A brief philosophical argument about the role of government, stimulus and recession

I was chatting with Marshall Auerback about some of my recent posts on Keynesianism and Austrian Economics — Marshall is a Keynesian — and he convinced me that my posts were somewhat misleading and that I had only presented half of the argument for stimulus. This led me to thinking about the role of government, stimulus and recession which I felt compelled to present here

Nouriel Roubini: Will massive stimulus ward off stag-deflation?

I am certainly of the view that a considerable worsening of the recession is baked in the cake for 2009. But will fiscal and monetary stimulus prevent worst case scenarios? I certainly hope so, as I have laid out in recent posts. But, don’t take my word for it. The RGE Monitor headed by Nouriel

What does Mises say about trying to stimulate the economy out of recession

Recently I wrote a post which claimed that Keynesian stimulus is what we need in the global economy right now. These ideas are considered heresy in Austrian School circles because trying to stimulate the economy out of recession only puts off the day of reckoning and often worsens that day of reckoning. This is exactly what we saw when Alan Greenspan lowered interest rates to 1% after the last recession.

So what exactly does Ludwig von Mises, the most revered Austrian School economist, say about this

Australia: 40% chance of recession? Try 95%

This is the absurd thinking of economists. Australia has a 40% chance of recession next year. What does that even mean? If you asked me, I would say the chances of recession in Australia are 100%. You have a slowing property market, financial sector turmoil, a falling currency, plunging commodity prices and a global credit

The Tribune files for bankruptcy

The Tribune was simply over-leveraged with a balance sheet made for this age of debt, leverage and bubbles. Note the lack of equity and the enormous debt load. Why would anyone, especially someone as savvy as Sam Zell load up a declining business with this much debt? Was it greed, hubris? It seems inexplicable to me

The U.S. has been in recession for one year

My very first post on this blog was in March and it was titled “The Economy Is Definitely In Recession.” Back then, this seemed like a stretch for a lot of people, but today the National Bureau of Economic Research (NBER), which makes the official recession call for the U.S., determined that the recession began in December

ISM Manufacturing Index: Deep recession territory

The Institute for Supply Management (ISM) released its monthly report on Manufacturing, the ISM Manufacturing Report on Business®. It showed a reading of 36.2 down from 38.9. Where 50 is the demarcation line between growth and recession, 36.2 says the manufacturing industry in the United States is deep into recession territory

Beware of deficit hawks

Recently, deficit hawks have been pushing a nefarious line of argument that I need to debunk right here and right now. The line goes as follows: we need to spend government monies now to get the economy back on its feet. In a couple of years, we can signal all clear and then raise taxes on the middle class in order to reduce the deficit again, much as we did in

The recession has been confirmed – semi-officially

Robert Hall, the head of the National Bureau of Economic Research (NBER), which is the official arbiter of recession in the United States, has said the evidence is now “conclusive” that the U.S. is in recession. For me, that’s pretty much all she wrote — the recession has been confirmed. I have held that we

ISM Manufacturing Index plummets

If you were not convinced about the severity of the present recession in the United States before, then the ISM Manufacturing index data for October will serve as a wake-up call. The index plunged to the deep recessionary level of 38.9 where 50 is seen as the level separating expansion from recession. Just two months

Breaking down the Q3 GDP numbers

So the numbers are in and the U.S. economy shrank 0.3% n the third quarter. That is a low number, but it is better than expected. The U.S. economy looks like it is in recession based on these numbers. However, before we go away thinking that’s the answer, let’s dig a little deeper. I have

US GDP shrinks 0.3% in Q3

I won’t be able to comment here until later today when I will update this post. But I wanted to report that U.S. GDP shrank 0.3% in Q3, less than the 0.5% median forecast. Now, when it comes to government statistics like GDP, the devil’s in the details. One detail is the inflation deflator, which