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Old 02-14-2013, 07:14 AM  
Direckshun Direckshun is offline
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The austerity policies of the past two years is threatening a double-dip recession.

It's time for some of those among us to come to two uncomfortable truths on this forum.

1. The Obama administration has overseen the sharpest decline in deficit spending just about every single one of us have seen in our lives, thanks in part to austerity demanded by Tea Party Republicans.

2. This radical reduction in the deficit is risking to stop our recovery growth dead in its tracks.

I've made this point over and over and over and over on this forum: deficit reduction retards growth.

So when you slash into the deficit as severely as we have, you will slow growth with the same severity. And what do you know? We ended up with negative growth in 2012's fourth quarter. Two quarters in a row, of course, is the legal definition of a recession (assuming the original assessment of 2012's 4th quarter holds where it is).

We've learned nothing from Europe, which has seen huge unemployment numbers, languishing recoveries, and double- and triple-dip recessions because they embraced austerity during a financial crisis while we embraced (albeit limited) stimulus.

In comes the Tea Party, and by the conclusion of the past Congressional cycle of radical austerity policy, we're now on the verge of a double-dip recession.

This is not random, folks. This is happening for that specific reason.

http://news.investors.com/blogs-capi...icit-hawks.htm

The Deficit Chart That Should Embarrass Budget Hawks
By Jed Graham
Posted 02/12/2013 08:05 AM ET



Here's a pretty important fact that virtually everyone in Washington seems oblivious to: The federal deficit has never fallen as fast as it's falling now without a coincident recession.

To be specific, CBO expects the deficit to shrink from 8.7% of GDP in fiscal 2011 to 5.3% in fiscal 2013 if the sequester takes effect and to 5.5% if it doesn't. Either way, the two-year deficit reduction — equal to 3.4% of the economy if automatic budget cuts are triggered and 3.2% if not — would stand far above any other fiscal tightening since World War II.

Until the aftermath of the Great Recession, there were only three such periods in which the deficit shrank by a cumulative 2% of GDP or more. The 1960-61 and 1969-70 episodes both helped bring about a recession.

Far steeper deficit cuts during the demobilization from World War II and in 1937-38 both precipitated economic reversals.

Now the deficit is shrinking about 50% faster than it did during the booming late 1990s, when the jobless rate was falling south of 5% and tax revenues were soaring — without tax hikes.

That's not to say that a recession is in the cards now, as the Federal Reserve applies its might to keep housing on a recovery path and helps propel the stock market higher. But growth is likely to be disappointingly weak yet again.

The Congressional Budget Office projects just 100,000 jobs will be added per month this year, the jobless rate will remain stuck around 8% and the economy will grow 1.4% if the sequester takes effect, but that may be too optimistic.

There was certainly no good economic reason for policymakers to risk the hit to growth that came with the roughly $200 billion fiscal cliff tax hike. Now they risk compounding the fiscal drag with poorly targeted budget cuts.

History suggests that there's little good to be gotten from cutting the deficit much faster than 1% of GDP per year. That's especially true at the moment, given the nature of our related demographic and budget challenges.

Both of those challenges suggest that growth should be our paramount concern, far ahead of near-term deficit reduction, even as we work to improve the intermediate-term budget outlook.

As far as the budget goes, it makes no sense that Congress remains focused on cutting discretionary spending. The danger clearly comes from entitlement programs, particularly health care, and the prospect that interest on the debt will spiral if we don't better align spending promises with revenues. These are programs that need to be reformed gradually and with great care, but there's no good reason to delay.

As for demographics, this was supposed to be the decade in which the leading edge of the Baby Boom generation began to ease out of the workforce and pass the baton to the next generations. Instead, there are not enough jobs to go around to allow for a seamless transition and Baby Boomers are hanging on longer as they try to recover from the financial damage inflicted by the housing bust.

There has been plenty of economic pain to go around, but younger workers have borne the brunt of three crises — jobs, housing and student loans. Since January 2000, the number of full-time jobs is up 10.5 million among workers 55 and up but down close to 8 million among the under-55 population.

