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QE 2 Was A Disaster: Here Is Why US Fiscal "Stimulus" Was A Complete Failure As Well
Two and a half years ago, Christina Romer, then still employed by the Obama administration in the position of Chair of the Council of Economic Advisers penned "The Job Impact of the American Recovery and Reinvestment Plan" - a report predicting the impact of a fiscal "stimulus" that took out $787 billion from the pocket of American Taxpayers (subsequently discovered to cost even more) and put that money...somewhere. We are not sure where, because according to a chart now made legendary for its complete failure to predict the future, it sure did not go into creating jobs. Below we present the original chart that made the January 10, 2009 presentation, and superimpose upon it the reality of the past two and a half years. It is simply stunning. And while we are here, and discussing the abysmal failure of QE2 (the impending arrival of QE3 notwithstanding), it is amusing to hear the whimpering of the likes of one Richard Koo, who is now claiming that all along the money from the Fed's monetary stimulus should have been invested in the form of a fiscal one. Well, Dick, below is the impact of your fiscal stimulus....AND it also includes the impact of $2 trillion in incremental monetary stimulus. Combined, both fiscal and monetary stimulus has now missed the worst case projection for US unemployment for 30 months running. Here is the simple truth: both monetary and fiscal stimuli are abysmal failures, when the economy is mean reverting to a state where it was hijacked from courtesy of 30 years of "great moderation" - and there is nothing that can be done to stop it. Correction: there is one thing - the Fed can destroy the dollar in its attempt to disprove simple physics. And, ultimately, it will.
From the original ARRA proposal:
And the outcome:
Nuff said.
h/t Mike
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BobbyRib - The decision for a business invest is not ONLY based upon the level of nominal interest rates, which you use as the basis of your opinion.
Real interest rates (nominal rates - inflation rate) allows businesses the confidence to know that rates will be stable, the USD stable to stronger (lower costs for imported inputs, and lower commodity costs).
Positive real interest rates also do give people the option to save or spend...within their means.
Yes, presently a real interest rate policy would force the hand of those who have spent beyond their means. Housing would find a bottom a lot quicker, than this long (3 year!!) drawn out process. The economy would find a bottom within a year, and grow responsibly from there.
There is "growth" but then there is real growth, which is much more healthy for the socio-economic condition of the US.
A positive real interest rate policy would also prevent politicians from their profligate spending, because if they spent too much (increased money supply) interest rates would HAVE to go up! They could not win re-election if their spending policies caused interest rates to go up.
If the dollar strengthened, our exports would be less competitive on the open market. I'm not endorsing the Fed's unofficial policy of weakening the dollar, but I do think it does help our exports somewhat. A strenthening dollar would hurt multi-national corporations in their new markets (developing nations) by making our goods "more expensive." While I don't measure our country's success by how good multi-national corporations' earnings are (the way some people do), they do seem to help add jobs for small businesses.
Bernank said the interest rates would remain low for a while (stable), but it doesn't seem to help the economy. The only reason I would not spend interest earned from my DDA's is that I believe the economy will be shitty for a long time no matter what our politicians think of.
I do agree that the quicker the economy bottomed, the better off the country would be.
Eventually as many people have noted on this site interest rates on our debt will rise and it will be the dollar end game (it's far too late to reverse this trend).
I think we are going to have to agree to disagree. As I said I think the economy will be shit no matter what the Fed or our politicians do. It's up to us to get corporations to bring the jobs back to the US. They enjoyed their record earnings, but now the party is over and their earnings (maybe dollars but not purchasing power) will never look anything close to that again. Eventually I do think raising interest rates is beneficial to the economy, it just wouldn't be good for our current ailments, IMHO.
I don't fucking care about what we do or don't export - products available on the local markets are all that matter.
sorry dude, but there's nothing american to buy on the comsumer end. the resource allocation centers (walmart, home depot, etc.), don't have american products.
There are American products to buy, you just have to look for them. I don't shop at Wal-Mart for that exact reason. Wal-Mart destroys American manufacturing jobs, but creates minimum wage greeter jobs.
find me an american made electric angle grinder.
You just have to go on the internet.
Pro: use less gas bought from durkadurkas
Pro: less exposure to "people of Walmart"
I refuse to chase USDHUF. There is always tomorrow. Maybe.
What about USDCAD?
:-)
Sorry, don't do the majors. Too prone to mischief, which gives time to exit the minors.
