Talk Elections

I'm sorry to the Obama supporters on here, but when 43 percent of independents "Strongly Disapprove" not just disapprove of Obama's job performance you just can't expect to pull out a narrow win with whats left.

I don't really think you can find a period of time where a politician was up for reelection with strong disapprovals like this. Basically, what it is saying is that 40% of the country doesn't just want you gone, they hate your guts. Another 10-20% just doesn't like you. And the people on the other side aren't particularly enthusiastic about you.

The margin for error when the country is lined up like that against you is almost to thin that its extremely improbable to make it through a campaign season without losing a little more support because you certainly aren't gaining any more support.

http://www.washingtonpost.com/blogs/the-fix/post/opposition-to-obama-grows--strongly/2011/10/04/gIQAlch2ML_blog.html

Yet he continues to destroy every Republican except Romney in head-to-head polls.

I don't know about "destroy". Most are pretty close and getting closer. But still way to early for polls like that to matter much.

Name recognition...

Is only relevant if they hold Obama below 50.  In many polls, they don't.

It's still too early to say if Obama can win in 2012 or not.
If the election was tomorrow, it would be a close race if Romney was the nominee.

The thing is, although many Americans dislike Obama as our president, they still like him more than any of the GOP candidates. This is the sentiment I keep hearing from independents. They hate all of the choices. They despise the entire system of governance we currently have, and thus, do not believe ANY of our choices can fix the economy and the jobs situation. This is where we have our problem which will lead to a dismal turnout in the election.

If there is dismal turnout Obama will go down in a landslide because the GOP is going to show up in spades.

All I'm pointing out is that when you have 40% of America that strongly hates you the margin for error is extremely thin. Just think about it the uncle or brother that been sort of a Republican all his life is now hammering you at every family gathering about how bad Obama is. I just don't see swing voters being able to uniformally buck that kind of onslaught over the next year.

At this stand point assuming no worsening of the economy Obama's only shot is to run a near flawless campaign and make next 0 mistakes. That is not easy to do. He pisses off 1 extra group of people and its game over.

I support him but I expect him to lose.  Then again, I expected him to lose in 2008.

Well, this early most indepents are either undecided or in favour of the incumbent. When they know more about the challenger, lots of them (both categories) will break for him/her.
So B.O. being just above 50% in those H2H is quite bad.

You got to remember than for 'normal people' (ie not members of this forum), the primary will start in January, most have no idea what Cain/Perry/even Romney are about.

I don't understand bringing up approval ratings this earlier when Reagan had low approval ratings the year before reelection.

Anyone know the approval ratings of
George H.W. Bush
Bill Clinton
George W Bush

At this time before their reelection?

I agree with the prevailing point, but Cain would certainly provide us with an interesting lab experiment.

A few key things about that though:
1) Reagan still had higher approval ratings(mid to high 40s not low 40s, high 30s)
2) Reagan didn't have close to the number of strong disapprovals that Obama had nor do I think that any president has going for reelection
3) Reagan's economy was already improving considerably at this point and was booming by the summer of the election. No reasonable economist is predicting much of an improvement by next November if at all(and some are projecting it to get worse).

It is easy to make that statement without the numbers, which is what I asked.  Not just for Reagan but for the other recent Presidents as well.  

So does anyone have some real numbers for the past few Presidents at this time in their Presidency?

Plus, Obama obviously doesn't need the kind of reelection Reagan or Clinton had.  Like all candidates he only needs 270 electoral votes

Reagan had reached his nadir during the Fall of 1982...but by Jan 1983 (Jan 2011 for 2012 comparison) the economy was rocketing off the launch pad, the stock market having lauched it's great bull run five month earlier in August 1982.

So, by this time in the 1984 cycle, Reagan has 10 months of excelent economic growth that would continue to build for the next 13 months leading up to Nov 1984 while America's power and influence in the world was growing by leaps and bounds.

In contrast, Obama has exactly the opposite going for him...and if the trend continues for another 13 months, history hints that Obama is going to lose in 2012 by a wider margin than he won by in 2008

Well I read Reagan's numbers at about this time in the cycle about a week ago. So what I posted was accurate.

I'm now debating if I want to spend the next half hour pulling up all those old numbers again for you.

I'm currently splitting my time between reading a few articles, following up on this thread, I have some phone calls to make, etc.

Maybe a little later.

If you've seen them recently then I don't doubt their legitimacy.  Plus I just remembered that GallUp has a President approval comparison on their website and it shows exactly what you said, that Reagan (and also Clinton) were only a few points above Obama, and that is despite the poor economic conditions right now.

 

...and Reagan and Clinto both had strong tails winds to sustain their upward momentum...while Obama is facing galeforce head winds that are about to become hurricane force...

Which is what makes Obama's current ratings all the more impressive, people aren't expecting things to get better anytime soon and yet he is still in the 40s

Both of them have reasons to have lower approvals around this time.

In the case with Clinton, he took a shellacking in the polls during the government shutdown just as the GOP congress did. But afterward he emerged with some really high numbers.
A) The economy started roaring in 96
B) The media spun the narrative that Clinton had won the shutdown showdown
C) Clinton signed welfare reform

While things were looking a lot better in 83 there were still a lot of negatives in the economy. Inflation was high, but falling fast. Interest rates were high, but falling fast. And Unemployment was still pretty high, but falling fast. In late 82/early 83 many of Reagan's supporters didn't think he would win reelection because of the economy.

In late 83 people looked around and said things are okay, but a lot of things still suck. In mid 84 the average person looked around and said, alright this is pretty sweet.

I'm interested as to why support among independents has eroded this much in 2011.

My immediate conclusion is:

1. The economy seems to be faltering.
2. Obama wasted 2011 with a wishy-washy "don't leave me at the altar" approach on the debt debate, when he should have crushed Republicans.

Not all independents are bland centrists who want compromise for the sake of compromise. This entire debt debate has been a massive distraction and has taken the focus away from jobs.

I can assure they are much, much worse than in 83 or 95 and getting worse. The strong disapproval vs. strong approval index is at a level never seen by pollsters in any reelection since they started polling. The enthusiasm gap is atrocious. The economic approval/disapproval is also in the proverbial toilet. Trust me as unemployment starts to rise again he'll be retesting new lows into the mid 30s. This is just the calm before the storm.

And again keep in mind that both Reagan and Clinton had huge surges in their approval ratings because of great economic situations during the actual elections. If there approvals were actually at the mid 40s during reelection they probably would have lost. Clinton definitely, Reagan possibly. Obama's approvals aren't getting better by next Nov. I can assure you of that.

Number 2 is definitely wrong!!! The reason why independents are ditching Obama is because his economic disapproval is 70%. Its amazing he's not in the mid 30% already on this point alone.

Obama is where he is because people are ticked off that no recovery has happened in 3 years. They are going to be really pissed off when the economy actually does start to fall back more. The difference between these 2 things is the difference between a 41% approval rating(where  he is now) and a 34% approval rating if things start slipping more.

It's good that you have that time machine to see what November 2012 is going to be like.  Although I do understand the desire of conservatives to see unemployment rise

Nope, its not wrong. Crushing Republicans would have done some good, in my opinion. Had Obama raised the debt ceiling on his own, well before the deadline, (or sh**t, had he just done the debt ceiling raise during the lane duck session) we likely would not have seen the stock market go haywire, and it wouldn't have undermined confidence in our political system.

We have a lot of young-uns around here, who just have not lived through as many crazed political cycles as I have I guess. Anyway, you don't see me making many predictions that are not highly, and lawyer-like qualified, as to what the landscape will be like in 13 months!  :)

are you for real or are you just trolling?!  it doesnt matter where you at in the polls 13 months before the election, what matters is the undercurrents...and those undercurrents translate into an approval rating of 30, maybe even sub 30, by election day.

there is not going to be economic growth for the next 6 months and the UE rate will be increasing....that already baked into the cake and there's not anything anyone can do about it....so, unless you're envisioning blockbuster economic growth starting in June 2012 with job gains >300k from June 2012 through Oct 2012....there is NO WAY Obama can win this election unless the GOP nominee gets caught with a live boy in his bed.

Incumbents are owned by the undercurrents because incumbents are held accountable for the prevailing conditions of the country: Reagan’s landslide, who was tied in the polls in Nov ’83, was sealed by the undercurrents that were at work 12 months prior to the election…same with Bush41’s defeat…same with Cliinton’s reelection.

So, while Obama may get a few brownie points for admitting “Americans are not better off than they were four years ago”, he still has to follow that sentence with “we've been able to make steady progress to stabilize the economy”, because Obama understands that although he will be given a pass on the first 2.5-3.0 years, he will win reelection or be defeated based on his record over the final 12 months leading up to the election.

