You're off by about a year actually. Things caught on in the popular media at that time, but back in 2007 things were looking really rocky already in the finance sector. We can turn, once again, to John Taylor (pdf). That paper was frist written in Feb '08, and figure 1 shows a sudden detioration in the LIBOR, effective Fed Funds, and Target Fed Funds rate in August 2007. Looking at figure 2 you see the LIBOR OIS spread showing the same problems starting in about August of 2007. These were the first warning signs of problems.

I was moving a little fast, just trying to give Boyd a link.

Actually my reference says the same thing, August. I just spit in the date of the article.

The important thing, big picture wise, is that the timeline is not sync'd to Obama's Presidency. You agree that is easy to find in the historical record.

So, why do people persist in believing that it is? Or that it is sync'd to the change to a Democratic congress? The data is there. It's easy to see.

There is a name for the condition when you don't trust your eyes or your ears, and when you prefer the visions in your head. It's called madness.

Spencer, consensus forecasts are never right.

You got anything to back that up other than your pathological dislike of economists? Combinging forecasts tend to actually do better than individual forecasts. Now that being said, I'm curious on what you base that statement other than nothing.

LOL. There was a link there, dude.

This is misguided. The issue of inheritance is not just the debt but a debt plus a crumbling economy. And the bush mistake was not in running a 40 percent debt but in doing so during relatively good economic times when he should have been continuing and maybe expanding the Clinton surpluses. Consequently Obama is not doubling down on Bush's failed policy, he's taking the inappropriately used Bush policy and applying it when it should be applied, but he has to go twice as far into the hole because of the idiocy of the Bush whitehouse.

Problem is that in the out years when we are running deficits just as large as will be run in the next few years you aren't dealing with a crumbling economy anymore. So this just doesn't fly. At all.

And Obama owns a significant chunk of this debt. He voted for it as a Senator and he pushed the stimulus, and he pushed the massive budget. He can't just run away from it and say, "Its Bush's fault!"

I think Tlaloc framed it as could-have-been counter-cyclical spending.

The recession wont last 10 years unless Obama and crew f*ck it up enough to make it last 10 years.

I think you need to go look at a time-line. The debt crisis really hit the rocks when the overnight credit markets seized. That was in September, 2008

You're off by about a year actually. Things caught on in the popular media at that time, but back in 2007 things were looking really rocky already in the finance sector. We can turn, once again, to John Taylor (pdf). That paper was frist written in Feb '08, and figure 1 shows a sudden detioration in the LIBOR, effective Fed Funds, and Target Fed Funds rate in August 2007. Looking at figure 2 you see the LIBOR OIS spread showing the same problems starting in about August of 2007. These were the first warning signs of problems.

Sure he does, but he's been in office for all of FOUR months. You don't seriously believe the enormous inertia of the US economy turns on a dime, right?

Wasn't that part of the argument for the stimulus and huge budget this year? That it will turn things around sooner rather than later? Yet, we are below the Administrations unemployment targets, other economic indicators aren't much better.

The average recession lasts 13 months. The great depression lasted something like 14 years.

No. Since WWII the average recession is 10 months. For all recessions the NBER has dated have an average length of 17 months. However, post-WWII and pre-WWII have radically different economic policies in place so you have some issues comparing the two.

During the 1930's there were two recessions, one from August 1929 to March 1933 and then another from May 1937 to June 1938. So no 14 year recession and no 14 year Depression if you consider a depression worse than a recession. However, during much of the 1930's economic growth was significantly below potential. Some like Ohanian et. al. and Luca and Rapping have argued that the economy should have returned to full potential or near to it by 1936, IIRC. Their explanation were the wrong-headed policies of FDR (and you can also look at James Hamilton on this as well).

At the time of the 1981-82 recession the cry was that the deficits would "crowd out" private investment. The critics failed to look at the US as closed economy and failed to anticipate that Japanese investment would prevent "crowding out".

What? Didn't you mean that they failed to consider the economy as an open one where Japanese investment could prevent the crowding out?

If the Reagan deficit were appropriate for a large recession, why are the Obama deficits inappropriate for a similar recession?

Did Reagan's deficits drive the national debt up by 2x, or was it projected too?

Spencer, consensus forecasts are never right.

You got anything to back that up other than your pathological dislike of economists? Combinging forecasts tend to actually do better than individual forecasts. Now that being said, I'm curious on what you base that statement other than nothing.

