Wingtips probably owns the "Free to Choose" videos. It's the board's sophisticated "progressives" that would benefit most from the series.
Speaking of Friedman, Paul Krugman wrote an excellent article about him in the most recent New York Review of Books. In short, Krugman praises Friedman's intelligence and ability to communicate and popularize complicated ideas. He gives Uncle Miltie a mixed report card on his actual policies/theories: Friedman was 100% correct about stagflation and its causes, had mixed results when it came to deregulation (worked for some industries [airlines, communications, natural gas] but not for others [electricity]), and wrong about others (monetarism).
Oh my gawd! Bolsheviks have taken over the Fed! http://news.yahoo.com/s/afp/2007020...JLUD5h12C.yBhIF;_ylu=X3oDMTA0cDJlYmhvBHNlYwM- Bad News Burbs http://news.yahoo.com/s/nm/20070206...ZOE2Iac_2yyBhIF;_ylu=X3oDMTA0cDJlYmhvBHNlYwM- More sellers than buyers http://money.cnn.com/2007/02/05/real_estate/housing_vacancy.reut/index.htm?postversion=2007020512 Where's Gordon Gecko when you need him? http://money.cnn.com/2006/12/18/markets/private_equity_outlook/index.htm?postversion=2006121815 The last story is just more pile-on to demolish the ridiculous notion that Bush's tax cuts caused an increase in capital gains tax revenue. The conditions that created LBO fever were caused most cirectly by Greenspan's easy money regime and were in place long before the tax cuts: "The merger boom's been fed by low interest rates, rising stock prices, plenty of money in the debt markets and greater tolerance for risk among investors worldwide."
stocks for the first time passed the 12,700 mark. Productivity surprises us!! This may be the lone bright spot in our horrible economy http://www.cnbc.com/id/17023395
Bizarre that you quote Bernanke in your first link but he himself disagrees with your other links. Yesterday he said the housing market is being offset by strong consumer spending and he has praised the Bush tax cuts for stimulating growth.
Friedman himself admitted he was wrong about some things. However a poll of economist done by Bloomberg last year found most economist agreed with his basic principles.
You want the truth? You can't handle the truth! Bernanke's testimony was a happy hunting ground for anyone looking for inconsistent statements (for example, inflation is supposed to be our greatest risk and the bursting of the housing bubble is not supposed to effect the rest of the economy and yet he lowered his 2007 GDP estimate again) if you just want to cherry pick out of context like you did. After all, as Fed chairman his chief job is to convince the bond market that he is tough on inflation. Also, he's not going to say anything to potentially disrupt the "soft landing" scenario. As someone hoping for the soft landing scenario myself, I'm perfectly happy that he is not just baldly telling the entire truth. The Fed chairman should not be going around talking about slowdowns and sowing unease. His job is almost always to jawbone the markets up and not down, Greenspan's famous "irrational exuberance" comments notwithstanding. Fed watchers are perfectly capable of reading between the lines and the fact that Bernanke has made ANY comments at all about education and income inequality is remarkable enough in itself. And I'm sure the tax cuts did stimulate some growth so Bernanke isn't an outright liar. But as Bernanke himself knows even though it is not politcally possible for him to say it out loud, they did not stimulate near enough growth to support the ridiculous "pay for themselves" argument. Far more important was the historic drop in interest rates that is still being felt in the LBO craze although the rise in interest rates is beginning to become more powerful as it winds its way through the economy. And even with historicall low interest rates and massive government spending (as wasteful and unproductive as it was under Bush), the recovery was the weakest and created the fewest jobs of any post-war recovery - even worse than GHWB's famous "jobless recovery". There were two recent articles giving limited glimpses into how the rate hikes will continue to feed into the rest of the economy (sorry, no links available): From the WSJ: "Efforts by major banks and Wall Street firms to unload bad U.S. housing loans are speeding up a shakeout in the subprime mortgage industry. As more Americans fall behind on mortgage payments, Merrill Lynch & Co., J.P. Morgan Chase & Co., HSBC Holdings PLC and others are trying to force mortgage originators to buy back the same high-risk, high-return loans that the big banks eagerly bought in 2005 and 2006... As more subprime lenders face losses or bankruptcy, big banks also face another problem: Many lent money to small firms like ResMae so that those firms could make more mortgage loans to borrowers. It isn't clear how much of these loans will be paid back to the banks. Wall Street firms also are increasing their own internal generation of subprime loans by acquiring smaller mortgage loan originators or processing companies... In recent months, as home-price appreciation fell and borrowers faced rising interest rates, more people defaulted on their mortgages. That prompted Merrill Lynch and others to exercise their contractual right to demand the sellers buy back the loans. Under mortgage contracts, mortgage originators must often repurchase loans that default very early in their term or that come with underwriting mistakes, such as flawed property appraisals." And from the Finnacial Times: "Concerns over risky US mortgage lending mounted yesterday as a key indicator of credit problems hovered at record levels, another small mortgage lender failed and a big homebuilder admitted borrowers' difficulties could damage its business. Investor worries over loans made to US borrowers with weak credit histories have grown since housing market activity