Hungarian GDP on Thursday... expectation 2.4% up from 1.9% yoy
Best canned bacon out there, though Poland is creeping up in quality.
Shelf life?
10 years. Sure miss their brass based 130V light bulbs, tho.
Pulled the chart. Watch eur/chf and trade the opposite.
Check this out:
Put the image of the last chart on your handheld device and stare at it while it spins backwards (counterclockwise) on the table top. You can see Benzebub.
Bull Conner riot is called the first political riot. About race. Conner was a 'D'. All Jim Crow laws were passed by D's to keep guns outta the hands of Darkies. Go Libs!
That's a riot!
The people who passed those laws were Conservative Democrats not liberals. I have something "interesting" (offensive most likely) to say about the section of the country that enacted those laws, so don't get me started..
go for it ... we could use a little excitement right now ...
I would rather not get chased off this site (basically abused to the point I can't post)...
BS, this ain't MW. Me as an example. 22 bounces off that scumbag site.
22?
LOL
You disbelieve? Go there and say I wish them well.
No... I believe you ... you're just a persistant MF!
Robert, what is your trade?
Bobby, go ahead and get started. Tell us how those racist "Libs' weren't racist or Libs? Please include Bobby Byrd in your 'excuse'.
BobbyRib...hehe go for it.
Again...a positive, real interest rate policy would prevent these political elite fecksticks from passing these spending / wealth transfer policies.
Bobby ... I got your back ... Unleash!!!
Perhaps...just perhaps.. Unca Ben's report today (no early QE3) has been scripted to force Congress to get serious about cutting the Fed budget deficit?
If so, ES will plummet tomorrow (maybe tonight) and get the attention of the cowards collecting large checks (y'know including their insider trading profits in their "blind" trusts) in Congress.
Shhhh! Sei ruhig! Tough the Tea Party cares less.
Re-Elect Oblahma! Vote Ron Paul!
Me, I'll take the orange juice can.
Not to worry ... we got another genius coming:
Sharpton knows who his father is?
Nope ... he's a genealogical dilemma!
Ha!
Well... he did say that he did not want to do any more QE .... but the he added that, in the event politicians would not act, he was gonna be there for us ....
You call it blackmail, I call it patriotism!!!
2 TBT, or not 2 TBT? That is the question.
Your Libs are melting down.
I'll back that statement!
what I don't get is
a. why there's such a smell of surprise in the air? (this is ZH isn't it? we've seen little snippets of info coming in, smart people everywhere knew there was a fan, and shit)
b. who knew this money wasn't put to good use? where's the money now? someone had been keeping track of it yeah?
A pivotal moment isn't it? In europe as well.
I can't stop thinking, if the USA accepts the mistake of QE2 (the disappearance of all that wealth, meant to save a failing system), if europe accepts the banks as their masters (same deal), what is everyone supposed to do? They're not "benevolent masters" are they?
What did they think? That we wouldn't notice? That Joe Sixpack or Georgos Rastapapotolos (or who ever) didn't notice his house was taken from him, or his orchard? No one would notice that everything would turn to shit slowly? What a disastrous plan, this heist. What a complete waste of planetary resources. Idiots! Why couldn't they just steal a little? Why everything? A successful parasite doesn't kill the host. I don't get it.
:-S
WTF? (Weinering The Future)
Do YOU read ZH? We knew it was pissed away.
all of it. even your posts ;-)
xoxox
"Two and a half years ago, Christina Romer, then still employed by the Obama administration in the position of Chair of the Council of Economic Advisers penned "The Job Impact of the American Recovery and Reinvestment Plan" - a report predicting the impact of a fiscal "stimulus" that took out $787 billion from the pocket of American Taxpayers (subsequently discovered to cost even more) and put that money...somewhere.
We are not sure where, because according to a chart now made legendary for its complete failure to predict the future, it sure did not go into creating jobs."
Excellent comment, TD! BUT... no need to be coy about "where the money went." WE KNOW where it went: into the pockets, bank vaults, and offshore accounts of RAHM EMANUEL, Larry Summers, Jared Bernstein, Gary Gensler, Mary Schapiro, Peter Orszag (bob rubin toadies all) (et al) pals on Wall Street, City-of-London, & Tel Aviv.
