tag:blogger.com,1999:blog-2249851329008146395.post708236882765551423..comments2023-10-30T09:11:12.922-07:00Comments on Clouded Outlook: Why fiscal stimulus packages don't workAlice Cookhttp://www.blogger.com/profile/05753570123987780947noreply@blogger.comBlogger17125tag:blogger.com,1999:blog-2249851329008146395.post-83068510928182239602009-06-26T10:13:58.462-07:002009-06-26T10:13:58.462-07:00Anything similar for blighty?Anything similar for blighty?Alan in HKnoreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-35592209605431927722009-06-26T10:13:58.461-07:002009-06-26T10:13:58.461-07:00Anything similar for blighty?Anything similar for blighty?Alan in HKnoreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-29663106327567057372009-06-26T10:15:05.497-07:002009-06-26T10:15:05.497-07:00I am generally a fan of your blog - but this time ...I am generally a fan of your blog - but this time I think you have it wrong. I can't believe that Joe public has the slightest notion of tax rises to come. Apart form anything the budget may get fixed by spending cuts rather than tax rises.<br><br>I have written in detail about why people are saving more <a href="http://mickanomics.blogspot.com/2009/03/exactly-why-does-bursting-of-asset.html" rel="nofollow">here</a>.Mickanomicshttp://www.blogger.com/profile/15474474764908992770noreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-33206623109313973682009-06-26T10:24:09.549-07:002009-06-26T10:24:09.549-07:00Mick,I think households respond to incentives and ...Mick,<br><br>I think households respond to incentives and signals. Right now, fiscal policy in the UK and US is screaming out huge tax hikes in the future. <br><br>Everyone knows it. Ask your gran or a taxi driver. They will put you right.<br><br>Thanks for the kind words and I regularly read your blog. <br><br>aliceAlice Cookhttp://www.blogger.com/profile/05753570123987780947noreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-75444952564276177582009-06-26T10:30:37.910-07:002009-06-26T10:30:37.910-07:00Ok, deal... I shall do a survey and get back to yo...Ok, deal... I shall do a survey and get back to you :-)Mickanomicshttp://www.blogger.com/profile/15474474764908992770noreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-6390025536539204632009-06-26T10:37:34.761-07:002009-06-26T10:37:34.761-07:00Mick,I am always surprised about how people proces...Mick,<br><br>I am always surprised about how people process economic information. My starting position is that people are not stupid. To coin an old cliche, no one walks past a five quid note on the street.<br><br>However, governments often distort incentives and this is why we often see people behaving oddly.<br><br>Trust me, ordinary people are picking up that public finances are in a total mess.<br><br>AliceAlice Cookhttp://www.blogger.com/profile/05753570123987780947noreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-43150764070269919002009-06-26T11:05:04.446-07:002009-06-26T11:05:04.446-07:001.Alice wrote "Instead of spending, they have...1.<br><br>Alice wrote "Instead of spending, they have decided to spend. " That surely should be "save."?<br><br>2.<br><br>Mick The laffer curve and international competition says state spending has to be cut as we are peaking on the Laffer curve.AntiCitizenOnehttp://www.blogger.com/profile/00017073518049848696noreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-55081323461048808372009-06-26T11:21:20.195-07:002009-06-26T11:21:20.195-07:00anti citizen oneThanks for picking that error up.A...anti citizen one<br><br>Thanks for picking that error up.<br><br>AliceAlice Cookhttp://www.blogger.com/profile/05753570123987780947noreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-40184481817964709862009-06-26T12:28:29.722-07:002009-06-26T12:28:29.722-07:00"Consumers instinctively know that a deficit ..."Consumers instinctively know that a deficit must be paid back and that fiscal stimulus packages never work."<br><br><br>More nonsense. People aren't saving because they are worried about taxes. They are saving because 1) there is a recession going on and they are afraid of losing their jobs, and 2) $14T of their net worth evaporated between 2007Q2 and 2009Q1 and they are afraid they will never be able to retire.<br><br><br>Beyond that, the idea that all these savers have deciphered the budget and worked future taxes into their planning is just silly. If people were good at planning for the future we wouldn't be in this mess in the first place. They also would have noticed years ago that federal debt was going up and started saving. There's no evidence of that.