Fair or unfair, that’s the way the cookie crumbles for incumbents of the White House.

Maybe its because I'm in Finance and its my job to determine the odds of different scenario's you thought about that?

You don't know what your talking about. That wasn't the big issue with the markets. Nor was really the downgrade which S&P already said they were going to do if the US didn't cut to its target. So if Obama would have just raised the debt ceiling S&P would have still just downgraded anyway.

The problem in the markets was still predominately Europe back then, still is now, and Chinese slowdown in manufacturing purchasing and risk of property developers default has been added to the list.

The debt ceiling issue was never that much of an issue for the markets.

I certainly hope your not referring to me!

Are you an old?

From the vibe I've been getting on this site, I'm probably older than half. I don't know. I'm wouldn't call myself "an old" by any means.

I'm in my later 20s.

But I was more referring to this comment, "Anyway, you don't see me making many predictions that are not highly, and lawyer-like qualified, as to what the landscape will be like in 13 months!  :)"

Since I am the OP am I to assume that was directed at me?

Good for you.  I'm unemployed and recognize that the conservative way of job creating doesn't work, if it did Bush's economy would have been a lot different.

Gallup (http://www.gallup.com/poll/116479/barack-obama-presidential-job-approval.aspx):

Reagan 47%
GHW Bush 64%
Clinton 48%
GW Bush 55%

Reagan and Clinton were coming off their lows, which were just after the midterms IIRC. They would both hit 50% the following month - Reagan in response to Grenada, Clinton in reaction to the gov't shutdown. Bush 41 was coming down from 91% after the Gulf War, and would start his downward spiral around late Oct./early Nov. as the bad economy came into focus more. Bush 43 was declining on bad Iraq news, and would stabilize in the mid to high forties around the time of the Dem. primaries.

Heavens no!  Generally the names are a blur to me, and I "love" most of you, yes I do, so getting personal like that just isn't my style - usually - except of course with my pals. :)

Yeah I did find this after asking, but thanks for posting it

I'm not liking his chances against Romney too much at this point due to The Depression. I do think he'd still beat Perry, Cain, etc. (in some cases handily).

Well you asked!      Really you sure about that?

Republicans will lose because in all likelihood, they are going to be stuck with Romney. Romney is not the type of conservative who can energize the Republican base. There just simply isn't a Republican candidate who can both appeal to moderates and independents, and also energize the base. It was thought that Perry could be that guy, but he's not. Christie might have been. Cain's 15 minutes of fame won't last any longer than Bachmann's did. No one else seems to be being given a chance, though I have to wonder why Gingrich isn't doing better.

Sounds like a rhetorical question; also I didn't ask you anything.

You go ahead and keep telling yourself that.

Like Obama really has his base all fired up this time around.

Fine sorry, you mockingly challenged me.

And I was just following up on your unbelievably vague statement, "and recognize that the conservative way of job creating doesn't work, if it did Bush's economy would have been a lot different." with a vague question. Because how else do you answer a vague statement like that?

If there is one thing Obama can do well, it is put on a campaign.  You may be right, the Democratic base isn't all fired up yet. Give it time.

ok, now I'm a little miffed...what are you trying to convince me of, exactly?  That government policy should be liberal enough to transform wasting-time-on-an-internet-forum-discussing-politics into a meaningful career path for you?

I sincerely hope my taxes aren't paying for your 267 posts on this forum in the last 2 months, cause if so, I sure didn't get my tax money's worth.

It's not a vague state.  The conservatives have been talking about how any increase in the top income tax brackets will hinder or stop job creation in its entirety, it is also referred to as socialism/fascism/communism/etc.  All this while simultaneously ignoring the better economy during Clinton than Bush or Obama with the higher taxes and that America was also not a socialist/fascist/communist/etc country under Truman/Eisenhower/Kennedy/etc

That's only if you assume the GOP nominee will have better approvals, which is not a guarantee over a year from the election. Modern campaigns are about getting your opponent's negatives up, which is what the President is most certainly going to focus on doing. At this point, we don't know what the numbers will look like.

You can win it easily if your opponent is, say, Herman Cain.

No I'm not on unemployment.  Sorry to burst your bubble but I'm not like Joe the Plumber and other conservative hypocrites

I'm getting one soon, just had a great interview a few days ago :)

good luck, hope you land the job....peace

Well you see that is more specific.

TXMichael while you seem pretty convinced, you also appear to be a pretty reasonable guy. So would you mind participating in a little exercise on here?

Yeah, but the incumbents approvals and disapprovals are always more important than the challengers.

I would guess lower turnout than 2008 if that were the case.

Good luck with the job. I mean that! And Congrats on the great interview.

Obama can't win, but the Republicans can lose.

The only people with lower approval ratings tend to be Republican politicans or Republican organizations/concepts/policies.

I'm completely open to voting for a Republican.  The problem is they are too conservative now.  That's why I tend to reference conservatives on policy issues instead of Republicans.

With the advent of the tea party most of the Republicans I like are now considered to be an anathema to the conservative base.  Such as Lugar, he is a real leader and I hope he wins reelection.  I'm sure there are plenty of Democratic Senators the Republicans like even though they don't necessarily reflect their views.

Edit:  Thanks for the luck

By the way, by "an exercise" I was referring to a small set of questions on policy not whether or not you were open to voting Republican. Up for it.

What like a questionnaire on policy?  Some sort of formal debate or something?

Real simple. An either, or question. Answer. Another either, or question. Answer. Another either, or question. Answer. Explanation. That's probably how it will play out.

I'd rather just let discussions on policy just sprout up organically.  I've received too many phone calls from political parties and special interest groups asking those sorts of questions

So I take that is a no? Man I thought you were open minded.

I've gone through enough of those questionnaires with loaded questions to want to do them for fun.  The most recent was a phone questionnaire by some conservative energy group supporting an oil pipeline from Canada down to Texas

"Do you think gas prices are too high?"
"Do you want more jobs in the U.S.?"

"Congrats!  Support the new pipeline to have more jobs and lower gasoline prices, add more conservative talking points, Democrats want high gas prices, add more conservative talking points."

I don't like those sorts of things on either side, tough luck

That's not the type of questions I would be asking you.

Do you really think I was born yesterday?  Hah!

What's the problem? I mean you don't even know what I'm going to ask you. And they're not "loaded" questions I don't lie. I'm assuming the reason you disliked the questions above was because they had assumptions you didn't agree with and didn't account for the fact that they're other motivations than just to increase jobs and lower gas prices, right? Don't worry the ones I was going to ask don't have either of those issues. And they aren't goal oriented questions like those are.

One of the main reasons for this is that both Obama and Clinton have alienated the traditional Democratic working-class base with their "liberal" policies....and that could ultimately cost Obama re-election next year.

What a shame. Don't ever tell me its the Dem activists that are the opened minded ones out there. They're always petrified of ever doubting what they believe so they never put themselves out there.

Its quite sad really.

I have Republicans in my family who also don't like to answer those loaded questionnaires.  How do you think I get a hold of them?  One of my family members doesn't want them so I asked if I could have them.  

Not a question of doubt, I've simply read too many GOP questionnaires to know exactly where you are coming from.  They lack any true intellectual rigor (same with the ones from the Democratic leaning groups)

If you are talking about likability, look at favorable ratings. Approval ratings are a bit different. If Obama loses, he will become a very popular ex-president, sort of like Jimmy Carter. Count on it.

Jimmy Carter is not a popular ex president. Most people in this country old enough to have been working at that time consider him to be the worst president they've ever had. Of course Obama seems to want to give Jimmy Carter a run for his money.

People don't like Carter personally? Can you prove that?....Actually don't even try.

Now I do understand people don't think he did a good job as President, but that's different from actually hating the man.

Anyways have you noticed the difference between Obama's approval and favorability ratings? The pubbies better not nominate a crazy.....

I know what a questionnaire is. I'm not asking you a questionnaire. As I said before its a small "exercise".

Example of an exercise: If I wanted to demonstrate fractional reserve banking to someone he would start with $1,000 in play money he deposits in me the bank, I loan guy B $900 and he buys something who then deposits it back, then to guy A again for $8,100, etc.

That would be an example of an exercise. I wanted to do one with you that was only a couple questions long and pretty easy to do. But I guess you don't want to.

Do you see Obama's trend lines? If I was a Dem senator or congressman I would RUN as far away from him as I possibly could.

Europe has been an issue all throughout the early 2010s. Yet despite trouble in Europe, the stock market did really well in 2010, and continued to increase into 2011. Market turmoil started getting noticeably bad after the debt ceiling debate, and so did all the talk about another recession. Yes, Europe has always shadowed economic outlook here, but if you look at all the leading outlets out there, the overall pervading worry isn't nuts and bolts economic data (which is actually much better than you'd think), but a lack of confidence in the American political system. In other words, we are so polarized that we can't do the right things to fix these problems.

