Obama and Japan, Continued By Philip Klein

by

geithner

Comparison of Japan then and US now Reveals Weakness in Geithner Thinking

http://spectator.org/blog/2009/02/10/obama-and-japan-continued

During last night’s news conference, I noted that President Obama erronously cited Japan in the 1990s as an example of a government not acting in the face of economic crisis, when in reality the opposite is true. Now that the transcript is available, I thought I’d offer some more context. The question comes from Jennifer Loven of the AP:

Q Thank you, Mr. President. Earlier today in Indiana, you said something striking. You said that this nation could end up in a crisis without action that we would be unable to reverse. Can you talk about what you know or what you’re hearing that would lead you to say that our recession might be permanent, when others in our history have not? And do you think that you risk losing some credibility or even talking down the economy by using dire language like that?

THE PRESIDENT: No, no, no, no — I think that what I’ve said is what other economists have said across the political spectrum, which is that if you delay acting on an economy of this severity, then you potentially create a negative spiral that becomes much more difficult for us to get out of. We saw this happen in Japan in the 1990s, where they did not act boldly and swiftly enough, and as a consequence they suffered what was called the “lost decade” where essentially for the entire ’90s they did not see any significant economic growth.

But this was an odd example for him to use, since the reality is the exact opposite of what Obama suggests. The Japan experience actually is a prime example of the futility of using government spending to stimulate the economy.

Is the Treasury’s Plan to ‘Go Japanese’ Doomed to Fail?

http://sev.prnewswire.com/publishing-information-services/20090209/UN6848109022009-1.html

CBO: Obama stimulus harmful over long haul

http://www.washingtontimes.com/news/2009/feb/04/cbo-obama-stimulus-harmful-over-long-haul/

President Obama’s economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.

CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.

CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary.

The House last week passed a bill totaling about $820 billion while the Senate is working on a proposal reaching about $900 billion in spending increases and tax cuts.

But Republicans and some moderate Democrats have balked at the size of the bill and at some of the spending items included in it, arguing they won’t produce immediate jobs, which is the stated goal of the bill.

The budget office had previously estimated service the debt due to the new spending could add hundreds of millions of dollars to the cost of the bill — forcing the crowd-out.

CBOs basic assumption is that, in the long run, each dollar of additional debt crowds out about a third of a dollars worth of private domestic capital, CBO said in its letter.

CBO said there is no crowding out in the short term, so the plan would succeed in boosting growth in 2009 and 2010.

The agency projected the Senate bill would produce between 1.4 percent and 4.1 percent higher growth in 2009 than if there was no action. For 2010, the plan would boost growth by 1.2 percent to 3.6 percent.

CBO did project the bill would create jobs, though by 2011 the effects would be minuscule.

SPECIAL PREVIEW Stimulus: A History of Folly

http://www.commentarymagazine.com/viewarticle.cfm/special-preview-stimulus–a-history-of-folly-14953

In fact, stimulus may be precisely the wrong metaphor. Rather than getting jazzed up, we need to be calmed down and to take the time to learn from the Great Depression, a time when government did too much, not too little. Amity Shlaes makes the argument in The Forgotten Man, her book about the Great Depression, that the constant experimenting and meddling of the New Deal froze investors and business operators in fear: “Businesses decided to wait Roosevelt out, hold on to their cash, and invest in future years.”

Despite the warnings of Keynes, the experience of the past half-century indicates that today’s low interest rates will start having a positive effect, though it still will take many months. Meanwhile, left alone, what Hayek called “spontaneous order” will find its way forward. Using a different metaphor, James Grant, in his history of credit, Money of the Mind, wrote, “The cycle of decay and renewal is as much a part of capitalism as it is of the forest floor.” But, in the 1930’s, “something in the normal regenerative process was missing. There was no decisive recovery from the business-cycle bottom. People had lost their speculative courage, and the more government legislated and taxed, the more that credit sulked.”

