Bush: "I don't think we're headed to recession."

[bascule]

http://ap.google.com/article/ALeqM5j057jBReERcsF-FcZRSWe0h1gaXQD8V3ICFO5

 

Despite economists warnings to the contrary, Bush says the US just in a slowdown, not headed towards recession.

 

What do you think? Is the US headed towards recession?

[DrDNA]

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”

Dr Paul Joseph Goebbels; German politician and Minister for Public Enlightenment and Propaganda during the National Socialist regime from 1933 to 1945.

[D H]

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. ..."

That's right. The question is, who is telling the lie here? Bernanke says we will just skirt having a recession. Greenspan says its about 50/50 we will have a recession. Bloomberg reports 45% of economists think we will have a recession, but a mild one. Who would benefit the most from a recession? The left. A recession will benefit the left in the upcoming election, and this is where a lot of the fear-mongering and lying seems to be coming from.

[ParanoiA]

A recession will benefit the left in the upcoming election, and this is where a lot of the fear-mongering and lying seems to be coming from.

 

Also is coming from Dr. Paul and company. It's no secret the economy is top heavy, value judgements aside, and this is a problem. I think you're right that it's mainly coming from the left, but I wish we'd start hearing it more from the right.

[bascule]

Some perspective:

 

A recession is: "a decline in a country's gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year."

 

I don't have data about the GDP for Q1 2008 to date, but given what I'm hearing I'm assuming it's negative.

 

Here's the latest data:

 

http://www.bea.gov/briefrm/gdp.htm

 

This shows growth of the GDP in decline for Q4 2007, but it's still positive.

 

We won't know if we're in a bona fide recession until the end of Q2 2008.

[D H]

Most recessions we have experienced since the 1940s have been mild ones. Because the definition is inherently retrospective, we have often only known we were in a recession only after the recession is over.

[Skye]

Recession isn't really that useful a concept, to me, because it doesn't give people making decisions any information about the position in economic cycle that they are in. Growth tends to be cyclical. There's a period of high growth, then it peaks, then goes into decline, then bottoms out. Each of the four stages has typical macroeconomic conditions. Once you go into decline, unemployment starts to rise, inflation falls, interest rates fall, etc. But this stage doesn't necessarily coincide with a negative growth. It's just a fall in the rate of growth. So in theory you can tell if you've peaked out and have started to decline by the way that various macroeconomic indicators have behaved. Reality is obviously more complex than theory, but I'd say that the US is fairly obviously going through a period of declining growth right now. If the US slides into recession, I don't see any reason for any change in the way that decisions have been made than if grwoth is just stagnant. Obviously it's worse than stagnant growth, but the way to treat a declining economy that is in recession or just stagnant should be much the same.

[john5746]

Yes, the US is headed to a recession and the loss of value in assets coupled with inflation is going to be one heck of a whammy. Having a new President might bring some short term relief.

[Daecon]

Why would you believe Bush anyway? I mean, does he have a track record for honesty?

[ParanoiA]

Why would you believe Bush anyway? I mean, does he have a track record for honesty?

 

No less so than any other average self serving politician.

[D H]

Note well: I did not cite any self-serving politicians. I cited the current Fed chair, Ben Bernanke, his predecessor, Alan Greenspan, and a host of lesser economists as interviewed by Bloomberg. Some references:

http://money.cnn.com/2008/02/15/markets/markets_morning/?postversion=2008021511

Bernanke and Greenspan on recession risks.

On Thursday, Bernanke told the Senate Banking Committee that the outlook for the economy has worsened recently and that the risks to growth remain to the downside.

However, Bernanke said that the economy should avoid a recession thanks to the fiscal and monetary policy that is in place. That includes the government's $170 billion fiscal stimulus plan and the series of interest-rate cuts and loans to commercial banks the Fed has instituted over the last 5 months.

On Friday, former Fed chief Alan Greenspan said there's at least a 50% chance the economy will fall into a recession.

http://www.bloomberg.com/apps/news?pid=20601103&sid=a5pmNsfZsvYc&refer=us

The proportion of economists who forecast a U.S. recession this year more than doubled in three months, to 45 percent, according to a survey by the National Association for Business Economics.

