$1.9T American Rescue Plan saved U.S. from economic disaster: Janet Yellen

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“In this country, we don’t often recognize the crises that do not happen; we don’t celebrate the bridge that doesn’t collapse. But maybe in this case, we should,” Yellen said.

Blujeanstraveler

They’re pushing this hard because the reality is all that money poured into an already rapidly recovering economy abd spurred inflation. It was far too large of a bill.

8815078

Instead of a healthy correction which was needed, we have runaway inflation and housing prices which will impact the younger generations for at least a decade. I don’t think a lot of millennials are going to afford kids during that time, which will have dire consequences. The rescue plan was so short term focused.

ShotBuilder6774

She’s right, some people just like to complain, the fed pulled out all the stops to prevent economic collapse and complete anarchy.

They had no choice, yes billions were wasted and the rich got richer, but the working class were going to be screwed regardless if they intervened or not. That’s the way capitalism works with state intervention, if you don’t like it start a business.

My greatest concern are the effects on healthcare from allowing this pandemic to run rampant. This decade is going to be plagued by immense healthcare costs from aging boomers, low population growth and the long term effects of covid which is going to eat away at American productivity and dominance.

thomas_sowells_soul

From where I sit we’re still participating in an economic disaster. The American Rescue plan has kept the “everything bubble” from popping, but it’s still a bubble. Banks were saved from mass defaults on debts but that’s about it. The mega asset holders were also saved I supposed. The average working class American was screwed and continues to be. The housing market is still broken. Inflation is stealing from the masses. I make good money and still can’t buy what I wish I could.

We are still in a disaster it’s just a different one than that which would have resulted in creditors losing money.

Coldfriction

Homebuyers are rushing to get mortgages before higher rates price them out

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If a 0.25-0.5% interest rate increase makes a house now unaffordable for you, then you couldn’t afford that house to begin with.

A quarter percent increase on a $300,000 mortgage is a difference of $42 per month.

tastygluecakes

There’s an awful lot of pressure at the moment to get on the property ladder anyway you can.

I couldn’t really afford our mortgage at first, but after 2 years of job advances, renegotiating our mortgage, wife going back to work after statuatory Maternity leave (we’re UK based), and our first kid hitting school age we’re more comfortable. If I was looking to buy our house now it’s gone up in value £60-70k.

So it’s made sense to struggle through those first 2 years. But even £50 extra a month would’ve made a considerable difference.

This is going to still hit a lot of first time lower income buyers.

SoyCapitan451

Higher rates means lower house prices. So there’s not really any need to rush. There might be some temporary pricing inefficiencies in the short term but you’d just have to be lucky.

oystermonkeys

Homebuilders and banks will adjust to the market. The last 5 years or so, the homebuilders have had their profits boosted by low interest rates as homeowner “affordability” is more determined on the monthly payment than the price of the house. If people can’t afford housing, prices will drop relative to increased interest rates….or, we will see changes in financing options (i.e. 40-year mortgages).

semicoloradonative

Everyone thinks the housing market is bubble for some reason.

What if it’s not? Why is there any reason to believe this isnt the new normal? Inhaling too much hopium I think.

Ragnaroknight

US regulators aiming at illegal and anticompetitive mergers

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Way too little too late. Almost every industry has become Oligopoly with it being hidden in plain sight with brands that all are owned by same mega parent company to give us the illusion of choice. Meanwhile they collude to keep prices artificially high.

RiddleofSteel

>“Our country depends on competition to drive progress, innovation, and
prosperity,” said Assistant Attorney General Jonathan Kanter, who heads
the Justice Department’s antitrust division. “We need to understand why
so many industries have too few competitors, and to think carefully
about how to ensure our merger enforcement tools are fit for purpose in
the modern economy.”

Could this include the mass looting that has been taking place in that country by the regional ISP monopolies for years on end?

Cosmic-79

For too long the US regulators have been way to loose how they were handling oligopolic structures.
it’s hard to believe that Microsoft had to keep Apple alive in the early 2000s to prevent to be taken apart, while nowadays the oligopolic structures became even worse, while the regulators were sleeping

doctorzaius6969

I’ll believe it when something significant actually happens.

Internet providers and banking in particular are over the top now. As is Amazon.

I expect it to be like the last 20 years where they “look into it” and nothing meaningful happens.

MimeGod

Oh what a bunch of bullshit. Fuck off “regulator’s”. You let Uber buy postmates. Limiting the number of delivery services and giving the asshats at Uber the ability to destroy postmates.

