http://www.cbo.gov/ftpdocs/99xx/doc9958/01-08-Outlook_Testimony.pdf

Gallows humor?


Testimony
Statement of
Robert A. Sunshine
Acting Director

http://www.cbo.gov/ftpdocs/99xx/doc9958/01-08-Outlook_Testimony.pdf


Asking someone to comment on the COB ten year outlook is like asking someone to comment on the telephone book... what did you have in mind?

If you are asking whether the COB tends to be accurate, it will represent the government consensus for the next year or two (on the more 'realistic' side) and after that it will insane conjecture.

http://www.cbo.gov/ftpdocs/99xx/doc9958/01-08-Outlook_Testimony.pdf


Asking someone to comment on the COB ten year outlook is like asking someone to comment on the telephone book... what did you have in mind?

If you are asking whether the COB tends to be accurate, it will represent the government consensus for the next year or two (on the more 'realistic' side) and after that it will insane conjecture.




Part of being a far less incisive thinker than you is being far more dismissive so quite the opposite -

Is this not implying by its 1 year forcast that doing nothing is a, umm..., 'work-able' alternative?

http://www.cbo.gov/ftpdocs/99xx/doc9958/01-08-Outlook_Testimony.pdf


Asking someone to comment on the COB ten year outlook is like asking someone to comment on the telephone book... what did you have in mind?

If you are asking whether the COB tends to be accurate, it will represent the government consensus for the next year or two (on the more 'realistic' side) and after that it will insane conjecture.




Part of being a far less incisive thinker than you is being far more dismissive so quite the opposite -

Is this not implying by its 1 year forcast that doing nothing is a, umm..., 'work-able' alternative?


No, it does not assume that doing nothing is a "workable alternative". I didn't look in detail at their assumptions but they forecast a series of data points that suggest not only stimulus but that the stimulus "works". Specifically, they forecast 8.2% unemployment for this year (the U3) and a $1 trillion "shortfall" in the GDP. It is virtually impossible to achieve either one of those without stopping the dominoes just about now. Two to three more months of layoffs at the current rate get the U3 past 8.2% and exceed the "shortfall" by half. Not only that but "recovery" in 2010 assumes not just stimulus but a significant TARP follow on and a significant continuation of the Fed's cash outflow.

The "recovery" after that is very optimistic in that it considers neither the structural weakness underlying this depression nor the measures that they will take to suck the money supply back in (beginning too early, if experience is a guide).

The stimulus discussion at the end is very political... much more so than is usual for the CBO. More importantly, there is some serious misery between the lines even if the optimistic estimates here prove true. A 9% U3 in 2010 is a fuckin' disaster...

It tells you what Obama's team is willing to "accept".

Here's a visual aid:

http://maker.geocommons.com/maps/2788?page=

First thing that jumped out was that a number of NA rez's with the highest unemployment get no stimulus money at all. Imagine that.

http://www.cbo.gov/ftpdocs/99xx/doc9958/01-08-Outlook_Testimony.pdf


Asking someone to comment on the COB ten year outlook is like asking someone to comment on the telephone book... what did you have in mind?

If you are asking whether the COB tends to be accurate, it will represent the government consensus for the next year or two (on the more 'realistic' side) and after that it will insane conjecture.




Part of being a far less incisive thinker than you is being far more dismissive so quite the opposite -

Is this not implying by its 1 year forcast that doing nothing is a, umm..., 'work-able' alternative?


No, it does not assume that doing nothing is a "workable alternative". I didn't look in detail at their assumptions but they forecast a series of data points that suggest not only stimulus but that the stimulus "works". Specifically, they forecast 8.2% unemployment for this year (the U3) and a $1 trillion "shortfall" in the GDP. It is virtually impossible to achieve either one of those without stopping the dominoes just about now. Two to three more months of layoffs at the current rate get the U3 past 8.2% and exceed the "shortfall" by half. Not only that but "recovery" in 2010 assumes not just stimulus but a significant TARP follow on and a significant continuation of the Fed's cash outflow.

The "recovery" after that is very optimistic in that it considers neither the structural weakness underlying this depression nor the measures that they will take to suck the money supply back in (beginning too early, if experience is a guide).

The stimulus discussion at the end is very political... much more so than is usual for the CBO. More importantly, there is some serious misery between the lines even if the optimistic estimates here prove true. A 9% U3 in 2010 is a fuckin' disaster...

It tells you what Obama's team is willing to "accept".


I should elaborate a little more on what I wrote above. Apart from what the CBO assumes, it is perfectly possible for the pace of this depression to slow or "stabilize" in 2009. It is probably as likely as another major step downward. The reasons why are obvious. The trigger was a banking collapse, no major banks have gone under for a few months, a series of fairly huge banking bailouts occurred in no less than 40 countries, the money supply continues to grow radically and it is likely that some of the credit freeze will thaw and the immediate impact of the financial collapse may pass. Over the next year, Bush's crappy stimulus and Obama's almost as crappy stimulus will have some impact. It could slow the unraveling.

The "real" problem comes later: Nine or ten percent official unemployment with twice that in actual unemployment, an indefinite slowdown in "emerging markets", the end to the growth of consumer debt and drawdown of inflated "home equity" to artificially inflate aggregate demand, increasing political pressure to suck the money supply back in and forestall the "dreaded inflation", and a much smaller political appetite for "huge stimulus" for next year after victory is already declared - this is how they back into it for round two. In the meantime, Obama becomes a shorterm hero, the prosperous breathe a sigh of relief, and tens of millions without a job wonder what the fuck everyone is talking about.

Of course, that's all moot if the slide continues...

You can bet on professional wrestling. I know, I witnessed it happen in East LA many years ago. But it's different than poker or blackjack. It's all predetermined.

There is nothing left of the economy. Brought low by $1.3 trillion in subprime derivatives gone wrong, there's the black hole approaching of $60 trillion in credit derivatives. We are toast.

However, it's important to be aware of the assumptions and work product of those with an interest in perpetuating the myth that there is a point in planning. In fact, it's important to know these assumptions in order to generate porposals that either take offer interim relief, e.g., keeping people in their homes, while the whole thing vanishes.

So, that's my comment, Mr. Newbie here.

I'm wrong about what I wrote here, Rusty. I looked closely at their assumptions and they don't factor in the "Obama Stimulus". Of course, the Obama Stimulus will be nearly negligible but CBO is still smokin' something. Take a close look at their September 2008 versus January 2009 projections. They revised downward by the size of a large European economy....