Stimulus—that is, fiscal intervention with the express purpose of speeding up the normal regenerative process that Grant describes—is unnecessary and almost certainly harmful, a policy based on hubris and anxiety, rather than on history and good sense. Under such circumstances, the proper way to analyze discrete proposals today for spending or taxing is on their own merits, not on their supposed ability to stimulate something else. There may, in fact, be a good reason for government to spend billions of dollars today on building highways, and it has nothing to do with stimulus. It is that long-term interest rates are at historic lows and that the right highways can boost the economy in the long term. There also may be a good reason, again far apart from stimulus, for revising the tax code and reforming Social Security and Medicare. It is that Americans now understand that the economic future is not so assured as they believed a couple of years ago, and it is time for decisions to be made—in a manner careful, sensible, and unstimulated.

From RepDarrellIssa

Geithner – Tax Chief or Tax Cheat?

2-10-09: KUSI San Diego

26 Responses to “Obama and Japan, Continued By Philip Klein”

  1. rosettasister Says:

    From MH5816

    DR.SAVAGE on 2/9/09

    Part 1

    Part 2

    Part 3

  2. rosettasister Says:

    Follow the Money

    Toxic banks or toxic assets?

    Posted on Tuesday, February 10th, 2009

    By bsetser

    http://blogs.cfr.org/setser/2009/02/10/toxic-banks-or-toxic-assets/

    But the reported plan does seem to involve rather extensive use of the Fed’s balance sheet.

    Ultimately, the financial sector’s losses are bigger than can be absorbed by the portion of the $700 billion in TARP funds that has been injected into the banks and the banks pre-existing equity.

    Goldman estimated that there at least $3 to $4 trillion of “troubled” assets on the books of US banks.

    That is the stock of troubled, assets – not the losses.

    But even if the banks existing equity investors take a large share of the losses on these assets,

    I suspect that the US will be lucky if can escape from the current mess with a net cost (meaning the net loss once toxic assets and toxic banks have been sold off) to the taxpayer of less than 5% of GDP …

    Systemic crises tend to be costly.

  3. calli Says:

    If Obama was that confident about his stimulus package then why is he campaigning to the american people!! Who is he trying to convince, the american people or himself?? Educated but no common sense!!!!!

  4. rosettasister Says:

    calli Says:
    February 10, 2009 at 6:53 pm

    If Obama was that confident about his stimulus package then why is he campaigning to the american people!! Who is he trying to convince, the american people or himself?? Educated but no common sense!!!!!

    ———————

    Good point, calli!

    I’m beginning to think that Obama is not the sharpest tool in the shed.

    He seems to possess a “tabula rasa”

    (Latin ‘scraped tablet’, from the Romans’ use of wax-covered tablets which could be written on with a pointed stick and cleared by smoothing over the surface)

    a mind without any preconceived ideas.

  5. rosettasister Says:

    Stock markets plunge after US bank plan announced

    http://www.france24.com/en/20090210-stock-markets-plunge-after-us-bank-plan-announced

    A key element of the new initiative will be a public-private investment fund started with 500 billion dollars, “with the potential to expand up to one trillion dollars” to help cleanse the banking system of toxic real estate assets.

    This will function as an aggregator bank, or “bad bank,” to help financial institutions value their troubled mortgage securities and clear their balance sheets of risky bets made on a US housing bubble.

  6. rosettasister Says:

    FY 2008 3.2 percent of GDP

    FY 2009 8.3 percent of GDP

    FY 2010 12.0 percent of GDP

    Grassley gets it!

    Floor Statement of Senator Chuck Grassley:
    Opening Floor Debate on Stimulus Bill
    Delivered Tuesday, February 3, 2009

    http://learfield.typepad.com/radioiowa/2009/02/harkin-estimates-iowas-share-of-stimulus.html

    Some folks might ask what’s the problem if we overshoot and flunk the test.

    The first problem is we’re running out of budget room.

    The bill before us will, when interest costs are included, add almost $1.3 trillion to the deficit.

