Obama is President

[agrippa1]

Currently, the market is predicting deflation lasting at least a couple of years. This is expected mainly from a curtailment of lending. The projection is that the price-level (CPI-U) in 2012 will be lower than it is today. Of course, the market can be wrong about this.

Relevant to this topic, I think the deflationary projections could well make the government more willing to spend money. For instance, in addition to sending out stimulus checks, they might decide to spend the same money (typically $100 billion or more) on "public infrastructure projects". That will be a nice boondoggle for politicians all the way down the line; and Joe Plumber will be told that it will help create jobs for him. [some pretty eminent economists are projecting the unemployment rate going to 8% and beyond.]

How can you tell the market is predicting deflation?

[softwareNerd]

How can you tell the market is predicting deflation?

The market is predicting a fall in the CPI, not deflation as such. This can be seen by comparing the yield on "Treasury Inflation Protected" securities to the yield on regular Treasury debt.

In case anyone is interested, here are the geeky details:

TIPs are pegged to the CPI-U index. When that index rises, the principal is adjusted upward; when it falls, the principal is adjusted downward [there is a floor to how low it can go, but that's too much detail for now]. Before the stock market plunged, the yield on TIPs was lower than the yield on regular government debt. For instance, in 2007, the yield on fairly short-term (3 year) U.S. debt was between 3% and 5%, while the yield on 3 years TIPs was somewhere in the 2% range. This implied that the market was guessing that the CPI-U would rise by about 1%-3% (annually) for the next 3 years. Then, things changed. Now, the yield on 3 year TIPs is about 3.5%, while that on regular government debt is 1.8%. The TIPs are yielding more, because buyers are expecting that they will take a haircut in the principal. So, the current prediction -- over that period -- is for the CPI-U to fall by about 1.5% annually.

[adrock3215]

There is an article on CNNMoney here about the Central Banks also anticipating deflation.

Personally, I would appreciate a little deflation. However, we know that this will not be allowed to happen. There is a quote from a Bernanke speech a few years ago (he was just a board member at the time I believe) where he says something like (paraphrasing): "Luckily, the central bank always has a weapon against deflation: the printing press."

Thomas: Firstly, you have to recognize that the dollar has gained a huge amount of value this year. The second issue you tried to spin is relating gas prices to Obama. Over the long term (say, 100 years) Obama will have very little, if any, effect on oil prices. What is certain is that oil prices will continue their long-term upward trend, regardless of who is in the Oval Office and what clowns we have in Congress (unless some new technology is discovered which makes the use of oil obsolute).

EDIT: Ok, I went and found Bernanke's speech, and you can find a pdf file of it here on the Fed's website. Although the topic of the entire talk is deflation, here is the relevant quote I mentioned:

Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

Edited November 13, 2008 by adrock3215

[Thomas M. Miovas Jr.]

Thomas: Firstly, you have to recognize that the dollar has gained a huge amount of value this year. The second issue you tried to spin is relating gas prices to Obama.

Actually, I didn't realize the dollar had gained value when compared to foreign money, nor did I realize that the price of gold has come down compared to its high (which is surprising considering the financial lock-up, since I would expect gold to go up). So, no, I didn't have to know that, as I don't keep up with that information in general. I guess one could say that we are at least somewhat in a deflationary time period, and that might account for some of the price drop in imported oil.

Regarding Obama and the price of oil, if you are going to say it doesn't matter what he does, then I think you don't understand supply and demand. If drilling and refining was permitted in the United States far more than it is now, then the price of oil would come down relative to what it would be if the domestic oil spigot was cut off (which it seems like Obama et al want to do).

What the price of oil will be 100 years from now is anyone's guess, even if we don't find an alternative. New oil deposits are being discovered and new methods of recovery are being discovered, so in a free market, the price would probably come down over the long term; everything else being equal, which it won't be.

[agrippa1]

Actually, I didn't realize the dollar had gained value when compared to foreign money, nor did I realize that the price of gold has come down compared to its high (which is surprising considering the financial lock-up, since I would expect gold to go up).

