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mindmetoo
Joined: 02 Feb 2004
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 Posted: Thu Aug 28, 2008 5:40 am Post subject: Has the sub prime crisis run its course? |
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http://news.yahoo.com/s/nm/20080828/bs_nm/usa_economy_dc_3
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WASHINGTON (Reuters) - The U.S. economy grew at a solid 3.3 percent annual rate in the second quarter, much stronger than first thought, but many economists expect growth to flag as the year progresses.
The U.S. Commerce Department on Thursday said consumer spending and net exports were more robust that initially estimated and that inventories fell less sharply. A month ago, it had said U.S. Gross Domestic Product had expanded at a 1.9 percent rate in the quarter. |
Despite dire predictions by some here that sub prime was going to bring the banking system crashing down and usher in a new ice age or something, the USA economy grew. Not bad. As I've predicted and continue to predict, sub prime is the S&L crisis of this day. Sucks, people lost a lot of money, but the free wheeling US economy is big enough to take the hit, it adjusts based on market signals, and things march right along. |
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mises
Joined: 05 Nov 2007
Location: retired
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mindmetoo
Joined: 02 Feb 2004
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| Posted: Thu Aug 28, 2008 9:44 am Post subject: |
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Why should I believe a single blogger over consensus economic data? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Aug 28, 2008 9:52 am Post subject: |
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It isn't at all "consensus". It is a political figure.
The methodology used to calculate GDP is ridiculous. In addition, the CPI is dramatically, hugely and shockingly underestimated. A better estimate is around 10%, which would place GDP growth (even using bizarre GDP methodology) somewhere between -2 to -3 pc.
http://www.shadowstats.com/alternate_data |
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mindmetoo
Joined: 02 Feb 2004
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| Posted: Thu Aug 28, 2008 12:04 pm Post subject: |
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| mises wrote: |
It isn't at all "consensus". It is a political figure.
The methodology used to calculate GDP is ridiculous. In addition, the CPI is dramatically, hugely and shockingly underestimated. A better estimate is around 10%, which would place GDP growth (even using bizarre GDP methodology) somewhere between -2 to -3 pc.
http://www.shadowstats.com/alternate_data |
Is there anyway you could supply me with academic sources for your claims? |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Aug 28, 2008 1:20 pm Post subject: |
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| mindmetoo wrote: |
| mises wrote: |
It isn't at all "consensus". It is a political figure.
The methodology used to calculate GDP is ridiculous. In addition, the CPI is dramatically, hugely and shockingly underestimated. A better estimate is around 10%, which would place GDP growth (even using bizarre GDP methodology) somewhere between -2 to -3 pc.
http://www.shadowstats.com/alternate_data |
Is there anyway you could supply me with academic sources for your claims? |
You're unaware of the politicization of economic data? Geeze dude, take econ 101. I'm not going to rummage through my old academic material for a dude on the interweb. Consider it a victory for you.
But yes, house prices dropped hugely q1,2, unemployment is going up, we're being warned of another major bank failure, Buffet, Greenspan, Summers, Robuini, Wolf and the rest figure we're about half done the credit crises (which they all regard as the worst in the post-war period) but GDP magically goes up 3%. 500b has been written down, with another 700-1,000 to go. Fortunately, the financial economy only has points of contact with the real economy (strong points, to be sure) and the real economy is fundamentally strong. But the sub-prime mess (we're past the term "sub-prime" btw, it is now called a credit crunch as the SP was only the first to fall) is not done. No. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Thu Aug 28, 2008 1:38 pm Post subject: |
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| the politicization of economic data |
Only the data? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Aug 28, 2008 1:43 pm Post subject: |
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| No. Everything government touches is political. That is the nature of the beast. This can be good or bad. In regards to economic data, there is a belief among some economists that the 'real economy' is of less concern than the perception of the real economy. If you build it, they will consume. I do not share this view but I am not an economist employed by the government or MSNBC. MM2 and I are going to have to agree to disagree. I'll keep this thread in mind when banks fail, billion$ write downs happen and the rest. |
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mindmetoo
Joined: 02 Feb 2004
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| Posted: Thu Aug 28, 2008 2:02 pm Post subject: |
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| mises wrote: |
| I'm not going to rummage through my old academic material for a dude on the interweb. Consider it a victory for you. |
Okay. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Thu Aug 28, 2008 4:04 pm Post subject: |
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| Quote: |
| No. Everything government touches is political. |
My point is that economics itself is political. Not just the data or what the government touches. |
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Join Me
Joined: 14 Jan 2008
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| Posted: Thu Aug 28, 2008 5:05 pm Post subject: |
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How can it be over? The major mortgage lenders "Fannie" and "Freddie Mae" are still in such bad shape they may require a government bail out. It is now extremely difficult to borrow money for just about anything. For those wanting to start a business or possibly buy new equipment for an existing one I wish them luck. Hell, those who lost there homes won't be able to get a "Best Buy" card for years as the result of their credit problems.
3.3% growth in one quarter? So people bought a lot more ice cream and gas because it was summer. Hardly and economic recovery. Talk to the average American and ask them if the economy is improving. |
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mises
Joined: 05 Nov 2007
Location: retired
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OneWayTraffic
Joined: 14 Mar 2005
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| Posted: Sat Aug 30, 2008 7:08 am Post subject: |
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Well most of the big name people on CNBC don't think that it's over.
Warren Buffet for example is expecting some more banking failures and says that in his view the fed was correct in rushing in to Bear Stearns because it could lead to other failures.
"When there's been a bubble and the banks have participated big time then there will be bank failures."
On the other hand, he's not exactly predicting doom and gloom, just a few tough years and a good future.
He thinks that it's a very bad time to be holding Fannie and Freddie stock. Sold out all his (he used to be the biggest stockholder) several years ago.
This isn't exactly the video I watched, but it's another from the same interview.
http://www.cnbc.com/id/15840232?video=828992865&play=1 |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sat Aug 30, 2008 7:24 am Post subject: |
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| It isn't over. The suggestion is laughable. Fanny and Freddie are a mess, Merrel lost 25% of historic profits and is still going, Citi will likely fail (or BoA) and Lehman is in trouble too. No matter how much Bernake pumps into the system total aggregate money supply is decreasing, in one of the most bizarre economic outcomes ever (capital destruction is the cause). House values continue to plummet. And yet GDP rose. Nonsense. Read the Naked Capitalism post I provided above. |
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