Norm Mogil — Fiscal Policy to the Rescue?

It's the multipliers, stupid.

Not all fiscal stimuli act with the same degree of potency. Chart 2 separates the type of stimulus between " investment" and "tax" measures. The governments obtain the greatest bang for the buck when undertaking infrastructure projects, both for their immediate impact on jobs and income as well as for their longer term benefits in adding to productive capacity (e.g. urban transportation systems). Next in importance are stimulus programs generated by increasing government consumption of goods and services (i.e. day-to-day expenses associated with government operations).

Tax measures, on the other hand, have not proven to be anywhere nearly as effective in promoting growth. The impact of reductions in personal or corporate tax cuts are de minimis. Since some portion of a tax cut is usually saved rather than entering the spending stream, tax multipliers are lower than government spending multipliers.

Thus, economists have long urged governments to look to stepping up their capital investment activities as the primary driver of fiscal stimulus policy.

Sober Look
Fiscal Policy to the Rescue?
Norm Mogil

An Athlete That In Theory Had Eaten His Fill And Bet His Life That He Could Outrun A Bear

   (Commentary posted by Roger Erickson)



Capex growth to slow

A complication occurred for this "athlete." The belly sequestered all the nutrients, and the legs are screaming & cramping in the 1st 100 yards.

"Structural" adjustments in the legs isn't gonna do squat.

[or rather, using the same word, with different semantics ... anything else but! :) ]

Proper, preventive, training & diet matters, and produces more adaptive resource distributions. We all hope there's another chance to learn that lesson. Praying that the bear catches some other idiot first isn't a reliable survival strategy.

This athlete needs MORE, not fewer, automatic stabilizers. Especially at the policy end. No tool helps much, if it's use isn't practiced, BEFORE it's needed. Even less if it's not even used.

There's many a fail 'twixt the theory & the outcome?

Might wanna pay a bit more attention to the actual operations, regardless of the theory?

David Rosenberg — Paul McCulley on capex trend

Paul McCulley, the former legendary economist and fund manager at PIMCO, who was once being touted to join the Fed as a policymaker, told me last year at the Altegris-Mauldin conference, the YoY trend in the three-month moving average of core capex orders had for a long time been his preferred indicator of how the broader economy was going to fare a few quarters into the future. Well, if you are bullish on U.S. growth prospects over the near-term, I suggest you look at the chart below:

David Rosenberg: INDUSTRIAL ACTIVITY SOFTENING

Zero Hedge

Why Paul McCulley Would Be Shorting The Economy With Both Hands Right Now

Submitted by Tyler Durden

How's PIMCO been doing since McCulley left?