Gold will go up, eventually. History teaches us that the amount of money lost to society through inflation equals the debt of its government (including outstanding currency). With some unknown percentage of the current tally of $5T spent by the U.S. on this bailout destined for the liability column, inflation will have to rise to balance the books. But right now the large corporations are cash strapped and are selling off some of their gold reserves to maintain liquidity. I have suspicions that the U.S. Gov't is doing likewise, both to maintain liquidity and to depress the price of gold, but those may be more paranoia than anything else.

The fact that the dollar has risen so sharply in recent months is good news and counters the contention that the U.S. has lost preeminence in international finance. In a crisis, look for the currency that rises wrt to all others. That is the fundamentally strongest. In this case, when the U.S. gets pneumonia, the rest of the world gets the plague.

[Erik Christensen]

Obama had better grow some balls when it comes to dealing with Russia.

[Steve D'Ippolito]

You are assuming that he actually thinks we have a right to stand up for ourselves and are not somehow to blame for their aggressive attitude.

[The Wrath]

You are assuming that he actually thinks we have a right to stand up for ourselves and are not somehow to blame for their aggressive attitude.

Statements like this are ridiculous strawmen. I am the token right-winger out of all my friends and I am frequently teased for not holding left-leaning views, but it's ridiculous and immature to characterize the views of left-wingers in this way. This is the same tactic Christians use when they say things like "I don't believe in atheists" or "I don't have enough faith to not believe in God." They get this big cheesy grin on their face when they utter some mindless phrase like that that they think is somehow clever. Well, it's not. Neither is the assertion that anyone who tends to be dovish "doesn't think we have the right to stand up for ourselves."

[Steve D'Ippolito]

You haven't read enough of Murray Rothbard (greatly respected by Libertarians) or Noam Chomsky (greatly respected by the Left) then.

Certainly a lot of Democrats are not like this. But the far Left ones are.

[Mammon]

Uh.... "Anyways"? Excuse me? Mind backing your argument up for once? I know that's asking a lot from you.

Deflation doesn't mean that your dollar is worth more. Deflation is a contraction in the money supply.

I wanted to avoid a perpetual shitstorm on the issue, at that moment, but I suppose it's inevitable. I give heated responses when people espouse incredibly grave errors that are made countless times. It's as if someone said Objectivism is a form of Nazism.

Edited November 17, 2008 by Mammon

[softwareNerd]

With Hoover Bush on his way out Roosevelt Obama plans to do weekly fireside chats YouTube speeches. So, if you want to keep track of the latest way he plans to screw things up, be sure to tune in.

[Clawg]

Today the Ministry of Change announced to change its name to Ministry of CHANGE. In response spontaneous rallies were held all over the country.

[01503]

War is Peace;

Freedom is Slavery;

Ignorance is Strength.

Sound familiar to anyone?

Take "war" here and make it more "inciting violence" than inter-national war.

EDIT: CHANGE: Was in response to Clawg's 1984 reference. Was not completely random.

Edited November 17, 2008 by NickS

[Thomas M. Miovas Jr.]

Obama wants to set up a technology czar!

As America counts down to President-elect Barack Obama's Jan. 20 inauguration, the tech industry is waiting to see whether the new president will name, as promised, a "chief technology officer" for the United States.

This is going to be a disaster. So far, the technology industry has had the advantage of not having the government meddle into its affairs. But it seems as if everyone in Silicon Valley wants this monstrosity. Some want it so that the government files can be put online in rapid time, but the technology czar will wind up having powers of standards and practices imposed onto the entire industry.

[gags]

We certainly seem to be headed toward a command economy, with all of the bad things that will encompass.

[Clawg]

Can anyone remember when that "Czar" thing started?

[Jake_Ellison]

Obama wants to set up a technology czar!

As America counts down to President-elect Barack Obama's Jan. 20 inauguration, the tech industry is waiting to see whether the new president will name, as promised, a "chief technology officer" for the United States.

This is going to be a disaster. So far, the technology industry has had the advantage of not having the government meddle into its affairs. But it seems as if everyone in Silicon Valley wants this monstrosity. Some want it so that the government files can be put online in rapid time, but the technology czar will wind up having powers of standards and practices imposed onto the entire industry.

They haven't escaped government meddleing at all. Microsoft was persecuted for years by both the US and the EU, Yahoo mergers keep getting prevented, ridiculous privacy laws are being passed etc.

I think many of them are actually looking for a way into government, assuming that they'll be able to control this democratic czar and get some things done through this new institution, that they can't seem to be able to get done through the justice system and the SEC/FCC nightmare.

