No, Krugman Was Wrong...

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Krugman claims to have been correct in calling for the failure of stimulus due to insufficient funds.

However, it is well known that no matter the amount of stimulus under consideration, Krugman will call for an ambiguous more. It is a wise gambit on his part, as stimulus generally results in extending contractions and when it fails he can fall back on "it wasn't enough" or "we never really tried a true stimulus". And if stimulus were to work, Krugman would still be correct because the Keynesian basis for his calculus would be verified.

Essentially, Krugman has set himself up as unverifiable. But what if his wild calls for massive stimulus spending were overtaken by even greater actual spending by government and economic growth still lagged?

Let's compare what Krugman seems to have called for via NPR:

Krugman is of the opinion that the proposed $800 billion-plus stimulus package is not large enough to have a meaningful impact. He says the administration should spend $1 trillion or more over two years.

... to the $13 trillion in stimulus spending PBS references which, of course, does not include the baseline of immeasurable "Brodian Stimulus" more commonly known as general government spending.

The myth is that the US never met the amounts of stimulus spending Krugman said we needed to work our way back toward prosperity. The reality is the we exceeded the Krugman call by a factor of between 10 to 15 and found even greater misery.

Despite Krugman's obvious desire to avoid set data points by which to measure the success or failure of his proscriptions, government spending outpaced even Krugman's wildest Keynesian desires and was found lacking.

Demand side solutions have failed.
Keynes was wrong.
Krugman was wrong.




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Keynesians in Search of a Success Story in WW2 Find Only Their Argument's End...

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I find it interesting that when one asks for an example of Keynesian solutions having pulled our nation from recession we are never referenced to any of these recessions ...

recession of the early 2000's
recession of the early 1900's
recession of the early 1980's
recession of the mid 1970's
recession of the late 1960's
recession of the early 1960's
recession of the late 1950's
recession of the mid 1950's
recession of the late 1940's
recession of 1945
recession of 1937

Many were relatively small and presumably more manageable but they are all ignored.

No. One is almost ritually taken back to the Great Depression to find proof of Keynesian success. But was the Great Depression a Keynesian success?

Under Hoover government expanded by around 30% (Keynesian before Keynes was chic); the recession continued. Under FDR there was a tepid recovery but further Keynesian meddling likely produced one of the worst recessions in the period from the Great Depression to today, the recession of 1937.

With over a decade of Keynesian solutions attempted from 1929 to 1941 the lasting result was a structural recession. Keynesian solutions had stalled the economic cycle at the worst possible point and what had once been a recession had garnered the status of The Great Depression.

Enter WW2.

(It is interesting to recognize that sometime in the past 20 years a shift occurred such that references to Keynesian success lead less frequently to the Great Depression than they once did and more frequently to WW2. This, I believe, represents the slow recognition that Keynesian solutions failed to usher our nation from the Great Depression.

As a result Keyneians now more frequently turn to the argument ending contention that WW2 represents a Keynesian success story.)

Lets assume for a moment that WW2 was a Keynesian success. That Keynesians now rely on WW2, a wartime economy in which Government spending accounted for over 50% of GDP, as an example of Keynesianism pulling America from the grip of recession shows how far Keynesians will stretch to find a single success story. Really, Keynesians now argue with a straight face that recessions should be fought with the equivalent of not just wartime spending but World War spending when no such response was needed in recessions prior to the Great Depression.

Of course, I question if even WW2 was a successful Keynesian experiment. If stimulus spending is intended to prime our economy as Kenynesians argue, then how does gearing industry for war help? The recession of 1945 answers that for us. It does not. At the war's end all the priming of the pump represented by WW2 resulted in ... wait for it ... the 1945 recession, not a Keynesian boom.

Just imagine the state of our nation after the recession of 1945 had we not had a world of devastation to sell our wares to, a world that payed not just for our goods, but for the retooling of all that industrial wartime "stimulus" more accurately described as bad investments for a peacetime economy. Imagine if those broken nations had not been there to make our war debt manageable by offing us their markets. Imagine the state of our nation after the recession of 1945 had we been required to compete with even one functional industrial economy or if our cities and towns had been brought to the waste of theirs.

When being asked to believe that WW2 represented a Keynesian success, I am being asked to believe that Keynesian solutions require us not only to raise national spending to over 50% of GDP, but that we must also destroy the industrial capabilities of friend and foe alike, destroy their infrastructures, destroy their homes and cities, kill off a large part of their workforce, have them kill off a large portion of our workforce, and then have them pay for retooling our economy so that we may sell them goods, climb back from recession and give Keynes a pat on the back for a job well done.