Of those, a majority expect the downturn to be ``relatively muted,'' according to the poll of 49 professional forecasters taken Jan. 25 to Feb. 13.

 

The economy is iffy, very iffy. But it is not doom-and-gloom time. If these economists are right, we will barely skirt a recession or have a mild one.

[iNow]

It's now become an issue of semantics. Whatever. The dollar hits a new record low relative to other currencies with each passing day. That doesn't exactly inspire a lot of hope in investors buying with the dollar.

[ParanoiA]

Note well: I did not cite any self-serving politicians. I cited the current Fed chair, Ben Bernanke, his predecessor, Alan Greenspan, and a host of lesser economists as interviewed by Bloomberg. Some references:

 

Those are all folks who believe in fiat currency. Their predictions may be sound, I certainly don't contest otherwise, after all, it's their voodoo playground. However, I question who's being served when we rationalize moving away from a representative monetary policy (like the gold standard), and continue to embolden and depend on a government-private banking collaboration where we have unelected officials making national monetary decisions.

 

The other point I wanted to make to Trans, is why should any president be listened to about the economy in the first place? Unless he's an economist, why the hell do I care what he thinks? They're almost a walking joke to me anymore.

[john5746]

The other point I wanted to make to Trans, is why should any president be listened to about the economy in the first place? Unless he's an economist, why the hell do I care what he thinks? They're almost a walking joke to me anymore.

 

I don't think it would be constructive for Bush to say what he really thinks. I mean if he says "Yeah, we are screwed - assets are devalued, inflation, energy crisis looms, Iraq/Turkey/Iran is a mess. Man, I'm glad I am rich and will retire soon. Sucks to be you."

 

That doesn't inspire much hope.

[ParanoiA]

I don't think it would be constructive for Bush to say what he really thinks. I mean if he says "Yeah, we are screwed - assets are devalued, inflation, energy crisis looms, Iraq/Turkey/Iran is a mess. Man, I'm glad I am rich and will retire soon. Sucks to be you."

 

That doesn't inspire much hope.

 

No, but that would be funny as hell.

 

And kidding aside, false hope doesn't do anybody any good either.

[john5746]

And kidding aside, false hope doesn't do anybody any good either.

 

I disagree, since a certain % of the economy or any human endeavor for that matter involves emotion. The President can't do that much to affect the economic cycle anyway, so being somewhat positive is better than being pessimistic.

[ecoli]

I disagree, since a certain % of the economy or any human endeavor for that matter involves emotion. The President can't do that much to affect the economic cycle anyway, so being somewhat positive is better than being pessimistic.

faith in stock market is an important factor in the health of the economy, so yes, you're right.

 

One of the reasons why Bush's statement is important... Saying there isn't going to be a recession won't prevent one. But saying there will be one will almost certainly increase stock market volatitlity.

[Pangloss]

The president's job, regardless of which party he's in (which is what this thread is really about), is to be optimistic about the economy in public statements. That's because being a pessimist doesn't help the economy, but being an optimist can (and often does) have an positive impact.

 

As any Wall Street analyst will tell you, what matters is not what the president says about the economy, but what the president does about the economy.

[Mr Skeptic]

[re president pessimistic about economy]

No, but that would be funny as hell.

 

And kidding aside, false hope doesn't do anybody any good either.

 

 

Yes, it would be hilarious right up until traders figure out that lots of people will be selling stock, so they would be better off selling it first... Hence a massive drop in stock prices.

[ParanoiA]

The president's job, regardless of which party he's in (which is what this thread is really about), is to be optimistic about the economy in public statements. That's because being a pessimist doesn't help the economy, but being an optimist can (and often does) have an positive impact.

 

As any Wall Street analyst will tell you, what matters is not what the president says about the economy, but what the president does about the economy.

 

Well then what's the point? If every president just plays optimistic then why do we give a crap what he says? That makes about as much sense as asking the car salesman for his opinion on the quality of the car you're trying to buy.

 

Why does optimism increase or lose its effectiveness if that's the ONLY treatment ever given? Its efficacy would seem to be stagnant at this point.

 

Why is it unreasonable to expect a clinical analysis of the economy? We don't need to inject any 'ism' in it at all. This is what bugs me so much about the political "game".

 

We should demand better representation than flowchart posturizing, don't you think?

