
Don't get too excited about some recent brighter economic news - pg
http://www.economist.com/finance/displayStory.cfm?story_id=13761823&source=features_box_main
======
sprachspiel
Remarkable facts about The Economist:

\- It is a British newspaper published in London, although only 13% of its
copies are sold in the United Kingdom. 57% are sold in North America, 17% in
Continental Europe, and 10% in Asia.

\- It doesn't actually focus on the economy that much. Most content is
political.

\- It is liberal in the classical sense. That is, it favors both personal and
economical freedom.

\- Articles don't mention the name of the author.

~~~
Ardit20
is there anyone who does not favour personal and economic freedom in a
democracy?

~~~
Xichekolas
Well (in a very rough sense) the Democrats campaign for personal freedoms and
seek to control economic ones more (pro-choice yet more regulation). Likewise,
the Republicans want economic freedoms and seek to control personal ones (low
taxes, deregulation, yet ban abortion and gay marriage).

Obviously, any time you generalize a party into two vectors like this, it's
not exact, and I'm sure there are numerous cases of policies from both parties
that don't fit this nice little mold, but I think that is what the OP was
trying to point out. The Economist's definition of 'liberal' does not mean
'democrat' as it does in most of America today. They espouse 'classical
liberalism', which is more libertarian in nature, but not taken to the
extreme. (They, for instance, support the idea of central banks and fiat
money, and a carbon tax or cap and trade scheme.)

I'm not really old enough to remember, but my understanding is that the
Republican party used to be more aligned to these views before they embraced
the religious right to win elections.

------
ieatpaste
It might be worth a note that the second derivative of _a few select_ markets
are improving. I wish I wrote down the other links.

[http://www.fivethirtyeight.com/2009/05/horray-second-
derivat...](http://www.fivethirtyeight.com/2009/05/horray-second-derivative-
of.html)

------
Ardit20
_This example highlights the difficulty of extrapolating from a single month
or quarter of data_

yet the comparison of the data that this article makes is that of this period
with a historical period.

I think the author misses the context, the fact that we have been and perhaps
still are in a recession. To compare the now with the booming years of say
2005 we all know that there has been a decrees.

Being in a recession, the comparison with say last year or last quarter makes
total sense, not to be used as optimism but realistically to see the trend.

The FT says we have bottomed out, I only wonder if we have learned the
lessons, or whether this cycle of boom and doom will continue as always.

------
jmonegro
Articles and reports like these should not be made. This because it actually
_hurts_ the economy by discouraging the public. I'm sure many people spent at
least a teeny bit more the last few days _because_ of these signs of hope
(which most likely led to more factory production, etc.) and now the media
comes and shatters them. Not good.

~~~
brandonkm
I highly disagree. To argue that articles like this have a macro effect on the
economy (short term) is categorically false. If we want to focus on economic
recovery as a function of consumer spending then we really can't zero in on a
strong correlation between magazine articles and how the public feels about
the economy without the data to back that up.

Furthermore, it is absolutely essential that everyone learns more about the
current recession and are realistic about a recovery.

[http://baselinescenario.com/2009/05/25/recession-and-
recover...](http://baselinescenario.com/2009/05/25/recession-and-recovery-how-
long/)

I would in fact argue that economic education for the public helps the
economy, because if more people are educated on the many factors that
contributed to the current recession (negative U.S. savings rate being one
major one) then they now have the knowledge to change their actions. On a wide
scale (larger percentage of people saving more) this would have a net positive
effect on the economy.

~~~
mtpark
Agree. It's almost impossible to determine the correlation, if it exists at
all.

On your later point, ironically if everyone now decided to save more, this
would not have a positive effect on the economy.

~~~
brandonkm
I think saving right now is one of the smartest financial moves families can
make. One reason being that if people have a stronger asset base then you not
only have the ability to transfer value over periods of time, but you are in
more sound financial condition when you buy a house. Think about the scale of
the sub prime mortgage market, then think about how things would have turned
out during the housing boom (2005, 2006, early 2007) if even 30% of those
subprime borrowers had more savings to their names (the vast majority had
none). While the financial crisis would have still occurred, maybe banks
wouldn't have been hit as hard because a larger percentage of people saving
could possibly translate into less people defaulting on their mortgages.

The second reason is the resulting taxpayer bailout of the financial
institutions. The increase in taxes from all of these recent programs aimed at
removing toxic assets from banks balance sheets, increasing liquidity in the
credit markets, etc. haven't even hit taxpayers yet. Saving now enables people
to react better financially when taxes rise later down the road. I don't think
increased consumer spending (on credit) is as reliable a metric of the overall
health of the economy as it was, because while the U.S. is a credit driven
economy, using lots of credit and having any or little savings are one of
those things that led us to where we are now.

~~~
jmonegro
I also believe saving is what families should do, but capitalist economies are
based on spending. If everyone saves everything, and spends nothing - or next
to nothing - on non-essential commodities, companies will suffer. And we don't
need more bankrupt businesses.

