Healthy economy equals quiet bulletin board

[Shapley]

Sometime during this fiscal quarter our total debt will equal our total GDP.

That's Mr. Obama's definition of a 'balanced budget'...

[Giant Communist Robot]

Sometime during this fiscal quarter our total debt will equal our total GDP.

Horrors! This means our economy is doomed! Wait a minute...I see intergovernmental holdings, which is money the government owes itself, is almost 5 trillion....uh...so the net figure is closer to 9 trillion. Well, we're doomed anyway!

[Giant Communist Robot]

That's Mr. Obama's definition of a 'balanced budget'...

"Balanced budget" is a powerful meme for the larger public. As it would be commonly understood, revenue equals spending. For Congress it means deficit spending will not exceed some arbitrarily chosen number. Since Congress spends all they want anyway, and then no more, this kind of amendment wouldn't change anything as they would place the limit where they like. This is the political equivalent of three card Monte.

[Giant Communist Robot]

I see my figures are some nine months old, but that doesn't change the picture much.

[Giant Communist Robot]

New Home Sales numbers are down after a big jump up in revision for Decembers' figures. Since these numbers are a count and not a sample, revisions will always be upward because the second time you do the count you find some you missed the first time. Don't be surprised if January's numbers get revised upward, too. In spite of everything, supply is down to the lowest number is six years.

[Giant Communist Robot]

I don't care to dig into the numbers, but most of that net figure the government owes is domestic. And a good portion of that is pension funds, 401's and the like.

[Shapley]

"Balanced budget" is a powerful meme for the larger public. As it would be commonly understood, revenue equals spending.

In that regard it is no differnt than household budget. I pointed out elsehwhere that a president can easily submit a 'balanced budget' proposal to Congress, they merely have to include unrealistic revenue projections and unrealistic spending cuts. To submit a budget that is $1.3 trillion out of whack may be realistic, but it shows a certain lack of fiscal fortitude.

Budgets are, of course, spending projections. They may or may not represent actual spending. Much was made of Bush's failure to include appropriations for the war in his budget. But wars are curious things: they do not usually follow predictable patterns, allowing them to be budgeted and thus limited by budgetary restraints. If you set out to win a war, you have to be willing to commit the resources necessary to do so, without the contraints of an arbitrary dollar amount chosen nearly a year before the fact.

The claim, of course, was that not including them in the budget 'hid' them from the Treasury, and thus we were not included in the debt. But, as GCR has noted before, the deficit is not the debt, and the debt is counted 'to the penny' by the Treasury, regardless of what the budget does or does not include.

[Giant Communist Robot]

as GCR has noted before, the deficit is not the debt

To be uncharacteristically responsible, I should point out that most economists consider deficit as debt; my view is a finer point of MMT.

[Shapley]

Deficits lead to debt, but they are not the same thing. IMHO. But then, I'm no economist.

[Giant Communist Robot]

The Heritage Foundation argues that the reduction in the number of taxpayers will create an electorate dominated by non-taxpayers

This sort of thinking--raising taxes on the lower half of income earners--while asking for cuts in corporate tax rates and not allowing higher rates for the wealthy--is what gives the Republican Party a bad name.

To be fair, though, we are given equality under the law; that doesn't mean equal income or equal taxes.

[Giant Communist Robot]

intergovernmental holdings, which is money the government owes itself,

Here's exactly how this happens: the Treasury runs their presses day and night until they have printed 5 trillion; the money is placed in wheelbarrows and taken to the Fed. After carefully counting it, the money is strapped to donkeys who are then shoo'ed back to the Treasury.

[dai bread]

Shouldn't that be elephants? The Republicans are the donkeys at the moment, from what I read about the candidates for President. You'd have to be an ass to vote for any of them.

[Shapley]

You'd have to be an ass to vote for any of them.

I'm not happy with the selection, but I think any of them can do a better job than the current occupant of the White House.

[Haggis@wk]

You'd have to be an ass to vote for any of them.

I'm not happy with the selection, but I think any of them can do a better job than the current occupant of the White House.

Dai, remember that 100% of what you read is being published by a media that is totally dedicated to the re-election of Obama. Imagine, for a second, the kind of treatment Obama would receive if he was a Republican. All of the current batch (including Paul and he's crazy) would do a better job than Obama.

[dai bread]

Indeed I'm well aware of media bias. That's why I always write "according to reports." Then you guys on the ground can correct me.

[Haggis@wk]

Indeed I'm well aware of media bias. That's why I always write "according to reports." Then you guys on the ground can correct me.

Most wise. In 1980 I was in England and when I went to bed on election night in the states we were hearing that Carter was leading in the exit polls and probably would win. The next morning we learned that Reagan took 44 states in a landslide victory.

I've admitted here before that I didn't vote for Reagan that election because of the negative news reports about him, especially his radical "fundemental religious position" (sound familiar?)

Every news report available to me portrayed Reagan as an old kook who was partly senile, including the supposedly non-partisan "Stars and Stripes."

Shortly thereafter I stopped placing so much faith in the mainstream media

[Giant Communist Robot]

Encouraging economic news out of Texas this morning; production has picked up; new orders growth, while slowing, is still growing; labor market is growing while hours worked picked up; and there is optimism among manufacturers. Elsewhere Pending Home Sales are also up--it won't be long before the housing sector has a positive contribution. Treasury auction had strong coverage with a larger yield, suggesting less demand for safety.

[Giant Communist Robot]

ECRI's call for a recession this summer is based on their Coincident Indicators Index. These are the indicators that change the same time as the economy; leading change before and trailing after. I have no experience using coincident data to forecast and wonder about it's usefulness. In particular, the levels ECRI is looking at have been pre-recessionary in the past, but what is the true nature of their relationship to the future? I'm skeptical. Even if the relationship is good, they overlook the jobless data. We've seen improvement there for a number of months and this suggests improving employment. No one is expecting much growth in jobs, but even small but continued growth could lead to a corresponding growth in consumer spending--would this be enough to keep the economy out of ECRI's recession?

Leading indicators continue to point to weak growth. The worry I see here is inflation. Core is already over target and energy is climbing in cost. Clearly this means the Fed will be unable to avoid considering tightening their policy. CPI and Q1 GDP had better look good or we may be in for an ugly summer. Overall, I'm still optimistic.

[Shapley]

Inflation may be necessary in order to improve job growth. I've pointed in the past to the artificial 'wage inflation' caused by the massive boost in the federal minimum wage, which affects more than just minimum wage earners. Experience has shown that the minimum wage generally raises unemployment until inflatino catches up with the artificial boost in labour costs.

It will be detrimental in other regards, but I still say that boost in labour costs is a factor in keeping job growth down. Workers laid off because they couldn't be afforded in 2007 cannot be replaced until employers can afford to pay the inflated 2012 wage rate.

[Giant Communist Robot]

I still say that boost in labour costs is a factor in keeping job growth down.

This may be a J curve.