Unemployment and homelessness
and are the only two
real growth industries of Obama Administration.
In Jan 2010 35 millions, or one in eight Americans,
are on food stamps
When I was a kid they told
us that automation
would "free" us from working long hours.
What they didn't tell us what that they weren't
going to pay us for all this leisure time we'd get.
We are not only coping with the largest financial crisis in history,
we also are going through a major restructuring of the American economy
and world economy. This transformation, which was postponed by two decades
by the collapse of the USSR, will be very long and very slow.
IMHO to get the economy out of this mess, government should concentrate
on jobs and job creation, not on propping zombie banks.
long term
high unemployment is a disaster for the country and disaster for the people,
despite the fact that it is irrelevant for banksters, too busy playing in
the huge casino they created. Jobs are the real problem and failure
to address it directly by Obama administration (which in economic terms
is Summers-Bush administration) dooms any attempts to cut unemployment.
There are several factors which make probable that in 2010
real unemployment will be still on the rise. Rosenberg thinks
that
U.S. unemployment rate headed for 12.0-13.0% U-6 can approach
20%. We can
list major factors which most probably make the current level of unemployment
self-sustainable (see also
U.S. unemployment will not to peak until 2011):
Economic recovery might stall
(Japanese stagnation) as real economy was by-and-large destroyed and
"fictional" economy (FIRE sector) needs to be severely downsized.
There is no smooth, painless route back to the easy-money based false
prosperity of Reagan-Clinton-Bush era (age of leveraging).
A
new economy needs to be created for sustainable recovery because the
old, FIRE-based was unsustainable. In 2010 housing probably will decline
further. Both commercial and residential construction continues to decline.
States continue to cut back budgets creating negative feedback loop.
Personal bankruptcies are up, more defaults are on the horizon.
The U.S.
economy needs to be re-structured, both on the "technical" and inter-sectoral
level. That amounts to a collective, system-wide Chapter 11 re-organization.
Obama
administration has totally failed to sell the public on the validity
of "stimulus", however named. Suspicion that this administration is
a puppet of big banks had grown sharply. Trying to kick the can down
the road will yield Republican Congressional majorities in both
houses.
The "new poor" class of people living of unemployment insurance
emerges. Millions of peoples who were accustomed to the comforts
of middle-class life or at least stable paychecks who are now relying
on public assistance for the first time in their lives and potentially
for years to come. Many two income families become one income
families. Especially hard hit are people in their 50th as well
as less-educated people, who has only a high school diploma. "Maximizing
shareholder value" often means replacing people with equipment and this
process accelerates during recessions. The term "a jobless recovery"
has a very menacing subtext as far as long term unemployment is concerned.
More education and skills no longer is guarantee for a job. But without
them your changes to hit the class of the new poor more then doubled.
Hypertrophied financial sector (aka "Casino
Capitalism" ) is a tremendous drag on the economy and continues
to siphon profits from other sectors via parasitic rents. The ascendancy
of the financial sector and the decline of manufacturing in the U.S.
will have grave long term implications. The creation of tangible products
whose utility/quality can be more or less objectively measured were
phased out in favor of “financial products,” whose utility/quality is
much easier to conceal behind legal/technical jargon and junk economics.
That created a new class of white collar criminals.While Blankfein
is out claiming that GS is doing God’s work, the reality is quite different:
it became a training ground for new type of ruthless criminals, much
more dangerous then bank robbers. Killing of Glass-Steagall by
Clinton and leverage without regulatory limit created prerequisites
to the financial panic of 2008. Glass-Steagall enshrined two principles
that were abandoned: The first is that there should be financial firewalls
between institutions to contain the spread of a panic. The second was
the that guarantees are limited to sectors with heavy accountability
to regulators and with marked financial conservatism in their operations
to assure solvency. The violation of the second principle directly leads
to a regulatory capture in which anything goes and a corresponding observed
“need” to accommodate indiscretions, as with the Greenspan/Bernanke
put. It perhaps should be identified as THE primary cause, since it
left Wall Street with the well-founded (LTCM, Latin America debt crisis,
etc. ) and since-proved belief that prudence and capital were quite
unnecessary, and that reckless, sociopathic deal making is profitable.
Four examples :
Wall Street Bankers will sell any kind of crap to clients. They
promoted the pipeline for sub-prime mortgages and manipulated the
AAA ratings to move the toxic sludge.
Finding sub-prime was extremely profitable but they decided
to keep more of the profits by buying subprime lender so they could
grow faster, manufacture and sell more sub-prime, reap bigger bonuses.
Making more money than most people could ever dream of, Wall
Street decided to leverage up and make five times as much. Push
the leverage out to 30-1 and make more money. What Risk? In finance
you usually can make mistakes and survive, unless you make mistakes
with 30-1 leverage in which case it destroys you.
Off Balance Sheet vehicles and company sponsored hedge funds
was the ultimate Tri-Fecta for selling crap to clients, manufacturing
more, and leveraging up. Bear Sterns, UBS, and CitiGroup all had
highly publicized sponsored hedge funds which blew up. The sold
toxic mortgages to the very best high net worth clients for the
typical hedge fund 2%/ 20% profit maximization (banker profit that
is) strategy.
A cynic believes that only selfishness motivates
human actions. As Gordan Gekko said “Greed is good”. I believe that
the bonus structure led Wall Street to line up all the pieces for
the clash as fast as they could. Stan O’Neal is the poster child.
After presiding over all four of the steps above at Merrill Lynch
he was paid $200 million to leave. Where is the clawback!
Capture of the government and the media by financial sector makes
the necessary reforms unlikely. “Failed Regulatory Oversight” is
probably the second reason of the current high unemployment especially
the Greenspan Fed, are part of the discussion for failing to enforce
the rules that were in place to rein in the banks. See Toxic Sludge
is Good For You: Lies, Damn Lies and the Public Relations Industry by
John C. Stauber
Effects of coming CRE crash on unemployment and economy in general
might be underestimated of official forecasts. A full scale commercial
real-estate crash would be devastating to the economy. Loans are usually
have five years duration and those made in 2005-2007 are coming home
to roost in 2010-1012. Only $400 billion came due by the end of 2009
but nearly $2 trillion by 2012. Due to harsh economic climate higher
percentage of these loans will become non-performing.
The coming collapse in the U.S. commercial
real estate market is a round two of the banking crisis.
Commercial debt is approximately one third of the size of the
total residential debt and it is concentrated in the same places creating
double whammy. In Florida commercial loans, broadly defined, are bigger
then residential. 2010 is the first of a series of heavy CRE debt
rollover years, and the CMBS market is close to dead.
Retail and white-collar positions will be directly impacted by CRE
crash. As stores and offices close, mall and office building owners
suffer from cuts in cash flow and severely limited prospects for new
tenants. I nsurance companies, hedge funds and regional banks are heavily
invested in CRE and are next in line so some financial jobs will be
lost too. Extend and pretend will not work as there is no liquidity
to stretch loans. Miami-based banking consultant and economist Ken Thomas
has tracked what he said are 500 "problem banks," 10 percent of which
are in Florida.
“There is no clear, easy way
out for housing,” said John Silvia, chief economist
at Wells Fargo. “Contrary to my
hopes, housing prices and the housing market in general will
weaken again.” He forecast a new decline in prices
of as much as 10 percent, which he expected to shave a half-point
off the nation’s economic output just as it emerges from the
recession.
"I'm a firm prophet of the 'W' shaped recovery.
Housing is going to go down again
in the first quarter of 2010," said Steve Horne,
CEO of Wingspan Portfolio Advisors, a firm that facilitates
loan modifications. "The real healing won't begin until all
these nonperforming loans start trading in earnest, until we
get these borrowers back on their feet."
Oil prices rise above $80 putting additional stress on
manufacturing, transportation and agriculture. Solid
US growth of the past decade and earlier was dependent on asset bubbles
to fuel consumer spending and cheap oil. With the rising oil all bets
for re-inflating the economy (aka kicking can down the road) are off.
Permanent jobs became more rare. There is a steady
stream of conversion of full-time jobs to self-employed/part time jobs.
Freelancers, independent contractors, consultants, part-timers, contingent
employees and the self-employed now make up 30% of the workforce. There
are an estimated 42.6 million of them in the U.S., and the number is
steadily growing. Independent workers
do not qualify for the essential benefits, such as
health insurance and retirement protections, that corporate employers
have traditionally supplied. Most independent workers don't qualify
for
unemployment benefits. Many are burdened with unfair taxes.
Outsourcing of US jobs continues ( albeit at slower pace ).
Almost ten times difference in salaries of It workers in Asia and the
USA makes outsourcing of various services (for example
IT outsourcing)
very attractive financially despite problems in a long run. Undocumented
workers further distort the picture.
The hidden cost of war will weight on weakened economics more
heavily in 2010. If you think about that annual cost per soldier
to be approximately $1 Million and
Obama May Add 30,000 Troops in Afghanistan that's additional
30 billion tag.
The latest internal government estimates place the cost of
adding 40,000 American troops and sharply expanding the Afghan
security forces, as favored by Gen. Stanley A. McChrystal, the
top American and allied commander in Afghanistan, at $40 billion
to $54 billion a year, the officials said.
Any expectations that Obama would show some sense of restraint
about military spending have long ago vanished.
"It is my intention to finish the job” translates to "I will
blow another $3 trillion war mongering if that is what it takes".
And of course Pelosi does not think war idiocy should be at
the expense of domestic idiocy.
War mongers want war but they
do not want to pay for it. Sadly, Obama, Bush,
Pelosi are all alike. Thus, Congress and the Administration
is committed to having military idiocy and domestic idiocy at
the same time.
God do we ever need a balanced budget amendment and a sound
currency. We should not fund a damn thing unless we are willing
to raise taxes to pay for it. Virtually no one but the war mongers
and the military beneficiaries would be in support of raising
taxes to pay for this monstrosity.
Children of baby boomers are about to join workforce. Essentially
net job growth might occur only if three sectors: health, education
and government related jobs. Municipalities are under tremendous financial
stress and will start shedding jobs in late 2010.
Many part time employed are actually hidden unemployed as their
earning does not provide for a living wage.
There has been some evidence of a shift by employers
to more temporary workers ("We are all temporary now!").
Increase of temporary workforce is the most trend that signifies
a changing employment relations and social structure.
Most recent research throw "cold water on the notion" that temporary
workers turn into full-time workers. The notion that temp
positions help low-skill workers to acquire experience and eventually
join the permanent workforce in better long-term jobs. Actually
opposite, very brutal process is happening. Many waiter/waitresses
has a college degree and are pretty proficient in calculus and/or
C language.
The US workforce (and Japan's and Europe's) have been increasingly
temporary for many years now.
Even most 'permanent' jobs don't have the protections of seniority
etc., and are basically temporary in nature.Due
to capturing of the government it can block any significant
reforms.
Automation and the recent advances in robotic and computers make
more and more workers redundant. Computers eat peoples job.
Manufacturing jobs continue to disappear not only due to outsourcing
but also due to new technology. The reality is that manufacturing employs
a mere 11.5 million workers in the U.S.A., or 9% of the workforce and
this percentage will not increase substantially.
Indirect job creation strategies via stimulus to businesses seized
to produce meaningful job generation. Reaganomics
has put the U.S. economy into a high-unemployment equilibrium
when the high-rate of labor unemployment is reinforced by the shortage
or absence of idle, but useful capital stock due to outsourcing and
low consumer demand due to high level of debt. Only service sector
and financial jobs can be generated with minimum capital infrastructure
(for financial jobs internet connection and computer are almost all
that needed). Automation of production lead to less and less workers.
Confidence is really low. Employees have no confidence in
their jobs, therefore are not consuming much. Businesses have no confidence
in consumers, therefore are not hiring much and scaling down the production.
This chicken-egg-chicken-egg cycle has to be broken, but I am really
puzzled how that is going to happen
The economic strategy of the last two administrations was/is
based on pushing wages down to make the economy more competitive with
Chinese and other Asian economies. State explicitly refuse to protect
well-being of the people beyond bare economic survival:
“Labor market conditions for 16-19 and 20-24-year-olds in the
city of Chicago in 2009 are the equivalent of a Great Depression-era,
especially for young black men.”
