Guest Post: The Unstimulus

Tyler Durden's picture

Submitted by John Aziz of Azizonomics blog,

If your predictions are wildly out-of-whack with reality, you need to change your approach.

Here’s a 2009 Obama administration graph authored by Jared Bernstein and Christy Romer showing their calculations for future unemployment levels with and without the Obama stimulus, updated by James Pethikoukis to show the actual figures:


These predictions have been an unmitigated disaster. Not only did the real figures not match up to the advertised ones, but they are also much worse than the baseline expectations. Romer and Bernstein appear to have both severely under-estimated the depth of the crisis, and over-estimated the effectiveness of the stimulus package.

The stimulus is a large and complex piece of legislation, and it sent lots of money to lots of different places. Money went both to projects like building roads and bridges, as well as to projects like Solyndra, and to many other kinds of projects. Here’s a rough breakdown (a deeper breakdown is available here):


To get the full picture, we need to look at the broad outcomes. So, who benefited in the wake of the stimulus?

Wages and salaries as a percentage-of-GDP in blue, corporate profits after tax as a percentage-of-GDP in red:


Obama might talk about spreading the wealth around, but the aggregate effect of the policies pursued during his administration have squarely benefited large corporations and the financial sector, and not the middle class or small business. Is reinflating financial bubbles and pumping up corporate profits Obama’s idea of recovery? The money isn’t trickling down, and small businesses and the middle class are more in debt than they were before the crisis started. Income inequality is soaring. The financial sector is richer than ever. American infrastructure is still crumbling. Housing starts are still deeply depressed, even as homelessness rises. And of course, employment is still deeply, deeply depressed. The stimulus didn’t get America working again. With a monstrous and broken financial sector still totally failing to provide adequate capital to Main Street, totally broken algorithm-driven markets that have alienated retail investors, and budget deficits that remain persistently high, this should surprise precisely nobody.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
vinayjha's picture

Obama and his administration are dumping money to keep stock market happy, nothing else.

Richard Chesler's picture

A banana republic is a country operated as a commercial enterprise for private profit, effected by the collusion between the State and favoured monopolies, whereby the profits derived from private exploitation of the economy is private property, and the debts incurred are public responsibility. Such an imbalanced economy reduces the national currency to devalued paper-money. Kleptocracy features influential government employees exploiting their posts for personal gain (embezzlement, fraud, bribery, etc.), with the resultant government budget deficit repaid by the native working people who earn money, rather than make money. Because of corporate manipulation, the kleptocratic government is unaccountable to its nation, the country's private sector–public sector corruption operates the banana republic, thus, the national legislature usually are for sale, and function mostly as ceremonial government.


goldfish1's picture

"...the policies pursued during his administration have squarely benefited large corporations and the financial sector..."

DUH. This is a surprise to whom?

Pareto's picture

Certainly not to Robert Lucas (1976).

DeadFred's picture

It's a surprise to anyone who listens to Obama's words but doesn't check what he actually does. When I ask people what Obama has done that actually hurt a bank or major corporation all I get is blank stares, surprised blank stares, No one has ever given an answer and it's clear they're surprised that they can't. Red and blue both get the same stare. One has to have a bit of respect for how effective his con job has been.

jeff montanye's picture

yes but only a bit.  according to those who watched or read the transcript (not i), he was off his game at the debate.  maybe he's winding down.  i voted for him last time.  this time gary johnson.

prains's picture

DUH. This is a surprise to whom?


to the previous 8 administrations


I'm pretty sure dick cheney has his shocked face on

Anusocracy's picture

What we are witnessing is the reversion to norm for government. This is how it usually behaves.

Democracy has become another of the multitudes of failed forms of government. There aren't any that are a net benefit to the productive class, only the ruling class.

Unfortunately, reality loses in its battle with what people want to believe.


RiotActing's picture

"HIS" administration? Right....

Dr. Engali's picture

John you are basing you work on the assumption that Obama really ever wanted to "stimulate" the economy. I suggest just the opposite, he wanted to and continues to disrupt it as much as possible. At the same time he and his handlers put out propaganda to make it look like the economy is better than it actually is.

fonzannoon's picture

Agreed, I am amazed at how much I still see this assertion put out there that this is all misguided policy that truly was meant to help. Enough already.

Radical Marijuana's picture


For the third time, enough already!

How much longer can mainstream morons keep on accepting this blatant hypocrisy? What really happens is what is intended. Moreover, it is imperative to dive much deeper through all of this, to see that there is a combined money/murder system, and that everything is inside of MILITARISM, AND HAS TO STAY THERE! There are NO real solutions outside of that reality! There is only more bullshit that talks about the existing systems on the basis of accepting their own immaculate hypocrisy at face value.

