The IUSB Vision Weblog

The way to crush the middle class is to grind them between the millstones of taxation and inflation. – Vladimir Lenin

Recession over? Economists panel isn’t sure yet.

Posted by iusbvision on April 13, 2010

All that news that the economy is in a huge recovery, in spite of the fact that we keep posting the economic numbers on this web site that show that we are coasting along the current bottom (a new bottom could come with a new shock to the economy, hence the term “current bottom”). Remember that these same mainstream economists are the same ones that did not see the mortgage collapse. In fact it was the geniuses at the Fed, at the top banks, and in Academia who missed it in spite of warnings from those “amateurs” who make their living working the markets

We have said it on this blog many times and I have said it in economics class as well; most economists we see and read about are political and/or ideological prostitutes. They say what they are paid to see for political expedience and call it “science” or “economics”.

Robert Reich and Paul Krugmann claim to be economists but it amazes me just how much basic macro they have to forget to write the nonsense they do every week…. and then there is Christina Romer, who has written some good stuff, most of which she had to forget as soon as she took a job at the Obama White House.

There are other kinds of economists who are masters of  Keynesian modeling. They make all of these fancy projections and it seems so intimidating, until you realize that their models rarely work out and that Keynesian theory just does not work worth a darn when applied in many circumstances.

Most “mainstream” economists fall into the previous categories.

Forbes Magazine went back to examine who it was that saw the collapse coming:

By 2004, concerns about a housing bubble were pervasive throughout the popular media. But responsible authorities continued to throw cold water on them.

Think on that statement for a moment. The responsible authorities were saying all is well, while those who participate in those markets are telling the media something different. When the “amateurs” are doing better than the super pro’s does that indicate that something is wrong in that profession?

One of the very few academics  who warned that this might happen was Bob Schiller (LINK) and that was in 2003. Hedge fund manager Michael J. Burry saw it coming and invested expecting a bubble burst (LINK, 2). 

The National Bureau of Economic Research says that the recession might not yet be over:

Most mainstream economists think the nation’s deep recession is over, but a special body that makes such a determination took a pass Monday, saying what many Americans intuitively feel, that the data remain inconclusive.

The National Bureau of Economic Research, a nonprofit group of economists, determines when recessions start and end as part of its work in calculating the peaks and troughs of the business cycle.

The bureau’s Business Cycle Dating Committee met last Friday and concluded that the jury is still out on the recession’s end, announcing that decision on its Web site Monday.

The committee reaffirmed that the recession began in December 2007, but its seven members couldn’t determine whether the recession has ended.

“The trough date would identify the end of contraction and the beginning of expansion. Although most indicators have turned up, the committee decided that the determination of the trough date on the basis of current data would be premature,” the committee said in a statement. “Many indicators are quite preliminary at this time and will be revised in coming months.”

One reason for a cautious view is the stubbornly high jobless rate.

Unemployment remains anchored in the ballpark of 9.7 percent. March employment numbers finally showed a solid gain of around 162,000 jobs, partly aided through government hiring to conduct the 2010 census.

Although economic expansion usually is marked by two consecutive quarters of growth, the committee wants to see more evidence of strong and consistent job growth as an indicator that businesses are hiring on the basis of a firming economy.


And in this state of regulatory uncertainty with ObamaCare, Cap & Tax, VAT Tax, status of bond holders, changes in capital gains tax rates, energy costs, expiring Bush tax cuts and the deficit can anyone be surprised that few want to create jobs here or invest in the United States? Several of the economists here at IUSB are saying that our economy has all the signs of what is called a “double dip recession”. To me this seems obvious. Economics is largely about incentives and confidence and that seems to be what most “mainstream” economists seem to continually miss.

Ed Morrissey at HotAir has some good comments HERE.

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