This is a fair argument which everyone should read. Here is the Question I would ask: Can bubbles be created during recessionary times? Some might ask Why I would ask this; my Reply being it is possible that bubbles require recessionary conditions, whether localized or Overall. It is my Thought that where there is a temporary Stall in a major industry, and Investment Cash will start looking at the most favorable alternate investment opportunity at the time. The rush of Cash into the investment opportunity sector leads to an automatic increases in Pricing and Investment schedules, both necessary conditions for a bubble to be born. Higher Pricing means higher demanded Return, while heavier Investment schedules means less share for any schedule–lower Returns. It is hard to prove this argument, but I find little information on bubble creation.
Does Anyone think that this article is Right? It is not the Public Sector employees who are responsible for Politicians having spent so much money, just as Social Security Recipients are not responsible that Politicians spent the entirety of the Social Security Trust Fund. Any examination of all that federal spending suggests it was directly in the benefit of Private Sector Corporate life that benefitted from that expenditure. The later earned high Profits while paying low Salaries in fulfilling that expenditure. Now Business would blame the labor which went into the Public Sector during this Period, without which said Business would never have made their Profits. The core responsibility for this Recession resides in the Business sector who mis-allocated Investments, many of which were criminally-inspired, and bound to fail. Labor, both Public and Private, were the Fall Guys.
I will give my Readers a chance to preview the current arguments alive in the economic and business world, though I do not agree with Tim Duy. Tim believes in shoveling more Cash into the economy, while Geithner worries about the increasing domestic Savings. It is all an attempt to force-feed Consumption, in the face of a return to normal domestic Savings rates. Americans are not going to expand Consumption as long as Personal Income does not rise to match the increased Cost of such Consumption. No one seems to understand that this trend is actually beneficial in the long-run, even if business and financial Returns fall. Europeans accept the concept of Recession; Americans do not! Sustained domestic investment in Production will have to occur to better economic conditions, but few economic policymakers see the necessity. lgl