In 2008, a startling 91.6 million people — more than 30 percent
of the entire U.S. population — fell below 200 percent of the federal
poverty line, which is a meager $21,834 for a family of four.
the proportion of American marriages in which the wife
makes more money rose to 22% in 2007 from 4% in 1970.
In the face of growing
unemployment the current administration proved to be as incompetent
as Bush administration in case of Hurricane Katrina. And that means
totally incompetent.
The USA as a whole is facing the worst labor market prospects since 1929.
In terms of duration of elevated unemployment we already rival the early
80s. But in no way we can expect a steep decline in the rate of unemployment
in the way that happened in 1983 when unemployment declined at a brisk 2%.
And permanent high unemployment creates economic conditions that feel like
the USA brought back slavery. The new reserve army of the unemployed
drives wages down, while average productivity continues to rise, as a way
to generate surpluses to be channeled into executive bonuses.
The whole
sectors like IT were decimated by outsourcing. Unfortunately
given the current overcapacity and ample supply of qualified job seekers
in many occupations, I certainly don't expect labor arrangements and employment
conditions to become more favorable.
Looks like 10% unemployment is going to become the "new normal".
In any case government statistics is very suspect (see
Fake
Employment Statistics). For example, the declining participation in
work force means that actual unemployment rate is higher then reported.
Obama-Bush administration saved banks waiting most of taxpayers
money and piling up debt in hopes that they restore credit flow in the economy.
But this was a fallacy: banks aren’t lending to prospective home buyers,
small businesses and real estate developers because bankers recognize the
obvious — we’re in a depression; many of those loans won’t get repaid.
Of course, as bankers refuse to lend, the depression becomes a self-fulfilling
prophecy. But since society is burdened with too much debt, piling on more
debt would not be the solution in any case. There is no smooth, painless
route back to the easy-money based false prosperity of Reagan-Clinton-Bush
era (age of leveraging). We entered the age of deleveraging. Obama’s
“you owe us” message to the banks is the height of naïveté’ and tells us
a lot about him. In 2009 our problems are worse than they were in 2007 before
the crisis. Peak credit is as dangerous for the economy then peak oil...
The inability of the economics profession to forecast unemployment in
the short, medium, or long run would be downright comical, if not for the
human tragedy involved. While the Occam Razor approach suggests incompetence
as a culprit, I think it's more of a corruption issue (with some "don't
rock the boat" variations).
First of all, economists much like elected officials and Wall Street
executives have a vested interest
in keeping the perception of a robust economy. The employment data
announced each month are critical to this perception. That's why government
"prints up jobs out of thin air" the same way the Federal Reserve prints
money. This is economic propaganda and as such it is not that much different
from the over-stated earnings practiced by companies of all striped and
colors.
Few of this city's recent celebrations of Franklin Delano Roosevelt's
100th birthday have passed without nostalgic references to the Civilian
Conservation Corps, that President's cherished vehicle for getting thousands
of jobless, hungry youths off the streets and putting them to work refurbishing
the nation's parks and forests.
With today's unemployment rate nearing a postwar high and new thousands
of young people again unable to find work, Congress is preparing to
wrestle with the Reagan Administration for money to start a new youth
job training program and reconstitute the Job Corps, the pale copy of
the old C.C.C. that emerged in the Carter days.
But there is little
in these plans that is likely to reproduce those Depression era pictures
of sturdy, bare-chested young men planting trees, building bridges and
saving the nation's battered farmlands.
Nor is today's procedure-encumbered Washington, where a year usually
elapses between idea and action, likely to duplicate the astonishing
start on the C.C.C., which four months after being conceived had been
approved by Congress and had more than 300,000 young men being clothed,
housed, fed and paid $30 a month while they breathed all that fresh
air.
In this crisis the main lesson was that theologically captured by free
market fundamentalism government can destroy economy at a really staggering
rate. Eight years of Clinton and eight years of Bush administration
(see The Economic Consequences of Mr. Bush, by Joseph E. Stiglitz) are as
good proof of this as one can ever get. Clinton and Bush regimes (especially
Rubin-Greenspan alliance and "vice president from an undisclosed location")
were not simply stupid, they prove to be a real wrecking crew. But that
does not mean that government cannot put it weight on easing the unemployment
burden. Incentives such a investment tax credit matters. Not tax cuts for
the rich, but direct investment credit. direct job creation which is anathema
to market fundamentalism would be even better and less costly. Roosevelt
administration did it, so why not capitalize on positive experience and
develop it further ?
In this crisis the main lesson was that theologically
captured by free market fundamentalism government can destroy
economy at a really staggering rate.
In any case socializing losses and privatizing gain (crony capitalism)
should be downsized. Insurance for gambling by big banks should be
cut.
As long as economists believe their report card is the rise in GDP (GDP
Mania), we will remain in a failure mode. A country is not defined by
GDP but by the quality of life of its citizens. And quality of life cannot
be assessed by one-dimensional metric such as GDP. This is a stupidly primitive
model. The key dimensions for well-being are: employment, earnings, wealth,
health, infrastructure, and living conditions. In that particular
order. With employment as the critical factor: the USA looks like
an underdeveloped banana republic by the current measure of unemployment
and in many respect has became such.
It looks like high persistent unemployment is the defining feature of
this recession and can last for several years, if not a decade. Jobs
creation prospect in 2010 look pretty grim -- there is no sector other then
government that can absorb redundant workforce and automation in manufacturing
makes sure that those who are unemployed right now will stay unemployed
in the foreseeable future. Many jobs cut are permanent, not temporary,
especially in such sectors as IT (structural shift). As Robert Reich noted:
...The basic assumption that jobs will eventually return when the economy
recovers is probably wrong. Some jobs will come back, of course.
But the reality that no one wants to talk
about is a structural change in the economy that's been going on for
years but which the Great Recession has dramatically accelerated.
Under the pressure of this awful recession, many companies have found
ways to cut their payrolls for good. They’ve discovered that new software
and computer technologies have made workers in Asia and Latin America
just about as productive as Americans, and that the Internet allows
far more work to be efficiently outsourced abroad.
This means many Americans won’t be rehired
unless they’re willing to settle for much lower wages and benefits.
Today's official unemployment numbers hide the extent
to which Americans are already on this path. Among those with jobs,
a large and growing number have had to accept lower pay... Or they've
lost higher-paying jobs and are now in a new ones that pays less.
The current crisis also means that financial services and real estate
(FIRE) economy, this gigantic casino that the US government was trying to
build for the last 25 years is now in trouble and shed workers in vast numbers
(although working condition in financial industry are still good or very
good depending on your position in the food chain). But the profitability
of large banks is now under the question as the most profitable essentially
converted themselves into hedge funds, getting most profits from trading
operations, not from the traditional banking activities.
The simplest and the most obvious solution is to cut work week and hours
of work (4 days six hours a day). That will put enough people to work to
make unemployment bearable and it might slightly help entertainment and
hospitality industries which now is suffering more that others. From the
other point of view if lower standard of living is inescapable why not to
make the transition smoother and more fun by cutting work hours.
Mauldin: Unemployment is likely to continue to rise and last
longer than ever before. We have to take care of the basic needs of
those who want work but can't find it. Unemployment insurance should
be extended to those who are still looking for work past the time for
benefits to expire, and some program of local volunteer service should
be instituted as the price for getting continued benefits after the
primary benefits time period runs out. Not only will this help the community,
but it will get the person out into the world where he is more likely
to meet someone who can give him a job. But the costs of this program
should be revenue-neutral. Something else has to be cut.
Mish:
Can we deal with 15 million volunteers? Somehow I doubt it.
Mauldin: We have to re-think our military costs (I can't believe
I am writing this!). We now spend almost 50% of the world's total military
budget. Maybe we need to understand that we can't fight two wars and
support hundreds of bases around the world. If we kill the goose, our
ability to fight even one medium-sized war will be diminished. The harsh
reality is that everything has to be re-evaluated. As an example, do
we really need to be in Korea? If so, why can't Korea pay for much of
the cost? They are now a rich nation. There are budgetary fiscal limits
to being the policeman for the world.
Mish: Bingo. We can easily slash our military budget by 70% and still
be the most powerful nation in the world. Moreover, it is time to declare
the war in Iraq and Afghanistan over, pack our bags and leave. Gradually,
over the next 5-8 years we should bring home all our troops from literally
every county they are stationed.
The US House of Representatives passed a 680-billion-dollar defense
authorization bill on Thursday that includes funds to train Afghan
security forces and more mine-resistant troop carriers.
Lawmakers
defied President Barack Obama's veto threat and approved 560 million
dollars to continue work on an alternative engine for the F-35 fighter
jet built by General Electric and British manufacturer Rolls-Royce.
The compromise legislation would also raise military pay by 3.4
percent -- half a percentage point higher than Pentagon recommendations
-- and assign 6.7 billion dollars for mine-resistant armored vehicles
known as MRAPs, which is 1.2 billion dollars more than the administration
had proposed.
Nearly $700 billion dollars of "defense" spending. The amount needed
for actual defense is 20% of that at most, and more likely 5%. Balancing
the budget is easy if you start here.
Mauldin: Glass-Steagall, or some form of it, should be brought back.
Banks, which are subject to taxpayer bailouts, should not be in the
investment banking and derivatives-creating business. Derivatives, especially
credit default swaps, should be on an exchange, and too big to fail
must go. Banks have enough risk just making loans. Leverage should be
dialed down, and hedge funds selling what amounts to naked call options
in any form, derivative or otherwise, should be regulated.
Mish: What we need to do is get rid of the Fed, FDIC, and fractional
reserve lending. Regulation has failed every step of the way. Regulation
created Fannie Mae, Freddie Mac, and the Fed. Regulation by the SEC
anointed Moodys, Fitch, and the S&P as debt rating companies. We do
not need more regulation, we need less regulation, a sound currency,
and no Fed. Regulation is clearly the problem, yet the cries for still
more regulation come from nearly every corner save the Austrian economists.
Mauldin: Let me see, is there any group I have not offended yet?
But something like I am suggesting is going to have to be done at some
point. There is no way we can continue forever on the current path.
At some point, we will hit the wall. The fight between the bug and the
windshield always ends in favor of the windshield. The bond market is
going to have to see a credible effort to get back to a reasonable deficit,
or we risk a very difficult economic environment. The longer we wait,
the worse it will be.
Expecting 8% returns in a 4% world. When 30 year treasury bonds
are yielding 4%, the dividend yield of the S&P 500 is 2%, and the
S&P 500 PE is 140 (26 if you use operating earnings), 8% returns
are from Fantasyland.
Pension benefits start too early. People are living longer.
Private employees do not receive these kind of benefits. Public
employees should not either, especially at taxpayer expense.
Indeed, continuing to chase high-yield in a low-yield world
is a guarantee those plans will blow up again down the road.
Pension plans are so underfunded that it is virtually impossible
to catch up, no matter what risks the plan managers undertake. When
asked how long it would now take for its investments to put the
fund back on track, Ohio officials simply said: "Infinity."
At first the unemployed searched eagerly
and diligently for alternative sources of work.
But if four months or so passed without
successful reemployment, the unemployed tended to become discouraged
and distraught.
After
eight months of continuous unemployment, the typical unemployed worker
still searches for a job, but in a desultory fashion and without much
hope.
And within a year of becoming unemployed
the worker is out of the labor market for all practical purposes: a
job must arrive at his or her door, grab him or her by the scruff of
the neck, and through him or her back into the nine-to-five routine
if he or she is to be employed again.
There are two popular unemployment measured U3 (official unemployment
rate, which dramatically understates real unemployment) and U6, which is
close to actual unemployment rate as was measured during the Great Depression.
U3 is often as low as half of U6 (that's why it sometimes called 50
cents unemployment rate). As
The
Big Picture note in the entry Unemployment Reporting
U3 is the "official unemployment rate" according
to the BLS website. Due to this, it is the current measure of Unemployment
that gets focused upon by most media, and therefore the public.
