tag:blogger.com,1999:blog-3240565408401956331.post2535827180490657093..comments2023-07-08T05:49:38.333-04:00Comments on Larry Davidson's Thoughts on Macro and Other Stuff: Macroeconomic Policy and Fooling the PublicUnknownnoreply@blogger.comBlogger7125tag:blogger.com,1999:blog-3240565408401956331.post-38241265214510510962011-09-15T17:00:27.078-04:002011-09-15T17:00:27.078-04:00You want money? Hang on while I fire up my printin...You want money? Hang on while I fire up my printing press.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-67031985666531521412011-09-14T21:44:44.846-04:002011-09-14T21:44:44.846-04:00James,
Intellectual I am not sure. For the econom...James,<br /><br />Intellectual I am not sure. For the economists in the crowd I wanted to speak in model terms -- to emphasize why the stimulus is not working. They have the wrong assumptions in their models. But if I read you correctly you are pretty much saying the same thing. Assuming that the government can make firms more optimistic is questionable or just wrong... especially when their policies are barking up the wrong tree.Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-13138310632726114402011-09-14T21:40:20.276-04:002011-09-14T21:40:20.276-04:00Al,
So this means you are not going to send money...Al,<br /><br />So this means you are not going to send money? <br /><br />LarryLarry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-43937649623674975772011-09-14T21:38:07.893-04:002011-09-14T21:38:07.893-04:00Thanks Brad. Yes, fear is taking over the markets ...Thanks Brad. Yes, fear is taking over the markets and for good reason. Yet our politicians here and in Europe do not get it. As for economists taking over from philosophers, you might call that the blind leading the blind. The question remains -- which philosophers? Which economists? :-)Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-32514465345374329822011-09-14T08:38:01.195-04:002011-09-14T08:38:01.195-04:00A little too intellectual for me. I want to put i...A little too intellectual for me. I want to put it in a more "on the street" perspective. I have a manufacturing company (I know it’s an anomaly). In 2006 at the peak of the housing bubble we were selling $1M in product used to seal pool deck and driveway paver bricks. The funding came from a false source...home equity loans. By 2009 that segment of our business had all but vanished. The coating installer dropped prices to the point that they could no longer make a profit and eventually quit buying from us. We in turn redirected out marketing efforts to hospital bathroom tile and grout because they had sustainable funding, the installer could get a fair price and competition had not discovered this niche yet. Problem is that the margin on the tile and grout product is 25% less than that on the paver brick product. So our net profit fell even though we had a sustainable growth market and were making more gallons.<br /><br />It is now almost 2012 and not much has changed. Forty percent (40%) of the homes are underwater so there is no hope for the paver brick market to return in the next 5 years. A new health care program will start to take place by 2012 in earnest and it appears this will drive down the fees at the hospitals thereby delaying any new capital expenses on such luxuries as tile and grout sealing. <br /><br />My point here is that the "new norm" was building on itself for the last 30 years and now it is here. Government's temporary spending in portions of the economy where the lowest worker income portion of wages exists will not translate to higher home values, more capital spending...etc. It will translate to people being able to feed their families and buy stuff made off-shore...for the most part. No tax credits will get me to employ any unemployed if I do not need them and we have fully automated our production and sales systems to cut cost of operation. We have joined the "new norm" and so have thousands of other small businesses.<br /><br />When the temporary government stimulus stops so does nay real impact because of the reasons Dr. Davidson gave above and the lack of our government to understand that they cannot create sustainable private sector jobs. All they can do is impact the environment in which these jobs should be created and we are no longer the only player on the world's stage for economic success.Jameshttps://www.blogger.com/profile/16257806506590834840noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-50726498683403292202011-09-14T08:21:24.661-04:002011-09-14T08:21:24.661-04:00I feel about Keynes as I do about Bear Bryant. Why...I feel about Keynes as I do about Bear Bryant. Why don't the Alabama faithful let Coach Bryant rest in peace instead of digging him up every fall? Why do the rookies in DC continue to dig up JMK? Bryant I can almost see. At least his scheme worked. Keynes, not so much.<br /><br />I was doing OK without taking any deep breaths until you brought up Krugman. He's living proof that the Nobel Prize for anything is irrelevant.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-23110659479216344482011-09-14T07:53:39.119-04:002011-09-14T07:53:39.119-04:00Thanks again Larry for an entertaining post. I re...Thanks again Larry for an entertaining post. I recently read an article in the Guardian's about the patient (the global financial system) still being in critical condition. It said that the 'F' word is back in the mind of the market (and leaders). That is 'F' for FEAR. Fear of a relapse of another economic crisis. The Euro crisis, UK riots, sovereign debt, etc. are all causing leaders to reconsider austerity measures that might topple their country's fragile economies. I agree that the wage illusion and business optimism illusions will be seen through if not by rational workers and businesses, but by very FEARFUL ones. There is genuine fear that governments aren't doing what is necessary regarding financial reform. And in return, politicians and central banks are fearful of not acting in time. So, once the FEAR genie is out of the bottle, how do we deal with it? As Marx said, "The philosophers have only interpreted the world, in various ways; the point, however, is to change it." One could very well replace philosophers with economists I guess.Bradhttps://www.blogger.com/profile/04468573490285001290noreply@blogger.com