In the speeches of Washington politicians, deficit reduction is all about being fair to the young and not leaving the next generation with ungainly debts. That might be true if deficit reduction came through smart changes to entitlement programs, but that's not the case.

In effect, the overly rapid fiscal retrenchment is giving younger workers a deal that none of them should want: We'll slash the deficit now, so that you will have a harder time getting good jobs and paying back your personal debts. We'll cut critical government spending on education, infrastructure and science so that new college graduates for whom job prospects remain discouraging can put their futures on hold for a little longer.
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Old 02-14-2013, 01:59 PM   #16
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Old 02-14-2013, 02:11 PM   #17
Direckshun Direckshun is offline
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Quote:
Originally Posted by donkhater View Post
Austerity measures would work if the U.S markets more closely resembled a free market economy. Because corporations and government are tied at the hip these days, reductions in federal money (i.e. freebies) will hurt their bottom line and slow the economy. Maybe this is what it takes to wake people up to the real problem--the all too close relationship the private sector has with the federal government. By definition we are a facist economy. Austerity will hurt it, but that doesn't mean it's bad.
I don't know what to say about your argument because it's so far afield ("fascist" economy? what?).

I will say that your recommendations will plunge us into a second recession.

If you want to shrug and say "well at least my ideology will remain pure," then that's on you. But that's not how you run a country.
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Old 02-14-2013, 02:15 PM   #18
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Originally Posted by mlyonsd View Post
And stop with the Obama policies got us out of the recession bull shit. The recession ended before he blew $800 billion in stimulus.
Link?

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Old 02-14-2013, 02:16 PM   #19
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Originally Posted by KC Dan View Post
And, he's 45 days from being in another recession. Wonder how he'll spin that on Bush if it comes to pass
He's also a GDP revision away from it, as well.

Reports are that the GDP revisions will change our estimation of the 4th quarter from -0.1% to +0.2 to 0.5%.
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Old 02-14-2013, 02:17 PM   #20
Direckshun Direckshun is offline
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Quote:
Originally Posted by Prison Bitch View Post
This board is the perfect place for retards.

Of course, your argument (that you've used over and over and over) is so simple to destroy, a child could rebut it. If deficits don't matter, why not just issue 545 Trillion Bazillion tomorrow? We'll grow like crazy. Unless you really do believe there's a limit to debt. If you do, then you're defeating your own point.
I never argued that deficits don't matter, or that there isn't a limit to debt.
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Old 02-14-2013, 02:24 PM   #21
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Quote:
Originally Posted by Direckshun View Post
I don't know what to say about your argument because it's so far afield ("fascist" economy? what?).

I will say that your recommendations will plunge us into a second recession.

If you want to shrug and say "well at least my ideology will remain pure," then that's on you. But that's not how you run a country.
The only way to get us out of corporatism, and back to capitalism, is to get the people to wake up. Government being in bed with corporations is bad for the country. It doesn't work. Free-market capitalism is the only tried and true way to create the most prosperity and largest middle class now.

Austerity will not and is not crippling the economy. We are in a deficit and debt crisis, and that is what is crippling the economy. For every dollar that the government spends, it has to take more than $1.50 from the private sector, either through taxation or inflation. This idea that the government can spend your money better than you can, is absolutely ridiculous.

If we actually practiced Austerity, we would inject trillions of dollars back into the private sector leading to an economic boom.
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Old 02-14-2013, 02:32 PM   #22
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Old 02-14-2013, 02:32 PM   #23
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Quote:
Originally Posted by Direckshun View Post
I don't know what to say about your argument because it's so far afield ("fascist" economy? what?).

I will say that your recommendations will plunge us into a second recession.

If you want to shrug and say "well at least my ideology will remain pure," then that's on you. But that's not how you run a country.
What "is on me"? I'm just offering opinion. I'm putting forth my opinion as to why austerity measures won't work. The way U.S. businesses are tied to government of course reduced govenrment spending will slow it down.

But that doesn't mean it shouldn't happen. Maybe someone, somewhere might ask the question "why?" and come up with something other than some lame-ass Keynesian response.

