Thursday, September 30, 2010

Looking for a Bubble

Cripes.

OK, let me explain this to you in normal everyday terms.

You are the father or mother of little Jimmy.

Jimmy has been a problem child ever since he went into school.

You get a report from Jimmy's teacher and she says;

"Little Jimmy showed some improvement today. He beat up LESS kids than he did last week. THis is an improving trend! Additionally, you know that D- he received on his test last week? Well, I made a grading error and it's actually just a regular D!"

You then reward Jimmy with ice cream for not beating up as many kids and getting a slightly better grade than previously thought.

It's the same thing here;

"We're not cutting as many jobs"

AND

"Instead of a sclerotic growth rate of 1.6%, we are now BOOMING with a revised growth rate of 1.7%."

And what's the Dow Jones doing? Up 50 points so far.

If I recall correctly, after Bush cut taxes back during his first term to fight off the then-Dotcom recession, GDP boomed at 6% one quarter and there was something like 300,000 jobs created.

But, oh, that's right. Those jobs don't count. Because it's Bush!

You are free to continue enjoying the decline!

3 comments:

CBMTTek said...

Correct me if I am wrong, but I do not think there is any inertia in the economy.

Despite numerous attempts to describe economic cycles as cycles, and to liken them to pendulum swings, the facts are, they are not truly cyclical, and definitely do not follow a pendulous path.

In fact, this "upward trend" could (and probably will) reverse itself by the next reporting period. There is no actual momentum to money, only perceived momentum.

Captain Capitalism said...

You actually hit on somehting I've been meaning to make a video of.

There is no "momentum."

There is only production, manifesting itself in the economic measurement called "GDP."

You either implement policies that prompt production

or

not.

Eric said...

Let's not forget the fact that tax receipts went up under Bush even after the tax cuts (sadly spending went up so much that the surplus still turned into a deficit despite higher revenues, but those the government still *made* money after the tax cuts).