is the result of a collapse of Three Bubbles:

    1. Stock overvaluation.
    2. Real Estate Overvaluation
    3. Credit Overvaluation and ensuing Debt excess.

    Having three major collapses like that in the space of a few months was a terrific shock to our and the world's economy. Fixing it will not be easy. Yet, the Central Bank (Fed) and the government have countered the effects of the three negative shocks by means of monetary and fiscal stimulus policies.

    The monetary and fiscal stimulus is aimed at boosting overall expenditure in the economy, which (it appears to be believed) is the magic ingredient for economic growth. There is some logic to this because the spending of one individual is income to another. A service sector economy works in this manner. Unfortunately, this does not appear to be helping Industrial Production, which keeps on falling and falling. The United States is the leading Industrial Production country in the world, well over two times bigger than Red China.
    To really come out of this Depression we have got to come out of this Industrial Production Depression.

    The Initial Stimulus Package was largely directed at picking up State, County and City projects that had fallen by the wayside (that still might place many orders for Industrial Products.) Yet my fear is that it is not enough, as these were projects that were originally scheduled to be done on the local level. So all we are actually doing is saving a few local and expensive projects, but not addressing the real problem. We need to get America’s industry humming again, not just the service sector We are not really working towards that right now.

    What I see Bernanke and Geitner doing is trying to solve the negative GDP numbers. They are ballyhooing the fact that GDP is down to negative one. That might be good, but millions of people are still losing their jobs every month. Don’t believe the federal government unemployment numbers. Believe the state Unemployment Insurance Claim numbers. The two and a half to three million people a month who are filling out those forms know that they are unemployed even if the government claims that only one fifth of them really lost their jobs. Are we to believe that the rest of those people are all liars or delusional?

    This brings to mind the homosexual group that used to chant, "We're here! We're Queer! Now, What ya gonna do about it?" Eventually most people decided to ignore them, and they stopped acting up. They had managed to get their message across to the straight world. Unfortunately, the government has decided to pretend that the vast number of unemployed are not really there. There is something wrong about that.

    As Josef Goebbles said when he was in power in Nazi Germany, "If you tell a lie, tell it big enough, tell it loud enough and tell it often enough and it will be believed. I do not believe the lies of the Federal Government. I do believe the state claim forms that the people take the time to fill out. I have written to Congress about the tremendous disparity between the real numbers of people filling out those claims and the outrageously LOW numbers reported by the federal government. As usual, nothing is ever done about the tremendous dishonesty in the federal numbers.

    To address that issue of unemployment, Bernanke and Geitner have endorsed a policy of loose money to help the Big Banks and to get the people spending again. The Big Banks have profited tremendously by refinancing mortgages and betting on the stock market rising, which they have helped it to do. I expect that they will soon bet on the stock market falling again, and amazingly they will be correct again!

    The Federal spending might help the service sector economy, but it will not place industrial orders. The half dozen Big Banks are getting richer off of the zero interest loans the Fed is giving them. Meanwhile the small banks are collapsing and failing by the dozens every month.

    It is obvious that the Government policy is not directed at saving the economy. It appears to be directed at improving an index. Once the index is improved we can declare victory over the enemy and say the recession is dead, even though the local banks are failing (an estimated 1000 are in serious trouble), the factories are failing and more and more people are losing their jobs every day.

    It is time to question the actions of Geitner and Bernanke because they appear to now be charlatans. Fixing an Index that is easily manipulated does not fix the problem.

    We are not addressing the real problem with the economy, and a for show improvement in an easily manipulated GDP will not heal the economy in this country.

    If the stock market goes up, the GDP goes up, so Bernanke has resorted to a potentially disasterous loose money policy that will allow the banks to bid up the stock market, even though the earnings of those companies are falling and falling.

    If the deficit in balance of trade goes down because we are not buying all those Chinese products because we are in depression and people are only buying absolute necessities, the GDP goes up, but it does not mean people are back to work. It just means we are spending even less than we were a quarter ago.
     
  2. Oddball
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    Oddball BANNED Supporting Member

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    I think that neither of them have but the most vague idea of what they're trying to do.
     
  3. publicprotector
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    publicprotector Member

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    Well when you have a private owned outfit that runs the banking system and run by a certain group of people I think the answer quite clear, you have been screwed, your being screwed and after screwing you they will dump you.

    The sole purpose of this process is to kill off the oposition and clean everyone out so you just end up with a few superbanks run and owned by the aforementioned. None of the stimulus money that has gone to the banks was ever going to go to the people.

    America and its people have been exploited to the hilt, the country wrung out and then will be dropped as the perps move on to new pastures India/China/Russia. Once the final collapse comes America will never again achieve its past status. The plan is the NAU where the US becomes a partner not a main player.

    The perps want one world bank and 3 spheres of influence, the NAU/EU/AFE and thats exactly how things are working out. For the US and its people there will be trying times ahead. The signs are there and patently clear, townships closing down, lack of investment at every level in everything but the military. The US is going to look and feel like cold war Russia.

