Recession or Growth?

Year over year Home Sales down 14.2%, though largest Price slash in 36 years. Kash cautions that the Housing market has not seen the potential worst, and provides historical and current data. Ironman at Political Calculations finds a 43.9% chance of a Recession. Menzie Chinn provides a good article detailing a more coherent analysis of the chance of a recession (though the young man tends to be avidly addicted to Models). His (mea culpa: I first referred to Menzie as a woman; I reread my own Post, and decided to google is find out his gender) most important point may be missed: future Monetary policy will have much less impact because of the vast increase in Housing stock since 2001, around 45%. Another datum not provided consists of the youth (newness) of the Plant, Capital Equipment, Stock, and Consumer products (unknown by this author, but obviously at least 20% younger). Fiscal policy, meanwhile, remains hampered by Entitlements, and a Congress dedicated to high Defense spending for futuristic weaponry.

Jeff Cornwall wrote a short piece on Worst Case scenarios. I am like Jeff’s father, I prefer to know what I will roll out with, if it all goes to hell. Tyler Cowan has two Posts, here and here, which discuss the limits and potentials of State welfare systems based on the Nordic. Tyler's later piece provides strong suggestion that the Nordic model would not be transferable to societies which lack homogeneous nature. I would provide the Alternative: institutionalization of Public trust so that all benefits attained would be uniform in nature and largesse.

What have We learned today?

Monetary and Fiscal policy will decline in effect and impact, when they have previously been overutilized. Economies will only submit to a limited degree of stress, before Economies counteract to eliminate response to such stress. This establishes the rule that only so much economic fuel can be applied to the Economy, before it becomes useless to attempt any further directional push. Where do We go when a Economy starts into a Recession, after the Boom was created by economic fuel in the first place? We come back to a Nordic model of Welfare State with some degree of Government management of economic resources. lgl