    All of this extra deficit increase would be proposed when the baseline deficit for this fiscal year will hit $1.2 trillion. That amount exceeds all historical records.

    As a percentage of our economy, that will mean 8.3 percent. That amount easily exceeds the previous peak of 5.7% in 1983. It’s almost 50% percent above any comparable post World War II levels.

  7. rosettasister Says:

    Worth repeating!

    From 3.2% to 8.3% to 12.0% of GDP

    This is unconscionable and unscrupulous!

    “CBO 2009 Deficit Projection Tops $1 Trillion”

    http://www.ombwatch.org/node/9563

    The Congressional Budget Office released its annual report on the ten-year budget and economic outlook.

    In 2009, CBO projects that the federal budget deficit will be $1.2 trillion.

    At 8.3 percent of GDP, that number would “shatter the previous post-World War II record high of 6.0 percent”

    And, that doesn’t include a economic rescue package that will likely be well over $700 billion.

    In FY 2008, the deficit was $455 billion (3.2 percent of GDP), so why the massive increase (and remember, this does not include an economic recovery bill)? CBO projects that in 2009:

    • TARP expenditures will add over $180 billion

    • Federal conservatorship of Fannie Mae and Freddie Mac will add $238 billion

    • Revenues will decline by $166 billion

    • Plus, the declining economy will increase eligibility rates for participation in other spending programs like nutrition assistance, unemployment insurance, and Medicaid

  8. rosettasister Says:

    Also worth repeating!

    ‘I found this deficit when I showed up,’ Obama said, in a clear swipe at the administration of former president George W Bush.

    (Translation – “Let’s pile on, let’s make things worse! It’s all Bush’s fault, anyway!”)

    “Faith-Based Economics”

    “Keynes makes a comeback, but his ideas are still wrong”

    http://nrd.nationalreview.com/article/?q=YzVhZmI5MDAxMDEyZGIzMWVlZTUzZWU1ZDY2ZjExNTQ=

    The CBO estimates that the 2009 budget deficit will be $1.2 trillion, or 8.3 percent of GDP.

    Obama’s “recovery and reinvestment” plan is expected to increase the deficit by $825 billion over two years.

    Assuming that sum is split evenly between 2009 and 2010, it would raise the estimated deficit to 11.3 percent of GDP this year and 7.6 percent in the following year.

    And that’s not counting another $350 billion for the TARP slush fund.

    A deficit of 11.3 percent of GDP would be nearly twice the previous peacetime record of 6 percent, set in 1983.

    Japan’s deficit was nearly as high in 1998, however, reaching 10.7 percent of GDP.

    Did that jump-start Japan’s economy?

    No, it did not.

  9. ddlew2 Says:

    Well it seems to me that if you are unhappy with your current mortgage situation, just stop making payments and let the government restructure your loan.

    This will pretty much throw us into further turmoil.

  10. rosettasister Says:

    I believe I may have misinterpreted this data.

    It’s even worse than I thought!

    FY 2008 3.2 percent

    FY 2009 at least 11.3 percent (it’s already at 8.3 percent)

    FY 2010 at least 7.6 percent

    I quoted another source on a previous thread that foresaw 12.0 percent

    for 2009 (not sure about 2010)

    Unchartered territory!

    Let’s face it, no one really knows how high these deficits will turn out to be in terms of percent of GDP.

    Let’s hope these three senators see the folly of their ways.

    And perhaps there’s a brave Senate Democrat who will join his or her 11 colleagues in the House.

    bbl

  11. susiezen Says:

    WE WILL BECOME A ONE PARTY NATION IN FOUR YEARS OR LESS.
    ITS A ONE PARTY BILL, NOT A STIMULUS BILL!

    everyone keeps asking the same question, where is all the money going? who’s getting it, how much, and when will they get it.
    the answer is; OBAMA REALLY DOES NOT CARE BECAUSE HE ALREADY HAS BILLIONS IN DISGUISE GOING TO THE INTEREST OF THE DEMOCRATIC PARTY!
    It will show up some time in 2011 or 2012, and he now has a grasp on his one party nation.