It has, over the years, slowly excluded many of the factors that
USED to go into how the US reported unemployment. Hence, there has
been a gradual decrease in the Unemployment rate that has occurred
regardless of what was happening in the Jobs market. U3 is now comprised
in a way that merely repeating it without a slew of caveats borders
on fraud.
U6, on the other hand, is the broadest measure of Unemployment:
It includes those people counted by U3, plus marginally attached
workers (not looking, but want and are available for a job and have
looked for work sometime in the recent past), as well as Persons
employed part time for economic reasons (they want and are available
for full-time work but have had to settle for a part-time schedule).
Its been pretty obvious for sometime that the Financial
Media are doing a disservice to their readers by only reporting
U3, given how dramatically it understates Unemployment.
Indeed, consumer sentiment reports are at deep negative levels that
only occur when Unemployment is much than what U3 has been saying.
It is painfully obvious that U3 does not paint an accurate view
of the Employment situation.
Here's the experiment I propose: Let's start reporting both,
with appropriate descriptions of each. Report U3, add U6, provide
monthly and year over year changes. Let the reader see the full
picture, via BLS data.
U-1 Persons unemployed 15 weeks or longer, as a percent of the civilian
labor force
U-2 Job losers and persons who completed temporary jobs, as a percent
of the civilian labor force.
U-3 Total unemployed, as a percent of the
civilian labor force (official unemployment rate).
U-4 Total unemployed plus discouraged workers, as a percent of the
civilian labor force plus discouraged workers.
U-5 Total unemployed, plus discouraged workers, plus all other marginally
attached workers, as a
percent of the civilian labor force plus all marginally attached workers
U-6 Total unemployed, plus all marginally
attached workers, plus total employed part time for economic reasons,
as a percent of the civilian labor force plus all marginally attached
workers.
Robert Reich is not very optimistic about the "recovery":
The
Sham Recovery, by Robert Reich: Are we finally in a recovery? Who’s
“we,” kemosabe? Big global companies, Wall Street, and high-income Americans
who hold their savings in financial instruments are clearly doing better.
As to the rest of us – small businesses along Main Streets, and middle
and lower-income Americans – forget it. ...
Look more closely and the only ones doing better are the people and
private-sector institutions at the top. Many of America’s biggest companies
are sitting on huge amounts of cash right now, but that says nothing
about the health of the U.S. economy. ... America’s
biggest companies
are also showing fat profits and productivity gains because they continue
to slash payrolls and cut expenditures. ...
(None of this, by the way, is stopping supply-side fanatics from arguing
government needs to cut taxes on big corporations in order to spur the
recovery. Their argument is absurd on its face. Big companies don’t
know what to do with all their cash they have as it is. They aren’t
investing it in new plant and equipment and new jobs. So why should
the government cut their taxes and enlarge their cash hoards even more?)
The picture on Main Street is quite the opposite.
Small businesses aren’t
selling much... Americans still aren’t buying much. Small businesses
are also finding it difficult to get credit. ... Small businesses ...
are responsible for almost all job growth in a typical recovery. So
if small businesses are hurting, we’re not going to see much job growth
any time soon. ...
Some cheerleaders say rising stock prices make consumers feel wealthier
and therefore readier to spend. But to the extent most Americans have
any assets at all their net worth is mostly in their homes, and those
homes are still worth less than they were in 2007. The “wealth effect”
is relevant mainly to the richest 10 percent of Americans...
Add to all this the joblessness or fear of it that continues to haunt
a large portion of the American population. Add in the trauma of what
most of us have been through over the past year and a half. Consider
also the extra need to save as tens of millions of boomers see retirement
on the horizon. Bottom line: Thrifty consumers are doing the right and
sensible thing by holding back from the malls. They saved a little over
4 percent of their disposable income in fourth quarter of 2009. In the
months or years ahead they may save more.
Right and sensible for each household but a disaster for the economy
as a whole. American consumers accounted for 70 percent of the total
demand for goods and services in the American economy before the Great
Recession, and a sizable chunk of world demand.
So what happens when the stimulus is over and the Fed begins to tighten
again? Where will demand come from to get Main Street back, create jobs,
raise middle class wages? Not from big businesses. Certainly not from
Wall Street. Not from exports. Not from government.
So, where? That question is the big unknown hanging over the U.S. economy.
Until there’s an answer, an economic “recovery” for anyone other than
big corporations, Wall Street, and the wealthy is a mirage.
There's another consequence of the lagging recovery for labor markets.
Here's Paul Vigna:
Meet The New Welfare Queens, by Paul Vigna: There’s a new profligate
in town, one that isn’t working, isn’t looking for a job, but is just
sucking off the government teat while productive citizens slave away.
This new welfare queen can be found in living rooms across the country,
her (or his) feet up on the coffee table, sucking down a Fuze and turning
down job offers while they waste time watching The View. They’re almost,
go ahead and say it, European.
“Continuing to pay people unemployment compensation is a disincentive
for them to seek new work,” Sen. Jon Kyl
said... That’s right, you 11 million or so unemployed Americans
collecting benefits: you’re being “disincentivized” to work by a government
handout. And in the process, you’re robbing decent productive, working
Americans. It’s only a matter of time before Mark Levin or somebody
starts screaming about unemployment queens.
This is so wrong on so many levels, I’m not sure where to start with
it. The worst economic meltdown in our lifetimes has thrown more than
8 million Americans out of work. The jobs have simply vanished. ...
When employers are losing money because they can’t hire enough people
to keep up with demand for their products, and people are on the dole
for two years, then come to talk to me about lazy Americans. Not before
then.
Right now, there are precious few jobs, and for each of those precious
few, there are more than five unemployed people. Employers aren’t adding
jobs because people still aren’t sure how this whole thing’s gonna turn
out. And until real, concrete demand starts showing up, that’s going
to remain the case. ...
Then, of course, unemployment benefits are only a slim percentage
of your previous wages, so I find it very hard to believe there’s anybody
out there living it up on the dole. ... At the best, you may have some
two-income families that are making due on one income and the unemployment
checks for the time being. ... So let’s hold off on all the joyriding
jobless talk, shall we?
If Congress had instituted the job creation programs that were needed,
and done so in a timely manner instead of dragging their feet on the false
hope that recovery was just around the corner, there wouldn't be so much
resentment of those receiving government help since many of them would have
jobs. There would, of course, still be irritation from the deficit hawks
over the deficit spending that would have been required to create the needed
jobs, much more deficit spending than Congress was willing to put in place
was needed, but at least their ire would have been directed at the government
and Congress rather than the unemployed.
Conservatives whine about everything, and the noise they make is often
quite disconnected from the importance of the problem, so the mere fact
that they are making noise doesn't say much. The real problem is those who
refused to give the help that was needed, people like Jon Kyl. The people
sitting at home jobless as a consequence of this failure, people just trying
to get by until there are jobs again, are not the ones to blame.
Eric said...
America’s biggest companies are also showing fat profits and
productivity gains because they continue to slash payrolls and cut
expenditures. ...
Well, these seems to be a serious problem, if true. Because if this
is true, then re-hiring is going to be real far down on the list of
things to do. I am a little amazed that there is little comment on
restricting the labor supply. Make a serious effort to enforce the
immigration laws and my guess is that it will become considerably
easier for lower skilled Americans to profitably offer their labor.
And by serious, I mean a 15 or 20 year commitment to this.
Thirty states and the District of Columbia recorded over-the-month
unemployment rate increases, 9 states registered rate decreases,
and 11 states had no rate change, the U.S. Bureau of Labor Statistics
reported today. Over the year, jobless rates increased in all 50states
and the District of Columbia.
...
Michigan again recorded the highest unemployment rate among the
states, 14.3 percent in January. The states with the next highest
rates were Nevada, 13.0 percent; Rhode Island, 12.7 percent; South
Carolina, 12.6 percent; and California, 12.5 percent. North Dakota
continued to register the lowest jobless rate, 4.2 percent in January,
followed by Nebraska and South Dakota, 4.6 and 4.8 percent, respectively.
The rates in California and South Carolina set new series
highs, as did the rates in three other states:
Florida (11.9 percent), Georgia (10.4 percent), and North Carolina
(11.1 percent). The rate in the District of Columbia (12.0 percent)
also set a new series high.
After last Friday’s print of 9.7 percent for the unemployment rate,
more than a few pundits are calling the 10.1 percent jobless rate seen
back in October the high for the cycle. It seems to be
way too early to make that call
based on the millions of “discouraged” workers who, when they start
looking for work again, will suddenly count as “unemployed” again.
Stephen Roach seems to agree, figuring that the
real jobless rate today is 11.5
percent.
The odds of a double-dip recession are now 40 percent? That’s good
to know. There’s been a lot of talk about another downturn for the U.S.
economy, but it comes as news to me that they’ve already taken the time
to poll economists and that they were this pessimistic.
The shills on CNBC are going wild because of the “upside surprise.”
The trend is to replace peremanent work force with temp work force.
The Birth Death data finally
updated — it was +97k vs a +134k in February 2009 . . .
March 5th, 2010,
BLS:
Nonfarm payroll employment was little changed (-36,000) in February,
and the unemployment rate held at 9.7 percent, the U.S. Bureau of
Labor Statistics reported today. Employment fell in construction
and information, while temporary help services added jobs. Severe
winter weather in parts of the country may have affected payroll
employment and hours; however, it is not possible to quantify precisely
the net impact of the winter storms on these measures. For more
information on the effects of the severe weather on employment estimates,
see the box note at the end of the release.
By the numbers:
NFP -36,000
Unemployment Rate (U3) unchanged at 9.7%
Underemployed (U6) 16.8%
Unemployed persons unchanged at 14.9 million
Long-term Unemployed (jobless 27 weeks+) 6.1 million Note:
This category includes about 40% of unemployed people
Civilian labor force participation rate (64.8%) and Employment-population
ratio (58.5%) were each unchanged
Total Recession job losses (since December 2007) are 8.4
million
The average workweek (Hours worked) declined by 0.1 hour
to 33.8 hours (This was most likely the biggest impact of the
snow storms effect)
Temporary help services added 48,000 jobs. This is the 7th
consecutive month of temp help gains; Since the low in September
2009, temp help employment has risen by 284k.
Revisions: December ‘09 revisions improved from -150,000
to -109,000; January revised downward from -20,000 to -26,000.
Generally, Construction employment fell (64,000), Manufacturing and
Retail were unchanged...
Mike in Nola:
rktbrkr: Oil prices will likely be lower than now. We have the
conundrum that the commodity bubbles have been caused by stimulus
from BB and China because the free money has gone into speculation
instead of useful investment. Once things improve enough for the
stimuli (correct plural?) to be withdrawn, all the excess liquidity
that has fueled the speculation will cause the bubbles to collapse
and we will see pricing based on real supply and demand.
BTW, Bill Gross made some “well, duh” statements on CNBC (not
watching it myself) which were treated as some amazing revelation.
As he or El Erian has said, the Fed
has essentially written a $1.5T check which is fueling the markets.
1.2M hired for $14B census, I wonder how this compares to 4 years
ago, you’d think with increased automation and efficency the 1.2M
number would be lower than last time but I bet it isn’t!
B/D now online – http://www.bls.gov/web/cesbd.htm – +97k. Mostly
Leisure/Hospitality and Prof/Biz services.
a_moran3:
I’m not surprised at all by these numbers. The government is
making the problem much worse, however, what I find amazing is this:
Underemployed (U6) 16.8% if that is what I think it means, how do
they measure that?
Of course, though, the big investment firms on Wall Street aren’t
feeling the
pinch since they stole from me, you and Joe!
Pat G.:
“-Temporary help services added 48,000 jobs” And there have been
way more hired for the Census than that number includes…
rktbrkr:
According to the Financial Times, the U.S. is hiring 1.2 million
census workers for the 2010 national head count that starts in April
– twice as many as were needed for the 2000 census. While census
workers are government employees, they do not appear to be showing
up under the government category in the monthly non-farm payrolls
employment report (hiring began by March 2009). The Bureau of Labor
Statistics appears to be counting these temporary jobs in the Business
and Professional Services category. As a consequence, the employment
numbers make the U.S. economy look much better than it really is.
