It's really nice to see conservative David Frum, who's been venturing left for more than a year, take another step in the right (left) direction!
Two years ago, Commerce estimated the decline of the US economy at -0.5% in the third quarter of 2008 and -3.8% in the fourth quarter. It now puts the damage at -3.7% and -8.9%: Great Depression territory.
Those estimates make intuitive sense as we assess the real-world effect of the crisis: the jobs lost, the homes foreclosed, the retirements shattered. When people tell me that I’ve changed my mind too much about too many things over the past four years, I can only point to the devastation wrought by this crisis and wonder: How closed must your thinking be if it isn’t affected by a disaster of such magnitude? And in fact, almost all of our thinking has been somehow affected: hence the drift of so many conservatives away from what used to be the mainstream market-oriented Washington Consensus toward Austrian economics and Ron Paul style hard-money libertarianism. The ground they and I used to occupy stands increasingly empty. ...Frum Forum h/t Paul Krugman
Hey, either you're pregnant or you're not. In the same way, something is either empty or not. No in-between. "Increasingly empty"! Elementary school teachers: sit down and shut up!
Language aside, that's a nice recantation on Frum's part! I mean no disrespect by saying to Frum that if he'd been closer to those affected by that <8.9%, he'd have realized what's really been happening that much sooner.
By the way, do you have to be Canadian like Frum to change your mind when confronted with facts? Is it possible American conservatives could ever learn this lesson.
Krugman also points to economist Joe Gagnon at the Peterson Institute who thinks Obama's plan to make refinanced mortgages more available may be a solid winner if, as Krugman points out, "if combined with a Fed program of buying mortgage-backed securities."
In addition, the availability of record-low mortgage rates for a fixed period of time likely would spur potential new home buyers into the market and boost home building and sales. Even more important, if the Federal Reserve supported the refinancing boom by purchasing $2 trillion of new MBS, for example, the existing MBS holders would have to find another market in which to invest $2 trillion. This avalanche of money would surely push up stock prices, push down bond yields, support real estate prices, and push up the value of foreign currencies. All of these financial developments would stimulate US economic activity. Based on a recent Fed study (Chung et al 2011) Fed purchases of this magnitude would increase US GDP by more than 2 percent after about two years, creating nearly 3 million additional jobs. ...Joseph Gagnon
Minus the 3 million jobs lost because Republicans will surely use their biggest guns to stop this economic recovery in its tracks. Republican interests are, of course, way more important than American interests.