Friday, February 27, 2009


Intrade is now predicting 10% unemployment by year-end...

Actually, those intrade contracts at unemployment above 8% at .75 look pretty attractive...

A month back I was bitching about how pathetically inadequate the stimulus was. Now it really appears to have been too small... The only positive statistical release I can think of is the Janauary CPI.

My thoughts on the budget balancing thing: Tax increases next year? Let's take care of the recession first guys... We don't know there's going to be a recovery by next year. The Obama team is acting like their miniscule stimulus package and doing nothing on banks is going to deliver us from evil.

I'm not saying we've got Armageddon on our hands, but it does seem a bit optimistic to just think that things will turn around on their own. And it still seems to me that all economists, but especially the President's economists, are way too optimistic.

Here's the NYT: "The country’s gross domestic product fell at an annualized rate 6.2 percent in the last quarter of 2008, the steepest decline since the 1982 recession. Economists are expecting a similar drop in the first quarter of 2009." Um, I'm no forecaster, but job-loss rates were higher in the first six weeks of 2009 than for Q4 2008, so why should we not expect worse GDP numbers too? And not just job-loss rates, housing prices, the stock market, and consumer confidence have all gone south since Q4 as well...

Here's the money quote:
The budget projected economic conditions that critics had called overly optimistic, including an estimate that G.D.P. would shrink 1.2 percent in 2009.
The administration thinks GDP will shrink only 1.2% in 2009! That's preposterous... It's just as likely that GDP will shrink by 11.2%... I'm not saying that's the most likely, but you've gotta believe if we have -8% for Q1, -6% on the year is entirely plausible, if not optimistic...


  1. California is already over 10%


    Bad times to say the least.

  2. Hi Prof. Veblen,

    I saw the news from a few other sites as well.

    It may get worse, before it gets better. Companies from the old mould, are still hunkering down.

    They may never recover. Reason being, the stimulus, was not geared towards them primarily and, the bulk of this stimulus, would not hit the main economy until 2010-2011.

    With that, demand in the other countries are still soft. The stimulus has not addressed the global aspect of the US economy, at all.

    They will have to do another special global based stimulus, with diplomatic effort to boot, before the end of 2009.

    But, with Pres. Obama not a keen supporter of trade, we can only hope he changes his mind and attitude towards the world--I don't think he has a keen enough appreciation for his position are the WORLD leader.

    Much rides on his shoulders, not just middle America.