The recession is taking away opportunity for the young to gain employment
experience, and many who are employed are working below their abilities
in jobs they are likely to get stuck in for many years, if not forever.
The recession is wiping out the accumulated assets of the unemployed
as they try to bridge the gap until jobs return, and since many of these
are older workers, this will have a large detrimental effect that lasts
throughout their retirement years. Recessions cause skills to depreciate,
there are psychological costs, there are costs to family members, the
loss of a job generally means loss of health care, the costs to working
class households go on and on.
It is worth repeating that many of the externalities of the financial
crisis are likely to become perpetual, as middle-aged workers are forced
to retire and young workers are unable to develop the skills that they might
otherwise have gained, leaving them permanently handicapped in the future
job market. The gravity of this situation is so strong that has produced
a
temporary respite from America's partisan sclerosis, as lawmakers push
for a government solution.
Roughly one in ten Americans is officially unemployed, with the effects
of unemployment becoming more dire, yet America's GDP managed to grow at
5.7 percent last quarter. What explains this juxtaposition?
Thoma blames taxpayer-funded financial bailouts, calling for more support
at the bottom of the income pyramid:
The fact that many of the costs were concentrated among those least
able to pay them stands in contrast to the fact that the bailout benefits
were concentrated among those at the opposite end of the income distribution.
Government transfers to compensate low income groups for the costs
they were forced to pay but had no hand in causing, transfers that are
financed by those who received the benefits during the bubble years
and the bailout money when the bubble popped, seem more than justified.
...If Congress doesn’t pass the debt ceiling, the Treasury can default.
But this constraint is not operationally inherent in the monetary system.
It is put there by the same Congress that could (and should) revoke
the unnecessary constraints, much as the European Union could (if it
chose to do so) could eliminate its arbitrary rules limiting government
expenditure. This is a problem of “willingness to pay” and not “ability
to pay”, as the government is at all times in control of its spending
process. In short, here we have the Chairman of the Federal Reserve
openly acknowledging that, short of voluntary political constraints,
there are no financial constraints on the ability of a sovereign nation
to deficit spend.
To anticipate the usual objections that we usually
encounter whenever we point this out, please note that this doesn’t
mean that there are no real resource constraints on government spending;
this should be the real concern, not financial constraints. Government
spending should be analyzed in regard to its effects on the real economy,
which means that it should, like Goldilocks, be neither “too hot” (or
else inflation will result), or “too cold” (as is the case today, where
we have an economy characterized by high unemployment and significant
resource underutilization) Debating whether the social losses due to
operating below full employment are higher than economic losses due
to inflation or currency depreciation, are germane discussions to POLITICAL
debate, but totally separate from the issue of national solvency.
So what’s with the Fed Chairman’s obsession with fiscal sustainability,
when Bernanke knows that there is no insolvency issue?
There’s obviously a degree of self-interest here. As head of the
nation’s central bank, Mr. Bernanke (like any other central banker)
is keen to assert the primacy of monetary policy over fiscal policy,
despite the fact that the former’s impact on real economic activity
is far more ambiguous. The manipulation of interest rates may be used
to control inflation and that inflation expectations may have an influence
on the spreads at the longer end of the yield curve. But the way in
which interest rate manipulation (that is, monetary policy) impacts
on inflation is unclear: rising interest rates certainly increase costs
for borrowers and may choke of aggregate demand but equally they increase
incomes for those with interest-rate sensitive portfolios which may
add to aggregate demand. Fiscal policy, by contrast is far more targeted
in terms of the impact it seeks to achieve.
There is also a political dimension: the financial class (whose views
still reflect the predominant economic thinking at the Fed and on Wall
Street), benefits from the deflationary bias imparted as a consequence
of these artificial financing rules, which are remnants of the gold
standard era. But in reality this is a denial of the essence of the
fiat monetary system that we now live in and there is thus no economic
basis for these constraints. Keeping unemployment high provides a strong
means of disciplining wage demands and enhancing profits.
A stable ratio of federal debt to GDP may or may not be the right
policy objective. But it is neither more nor less “sustainable,” under
different economic conditions, than a rising or a falling ratio and
Mr. Bernanke implicitly recognized that in his testimony today. We wish
he had gone further. It is not, as
Professor James Galbraith has argued, “a hidden evil. It is not
a secret shame, or even an embarrassment. It does not need to be reversed
in the near or even the medium term. If and as the private economy recovers,
the ratio will begin again to drift down. And if the private economy
does not recover, we will have much bigger problems to worry about,
than the debt-to-GDP ratio”.
dave:
So spending like a drunken sailor doesn’t cause inflation, except
when its wasteful (like it usually is). And an example of wasteful
activity is warfare (we are two wars) and transfer payments (bailouts).
And inflation is suppose to be great for the common man, except
when you believe that wages don’t seem to keep up with prices, which
you think is true today.
So what exactly was your point again?
Thomas Barton:
I believe this comment reflects the view that we are inexorably
headed to a Japan super-stagnation situation. I wonder if Yves or
someone else could discuss the possibility that one major economy
can flounder for a decade and a half when it has several large growing
economies to sustain it while now we are entering an EU debt and
US debt contagion which surely changes the dyanamic of the Japanese
economy or does it ?
steve from virginia:
I appreciate it when Mr. Auerback publishes that there are some
limits to deficit spending outside the mechanical process that is
able to produce lending in one’s own currency to a degree greater
than common sense might otherwise indicate:
“To anticipate the usual objections that we usually encounter
whenever we point this out, please note that this doesn’t mean
that there are no real resource constraints on government spending;
this should be the real concern, not financial constraints.
Government spending should be analyzed in regard to its effects
on the real economy, which means that it should, like Goldilocks,
be neither “too hot” (or else inflation will result), or “too
cold” (as is the case today, where we have an economy characterized
by high unemployment and significant resource underutilization)
Debating whether the social losses due to operating below
full employment are higher than economic losses due to inflation
or currency depreciation, are germane discussions to POLITICAL
debate, but totally separate from the issue of national solvency.”
I agree about national solvency. I also agree that most economic
knuckleheads pundits don’t ‘get it’. I don’t agree that there are no finance limits to sovereign finance.
The issue is credibility. A ten- quadrillion dollar
deficit is absurd. A ten year old knows its absurd. No country can
service a ten- or twenty- or three hundred gazillion- quadrillion
dollar deficit. There are limits – money limits – to sovereign borrowing.
The biggest real limits are resources,
claims against them and reality. Auerback’s remark,
“where we have an economy characterized by high unemployment and
significant resource underutilization,” is an economic mischaracterization
that undermines his greater thesis.
The problem of all the world’s economies – including China’s – is
the OVER utilization of resources leading to credit distortions
and reliance on borrowing/deficit spending to create paper substitutes
for the overutilized resources.
The result of this deficit spending is a (large and increasing)
surplus of claims against a declining resource base. I know, I know,
Auerback uses a word resource that means a lot of funny economic
things that don’t matter …
The resource that matters is oil and it’s vanishing in its most
important iteration – the cheap form.
$20 oil has disappeared forever and nothing the Treasury,
Barnanke, Auerback or anyone else can do can bring it back.
Without cheap oil resource, the vast and varied oil dependent infrastructure
that makes up the equally vast majority of our modern world is stranded
and unprofitable to operate.
Welcome to the great economic meltdown, beginning around 2000.
Peak oil took place in 1998, people! We don’t have ten or twenty
or eight gazillion years to get ready for it. The ship left the
dock over ten years ago and all the calamities promised by the ‘Peak
Oil Theorists’ have already begun … to bite us on our collective
asses!
Auerback has as always put the finance cart before the energy
horse and his argument dissolves as a consequence. Even though it
is a decent one – it’s irrelevant. It
doesn’t matter how much the Treasury can borrow, it cannot borrow
energy and the Fed cannot print oil or jobs.
john haskell:
Thank you Steve. I’m glad to see I am not the only person in
America who is getting tired of Auerback.
“We can service any amount of debt we want… we have a printing
press!” is not a persuasive argument to any thinking person and
I’m shocked at the number of people who are willing to give him
a forum.
Francois T:
The result of this deficit spending is a (large and increasing)
surplus of claims against a declining resource base. I know, I know,
Auerback uses a word resource that means a lot of funny economic
things that don’t matter …
The resource that matters is oil and it’s vanishing in its most
important iteration – the cheap form. $20 oil has disappeared forever…
OK! So…we have to adapt to this new set of circumstance, whether
we like it or not. Which means adoption of new technologies (the
plural is intentional here) and new behaviors. I don’t buy the argument
“after oil came the Great Void”, unless of course, we fail to adapt.
So, what does the above has to do with the gist of Marshall’s
post?
steve from virginia:
It also should be pointed out that sovereign borrowing/spending
only gains traction when credit multipliers are functioning. Otherwise,
there is no new money being created – as is the case right now.
No new money, lack of velocity, the new hard dollar (pegged
to crude oil by the swing producer Saudi Arabia)
misguided inflation fears on the FOMC … the new super- hard petrodollar
means deflation is hitting the US economy like the hammer of Thor.
If you think times are tough on Main Street America this year,
check back this time NEXT year!
nowhereman:
Look, I’m pretty unschooled when it comes to economic jargon,
but what I know is this…no matter what happens, the middle class
will pay.
Until we stand up against TPTB we have no HOPE.
While MISH and his crew rail against the unions protest against
having to pay for the sins of the banks and their monoline enablers,
maybe we should be joining in the protest.
Who stole our pension funds? Who sold garbage to municipal bonds?
Who stole our future? Who’s going to get away with it by making
it our problem, not theirs. Why do we fall for this crap, are we
that insecure in ourselves that we allow these assholes to define
the situation.
We need to grow a set and call them out on this. All of them,
Goldman, Dodd, Pelosi, Bernanke, Geithner, Summers and Obama. Times
up gents, The Jig is up. We don’t believe a word you say, you lying
bastards.
Hugh:
Marshall Auerback nails it.
“The reality is that all questions of “national insolvency”
or fiscal sustainability go by the wayside whenever Wall Street
or some other major corporate interest demands a hand-out from the
government.”
The same could be said for the wars or tax cuts for the rich.
It is, as he says, a question of willingness. For our political
classes and financial elites, deficit spending never stops them
from what they want to do. And yes too, it is a matter of credibility.
This is what the Bush and Obama Administrations have been running
through far faster than any debts we have accumulated. The truth
is we could be running much higher deficits than currently if there
was a real perception that our government had a solid plan for the
economy and a strong commitment to it. Of course, what we see is
the very opposite. We see a muddle, deficits and a lack of direction.
This does not destroy but it does weaken the resources we have to
deal with the economy. I am a broken record on this, but the greatest
obstacle to economic recovery is our elites.
Jim:
So do the MMT boys and girls believe
that the Treasury Secretary and the Federal Reserve Chairman were
acting in the public interest when they stepped in, with the help
of Congress, to save the private financial oligarchy?
Do the MMT boys and girls believe that both the private financial
oligarchy and the sovereign state sector have mutual interests which
end up facilitating massive wealth transfers to themselves at the
expense of the American people?
Do the MMt boys and girls assume that there is a level playing
field or do they recognize that their analytical framework does
not come close to dealing with this issue?
Do the MMT boys and girls see that their appropriate critique
of neo-liberalism combined with their fawning analysis of the state
sector leads many of them (not all) to endorse a standard left/right
paradigm which is politically inadequate and, in fact, a hindrance
to understanding and changing the corrupt structure of power that
has evolved in the U.S. since the early 1970s?
Matt Franko:
Jim,
It’s like you can’t even read….to answer any of your questions just
read Auerbacks post or any other of his recent posts.
MMT is not a “morals” issue, it is just a recognition of the
realties of how our Treasury and Central Bank actually operate….no
paranoid conspiracies.
bob goodwin:
I am currently reading Rogoff right now, and he goes to great
pains to elaborate on ‘ability to pay’ and ‘willingness to pay’
as being variation on a similar theme, as he states that countries
never go belly up, they just simply find that the benefits of a
partial default are sufficiently high for the government to chose
to do so.