But I suppose everyone should defer to your opinion since you "know how to run a country"?
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Old 02-14-2013, 03:50 PM   #24
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Originally Posted by Direckshun View Post
I never argued that deficits don't matter, or that there isn't a limit to debt.

Sure you did: "Deficit reduction retards growth". That clearly indicates you are ok with deficits because you want growth instead of balanced budgets. That's fine if you believe that. But you're not laying out any limit to debt here.


If you say there IS a limit to debt - whatever level that may be - then you're disputing your own point that "deficit reduction retards growth". The second you decide to start putting the brakes on debt, you're admitting it has limits in growing the economy. (Diminishing returns)
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Old 02-14-2013, 04:16 PM   #25
Direckshun Direckshun is offline
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Quote:
Originally Posted by DementedLogic View Post
The only way to get us out of corporatism, and back to capitalism, is to get the people to wake up. Government being in bed with corporations is bad for the country. It doesn't work. Free-market capitalism is the only tried and true way to create the most prosperity and largest middle class now.
No, plunging us into recession is not the only way to sell your preferred form of government.

You could try winning elections on the content of your ideas, for starters.

Quote:
Originally Posted by DementedLogic View Post
Austerity will not and is not crippling the economy. We are in a deficit and debt crisis, and that is what is crippling the economy.
That's not remotely true, and I'd like to see what sources you have for that argument.

The GDP downturn last quarter was due to two things: Hurricane Sandy and dramatic cuts in defense.

That's why the economy crippled in the previous quarter. Do I even need to link to the CBO report?

Quote:
Originally Posted by DementedLogic View Post
If we actually practiced Austerity, we would inject trillions of dollars back into the private sector leading to an economic boom.


If we practice austerity, the opposite happens.

Not what you just said. The opposite of what you just said..
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Old 02-14-2013, 04:19 PM   #26
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Originally Posted by donkhater View Post
I'm putting forth my opinion as to why austerity measures won't work. The way U.S. businesses are tied to government of course reduced govenrment spending will slow it down.

But that doesn't mean it shouldn't happen.
That's exactly why it shouldn't happen.

Because it won't work.
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Old 02-14-2013, 04:21 PM   #27
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Originally Posted by Prison Bitch View Post
Sure you did: "Deficit reduction retards growth". That clearly indicates you are ok with deficits
Stop right there, Fallacy Express.

Deficit reduction does retard growth -- all evidence suggests that.

Which means you should only practice it when the economy is strong enough to withstand it.

Right now, it is not.

Quote:
Originally Posted by Prison Bitch View Post
If you say there IS a limit to debt - whatever level that may be - then you're disputing your own point that "deficit reduction retards growth".
Not remotely.

There is a limit to debt, but right now we are light years away from it.

We are borrowing money for less than zero percent. Because as weak as our economy is, just about everybody else's is struggling worse and they desperately want the security of our bonds.
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Old 02-14-2013, 04:38 PM   #28
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Originally Posted by mlyonsd View Post
Oh, it's "maybe" now?
I swear to god I read an article last week on the BBC network that England entering its triple dip recession. Some are claiming its there. Almost all say they are a month or two from another one. It's not a far fetched claim.
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Originally Posted by mlyonsd View Post
And stop with the Obama policies got us out of the recession bull shit. The recession ended before he blew $800 billion in stimulus.
Thats BS. Do your scientific research. Ask around and see if people think the recession ended before Jan. 2008? It officially ended in June 2009. A year and a half into Obama's polices. You are better than just spouting a bunch of propaganda.

But the bottom line question remains..... Do you feel we should have used austerity and went through a double dip recession and almost a third recession and still can't see a guaranteed recovery? That was a better path?
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Old 02-14-2013, 04:49 PM   #29
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Fascinating that the end of the 'stimulus' spending spree and defense spending cuts that liberals have wanted for years is now viewed at 'austerity'.
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Old 02-14-2013, 04:58 PM   #30
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Fascinating that the end of the 'stimulus' spending spree and defense spending cuts that liberals have wanted for years is now viewed at 'austerity'.
Liberals don't want to slash defense spending by hundreds of billions and thousands of employees immediately. They want it phased, like sane policy does.
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