Really? We have to do all this to make Keynesianism work? Really?

If it takes rehashing WW2 for Keynesianism to work, I want no part of it. And when Keynesians have only WW2 to rely on as an example of a Keynesian success story, they have lost their argument.




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Joy, Joy. Failed Keynsian Shovel Ready Laughs...

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Note the joy in stalling the economic cycle at the worst possible moment.

What if 3/4 of the US Felt Government Overspends...

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Another Non-Keynesian Reality...

Gallup:

The large majority of Americans say spending too much money on unneeded or wasteful federal programs is to blame for the federal budget deficit, while 22% say the deficit is a consequence of not raising enough in taxes to pay for needed programs.

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Don't Panic!!!

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Michael A Walsh...

Already, we're hearing that action is urgent. If the limit isn't raised again at once, we face possible default on our sovereign obligations, a ruined currency . . . Somebody do something, quick!

Hold on. This is no time to panic. Instead, it's a time for sober, serious reflection, tough judgments and hard choices. Too bad there's nobody in Washington who seems up to the task.

Because panicking is exactly what we've been doing ever since the fall of 2008, when the housing bubble burst, Lehman Bros. collapsed, and Washington handed America the bailout of insurance giant AIG and the rest of the $700 billion Troubled Asset Relief Program -- followed soon after by the $787 billion stimulus program and the de facto federal takeover of GM and Chrysler.

Wall Street's fantasy finance (a joint production with Washington), which divorced "financial instruments" from any real-world concept of value, destroyed the housing market and seriously damaged the country, but Congress and President Bush were right there to bail them out, and this morning the stock market is sitting pretty at 12,506. Wall Street got theirs, while Main Street still suffers.

Keynesian Theory has lengthened 3 depressions, of course depressions aren't called depressions anymore. The current one in the US is referred to as the Great Recession while the other in Japan was called the 10 Year Recession but is now referred to as the more illuminating 20 Year Recession, as Japan seems mired in a seemingly endless economic nightmare of stimulus spending from which the nation is unable to awake.

What do the Great Depression, The Great Recession, and the 20 Year Recession have in common? The answer is that they all employed the failure that is Keynesian Theory.

Thieving from the future, while comforting today, yields a diminished tomorrow.




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Inflation Explained...

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In a world where cartoon bears are the most reliable source of information anything is possible.

Doctorates in economics make for fairly good walking dictionaries, though.


And how about a graph of the failure that has been brought upon us via the implementation of Keynesian Theory. Any economic policy that not only calls for but results in declining dynamism should be questioned.

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Keynesian Plaque...

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Michael Victory:

Society is bursting with inefficiencies that should have been rooted out by recessions long ago. Today big government and big business share the same bed and insatiable addiction to money printing. It must be cured if we are to move into any genuine period of prosperity.

I see this as the result of the lack a economic dynamism in the US since our nation embarked on the Keynesian path of muted market swings rather than purely a fiat currency issue, but ... Yeah.




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Gov Growth Results in Fewer Supporting Stimulus...

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An argument for stimulus through tax cuts paid for through equal cuts on government.

Keynes supporters claim cutting Gov spending will hurt the economy due to those dollars not being injected into the economy. However, they seem perfectly fine with removing ever more dollars from the economy through increased taxing.

Furthermore, Keynesian promoters tout the benefits of Gov spending on the economy except in the case of tax cuts which they deride as "spending".

One would think that stimulating private enterprise through tax cuts funded with a commensurate decrease in government services so as not to increase government debt would stimulate the economy without increasing debt would be "stimulative". This suggestion is roundly ridiculed by Keynesians, though.

What Keynesians refuse to accept is that while funding stimulus through private sector taxes may make some sense when the government accounts for only 10% of economic activity, it makes much less sense when the government accounts for 50% of economic activity.

Look to our experience.

As time has passed the US has had less and less private sector from which stimulus funding could be sourced due to government growth. When at one point stimulus relied on the private 90% of the economy for funding it is now forced to rely on the private 50% of the economy for funding. The gap is absorbed by increasing debt which the private sector pays for later.

The result is that fewer and fewer are shouldering the burden of stimulus funding as government grows.

To a Keynesian the only source for funding stimulus is the private sector despite the size of the private sector relative to the economy as a whole. They refuse to accept that perhaps government with its ever increasing presence in the economy should sacrifice for the sake of stimulus as well. As a result debt grows but according to Keynesians it should be ignored because "its not debt when you owe it to yourself".

At this point the Fed is clearing US debt from the market at the rate of 70% of new US debt issuance. The fat lady is singing.

(Some percentages above are rounded for simplification)




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Keynesians Hobbled by Blindness...