Then there’s the countless cable/internet mergers over the last 2 decades. That has given us basically one cable option per geographic location.

To fuckin little. To fuckin late. American capitalism is bullshit in action.

GraveYardBaby420

Economics is once again becoming a worldly science

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So many economists have never really understood that the unspoken assumption of ceteris paribus underlying neoclassical economics is never true in reality.

bemrys

Suggesting that the minimum wage work of David Card is somehow the opposite of “supply and demand” reasoning reveals the author’s ignorance. The Card-Krueger monopsony theory of minimum wage effects is very much a partial equilibrium supply and demand analysis, only it specifies that labor supply is somewhat inelastic (rather than perfectly elastic, as was traditionally assumed).

There are many good critiques to be made of the economics profession, but is one is not well informed.

olusknox

The irony is that our present state reflects that economics is not just important science, but is the most essential one.

If you want evidence of this, note that every macro-level challenge we face- environmental, health, distribution, transportation, energy, or education have all had technological breakthroughs that dramatically extend far beyond their current applications, simply because there is no way to harness their benefits equitably for all due to economic realities.

What is needed is breakthroughs in economic science that incentivize us to cultivate the benefits from these other fields equitably and sustainably. What we have instead is a set of economic principles that are aging quite ungracefully, rewarding too few at the expense of too many…

chubba5000

The author of this article seems to know very little about economics. Taking data from 1860-1980 and plotting it all on one diagram does **not** show that the labor supply curve slopes downwards at any given time period!

hellosilly

I know this is a wildly unpopular opinion, but oh well.

The issue is that economic modeling is stupid. An economy is far too complex and there are far too many variables to derive meaning from data alone. The economy is not a petri dish where you can change one thing in a self-contained manner and observe the impact.

The author of this article is criticizing economic models that we use because they rely on unrealistic assumptions. It seems to be his view that we should have no foundation of assumptions at all, but rather just view data. The author wants it to become an ‘Evidence-based’ field, which is completely nonsensical and that approach doesn’t apply to economics.

Economics isn’t supposed to be a science. Philosophical/psychological deductive reasoning will yield more truth than collected data. We know there are some things to be true. We know how humans act and react to incentives. When we establish a set of assumptions, we can make claims about the causal impact some policy will have. Data will not help prove those assumptions right or wrong, only logical analysis of those assumptions will.

I can tell you, without any doubt, lots of causal relationships that exist in economics. But because of the complexity of the economy and the constant shifting of other variables, I can’t describe to you what the world will like like after applying a policy. The evidence might contradict the assumption. That doesn’t mean the assumption is incorrect or that the causal relationship doesn’t exist. It means nothing. It means other things happened as well.

To me, that isn’t an indictment at all on economics being a deductive vs inductive field. Instead, I think it strengthens the argument for it in fact. The economic methodology has been corrupted with an attempt to convert it to an inductive evidence-based field. The solution is not to push it further in that direction. Game theory and behavioral economics are valuable. Econometrics is not.

TastyHoneydew3

Inflation has ‘direct correlation’ with America’s chip shortage: Commerce Secretary

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The proposed solution (increasing semiconductor production in the US) won’t solve the problem in the short term, unfortunately. It’s a good long-term solution, to be fair, but it takes years to build a foundry and get production up and running.

One of the major issues is actually carmakers using legacy chips that require outdated and unprofitable equipment. Automakers use this antiquated tech largely for reliability and compatibility reasons: old chips are familiar and reliable, which is important for safety, plus their dimensions fit existing panel designs, so you don’t have to re-engineer anything.

We basically have a game of capitalist chicken strangling a large part of the world economy. Automakers shifting to newer tech would require them to run new safety/reliability tests and to redesign the car’s electronics, which would be a major hit to their profit margins. Similarly, the equipment to forge this antiquated tech isn’t cheap, and these chips aren’t very profitable, so chipmakers are resisting expanding production. Someone is going to flinch, but it could take a while before that happens. Meanwhile the world economy burns…

discodropper

Either spend the big bucks and move chip manufacturing to America or just stop putting chips in everything. “The internet of things” seems to have gone too far – everything doesn’t need to be on my WiFi. Sometimes a toaster should just be a toaster.