    Can it not be seen how obsessed he is with getting that money. It will forever buy his leadership, without it he loses most of his furure power.
    HE DOES NOT GIVE A CRAP ABOUT POOR PEOPLE, OR UNDERPRIVLEDGED….HED RATHER THEY WERE GONE, THEY ARE A PAIN. JUST LIKE THE REPUBLICAN PARTY, HE WANTS IT GONE, HE DOES NOT WANT ANYONE TO EVER HAVE THE CHANCE TO HAVE ANY POWER, ITS HIS NOW.

    Do you think Im getting carried away. maybe a little on the nutty side…kinda paranoid.
    I sometimes stop and think that this is all crazy myself…a year ago I would have laughed my butt of at the mere idea of such a thing.
    BUT, I dont think Im wrong, or crazy, or paranoid.
    This man and his freakish wife scare me. Why is he in such a hurry to rush thus stimulus, why is he campagning all over the country the last two days when hes already won the stimulus….
    In order for him to complete his plans he needs the public to continue to be in love with him….hes looking for something more folks.
    HES LOOKING FOR SOMETHING MORE< AND HE NEEDS TO HOLD UP THE WORSHIPERS TO COMPLETE THE PLAN. we are screwed.

    bow to obama…the dictator to the “NEW AMERICA”

  12. susiezen Says:

    If the democrats actually put some real benifactors to the stimulus they would be copletely obligated upon signage to follow through with sai commitment . example: if the stimulus bill has 6 billion going to a prominant established buisness like say bank of america, well they would HAVE to give 6 billion to them.
    If 1 billion is going to a golf course in florida, and another billion to a frisbee park, atv trail etc etc….now your up to several billions of dollars.OKAY…who are these people and whose to say they will get their money…maybe one or two of these bogus buisnesses folded and disappeared {or never existed in the first place}…wel then Obama can decide with paloosi to move the money sey to commercials for the democratic party…hey some liberal intern wiil be hired…thers a job created! and so on and so on…..he has a pile of money with his name all over it….and once the money is released he can do whatever he want with it….TREASON, TYRANNY!
    firing…………………………………………………………………………………
    ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,squad

  13. Fernley Girl Says:

    Michelle, at the Facebook group “Impeach Obama” is keeping tabs on Obama. She’s listed his “accomplishments” for his first 3 weeks at:

    http://face.com/topic.php?hid=13200515790&topic=9110

    We’re toast.

  14. susiezen Says:

    rose, if im getting to crass you can tell me to tone it down. I get myself riled up by the devastating effects this is bringing to us.
    maybe its not so bad Rose, but it worries me so, and I get emotionally involved when I feel we are being wronged, however deep this may or may not be…

  15. susiezen Says:

    fernley girl that site was scrubbed, cant get it

  16. susiezen Says:

    obamas people are getting fast with the scrubbing

    quick draw mcgraw..fastest scrubber in the west !!!!

    barbarric, id say

  17. Fernley Girl Says:

    Sorry, have to type in URL, my bad!

    http://facebook.com/topic.php?uid=13200515790&topic=9110

  18. Fernley Girl Says:

    DJI down 383 for the day. Thanks, Geithner. Your speech did wonders.

  19. Tenacity Says:

    It is time for everyone to get involved (off their duffs) Zen. We have no choice but to take action to alter or abolish the usurpation. Those that didn’t vote and allowed this Kenyan/Indonesian Marxist impostor to commit this fraud now need to acknowledge their folly and step up to remove the tyrant.

  20. Tenacity Says:

    Fern,
    They want/need for the economy/dollar to crash to accomplish their real (not stated) purposes.