The US does not have a history of outright default, but he does
claim inflation (70s) and debasement (30s) is the US way of achieving
default.
He also is unambiguous that we are likely to head one of these
directions again sooner than later. We have an exorbinant privilege
visa-vis the dollar, and history tells us governments act only as
prudently as they need to.
A typical bank crisis raises debt by 70%, and our bank crisis
is not over yet. By his numbers we will be have very high debt levels
compared to most countries who end up defaulting.
Higher short interest rates will push sovereigns over the edge.
nonsense:
WTF is this-
The manipulation of interest rates may be used to control inflation
and that inflation expectations may have an influence on the spreads
at the longer end of the yield curve.
Reply
suggestion says:
February 26, 2010 at 7:58 am
Short. Declarative. Sentences.
The manipulation of interest rates may be used to control inflation.
Inflation expectations may have an influence on the spreads at
the longer end of the yield curve.
Reply
Ignim Brites says:
February 26, 2010 at 8:32 am
So the money question for Mr. Auerback is: What level of deficit
spending would be consistent with restoring full employment within
the next two years? Five, Six, Seven trillion per annum? And why
not shoot for it this year by going for a deficit of say eight or
ten trillion? Maybe these numbers are high. Maybe they are low.
The point is that Mr. Auerback seems to imply that with unemployment
so high there really are no resource constraints on high deficit
spending. Well, he should put out a number.
dwight baker says:
We the few in the many! Have been summoned for a time such as
this. To rise up against the FOES that are within us disguised as
Politicians, Pundits, and Warring Generals and Corporate billionaires
with sin sick mean cruel lust and love for money agendas.
By Dwight Baker
February 25, 2010
Dbaker007@stx.rr.com
Birds Eye View Pointing the Finger for We the People Advocates
Yes those are ‘the one’s hired by us’ but they represent the
will of the Military Industrial Complex and the Old Line of Barons
who have been in control of our nation for over 200 years. Some
in Politics have thought of We the People as PUSH OVER’S. Those
thoughts have emerged from the supposed intellects that comprise
many of the think tanks that earn their living by studying out the
best of ways of how to lie, cheat, steal and finally defeat us.
WHY, are We the People the object of such attention? It is our
communed held wealth in our People and Property. The real value
of We the People living in our Rich and Abundant America far exceeds
$400 Trillion net worth. And for over 200 years our individual industrious
genius has been clearly seen in our creativeness in producing wealth.
The deist lust for our wealth and to that end all of these people
doing these things are out there to destroy the will of We the People
to fight back.
We the People by accumulating such wealth have been ‘set up’
for the siege led by Barbarian Predator Beast Wiccans along with
the Barons of old worshiping the Devilish Canaanite religions. We
have been ‘set up’ to be run over and overcome from within by our
own elected Politicians, Pundits and Warring Generals. Included
with them are the many of the Giants in the corporate cultures as
Billionaires who have believed in and become converts to the same
failed religious views known as Deist. They have been allowed to
run rough shod over us time and time again without We the People
standing up against them as in times gone by, when our true blue
agrarian Patriots in our rich history resisted such tyranny.
The siege was set up long ago and is operating today as many
have seen done — too:
1. Demoralize the American People
2. Refuse to enforce the Laws against the many white-collar criminal
minded and the controlling Predator Beast elite that are the worst
of all offenders and defy the laws and have the legal staffs to
put off prosecution and they have known and used ways to bribe Federal
Judges to get decisions as too their wishes.
Note: Our Present elected Federal officials have proved they cannot
enforce our laws loosing 1/2 of the money spent on Medicare and
Medicaid because of fraud. Therefore proving that the RULE of LAW
does not exist as a NEED to DO item on the top priority. Since the
beginning of the Medicare program, CMS has contracted with private
companies to operate as intermediaries between the government and
medical providers.[5] These contractors are commonly already in
the insurance or health care area. Contracted processes include
claims and payment processing, call center services, clinician enrollment,
and fraud investigation. Medicare contracts with regional insurance
companies who process over one billion fee-for-service claims per
year. In 2008, Medicare accounted for 13% ($386 billion) of the
federal budget. In 2010 it is projected to account for 12.5% ($452
billion) of the total expenditures. For the decade 2010-2019 medicare
is projected to cost 6.4 trillion dollars or 14.8% of the federal
budget for the period.[35]
3. Lie about the REAL VALUE of our communed held wealth.
4. Confuse to diffuse ALL the real Care for US issues at hand
5. Divide the American People in warring factions one against another.
6. Destroy the Republican Party leaving We the People uncovered
by the protections of our Laws in our Constitution guaranteeing
our sovereignty.
7. Continue the dilemmas in the ravages of un-justified wars abroad
spending our communed wealth without our agreements and destroying
our young for no Real American Purpose.
8. Strip away our communed owed obligations to each other and our
personal defenses in an orderly devious and seemed legal way.
Propel hypocrisy as just a rule for those to follow inside the Beltway
of Washington DC.
The above things and matters have been created and envisioned
by those listed below to totally enslave us sooner than most of
We the People think.
The Pirates [offenders] in the New World Order will continue
to strip from We the People our sovereignty and our love admiration
and honor we hold as sacred for our People and Property. The language
that We the People use should be revised to declare —we name the
names of the offenders and their offense spelled out in proper legal
form. Listed below.
Why, should we do that? To let ALL of them know foremost and
at first dawn daily that their CON’S HAVE RUN THE COURSE and they
are coming out as the rejected and dejected losers. And sooner than
they think — they will be charged and indicted for misdemeanors,
felonies and acts of treason against We the People and prosecuted
with the authority found in our Constitution as the Law.
A Partial list of our FOES.
http://mapper.nndb.com/maps/286/000003277/
I submit you do the math. By doing you will see the CONS.
Medicare (United States) – Wikipedia, the free encyclopedia
http://en.wikipedia.org/wiki/United_States_federal_budget
My take STOP THE WARS—STOP THE FRAUD —COLLECT 12.9% taxes from
our Corporations. All then will work out just fine.
Forget most you hear and see on National TV and found in the
Internet Progressive Media but never forget to:
Stand up and Shout out Stop This Madness
STOP ALL THE WARS.
This message brought to you by We the People Advocates
Pass along — publish if you will in part or complete
By Dwight Baker Grassroots Organizer for those who want to think
clearly using sanguine sane common sense and reason working toward
civility using sanity. With facts in history as our guide under
the control of each ones own conscience! Where your voice is heard
and your vote is counted. We the People Advocates
Dwight Baker PO Box 7065 Eagle Pass TX 78853 Tel 830-773-1077
RPB:
Sure, we can print as much money as we like. No one would ever
argue there is a physical constraint on a fiat currency. That would
be an exercise in sheer stupidity.
The problem, still, lies with the crowding out effect of private
investment, the global limit to simultaneous debt creation, and
the limit to export absorption. Japan was only able to avert a depression
over the last two decades by means of its willingness to depreciate
its currency in order to export and by keeping its low interest
rates its deficit. However, Japan is the perfect example of why
Keynesian stimulus is not the correct solution. After experimenting
for two decades with these types of policies they show virtually
no economic growth, face a retirement crisis and destroyed many
resources in meaningless make work projects. That withstanding,
save four identities, Japan would have gone into a major depression
despite these measures. These four circumstances unique to Japan
and the time period are:
1. A Japanese cultural propensity to save and thus buy JGBs (and
a demography largely positioned in the sweet spot to save)
2. The willingness of other countries’ governments to allow their
populations to absorb Japan’s productive surplus
3. An asset/interest rate environment that favored consumption
over savings in the world’s largest economy
4. A lack of meaningful competition from the world’s large economies
to do the same export/deficit stimulate
Absent these four phenomena, the Japanese government would find
themselves without buyers for both its bonds and its goods. The
stimulus would have ran into hyperinflationary waters and we probably
would have seen the rise of fascism or socialism (whichever way
the pendulum swung). With their coming retirement crisis we will
see the erosion of Japanese living standards to the point of near
crisis. Hopefully, the old will be too tired for revolution.
We are different than Japan. Both our society and the global
environment are substantially different than the ones Japan faced
while undergoing their Keynesian stimulus/mercantilist export regime.
At the end of the day government spending cannot fill the breach
and stimulus will not be as “successful” for us in the same way
it worked for Japan (if you call what occurred a ’success’).
Our largest population demographic is past the point of saving
and our services based economy is geared towards consumption. Also,
unlike the environment of the 90s/00s, no foreign government will
allow us to flood their markets with our cheap goods absent tariff
or quota. Furthermore, there is no greater economy in the world
that will absorb the amount of goods we need to produce in order
to achieve at least sideways growth. Last, and most importantly,
we are currently in an environment, unlike Japan, where every other
major economy will try to compete with us to enact the same type
of stimulus/export measures.
While you argue stimulus spending should continue until private
spending fills the gap, at what point does this occur? Even with
the most favorable of circumstances, Japan has not been able to
kick the stimulus/deficit spending habit despite 20 years of record
exports and a debt/GDP over 200%. How will we do better in a less
favorable situation? And with massive stimulus spending without
financial reform and possibly a cap/trade regime, are we not just
further siphoning off capital away from real, productive industries
and towards meaningless, lobbyist connected financial/asset/government
subsidized businesses?
Sure the Fed can take down each auction indirectly through the
dealers (and give the BDs a easy few ticks on the purchases, I HAVE
SEEN IT HAPPEN ACROSS THE YIELD CURVE). Sure they can do reverse
repos, pay interest on reserves or enact any manner of ways to limit
monetary base growth. No one would question their short term financial
influence. But what type of risk perversion will we further endure
if they continue to massage the interest rates on the back end (and
front end) of the yield curve? At what point do we stop trying to
fuel asset inflation at the point of crowding out real investment
into productive industries? How long will the Fed keep back end
rates low in the face of exploding M3 and eventually inflation?
How long will the private lending market reflect these dovish inflationary
expectations? Even with all the policy options it retains, the FED
is playing hot potato with the massive amount of reserves it is
creating/injecting into the economy. If they lose control of the
unprecedented growth of M3 (yes you can still measure it), what
magnitude of inflation (perhaps hyper) will occur in a speculative,
non-productive, service based environment? Do you have a model for
this? I believe you mentioned a similar one in your above missive.
You argue these two things, fiscal and monetary policy are interrelated
– they are, but again, at what point do the inflationary pressures
tip the Fed’s hand to stop buying Treasurys and stop perverting
risk? At that stopping point, what occurs then in terms of a US
Govt bond auction? Will we see a failed auction as the broader market
chokes on supply or will we see treasury rates 15.00% or more? Perhaps
the latter than the former?
This unlimited printing press facilitates inflation, perhaps
not hyperinflation, but inflation none the less. If the Fed continues
to misprice long term interest rates, what asset class will enable
enough return for middle class investors to save enough for retirement?
With interest rates kept so low, how much more real capital will
be diverted toward speculative markets instead of fueling production?
And in speculation, how much more capital destruction will this
incur? How much more wealth transfer to the financial oligarchy
will occur as the big boys scalp these retail specs?
Are the soon to be retired to rely entirely upon social security
in the face of a constantly ‘adjusted’ CPI that reflects anything
but real inflation? Is the middle class going to see their savings
eroded by inflation? Or will the lack of real investment return
force them into low yield treasury prices? Or will we see another
unproductive asset bubble? Or will all of these things occur? What
will happen to the real economy when it faces both high inflationary
costs, high lending rates and another asset bubble?
Where does this dog and pony show end? What is the end game other
than kicking the can down the road? Do you hope that one day we
will discover some sort of technology or industry that will create
magical economic prosperity that will solve these issues? Are you
planning on placing these burdens solely upon the shoulders of people
like myself, the young?
“And if the private economy does not recover, we will have much
bigger problems to worry about. . .”
- Exactly my point. The economy has not recovered in Japan, why
do we think it will be any different here in a cutthroat, beggar-thy-neighbor
environment?
Andrew Baumgardt:
What an outrageous lie.
The US already defaulted about 40 years ago when Nixon took us
off the gold standard. Since then its only been the end game that
has been playing out and is now starting to reach a final conclusion.