Careless-Degree

Maybe if America didn’t fucking outsource all its labour they would have more chip making plants in the US. “But wait that means paying it’s people livable wages and giving them health insurance??!! Impossible to do sorry gotta have my super backer make another billion”- some stupid politicians probably

Simple-but-good

America should stop outsourcing its production to save on labor costs for extra profit. Perhaps taxing foreign produced goods more would encourage more American firms to shift production back home

It’s not like these countries have any natural advantage it’s just low wages

wb19081908

Along with the chip shortage, Biden’s energy policy has also led to increasing automobile prices. Since the beginning of his term, President Biden has had a firm stance against oil pipelines. These oil pipelines are responsible for the creation of adhesives, chemicals, and plastics needed to manufacture a car. While the demand for a car has increased, the supply of essential materials needed to manufacture a car such as chips,chemicals,and plastics have not kept up. These are some reasons as to the inflation in automobile prices.

Anxious_Cantaloupe44

Shipping Companies Had a $150 Billion Year. Economists Warn They’re Also Stoking Inflation

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I’d caution anyone that wants to react emotionally to this article, to take into account the first bar graph. I’d go so far as to say that what we are witnessing isn’t anything sinister, as much as just normal business.

Shipping has major leading, and lagging factors… but nothing comes close to the fact that the business cycle has been **INCREDIBLY** competitive for **MANY** years. It’s telling that article uses an image of COSCO shipping, since anyone in the know could put 2 and 2 together…

COSCO is China’s political benefactor, for many years. Also, it *seems* that China has *stopped* supporting COSCO as much as it did. Now? Well, now it’s back to business as normal, in a severely under supplied (read: containerised) world.

It’s completely TERRIBLE for low margin products, I agree. I work in the fruit industry… *BUT* **shippers have enjoyed a prolonged period of shipping costs being almost negligible**.

It was bound to end eventually, and since China isn’t financing cheap shipping anymore – well now everyone providing shipping can make some profit again.

sooibot

You people know that ship-owning companies do not set rates right?

Bulk carriers and especially containers had had the worst decade after the 2007 crash with daily rates being much lower than their ship’s running expenses. They haven’t seen rates such as these since 2007.

Do you guys even know what you are talking about or are you just mumbling to yourselves?

What does “saw the opportunity to maximize profits” mean as someone who has deleted his comment has stated? This is the market. Containers after covid quarantine where in such need that naturally the daily rates skyrocketed.

Half of you here just comment to rile spirits and do not look at the facts or have any idea how things work.

Hokhoku

I love the range of reactions here:

1. Shipping companies raised prices and made a big profit because they finally can
2. Shipping companies raised prices and made a bit profit because they can and that’s bad of them
3. Shipping companies raised prices because the money supply doubled

We sure have our narratives. The data fits them because they’re such simple, high-level narratives any data would fit them.

dickingaround

If you really wanted to bring down shipping costs to the US and thus bring down inflation pressures….end the Jones Act…..and tariffs in general

thisispoopoopeepee

Let’s not blame the ships as much as we wouldnt blame the truck drivers…neither are the problem causing inflation…look directly at your politicians as the root cause

rb109544

China’s Property Crisis Reaches Biggest Builder Country Garden

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Do you all remember when I posted this in the last Evergrande thread?

—–

Everyone is watching the nascent real estate bubble (r/REbubble) in the US, but we will be lucky if the big fat festering bubble in China doesn’t spread into international contagion.

Not only are there the obvious financial issues with developers like Evergrade, Kaisa, now Logan and Country Garden, et. al., There are severe structural problems extending deep into the Chinese political system that could even be potentially destabilizing. Not only do you have 70%+ of Chinese savings trapped in this bubble, you also have the issues with shadow financial products (WMPs) and deposits brought to light by Evergrande. This could, and already has to a limited extent, result is mass social unrest should a 2008 or worse situation materialize.

To make matters even worse, most local government funding is derrived from land sales which have all but ground to a halt. Most Chinese government debt is owed by these local government entities and attempts to institute a property tax have this far been fruitless. You have to wonder if the solvancy of certain government entities in China could be tenuous. Again, the implications of this are huge. Will it collapse other state owned enterprises that also tend to be owned by local governments? Will this result in mass unemployment on top of the potential WMPs, loss of savings, and undeliverable unit issues?

Finally, consider the implications if a political crisis were to transpire from all this. What happens if millions organize in the streets? How does the CCP react? Do they slaughter millions of civilians? Do they roll out the tanks? What happens if there were, say, a general strike of tens or hundreds of millions of Chinese or something like that? We all saw what covid disruptions in China did to global supply chains. Even short lived political unrest in China would potentially bring the global economy to it’s knees in a way that would make the current issues look like a joke.

