Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20
THE STOCK MARKET BIG PICTURE - Video - 19th Nov 20
Reasons why Bitcoin is Treading at it's Highest Level Since 2017 and a Warning - 19th Nov 20
Media Celebrates after Trump’s Pro-Gold Fed Nominee Gets Blocked - 19th Nov 20
DJIA Short-term Stock Market Technical Trend Analysis - 19th Nov 20
Demoncracy Ushers in the Flu World Order How to Survive and Profit From What Is Coming - 19th Nov 20
US Bond Market: "When Investors Should Worry" - 18th Nov 20
Gold Remains the Best Pandemic Insurance - 18th Nov 20
GPU Fan Not Spinning FIX - How to Easily Extend the Life of Your Gaming PC System - 18th Nov 20
Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Stock Market Double Top - 18th Nov 20
Edge Computing Is Leading the Next Great Tech Revolution - 18th Nov 20
This Chart Signals When Gold Stocks Will Explode - 17th Nov 20
Gold Price Momentous ally From 2000 Compared To SPY Stock Market and Nasdaq - 17th Nov 20
Creating Marketing Campaigns Using the Freedom of Information Act - 17th Nov 20
ILLEGITIMATE PRESIDENT - 17th Nov 20
Stock Market Uptrend in Process - 17th Nov 20
How My Friend Made $128,000 Investing in Stocks Without Knowing It - 16th Nov 20
Free-spending Biden and/or continued Fed stimulus will hike Gold prices - 16th Nov 20
Top Cheap Budgie Toys - Every Budgie Owner Should Have These Safe Bird Toys! - 16th Nov 20
Line Up For Your Jab to get your Covaids Freedom Pass and a 5% Work From Home Tax - 16th Nov 20
You May Have Overlooked These “Sleeper” Precious Metals - 16th Nov 20
Demystifying interesting facts about online Casinos - 16th Nov 20
What's Ahead for the Gold Market? - 15th Nov 20
Gold’s Momentous Rally From 2000 Compared To Stock Market SPY & QQQ - 15th Nov 20
Overclockers UK Quality of Custom Gaming System Build - OEM Windows Sticker? - 15th Nov 20
UK GCSE Exams 2021 CANCELLED! Grades Based on Mock Exams and Teacher Assessments - 15th Nov 20
Global "Debt Mountain": Beware of This "New Peak" - 13th Nov 20
Overclocking Zen 3 Ryzen 5600x, 5800x, 5900x and 5950x to 4.7ghz All Cores Cinebench R20 Scores - 13th Nov 20
Is Silver Leading Bitcoin or is Bitcoin Leading Silver? - 13th Nov 20
How Elliott Waves Simplify Your Technical Analysis - 13th Nov 20
How to buy Bitcoins using debit/credit card? - 13th Nov 20
Will COVID Vaccine Kill Gold and Silver? - 12th Nov 20
Access to Critical Market Reports - 12th Nov 20
Stock Market Dow Futures Reach 30,000 on News of COVID-19 Vaccine Trials Success - 12th Nov 20
8 Terms & Conditions You Must Know Before Asking For Life Insurance Policy Quotes - 12th Nov 20
Gold Stocks Post 2020 US Election Outlook - 11th Nov 20
Champions’ League Group Stage Draw: All You Need To Know - 11th Nov 20
Stock Market Secular Trend - 11th Nov 20
Stock Market Correction Curtailed by US Election - 11th Nov 20
What Causes a Financial Bubble? - 11th Nov 20
Ryzen 9 5900X RTX 3080 - Scan.co.uk vs Overclockers.co.uk UK Custom PC System Builder Review - 10th Nov 20
Killing Driveway Weeds FAST with a Pressure Washer - Saving Block Paving from LOTS of WEEDs - 10th Nov 20
Trump Fired, Biden Hired, What Next?  - 10th Nov 20
Looking for a Personal Loan? Here Is What You Have To Know  - 10th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

On the Brink of Economic Recovery

Economics / Economic Recovery Aug 10, 2009 - 02:28 AM GMT

By: Mike_Shedlock

Economics

Best Financial Markets Analysis ArticleEconomist Paul Krugman and Obama's economic adviser Laura Tyson claim U.S. Economy May Be on Brink of Recovery.


The U.S. economy may be on the cusp of a recovery and the impact of the nation’s stimulus plan should increase this quarter, said Laura Tyson, an adviser to President Barack Obama.

“We may have hit stability, we may be in the beginning of an upturn” based on the latest economic data, Tyson, a member of the White House’s Economic Recovery Advisory Board, said yesterday during an interview in Kuala Lumpur. Nobel Prize- winning economist Paul Krugman said the deepest slump since the Great Depression may be ending.

“It’s quite possible, though not certain, that retrospectively, we’ll say that the recession ended in July or August, maybe September,” Krugman said in a separate interview in the Malaysian capital. “My guess is that we’ve bottomed out now, that August was probably the trough month.”