Which brings us to THE CURE for this economic nightmare: CUT OUT the EXTORTIONATE "financial geniuses" MIDDLE MEN! The KEY to winning WWII, was to keep FINANCE COSTS DOWN to the absolute minimum (along with HIGH WAGE union scale jobs, which ALLOWED workers to buy war bonds; and HIGH MARGINAL TAX RATES at the top end - near 90%!!)
EVEN THE FED was productive & constructive during the WWII years - they (the Morganthau, Bernard Barch, Goldman,Sachs, Lehman, Solomon Bros, et al bunch) realized the cost of failure!
It IS possible to restructure a PRODUCTIVE, more democratic economy; we just have to reign in all the Fed/gs/jpm/r's lackeys first.
I'm working a (h5) dxy chart and it looks really heavy! The hourly looks very short term up and then a TANK. The 10 can't even cross the 20 on short term charts! Yen
Charting is, like, BS. Contrary to popular belief. even Fx is rigged.
The trick is to find where the rig is.
Lookie that $ climb in the face of bankruptcy!
Mynhair I read charts all day long. It's not rigged. I'm up 400k in one of my fx accounts ytd. You have to manage margins and understand macro/micro moves. It's not a part time job.
I don't do jobs. Major kudos, tho, I've only done 22% on my half assed system.
Nice work as well!
"both monetary and fiscal stimuli are abysmal failures"
and we can generalize those statements axiomatically. centrally planned monetary and fiscal programs create the very problems which they claim to solve. it is recursive fucktardedness...
the austrian perspective of economic depressions as a means of clearing bad investment is the correct one. until the crap is cleared from the system, the system will stagger and eventually collapse into perpetual stagnation and shrinkage as in japan....
however, the monetary and fiscal policy would be constrained if fractional banking were outlawed and if currency were redeemable for money.
we have the added burden of a debt based money system. it is a cancer on the people.
And how would the Austrian theory work on bad investments re-packaged and diluted to unaware investors ... who would pay the price then?
Sorry ... I call the Austrian BS in this case!
Idio - under the Austrian school that is called fraud...and the perps woukld go to jail. It's a great system.
Granted that it is a system that sounds good ... however a system based on human behavior?!? ...
Isn't that the problem to begin with?
Personal responsibility.
Can't work in America though, which is ironic. People don't seem to understand that responsibility and freedom are the same thing. You cannot have one without the other.
++good.
Lib view: tax every breath they take (cue the Police)
Conservative view: Debirth the Libs so we can breath free
If you don't get it, vote Weiner
Thanks for the laugh!!
We should go back to the good old times ...
Romer's from UC Berkeley, if I remember correctly. Well, what do you expect? Shit, she's probably the one who sold the SAC trader the shrooms.
http://www.zerohedge.com/article/what-gets-sac-portfolio-manager-13-mm-lots-insider-trading-and-running-around-naked-while-hi
The next time somebody tells me to trust government central planning I'll show them that chart.
Orzag, Romer, Summers, Goolsby..... All wrong. All gone. All discredited. All things are now much worse than before.
Luckily, we still have the cheerful hobbit Krugman, at the NYT, to laugh at. He said we just didn't do enough stimulus. Guess that's why everybody else had to leave in disgrace -- if only they had spent twice as much like he wanted.
QE3
another economic
fiat enema ....
Ouch!
That being said, I did read in Reuters that Wall Street handed out record high bonuses for both 2009 and 2010...if that's at all relevant.
The real unemployment numbers on that chart should really read closer to 15 - 20%, but to admit that would truly expose the failure of QE2. Of course, the intention of the QE program was never about employment and only about saving Wall Street....and QE3 will be the same. This type of action will continue....until it can't.
QE3 a la Monedas ! Print up about 3/4 of a trillion FRNs......make it a trillion, WTF ! Identify the 10.000 most successful businesses in the country using IRS data ! Easy enough ! These are the leaders, the innovators, the job creators, the cutting edge of a forward looking economy ! Divide the trillion dollars between them in strict proportion to their profitability ! Tell them to go for it and do more of whatever they are doing right ! Promise them if they perform well they will receive simular stimulus each year in proportion to their success ! Tell them the program will last at least 20 years and maybe forever ! .............. Monedas 2011 It's called a permanent TAX CUT ! http://trololololololololololo.com/
QE 2 Was A Disaster
No, actually it was a complete success ...once you understand the real purpose, transfering more wealth from the American people to the government ...and Wall Street of course.
in general I would like to share some comments that are unrelated to moving averages etc., about the US stock market::: it is headed down. Simple reasons: it's the end of the cycle - global and US- and those who have been inclined to purchase and hold have for the most part already done it. The amount of new capital to keep it at these levels is soon to be rapidly declining. The greater fool theory is in intact.