Markets move on feelings, and especially on confidence. When you have a confidence gap, you run into trouble.

The debt ceiling fiasco was the straw that broke that camels back.
 

For the last time, I'm not playing games of someone who has a blatant political ulterior motive no matter what you want to call it, Savvy?

If you want to make a point just say it.

Fair enough. But I'll just repeat the fact that its clearly the Dem activists that don't have an open mind to anything that might put their own beliefs in doubt.

If someone offered this to me, I would take it every time because
A) I have my confidence in my own knowledge and ability to navigate a false assumption that placed in front of me
B) If I was actually wrong about something I would want to know. My allegiance is to the truth not my own party. Yet so many fail to grasp that concept.

Uh, yes I have....and it has nothing to do with what I asked you. People might disapprove of his performance as President but you think they hate his guts (talking about independents mostly)? I think people just see him as a little clueless. Like a cute puppy.

You pubbies might have hate in your heart but that's just par for the course. :P

If I were to participate in an "exercise" as you call it which wasn't going to have some sort of political bias in it then I would be all for it.

Not indulging your games doesn't mean I'm close minded, it just means I'm not stupid enough to play them

Nice try though :)  I'm sure it has worked before

Hey buddy you do realize your arguing with someone that does this for a career. The US markets recovered the losses caused by the news of the downgrade within 5 days. The reason for the downgrade wasn't political as much as the Dems tried to paint it as such. Again I actually read these documents and I understand how agencies rate debt. They downgraded because the US wasn't able to make enough progress on medium term debt reduction. But it still didn't matter because the market paired back its losses within a few days.

What you didn't know is the whole week of debt ceiling debate the European markets were extremely volatile and their sovereign credit markets were seizing up. CDS spreads were shooting through the roof in Greece, Italy and Portugal.

It was only a couple weeks after the debt ceiling debate that the first big run on the European sovereign debt started to happen. CDS spreads shot up and spread through out Europe first from Greece, to Italy, to Portugal, to Spain, to Ireland, and even spread right into the French markets causing a huge jump in French CDS vs. German CDS spreads. That was the first signal to the Europeans that contagion effect throughout all of Europe was very possible. At about that same time due to Greece's continual miss of deficit targets, the worsening of the situation, and the realization that debt service itself was becoming dangerously close to outstripping any capability of the Greeks to avoid default even with the help of the rest of Europe, investors priced in the fact that Greece would default...it was just a matter of time. About another week later Greece actually had its first mini default. Europe had convinced French and German banks to retroactively change the terms of its debt with Greece which is a default.

Since that time its just been a continuous cycle of larger and larger runs on the European sovereign credit markets and banking systems. Even recently Europe had to announce a TARP like program to save a bunch of their "middle tier" banks.

What has been happening in Europe over the last 4 months is very different than what was happening a year ago. Their system is in the process of collapsing.

And as of about a week and a half ago, China is now the new culprit further driving down global markets.

So yeah, YOU DON'T KNOW WHAT YOUR TALKING ABOUT!

Alright buddy, sure!!!

If you had a real point with your game you could have made it.  Not with a game, you could just say it straight up.  Having to hide it shows that it is nothing more than a blatantly partisan exercise. 

You were called out, tough luck. 

I'm all ears if you want to make your point, but don't hide it.

Wonkish, you're glossing over the debt ceiling debate, which is dishonest. It played a much bigger symbolic role than you are admitting. It wasn't just a blip on the radar.

This is a more articulate version of what I'm trying to say:

"While the global economy was struggling going into the third quarter, the inability to favorably resolve budget and debt problems in both Europe and the U.S. has seemed to erode consumer, business, and investor confidence. The Greek debt crisis remains in the news on a daily basis, currently without a solution. The failure of the U.S. Congress to address budget issues, the debacle over increasing the U.S. debt ceiling, and the downgrade of U.S. debt by Standard & Poor's all contributed to U.S. market’s steep decline. The problems in reaching an agreement on the debt ceiling highlighted the ineffectiveness of Congress in dealing with important economic issues. More so than in most time periods, the global economy is currently dependent on politicians and bureaucrats to act forcefully and intelligently. Policy decisions currently in the hands of government officials will have a significant impact on the global economy over the next year."

http://seekingalpha.com/article/297761-q3-2011-market-review-recessionary-fears-overwhelm-market

Alright bryan you want to piss with the big dogs. In order for real damage to occur to an economy you have to deliver structural damage. Defaults increasing within a specific credit market for example would induce structural damage to the economy. Bank losses cause structural damage. Corporate earnings falling or corporate losses cause structural damage. Layoffs cause structural damage.

Tell me Bryan, what structural damage was done to the economy by the debt ceiling debates. Was there defaults caused by it? Did other countries cancel any orders with domestic exporters? Did sales numbers fall in any industry?

Come on Bryan tell me what happened because of the debt ceiling debate that actually affected our market fundamentals in any way. Equity prices are based on earnings and risk. A sovereign debt crisis on another continent that buys our goods and who's debt instruments are at least to a reasonable extent owned by our banks is real risk. A debt downgrade on the sovereign bond that is considered the worlds ultimate safe haven is NOT REAL RISK.

No damage to earnings, revenue, employment, etc. was done because of the debt downgrade and not 1 tiny bit of risk was added into the system.

So yeah knock yourself out and go find an article from a nobody on seekingalpha to support your claim, but the truth is neither he nor you could actually find real damage to anything in the market. Stock price declines in and of themselves don't actually cause any damage to anything.

But that just isn't true, Wonkish. Not to mention the fact that it is vastly understating what the stock market did immediately following the debt debate.

When stock prices plummet, and they did for several days following the debt cieling debacle (and before the downgrade even happened), that scares people and ruins confidence in the economy. It hurts retirement funds too, and that makes people not want to spend money, which hurts the economy too.

Furthermore, the debt debate did hurt employment, because people stopped hiring because they were unsure if the country was going to default on its debt. No jobs in August, after a gain of 100,000ish in July? Not just a coincidence. And such a miserable jobs report feeds back into second-guessing the economy as well. Its just a nonstop loop of unfortunate consequences.

It created a massive, unnecessary cloud of uncertainty over everyone's lives.

There were no losses in the markets the agency was "rating" ie US government debt.  The hack ratings agency downgraded US debt and the market rebuked them and debt rallied to historic highs.  In short they have no idea what they are doing.

See I think one of the things people don't realize is that by themselves stock market losses don't destroy wealth and stock market gains don't create wealth. You see it written up all of the time in news articles by halfwit journalists("the US markets lost $200 billion this week"), but they just fundamentally do not understand the basic functioning of markets.

There is an easy to illustrate this:

Lets say I and Bryan here are going to engage in stock trade.

I want to sell ABC company. Well I can't just sell it into thin air(even though many idiots in this country think you can). In order for me to sell ABC someone else, in this case Bryan has to simultaneously decide he wants to buy ABC.

At the beginning of the trade I have stock, but want cash. Bryan has cash, but wants stock. When I trade my stock for his cash the same amount of stock and cash exists after the trade as before the trade.

That is why stock values don't "store money". Now you may ask then how prices for stock go up or down. Well if I want out of my stock more than others want in than I may have to lower the asking price for the stock in order to sell it. If that is what happens essentially on a very, very, very tiny level I have decreased the value of the stock and I've slightly increased the value of cash relative to each other. And in the opposite case if there are a bunch of people trying to get into the stock and only a few people that are willing to sell at the current price than the price of the stock must fluctuate up in order find additional sellers willing to sell to this bunch of people. In that case on a very tiny level the stock has gone up in value and cash has in a tiny, tiny, tiny way gone down relative to each other.

Why is this important? It illustrates that stock prices are not stored money. You don't buy stock and have your money converted in this asset known as stock(its easy to forget this with online trading these days, but just remember 100 years ago this was obvious because the trade had to physically change hands). So when the stock market crashes essentially what happens(assuming no structural damage, losses, and monetary contraction) is that the perceived value of stock has gone down and the perceived value of something else cash, gold, bonds, etc. has gone up relative to each other.

The only time this isn't true is when actual losses take place. A default(a bank loss) is monetary destruction based on how our fractional reserve banking system operates. So once losses start occurring the pool of available money shrinks and therefore a larger spread in the value between cash and other assets(like stock grows) so the market naturally corrects through a sell off to increase the value of smaller supply money(to account for all of the assets in the country) and decrease the value of the larger supply of assets.

You know I do find it hilarious when people try to act like they know how to do my job better than I do.