There’s no reason for a second stimulus package now, Tyson said in the interview. She suggested on July 7 the U.S. should consider drafting a second stimulus package focusing on infrastructure projects because the $787 billion approved in February was “a bit too small.” She told CNBC three days later that it’s premature to plan for a second stimulus package.

“We know that relative to plan, the stimulus package in place is performing along expectations,” Tyson said yesterday. “Right now, based on the evidence that the economy has put forward and the stimulus spend out relative to plan, there isn’t any reason to think about a next round.”

Krugman Thinks Stimulus Round Two Needed

In contrast to Tyson, Paul Krugman argues a second stimulus is still needed. Please consider U.S. Economy May Have Reached ‘Trough,’ Krugman Says.

The U.S. economy is stabilizing and may have bottomed out, as the government’s stimulus plan probably saved a million jobs, Nobel Prize winner Paul Krugman said today.

A second stimulus package for the economy is still needed, and should be directed at state and local governments as well as infrastructure spending, he said in an interview in Kuala Lumpur. The world economy may face several years of weak growth without falling into a “double-dip” recession, he said.

“It’s quite possible, though not certain, that retrospectively, we’ll say that the recession ended in July or August, maybe September,” Krugman, 56, said. “My guess is that we’ve bottomed out now, that August was probably the trough month.”

The Princeton University economist said Federal Reserve Chairman Ben S. Bernanke “has done a really good job” to contain the financial and economic crisis.

“He failed to see this coming and he was behind the curve in early phases,” Krugman said. “But he’s been really very good in the sense that it’s really very hard to see how anyone could have done more to stem this crisis. He’s earned the right to a second term.”

Krugman said in June the U.S. may emerge from its downturn by September. In a June 9 speech, he said damage from the U.S. recession may persist “for a very long time,” with no clear engine for renewed growth.

Bernanke Should Be Fired

Bernanke never saw this coming then had a panic attack of various alphabet soup measures attempting to prevent another "Great Depression".

About a week ago Calculated Risk wrote "I'd like a doctor who never gave up trying for a cure, but I'd prefer someone with better diagnostic skills."

Indeed.

Praising Bernanke now is like praising a doctor for nearly killing your son because he finally guessed right on the fourth guess (in this case assuming that the right medicine has finally been prescribed, which is debatable).

Bear Stearns collapsed. Did the world end? Lehman went bankrupt. Did the world end? If Citigroup went under would the world have ended? I think not but I cannot prove it. Nor can Bernanke or Krugman prove the world would have ended had Citigroup gone under.

Campaigning For Fed Chairman


In an unprecedented move, Bernanke is clearly campaigning for reappointment. Please see Bernanke Goes On Self-Promotional Media Blitz for details.

It is equally clear that Janet Yellen, president of the Federal Reserve bank of San Francisco, and Larry Summers, Director of the White House's National Economic Council for President Barack Obama, are campaigning to replace Bernanke.

The correct solution of course is none of the above. We need to abolish the Fed and its serial bubble blowing tactics entirely.

Keynesian Clowns Want To "Make Sure"

If the economy has bottomed, pray tell why is a second stimulus needed? Just to make sure?

Keynesian clowns always want to make sure. Then when the stimulus fails anyway, which it will, the clowns will blame it on failure to "Make Sure".

Easy To Praise Keynesian Clowns When You Are One

Krugman has high praise for Bernanke. The reason should be clear but it probably isn't. The reason Krugman likes Bernanke is that Bernanke is willing to throw money at problems just as Krugman would do.

It's easy to praise Keynesian clowns when you are one yourself.

Bernanke (in misguided praise of himself), and Krugman (in misguided praise of a fellow fool), both think Bernanke saved the day.

I think they did nothing of the kind. However, the debate cannot be proven no matter what happens from here on out.

Perhaps Armageddon was not coming no matter what silly measures were taken by Bernanke. Indeed I claim that Bernanke's measures will drag this mess on for another decade, just as happened in Japan.

My claim can only be verified 5-10 years from now. Bernanke and Krugman have a distinct advantage: Their claim can never be proven or disproved given their inevitable fallback excuse "we failed to stimulate enough".

The Seen and The Unseen

The "seen" benefits (prevention of Armageddon) may be a mirage. Financial Armageddon may come anyway, or it may not have come regardless of what Bernanke did. After all, social safety nets are vastly different now than in 1929!

And while most have their party hats are celebrating the "recovery" now, others are asking What Growth is the S&P 500 Pricing In?

Right now we know that the jobs picture still sucks, that credit card defaults are still rising, that bankruptcies and foreclosures are still rising and the budget deficit is out of control.

Furthermore, we can easily see the massive $14 trillion balance sheet of the Fed while the benefit is debatable. The "unseen" is the massive set of problems down the road unwinding the Fed's positions. Those consequences are without a doubt coming down the road.

Presuming we are indeed "On the Brink of Recovery", what PE are you willing to pay given the recovery has not even started, yet we still face the seen and unseen consequences at highlighted above?

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2009 Mike Shedlock, All Rights Reserved

Mike Shedlock Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules