No wonder Paul Krugman's ire was aroused: this is worse than I had expected. Much worse:
Robert J. Samuelson: Bankrupt Economics: What we are witnessing, in the broadest sense, is the bankruptcy of modern economics.... The $152 billion "stimulus" program earlier this year was a classic exercise in "demand management." It didn't work well mainly because this crisis originated in frightened financial markets.... Unfortunately, we lack experience with stabilizing financial markets, and the issue has been at the fringes of economics...
Do I point out that Ben Bernanke has spent most of his life analyzing the stabilization of financial markets, and that nobody but a blithering idiot would put him "at the fringes of economics"?
Do I point out that we have a lot of experience with stabilizing financial markets--that we dealt with a credit crunch in 1990-92, with exchange rate crises in 1992, 1994-5, 1997-8, 2001-2, plus others that did not become crises, plus a bubble collapse in 2000-2001?
Do I note that economists are now investigating whether the second quarter stimulus program worked better or worse than expected--which means that it worked about as well as people thought beforehand?
It worked VERY well for its purpose: enabling the Administration to pretend a recession didn't start in Q IV of 2007. (See the Jim Hamilton GDP/GDI post.)
The only question is whether NBER is going to decide not to announce their finding until after the first Tuesday after the first Monday in November. And the ca. 2.5% of GDP thrown into the cash flows in Q2 may just muddy the waters enough to give Poterba cover to wait.
Posted by: Ken Houghton | October 07, 2008 at 03:33 PM
It worked VERY well for its purpose: enabling the Administration to pretend a recession didn't start in Q IV of 2007. (See the Jim Hamilton GDP/GDI post.)
The only question is whether NBER is going to decide not to announce their finding until after the first Tuesday after the first Monday in November. And the ca. 2.5% of GDP thrown into the cash flows in Q2 may just muddy the waters enough to give Poterba cover to wait.
Posted by: Ken Houghton | October 07, 2008 at 03:34 PM
It worked VERY well for its purpose: enabling the Administration to pretend a recession didn't start in Q IV of 2007. (See the Jim Hamilton GDP/GDI post.)
The only question is whether NBER is going to decide not to announce their finding until after the first Tuesday after the first Monday in November. And the ca. 2.5% of GDP thrown into the cash flows in Q2 may just muddy the waters enough to give Poterba cover to wait.
Posted by: Ken Houghton | October 07, 2008 at 03:35 PM
Oops. Sorry. Typepad was giving me troubles which appear to be being inflicted on everyone else now.
Posted by: Ken Houghton | October 07, 2008 at 04:18 PM