The worst part of all this is that there is no data. We have no idea what’s going on in China. I would actually posit that the CCP itself might have a very limited understanding of what they are dealing with here. This whole situation is on a knife edge and I don’t believe the party line that they have it all under control. Not for one second.

—–

We still have no data. The PBOC is now making emergency rate cuts while the rest of the world tightens. They were almost begging Western Central Banks not to tighten the other day because, just like I said, the Fed could very well tip this into an Asian Financial crisis dollar liquity shortage.

Now Country Garden, yesterday it was Logan, who’s next?

Louisvanderwright

Chinese Wumaos will be in here defying reality and saying china is better than everyone else

Aside from that, local governments have started going bankrupt now too and every measure is showing massive slowdowns in chinas economy. Only exports have kept it going so far but this will cool down and needs to be forcibly moved to anywhere but china over the coming years.

After chinas lies and irresponsible actions around covid and the disaster it caused the world with their secrecy and lies, we all need to collectively move away from this human rights abusing criminal regime

evorna

>The crisis engulfing China’s property sector is impacting its biggest developer, with Country Garden Holdings Co.’s shares and bonds hammered amid fears that a reportedly failed fundraising effort may be a harbinger of waning confidence.

>Country Garden is one of the few remaining large, better-quality private developers that had been largely unscathed by the liquidity crunch, even as peers such as Shimao Group Holdings Ltd. saw dramatic reversals in their credit ratings.

>The firm is viewed as a bellwether for contagion risk, as unprecedented levels of stress in the offshore credit market threaten to drag good credits down with bad.

MrCrickets

Wow, this is amazing! For once this sub takes the conversation of Evergrande and China RE bubble seriously. Previous threads have been deleted, or simply met with “anecdotal evidence is not economics”. On that note how can anyone say the U.S. will be fully insulated from this, that is a joke. One may think that this sub is paid for or that the economists in here are detached from reality. PS. Not an economist, I am software engineer.

crypto_knight1

This is actually a good thing for US markets. 1) it slows the fed rate hikes because an economic crisis in china is no time for US to put the brakes on their own economy. 2) treasuries become the safe haven asset again. All foreign govts will continue buying t bills, driving the tnx lower. 3) economic crisis in china will mean they lower their interest rates, spurring manufacturing, improving supply chains. US inflation will decrease if China housing bubble pops.

ALongKneeMoose

China’s GDP per capita reaches $12,551 in 2021, has escaped middle income trap defined as $12,500.

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A quick check tells me that the 12,000$ number comes with the caveat of being in chained 2011 dollars. As it stands the gdp per capita in Yuan is about 80k.

In chained 2011 dollars 80k Yuan is more like 62.5k yuan, or a smidge under 10k USD

Tierbook96

It barely missed out on the high-income threshold defined in 2020 as $12696. Will likely hit it in 2023, as was predicted by a number of sources. Note that a country can still be considered high-income and a developing country.

Simian2

Article

>China’s GDP has expanded at 8.1 percent in 2021, growing the fastest in nearly a decade and landing well above the government’s annual target of achieving a growth rate above 6 percent.

>The robust expansion, which beats the market expectation and eclipses most of other major economies in two-year terms, spells out a steady economic recovery path – building upon the country’s zero-tolerance epidemic strategy – that Beijing has been unswervingly staging on despite Western slandering and headwinds throughout the year, which ranged from sporadic coronavirus outbreaks, woes in the property sector, bulk commodity price hikes to a power crunch.

>The country’s total GDP in 2021 reached 114.37 trillion yuan ($18 trillion), according to data released by the National Bureau of Statistics (NBS) on Monday.

>Liu Xuezhi, a senior macroeconomics expert from the Bank of Communications, told the Global Times that China’s economy in 2021 has continued a “mild recovery” in a post-COVID era, with major economic indexes operating at a relatively stable level.

>In 2021, China’s GDP per capita was around $12,551, according to the NBS, nearing that of a “high-income country” as defined by the World Bank and overtaking the global average GDP per capita.

>The economic volume in 2021 represented an increase of $2 trillion compared with 2020, or roughly the equivalent of world’s 8th largest economy Italy’s GDP in 2020 based on the Global Times’ calculation.

>”The scale of incremental economic output in 2021 also hit a new high,” Tian Yun, former vice director of the Beijing Economic Operation Association, told the Global Times. He estimated that from 2020 to 2021, China’s economic increment has contributed an overwhelming 50 percent to that of world, highlighting China’s role as the anchor and stabilizer for the global economy.

