Are We There Yet?

Do I trust Larry Summers to give an effective argument for the Stimulus package? Do I change my mind because Brad DeLong agrees with it? I think I agree with Tyler Cowen, who sees hidden dangers in the program. Larry Summers first states that We have dodged the destructive Christmas tree. I don’t think so, unless you agree that Business taxes are horrendous; to my thinking, the word should start with the letter ‘W’ when discussing the issue. The chance of the Stimulus package actually has little likelihood of increasing Consumption, a real Suggestion that it is foolish to pay Consumers an equivalent $4 to get $1 of Consumption from the Package. The issue of national savings is distortion, as paying down Consumption Debt is not exactly savings. We do not get real increase in Consumption, or real increase in national savings, though We proudly do increase the Deficit.

Mish comes out with his Take on the Service Sector deterioration, as reported by the ISM. I have a little difficulty with the ISM readings, and with Mike’s assessment. The disappointing Christmas Sales produced a real decline in Restock issues, and too much emphasis may be placed on the Service Sector decline, as Business moved much of their ancillary efforts in-house, to fully employ their already Hired, while much of the decline can be attributed to Management cancellation of Weekend trips to supervise the in-house Move. This came on top of an escalating fear that their Investment portfolios hold less estimated Value, and personal economies should be adopted. This attitude will alter as We come off Winter, and such in-house activities impede the Work effort, and Management wishes some relief from the pressures.

James Hamilton gives Us the current Study trend of Michael Dueker on Recessions, especially his belief that We are headed for a Recession. I do not think much of the two negative Quarters rule to define a Recession. My basic Reasoning is such criteria only indicates the Result of Management decisions made much earlier, based upon observed Consumption patterns identified in Real Time. It is at the point in Time where those decisions have been made, which should be identified as the start of a Recession; an identification that would declare that the Recession of 2007 started last July. Finding a couple of consecutive Quarters in the red this year will only justify my estimate. It is one of major problems of Stimulus packages; they get passed long after the Race has been run, and the Horses are already bedded down in the Stable. lgl