Technically Bernamke is right when everyone accepts the legalized
couterfeiting ring that exists between the Treasury and the Federal
Reserve. I for one and a growing number of Americans do not. I will
call it exactly what it is – theft and lawlessness.
But the immediate crisis hasn't passed. It is not over for the
jobless. It is not over for those losing their homes. It is not
over for Greece, Spain, Portugal, or Iceland, facing ruin in the
capital markets. ...
People need work. We face the challenge of climate change. The
broad outline of a program is therefore plain. There is no mystery
about it. In 1929, Keynes wrote, "there is work to do; there are
men to do it. Why not bring them together?" Today as then, it is
that simple.
Do we need to "rethink the relation between the market and the
state"? A futile hope! Those who once thought the market could flourish
without the state have either already "rethought", or they cannot
think. They are our own
Stanley
Baldwins and when they discourse on this subject, "it not only
is nonsense … but it looks like nonsense to any simpleminded person
who considers it with a fresh, unprejudiced mind".
In the crisis, the financial sector collapsed. It hasn't recovered.
... In this situation, the state must act. It can act through the
banking system by mandate, as it does in China and as it used to
do in Japan and France. Or it can bypass the banks and go to work
directly – as it did in America in the New Deal and as Keynes proposed
for Britain in 1929.
A jobs program? Keynes again: "No, says Baldwin. There are mysterious,
unintelligible reasons of high finance and economic theory as to
why this is impossible. It would be most rash. It would probably
ruin the country. Abra would rise, cadabra would fall… No, cries
Baldwin. It would be most unjust… Unemployment is the lot of man…
For the more the fewer, the higher the less."
The question facing world leaders today is not what to do. It
is whether to do it. There are two goals to meet: full employment
and sustainable energy. That's technically complex. But the complexities
are complexities of engineering, organization and politics. They
are not complexities of economics or finance.
The question is posed as though it involved deep questions and
high obstacles, whose true nature the uninitiated cannot be expected
to grasp. Thus the hue and cry over public debt and deficits – projected
to be unsustainable – for reasons never stated – in the long run.
Our papers and our television speak of almost nothing else. But
if they are right – as all the voices of Wall Street and the City
say – then how come the long-term interest rate on the government
bonds of the rich countries remains so low? ...
In truth, the deficit/debt uproar is a deliberate effort to sidetrack
attention, to defeat the will of the electorates in the US, as well
as Greece among others, who stubbornly insist on effective action,
economic recovery and financial reform. Those behind the uproar
never foresaw the financial crisis. They never warned against the
dangers of excessive private debt. Their interest is plain: they
profit from private debts. So it pays to make believe that private
is productive and public is sterile, that private is stable and
public is not, when the reality is the other way around.
A final word from Keynes: "It may seem very wise to sit back
and wag the head. But while we wait, the unused labor of the workless
is not piling up to our credit in a bank, ready to be used at some
later time. It is running irrevocably to waste; it is irretrievably
lost. Every puff of Mr Baldwin's pipe costs us thousands of pounds."
Every day that goes by with unemployment higher than it needs to
be means that people are struggling needlessly. People need jobs. And
not at some point in the future when Congress gets around to it (if
they ever do), this can't wait another day. It should have been done
months and months ago.
Congress ought to have the same urgency in dealing with the unemployment
problem as it had when banks were in trouble. Collectively the unemployed
are too big to remain jobless, and the millions of individual struggles
among the unemployed shouldn't be tolerated. But Congress doesn't seem
to be in much of a hurry to do anything about it, or give any sign that
it much cares.
Selected Comments
Min:
Mark Thoma: "Congress ought to have the same urgency in dealing
with the unemployment problem as it had when banks were in trouble."
Amen, brother!
Jobs now!
purple:
I suspect something will eventually be done because it will have
to be. US businesses cannot survive without a US consumer.
But for now, a faction of US big business thinks they can just run
off to Chindia and make billions there. However, both those countries
are not interested in seeing their wealth drain away and will -
for the foreseeable future - protect their own industries and businesses.
Hence the whining from the EU and US Chamber of Commerce about
China's favoritism of domestic companies, etc. But what do they
expect ?
It Is Not a Jobless Recovery, It is a Growthless Recovery
The New York Times has a good article * on how millions of workers
are likely to face prolonged joblessness as a result of the current
recession. The article implies that there has been a change in the
relationship between economic growth and employment in recent decades
as it has taken longer for the economy to recovery the jobs lost
in the last two recessions than in prior recessions.
While it has taken longer to recover the jobs lost in the downturn,
this has nothing to do with a changed relationship between growth
and jobs. The problem is simply that growth has been very weak.
Here is the cumulative growth in the 8 quarters following the end
of the last 5 recessions:
As can be seen the growth coming out of the last two downturns
has been very weak by historical standards. Most projections show
that the growth coming out of the current recession will be similarly
weak. In short, there is no mystery about the economy's failure
to create jobs. Weak growth typically means weak job creation.
By the way, the explanation for the slower growth following the
last two downturns and projected for this recovery is not difficult.
The 1990-91 recession was not countered with any fiscal stimulus.
In fact, the government put in place a deficit reduction package
at the start of the recession (not the cause, but it didn't help).
In other words, we had really stupid policy, but in Washington,
we don't ever say such things.
The 2001 recession, like current one, was caused by the collapse
of a bubble. It is very difficult to reverse the effects of a collapsed
financial bubble.
Millions of Unemployed Face Years Without Jobs
By PETER S. GOODMAN
BUENA PARK, Calif. — Even as the American economy shows tentative
signs of a rebound, the human toll of the recession continues to
mount, with millions of Americans remaining out of work, out of
savings and nearing the end of their unemployment benefits.
Economists fear that the nascent recovery will leave more people
behind than in past recessions, failing to create jobs in sufficient
numbers to absorb the record-setting ranks of the long-term unemployed.
Call them the new poor: people long accustomed to the comforts
of middle-class life who are now relying on public assistance for
the first time in their lives — potentially for years to come.
Yet the social safety net is already showing severe strains.
Roughly 2.7 million jobless people will lose their unemployment
check before the end of April unless Congress approves the Obama
administration’s proposal to extend the payments, according to the
Labor Department.
Here in Southern California, Jean Eisen has been without work
since she lost her job selling beauty salon equipment more than
two years ago. In the several months she has endured with neither
a paycheck nor an unemployment check, she has relied on local food
banks for her groceries.
She has learned to live without the prescription medications
she is supposed to take for high blood pressure and cholesterol.
She has become effusively religious — an unexpected turn for this
onetime standup comic with X-rated material — finding in Christianity
her only form of health insurance.
“I pray for healing,” says Ms. Eisen, 57. “When you’ve got nothing,
you’ve got to go with what you know.”
Warm, outgoing and prone to the positive, Ms. Eisen has worked
much of her life. Now, she is one of 6.3 million Americans who have
been unemployed for six months or longer, the largest number since
the government began keeping track in 1948. That is more than double
the toll in the next-worst period, in the early 1980s.
Men have suffered the largest numbers of job losses in this recession.
But Ms. Eisen has the unfortunate distinction of being among a group
— women from 45 to 64 years of age — whose long-term unemployment
rate has grown rapidly.
In 1983, after a deep recession, women in that range made up
only 7 percent of those who had been out of work for six months
or longer, according to the Labor Department. Last year, they made
up 14 percent.
Twice, Ms. Eisen exhausted her unemployment benefits before her
check was restored by a federal extension. Last week, her check
ran out again. She and her husband now settle their bills with only
his $1,595 monthly disability check. The rent on their apartment
is $1,380.
“We’re looking at the very real possibility of being homeless,”
she said....
Jo:
What they need to teach in universities for the future is that
you can bail out the bad guys or you can help the good guys.
You can't do both; governments around the world chose the former.
It's no use theorizing about it after the event and making the already
horrific future we face worse through a 'Bailout: Phase II - This
time it's for Mainstreet'.
That window has closed.
To repeat, you can't do both.
save_the_rustbelt:
Business owners have little confidence in consumers, have limited
access to credit, and are generally scared of the federal government.
Workers are scared for their jobs, are scared to spend despite
plenty of great deals, and think Congress is owned by Wall Street.
We've been running outlandish deficits for a decade and job growth
halted. Soviet style belief that the government can legislate jobs
is folly. Mega-deficits as far as the eye can see is unsustainable
and crowds capitol out of the private sector. Learn.
Anonymous:
Reniam:
Until Keynesians understand the causes of structrual malinvestment,
they will never learn.
For example: we misallocated trillions of dollars into real estate
with the government's support (GSEs, tax credits, etc.). The misallocation
provided "jobs" that were built on a mirage of sustainability.
More government will just generate more unsustainable jobs.
Here are some tough steps that no one seems willing to take:
1. Shut down casino capitalism on Wall St
2. Shut down public sector unions.
3. Shut down housing subsidies.
4. Take on medical malpractice lawyers.
5. Take on health insurance companies.
6. Invest in self-sustaining infrastructure.
7. Invest in education.
Keynesian spending without structural reform will just lead to
another crisi.
Structure:
Seems
like we could solve several of your problems all at once. Impose
a million dollar a year extra tax on the richest 1000 Americans
for the next 10 years. Kills the banksters, CEOs, and idle wealthy
(well and non-idle too, but they'll survive...) Pays off the national
debt in no time.
Of course, it does suggest that the national debt is sustainable.
anne:
"We've been running outlandish deficits for a decade and job
growth halted. Soviet style belief that the government can legislate
jobs is folly."
Actually we have not been running any sort of deficits for 10
years, we have rather been running deficits from July 2001 following
the Bush tax cut and weakening of the economy in the short and shallow
recession of 2001. Following the initial Bush tax cut, there were
continual increases in military spending along with further tax
cuts with was just what conservatives wished.
The combination of military spending increases and tax cuts had
remarkably little to do with jobs but everything to do with the
continual deficits from July 2001 through 2007. Another recession
in 2008, more tax cutting and more military spending, added to the
deficit.
anne:
"Mega-deficits as far as the eye can see are unsustainable and
crowds capitol out of the private sector."
Looking at interest rates from 2001 on would suggest that deficits
have in no way crowded out capital from the private sector, but
I am immediately willing to have us begin to cut military spending
to deal with the deficits, especially so because the crowding out
idea could mean that every dollar less in military spending would
be a dollar not crowded out of the private sector.
We could do away with "Soviet-style" military spending, and watch
business and employment blossoming.
"but I am immediately willing to have us begin to cut military
spending to deal with the deficits"
I agree. Military spending should be cut to 33% of current levels.
"Looking at interest rates from 2001 on would suggest that deficits
have in no way crowded out capital from the private sector"
Times have changed. We were in a massive credit inflation. Today,
we're in a massive credit deflation.
ken
melvin:
No one ever started a business w/o borrowing in one form or another.
Borrowing for stimulus is much more akin borrowing to do business
than it is the household model to which you refer.
Anonymous:
"Times
have changed. We were in a massive credit inflation. Today, we're
in a massive credit deflation."
Reniam: Japan has failed to reflate, yet Bernanke and company
are committed to trying. I fear that instead of reflating, they
will destroy the currency.
Goldilocksisableachblond
"Hope you weren't expecting change."
I did , in fact , expect change. Instead I got "Just Words" Obama.
It's still not too late , but I'm afraid it will be soon ---
on the order of months to , at best , a few years.
Some "Words" followed ( and preceded ) by "Deeds" , from the
past :
" But I cannot, with candor, tell you that all is well with the
world. Clouds of suspicion, tides of ill-will and intolerance gather
darkly in many places. In our own land we enjoy indeed a fullness
of life greater than that of most Nations. But the rush of modern
civilization itself has raised for us new difficulties, new problems
which must be solved if we are to preserve to the United States
the political and economic freedom for which Washington and Jefferson
planned and fought."
...
"And so it was to win freedom from the tyranny of political autocracy
that the American Revolution was fought. That victory gave the business
of governing into the hands of the average man..."
"Since that struggle, however, man's inventive genius released
new forces in our land which reordered the lives of our people.
