New Thinking on the Economy
by Dean Baker,
co-Director of the Center for Economic Policy Research (CEPR)
also Beat the Press
[This points to an interesting problem or ROR:
(see labels for explaination)
The government is not getting its money's worth when buying bad assets. Anyone who understands how the economy works and the market works should not wonder. That is how it works. That is the point of buying bad assets, whether one wonders whether it should be done or not. If someone else would buy them the same would apply. The housing bubble* is a similar mechanism within the greater mechanism that is the financial problem.
How the economy works is different than how economics works. The economy is the thing. Economics is an equation. They both need tweaking and can work the way they are designed, but will tweak someone. Unfortunately an equation in economics will work only to the extent that everything (that is needed or wanted) is included in it. The economy works regardless but almost everything is included, except they are tweaking when they do the economics. And speaking of bubbles, they leak.
It might be easier to agree what not to do, than what to do, as long as failure is an option. But failure is not an option; it is a choice. This may seem like lost words, but failure is a potential outcome. And it can no more be simply allowed**, than freedom. Maybe this is Philosophy 701, but the Washington Post is not up to Journalism 201, let alone the economy.]
* housing equals assets except for the financial blowing of the economics.
** meaning failure should be prevented, and freedom promoted(are these not good points to work on?)
[Speaking of link(and equations): the stimulating if not shaky journalism below.(nfry)]
[only glanced at but likely recommended read: and see comments and embedded Krugman. For now: They'll be back.]
[That was Shwartznegger but later Ron Reagan covers similar territory with a guest who earlier slammed the stimulus. That was in December, so it was not the current plan. Which should be called what is: ARARA for Jobs! or just the begining or what is a quick and practical start. But does have a good chart on "Bang for the Buck", which depending on the math(see comments), could make a 1 trillion dollar difference in effectiveness.] [Post comment comment: of course this is as ridiculous a hypothesis as Plato's Republic, but for the sake of dialogue, a totally bipartisan package, could be seen to have potential for zero stimulus, as dollar for dollar is not really a bang.]
5 comments:
Like Descartes' distinction between mind and matter, there is a little fog regarding my distinction between how the economy works and how the market works. People work in the economy and the market may not work for them, like putting Descartes before the horse.(or Plato)
Speaking of the center, it is a good place to play chicken, but even if you win you may not be going the right direction, and even if you just survive, you may not be on the road to anywhere.
The trillion dollar calculation is a purely partisan yet correct math, assuming an $800 Billion dollar package and that the far right get it's way (more Bush)and the far left (as imaginary as they are) would get the opposite end of the charts way (all food stamps), that would be the swing of effectiveness. But it would not be correct economics, let alone politics. Such line item math would probably whack the chart's effectiveness.
I was going to calculate the $80 billion disagreement between the House and Senate packages(supposedly), but why stop there. But the math demonstrates the potential "Bang for the Buck" based on the factoring of 29 cents on the dollar versus $1.73 for the dollar and the risk of chicken.
OK, my math may be solid, but the language fuzzy. Having it their way or our way, is the difference between a $568 billion in the red and $584 billion in the blue. Or going the right direction for the people. (Search heckuva job or equation.)
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