Totentänzerlied's picture

"How much longer can mainstream morons keep on accepting this blatant hypocrisy?"

Longer than you can imagine (ignoring economic/fiscal considerations). Many don't detect any hypocrisy, the rest don't care.

Radical Marijuana's picture

Yeah, tragically, you are surely right!

awakening's picture

Idiocracy was a documentary, now if that doesn't give anybody a chill than I dare say they're the sucker at the poker table.

RSBriggs's picture

Bingo.  This has never been about money for small businesses - it's about looting trillions for cronies.

goldfish1's picture

Talking about the stooge for the cronies...

"Geithner, who was speaking at an India-U.S. business forum in New Delhi, said he was "relatively confident" that Washington can manage its fiscal challenges.

"Now we're growing close to potential but if you look through those factors, it's a little more encouraging than you might think," he said. "We are now in a much stronger position than what is true for any other major developed economy.""

Slightly Insane's picture

I'l love to run over Tim Geitner with my yazoo lawn mower.  It turns baseball bats into toothpicks.  Tim could go right into my tomato ketchup ..... that's if my dogs didn't eat him first.

SafelyGraze's picture

a stimulus apologist (stimpologist) looks at the chart and says, well, just think how much higher unemployment *would* have been without that injection of gov spending.

what I thought the article would try to do is go the opposite direction and connect dots (dots that I do not see) indicating that the stimulus itself increased unemployment. 

if such a case can be (or has been) plausibly made, zh is a good place for someone to spell it out and/or link to it.

would be counterintuitive. but the whole freakshow is counterintuitive. 

apologies if this subject has already been covered and I wasn't watching. 

oprah was on. or ellen. or the view. or celebrities dancing and singing and judging. or playing sports. 

gotta go now. my cop show about state's attorneys catching the bad people is just starting.

what station is zh on, anyway? 

sschu's picture

There are those studies out there (which I am too lazy to look up) that compare the  additional debt with the growth in GDP, the idea of marginal utility of debt.  I do believe it has been shown to be negative, $1 of additional debt only creates about $.50 of GDP growth.  Historical this as been a multiple of debt, more debt creates even more growth.

If we can assume that GDP growth and employment are correlated, then we can show that adding debt (which theoritically has to be paid off) has in the long run reduced employment.  The stimulus funds were "borrowed" and when paid off will result in lower economic growth and less employment.  The key is this will be a problem for the next administration ... or generation.

If they had done nothing, or spent the funds much more wisely, then most certainly the effect on employment over the longer term would have been better.  Allowing the market to clear, while causing severe short term pain, would have resulted in better economic growth longer term.  Plus we would not have a trillion+ more in debt to pay off.  They made a bad choice.



Missiondweller's picture

The "multiplier" was .2!!!!!

This has to be some of the best evidence of debt saturation in our economy. To get $1T in new economic activity you would need $5T in new deficit spending!!!!

bigdumbnugly's picture

unstimulous?   you call that unstimulous?    you can't handle unstimulous.

when i get a bit too spunky at what is apparently the wrong time for a certain somene here, she pulls on the hillary mask, a pantsuit thing, and cackles.

that's unstimulous, son.  


Slightly Insane's picture

Obama said "trickle down doesn't work".   So I'm guessing that we have to wait for "seepage" to get down to the little people .... but that's if it doesn't evaporate first.

SafelyGraze's picture

didn't mean to make you mad with the triple post. 

are we ok?

Just Ice's picture

You too can go in his ketchup

pain_and_soros's picture

The scariest part of all this is that Obama has a real chance to win re-election despite such a horrible record - Jimmy Carter has nothing on him...

And equally as bad, Romney appears to be just as incompetent...

Which simply suggests that US citizenry in the main, are still completely clueless or could care less about what is happening in & to their country...

I fear when the collapse comes, it will be quick, complete & irreversible.  Get ready for a (harsh?) military dictatorship, which will offer the only hope for some semblance of order amid the chaos that will be unleashed.



RiotActing's picture

Obama is a lock, wake up, Joe Corzine, Jamie Dimon? Hello!? I cant believe people that read ZeroHedge actually think Presidents are elected. WAKE UP PEOPLE! NOW!

DeadFred's picture

Few of us think the elections are real but many of us think THEY will choose the other Obamney.

prains's picture

the theory goes like this:

no matter what the vote "you are fucked"

red/blue is a game for the weak minded, a diversion, think three card monty

while what is really going on is a slight of hand that has to be watched and studied

RiotActing's picture

No Smart Guy, the theory they choose that idiot Romney to lead the US Titanic into the abyss.... not likely...

Pants McPants's picture

I personally don't want the government to stimulate me, the economy, or anything else for that matter.