    All what has taken place and what will take place has been planned for a long time, all events are connected and nothing is random. When you see people in your own nation queuing for free food, field hospitals, millions loosing their homes you know something is not right. Ask yourself why is the Government spending trillions on war and weapons when its people lack medical care, homes and education. Couple that with the police morphing into a Para Military force and soldiers on the street it dose not look to good dose it.

    I wish I was wrong but its been done so many times before the perps know they can and do get away with it.
     
  4. Toro
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    Toro Diamond Member

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    GDP is economic output. They are trying to stabilize the economy first. You've got to put out the fire before you rebuild the foundation.

    Employment is a lagging indicator. Employment always bottoms well before the economy bottoms. There is not one single recession I can think of when this did not happen.

    Only $60 billion of the stimulus bill has been spent. There is another $700+ billion coming. Much of that will go into goods not services.

    The other stimulus that has come from the Fed has primarily gone into the financial system and been used to recapitalize the banks. It seems that most of the Fed's stimulus, apart from stabilizing the financial system, has gone into asset market speculation.

    Make no mistake about it though. The Fed's actions saved the financial system. Things would have gotten multiples worse had they not done what they did.

    The problem now is that the Fed's actions are re-creating imbalances in the asset markets. The Fed is going to have to start withdrawing liquidity at some point in the not too distant future, or we will have yet another bubble on our hands.

    The unfortunate thing is that we have become an asset/bubble economy. The Fed and the government are tacitly supporting asset prices such as homes to save the banking system. This is creating excess liquidity which is finding its way into stocks and commodities. What is especially worrisome is that they may be creating greater and greater bubbles with less and less economic effect.

    I am disheartened by what I see as excessive speculation returning once again. It appears that we have not learned much from this. Or if we have, then little has been implemented.

    Gold to $5000 anyone?

    Stocks are no longer inexpensive. By historical standards, they are trading at above the average of the past 140 years. However, this is not an average economy. People buying stocks here buying because of momentum, not because of good returns.
     
  5. Oddball
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    Oddball BANNED Supporting Member

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    Actually, most of it will end up in the hands of political cronies and other hangers-on.
     
  6. pinqy
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    pinqy Gold Member

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    I'll assume you're just ignorant rather than actively lying, but you continue to speak untruths. For June, 2009, the CPS survey asked questions about the week of June 7-13. The not seasonally adjusted numbers say that there were 3,899,000 newly unemployed in the previous 5 weeks (SOURCE). For the previous 5 weeks the total unadjusted UI claims numbers were 2,719,063 (claims for weeks ending 05/16/2009, 05/23/2009, 05/30/2009, 06/06/2009, 06/13/2009) Close considering that Unemployment is a much broader measure than UI claims. But you're saying trust the UI claims, which are LESS than the total Unemployement numbers. Weird.

    Your continuing problem is that you look at UI claims, which are a GROSS loss to labor and compare them to the reported change in the Employment and Unemployment numbers which are NET loss to labor. Why on earth do you think it valid to compare gross to net?
     
    Last edited: Aug 3, 2009
  7. Neubarth
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    Neubarth At the Ballpark July 30th

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    You come across as CRAZY as a LOON. I don't give a shit about net and gross. What were they basketball players for Fordham?

    I am only interested in the people who think they are out of work and in need of their unemployment benefits. They have been asking for those benefits at a rate for the past year around 3 Million a month.

    You can Net and Gross all you want, but 3 Million people who want their benefits sounds pretty serious to me. In fact it is frightening. Tell me what you think about that, and forget the net. I grew up on the south side of Chicago and we never had nets. That kind of stuff was for the rich white boys.
     
  8. Neubarth
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    Neubarth At the Ballpark July 30th

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    Damn, Toro, you have me totally confused with this post. If Employment is a lagging indicator, wouldn't it trail the economy bottom?

    When I see 3 Million a month filing for UI , I think it is a WARNING INDICATOR. And that is a very leading indicator to me. To me it says things are going to shit on our economic rollercoaster.
     
  9. Toro
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    I apologize. I got that backwards. My bad.

    Employment always lags the economic recovery. It also lags the economy going into a recession.
     
  10. pinqy
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    pinqy Gold Member

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    Because you don't understand the difference. You've made it abundantly clear that you don't know a damned thing about statistics or economics. You show no comprehension of even the basic concepts and prattle on about numbers when you don't even know what those numbers mean.
    You keep calling me insane, but have NEVER pointed out one thing I've said that doesn't make sense.

    And you don't give a shit about the thousands of others who are out of work but aren't eligible for UI benefits.

    If that's frightning, how about the real number of about 6.5 million a month collecting UI benefits and the 8 million who are unemployed and not collecting UI?

    One more time...Initial UI claims is NOT...I repeat NOT a measure of unemployment.
     

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