Below is a great article for nerds like me only on Friedman vs Keynes Economic Theory.
A Wall Street Journal blogger agrees with me about Wall Street.
The financial headlines for today are:
1) Stocks continue rally after manufacturing report
So much for that soft patch.
A rebound in U.S. manufacturing surprised investors Friday, sending the Dow Jones industrial average up nearly 170 points. The Dow ended up 648 points, or 5.4 percent, for the week. It was the index's best week in two years.
The rally started Monday after Nike Inc. reported strong quarterly results. Revenue that beat analyst predictions indicated that shoppers are still splurging on pricier sneakers and sportswear, despite the recent run-up in gas prices. Thursday, Greece cleared its final hurdle before it receives its next round of loans to avoid default on its debt. The same day, a report showed that manufacturing in the Chicago region had picked up unexpectedly.
Friday's Institute for Supply Management report showed that manufacturing across the country had expanded, reinforcing the growing perception that the slowdown was temporary. Federal Reserve Chairman Ben Bernanke and a number of prominent economists have argued that the economy will pick up again once the effects of the Japan disaster waned and high gas prices receded.
It's quite a turnaround from May and early June. Many economists and analysts began lowering their estimates for growth in May after a string of negative reports on manufacturing, consumer spending and hiring by private companies. A shortage of computer chips and auto parts from Japan, higher gas prices and severe weather in the South all contributed to what appeared to be a slowdown in the economic recovery. Stocks had lost most of their gains for the year by mid-June.
Todd Salamone, an investment strategist at Schaffer's Investment Research said the recent surge in stocks represents an "unwinding of the tremendous negativity that built up over the past few weeks."
The Dow rose 168.43 points, or 1.4 percent, to 12,582.77, on Friday. The Standard and Poor's 500 index gained 18.94, or 1.4 percent, to 1,339.67. The Nasdaq composite added 42.51, or 1.5 percent, to 2,816.03.
All 30 stocks in the index rose Friday. Companies that do well during times of economic expansion led the index. Alcoa Inc. and Caterpillar Inc. each gained more than 2 percent.
2) Great Recession cooks Friedman and Keynes- From Marketwatch
Some of the biggest names in economics gathered at the University of Chicago in November 2002 for a 90th birthday celebration of the brightest star of them all. Milton Friedman, a Nobel laureate and seminal thinker, was returning to the university where he had made his name.
One of the speakers was a Federal Reserve governor, Ben S. Bernanke. In a scholarly address, he endorsed Friedman’s view that the Fed was instrumental in causing the Great Depression with a tight monetary policy that turned a contraction into something much, much worse.
In concluding, he addressed Friedman and Anna Schwartz, co-authors of the magisterial “A Monetary History of the United States,” in which that thesis originally appeared. “I would like to say to Milton and Anna…regarding the Great Depression: You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again,” Bernanke said.
He kept his word. When the financial crisis and recession descended six years later, Bernanke, now the Fed chairman, followed Friedman’s monetarist playbook to a “T”: He flooded the system with liquidity and stuffed banks full of reserves in a series of desperate efforts to stanch the new Great Contraction.
“Bernanke is following a monetarist depression-prevention model laid out by Nobel laureate and libertarian patron saint Milton Friedman,” the libertarian magazine Reason wrote in 2009. “Trillions of dollars have been staked on the insights of ‘monetarism’… A series of Fed policies many libertarians find repugnant are being championed by a man claiming to take his chief inspiration from the most influential libertarian economist of the 20th century. “
Meanwhile, Presidents Bush and Obama took the route of another legendary economic theorist, John Maynard Keynes. In two, maybe 2 1/2, economic stimulus packages, they used all the Keynesian tools — direct tax rebates, temporary tax cuts, boosting unemployment insurance, bailing out state and local governments and building infrastructure — to boost consumption and thus make up for the sharp plunge in private demand.
The government spent nearly $1 trillion on stimulus programs. The Fed boosted its reserves by $2 trillion. Now, almost three years after the fall of Lehman Brothers, gross domestic product is growing at less than 3% annually, while the official unemployment rate is 9.1%. Add those who are working part time and the total is over 15%.
3) Grim report from blogger about Wall Street-From WSJ Blogs
http://blogs.wsj.com/deals/2011/07/01/mean-street-on-wall-street-its-grim-and-getting-grimmer/
Inspirational Quotes Twitter@Inspire_Us .
People will forget what U said, people will forget what U did, but people will never forget how U made them feel -Maya Angelou
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