Do you know that consumer confidence is one of the best contrarian indicators in the market? When consumer confidence is very low its usually a sign to buy because public have overplayed the fundamentals.

Stock market declines do not cause bad economic outcomes. Bad economic outcomes cause stock market declines. This is finance 101, here. You're just flat wrong!!

You also don't fundamentally understand consumer buying behavior.

Businesses didn't stop hiring because of the debt crisis, please! That is absolute BS. Hiring was decreasing each month up until that point. August is a traditionally slow hiring month. Look businesses are cutting back because credit is cutting back. Bank write offs are on the rise. And because buyers of our export goods Europe and China are buying less. It has nothing to do with a bad week in the markets and businesses weren't scared that the Federal government was going to default.

That is a joke.

The lesson here... don't try to challenge Wonkish... he'll out-write you, because his knowledge-base here is without comparison... apparently. :P

Well I mean who challenges someone who does something as career? I mean I would never walk up to a doctor and challenge them on the practice of medicine nor would I do it to lawyer or anybody else.

Lets say I was going to get into a discussion with a health liability PC guy about Tort reform, I would just shut up, listen, and ask questions that's it. Same for a school principal on a conversation about student discipline or even a climate scientist talking about global warming. In each case, shut up, listen, and ask questions.


The moment this country's voters became more concerned with maintaining their ideology vs. learning everything they could about how our world and country works is the moment this country really started developing problems. Nobody wants to learn anymore.

I'm not being difficult - but I'm curious as someone whose career is public policy development and implementation - because you work in finance... we should sit quietly to you and just listen?

I'm sure that's not your point, but it does sound like that.

Nope but to be quite honest with you since you first mentioned was your career a few days ago I've been secretely waiting for you to weigh in on something in that arena so I could start firing off questions to you. Its not right though for me to just start throwing random questions at you until you initiate something.

I guess that would be the sort of example I meant by what I said above.

I would not be surprised if he gave up and decided not to seek the Democratic nomination, he's a realist after all, no need to waste all that money in a losing effort. 

Alright TXMichael I missed this post before. I'll just run ahead with it. Again its quite simple.

First, I'm going to operate under the assumption(I was going to ask you this first before) that you are in fact a supporter of government expenditure to boost jobs(stimulus). If you are in fact not a supporter of this then feel free to let me know and this thing becomes a mute point.

But question number 1:

Given the choice between the government spending 100% of the cost of hiring a worker for beneficial project

vs.

It spending 80% of the cost and a private investor kicked in 20% of the cost for the same project because they agreed with it being done

Which would you choose?

In the first case if it was a job paying $50k the government paid out all of the $50k. In the 2nd case the government would save $10k because of the investors money and us taxpayers would only have to shoulder the $40k.

So which one would you prefer?

In this scenario I have no preference either way and with both I'd be fine.  I have no problems with PPP

Skip the details and get to the point.  What is your point, you are clearly trying to make one.  Either make your point or I'm done with you.  We've been going over back and forth all day and I just want to hear your point.

What is it?

So you wouldn't want the government to save the extra $10k? Why not?

And what do you mean by PPP?

Public Private Partnerships

In Dallas one of the commuter rail lines that has been proposed has had an alternative funding solution presented as a PPP because the transit agency doesn't have the funds via taxes alone to construct it.  If that ever moves forward I would presume that at least some people would have some percentage of the cost of their employment borne by the tax payers and some by whatever private entity they go with.  I don't even know if there is a full proposal.  However DART (the transit authority for most of Dallas County) simply doesn't have the money to move forward without some sort of external money source such as a grant from the federal government or as part of a PPP.

If there are no private sources of money - the government foots the entire bill
If the government can't afford it alone - go with the private source along with the the government
If neither can afford it and it is a critical project then it would probably go on the national debt
If the private company can afford it and if the government can then I really have no preference, if I were a Representative I would vote yes on both in the hope that at least one gets passed



Now the point must exist. 

I see usually when I see PPP I think Purchasing Power Parity.

But why would you have no preference between both options if the latter saves tax payer money to be spent on something else? Do you just not care if government money is wasted when it doesn't have to be? This is kind of a big sticking point before I move on.

That same money would have be out of the tax payers hands either way, the money doesn't to the business to pay their share of the new hire by magic

Since you are not stating your point, I'm out.  If you want to make it then either post it next or send it to me in a private message because I don't play these ridiculous games.  

The point is in how you arrive at a particular answer. If I just told you it then you would just go, "I  don't agree with how you arrived at your conclusion, I disagree" So if I can't walk you through how one would arrive at a certain conclusion then the point is meaningless. That is how economics works.

Or did you think it was just a bunch of people that got up 1 day and decided these are the policies that sound good to me and nothing else matters?

Then message the two paths if that's the point.

Like I said, if you didn't post it I would be out.  So you can private message me your paths where the government gets Bill O'Reilly angry because it raised taxes to afford the additional $10,000 and the alternative where everything is great because in the conservative less government spending is always better.

Not even close! I'm actually quite surprised that you would be okay with a government telling an investor to get lost for kicking in 20% of the cost of a project thereby saving the government money. Since I wasn't expecting you to take such an odd position there is no way I could continue this unless you actually realized that its pretty stupid for the government to pay the whole thing when someone else was offering to pay some.

And FYI an investor already has a pile of earned capital. His capital doesn't come from tax payers.

The basic facts are almost never subject to controversy except at the edge of knowledge. Were I to seek to know how to slice up a side of beef, then I would go to someone who knows how to slice up a side of beef. That would not be an attorney. If you are discussing history, then some facts are beyond question -- such as that Sir Winston Churchill was Prime Minister of the UK during the Blitz and that he spoke of the performance of the RAF against the Luftwaffe as "the finest hour". Good science ordinarily has enough qualifiers that until recently any good chemist could say that "within the available measurements bismuth-209 is stable" -- until measurements now available show that the isotope has a half-life of one billion times the estimated age of the universe. Both statements have been true, the first one now refuted only because the measurements have gotten better.   

Even something so loaded with value judgments as economics has points of undeniable reality -- such as the content of John Maynard Keynes wrote in his General Theory.  One can disagree with Keynes, but one cannot deny what he wrote.

When people get into positions of advocacy, then their credibility as experts vanishes. Advocacy positions almost always have personal values behind them, and those personal values are beyond proof. Look at it this way: much of my idea of how human nature operates results from what I observed as an infant -- such as whether people are trustworthy, whether one can eventually get what one wants and how, whether strangers (and which ones) are acceptable or to be shoved aside, whether one can be confident or must wallow in fear, and whether what one person gets implies a complete loss for someone else. There is a huge difference between being brought up as a Reform Jew and being brought up as a Pentecostal, between having drunken philanderers as parents or having  attentive parents,  whether "curiosity killed the cat" or a little curiosity is a nice thing, and between having been  brought up rich or poor.  Basic values are beyond proof.

One cannot prove that an extreme position of economic inequality is a good thing or it is a great horror.  One can't prove that the Holocaust, the Atlantic slave trade, or Stalin's forced collectivization was wrong. Extremely offensive and disgusting to someone who believes that life is precious and worthy of legal protection? Sure -- that is a consequence of what I believe due to values that someone inculcated in me even when I was nursing from a bottle. I have a large vocabulary of pejorative words appropriate for harsh judgment. "Bad" is just too vague.

Sure, there is specific learning to any trade or profession. Some professions require a vast store of knowledge not available elsewhere. For good reason, beauticians can start working on hair when eighteen or so; physicians are about 28 before they do serious medicine.

But know the limitations. If a physician appears on an advertisement for a non-prescription poll for headaches or sinus congestion, then his objectivity is gone. If an economist says "Vote for Smith", then he likely says more about what he believes in than about economics. If a climate scientist is in the employ of a large oil or coal company, then watch out.

And there you have it!  Thanks Tom Wolfe, from whom I purloined.  :)

I am curious what the intent of the questioning is... but you are welcome to PM me.

Gray Davis got re-elected with similar approvals.

You'll have to forgive me, but there was a brilliant post which argued very well that even if Obama's disapprovals are low that doesn't mean they will just vote for ANYONE the GOP puts up.

I am with you on this debate, Wonkish. But I would add this concise fact that is so often overlooked among our friends on the left: In order for the government to give anybody anything, the government must take something from somebody (if they simply "print money" to "pay," they are still taking something from somebodies: lost purchasing power via inflation). In other words, all government spending is EVENTUALLY paid for by taxation on market activities and/or inflation upon society at large.

