Thursday, August 13, 2009

Economist: Claim that Economy Has Recovered “Is Like Somebody Borrowing Money from Their Uncle and Then Celebrating that Their Income Has Gone Up”


John Hussman - PhD economist and former professor of economics and international finance at the University of Michigan - has a great quote:

If you look carefully at the economic data that shows improvement, and correct for the impact of government outlays, it is difficult to find anything but continued deterioration in private demand and investment. What we do see is a government that has run what is now a trillion dollar deficit year-to-date, representing some 7% of GDP.

That sort of tab will undoubtedly buy some amount of Cool-Aid, but it has been something of a disappointment to watch how eagerly investors have guzzled it down. It is not at all clear that short-term, deficit-financed improvement necessarily implies sustained growth in the context of a deleveraging cycle. This is like somebody borrowing money from their Uncle and then celebrating that their income has gone up.


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3 comments:

  1. petkovAugust 13, 2009 at 10:02 PM

    Wait a minute. This has been going on pretty much NON stop since 1913 when the Fed was created. SO this system has worked more or less for 90 years now. If it has worked in the pass it shall continue to work in the future too and they will come up with other tricks to make it work and prop it up.
    So the sky isn't falling, NOT yet anyway. FUD isn't helpful or necessary or constructive at all.

    ReplyDelete
  2. AnonymousAugust 14, 2009 at 6:58 AM

    Duh yeah duh yeah, don't change nuttin, duh yeah.

    Fed good, kiss butt of Fed.

    Duh yeah duh yeah.

    ReplyDelete
  3. UnknownAugust 15, 2009 at 10:27 AM

    Why should we listen to a man with a Phd in economics, when we can listen to our tax evading treasury secretary.

    ReplyDelete

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