slumped last year. They were throwninto sharper relief last week when HSBC and New Century warned they had underestimated the spike in defaults on so-called sub-prime mortgages. A credit derivative index tracking credit risk on sub-prime mortgage bonds has soared to a record high this week. The ABX index, based on bonds rated BBB-, has traded at levels approaching 1,000 basis points- up from 650bp a week agoand about 250bp last autumn. Meanwhile, California-based ResMAE Mortgage filed for bankruptcy yesterday, becoming the latest in a string of sub-prime lenders to succumb. The company, backed by prominent investment firms Thomas H Lee and Putnam Investments, said the sub-prime market had been "crippled"." The good news is that the problems in the sub-prime market almost certainly won't effect the far larger corporate debt sector. Unfortunately, we still have far-above-trend inventory of unsold homes and that's even though home price growth for both new and existing homes have been negative since 3Q06. In the unlikely event that Bernanke really disagrees with me and thinks that home prices will start climbing now, I'm in good company, including President Poole of the St. Louis Fed among others. Even the big banks are tightening credit on mortgages and making fewer loans to homebuyers, choosing instead to fund more risky LBOs. Retail sales growth has tranded dowards since late 2005. Even subtracting the notoriously volatile "food service and motor vehicles" sectors, YOY retail sales growth topped out at about 7.5% in mid-2005 to around 1.5% for the last half 2006 and shows no signs of bottoming out and the upwards distorting effect of warmer than usual weather is now gone. So we can look for the housing bust to continue to impact the rest of the economy thoughout 2007.
Re: You want the truth? You can't handle the truth! In other words, this bubble is about to burst, baby!
Re: You want the truth? You can't handle the truth! Which bubble? The housing bubble has already burst. Since lately we seem to create the illusion of growth primarily via asset bubbles, it does beg the question if there's another one in our future. Some people are guessing it will be LBOs but I don't think so although if we start to see sheer speculation there again, they would climb to the top of the list. There's also a decent case to be made that hedge funds could go next. They're essentially unregulated, finally all the rage among the kind of patsies who watch Kudlow or Cramer, and the smart money seems to have begun cashing out. Then again, the big boys who deal in things like LTCM (of which Merton and Scholes were on the board, btw) are the kind of people who own senators so they know they'll get bailed out if the shit hits the fan. But if small investors pile in and then get caught in a bust, they're screwed. Anyway, unless something drastic changes we seem to have just begun the downside of the business cycle. But that's just the normal business cycle and not a "bubble" - unless Bernanke creates another Greenspanesque asset bubble. We're all hoping for a soft landing and it looks like we'll get one mostly because the late, lamented recovery was so weak that we really don't have all that far to fall. But that party is over and really, to stick with the anallogy, the beer was warm and the chicks were cold so most Americans probably won't be looking back on it fondly as some kind of Golden Age.
The housing bubble has not yet burst. When something goes up 20% a year for 4 or 5 years, and then goes down 3%, that's not bursting. I'm talking about a haircut of 15 - 20% in the hottest areas, like Florida, Las Vegas, Southern CA. Here, the bubble has already burst, true. But a lot of people who took their homes off the market because they weren't getting any interest are going to need to sell them soon when they have to pay more than interest. There is a coming credit crunch. The only way people can buy an half a million starter house, or a one million McMansion is through creative financing, and creative financing is going to be dead very soon. Nobody noticed that HSBC is writing off 10 billion in loans? That forclosures have doubled? That Merrill Lynch is making margin calls on the people who sold them sub-prime loans? That Countrywide no longer offers 80-20 loans? This year and next, I would predict a loss of construction, mortgage, and financing jobs that will significantly increase unemployment, a lot lot lot of people trying to sell homes they can no longer afford (really, they never could) and a hit to the economy because people who have been refinancing won't have a lot of extra cash.
Maybe I was unclear. By "The housing bubble has already burst" I meant that the bubble no longer exists (ie., we've switched from incredible price growth to falling prices, the housing industry can no longer be counted on to provide 40% of our employment creation, etc.) and not that everything is hunky dory in the housing market. Clearly it is not and the housing bust has only just begun to be felt in the rest of the economy. And yes, there will be a retail credit crunch and unemployment will increase this year. All mainstream economists expect those things. I still think that even though economic conditions for most Amercians will deteriorate this year due to the interest rate hikes, we will have a soft landing as Bernanke will keep rates where they are or even lower them and they're still fairly low as it as although obviously not as incredibly low as they used to be. Also, we've devaluing our currency as quickly as we can so that should evenutally help exports albeit not enough to put a serious dent in our trade deficits. And who knows, maybe Bernanke's hints will get through to Congress and whoever wins the White House in 2008 and we can switch from pissing billions of tax dollars away into the sinkhole of "Iraq" and start investing in salvaging the American middle class.
