Friday, February 15, 2008

Recession Time

Many years ago I worked at the police department on campus to put myself through college where they had this kind of "campus cop" program. There we'd patrol campus, do building security and a whole host of other various security duties, but when Christmas time rolled around the campus was dead. Absolutely nothing going on as all the students had left. Thus you'd be patrolling a graveyard of a campus with absolutely no action to speak of, so we'd come up with songs to stave off the insanity. Songs such as "Zone Patrol"

"It's Zone Patrol

Yeah, zone patrol

Fetch me a scotch and a kaiser roll.

Protect the campus while you take a stroll.

Listen to guys talk of Robert Dole

Just let me outta here, I'll sell ya my soul

Cause it's zone patrol

Yeah, zone patrol."

Other such toe tappin' ditties like "Wilson Gate" "Williams, Nothing More than Williams" and "Check Out Time" were created by many a men on many a patrols. They never went platinum, but they were still popular with the kids.

Regardless, I think it's time for a new song given this latest Jim Dandy chart;

"Recession time

Yeah, recession time

Hey, fetch me a scotch with lemon and lime

Buy me a beer with a quarter and a dime

Listen to dat kid make dem stupid rhymes

Now don't you bitch and don't you wine

Cause it's recession time,

Yeah recession time."

(This was a heavily plagiarized version of the song "Check Out Time")


Anonymous said...

Good one Capt.

Check this one out:

Rock On

Anonymous said...

Hey, Capt. Capitalism, I have a question for you. Its about something has been bugging me for years and I figure it needs an economist to give an opinion on.

Going back to post-WWII the western world including the US falls in love with the theories of Keynes and decide the best way to moderate an economy is to have the government spend its way out. Long story short: by the 70's this has led to budget deficits, inflation, higher interest rates, etc. Not a particularly successful methodology.

Then a sea-change happens. The theories of Hayek and Friedman (among others) finally get some traction, and under Reagan/Volker (?) and Thatcher a more monitorist approach to economic management takes place. It seems to me that this approach uses the micromanagement of interest rates in order to manage inflation but also to entice economic activity. The inflation fighting aspect seems like it has been very successful, however the economic enticement aspect leaves me wondering.

The last 6 or 7 years have seen extensive use of constantly lowered interest rates in order to try and stave off possible recession. How successful this has been I don't know, but isn't an over reliance on this method of prompting activity simply like adding fuel to a campfire to keep it going, when what is really needed is a good supply of wood? I guess what I'm trying to ask is how much does lowering interest rates simply give an artificial stimulus to the economy, when there is a real possibility that the underlying market fundamentals simply don't exist for long term growth? And I wonder if interest rate lowering isn't simply a case of avoiding the inevitable - would we be better off (in the long run) just to allow a recession to take place and for market fundamentals to lead the way out - sans artificial starter fuel?

There - I finally got that expressed in a semi-literate form.


Captain Capitalism said...

Hi Gatmando,

No, I agree with your sentiment or sensing there is an artificial staving off of recession.

Like Ryan Fuller, I believe that recessions are just a natural and necessary function of any nimble and efficient economy. When you have such egregious misallocations of resources like Dotcom Mania and the Housing Bubble, you are guaranteed to have a recession. However, the levers of fiscal and monetary policy have been pulled to shield us from that. But in a kind of "mass cannot be destroyed, only moved or converted to energy" sort of physical principle, I believe the same for economics.

All we've done is temporarily suspend a recession or distributed the ill-effects across the nation. By exapnding fiscal policy we've just ran deficits and postponed paying the piper to future generations. With monetary policy, I think artificially low interest rates you're trying to save the economy by inducing consumer spending. Well, what income do we have to spend? None, so people borrow, again, racking up debt and postponing the effects of the recession into the future.

in this sense I see us a lot like Japan, staving off the inevitable and at the same time crippling our ability to grow at anything above 2.5% RGDP growth per year for a decade. I would surmise we'll be like France for a bit here.