Table#1
Monetary / Fiscal Stimulus (% of GDP)
Peak Trough Length(Months) Decline in GDP Monetary Fiscal Combined
% of GDP
Aug ‘29 Mar ‘33 43 27.0% 3.4% 4.9% 8.3%
May ‘37 June ‘38 13 3.4% 0.0% 2.2% 2.2%
Nov ’48 Oct ‘49 11 1.7% -2.2% 5.5% 3.3%
Nov ‘73 Mar ‘75 16 3.1% 0.9% 3.1% 4.0%
July ‘81 Nov ‘82 16 2.6% 0.3% 3.5% 2.8%
July ‘90 Mar ‘91 8 1.3% 1.0% 1.8% 2.8%
Mar ‘01 Nov ‘01 8 0.2% 1.3% 5.9% 7.2%
Dec ‘07 - 15 1.8% 18.0%* 11.9%* 29.9%*
*Estimated
Source: Federal Reserve, Congressional Budget Office; as cited in Grant’s Interest Rate Observer,
“Sold to you, Uncle Sam,” Vol 27 No 7, 3 April 2009, p 2, “What the government did—and didn’t do” table
“hat tip” Jim Puplava
TABLE #2
Imagine your are a politician in power and you experience the crisis of your lifetime.
You push on every button and stimulate (pls see #1 . table) the economy at a pace 4x as hard as your predesessors did during the GREAT DEPRESSION.
But this sucker still panics and goes into a deepdive into March 2009.
What would you do, how could you pull the people out of a mood of desperation?
Wouldn't you turn to someone you trust, who could let's say support a tailspinning ,mood darkening Equity market....?
(Pls look at Table #2, showing Goldman's prop desk spinning a huge wheel)
Voila, a miracle "green shoots" rally emerges with more momentum and power than anything we've seen a long time (we are talking decades in terms of technicals!!)
but ....unfortunately with lacking Volume, meaning some folks are still hesitant to believe what their eyes are seeing....
After 8 weeks of "pure force" Uncle Ben from the FED tells us the that the worst is behind us. (pls see below)
Do you buy it ?
http://www.federalreserve.gov/newsevents/press/monetary/20090429a.htm
"Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower....."
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