The age of machinery, of railroads; of steam and electricity; the
telegraph and the radio; mass production, mass distribution—all
of these combined to bring forward a new civilization and with it
a new problem for those who sought to remain free.
For out of this modern civilization economic royalists carved
new dynasties. New kingdoms were built upon concentration of control
over material things. Through new uses of corporations, banks and
securities, new machinery of industry and agriculture, of labor
and capital-all undreamed of by the fathers—the whole structure
of modern life was impressed into this royal service.
There was no place among this royalty for our many thousands
of small business men and merchants who sought to make a worthy
use of the American system of initiative and profit. They were no
more free than the worker or the farmer. Even honest and progressive-minded
men of wealth, aware of their obligation to their generation, could
never know just where they fitted into this dynastic scheme of things.
It was natural and perhaps human that the privileged princes
of these new economic dynasties, thirsting for power, reached out
for control over Government itself. They created a new despotism
and wrapped it in the robes of legal sanction. In its service new
mercenaries sought to regiment the people, their labor, and their
property. And as a result the average man once more confronts the
problem that faced the Minute Man.
The hours men and women worked, the wages they received, the
conditions of their labor—these had passed beyond the control of
the people, and were imposed by this new industrial dictatorship.
The savings of the average family, the capital of the small business
man, the investments set aside for old age—other people's money—these
were tools which the new economic royalty used to dig itself in."
"Throughout the Nation, opportunity was limited by monopoly.
Individual initiative was crushed in the cogs of a great machine.
The field open for free business was more and more restricted. Private
enterprise, indeed, became too private. It became privileged enterprise,
not free enterprise.
An old English judge once said: "Necessitous men are not free
men." Liberty requires opportunity to make a living-a living decent
according to the standard of the time, a living which gives man
not only enough to live by, but something to live for.
For too many of us the political equality we once had won was
meaningless in the face of economic inequality. A small group had
concentrated into their own hands an almost complete control over
other people's property, other people's money, other people's labor,
other people's lives. For too many of us life was no longer free;
liberty no longer real; men could no longer follow the pursuit of
happiness.
Against economic tyranny such as this, the American citizen could
appeal only to the organized power of Government. The collapse of
1929 showed up the despotism for what it was. The election of 1932
was the people's mandate to end it. Under that mandate it is being
ended."
"These economic royalists complain
that we seek to overthrow the institutions of America. What they
really complain of is that we seek to take away their power. Our
allegiance to American institutions requires the overthrow of this
kind of power. In vain they seek to hide behind the Flag and the
Constitution. In their blindness they forget what the Flag and the
Constitution stand for. Now, as always, they stand for democracy,
not tyranny; for freedom, not subjection; and against a dictatorship
by mob rule and the over-privileged alike."
"Governments can err, Presidents do make mistakes, but the immortal
Dante tells us that divine justice weighs the sins of the cold-blooded
and the sins of the warm-hearted in different scales."
"Better the occasional faults of a Government that lives in a
spirit of charity than the consistent omissions of a Government
frozen in the ice of its own indifference."
"In our own land we enjoy indeed a fullness of life greater than
that of most Nations."
Over the past three decades the standard of living of most americans
(e.g. the bottom quintiles) has decreased while income inequality
in the usa has increased. Your "fullness of life" and "greater than
most nations" is exceptionalist propaganda.
Unemployment and underemployment are measures of a real output
gap that represents huge losses from forgone opportunity in addition
to the effect of unemployment in human cost. Not funding programs
that would close the gap increases the deficit anyway through automatic
stabilizer transfers and lost tax revenue. Closing the gap and addressing
unemployment and underemployment makes good sense economically in
addition to being the right thing to do.
A government deficit is equal to non-government net financial
assets as an accounting identity. Debt issuance to cover the deficit
is just provides storage for the increased net financial assets,
and it simply a transfer of one asset form (demand deposit) to an
interest-bearing government security. The national debt is the accumulated
non-government net financial assets saved, a portion of non-government
wealth. Deficits do not cause inflation when there is significant
unemployment and real capacity underutilization.
"Efficiency is doing thing right, and effectiveness is doing
the right thing." Peter F. Drucker
Unfortunately, the private sector has become synonymous with
the corporate oligarchy. Large swathes of entrepreneurial potential
have been strangled by mega corporations and their de facto monopolies.
Global confidence in the US economy has reached zero, as was proved
by last month’s stock market meltdown. But there is an enormous anomaly
in the US economy above and beyond the subprime mortgage crisis, the
housing bubble and the prospect of recession: 60 years of misallocation
of resources, and borrowings, to the establishment and maintenance of
a military-industrial complex as the basis of the nation’s economic
life. The military adventurers in the Bush administration have much
in common with the corporate leaders of the defunct energy company Enron.
Both groups thought that they were the “smartest guys in the room” —
the title of Alex Gibney’s prize-winning film on what went wrong at
Enron. The neoconservatives in the White House and the Pentagon outsmarted
themselves. They failed even to address the problem of how to finance
their schemes of imperialist wars and global domination.
As a result, going into 2008, the United States finds itself in the
anomalous position of being unable to pay for its own elevated living
standards or its wasteful, overly large military establishment. Its
government no longer even attempts to reduce the ruinous expenses of
maintaining huge standing armies, replacing the equipment that seven
years of wars have destroyed or worn out, or preparing for a war in
outer space against unknown adversaries. Instead, the Bush administration
puts off these costs for future generations to pay or repudiate. This
fiscal irresponsibility has been disguised through many manipulative
financial schemes (causing poorer countries to lend us unprecedented
sums of money), but the time of reckoning is fast approaching.
There are three broad aspects to the US debt crisis.
First, in the current fiscal year (2008) we are spending
insane amounts of money on “defence” projects that bear
no relation to the national security of the US. We are also keeping
the income tax burdens on the richest segment of the population
at strikingly low levels.
Second, we continue to believe that
we can compensate for the accelerating erosion of our base and our
loss of jobs to foreign countries through massive military expenditures
— “military Keynesianism” (which I discuss in detail
in my book Nemesis: The Last Days of the American Republic).
By that, I mean the mistaken belief that public policies focused
on frequent wars, huge expenditures on weapons and munitions, and
large standing armies can indefinitely sustain a wealthy capitalist
economy. The opposite is actually true.
Third, in our devotion to militarism
(despite our limited resources), we are failing to invest in our
social infrastructure and other requirements for the long-term health
of the US. These are what economists call opportunity
costs, things not done because we spent our money on something else.
Our public education system has deteriorated alarmingly. We have
failed to provide health care to all our citizens and neglected
our responsibilities as the world’s number one polluter. Most important,
we have lost our competitiveness as a manufacturer for civilian
needs, an infinitely more efficient use of scarce resources than
arms manufacturing.
... ... ...
Some of the damage can never be rectified. There are, however, some
steps that the US urgently needs to take. These include reversing Bush’s
2001 and 2003 tax cuts for the wealthy, beginning to liquidate our global
empire of over 800 military bases, cutting from the defence budget all
projects that bear no relationship to national security and ceasing
to use the defence budget as a Keynesian jobs programme.
If we do these things we have a chance of squeaking by. If we don’t,
we face probable national insolvency and a long depression.
In the original Hackonomics, I buried the detailed spending habits
of the of the upper echelon of wealth in America. I suspect you will
find this data a bit more unequal than the quintile nonsense we saw
from Alm and Cox.
Here is how this group spent their money as follows:
Dollars Spent Category - 2007 Spending per Affluent
Elite Household
According to this CNN/Money
report, unless Congress acts quickly, March is going to be a pretty
miserable month for many of those without jobs, particularly in California.
One million could lose jobless benefits in March
More than 1 million people could lose their jobless benefits
and health insurance subsidy in March if Congress doesn't act fast.
When it returns from the President's Day recess on Monday, the
Senate will have one week to extend the deadlines to apply for federal
unemployment benefits and the COBRA health insurance subsidy. Currently,
the jobless have until Feb. 28 to sign up.
Without an extension, people receiving state jobless benefits won't
be able to apply for additional federally paid unemployment insurance,
and anyone already receiving those checks could be cut off.
While it is an entirely different situation for those who are supporting
families with their jobless benefits, the phrase "funemployment" is
increasingly heard regarding the condition of much younger workers or,
in this case, would-be workers.
"The reality is that manufacturing employs a mere
11.5 million workers in the U.S.A., or 9% of the workforce. So let’s
say we see a 5% pickup in the coming year — that is barely more than 500,000
net new jobs. Meanwhile, there are 7.7 million people in financial services
and this sector is in secular downsizing mode. There are 14.4 million in
retail — that is hardly a growth sector. There are another 20 million in
the State and local government sector and again, an area in decline. "
The Philly Fed did eke out an increase in February,
to 17.6 from 15.2 in January, but still below the nearby December high
of 22.5. To be sure, most of the components were firm — in contrast
to the New York Fed empire index. Vendor delivery delays swung to -2.1
from +6.6 and backlogs fell to -7.5 from +3.6 — not the signposts of
the inflationary climate portrayed by the PPI last month. The expectations
component of the Philly Fed also dropped in January, to 35.8 from 43.3,
to stand at its lowest level in 10 months.
Interestingly, in the ‘special question’, only 18% of
respondents are looking to add to inventories this year compared to
21% who intend to cut their stockpiles. The rest intend to leave them
whether they are. And over the past month, only 11% reported increases
in their customers’ desire to boost inventories versus 21% who intend
to lighten their loads. This is another
reason why the current inventory boost to GDP should be viewed as an
adjustment and not a cycle.
LEADING INDICATOR A GIANT HEADFAKE
The Conference Board’s leading economic index (LEI)
rose 0.3 points in January, to 107.4 — a new high on the level. But
the good news started and ended with the headline because the data beneath
the surface were not so constructive. The diffusion index collapsed
to 55 from 100 — the weakest breadth since March 2009. In fact, if not
for the continued vital contribution from the shape of the yield curve
— it only has to stay positively sloped to add to the index; it doesn't
have to move — the LEI would have actually dipped 0.1% last month.
The coincident/lagging ratio did improve to 92.7 from
92.4, and that was the best reading since September 2008; and the coincident
index itself edged up 0.2 points to 100.1 and it does look as though,
based in this indicator, that the recession did end in technical terms
last June.
STILL THE HOUDINI RECOVERY
The economy continues to
pull a rabbit out of the hat and expand even with contracting employment
and bank credit. As we stated above with respect to Wal-Mart’s
weak sales data, how did Mr. Market manage to ignore the labour market
news yesterday. All we hear from bullish
strategists is that jobless claims are the key, and while they have
been improving in recent months, yesterday’s data was disappointing
in that claims rose 31,000 in the February 13 week, to 473,000. Unfortunately, that was the nonfarm payroll survey week.
While the number of continuing claims was unchanged
at 4.56 million that understates the situation because when all the
emergency benefit programs are included, the
backlog of total unemployment claimants jumped 280k in the January 30
week to a whopping 11.7 million.
THE MANUFACTURING REVIVAL
It was so good to see this headline on the front page
of yesterday's WSJ —Factories Gear Hiring Up — because we had
a manufacturing revival in the United States as a secular bullish theme
in our inaugural 2008 piece while heading up Merrill’s North American
economics department; we called it the "Renaissance." But let’s
not get too carried away in terms of the employment pickup. No doubt
that if the data are anywhere close to being in the ball park, manufacturers
will be able to continue to churn out productivity gains of a 10% annual
rate, as has been the case over the past three quarters. That is a record,
as well as unsustainable. It stands to reason that some labour input
is going to have provided some contribution to any future production
growth.
The reality is that manufacturing employs a mere 11.5
million workers in the U.S.A., or 9% of the workforce. So let’s say
we see a 5% pickup in the coming year — that is barely more than 500,000
net new jobs. Meanwhile, there are 7.7 million people in financial services
and this sector is in secular downsizing mode. There are 14.4 million
in retail — that is hardly a growth sector. There are another 20 million
in the State and local government sector and again, an area in decline.
