Posted by swamphawk22 on 5/14/2012 7:13:00 PM (view original):
The economy was in a normal dip. It was a big dip but nothing bizzare.

It would have rebounded. FDR responded after America was at rock bottom for a while, Obama jumped in before the paint on the 1st forclosure sign was wet.

How can you walk the tight rope between he did a bad job but it still helped?

It was the biggest dip since the great depression, but the most the important factor wasn't necessarily the size of the dip, but what was causing the dip.  There have been plenty of recessions where a stimulus package wouldn't be ideal.  For this recession, it was.

Here is why:

Basic economics, spending has to equal income. http://wiki.answers.com/Q/Why_aggregate_income_is_equal_to_aggregate_expenditure

When wall st had its melt down and the housing market crashed, everyone (businesses and individuals) stopped spending money for a variety of reasons.

That started a downward cycle of contraction. More people held on to the money they had, the worse the economy got, causing even more people and businesses to stop spending money.

At this point, the only entity big enough to slow/stop/reverse the cycle is the government.  No one else, acting rationally, can spend enough to turn around a 14 trillion economy.

The stimulus was smaller than it should have been and it wasn't targeted as well as it could have been, but it was drastically better than nothing.

1 Saying its the biggest dip since the great depression is like putting me and Paris Hilton in a room and declaring her the second fatest.

2 There has to be a reson not to invest your money. If you are not making money you are losing money.

3 I cannot disagree more that it was better than nothing. Nothing would have forced business to get going.

Why would doing nothing force businesses to do anything?

Imagine you own a company that makes widgets.  2007 was a great year for you.  Sales were high and you had 20 employees who were working overtime to get all the work done.

The recession hits and your sales drop by half.  What can you do to get going?  Well you certainly aren't going to hire more employees.  You already have 10 sitting around doing nothing.  In fact, you're probably going to lay most of them off.  You certainly aren't going to buy more equipment.  Most of the machinery you have now sits around unused.  And most of your clients are going through the same thing.

What could you do to get the economy going?

Regarding your point #2, you are free to look up cash holdings of public companies yourself if you don't believe me, but most large companies started hoarding their cash in late 2008.  The stock market was extremely unstable and, as you see above, reinvesting that cash into the company would have been pointless.  I think Apple was sitting on $80 billion in cash at one point.

Typical Econ theoretical discussion...the widget.

Lets say I produce light bulbs. I have cash, but that will lose value if I sit on it.

1 New marketing campaign...light bulbs are the new pet rock
2 New Product...The T-1000 series bulb is better than the T-101.
3 Salespeople pressure...1st place is a Cadillac, 2nd place is steak knives...

When the government comes along to save us all it stagnates the process.

Posted by swamphawk22 on 5/15/2012 11:24:00 AM (view original):
Typical Econ theoretical discussion...the widget.

Lets say I produce light bulbs. I have cash, but that will lose value if I sit on it.

1 New marketing campaign...light bulbs are the new pet rock
2 New Product...The T-1000 series bulb is better than the T-101.
3 Salespeople pressure...1st place is a Cadillac, 2nd place is steak knives...

When the government comes along to save us all it stagnates the process.

So you provide light bulbs.  Lets say your clients are hardware stores.

When a bunch of construction workers, mortgage brokers, real estate agents, and bankers lose their jobs, they have less income.  Because they have less income, they spend less on everything.  They stop fixing things around the house, building projects, working on hobbies, going camping, etc.  Hardware stores (along with other businesses like restaurants, clothing stores, movie theaters) see a massive decline in sales.  They lay off workers and close stores.  Things get worse because now there are even more people out of work who don't have income to spend on stuff, including light bulbs.

Your special marketing and sales incentives may keep you afloat, but you certainly aren't going to grow, and you certainly can't pull the entire economy out of a recession.  In fact, it would be irrational for you to take steps that would help the economy.  Your sales are down, you aren't going to hire more employees.  Your sales are down, you aren't going to invest capital in new machinery.

The stagnation is the contraction in the economy.  Something has to jump start it or the downward spiral doesn't stop.  Looking at the broad economic indicators, the stimulus did jump start the economy.  Just not as much as we needed.

Any one company could not start it. Combined they could.

You seem to be implying that there is nothing but fear holding back the economy.

Posted by swamphawk22 on 5/15/2012 3:18:00 PM (view original):
Any one company could not start it. Combined they could.

You seem to be implying that there is nothing but fear holding back the economy.

So you expect a huge amount of companies (and the number really would have to be huge) in the middle of a recession where their survival is in question, to all act irrationally, spending money on things they don't need, in the hope that other companies are doing the same?

Yes. Yes, he does.

Posted by jrd_x on 5/15/2012 3:37:00 PM (view original):

Posted by swamphawk22 on 5/15/2012 3:18:00 PM (view original):
Any one company could not start it. Combined they could.

You seem to be implying that there is nothing but fear holding back the economy.

So you expect a huge amount of companies (and the number really would have to be huge) in the middle of a recession where their survival is in question, to all act irrationally, spending money on things they don't need, in the hope that other companies are doing the same?

Most companies cannot contract to stay alive.

If it isnt the actions of Obama what outside forces are keeping the depression going?

Posted by swamphawk22 on 5/16/2012 11:09:00 AM (view original):

Posted by jrd_x on 5/15/2012 3:37:00 PM (view original):

Posted by swamphawk22 on 5/15/2012 3:18:00 PM (view original):
Any one company could not start it. Combined they could.

You seem to be implying that there is nothing but fear holding back the economy.

So you expect a huge amount of companies (and the number really would have to be huge) in the middle of a recession where their survival is in question, to all act irrationally, spending money on things they don't need, in the hope that other companies are doing the same?

Most companies cannot contract to stay alive.

If it isnt the actions of Obama what outside forces are keeping the depression going?

It certainly isn't Obama.  A worldwide lack of demand is what is keeping the economy down.  But it is getting better and would be even better if we hadn't had massive public sector layoffs.

How can their be a Worldwide lack of demand? How could that have happened?

The real estate bubble burst and it caused a slowdown.

Why is it still going on is the question?

Posted by swamphawk22 on 5/16/2012 3:26:00 PM (view original):
How can their be a Worldwide lack of demand? How could that have happened?

The real estate bubble burst and it caused a slowdown.

Why is it still going on is the question?

The real estate collapse caused economic ripples worldwide. I read the other day that the US economy was contracting at rate of almost ten percent.

So why are we not recovering?

Why is what happened after Reagan took over and he turned around the Carter collapse (At the time the worst collapse since the Great Depression).

Posted by swamphawk22 on 5/16/2012 7:41:00 PM (view original):
So why are we not recovering?

Why is what happened after Reagan took over and he turned around the Carter collapse (At the time the worst collapse since the Great Depression).

We are recovering, just slowly.  Since the recession bottomed out in 2010, the private sector job gains have been good.  Unfortunately, they have been somewhat offset by public sector job losses.

The recovery is much slower than it would be without Obama's interference.

The idea that if only we were borrowing more money we woulde better off is shocking.