Everyone’s talking about this gloomy prediction from Goldman’s chief economist:
We see two main scenarios for the economy over the next 6-9 months — a fairly bad one in which the economy grows at a 1½%-2 percent rate through the middle of next year and the unemployment rate rises moderately to 10 percent, and a very bad one in which the economy returns to an outright recession. There is not much probability of a significantly better outcome. The reason is that “short-cycle” factors such as the inventory cycle and the impulse from fiscal policy are likely to continue deteriorating through early 2011, keeping G.D.P. growth very sluggish.
My reading of Hayek suggests that it’s time to put an end to fiat money.
I suspect nobody at G-S will notice a difference, including their “highly respected economist.”
My reading of Bozo the Clown suggests that it’s time for a Tom and Jerry cartoon so everyone can forget their problems for a few minutes.
So is this a sincere pitch for the Amero or a call to boycott European cars?
joe from Lowell
I think you’re a bit confused, Doug.
Clearly, the best way to avoid slowing growth would be to lay off several hundred thousand public employees.
OT, but didn’t someone post about this bill yesterday? Well looks like the Pres won’t be signing it.
Why President Obama is Not Signing H.R. 3808
DougJ is the business and economics editor for Balloon Juice.
Obama’s nuking H.R. 3808
@kdaug: Hardly nuking.
More of a pocket veto. Plus this:
Of course Obama making sure more foreclosures don’t occur (which is against congress’ wish) is more proof of how he’s just as bad as McCain/Bush.
What? You say this is a good thing, but that’s against the narrative that says Obama will rollover for big biz every day, every time.
If only there was some sort of institution that had a lot of money and could loan it to businesses and individuals. It would take money that had been banked and make investments with it.
a veto is a veto though right, doesn’t really matter what concillatory language is used to save face for all the people including Dems who voted for the bill in the House and Senate
@DougJ is the business and economics editor for Balloon Juice.: Don’t forget to stop fractional reserve banking.
Also, too: “impulse from fiscal policy are likely to continue deteriorating” translates to the stimulus package is over and it ain’t coming back.
The part they left out:
@FlipYrWhig: There obviously are many such institutions, the problem is that businesses and individuals don’t want to borrow money to invest and spend. What’s your problem, don’t you worship Krugman?
@Poopyman: It’s a veto, they’re returning the bill to the house unsigned. That’s what a veto is by definition. And given that Democrats in the senate passed this through and expedited it; he can’t call them out in an election season. Better to just say they had good intentions instead of saying the senate is owned by the banks.
@FlipYrWhig: I find your ideas intriguing and would like to subscribe to your newsletter.
I would like to propose a piece of legislation:
Any publicly traded company that is willing to make economic forecasts – whether it’s an investment house or Krugman at the Times – has to provide a parallel economic forecast for their company in identical language. What the revenue/profit forecast for G-S and unemployment outlook for their employees over the same period?
@lamh32: Yeah, it’s more of an “I’m going to forget this ever happened. Now what can you send me that actually, you know, helps people” kind of veto.
This is great news for John McCain.
DougJ is the business and economics editor for Balloon Juice.
Hillary would have done a real veto. Bush would have pounded the podium and said “I will not sign this damn bill.”
Once again, Dr. Utopia resorts to half measures when bold action is needed.
@lamh32: Yeah, he still has to deal with Congress – no need to burn any bridges by being inflammatory about it. But the end result is the same.
Was I too deadpan or something? OK, no sarcasm, what I meant was that Goldman Sachs is an investment bank, so if they’re concerned about the economy, they have the power to, like, do something about it.
Here’s what jumps out at me in this: even the bootlicking propagandists of the economic elite are now openly admitting for everybody to see that economic growth and employment are no longer correlated with each other except in the loosest possible sense. In other words, to paraphrase a Carter era headline torn from the newspapers, Wall St. to main street: Drop Dead.
Everything else is just details.
@FlipYrWhig: Not while Obama’s in office. They’re going to sit on their money and hope for such a crappy economy in 2112 that the voters blame Obama and they can install another puppet in office.
Saw a story yesterday somewhere that a number of large companies are using their excess billions to buy back their stock. Not invest in new capital expenditures, not hire people. Just churn the cash.
This is by design. Brought to you by the Chamber of Commerce.
I’m not looking forward to that hundred-year recession.
The good news is that life is short for the proles.
@FlipYrWhig: If you’re talking to me, I understood perfectly. (But note that you added the second sentence after I replied). My Krugman line was sarcasm.
As for this comment, GS doesn’t care about the real economy. “Fairly bad” and “Very bad” don’t describe the scenarios for GS’s future profits. Just check their stock price.
kdaug is partially right, companies are buying back stock, but because that increases their profits, not to “churn cash”, whatever that means.
What nonsense! This country would be on the road to prosperity if we just cut taxes, outlaw unions and pay public sector employees the minimum wage with no benefits (Except for teachers. Teachers would be paid 3/4ths of the minimum wage because they only work nine months out of the year).
@Norwegian Shooter: Oh, I know, they don’t care. But it just seems ironic (or something) for an investment bank to make dire predictions about the economy, when one of the key problems for the economy is (as I understand it) investment capital sitting idle.
@Dennis SGMM: The minimum wage is unconstitutional. Haven’t you been paying attention?
@Norwegian Shooter: By “churn cash”, I mean keeping it out of the real economy. Not hiring, not investing. Just hoarding it.
For political reasons.
Was that a subtle Rush dig?
Absolutely. The imminent return of lifetime indentured servitude should take care of that pesky minimum wage.
@FlipYrWhig: It’s nothing. The situation is dire, btw, they aren’t spinning. And idle capital is a result of the key problem of the economy (insufficient demand), not a cause. Read Krugman and/or Reich.
By that time the Solar Federation will return to resume control.
J sub D
I think we should always rely on the administration’s economic forecasts. No matter who’s in office they are always positive, encouraging, and invariably wrong.
Housing prices haven’t hit bottom yet. Don’t expect a recovery until they do.
Stupid keypad, putting the zero so close to the one without considering my fat thumbs. Bad keypad!
So Goldman Sach shorted the market and they are pissed it is going up?
@kdaug: you’re being paranoid; large corporations care about one thing only, the stock of the executive staff. The buy backs will continue as long as CEOs see it as the easy way to get their personal portfolio up for the new super yacht.
Well, at least we know that if he’s making this statement now, the twenty-somethings at Goldman have been hard at work betting against American recovery in various ways for the last quarter. And then they will spend that money on $1,500 cocktails at a club that won’t have the likes of you, not on your wretched life, and then within the hour the owner will spend that money on thirty-three kilos of Colombian in the alley out back. The dealer will go missing, the kingpin will give the money to his son for his confirmation, the son will in turn use it to buy Katy Perry. We call that ‘net gain’.
@kdaug: But didn’t you say that companies were buying back billions in stock? That’s the opposite of hoarding cash; they’re sending it to investors who want or need to cash in.
@ThatLeftTurnInABQ: NO not Carter-era, FORD-ERA!
As someone who lived in said city when it was told to by President Ford to DROP DEAD in huge 1000-point type on the front page of the Daily News, I remember it rather well.
Ford did not do well in 1976 elections. Then again, he wouldn’t have been expected to anyway. Which is why he couldn’t give a shit whether we lived or died.