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At the heart of every Keynesian is the desire for real-time control over the markets. This requires projecting forward real-time data. Unfortunately real-time data has no trend from which to project a future. The result is an incessant bickering over the meaning of the numbers or as Keynesianists call it, "elevating the debate". It also means our economists are blindly driving our fragile economy. Not only can they not see the future, but they blind themselves to the long term damage being done to our nation with Keynes.

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Rep. Brad Miller -- Wants Jobs Now, Not Once They're Earned...

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Vibrant, healthy economies create jobs. An earlier non Keynesian America accepted this reality. But today our non reality based betters buy jobs with debt at the expense of national economic health. Buy jobs first with debt with the expectation that economic growth will soon follow...

Unfortunately North Carolina is the home of one of these Keynesian members of the surreal.

Listen to Brad Miller claim if we build it they will come:

North Carolina 13th District Rep. Brad Miller said the federal deficit is not the nation's biggest problem. He said growing jobs should be the top priority.

"The most pressing thing is getting American back to work. Bringing the unemployment rate down. That will probably take care of half of the deficit," said Miller. "American's don't pay income taxes if have no income."

Our economy ain't a surreal movie Brad Miller.



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Democrat Congresses = Budget Deficits - Fire Rep. Brad Miller, Rep. Bob Etheridge, Rep. GK Butterfield, Rep David Price, Rep Mel Watt...

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With the fact that we are going to the polls this Tuesday and all house seats are up for grabs it is wise to understand that it is the house that controls the nation's budget.

There are not "Clinton Surpluses"; Newt's congress forced the surpluses on him, neither are there "Bush Deficits" as Pelosi forced the majority of deficits on him during his final two years. Presidents do not control the nation's purse, congress does. Allowing this meme, that presidents have surpluses and deficits, only decreases accountability.

There are, in fact, Republican Congressional Surpluses and Perpetual Democrat Congressional deficits.





It is in this nation's interest to know which party is the party of fiscal responsibility and which party does not understand that Keynesian Theory is a failure.


[Graph via gatewaypundit, but altered]
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More Keynesian Fail as Government Incentives End on Homes --- Rep. Brad Miller Cosponsored a Bill for More of the Same...

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Yahoo...

New-home sales in May fell from April to a seasonally adjusted annual sales pace of 300,000, the government said Wednesday. That was the slowest sales pace on records dating back to 1963. And it's the largest monthly drop on record. Sales have now sunk 78 percent from their peak in July 2005.

Analysts were startled by the depth of the sales drop.

"We all knew there would be a housing hangover from the expiration of the tax credit," wrote Mike Larson, real estate and interest rate analyst at Weiss Research. "But this decline takes your breath away."

[emphasis mine]

yet Brad Miller (NC-13) cosponsored a bill (HR-5297) to help builders construct more homes to the tune of 30bil dollars. The market is saying no to more homes.

Brad Miller, pushing failure.



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Rep. David Price (NC-4) -- Arguing Dishonestly for Health-Care Reform....

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From The Wall Street Journal we hear that Caterpillar Takes a Hit on Health Care...

Caterpillar Inc. said Wednesday it will take a $100 million charge to earnings this quarter to reflect additional taxes stemming from newly enacted U.S. health-care legislation.

Caterpillar was joined by John Deere in announcing their increased health care costs....

Farm equipment maker Deere expects after-tax expenses to rise by $150 million this year as a result of the health care reform law President Barack Obama signed this week.

These expenses are not ultimately born by the corporations. Whether it's a corporate tax, an environmental tax, a health car tax, or the cost of raw materials and labor, expenses are ultimately passed on to the consumer as increased prices for goods. Not only does this make the citizens of the US poorer,but In a global economy this makes American Corporations less competitive and when they are less competitive they provide fewer jobs. (See GM, Ford) This is yet another step in the great wind-down of America fostered by the progressive movement.


There is no free lunch nor is there free health care and running it through the gov. only exacerbates the costs. It seems that Obama believes otherwise. He even claimed that business would see a 3000% reduction in costs with the passage of his plan.


Leaving aside the ignorance in stating that something would reduce costs by over 100%, Obama lied. I realize that in a storm dishonesty one lie can seem inconsequential, but a lie is a lie and should be called out as such.

David Price supported this dishonesty, the lie that ObamaCare is a cost savings, with his vote for Obamacare.

North Carolina is better than David Price and his support for ObamaCare is an embarrassment for this state. David Price is an embarrassment for North Carolina.

Oust David Price as NC-4 from office this November.





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Rep Bob Etheridge -- An Extremist Practicing Immoral Governance

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Extremism. What is extremism?