And the game is now essentially over - musical chairs has just begun.
the problem i have with spiritualists, is that they believe that there are natural laws which are immutable, and yet they refute reality.
Kondratiev winters cannot be stopped. They are also very cold.
Even if we know we need stimulatory countercyclical spending we cant stop the inevitable, because our priorities change at times like these and irrational debt acquisition turns into irrational debt revulsion.
this is not rocket science...
That "STIMULUS has been A FAILURE" is simplicity itself.
the BAIT & SWITCH swindlers from GoddamnSachs (and closely related NY, DC, appartchick swindlers) who INFEST the obama administration, http://www.jewishvirtuallibrary.org/jsource/US-Israel/obamajews.html have SWINDLED money publicly committed to "STIMULUS" (actual ground-breaking, shovel moving, sweat producing, jobs & paychecks creating business contracts) and JUST ADDED those "stimulus" dollars to the GREAT HEAPING PILE of money they have already stolen http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aY0tX8UysIaM as "Bailouts," "liquidity injections," http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a9MTZEgukPLY "Quantitative easings," "Loan quarantees," "backstops," Fannie & Freddie paying TOP DOLLAR for pure s*** Wall St "securities" etc. etc. etc. etc. etc.
HAD that money been spent on REAL JOBS CREATING contracts, and HAD obama's INSANELY CORRUPT & DERELICT REGULATORS been doing their jobs these past 2 1/2 years (holder, gensler, shapiro...) we WOULD HAVE HAD SOME GENUINE economic activity/recovery by now.
No, we would have had another economic bubble in whatever 'shovel-moving' industry the central planners decided in their infinite wisdom to stimulate.
The government creates malinvestment when it intervenes fiscally, same way the Fed does when it intervenes monetarily. Both are just moral hazards, imposed on the economy with no responsibility to be efficient or effective, because they operate without fear of failure. Most here agree that "TBTF"s are bad news...well the government and the Federal Reserve are the biggest of the Big.
Awesome avatar!
"Two and a half years ago, Christina Romer, then still employed by the Obama administration in the position of Chair of the Council of Economic Advisers penned "The Job Impact of the American Recovery and Reinvestment Plan" - a report predicting the impact of a fiscal "stimulus" that took out $787 billion from the pocket of American Taxpayers (subsequently discovered to cost even more) and put that money...somewhere. We are not sure where, because according to a chart now made legendary for its complete failure to predict the future, it sure did not go into creating jobs." Really Tyler? One third of it was in the form of tax cuts! That )and the fact that given the size of the problem the stimulus should have been more in the range of two trillion on an historically adjusted basis - remember debt to GDP levels incurred to fight WW2) probably account for the fact that not enough jobs were created.or saved. Here's the thing. You can argue the utility of the stimulus either way -- but when you say misrepresent the facts you lose credibility, douchebag.
All I can say is yep, pretty much tells the story of the 'success' that is DC.
Just think what the chart would look like if real unemployment numbers were used!
Christina Fucking Romer,
Perveted Government Barney the dinosaur Lackey in female spots spouting dinosaur eggs, flatulence, and digested middle income families for mainstream media consumption.
What a crock of shit.
Anyone who watched her in interveiws and her wandering eyes, high pitched pandering falsetto, and gazed into the the glazed orbs of decades long self-decpetion at schools of arcane economic sophistry delving the depths of masturbatory theory relating to people being eager to serve judicial overlords and perverted elitist baboons must know she is a bag of wind, of piss, a bladder of effluence and the dead airs of a gasping oppressive republic.
Wow, and I thought I could rant. Indeed, look into their eyes, read their body language. Some of the best of the thieves can partly control both, but most cannot.
My dead lords...my dead lords
Your strange ringed fingers turn,
Turned to knots of scented wood.
From your arms
that held our secrets fell the fruit
My dead lords...
You hold the past.
And I confess the uneasiness
of my love for you my lords.
My anger gives me strength my lords.
You loved and listened to the lovers
But we have stopped listening to you...
