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PeakTrader said...

This is an example of "spurious correlation."

The "unemployment rate" is not determined by "federal spending as a percent of GDP" or vice versa.

The "unemployment rate" or "federal spending as a percent of GDP" are determined by GDP growth.

However, the U.S. government overspends, in part, because of income redistribution, including redistributing income from the future to the present.

We wouldn't allow an international government to redistribute income from the U.S. to a poor country.

Yet, we allow the federal government to redistribute income from a rich state to a poor state.

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rjs said...

chrissake...the govt spending is up because of the unemployment, not vise-versa...

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PeakTrader said...

rjs says: "...the govt spending is up because of the unemployment, not vise-versa..."

That's true to an extent. However, it doesn't fully explain the increase.

A large tax cut is more effective in stimulating growth, which worked under Kennedy in '61, Reagan in '81, and Bush in '01.

Normally, "federal spending as a percent of GDP" rises when GDP growth slows or contracts, because private sector growth slows or shrinks, while government sector growth remains stable or continues to grow through deficit spending.

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http://www.blogger.com/comment.g?blogID=28997633&postID=6439062350192205537

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Che is dead said...

"Sure, but home buyers ... don't have to put 20% down, they can put 3-5% down with FHA, 0% down with VA." -- Dr. Perry

Isn't that, in part, how we got into this mess?

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PeakTrader said...

Che says: "Isn't that, in part, how we got into this mess?"

Do you want rain in a flood or a drought?

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After the 2006 peak, will it finally bottom next year?:

Nearly 29% of mortgaged homes underwater, report finds
Nov 7, 2011

A whopping 28.6 percent of homeowners with mortgages owe more on their loans than their homes could sell for, according to quarterly data released by Zillow, a real estate website.

That's up from 26.8 percent in the second quarter.

Home values declined only 0.2 percent from the second quarter but were down 4.4 percent year over year.

In several cities, more than half of all homes with mortgages are underwater, including Phoenix (66.2 percent), Atlanta (58.7 percent), Riverside, Calif. (51.4 percent), Tampa (56.5 percent) and Sacramento (50.9 percent).

Other big metro areas with a high percentage of underwater homes include Miami-Fort Lauderdale (46.7 percent), Chicago (46.2 pecent), Cleveland (41.5 percent) and Denver (38.5 percent).

Zillow chief economist Stan Humphries (says) "We're in uncharted waters."

Homes with underwater status are often considered risks for future foreclosure.

Humphries estimates that home values will bottom out in 2012 at the earliest and said the foreclosure market will remain "robust" for the next two to four years.

http://www.blogger.com/comment.g?blogID=28997633&postID=8858664512473005945