Where's the evidence? The only evidence I know of for that claim is self-reporting from stimulus recipients, but those numbers are a joke.
The economy was contracting at a frightening rate prior to the stimulus. So far as I recall, data indicated we were contracting at about 6%. We were losing about 0.5 million jobs a month. Every lost job results in less demand, which results in more lost jobs. And this had obvious and sudden impacts on consumer confidence, which also reduced demand. The contraction was severe and quick, and markets did not have time to respond. We saw a demand contraction unlike any. Average savings increased to historic levels. And private industry responded by reducing costs, driving down demand even further. How, in this scenario, one could possibly suggest that increased demand would not save or create a bunch of jobs is beyond me. Really. It's just that obvious. The government increased spending, hiring countless private firms to complete projects, many of which would have been completed years earlier had only funding existed.
I am employed now only because of government spending. And that goes for at least half the folk in my office, and so far as I can tell, it's a common trend throughout our nation-wide firm. And it will be for some time, because the private markets have a long way to go.
Could the Stimulus have been better? Obviously. But these suggestions that it hasn't saved or created a huge number of jobs are driven by political bias.
That's not obvious at all. First off, investor confidence is, well, still not that confident.
Not NOW. Not since Greece. And blocking unemployment extensions WILL NOT HELP. But the general trend has been increasing confidence.
And secondly, how do you know it wouldn't have recovered on its own?
Because we were watching job losses continue to increase to beyond 0.5 million per month. There's no way consumer confidence is going to improve on its own with such dire numbers.
Look, I'm not going to argue that the Stimuls was perfect, but let's be reasonable-- to suggest that a multi-hundred-billion-dollar jobs package wouldn't positively impact confidence in a market stricken by the constant fear of job loss is, well... come on, really?
You have already claimed that the estimates of where the economy was at before the stimulus were way off. If estimates of current conditions aren't even reliable, why would you put any faith in projections for what would have happened under alternative scenarios?
1. I didn't
claim estimates were off. They
were off. Over time, more data are compiled, and more analysis conducted, so trends are more well defined.
2. Are you serious? We may not understand the exact unemployment rate, but we have plenty of data to know that it stinks. Because, however, we don't know the actual unemployment rate, should we abandon all hopes of trying to pick the best policy to positively impact unemployment? Come on...
3. Again, are you serious? 0.5 million job losses a month. Nearly unprecedented contraction. Historic saving levels. Historically low consumer confidence. There's only one place these data point, and it's not good. No one can say for certain what would or would not happen in scenarios that cannot be modeled 100% accurately, but one can induce, and it's tough to find any non-grim induction from these given indicators.
Yes they did - in the short run. But how exactly does that translate to general economic improvements? We will have to pay for those tax breaks, and business investment is affected by estimates of future costs (including taxes). That will negatively affect the economy.
1. It restores confidence in the global financial system, as investors have some reason to believe that banks' holdings may actually have some worth. This was why stopping the housing deflation was essential. This decline in investments nearly brought the credit markets to a halt, which required immediate intervention by way of the largely successful TARP. Weren't you paying attention?
2. It restores confidence in the US's financial system, as banks have some reason to trust one another, which increases inter-bank-lending. This allows private businesses to obtain loans, which are crucial to our economy. The credit crunch was very real. It even impacted my parents, who own a 50-acre prune and walnut orchard. At the time product went to market, just as everything started to crumble, long time buyers were unable to obtain agricultural loans necessary to purchase goods. Not good. At all. For anyone.
3. It's better timing. The economy is a lot like natural selection; smaller, incremental changes are fine, because markets (species, or fauna) have time to adapt (evolve), but multiple, sudden, severe market (environmental) shifts can cause recessions or depressions (mass extinctions) as selection acts upon entire markets (species, or fauna). The housing market has not yet fully recovered. It's yet plenty of pain to be felt. But it's best the pain be felt later, when the economy just might have the strength to pull through. Said another way, would you prefer to experience acute kidney failure during or after stomach cancer?
So I don't see why you think this is anything other than just a wealth transfer scheme to take money from the majority of tax payers to line the pockets of the few people who are currently buying or selling homes.
If you don't understand the role these assets play in our current setting, you should educate yourself prior to holding conclusions. I've tried to follow this on a daily basis, and even I find my opinions rely on an inadequate understanding of the current crisis-- but at least I think I'm somewhat in the ball park, and I listen and read carefully, and I change my conclusions when appropriate. And I try to base them on real numbers.
Look, it's complex. There are no easy answers. And almost nothing is obvious. But one thing does seem obvious to me: you're relying on ideology and political bias. I don't think I've read or heard any economist suggest that controlling the free-falling housing prices isn't a crucial part of recovery. That being said, I don't follow academic economic journals, so I can't say the claim hasn't been made. I can say, however, that your lack of understanding of the importance of housing deflation indicates that you've not been paying attention, because it's been big news for a long time. That you have an opinion while not paying attention indicates you have been relying primarily on political bias. Maybe I'm wrong. I doubt it.
Given the government's disastrous role in creating the housing bubble in the first place, why do you trust them to know that housing prices need to be inflated right now?
Disastrous? One of the large problems was the removal of government regulation that had been put in place because of the Great Depression. You're going to blame the government for deregulation? And you appear to be coming from a fiscally conservative point of view? Doesn't this seem a bit dishonest to you?
Some blame is fine. I agree with some blame. But to blame only the government and not the private sector-- who actually did the lending-- reeks of political bias. And it's even more so when the blame comes from those on the right who have tended to argue for and support deregulation.
THAT ALL BEING SAID, I've been historically a fiscal conservative. I've voted against every bond issue in every election up 'till this crunch. I want that known up front, so that when my "liberal" politics are used to counter my claims that the post to which I'm responding reeks of political bias, it is well known why I've flown off the handle.