We have stopped listening to you my lords
We've paralysed...the pain.
And the wind in your bare ribs
Uttered still the tunes of lovers
In the geese veed sky
My dead lords
I confess an uneasiness in my love for you,
Confusion in my passion.
Were you the song of September
That charmed the fieldfares?
When your rotten skin grew hard
It fed your minion crows,
My black shining brothers
My dead lords
Oh my dead lords
I confess...
My anger gives me strength my lords.
I kissed your hard crusted rotten skin.
My uneasiness it grows
But you my Morton lords
Live on in my anger
Like the sun.
"And Also The Trees - Blind Opera"?
Sounds like Shakespeare.
I like it.
Supply Side has proven to be a failure. Propping up the Plutocratic state has ruined the working/middle classes (read: majority of citizens/voters).
Gifting more money to the Too Wealthy Few will result in more of the same: Hording.
To invigorate the economy - and, to create "New Wealth" - any additional monies (stimulus?... yeah...) should be targetted at projects that will put said money into circulation - NOT a Bankster's pocket.
Uncle,
The truth is that any money that flows from the Gobberment goes into the coffers of oligarchical Big Business who create no new jobs with the money they receive. Over the past 11 years there has been zero job growth attributed to large concerns. Yes 100%, of growth has come from medium to small companies.
The federal cannot create jobs … all it needs to do is get out of the way (smaller government, less regulation, and rational taxes) … and the jobs will be created. In addition, ‘stimulus created’ will be of a short duration created to accomplish a marginally valuable purpose and at the same time rob the private sector (through taxes required for the stimulus) of jobs that could become truly productive for our society. Government stimulus are counter productive.
This opinion that government getting out of the way, etc. will create jobs is wrong.
There are many reasons for the Federal Government to get out of our way, and be pulled back from its tyrannical rule, but creating jobs isn't one of them.
Jobs that mean something, wherein something of value is created, like a steam engine, an Ipod, a S/W program that allows us to bid with the click of mouse, a Cotton gin, plow, or sewing machine, etc. are not being conceived because industries and services are not aborning.
Bottom line is our creative, inventive, and development minds, hard at work in research and development departments all over the world are not coming on line with innovative products and services fast enough to absorb the people that are being reproduced at rates which exceed our ability to use them.
Paradigm changes, game-changing policies are at odds with the establishment businesses, like oil, autos, roads and superfluous infrastructue.
The ability for existing industry to put 400,000 people a month to work just in the U.S. is completely absent. Either population has to go down, or industries need to be created or a combination of both if we are to avoid a Vonnegut-like world where the few work to support the many.
Lets sell the dollar into New York. That 5 hour chart says it all! YEN
P.S. I'm a day ahead.
Positive?
http://www.youtube.com/watch?v=7lC1lRz5Z_s&feature=player_embedded#at=363
and THAT is why, your bumper sticker should read "ANYBODY but Obama" - is if it matters who is the puppet of the banksters - but just in case.
Who needs you when I can argue with myself.
http://favim.com/orig/201103/30/Favim.com-10500.jpg
The NY Post has an article that Wall Street banks will be laying off "thousands."
http://www.nypost.com/p/news/business/slasher_street_3N2eDrojp9DGzQcAlzGPhN
Government cannot allocate capital efficiently and the more money spent by government the less growth in productivity and living standards in aggregate.
Why do some people refuse to see the obvious? All serious economists concede the inefficiency of government capital allocation decisions. Some will argue that efficient improvement in average standard of living is not an important.goal. That is the only serious argument for increased government spending.
Governments thinking short term and passing out goodies as bribes to voters harms our long term vigor. Asians will work with a back ache. Americans and Europeans want a disability check.
The asians will ultimately surpass whiny, lazy westerners who want something.for nothing with western governments only too willing to attempt to provide it.
Did anybody notice that Bernanke looked like he had a gun to his back when he spoke recently?
It definitely makes me think things are gonna tank really soon. He was peaked (pee-kid), and mis-spoke many times. He was not at his best for sure. So, either he was sick, or he's a terrible liar.
qe is free finance for the disabled financial sector
broken by its own fraud, in need of credibility and cash.
without it the crooks can't finance the austerity vigilantism
with which
they wish to execute the peasants and natives around the globe.
one world, one scam. qe^, fiat, fractional reserve requirement
to bludgeon the masses.
fight back !