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Politics or Economics?

Economics fails when too many economists too often use economics as politics.

One of the worst cases of economics turned into politics was the Bush years of the 2000s.

Bush inherited the worst stock market crash since the Great Depression, a recession, and 9/11. However, the Bush Administration turned the recession into one of the mildest in history, after the record 10-year economic expansion.

Over a five-year period in the mid-2000s, U.S. corporations had a record 20 consecutive quarters of double-digit earnings growth, two million houses a year were built, 16 million autos per year were sold, U.S. real GDP expanded an average of 3%, in spite of 6% annual current account deficits (which subtract from GDP).

The U.S. economy was most efficient, while Americans became stocked-up with real assets and goods, and capital was built-up. It was one of the greatest periods of U.S. prosperity, and in a structural bear market that began in 2000.

The Bush Administration was adept minimizing the recession in 2008, until Lehman failed in Sep '08, which caused the economy to fall off a cliff. However, subsequent appropriate policy adjustments were implemented quickly.

Yet, the vast majority of people believe the Bush economy was almost a complete failure, because of unrelenting politics instead of economics.

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bobble said...
you mean "the lost decade"
http://www.economist.com/blogs/freeexchange/2010/03/american_economy

-worst job creation record on record (negative)

-lowest 10 year average gdp growth rate since the 30's

- false "prosperity" was financed in large part by mortgage equity withdrawal

- useless war in iraq. how's the search for those WMD's going?

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PeakTrader said...
Bobble, if U.S. real GDP can expand without job growth, that means the U.S. economy became much more efficient. However, GDP only reflects the production side. The consumption side should also be included.

When you can buy $200 worth of goods for $100, you're going to spend, including going into debt, if you can.

I don't know where are Iraq's WMDs. You may want to ask one of the following people:

"We know that he has stored secret supplies of biological and chemical weapons throughout his country." -- Al Gore, Sept. 23, 2002

"We have known for many years that Saddam Hussein is seeking and developing weapons of mass destruction." -- Sen. Ted Kennedy (D, MA), Sept. 27, 2002

"There is unmistakable evidence that Saddam Hussein is working aggressively to develop nuclear weapons and will likely have nuclear weapons within the next five years ... -- Sen. Jay Rockefeller (D, WV), Oct 10, 2002

"In the four years since the inspectors left, intelligence reports show that Saddam Hussein has worked to rebuild his chemical and biological weapons stock, his missile delivery capability, and his nuclear program. He has also given aid, comfort, and sanctuary to terrorists, including al Qaeda members ... It is clear, however, that if left unchecked, Saddam Hussein will continue to increase his capacity to wage biological and chemical warfare, and will keep trying to develop nuclear weapons." -- Sen. Hillary Clinton (D, NY), Oct 10, 2002

"Without question, we need to disarm Saddam Hussein. He is a brutal, murderous dictator, leading an oppressive regime ... He presents a particularly grievous threat because he is so consistently prone to miscalculation ... And now he is miscalculating America's response to his continued deceit and his consistent grasp for weapons of mass destruction ... So the threat of Saddam Hussein with weapons of mass destruction is real..." -- Sen. John F. Kerry (D, MA), Jan. 23. 2003

Now, you know Hillary is no dummy, and Al Gore is a "smarty pants."

According to your "lost decade" charts, the U.S. added trillions of dollars to its economy in the 2000s (through exponential growth on both the production and consumption sides) without creating any jobs. That's a remarkable efficiency ratio.

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bobble said...
Bush's sorry fiasco in iraq is his own fault, and he has only himself to blame for a TRILLION dollars and many fine american soldiers turned to dust in the desert.

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PeakTrader said...
Bobble, how do you know the world would be better off without the Iraq invasion? I stated before:

al-Qaida's 9/11 attack was more diabolical than most people realize. al-Qaida not only turned our own people and technology into missles against symbols of American power, it also attempted to provoke a war between the largest oil consumer and the largest oil producer by using Saudi hijackers.

So, the invasion of Iraq, to free-up cheap oil, was no less important than the invasion of Afghanistan.

A lot of money will continue to be spent on police, security at firms and households, the military, etc. I know you won't get rid of your keys and other security systems.

Do we want a madman and his two sons, sitting on trillions of dollars of oil, who used chemical weapons before, started wars in Iran and Kuwait, killed more Middle East people than anyone in history, and created an enviornmental disaster burning oil fields, while thumbing his nose at the UN and the civilized world for over a decade to continue his regime.

Or want fanatics willing to kill as many innocent people as possible, including through weapons of mass destruction, so they can go to heaven. Or a nuclear arms race in the Middle East, etc. How many 9/11s should there be?

Oil is a cheap form of energy. It's unfortunate the world has been prevented from buying oil and peaceful people have been prevented from selling oil by a bunch of criminals and fanatics. So, we have to rely on expensive alternative energy.

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Anonymous said...

On 14 October 2009, the Associated Press reported that Iraq’s government had finally released their figures for the death toll. A report by the Human Rights Ministry said that from the beginning of 2004 to 31 October 2008, a period of 58 months, 85,694 Iraqis were killed – a rate of 1,477.5 deaths per month. No Americans, insurgents or foreigners are included in the figure.

The Iraqi defence, interior and health ministries estimate that from 1 November 2008 to 31 August 2009, there were just 3,045 Iraqi casualties – a rate of just 304.5 deaths per month. (For comparison, the murder rate in peacetime South Africa currently stands at 1,512.3 deaths per month, higher than even wartime Iraq.)

Taken together, this means that 88,739 Iraqis were killed over the past 68 months – a rate of 1,305 deaths per month. Bear in mind that these deaths were overwhelmingly caused by terrorist attacks while the ‘evil US occupation soldiers’ were giving their own lives to protect Iraqi civilians.

Compare this to Saddam Hussein’s reign. From July 16, 1979 to April 9, 2003 and focusing on just six war crime events listed by US War Crimes Ambassador David J. Scheffer, there were an estimated 865,000 Iraqi deaths over 285 months – a rate of 3,035.1 deaths per month.

And compare to the Bill Clinton-era embargo that followed: From Aug 6, 1990 to Aug 6, 1999 the United Nations estimated one million Iraqi civilians died over 108 months as a result of the sanctions – a rate of 9,259.3 deaths per month.

Thus, Saddam Hussein’s death rate was 2.33 times greater than Bush’s. Clinton’s death rate was 7.1 times greater than Bush’s. So if Bush’s invasion had not ended both Saddam’s rule and the embargo, we can estimate that from the period of 1 January 2004 to 31 August 2009, a total of 206,387 + 629,632 = 836,019 Iraqis would have died.

Taken against the actual figure of just 88,739 deaths during that period, we can determine that 747,280 fewer Iraqi lives have been lost due to ‘Bush’s war of aggression’.