[Pangloss]

Well then what's the point? If every president just plays optimistic then why do we give a crap what he says? That makes about as much sense as asking the car salesman for his opinion on the quality of the car you're trying to buy.

 

Of course. And yet that's how it works. I guess it just goes to show you that there are plenty of stupid investors in the markets. Maybe a better question would be: Who cares? It doesn't really matter a whole lot, either politically or economically. It's not that presidential statements make ALL the difference -- the stock market was way down today. I guess most of them are smart enough to see the forest for the trees.

 

 

Why does optimism increase or lose its effectiveness if that's the ONLY treatment ever given? Its efficacy would seem to be stagnant at this point.

 

I'm not sure I understand you -- are you saying that's the only thing the president ever does about the economy? I would say that that's not the case at all. Didn't he just sign the stimulus package two weeks ago? A drop in the bucket, of course, but a bigger drop than any knuckle-headedly optimistic public statements, or so it seems to me.

 

 

Why is it unreasonable to expect a clinical analysis of the economy?

 

Because he's not an economist, he's a politician. Is there a shortage of available clinical analyses from the real experts inside and outside the administration? Fed Chairman Bernanke is speaking on an almost daily basis. You'll notice that much of what he does is cheerleading as well, but it's rather more analytical, direct, reflective of reality and (most importantly) indicative of upcoming Fed Reserve actions that have real impact.

 

 

We don't need to inject any 'ism' in it at all. This is what bugs me so much about the political "game".

 

We should demand better representation than flowchart posturizing, don't you think?

 

I think I understand where you're coming from, and I empathize with the sentiment. But this isn't politics, it's just the daily-grind mechanics of government. Framing this as politics is a very dangerous game, in my opinion, and it's one that most candidates steer clear of, for good reason. There's a reason Bill Clinton chose to keep Alan Greenspan as Federal Reserve Chairman, which I've always considered to be the single best decision of his entire presidency.

[iNow]

It's important to note also that the President's words don't impact the knowledgable investor nor the Wall Street trader... His words impact John Q. Public who doesn't understand this stuff and who looks to leadership for guidance.

 

If said leadership says, "Economy is bad," then John and Suzie Q. Public tighten their wallets... stop spending... start stuffing bucks under the mattress... and matters get worse.

 

Remember the audience, and what the President's words mean to them. Just because they shop more often at Wal-Mart doesn't mean the economy won't suffer if they stop doing so...

 

 

As a tangential point, I don't see the economy as a partisan issue. People aren't attacking GW because he's Republican, they're attacking him because he's either stupid or lying, neither of which reflect well on a person in a position of such great authority.

[bascule]

If said leadership says, "Economy is bad," then John and Suzie Q. Public tighten their wallets... stop spending... start stuffing bucks under the mattress... and matters get worse.

 

Depends. In many ways that's preferable to John and Suzie Q. Public financing purchases on credit... and failing to pay for it

[iNow]

Depends. In many ways that's preferable to John and Suzie Q. Public financing purchases on credit... and failing to pay for it

 

That's an interesting point, but would they or would they not be in the same position to pay for their financed purchases on credit regardless of what the above referenced leadership indicated was the state of the economy?

 

In other words, their ability to pay for it is not a factor until they purchase it, and it's the purchase which is effected by the statements of the leadership.

 

Maybe I'm missing something in your point? It's a valid comment, but I'm not sure of it's relevance.

 

EDIT:

 

On second thought, the confidence in future income will impact present decisions to spend money not yet available. If I have trust in a stable economy, I will trust that there is less risk in borrowing. However, once I've borrowed, I am obligated to pay the creditor, and a failing economy could make that seriously challenging.

 

Interesting point, indeed.

[bascule]

That's an interesting point, but would they or would they not be in the same position to pay for their financed purchases on credit regardless of what the above referenced leadership indicated was the state of the economy?

 

In other words, their ability to pay for it is not a factor until they purchase it, and it's the purchase which is effected by the statements of the leadership.

 

Maybe I'm missing something in your point? It's a valid comment, but I'm not sure of it's relevance.

 

The relevance is America is a period of record credit card debt, not to mention debt in general.

 

Spending is a bad thing for the economy if you're spending on credit. Unfortunately that's something the present Administration doesn't seem to get...