This argument has always been bull$hit to me. I use to sit down with Keynesian professors and lay step by step by step a proof for them to see on a very, very narrow subject(which is what you have to do otherwise the width of the subject makes a conclusion reached in timely manner impossible). They would look down and look up and admit they had no way to wiggle their way out. I was in fact correct. The fact is that 2 + 2 = 4 whether you are a Democrat or a Republican, Conservative or Liberal, Keynesian or Austrian/Chicago/Supply(take your pick).

The truth is when your talking about a values type question like abortion, gay marriage, euthanasia, etc. well of course its a struggle between to opposing sides for the soul of the country. But in the case of education, healthcare, pensions(SS), etc. it isn't a question of values. There are ways that quantifiably improve the value of these systems. Value meaning higher quality for lower cost. And there are ways that don't or make things worse. And the answer to this obvious goal that everybody shares according to our would be friends on the left "we don't want to read data because it might be biased, wahh, wahh, wahh. We prefer to go do everything blind as a bat because we might be mislead by the ulterior motives of the person giving us the data". What a crock. Its the same damn line you see from just about every single one of them to cover up the fact that they haven't read d*ck and don't want you to help them try to make healthcare better or education better. Because for them its not actually about making it better. Its that they want to be stubborn in there method of doing it.

This is the same situation I've come across for more than a decade. The truth is that only maybe 5-10% actual activists would spend the time to actually go back and forth to improve upon their own ideas. The other 90-95% would be scared you might negatively influence them.

Okay, I give you the play by play.

The question of 100% of government expenditure for a job
vs.
80% gov. and 20% by a private investor
Is a no brainer for most sane people. Why waste the extra 20% when someone else is willing to fork it in.


So how about 80% and 20% vs. 50% and 50%
Same why waste the other 30% of expenditure when someone else is willing to kick in the other 30%

So how about 20% from the government and 80% by the private investor. Yet again the same is true.

How about even 10% from the government and 90% by the private investor. Again yet again the same is true why waste any more government money when he's willing to fund 90% of the project.

Why pay $50k in government expenditure to create a new job when you could create a job for only $5k in expenditure? You wouldn't. And the person that agrees to that simple stream of thought would have just agreed by default that tax cuts are a much more efficient way to create jobs than government expenditure is. You get more bang for your buck.

Meanwhile, why make 1 owner of 1 construction company much more wealthy when you decide to build that road, when you can make all job creators just marginally more wealthy? Seems a lot more fair to do the latter route. You don't pick winners and losers. And that is speaking from someone that knows wealthy folks that don't care what % taxes they pay because they are the beneficiary of government deals that have made them very wealthy as a consequence. Also since the private sector is better at delegating work to be done that generates a higher return on overall society then why wouldn't you want them to employ the next several hundred employees, than having the a central planner do it who has no idea what is the next most demanded project.

I think you need to be careful to not paint all with one brush.

I'm not extremely economically left-wing, but still 'liberal' and see public private partnerships as a great thing, however, within my own recent experience on PPPs there are limits on both minimum investment levels and the nature of the investment.

Hmm, I guess you didn't actually get the crux of the argument. PPPs wasn't the argument I was making. Read it again.

I do indeed.

But I don't get to reside in that theoretical world.

What you're asking is a) better than b) - but what I'm suggesting is that sometimes b) is not the practical option - but I support it when it is.

FTFY

Look you support it when investors are willing to but if you follow down the line of the argument and you'll find that its obvious that investors will want to because they are the ones hiring for their own company.

So play by play!
If you support 20% kicked in by a private individual when you can, if you support 50% kicked in when you can, and you support 80% when its possible than why not cut the damn corporate tax rate and issue a reasonably large worker tax credit and the businesses that are close to hiring will tip over the end and hire. And the federal government then only ends up kicking in a fraction of the cost of a job instead of the cost of the whole job.

??

And look the context is that when a business makes several million dollars off a government deal they know they get more of those government deals if taxes rise.

I can assure that other business owners do care about what taxes they pay. I work in a smaller firm that would hire at least a couple more analysts if tax rates were slashed another 10%. And those people that would have a job if that were to happen, but will never know what they are missing at our firm...do care if that effects them being able to get work.

So how do you propose the private sector create this new job?

As I said, it's a painting everything with the same brush... sure there are going to be circumstances where what you propose would be workable - but not all projects would fit within those parameters.

Many government projects would not generate revenue... nor should they all, which would be an unattractive investment. But where it's appropriate sure.

Yeah again all I'm saying is that when the money is there its better than the alternative of the government footing the bill. But that isn't the point. The point is that if the goal is to have the least amount of government expenditure or loss of revenue than tax cuts are vastly more efficient than than stimulus spending whether that is PPPs or complete government expenditure.

So the argument that stimulus spending is an effective and efficient way to boost employment is a false one. Tax cuts are much more effective and I used the above list of questions to demonstrate that.

http://www.urbandictionary.com/define.php?term=FTFY
Decreasing taxes won't increase hiring in almost all circumstances. If you were to attach strings to them, the effectiveness would be the same as if you just created government jobs.

Btw Obama's stimulus created jobs, but a lot less efficiently than expected. Bush's tax cuts... Didn't create a single job.

The government has to pay the cost of the whole cost of the job. Where the former the government doesn't have forgo much at all. There is no straight way you can deny that.

Please explain to me the rationale about how tax cuts don't create any jobs?

The main premise is that no business is going to hire workers unless they will pay for themselves. Tax cut or not it will not change the bottom line(especially since a taxes are based of profit)
I'll make a distinction between buisness and corporate taxes

For Personal taxes for people with businesses:
They have nothing to do with their business.  Most rich people already save a part of their income, and a tax cut will just mean that they will be saving more money. That won't create jobs. Only poor will spend their tax cuts.
For Corporate taxes
I don't think I even need to argue this point, but it's the bottom line. Yes corporations go overseas, but most of them fill in a niche in their own country where they will not be able to keep functioning in another country because the products are usually region specific for most. Labor costs and infrastructure play a lot bigger role in outsourcing anyway(this is why manufacturing got moved to banana republics that had really basic needed infrastructure).
I am sure somebody could argue my point a lot better, I need to go to bed soon.

Thanks for demonstrating that you don't know the first thing about how a business is ran. Your comment was nothing more than a smattering of random lines you picked up clearly from other people that have nothing to do with the question. Outsourcing has 0 to do with the question of whether or not tax cuts cause hiring domestically. Its a completely different issue. You just threw out the term "bottom line" in a random spot in the paragraph.

"This is why manufacturing got moved to banana republics that had really basic needed infrastructure" This is bull$hit and partially doesn't even make sense.


Yeah clearly you need someone else to argue it for you because you don't have a clue what your talking about. Its just another example of a person who comes out with an outrageous statement like "tax cuts don't create any jobs." And then attempts to back it up with something that just shows he has never spent more than 10 minutes thinking about this in his life.

Here's the truth:
Just about every business would expand if they didn't have a capital constraint such as limited retained earnings, high cost of capital, etc.) You lower taxes and you increase retained earnings. Retained earnings increase and you are more like to invest in capital improvements which include new hires. Plus in the case of a worker tax credit the company only gets the credit if he hires.


And this has nothing to do with the topic, but since you seemed intent on bringing it up in your meandering pile of filth you called an argument. Companies move overseas because of what is called "Cost of Doing Business"
Its a combination of these things
1) Cost of input costs(raw materials, spare parts, etc.)
2) Cost of capital equipment(whats the price of a piece of machinery, building, etc. in 1 country vs. another)
3) Cost of Labor(this ones obvious)
4) Cost of taxes(yes taxes are a big piece of cost of doing business)
5) Cost to make delivery(this one is a huge advantage to the United States because the worlds customers are close by cutting down on transportation costs---also why your "infrastructure" argument is bull$hit)
6) Currency risk
7) Regulations
8) Liability risk
9) Cost of energy
10) Access to capital markets(if its not a multinational)(another one we have a huge advantage in)
11) Quality of labor
12) And many more!

Now a company puts all of this together and they determine by looking at the numbers if it makes sense to outsource to another company based in another country, to set up their own outfit in a different country, or stay here.

So if the US government has created an environment where all the things on this list add up to a cheaper alternative than companies stop moving to other countries and you see a huge net increase in companies bringing jobs here. If the US government has created an environment where all the things on this list add up to way more than what can be done in a different country then companies start leaving.

And contrary to what you may think while Labor cost is a big factor it falls way, way, way short of trumping the rest of the list. A few of those items are just as important or even more important to certain companies. The fact is the United States has created an environment where a lot of these things are unnecessarily high relative to rest of the world so companies leave.

A hypothetical statement laden with assumptions.

Rubbish.  This conclusion doesn't magically follow from the hypothetical given previously.

The rest of your post suggest you dont understand the basic functioning of markets either.