>In 2020, China was the only major economy in the world to eke out an expansion, with a GDP growth rate of 2.3 percent. If taking out the base effect and translating into two-year terms for an objective evaluation, China’s average GDP growth was 5.1 percent from 2020 to 2021, also leading most of the world’s economies, analysts said.

>According to a World Bank report, US GDP is expected to grow 5.6 percent in 2021, and that translated to an estimated average growth rate of 1.05 percent in 2020-2021 period.

>In the fourth quarter of 2021, China’s GDP grew at 4.0 percent. The economic growth in the first, second, and third quarter were 18.3 percent, 7.9 percent and 4.9 percent, respectively.

>”China’s quarterly GDP expansion gradually tapered down throughout the year. The downward pressure culminated to a height in the third quarter, but most were cleared out in the fourth quarter, which means the economy was bottomed out and could set off a head start this year,” Tian said, also taking note of a larger base at the second half of 2020.

>While the Western media has been hyping how China’s dynamic zero-tolerance COVID strategy inflicted tremendous damage on the world’s second-largest economy, analysts debunk these claims by pointing out that it is the strategy that cost the less to ensure the world’s largest factory recovered faster, keeping roaring and supplying to the world.

>China’s factory output – buoyed by both strong demand abroad and a resilient supply chain at home – continued its vibrant streak in 2021, while investment in manufacturing and real estate was subdued and the resurgence of coronavirus weighed on consumption.

>According to NBS, retail sales, a reflection of nationwide consumption, soared 12.5 percent year-on-year to 44.08 trillion yuan last year. Industrial added-value expanded 9.6 percent, and fixed-asset investment rose 4.9 percent to hit 54.45 trillion yuan.

>In 2021, China’s foreign trade volume reached $6.05 trillion in 2021, surpassing the $6 trillion milestone for the first time, according to customs data released on Friday.

>Analysts said in the near term, the spread of highly transmissible Omicron variant in Beijing, Zhuhai in South China’s Guangdong Province and North China’s Tianjin Municipality as well as resurgence of Delta variant in multiple cites has cast a shadow on the spending during the Spring Festival holidays and the economic outlook for the first quarter of 2022, though this impact is likely to fade away by the second quarter.

>According to a report issued by the Chinese Academy of Sciences, China’s GDP growth is projected to moderate at around 5.5 percent in 2022.

>”This year, authorities are excepted to fine tune to a more proactive fiscal policy to shore up the economy, but that will not be like a ‘flood-like’ stimulus,” Tian said.

Peugeot905

As usual. How about we adjust for inflation first. And than see this trashhold (like in trash news). But they are closer to making everyone equal though, Bolshevik style.

AggressiveDrive1692

Even ignoring the inflation issues that others have mentioned, just because they’ve reached some arbitrary number doesn’t mean they’ve escaped the trap. Chinese workers are still demanding more pay for the same work, and there are still lower income workers in lower income countries that are willing to do the same work for half the price if only the infrastructure were there. China is still heavily reliant on foreign investment and until that changes, I don’t believe they’ve truly escaped the middle income trap.

indrada90

Where did the $800 billion Paycheck Protection Program money go?

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An example of big government being bad at implementation even when the original idea was sound. Basically, a one-size-fits-all solution like the $2000 stimulus checks rather than a needs-based one. The main qualification for the loan was an unaudited attestation that your business was negatively impacted by the pandemic. Losing 1 customer due to lockdown is a negative impact. We took millions when I know for a fact that we would not have laid off many employees even if we did not receive the PPP loans.

defaultbin

I think the fear was a massive default on bank loans and a failure of many smaller banks, most businesses owners pay rent or a note on a commercial loan, if lots of businesses failed to make their payments it could have been a domino effect. Also cities and counties cash flow their day to day from monthly and bi-weekly sales tax and payroll tax income, if a lot of medium size business fail that is a massive cash crunch at a local government level, I think that was the primary objective of PPP. I know a lot of business owners that are only still in business because of PPP

zbreman

Not making a mere joke or being snide, but I wouldn’t look too much into it considering what happened to the person who published the Panama Papers.

MakeGoodBetter

While there may have been some good intentions, it’s astounding how many business owners pocketed that money. I would hope that there would be more effort in auditing these payments and not forgive them so quickly.

ZookyTheClown

They never should have given it to businesses if the purpose was to help the worker. It was planned as a boondoggle.

They should have just given everyone money to get through it directly with no means testing. It would have sustained the businesses by people still being able to keep spending.

But they never actually wanted to help individuals survive this thing, did they?

TheodoraWimsey