Citizens siding, with liberty, with the Constitution, protesting government overreach or Rep. Bob Etheridge's last two years that have defined him as a practitioner of Governance through the tyranny of the majority?

Bob Etheridge voted in support of:

• --Cap & Trade --- ignoring conservative input and attempting to force poverty on the nation through higher energy prices. Immoral.
  
• --ObamaCare --- ignoring the input of the citizenry and conservatives and breaking the bond between consumer and health care producer. Immoral.
  
• --$13 trillion financial bailout --- ignoring the input of the citizenry and conservatives and passing the costs of bailing out current failure to unborn generations. Immoral.
  
• --Failed Stimulus --- ignoring the input of the citizenry and conservatives and wasting tax dollars by running them through a soulless government. Immoral.
  
• But voted against the Balanced Budget Amendment. Immoral.
  

Bob Etheridge has proven himself to be an uncompromising statist who ignores not only the opposite side of the isle but the citizenry and state he pretends to represent. One can not put 1/6 of one's home state's economy under the direct influence of the federal government and claim to represent their state.

How is it, then, that Bob Etheridge can feel comfortable with charging Renee Ellmers, a woman who sides with the Constitution, liberty and the value of American Heritage, of extremism? The answer is that Bob Etheridge has been swimming so long with Pelosi, Reid and Obama that has lost sight of the Constitution limitations, the needs of the state of North Carolina, and the people he represents.

It is truly sad where the immoral governance of Bob Etheridge has taken our nation.



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Rep. Brad Miller -- An Extremist Practicing Immoral Governance

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Extremism. What is extremism?

Citizens siding, with liberty, with the Constitution, protesting government overreach or Rep. Brad Miller's last two years that have defined him as a practitioner of Governance through the tyranny of the majority?

Brad Miller voted in support of:

• --Cap & Trade --- ignoring conservative input and attempting to force poverty on the nation through higher energy prices. Immoral.
  
• --ObamaCare --- ignoring the input of the citizenry and conservatives and breaking the bond between consumer and health care producer. Immoral.
  
• --$13 trillion financial bailout --- ignoring the input of the citizenry and conservatives and passing the costs of bailing out current failure to unborn generations. Immoral.
  
• --Failed Stimulus --- ignoring the input of the citizenry and conservatives and wasting tax dollars by running them through a soulless government. Immoral.
  
• But voted against the Balanced Budget Amendment. Immoral.
  

Brad Miller has proven himself to be an uncompromising statist who ignores not only the opposite side of the isle but the citizenry and state he pretends to represent. One can not put 1/6 of one's home state's economy under the direct influence of the federal government and claim to represent their state.

How is it, then, that Brad Miller can feel comfortable with charging Bill Randall, a man who sides with the Constitution, liberty and the value of American Heritage, of extremism? The answer is that Brad Miller has been swimming so long with Pelosi, Reid and Obama that has lost sight of the Constitution, the state of North Carolina, and the people he represents.

It is truly sad where the immoral governance of Brad Miller has taken our nation.



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Rep. Brad Miller, Bob Etheridge, and David Price Express Pride in Diminishing America Through Economic Stimulus...

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According to MyNC three of our nation's most liberal representatives, Brad Miller, Bob Etheridge, and David Price toured the goodies they forced our grandchildren to buy for us...

Congressmen David Price, Brad Miller and Bob Etheridge made stops around Raleigh including one at the City's Transit Operations Center, which is under construction on Poole Road.

City officials said $11.6 million of stimulus money is helping pay for the $21 million facility that will house and maintain Capital Area Transit buses.

Having served over 40 years combined, they have become power brokers pure and simple. They endorse funneling money earned by North Carolinians through the Fed Government with the tool of the IRS. They later claim that they are bringing federal dollars "home" to NC in a shameless attempt to garner votes. Of course, they claim to be Robin Hoods as they impoverish us all; they are not; they are shysters accumulating political power on the backs of our confiscated income and labor.

What is sadder is that they now spend more money gathering votes than we give them in taxes. They make up the difference by taxing the unborn. This is the sort of governance that leads to the end of nations, yet...

Brad Miller, Bob Etheridge, and David Price publicly parade with pride by the fruit of their immoral governance.

These three representatives swim in seas of immoral governance so deep and so wide that they know nothing else and see nothing inherently wrong in attempting to gleam votes from the goodies they forced later generations to buy us.

Of course, our grand children not only have to pay for those goodies, they also have to pay interest to the Chinese for Miller's failed stimulus. Yet Miller, Etheridge, and Price seem proud of the fact that they are stealing American prosperity from later generations and leaving them a diminished America.