Now we have wide spread anticipation that the domestic personal savings rate will rebound from the near zero bottom of a few years ago back to levels reached in the late 1970s, early 1980s. If this happens the supply of savings will expand much more than the federal deficits, so the supply to finance the deficit will be readily available and this actually implies that US dependence on foreign capital will fall sharply.

Someone tell me what is wrong with this scenario?

If the Reagan deficit were appropriate for a large recession, why are the Obama deficits inappropriate for a similar recession?

It's a good thing you're a touch-typist, since you undoubtedly can't see the keyboard or monitor with your nose buried so far up Obama's ass. I suppose it's a also good thing for you that his shit don't stink, either.

That's pretty hilarious given that I was almost banned from Balloon juice for pointing out how they were in the Obama Kool-aide. I'm not a great fan of Obama. I didn't vote for him (nor McCain, although I would have considered it if he hadn't run so hard to the right).

That said I'm not going to blame Obama for the things that aren't his fault. I'll have plenty of things to blame him for (I already have his FISA vote, his tepid walkback of torture, and so on).

Sorry Tlaloc but I don't entirely buy that either. At some point Obama gets to own his own debt

Sure he does, but he's been in office for all of FOUR months. You don't seriously believe the enormous inertia of the US economy turns on a dime, right?

The average recession lasts 13 months. The great depression lasted something like 14 years. Some economic indicators are closer to the depression than a recession (and some aren't). Expecting him to have the thing not only wrapped up in 120 days but also for him to be on to debt/deficit reduction seems a wee bit unrealistic.

Obama was part of congress while they were spending all that cash-congress is in charge of appropriations, where was obama? He was part of the problem-he was one of 50, but he was still part of the problem.

To be fair Obama wasn't in congress very long at all. He was a senator for about a year before the campaigning for president started up (and yes I am very sympathetic to arguments that he'd have been better served with more time at the federal level before running for president, but that ship's not only sailed it's docked and disembarked passengers on the other side).

So, Bush's policies were idiocy (not inherently so, but due to timing), but the economy has changed so much since he left office in January that Obama has to push those same policies twice as hard. And that's merely expressing economic wisdom on Obama's part.

I think you need to go look at a time-line. The debt crisis really hit the rocks when the overnight credit markets seized. That was in September, 2008

...but he has to go twice as far into the hole because of the idiocy of the Bush whitehouse.

So, Bush's policies were idiocy (not inherently so, but due to timing), but the economy has changed so much since he left office in January that Obama has to push those same policies twice as hard. And that's merely expressing economic wisdom on Obama's part.

It's a good thing you're a touch-typist, since you undoubtedly can't see the keyboard or monitor with your nose buried so far up Obama's ass. I suppose it's a also good thing for you that his shit don't stink, either.

Brazen Tunneling and Inflation

Is there a political dysfunction here? Do conservatives face a mental block about criticizing "business" and so make it "Obama's" debt and so miss the story?

You have to be kind of simple to interpret that as "Well I have to spend a trillion dollars because Bush made me."

It was Lehman and AIG and Wall Street that made him go beyond common Democratic responses like increased unemployment benefits and retraining. If anything the common thread is that Obama and Bush/Paulson accepted the Wall Street argument.

The money in fact did not go to the typical Democratic targets.

I am already pretty sick of Obama's "Well I have to spend a trillion dollars because Bush made me" excuse.

Obama was part of congress while they were spending all that cash-congress is in charge of appropriations, where was obama? He was part of the problem-he was one of 50, but he was still part of the problem.

“We inherited this mess.” The debt was 41 per cent of GDP at the end of 1988, President Ronald Reagan’s last year in office, the same as at the end of 2008, President George W. Bush’s last year in office. If one thinks policies from Reagan to Bush were mistakes does it make any sense to double down on those mistakes, as with the 80 per cent debt-to-GDP level projected when Mr Obama leaves office?

This is misguided. The issue of inheritance is not just the debt but a debt plus a crumbling economy. And the bush mistake was not in running a 40 percent debt but in doing so during relatively good economic times when he should have been continuing and maybe expanding the Clinton surpluses. Consequently Obama is not doubling down on Bush's failed policy, he's taking the inappropriately used Bush policy and applying it when it should be applied, but he has to go twice as far into the hole because of the idiocy of the Bush whitehouse.