Tag Archive for Jack Rasmus

Linkage: Sachs on Happinomics, Baker Kicks Double-dippers, Yves Kicks Ezra, More

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I read so damn many interesting commentaries and articles every day, I couldn’t hope to blog even a fraction of the most provocative here. So I’m going to start posting links to good stuff with (very uncharacteristically) brief comments here, if I remark at all. Right? Sure. I’ll try it.

Happinomics

First up, a great piece I by one of the few progressive economists who really convincingly cares about people: Jeffrey Sachs. We disagree on solutions and some other big areas, but I can’t help liking this guy, and not just because he’s buds with my little brother. His latest commentary is on “The Economics of Happiness“, and it made me smile. A quick excerpt:

[T]o promote happiness, we must identify the many factors other than GNP that can raise or lower society’s well-being. Most countries invest to measure GNP, but spend little to identify the sources of poor health (like fast foods and excessive TV watching), declining social trust, and environmental degradation. Once we understand these factors, we can act.

Baker Kicks Double-Dippers; Rasmus Kicks Back

Notoriously prescient economist Dean Baker, whose prediction of a housing bubble and its effects I started paying close attention to way back in 2003, gained lots of attention yesterday with remarks in his own blog about the prospect of a double-dip recession, or lack thereof:

Of course consumption is not really growing that fast, more likely it is increasing at near a 2.0 percent annual rate, but maybe this number will shut up the arithmetic challenged economists who keep talking about a double-dip recession.

The implication is that tens of millions of people will remain unemployed or underemployed because of the Wall Street sleazes and the incompetent economists who could not see an $8 trillion housing bubble and still don’t know a damn thing about the economy. It’s a crime that they still have their jobs.

These fighting words — which really just pile on to a more detailed argument from last week — got noticed by some economists who foresee a second dip, including one of my other favorites, Jack Rasmus, who took exception:

Baker conveniently forgets that some of the most prescient economists who predicted the recession and financial collapse back in 2007 are also now predicting that a double dip in the coming months is increasingly likely. In other words, not everyone forecasting double dip today were the polyannas predicting no recession back in 2007.

Dean isn’t without friends, though. Karl Smith over at Modeled Behavior backs him up, tentatively.

Yves Smith vs. Ezra Klein on Refi Ridiculousness

One of the Obama administration’s hairbrained ideas for boosting the slouched housing market and economy is to offer a new federal refinancing program that would of course work with private lenders to help homeowners get a new life on their equity or maybe get out from underwater.

This is dumb. Thanks to Naked Capitalism’s Yves Smith (heavily citing Adam Levitin) for speaking direct, simple truth to this silliness. Levitin shuts the idea down effectively, but Smith locks the door by pointing out that there are real opportunity costs to pursuing mediocre-at-best policies, a lesson the administration seems determined not to learn. Whereas administration pumper Ezra Klein had said “it’s worth a try”. No, Ezra, it’s really just not.

‘Who Will Help the Poor?’

This is the title question of a commentary by Dominique Moisi, who worries (as do I) that in a belt-tightening frenzy ravaging the West, the world’s most vulnerable populations are without a helping hand. I wish I had time to critique this one, as I don’t totally agree with the premises, but I am so hungry for anyone actually caring about this matter, I wanted to draw readers’ attention to it even without remark.

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The Coming Second Dip

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I don’t plan to spend a lot of time on this blog writing about acute economic scenarios like our likely double-dip Great Recession, as I have my eyes a good bit further down the road. But I’ve been seeing a lot lately about us being on the verge of that second dip. I don’t do analysis on this level, but I do pay attention to it, so I thought I’d share some. The stock market is beginning to bet on that second dip, which of course doesn’t help us avert one (if that’s remotely possible).

For a light listen, NPR is on the ball with “Double Dip: Is the U.S. Headed for Another Recession”.

So how much does this matter? This report from the Economic Policy Institute suggests the mere slow recovery is having a measurably negative impact:

[T]he last six months have seen an average growth rate of less than 1%, a rate of growth that fully explains why the previously declining unemployment rate reversed course in the past six months.

So imagine what another downturn would do.

For a slightly headier review of the prospects, check out Harvard economist Kenneth Rogoff’s analysis. He notes:

But the real problem is that the global economy is badly overleveraged, and there is no quick escape without a scheme to transfer wealth from creditors to debtors, either through defaults, financial repression, or inflation.

Which of those sounds most enticing? (I know my choice, if I can’t have none of the above.)

For true long-game insights, never miss Jack Rasmus. On the impending “dip” (plunge?), and how it relates to the recent debt-ceiling “debate”, Jack’s take is cynical but probably very realistic:

No wonder the stock market shuddered on Monday, notwithstanding all the “good news” about the debt deal. The performance of the real economy was far more important and “real” than all the huff and puff about debt ceilings and defaults by the US government. The alleged “good news” of the debt agreement was overwhelmed by the undisputable “real news” that the real economy was heading for a relapse.

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