Well feel free to point out where then, instead of copping out!

Please enlighten us!

It doesn't magically follow anything, but it does logically follow it.

Examples:
Assumption -- "you could create a job for only $5k"
Assumption -- job B ("create a job for only $5k") is at least equivalent to job A  (created by government expenditure).

If true, this sounds like a wonderful proposition.  But one has to buy into the assumptions to go along with this argument.




I used the word 'magically' since logic seemed absent from your statement. 

So your argument is that a $50k job created by the government and a $50k job created by a private individual, I'm making an assumption that one created by a private individual may not be as personally fulfilling to the person as the one created by government, is that what your saying? Or what are you saying?




How are you not following it? Its pretty clear cut. If someone agrees that with the idea of a job only 10% funded by the government and 90% by an investor all you have to do is just flip the person who is the one deciding on the need for the job(the private individual instead of the Gov.) and the by product is a tax credit for hiring and the rest is payed for by the private individual. $45k funded by investor and $5k funded by government = approximately the same thing as entrepreneur hires $50k worker and receives $5k tax credit. There is 0 difference in those two things. I just phrased it in a language that pro-government stimulus people would understand.

You wrote "by themselves stock market losses don't destroy wealth and stock market gains don't create wealth".   In economic terms, wealth is a measure of net worth or the difference between assets minus liabilities.  The value of assets and liabilities are typically measured using a money price.  Stocks are an asset.   If the price of stocks goes down, the value of that assets owned goes down, and unless there is an equal or greater decrease in liabilities, then wealth goes down.

I didnt write anything about a job being "personally fulfilling to the person".  
My argument is that you are presenting an either our -- either "50K" or "5K"  expended to create a job -- with an assumption that the two scenarios have equivalent outcomes.





How are you not following it? Its pretty clear cut. If someone agrees that with the idea of a job only 10% funded by the government and 90% by an investor all you have to do is just flip the person who is the one deciding on the need for the job(the private individual instead of the Gov.) and the by product is a tax credit for hiring and the rest is payed for by the private individual. $45k funded by investor and $5k funded by government = approximately the same thing as entrepreneur hires $50k worker and receives $5k tax credit. There is 0 difference in those two things. I just phrased it in a language that pro-government stimulus people would understand.
[/quote]

The originally phrase was "tax cuts are a much more efficient way to create jobs than government expenditure" with no qualifier that the tax cut was linked to hiring.  

If your point is giving a company a tax credit is essentially the same as giving that same company an equal direct expenditure, then sure.   But so?

But stock market prices don't go up and down in a vacuum. In the absence of the creation or destruction of money or goods an overall stock market decline must result in another asset increasing in value. So my answer was in combined wealth for an economy not in the way you phrased it which is also correct, but an answer to a different question.

If I go out and invest in the stock market and it goes up I have earned more wealth. That is correct and you correctly stated that in your piece.

But if I own stock and Joe Blow owns bonds. And we exist in an economy of only those 2 instruments and no other currencies. Assuming no money or goods get created or destroyed any fall in stock will result in an increase in value of bonds or cash or both. So taken as a whole no wealth gets destroyed or created when a particular market moves in absence of the creation or destruction of money or goods because some other market has pick up the slack.

Do you understand the difference between what I said and you said is? They are both correct answers they just address different things. Your answer is a micro answer pertaining to one market my answer is a macro answer pertaining to ALL markets.

One could argue, as you seemed to be, that a decline in stock market prices indicates that value of cash has gone up as measured in shares since #ofshares/$ is the reciprocal of $/#ofshares.  But we measure the economy in $ not in  # of shares of stock.

I have to go to work now.  Will check in later in the day.

Okay, now I see. You just misunderstood. In the example, $50k gets spent in both cases. The only difference is what the government has to actually fork out. In option A, you have $50k provided by the government. In option B you don't have only a $5k job. That is just the amount the government is subjected to. The salary is still $50k, not $5k. Who would work for $5k in salary? The difference is that you don't have to bore so much cost on government allowing you to positively impact 10 jobs for the same cost to the federal tax payer as 1. All the while the salary paid out is still the same.



No its not. Its that some folks would line up and agree to a stimulus package where the government paid for the full cost of work performed. By flipping it over to the tax side you can allow the private business to decide on the project instead of the government and get the job created for a fraction of the cost of outlaying the entire cost of the job like they do in a stimulus package.

Getting much closer.

Look the situation that created this topic was the S&P downgrade of US Treasuries. Bryan made the argument that it had done damage to the economy because the stock market fell causing a cascading effect throughout the rest of the economy reminiscent of a deflationary spiral. Now you and I both know that isn't true because if that was the case every time a really bad day happened in the stock market things would just increasingly deteriorate until the economy went into free fall.

Instead what happened on that day was that people sold stock for cash and used their cash to buy treasuries. Now the stock market value dropped. But the treasury market(as well as several other markets including cash) increased in value. All that actually happened was a temporary fluctuation. Investors determined that day that Treasuries were cheap and equities were overvalued. So they sold one and bought the other. 5 days later they reversed that and bought equities and sold treasuries. No net wealth was destroyed in that fluctuation just the same as no net wealth would be destroyed if investors sold ABC stock and bought XYZ stock and 5 days later sold XYZ and bought ABC. So what we are talking about here is market fluctuations not wealth destruction.

Now what happens between equities and cash is like in physics. I exert on force on the world and the world exerts force back upon me. But since I'm so tiny in comparison to the world you could never calculate the amount I actually move the world because its so negligible. Now the currency market is huge. The amount of dollars out there makes even engaging in a $100k transaction almost undetectable on the value of the dollar.

But that doesn't change the fact that when I buy something at slightly more than it was previously listed the dollar very, very, very slightly decreases in value. In much the same way I negligibly push on the world I negligibly reduced the purchasing power of the US dollar. If you think about it, it makes sense given how inflation works. Now if I buy at slightly more than it was previously listed at the dollar very, very very slightly increases in value. I negligibly increased the purchasing power of the dollar.

This is true of stocks, bonds, cars, homes, gasoline, gold, etc. every good known to man. If it goes up in price and I am willing to buy there, purchasing power of the US dollar ever so slightly decreases and if price drops and I am willing to buy there, purchasing power of the US dollar slightly increases. In effect I'm confirming as a participant in the market that the good or asset is that much more or less valuable than the dollar than before.

I realize I probably reiterated the same concept 3 times in different ways, but hopefully you get the point now.

So your entire argument is based on the presumption that an investor actually has the money to move forward with hiring someone!  

It also presumes that a private investment costs the residents (tax payers) less because the government isn't taxing them as much, however the residents have been putting their money into that business.

It also presumes that all government spending is wasteful by default.  You are saying the taxpayers dollars are "wasted" in the scenario where the public investment is greater.  The person gets hired and the project gets done, the private company then saves the additional unspent money that he can put forward to future investments. 

lol

So what about in 2011 when private investors either don't have the money to fix the crumbling infrastructure or don't want to?

This played out exactly how I thought it would. lol


This is no different than me "walking you" through how a green house gas functions and coming to the ultimate conclusion that global warming is real while ignoring every other external factor.  See why I don't play these games?  I could easily rig one up for you which "teaches you" that global warming is 100% unquestionably, undeniably real.

You try to rig a game using biased information and ignoring external factors.  The main factor here you are ignoring is; Are businesses hiring and investing?  The answer in 2011 is generally not.

One point to consider... for someone to consider anyway....

The BIG difference between direct stimulus and tax cuts is usually when such payments are needed.

Tax cuts, as a general rule, cannot be effective immediately and whereas where I support direct stimulus is that the state is the ONLY body that can put liquidity in the economy when the private sector is either too skittish to (which is the BIGGEST problem IMHO) or unable to.

Do they activate a long-term growth trajectory? No... but that's not the point. It's designed to stem the bleeding to allow the economy to recover.

Fiscal policy cannot put liquidity into the economy. The moment they spend the money a bond gets issued. Money goes from investor to treasury via a treasury auction and then eventually back to some other individual. No liquidity gets created.

Only the fed can create liquidity.

And actually, one of the primary complaints towards stimulus is that it takes to long. It has to go through a appropriations process, pass, and then a bureaucrat has to plan the project out and hire the necessary companies to initiate the project. That takes months. Where as the moment a change in tax policy occurs market participants immediately adjust their numbers. The same way that a person would adjust what they can and can't afford by in increase in salary. 

So your entire argument is based on the presumption that an investor actually has the money to move forward with hiring someone!  