  21. rosettasister Says:

    susiezen Says:
    February 10, 2009 at 8:44 pm

    rose, if im getting to crass you can tell me to tone it down. I get myself riled up by the devastating effects this is bringing to us.
    maybe its not so bad Rose, but it worries me so, and I get emotionally involved when I feel we are being wronged, however deep this may or may not be…

    ——————-

    Oh no susie, you are so right to be worried right now.

    I’m really worried, too.

    And that’s not me.

    It’s the ones who are willing to be led down the garden path, who should be questioning themselves.

    My brother, God rest his soul, used to call politicians the “second-stringers.”

    And it’s these second-stringers who want us to trust them right now.

    No matter that there’s nothing new under the sun.

    But are we bound to history repeating itself?

    It doesn’t have to be that way.

    We can learn from our mistakes and not repeat them.

    And we can’t let them win the argument that they occupy the higher ground.

    They’re just as lost as we are.

    So keep worrying, susie, because the toddlers want to lead us around by the nose.

    But don’t ever worry about the content of your posts, because I’m very proud of all the Americans who post here.

    When I am at my most cynical, I start to think about what really lies behind the motives of the PuppetMasters.

    George Soros comes to mind.

    The left in our country really does want us to become more like Western Europe.

    But if that happens, we won’t be able to afford to intervene anywhere, even if we would be in the right in doing so.

    Unfortunately, if that happened, there would still be thugs with big guns.

    Hey, I did learn a thing or two after all!

    But, it’s not too late and we don’t have to let that happen.

    We are too passive, but it doesn’t have to be that way.

    Rose

  22. jrh Says:

    Hi all,

    There was a news tidbit that didn’t get much attention and I don’t think I saw a post on it here (but I may have missed some).

    Apparently O has decided to move the management of the US Census from its usual bureaucratic place at the Commerce Dept to the direct control of Rahm Emanuel.

    Sure, this is just one more thing in a flood of changes but I find this very distrurbing. This smacks of another Acorn-like means of redefining voting constituencies almost certainly with the intent of enhancing the democratic control of the EC and congressional districts and other nefarious purposes I haven’t thought of yet.

    This had been quasi non-political up until now.

    Anyone else bothered by this?

  23. Katie Says:

    jrh Says:
    February 10, 2009 at 9:39 pm

    Hi all,

    Apparently O has decided to move the management of the US Census from its usual bureaucratic place at the Commerce Dept to the direct control of Rahm Emanuel.

    Anyone else bothered by this?
    _________________________

    Only those of us with a brain.

  24. Tucker82254 Says:

    This economic crash was planned to further Obama and the Democrats agenda…,

    At 2 minutes, 20 seconds into this C-Span video clip, Rep. Paul Kanjorski of Pennsylvania explains how the Federal Reserve told Congress members about a “tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars.” According to Kanjorski, this electronic transfer occured over the period of an hour or two.

    Here is a transcript of what Kanjorski says More.. in the video:

    “On Thursday Sept 15, 2008 at roughly 11 AM The Federal Reserve noticed a tremendous draw down of money market accounts in the USA to the tune of $550 Billion dollars in a matter of an hour or two.

    Money was being removed electronically.

    The treasury tried to help with $150 Billion.

    But could not stem the tide.

    It was an electronic run on the banks

    The treasury intervened but had they not closed down the accounts they estimated that by 2 PM that afternoon. Within 3 hours. $5.5 Trillion would have been withdrawled and collapsed and within 24 hours the world economy.”

    Kanjorski does not provide further details.

    liveleak.com/view?i=ca2_1234032281

  25. ddlew2 Says:

    How can 3 US Republican Senators look at this package, know that they are the only 3 Republicans voting for it, and still think they are right to vote for it?

    These three literally need to be removed from office.

    This makes no sense and is unforgivable!

  26. rosettasister Says:

    Cutting out early again, good people!

    The Good Lord saw fit to drench us with rain, but the sun came out again today.

    And the desert flora is just bursting with joy.

    Until tomorrow!

    New Thread:

    https://rosettasister.wordpress.com/2009/02/10/hey-rosetta/

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