Monday, August 10, 2009

The Sadness

All you didn’t really want to know about Economics, but can be found here anyway. Tim Duy may be right; I hope so. Gary Becker and Nate Silver might also be right, though I don’t believe Nate can hold back the Unemployment Bear; there are just too many being Laid-Off, and too many joining the Job markets because of Investment losses. All Mortgages are shakey, as James Hamilton mentions, no less because Job change often leads to lack of optimum Transit Costs. This later may seem ridiculous in consideration of overall Household performance, yet there is often added Mileage, longer commute times, and lower Wages scales which have dropped about 5% since last November (insecure data, but I believe accurate). Consumer Credit is becoming more expensive, and loan renegotiation have been reeved up by Bankers to be as simple as filling out your own Tax Return. Climate Change will always be with Us, because Special Interests will destroy all legislation; Cap-n-Trade will resemble the European debacle in the same area. Everyone will make a Corporate Profit on the Deal, except the Consumers of such Energy.

Mark Perry thinks that the natural healing forces are bringing the Recession to an end. I don’t see sounder loans being made, better financial instruments being written, or financial institutions taking more of a Risk in their loan procedures. I see no one except the individuals who brought on this financial crisis allowed to maintain their previous Wage scales. I have not been confronted with any of the traditional healing processes; in truth, I have only seen Fed and Treasury forestalling those healing powers. The people who made the mistakes get Pay Raises, while Everyone else only face higher financial charges to pay for those Raises. A real anomaly I perceive consists of financial institutions mounting great screams over losses, simply to cut even Investors out of Windfall; overall considering entire institutional portfolios, these financial entities must be about 10% ahead in sheer Profitability year over year.

Arnold Kling, as usual, presents a very cogent Argument that neither financial or monetary policy errors could account for the total trouble of the Recession. I have always stated my belief that the sheer size of the economy alters the impact of monetary policy. Economic expansion always decreases the power of government intervention, while the size of the Labor Market will always intensify the amount and degree of Employment under Recessionary conditions. Governments have already overspent their Stimulus power, and Arnold’s planning errors develop greater sudden impact. The Recession is not over, and I am afraid the Christmas season will confirm the loss. lgl

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