<br><br><br>As usual, your graph fails to provide proper context. The US savings rate has been far, far too low for years. Reversion to some acceptable rate was inevitable.<br><br><br>http://research.stlouisfed.org/fred2/series/PSAVERTAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-17683727943602438392009-06-26T13:31:12.794-07:002009-06-26T13:31:12.794-07:00Alice said "I think households respond to inc...Alice said "I think households respond to incentives and signals".<br>This sounds very similar to the kind of statement the Stand-up Economist satirises in his routine on Mankiw's ten principles of economics (on Net).Highly recommended.(Yes,he gets laughs analysing an Economics textbook.)DBC Reedhttp://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-5057271606588318492009-06-26T14:14:52.194-07:002009-06-26T14:14:52.194-07:00If by savings one includes "paying off debt&q...If by savings one includes "paying off debt" then the second stimulus did exactly what it was designed to do - it was designed to make some of that iffy credit card debt on the banks' books look a little better. In no way are people saving to cover their next tax bill. People are getting letters in the mail saying their CC interest rate is going from 7% to 21% - that is the incentive they are responding to.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-54073172855358397342009-06-26T22:59:01.677-07:002009-06-26T22:59:01.677-07:00Such a nice informative topic and graphically repr...Such a nice informative topic and graphically representation show how it effected by the economical level.window stickerhttp://www.emanprinting.com/sticker-printing/Window-Sticker.phpnoreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-65427415846810910102009-06-26T23:58:07.592-07:002009-06-26T23:58:07.592-07:00I agree with the last anonymous poster that it is ...I agree with the last anonymous poster that it is not a case of people saving more, but of cutting down on their debts, as their economic prospects worsen, and to avoid usurious interest rates now being charged by the ever-more-greedy (or is that desperate?) banks.deepianhttp://www.blogger.com/profile/01289805031535371204noreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-66370916924999171632009-06-27T00:36:46.904-07:002009-06-27T00:36:46.904-07:00I have to agree with other anon, most people don&#...I have to agree with other anon, most people don't understand the link between government debt and higher taxes. They still think if it is supplied by the government it is "free".<br><br>Just look at the Labour party election campaigns, they have been based on the idea people are morons for years and it has worked out pretty well for them so far.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-17175728347669347202009-06-27T03:10:30.017-07:002009-06-27T03:10:30.017-07:00People are stupid and selfish... or we wouldn'...People are stupid and selfish... or we wouldn't have New Labour in power now.<br>Even though they knew that Blair had lied about Iraq, they still voted for him back in 2005... because they "felt wealthy" 'cos their houses had doubled in value and were that naive they thought it would go on and on... free money !<br>Even now, New Labour are popular because they spend and the Tories talk about tax hikes and spending cuts.<br>Any thinking person will realise that this spending splurge is just not real - it is yet MORE borrowed money that will have to be paid back one day - through either tax hikes, spending cuts (which means job and/or pay cuts) or more than likey - both!<br>People don't seem to be able to put 2 and 2 together - they don't seem to understand that the UK does not earn the lifestyles we have had and that the "boom" was just a mirage - a mad spending spree using someone else's money.<br>Reckon there will be one hell of a reality check after the next general election... whoever gets in !!!Markbaldynoreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-23983857181000398142009-06-27T05:42:18.017-07:002009-06-27T05:42:18.017-07:00I would suggest that the savings increase has been...I would suggest that the savings increase has been caused by fear of the future. I'm sure taxes play some role in that, but I would think that fear of losing your job would be a bigger component.K T Cathttp://www.blogger.com/profile/10259428595745509790noreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-27929874986961257592009-06-27T13:51:42.438-07:002009-06-27T13:51:42.438-07:00And it also speaks of low inflation expectations. ...And it also speaks of low inflation expectations. Weak pound, higher commodities, still we expect deflation, or is that just because house prices are going down?boiling frognoreply@blogger.com