If they didn't have a decent amount of money to hire someone nobody would have the money to buy the treasuries to fund the US government. If there wasn't any actual money there, everybody would be screwed including the US government

It also presumes that a private investment costs the residents (tax payers) less because the government isn't taxing them as much, however the residents have been putting their money into that business.
Your comment doesn't make any sense. Of course private investment doesn't cost the public as much because its only bore on the one making the investment. The rest of the public doesn't put capital into that business the owners do.

It also presumes that all government spending is wasteful by default.  You are saying the taxpayers dollars are "wasted" in the scenario where the public investment is greater.  The person gets hired and the project gets done, the private company then saves the additional unspent money that he can put forward to future investments.  
If the goal is to create jobs and your doing for 10 times the public cost of another method then yes you're wasting money.


lol

So what about in 2011 when private investors either don't have the money to fix the crumbling infrastructure or don't want to?
Well private investors are exactly who ended up paying for the crumbling infrastructure because they are the ones that bought the treasuries that paid for it. What do you think the government just pays for everything from money created out of thin air(even though some of it is). What makes infrastructure more important than other investments? Ones that private investors were and are willing to put money towards because **there is demand there***.

This played out exactly how I thought it would. lol


This is no different than me "walking you" through how a green house gas functions and coming to the ultimate conclusion that global warming is real while ignoring every other external factor.  See why I don't play these games?  I could easily rig one up for you which "teaches you" that global warming is 100% unquestionably, undeniably real.

Knock yourself out! I'm not one of those that hides from stuff whenever I can.

You try to rig a game using biased information and ignoring external factors.  The main factor here you are ignoring is; Are businesses hiring and investing?  The answer in 2011 is generally not.

No biased information here and I'm not ignoring external factors. Because those external factors are in play in my example as well as in any other action that would be taken.

In January 1980 Jimmy Carter was ahead of Ronald Reagan by 34%

http://www.harrisinteractive.com/vault/Harris-Interactive-Poll-Research-CARTER-NOW-FAR-AHEAD-OF-BOTH-REAGAN-AND-BUSH-1980-01.pdf

So what exactly is your point?

I understood the construct of your scenario.  But it seems to me that there have to be a lot of assumptions or agreements or even regulations to ensure that the 5K from the public sector is actually matched by 45k from the private sector and actually leads to creation of an equivalent or better job.    If such a scenario exists, then sure, it would be an effective way for the public sector to leverage its resources.     But this hypothetical scenario doesnt prove that "tax cuts are a much more efficient way to create jobs than government expenditure" since it is based on criteria (such as the 45K match from the private sector that leads to creating a job) that are not universally inherent in tax cuts.

I saw Bryan make an argument about the "debt ceiling fiasco".  In your responses you seemed to  twist his argument to make it about the S&P downgrade.


I didnt see Bryan make that specific argument.



If during those 5 days, the price of XYZ dropped relative to ABC, then wealth would have been destroyed as at the end of the two transactions, the investors would hold less ABC than they had originally.   
 
Clipped the discussion of purchasing power dynamics since its beside the point to the question of whether changes in asset values result in changes in wealth.

In the case of both infrastructure spending and private sector hiring the government isn't going to be able to set wages. The company the government hires to perform the services will end up determining wage. That means that income should average out between a tax cut incentivized hire and government contracted hiring.

But even if we were operating on the assumption that the public sector was overpaying the market rate for work that wouldn't be a good thing. That would be just more waste that would be better spent on more jobs not unnecessarily higher paying jobs, and here's why:

I think most Libs actually believe the principal value to an economy of work is the quantity of income to the worker. That is in fact incorrect. The principal value to an economy of work is the production it creates to "expand the pie" by increasing supply, reducing prices, and thereby increasing the availability of work for others. And one of the reasons why you hope for that cycle to happen is because as production increases the amount of skilled enough workers to each available job decreases and that increasing shortage of labor drives up incomes over the population. Nothing could be accomplished for the public just because 1 employer decided to way overpay a few people for their services(even though that works out great for those particular individuals).


By the way you could easily put a string on a tax credit to produce higher income jobs it wouldn't make sense to do so, but you could. All you would have to do is make the tax credit equal to $1k per $10k of salary up to $50k lets say. But then the government would have revenues fall the exact same amount as before for jobs created that were $50k or more. But the number of $0-$50k jobs would be less. Why would you want less jobs to be created? Just because they are lower paying doesn't mean they shouldn't be created period, should they?

The wage rate is irrelevant to what I am saying.   My point of contention is the assumption that the mechanism will produce the result -- that the tax cut will lead to hiring, that the hypothetical X% public contribution will be met by a (100-X)% outlay by the private sector. 

I saw Bryan make an argument about the "debt ceiling fiasco".  In your responses you seemed to  twist his argument to make it about the S&P downgrade.
Doesn't matter neither of them created or destroyed aggregate wealth. They just transferred wealth from one side of the markets to the other. A change that eventually went back after the situation passed.

I didnt see Bryan make that specific argument.

Well essentially he did I just summarized it. Saying that minor stock price decreases and bond price increases caused consumer confidence to deteriorate leading to less buying and the less hiring is essentially the same thing as the statement I provided above except the one above is a summary position.


If during those 5 days, the price of XYZ dropped relative to ABC, then wealth would have been destroyed as at the end of the two transactions, the investors would hold less ABC than they had originally.

Well assuming no other asset increased in value as a consequence(which is a huge assumption) then yes you would be right aggregate wealth would have fallen. But its not because of something at XYZ. Its because money or production was destroyed somewhere in the economy and it reflected itself in a decrease within all markets and that can reflect itself in either across the board decreases in asset prices or a fall in certain asset prices without a corresponding increase somewhere else.
 
Clipped the discussion of purchasing power dynamics since its beside the point to the question of whether changes in asset values result in changes in wealth.

Well you can't. Its an important piece of overall markets. The purchasing power of a dollar is the fluctuating price of the currency stock known as the US dollar. To forget that means you miss a very important piece of domestic and global markets. I mean look the best performing stock market over the last decade in the world according to your argument would be the Zimbabwe stock market in nominal terms. It wouldn't even be close. But today those few trillion Zimbabwean dollars you've "made" buys you a couple eggs. I can't stress this enough to you, certain markets don't exist in a vacuum. Just because a particular market is up or down doesn't mean that wealth has been created or destroyed. Its all markets that determine whether or not aggregate wealth is created or destroyed.

Look I hope you realize your getting pretty crushed here. I mean your not really giving me much of a challenge. A tip: Generally speaking if your trying to trip a knowledgeable person up the best course of action isn't statements and instead really really good questions. Can't say it will work on me on this particular topic, but it probably stands a better chance then what your doing.

Well in the case of a tax credit for hiring it has to. If a hire doesn't occur the tax credit doesn't go out. With the credit set at a certain rate you get x hiring. You increase the credit you get more hiring. In each case its better than the government paying the entire cost of the new hiring.

You do not seem to have grasped Bryan's argument, since you restatement of it is off.  



I can.  Clipping text from a dialogue box is something I can do.   Your diatribe on purchasing power is all well and good, but its is an attempt to shift the discussion away from what it was about since you have already essentially had to walk back your initial statement.  



This kind of remark suggests you are feeling insecure about your arguments.  
I dont need to trip you up; your falling on your own.

You do not seem to have grasped Bryan's argument, since you restatement of it is off.  

Actually I have. Please point out where I "haven't grasped Bryan's argument".

I can.  Clipping text from a dialogue box is something I can do.   Your diatribe on purchasing power is all well and good, but its is an attempt to shift the discussion away from what it was about since you have already essentially had to walk back your initial statement.  

I haven't walked back $hit. You challenged my point by making a completely different one and assuming that was the one I made. I'm talking in aggregate wealth and you're talking about particular parties' wealth. They are not the same thing. Talk of the dollar is not shifting discussion away. You want to ignore the largest market in the world, currency. If Cash goes up in value by the same amount that a particular asset goes down in value(or vise versa) than no net wealth has been destroyed(nor created). Go ahead and find the hole in that.

This kind of remark suggests you are feeling insecure about your arguments.  
I dont need to trip you up; your falling on your own.

No its just truth. And I'm pointing it out because your boring me since you aren't actually giving me a real challenge. But feel free to continue as long as you want. I'll continue to make you look foolish.

I'm happy to see more balance to these forums with Wonkish1 on here...

Well thank you!

Well essentially he did I just summarized it. Saying that minor stock price decreases and bond price increases caused consumer confidence to deteriorate leading to less buying and the less hiring is essentially the same thing as the statement I provided above except the one above is a summary position.

That is actually a poor summary of my argument. I did say that bad stock market news could further undermine economic confidence by feeding back in to a pre-existing panic/misery loop, and I said that the debt debate undermined confidence that our political system's ability to function.