It would be neat to see what happened before 1994. Because all this graph says is that the S&P and the NAHB both did well since 1995 with the exception of the recession that began in late 1999. 12 years of data doesn't say much.
Re: You want the truth? You can't handle the truth! You're very confused. The subject is about how the economy is good, which it is. You desperately tried to tie lack of savings to a bad economy and when it was presented that IRA's and 401k's are bigger than ever before you still tried to tie that to George Bush. Before calling Bernanke a liar I would look in the mirror if I were you. Especially since you quote him as evidence to your argument and then other sources which Bernanke already pointed out were false. I take it that you are no economist Ratdog, that much is clear. Productivity growth is over 3.1% per year (and your previous graph had no source and does not jibe with the official productivity numbers from the Government) which is extrememly good. Lowering the GDP estimate had absolutely nothing to do with the housing market, which he explained. You also quote the WSJ but no one at the WSJ shares your views on economics. Actually do you have today's issue? Most of what you say is rebuked on a daily basis. Please stop pretending to be an economist.
I suppose the question is, why is it surprising -- the economy posted "surprising" growth? It is because most economic models -- the ones that assumed that Americans would stop spending money when gas prices went up, we went to war, their savings shrunk, the costs of health care and college increased exponentially, their investments leveled, their salaries showed nominal increases, and credit standards were raised, the dollar fell, housing prices lowered and housing inventories increased -- all these seemed to make economists think maybe -- just maybe -- Americans might stop spending money on crap they don't need. But surprise! They still do, to an even larger extent than expected! The economy is doing great!
Re: You want the truth? You can't handle the truth! No, you're just ignorant and haven't even bothered to read this thread but you haven't let that stop you from shooting your mouth off. Also, you clearly did not understand my post or my larger argument on recent economic history let alone Bernanke's testimony. And you sure as hell have no clue how to put Bernanke's testimony into any sort of context. You try to attack the fact that I did not have a link to my posts and yet you yourself offer no link to any WSJ articles that you brought up. And the fact that you think the excellent reporting in the WSJ is on the same level as the looney views of its ownership just shows how bereft of clue you are. The WSJ Op Ed page is a joke among corporate economists. And the funniest thing of all is that the "surprising" growth that MITH referred to is now viewed as likely to be revised substantially downward to about 2.5% or so. Basically, your argument is on the level of the poor suckers who watch CNBC for an hour a day and think they're experts. Simply repeating your ignorant assertions with no backup and avoiding the substance of my post just shows what a lightweight you are. Oh, and since you like links so much, here are two more stories for you to ignore because you do not understand the information in them: http://news.yahoo.com/s/nm/20070216/bs_nm/usa_economy_prices_dc;_ylt=Aoi37LvAycJv79m5pUdp_BiyBhIF http://money.cnn.com/2007/02/20/new...cagofed.reut/index.htm?postversion=2007022010 I'll give you a hint on what they mean. Both the producer price figures and the Fed's own numbers disagree with some of Bernanke's testimony. The odd thing is that the Fed puts the resources into generating numbers it then ignores. Maybe you can ask Ben about that next time he comes over to your house to play Xbox.
And you can't explain what caused that. Seriously, you can't. wingtips tried to link it to economic growth or productivity growth and neither of those correlate very well. So you're left with the following argument: Bush tax cuts + miracle happens = higher capital gains tax receipts. Since you're only interested in trying to make Bush look good and couldn't care less what really happened, you accept that nonsense. Mainstream economists, in contrast, started with the facts and worked back from there with little political bias and so they have a legitimate explanation. But you don't want to hear the real story and you wouldn't understand it if you did. I'll give some hints, though: interest rates, business cycle, lack of profitable investments in production, equity trading activity.
Actually you’re Keynesian models seem unable to explain the current economic conditions. You’re view of supply-side theory is much too simplistic - supply-side is much more than simply “tax-cuts”. Marginal tax rates are cut to spur the economy and the Fed keeps inflation in check by adhering to a domestic price rule. The result is strong economic growth with low unemployment and inflation. Worked for Kennedy/Johnson in the 60s, worked for Reagan in the 80s and seems to be working for Bush today. And if anyone is guilty of partisan cheerleading it has to be you. Other than economic policy I don’t agree with Bush much on anything. I didn’t vote for him despite be given no palatable alternative. You, on the other hand, seem to have so much emotion invested in this debate that an economic down turn would be welcomed.