More on the Economy–Economics 101 (Not Levels, but Growth that Counts)

September 6, 2010 Leave a comment

From Paul Krugman.  This is not political, it is just simple economics.

If you want the economy to accelerate you must keep stimulus growing.  The economy must grow faster to raise absolute levels of employment, otherwise, unemployment stays the same or gets worse.

Delusion #1 is that we’re on the road to recovery, just more slowly than we’d like; to be fair, the White House keeps saying this.

But it’s not at all true. GDP is growing below potential; employment, even if you focus just on private employment, is growing more slowly than the working-age population. If you ask how long it will take us to return to, say, 5 percent unemployment on the current track, the answer is forever.

Delusion #2 is the belief that the stimulus may yet do the trick, because there are still substantial funds unspent. I tried to deal with this last year. The level of GDP depends not on total funds spent, but on the rate at which funds are being spent, which has already peaked; GDP growth on the rate of change in the rate at which funds are being spent, which peaked last year. It’s all downhill from here.

via Delusions Of Recovery – NYTimes.com.

Filed under Economy, National

Florida’s High-Speed Answer to a Foreclosure Mess – NYTimes.com

September 5, 2010 1 Comment

Do not fail to read this, an article about how the Florida legal system handles foreclosures, is dominated by lawyers and big financial interests, and fails to take into account the apparent victims of the system.

Florida’s High-Speed Answer to a Foreclosure Mess

via Florida’s High-Speed Answer to a Foreclosure Mess – NYTimes.com.

Filed under Economy, Florida, Housing

More Economic Aid (Stimulus): About Time

September 3, 2010 Leave a comment

Finally, the Administration has accepted that the initial stimulus package was not enough to bring employment back up.  This will benefit Florida and Coral Gables, especially, because the state’s unemployment rate is a good 20% higher than the national average.

Eager to jumpstart the economy ahead of crucial midterm elections, President Barack Obama said Friday he intends to unveil a new package of proposals, likely including tax cuts and targeted spending, to spark job growth.

Obama spoke in the Rose Garden after the August jobs report came out better than expected, showing the private sector adding 67,000 new jobs last month and revising upward the numbers from June and July. But unemployment ticked upward to 9.6 percent as more people entered the job market, and the president said it wasn’t good enough.

…

Obama’s package could include a number of provisions that have languished in Congress for much of the year, including infrastructure bonds for municipalities and extensions for a series of tax breaks for businesses and individuals that expired at the end of 2009. Democratic leaders are considering making one of the tax breaks permanent, for businesses that invest in research and development.via

The Associated Press: Obama planning new package of economic aid.

Filed under Economy, Florida

More on the Economy–Not Good for South Florida and Coral Gables

September 2, 2010 Leave a comment

The outgoing head of the Council of Economic Advisors, Christina Romer, has regrets.  South Florida cannot count on housing and housing values to defend family and city balance sheets.  Conclusion:  Coral Gables do not postpone the pain–it may just get worse.

The thing I do regret is that there is still so much unfinished business. I would give anything if unemployment really were down to 8 percent or lower. The American people are suffering terribly. Policymakers need to find the will to take the steps needed to finish the job and return the American economy to full health, and no one should be blocking essential actions for partisan reasons.

That the economy remains as troubled as it is despite aggressive action reflects the fact that this has not been a normal recession. Just as the downturn was uncharted territory, so is its recovery. Because the recession began with interest rates at low levels, we can’t just have interest rates fall and housing, investment, and other interest-sensitive sectors come roaring back as they typically do in recoveries. Rather, because of overbuilding in housing and commercial real estate during the bubble, construction is likely to remain subdued for some time.

Filed under Economy

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