But I didn't say the stock market "decreases" (I would call the DJI dropping more than 450 pointsin a single day more than a "decrease", but I digress) were what caused hiring to freeze. What I argued caused hiring to freeze was employers fearing that a financial crisis would be triggered by a failure to raise the debt ceiling. People were so scared that all hell was about to break loose, and it created a dark and unnecessary cloud over economic activity that month.

Now, as this thread has shown, you are free to disagree with all of that, but you aren't free to misrepresent it via a bad summary. You're entitled to your own set of opinions, but not your own set of facts.

Well then sorry, but that was what appeared to be your argument.
"Market turmoil started getting noticeably bad after the debt ceiling debate, and so did all the talk about another recession."

"Markets move on feelings, and especially on confidence. When you have a confidence gap, you run into trouble."

"Not to mention the fact that it is vastly understating what the stock market did immediately following the debt debate."

and the big one!!!
"When stock prices plummet, and they did for several days following the debt cieling debacle (and before the downgrade even happened), that scares people and ruins confidence in the economy. It hurts retirement funds too, and that makes people not want to spend money, which hurts the economy too."

I have no problem arguing your second paragraph, but it wasn't what your argument at least appeared to be before(examples above). So I'm sorry if I missed that being a cornerstone point, but I think you can see from these examples that I probably was pretty fair in my summary of your argument.

How is there any real argument here - there's a whole lot of 'duh' in there.

What are you referring to?

The issues around confidence, the market (ie the people behind it)

Again as I've pointed out before confidence really isn't the factor that people think it is. Unless destruction occurs to the fundamentals, confidence indicators don't have much affect. And actually they are very contrarian. The further they fall the more it is a sign to buy because confidence itself can't overcome the fundamentals of an economy. The consensus in the minds of the public always way overplays its hand.

I agree with BOTH of you, try to deal :P .... I think the fact that the economy still manages to survive despite the doom-sayers is testament to that...

Well of course it does. The vast majority of consumer spending can't be delayed that much. People have to eat. People have to put gas in their car if they are going to be able to make it to work. People can't delay fixing a problem in their car for very long. People can't put off fixing the roof indefinitely. This is a point that Buffett has spent quite a bit of time on over the last few years. So all those people that pull back, save more, and have a balance sheet that is improving because of that, eventually have to go out and engage in some consumption. That is why the "never ending deflationary spiral" theory is a myth.

Oh and by the way contrary to what some Keynesians like Krugman would say, savings is not a problem. When you save money in lets say in a savings account that money goes to A) bolster the reserves of banks bettering their financial position and B) issue more credit to other businesses and people that do need to make a capital investment. All the while your personal balance sheet is improving so that when you do have to make a larger purchase down the road you're in a much better position to do so. Eventually as the economy improves you delay the purchases less and less.

I'm not an economic ideologue - I want to know what works, not what a bunch of navel gazers think it should work.

If there's a Monetarist-backed idea that has a proven record of delivering what is required.... fine, if there's a Keynesian idea that delivers what is required... equally fine. 

Sometimes you need to spend money, sometimes you can get others to spend theirs... which is why economic theory sent me around the wall during my Undergrad and my Masters... and why my PhD will avoid theory like the plague.

I definitely wouldn't consider myself an economic ideologue either. Ideology is not what sent me off to learn about economics. I went to go learn about economics and then when I came back some would accuse me of ideology and others wouldn't(particularly those that are also well versed in econ and see me as a pretty fair guy).

You may be surprised by how much even Austrians and Keynesians agree over economics let alone Monetarists and Keynesians. A lot of econ is settled. Just like how everybody in the study of climate can tell you where rain comes from, but they are still an extremely long way away from being able to predict weather with a high degree of accuracy.

But just realize that the amount of econ that is settled is much, much more than what many politicians and bureaucrats would like to admit.

I do know that... I also work with economics, and Government-related economics at that - and have also studied it at undergrad and graduate levels.

Granted not the same 'nature' of work you do...

I realize "Romney: Occupy Wall Street is not the way to go" has become a terrible thread that needs to be buried, but reviving this other terrible thread is not the way to go.

And this is why you never count your chickens before they've hatched.  You end up with hilarious in hindsight threads like this one.  lol

iirc Wonkish was the type who would claim Obama didn't really legitimately win at all.

What happens is that people see one statistic, misjudge it as the key, and ignore other facts.

Note well:

1. Nate Silver established that it is a great myth that incumbent politicians need 50% approval before the electoral campaign begins to have a real chance of winning. For an incumbent who got elected the first time, the average campaign moves the approval rating up about 6% to a vote share in a binary election, which is ordinarily enough with which to win if one's approval ratings before the campaign season are above 44%.

http://www.fivethirtyeight.com/2010/02/myth-of-incumbent-50-rule.html

It applies in huge numbers to Senators and Governors. Because most incumbent Presidents were Senators or Governors, it probably applies to the President as well.

It's easy to understand why a politician with a 52% share of the vote might quickly see his approvals diminish to 46% or so once the campaign ends and the politics of legislating or governing begin. Most political choices are split around 50-50, and few elected officials get to offer new policies with anything like 65% approval. Such policies usually get enacted long before they have 65% approval -- like when they get 52% approval. When gay rights got about 52% approval, Barack Obama went with it.

Opponents, including potential opponents in the next election, carp at will about the incumbent and get much publicity.  They get away with it until the electoral campaign begins, and all of a sudden the opponent starts getting scrutiny for the content of his criticism. About then the incumbent gets to show either why he was elected in the last election or that electing him was a mistake.

If campaigns for re-election did not matter, then politicians would invariably set themselves above the campaign and win re-election with no effort. Such was so with Dwight Eisenhower in 1956, winning in a near-blowout while doing little campaigning. But Dwight Eisenhower saw campaigning more of a risk than a reward, and chose not to go for a 49-state blowout. He won 43 states. He was that good as President.

Barack Obama had to campaign in 2012, and he campaigned enough to win. 

2. Campaigns matter, which explains why appointed pols do not fare as well as those already elected to the job in electoral campaigns. An appointed pol (Hickenlooper in 2010) needs approval near 50% to win re-election. It also explains why Gerald Ford did not get re-elected.

Ford had never run for any statewide office and had no idea of how to run a Presidential campaign because he had never run for Governor of Michigan or US Senator from Michigan. He liked his role in the House of Representatives. He failed to manage campaign resources (including personal appearances) effectively, and was the last Republican to lose such states as Texas, Mississippi, Alabama, and South Carolina in a Presidential bid -- in a very close election.

3. The odd case of former Senator George Allen, who lost a re-election bid for the Senate in 2006 despite starting with approval slightly above 50%, demonstrates not so much a failure of Silver's model but instead what can go catastrophically wrong.  Allen

• (1) faced an unusually-strong challenger. James Webb was a strong challenger -- one much stronger than the usual opponent of an entrenched Governor or Senator. He well fit the sensibilities of a state drifting D.
  
  (2) was tied to an unpopular President. Dubya wasn't particularly unpopular at the start of 2006, but by November he was widely despised for failures. Allen was closely attached to the GOP Establishment and became vulnerable for that alone.
  
  (3) ran a horrid campaign. Under normal circumstances an incumbent gains some, but Allen was slightly ahead until the last couple of weeks. Then some of his campaign staffers roughed up a heckler. That doomed him, and Silver's model cannot predict something like that.

OK -- so what about wave elections as the political climate shifts? If America is going right-wing as shown in mass rallies (2010) or with a right-wing religious revival (1980) the model probably catches the trend.

OK -- an incumbent Governor or Senator could fall to a breaking scandal -- right? Not quite. Corruption usually forces secretiveness by a politician, and secretiveness is not good for getting elected or re-elected. Add to that, the news media know things about politicians in trouble that they dare not release until they get corroboration, but individual journalists know enough to avoid plugging politicians who might be subject to a breaking scandal. The same Illinois media that plugged Senator Barack Obama while he was in one of the usual penultimate postings before the President did not do the same with Governor Rod Blagojevich. Obama was squeaky-clean; Blagojevich was a corrupt Illinois machine pol who eventually got caught trying to sell an appointment to the US Senate seat that Barack Obama held. Blagojevich was in political trouble before the scandal broke. Switch the offices, and 'Senator Blagojevich' sells his affiliation to the Democratic Party for a million dollars to switch to the GOP  and gets defeated in a re-election bid in 2010 to a Democrat, and 'Governor Obama' is in a good position to be elected President in 2012 after reporting a lame-brained bid to buy an appointed Senate seat to the FBI.

Political journalists are either the best friends of a politician's career or the ones who grease the skids. They ride waves that they like and jump off the bad ones. News coverage may explain why some politician has 40% approval a year before the next election and another has 47% approval.