Just leave the economy alone.  Please.

prains's picture

it has to be stimulated, it's a fucking corpse

RiotActing's picture

When are you so called "experts" going to pull your heads from your asses and realize this is not "Obama's" doing, or "Bush's" or "WhateverPresidentyouDesire". They have all done what they are told to do since Kennedy. The quicker we all get on the same page with this the better. The more people talk as if the Democrats are different from the Republicans the longer it is going to take people to wake the fuck up. Stop with the partisan bullshit. "Oh The Obama admisistration...." WRONG dumb fuck... The Federal Reserve Administration is where the blame lies. Playing Red vs Blue does nothing but divide. Just stop already, stop painting the country's problems in Red and Blue. Fuck you if you keep doing it.....

Slightly Insane's picture

Posit a solution please.   I know that red and blue play in the same sandbox, with the same toys.

RiotActing's picture

I dont have one! But I know pointing fingers to divde does exactly what they want. If more people started looking at this as a human issue instead of those "Liberals" and those "Conservatives" maybe solutions would come easier. Its so crazy that people smart enough to understand what is on ZeroHedge cant see what the fuck is going on.... yeah USA!!! When is the date to unregister to vote? Keeping my head down....

Anusocracy's picture

Read The Righteous Mind: Why Good People Are Divided by Politics and Religion by Jonathon Haidt, to find out what the enemy really is.

Book Description

Why can’t our political leaders work together as threats loom and problems mount? Why do people so readily assume the worst about the motives of their fellow citizens? In The Righteous Mind, social psychologist Jonathan Haidt explores the origins of our divisions and points the way forward to mutual understanding.
His starting point is moral intuition—the nearly instantaneous perceptions we all have about other people and the things they do. These intuitions feel like self-evident truths, making us righteously certain that those who see things differently are wrong. Haidt shows us how these intuitions differ across cultures, including the cultures of the political left and right. He blends his own research findings with those of anthropologists, historians, and other psychologists to draw a map of the moral domain, and he explains why conservatives can navigate that map more skillfully than can liberals. He then examines the origins of morality, overturning the view that evolution made us fundamentally selfish creatures. But rather than arguing that we are innately altruistic, he makes a more subtle claim—that we are fundamentally groupish. It is our groupishness, he explains, that leads to our greatest joys, our religious divisions, and our political affiliations. In a stunning final chapter on ideology and civility, Haidt shows what each side is right about, and why we need the insights of liberals, conservatives, and libertarians to flourish as a nation.

Know [the] other, know [the] self, hundred battles without danger; not knowing [the] other but know [the] self, one win one loss; not knowing [the] other, not knowing [the] self, every battle must [be] lost. Sun Tzu

RiotActing's picture

We're so fucked bro, you're talking about thinking critically about thinking. We're the nation of Honey Boo Boo... Yeah!!!

prains's picture



Slightly Insane's picture

If the intent was to "stimulate the economy" .... I would have to say .... "What an unmitigated disaster",  But then again what should one expect when only "ivory tower elitests" who were educated at all the "ivy league schools", were the financial wizards to make the proper, and most prudent selections.

I would have rather given the money to the village idiot, as at least some sectors of the economy would b booming.


I say "no more viagra for the banks" ..... if they can't make it right by now, I say "pull out" .... and let them fail.

Curt W's picture

Part of the stimulus paid for research on gay prostitutes in Thailand, and German solar companies, and who knows what other BS.  They could have spent the entire amount on bridges, highways, light rail, and other infrastructure.  It would have had a more profound effect.

Chuck Walla's picture

Romer and Bernstein appear to have both severely under-estimated the depth of the crisis, and over-estimated the effectiveness of the stimulus package.

Right or wrong or totally made up, The checks cashed the same...


Slightly Insane's picture

Bring back the "gallows" .... it is the only effective way to truely reform really bad behavior.  I have never heard of a single problem arrising after it's use.

ebworthen's picture

Pretty good price on rope at Home Depot.

AllWorkedUp's picture

Absolutely shocking! Jared jewstein is a lying prick.

Andy Lewis's picture

And you're a worthless piece of shit.


backhandtopspinslicer's picture

Enough already of this trickle down sheet!!! Give me the money and I will show you INFLATION bitch! Better yet a table top fiat printer free of charge for the first sixty days. Now we're talkin' baby!!!!!

lolmao500's picture

Don't try telling this to Obamabots... they'll say you're republicans shills, conspiracy theorists or just laugh at you.

tony bonn's picture

"..small businesses and the middle class are more in debt than they were before the crisis started..."

that was the whole point of the engineered financial crisis.....the rockefeller axis of evil wants to enslave you in order to dismantle american sovereignty completely....with 30,000 drones flying above the sky spying on your every fuck and fart, you can be assured that you are nothing but dead horse meat....