These individuals are leading this country toward a generational embarrassment in which we will have left our progeny less than our parents left us.

-- Immoral governance personified by three individuals lost in governance.



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If You Value Your Home Please Take Time to Understand America's Current Mortgage Mealtdown...

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A short and readable description of America's mortgage mess has been in dire need for som time now and Gonzalo Lira has delivered once again, but some information simply does not package well as a short teaser, thus the one below provided by the author.

Excerpted from Gonzalo Lira's The Second Leg Down of America's Death Spiral.

In the crazed frenzy to get as many mortgages securitized during the Oughts, banks took shortcuts with the paperwork necessary for the Mortgage Backed Securities. The reason was because everyone in the chain of this securitization mania got a little piece of the action—a little slice of the MBS pie in the shape of commissions.

So in the name of “improved efficiencies” (and how many horror stories are we finding out, carried out in the name of “improved efficiencies”), banks digitized the mortgage notes—they didn’t physically endorse them, like they were supposed to by the various state and Federal laws.

Plus—once the wave of foreclosures broke, and the holes in this bureaucratic paperwork became evident and relevant—some of the big law firms handling the foreclosures for the banks started doing some document fabrication and signature forgery, in order to cover up the mistakes—which is definitely illegal.

Long story short (since this is the short version): A lot of the foreclosed properties might not have been foreclosed legally. The people evicted might still have a right to their old houses. The new buyers might not actually own the REO’s they bought off the banks. The banks could be on the hook for trillions of dollars, and in the sights of literally millions of lawsuits.

In short: This could become another massive oozing sore, complete with yellow-green pus drip-drip-dripping out of some unmentionable places on the Body Economic.

His long version ,which is not really much longer, is much more informative and just as readable.



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For some time now I have been referring to the "housing bubble" in posts deriding the state of our economy and the solutions often proposed by politicians like Brad Miller. The reality, though, is that government created Keynesian bubble as described at the top of every page on this blog. Bastardized Keynesian Theory. Others, though, hit similar points frequently with far more flare..


Who Caused the Housing Bubble by Gregory Sullivan:

You've got to get it out of your head that there was a "housing bubble." There was a government bubble, a banking bubble, a 401k bubble, a credit card bubble... hell, let's just say we were doing the backstroke in a bathtub full of bubbles and wash our hands of it. You paid good money for worthless things. You got mugged, and you're blaming your split-level two bedroom wallet.

It's widely reported that people used the equity in their home to do all sorts of things, and since the dollar value of houses eventually slumped, it showed the rottenness of the house. No it didn't. It demonstrated the worthlessness of the things the money was lavished on.

You borrowed against your house to send your kid to college. Your kid now lives in your basement eating Cheetos and downloading porn all day instead of out in the workforce, sitting at a desk eating Cheetos and looking at porn on company time as God and Nature intended. But that's a college education bubble. A college loan bubble. You borrowed against a useful and valuable thing, your house, and your children learned Ida Tarbell's bra size, but nothing useful enough to make them employable in a recession.

The rest can be found here.




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Rep. Bob Etheridge -- Defined by His Votes...

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Americans for Job Security has released the campaign advert below in the interest of Renee Ellmers. Inserting Brad Miller or David Price in place of Bob Etheridge yields the same result.
Failed governance.

According to UnderTheDome the Etheridge attempted to define the group sponsoring the ad this way:

“AJS is nothing but a Washington, D.C. based shadowy front group funded by big corporate special interests and run by partisan hacks doing the dirty work for their candidates," said Mike Davis a spokesman for the Etheridge campaign. "Bob Etheridge is working hard to create jobs for working people and our opponent’s economic plan would crush middle-class families."

Businesses are good for America; they provide work for Americans, and prosperity for America. Success stems not from Bob Etheridge or the implementation of his failed Bastardized Keynesian Theory, but from us -- the citizenry and the businesses we create.

Bob Etheridge voted:

• Yes -- On fewer jobs and greater poverty through Cap&Trade
• Yes -- On limiting American liberty and increasing poverty through ObamaCare
• Yes -- On picking all our pockets to bail out his "shadowy" banks
  
• Yes -- On a failed "stimulus" (pork to buy votes) based on failed Keynesian Theory
  

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Cavuto on the Spawn of Bastardized Keynesian Theory...

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Over almost a century Bastardized Keynesian Theory has become the Wmap of public spending policy; it has become the dark energy behind our ever expanding national debt, and is at the heart of our current economic malaise.


Cavuto doesn't mention Keyens, but the connection is obvious.




Clowns to the left, clowns to the right
Swimming a sea of Theory
No land in sight.



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