Others are of course just looking for protection from Big Brother, like the car companies and the financial industry.

I agree, even if they get a few mergers and deals through with shady arrangements and campaign contributions, on the long run they'll regret their decision.

[D'kian]

Can anyone remember when that "Czar" thing started?

In Roman times. after the fall of the Roman Empire many European monarchs styled themselves "Caesar." Most notably the Prussian kings (Kaiser), and the Russian ones (Czar or Tzar).

I know that's not what you asked, but it is relevant to point out what the word means: an emperor for a given task or area.

Back to your question, I think it began in the late mid to late 70s. I do recall a very early computer game called "Energy Czar," for the Atari 800 and 16000. I suppose in response to the Carter-generated energy crisis of the time.

[01503]

http://money.cnn.com/2008/11/24/markets/ma...sion=2008112415

If this is any indication of how the Obama presidency will be... one long "everything good that happens shall be credited to Obama"... I think I will need a bucket for the ride.

[KevinDW78]

This just made me laugh out loud:

Obama has shown a knack for symbolism, in this case following the Thanksgiving tradition of helping the poor, said David Greenberg, a Rutgers University historian who is working on a history of political spin. "Here he's showing a different side of himself, the president as national conscience or moral authority."

That's a "different side"? What is the "regular side"?

[Space Patroller]

I personally am horrified by this. Anyone else have thoughts?

The better man won, or more correctly, the worse man lost

The less consistent man lost, ergo the less principled man lost ergo the one wh blurred the party and idiological differences lost.

Ergo, the battle lines are now more defined.

How could we have fought the Environmentalists if the Republican president is in their camp?

HOw could we secure the borders if the Republican president is the Howard Roark of shamnesty?

How could we claim the high ground, when, at one time the Republican presient was ready to bolt the party and join the Dems?

McCain attaced Romney from the Left

When the South Carolina GOP antagonized McCain, he rubbed their noses in an editorial in the NY Times

As far as Suprem Court nominations go. McCain would have been easily rolled by the Democrats and the liberal Establishment plus, seeing a Repubican in office, some of the conservative justices may have retired figuring that a like-minded replacement would succeed them.

Ergo we dodged a bullet. Now when the cowpie hits the fan. It's all Democrats all the time. Also, the Republican Party can (whether it will or not is another matter), craft itself as a credible, freedom-oriented alternative.

[utabintarbo]

...

Ergo we dodged a bullet. Now when the cowpie hits the fan. It's all Democrats all the time. Also, the Republican Party can (whether it will or not is another matter), craft itself as a credible, freedom-oriented alternative.

Heh. Good luck with that.

I hope your right, but I remain dubious.

[Space Patroller]

Heh. Good luck with that.

I hope your right, but I remain dubious.

Agreed!

I've been at it for 3-1/2 decades.

However the alternative I projected would have lowered the probability of doing it by dragging the party from about 60% Right to about 40% Right. The university-media-totalitarian complex would have had a field day saying that the Right is Dead. Don't think that wasn't in the works as a fallback position for a McCain win.

Here's a fictional example

"Conservatives claim that McCain had sided with Democrats on too many crucial issues such as climate change and campaign finance reform: And yet he won. This shows how out of step conservatives are with the electorate. Now McCain is clearly not our first choice but we can live with his major afforts to bring about change.

The conservatives did come to support him but only as a hate-based "stop Obama" strategy. That the party which the conservatives have called home nominated and elected McCain shows the dwindling influence the Right has in US politics. This is to be applauded and encouraged further.

Ome can only hope that we will see other reasonable actions by President McCain and a more reasonable agenda from the GOP in the future. The signs are hopeful and we can and should reach out to him.

Given the way McCain had his head up the nether regions of the NY Times, we'd be off to the races (all left turns). At least we don't have that nightmare looking at us.

As I said. we dodged a bullet. However most modern pistols have at least 6 of them. Actually, we didn't dodge it. The enemy was so bleary-eyed that they couldn't see to aim straight and their legs were too busy quivering from their obasm that they couldn't stand steadily to fire straignt.

[K-Mac]

This poll by Pew is interesting. If you roll your mouse over the various words used to describe Obama, you can see how the results have changed since September.