What about construction? In contrast to manufacturing where productivity
has risen to record highs, productivity in the construction sector is
near a 50-year low. In fact, if the 5.7 million level of construction
employment were to go back down to the last time spending in this sector
was at today’s level, we would be talking about another 2.8 million
decline in employment, which would dwarf any improvement we are likely
to see in factory payrolls. So the bottom
line is that any improvement we are going to see in that 11.5 million
manufacturing workforce is going to have to be pretty impressive in
order to cushion the blow from what is likely to be downsizing in the
combined 48 million workforce in the lower levels of government
and the retail, financial and construction sectors.
Throughout the financial crisis, policymakers have focused
on keeping things afloat until the storm passes. They've spent
vast sums of taxpayer funds trying to jumpstart growth until
the economy is back on track. They've encouraged people to keep the
faith until businesses start hiring again.
But what happens if all those "untils" turn out to be wide
of the mark? What if the carnage we've experienced so far is structural,
not cyclical? If that's the case, then Americans are going to find that
instead of experiencing better times ahead, they are going to be much
worse off than they were -- or are.
Why? Because they've not been adjusting lifestyles and spending habits
to take account of a step-change decline in living standards. And, they've
not been reorienting the way they manage household finances and investments
to take account of a much riskier economic and financial outlook.
In addition, many people have not been focusing strongly enough on
acquiring new skills and seeking alternative careers that take account
of big changes in the job market. As the following collection of articles
suggests, not only is the overall employment situation likely to remain
problematic for years to come, prior work experience may no longer be
relevant.
Even with political focus on jobs, return to prerecession
work levels could take 5-plus years
Job creation is stuck on an uphill treadmill.
So many jobs have been lost that the U.S. must run hard just
to keep from losing more ground. Despite the election-year emphasis
on job creation by both parties, the short-term outlook is bleak.
While many economists believe the recession is technically
over, nearly 15 million Americans remain unemployed. Six million
of them have been out of work for more than half a year.
President Barack Obama is asking for almost $300 billion
more for recession relief and job formation. The House last
December passed a $154 billion spending bill focused on jobs.
The Senate is due to debate a far more modest version on Monday,
but appears bogged down in partisan bickering.
With or without new legislation, reducing a jobless rate
that's now just under 10 percent to prerecessionary rates of
about half that won't happen soon, especially as government
efforts to prop up the economy begin to wind down.
It could take up to five years or more just to get back to
even.
There are limits to how many jobs can be created by government
action — either directly or with tax and other incentives for
the private sector — and how quickly.
"We've gone though a period of enormous job loss," said Robert
Shapiro, a former adviser to President Bill Clinton and now
chairman of Sonecon, an economic advisory firm.
"The long-term problem is exacerbated by the fact that credit's
still not available because we really haven't reformed the financial
system. People don't have confidence in the future and people
are poorer so demand is down. All these things are coming together,"
Shapiro said.
Returning to prerecession employment levels and
keeping up with working-age population growth will require the
creation of 10 million or more jobs.
BUENA PARK, Calif. — Even as the American economy shows tentative
signs of a rebound, the human toll of the recession continues
to mount, with millions of Americans remaining out of work,
out of savings and nearing the end of their unemployment benefits.
Economists fear that the nascent recovery will leave more
people behind than in past recessions, failing to create jobs
in sufficient numbers to absorb the record-setting ranks of
the long-term unemployed.
Call them the new poor: people long accustomed to the comforts
of middle-class life who are now relying on public assistance
for the first time in their lives — potentially for years to
come.
Yet the social safety net is already showing severe strains.
Roughly 2.7 million jobless people will lose their unemployment
check before the end of April unless Congress approves the Obama
administration’s proposal to extend the payments, according
to the Labor Department.
Here in Southern California, Jean Eisen has been without
work since she lost her job selling beauty salon equipment more
than two years ago. In the several months she has endured with
neither a paycheck nor an unemployment check, she has relied
on local food banks for her groceries.
She has learned to live without the prescription medications
she is supposed to take for high blood pressure and cholesterol.
She has become effusively religious — an unexpected turn for
this onetime standup comic with X-rated material — finding in
Christianity her only form of health insurance.
“I pray for healing,” says Ms. Eisen, 57. “When you’ve got
nothing, you’ve got to go with what you know.”
Warm, outgoing and prone to the positive, Ms. Eisen has worked
much of her life. Now, she is one of 6.3 million Americans who
have been unemployed for six months or longer, the largest number
since the government began keeping track in 1948. That is more
than double the toll in the next-worst period, in the early
1980s.
Experts say new economy can no longer support some jobs created
during the boom, including finance.
Despite some hopeful signs, the Charlotte area's economy
won't outpace unemployment anytime soon, economists warn.
Some jobs are gone forever, and those that will replace them
could leave the region's lowest-skilled and least-educated workers
struggling to catch up, experts say.
"The question is, are growth levels adequate enough to get
us out of the hole we're in? It doesn't look like it," said
John Quinterno of South by North Strategies Ltd., a Chapel Hill
economic research firm.
Some jobs are cyclical, and economists expect them to bounce
back once demand and consumer spending increase. But they worry:
Government stimulus spending, which has helped spur that demand,
is not a permanent fix. What's more, a larger shift is under
way, with the economy moving from production to services-based.
Economists say the new economy can no longer support some
construction, real estate and finance jobs created during the
boom. Many manufacturers, too, will continue to do more with
less, replacing workers with technology and sending more jobs
overseas.
While the economy is getting better, the jobless rate is
expected to remain high - possibly for years - because of financial
uncertainty among households and businesses, Federal Reserve
policy-makers said when they met in a closed-door session last
month.
Minutes of the Fed meeting of Jan. 26-27, which were released
Wednesday, show that officials think the unemployment rate this
year will range between 9.5% and 9.7%, and from 8.2% to 8.5%
in 2011. In 2012, the rate likely will be between 6.6% and 7.5%,
the Fed panel forecast.
A "sizable minority" of the Fed policy-makers took the view
that a return to more-normal growth and employment could take
more than five to six years.
High levels of unemployment may last indefinitely. A number
of economists (including this writer) have been warning about
permanent joblessness, and the idea is now seeping into popular
magazines.
More than 8 million American jobs were lost since 2007, based
on the most recent revision of the overall job count of U.S.
establishments. But that is not the worst of it, because the
establishment survey fails to capture smaller businesses and
the self-employed. By the Bureau of Labor Statistics’ broadest
measure of unemployment, including the forced part-time workers
and so-called discouraged workers, the unemployment rate rose
to 17 percent from 8 percent before the recession. That is 9
percentage points, corresponding to slightly over 12 million
adults. A website called Shadow Government Statistics includes
“long-term discouraged” workers defined out of the labor force
by the BLS, but that alternative measure has tracked the BLS
broad measure quite closely in the past few years.
There are several reasons to believe that most of these jobs
never will come back. That is a less contentious statement than
it might appear, because the jobs lost in the recessions since
1981 never came back. Some sectors, notably manufacturing, continued
to shrink, and other sectors, such as heath care and retail,
replaced them. The difference in 2010 is that it is not apparent
where new jobs will come from.
The Great Recession may be over, but this era of high
joblessness is probably just beginning. Before it ends, it will
likely change the life course and character of a generation
of young adults. It will leave an indelible imprint on many
blue-collar men. It could cripple marriage as an institution
in many communities. It may already be plunging many inner cities
into a despair not seen for decades. Ultimately, it is likely
to warp our politics, our culture, and the character of our
society for years to come.
How should we characterize the economic period we have now
entered? After nearly two brutal years, the Great Recession
appears to be over, at least technically. Yet a return to normalcy
seems far off. By some measures, each recession since the 1980s
has retreated more slowly than the one before it. In one sense,
we never fully recovered from the last one, in 2001: the share
of the civilian population with a job never returned to its
previous peak before this downturn began, and incomes were stagnant
throughout the decade. Still, the weakness that lingered through
much of the 2000s shouldn’t be confused with the trauma of the
past two years, a trauma that will remain heavy for quite some
time.
The unemployment rate hit 10 percent in October, and there
are good reasons to believe that by 2011, 2012, even 2014, it
will have declined only a little. Late last year, the average
duration of unemployment surpassed six months, the first time
that has happened since 1948, when the Bureau of Labor Statistics
began tracking that number. As of this writing, for every open
job in the U.S., six people are actively looking for work.
All of these figures understate the magnitude of the jobs
crisis. The broadest measure of unemployment and underemployment
(which includes people who want to work but have stopped actively
searching for a job, along with those who want full-time jobs
but can find only part-time work) reached 17.4 percent in October,
which appears to be the highest figure since the 1930s. And
for large swaths of society—young adults, men, minorities—that
figure was much higher (among teenagers, for instance, even
the narrowest measure of unemployment stood at roughly 27 percent).
One recent survey showed that 44 percent of families had experienced
a job loss, a reduction in hours, or a pay cut in the past year.
There is unemployment, a brief and relatively routine transitional
state that results from the rise and fall of companies in any
economy, and there is unemployment—chronic, all-consuming. The
former is a necessary lubricant in any engine of economic growth.
The latter is a pestilence that slowly eats away at people,
families, and, if it spreads widely enough, the fabric of society.
Indeed, history suggests that it is perhaps society’s most noxious
ill.
The worst effects of pervasive joblessness—on family, politics,
society—take time to incubate, and they show themselves only
slowly. But ultimately, they leave deep marks that endure long
after boom times have returned. Some of these marks are just
now becoming visible, and even if the economy magically and
fully recovers tomorrow, new ones will continue to appear. The
longer our economic slump lasts, the deeper they’ll be.
If it persists much longer, this era of high joblessness
will likely change the life course and character of a generation
of young adults—and quite possibly those of the children behind
them as well. It will leave an indelible imprint on many blue-collar
white men—and on white culture. It could change the nature of
modern marriage, and also cripple marriage as an institution
in many communities. It may already be plunging many inner cities
into a kind of despair and dysfunction not seen for decades.
Ultimately, it is likely to warp our politics, our culture,
and the character of our society for years.
The DOL reports on weekly unemployment insurance claims: In the week
ending Feb. 13, the advance figure for seasonally adjusted initial claims
was 473,000, an increase of 31,000 from the previous week's revised
figure of 442,000. The 4-week moving average was 467,500, a decrease
of 1,500 from the...(more)
Capital One Financial Corp's U.S. credit-card defaults rose in
January, in a sign that consumers continue to remain under stress,
it said in a regulatory filing.
Capital One said the annualized net charge-off rate -- debts the
company believes it will never collect -- for U.S. credit cards
rose to 10.41 percent in January from 10.14 percent in December.
Capital One credit card annualized net charge-off rate is now at 10.41%
- above the peak in 2005. As Reuters notes, Capital One is usually the
first to report monthly credit card charge-offs. The other major credit
card issuers will report later today.
"An unintended consequence of the specialist/expert society that embeds
so much of that expertise into its technology and lifestyle is our growing
and nearly utter dependence on those with that specialized knowledge just
to live a normal modern life. "
Last night I watched that wonderful movie American Graffiti again.
About America just a few years before it began its downhill slide
(circa 1963), when FRN's could still be redeemed for silver coins.
One thing that most people miss when enjoying the film: while
it depicts America at its wealthiest, the wealth is mostly hidden
-- embedded in the productive infrastructure. The kids don't have
a lot of pocket money, no cellphones or ipods or gameboys, and their
fun is pretty much cheap fun--cruising the Miracle Mile circuit
on .20/gal gas, hanging out at Mel's for cheeseburgers and cokes,
dancing at the freshman hop. No limo's, no expensive toys, no designer
clothes.
None of them intend to become MBA's either.
It's an uplifting film and also heartbreaking. Is it an unrealistic
portrayal of life in the US early Sixties?
Not really. Yes, it overlooks racial prejudice and endemic
hypocrisy and under-the-surface spousal/child abuse and lots of
other societal maladies. But having been there at
the time, I can tell you that it gets the temper of the times right.
The US was on top of the world, and
reality still could defeat illusions.
Little did anyone know what was coming.
Like I said, watching the film is a bittersweet experience.
Bob Dobbs:
unirealist wrote:
It's an uplifting film and also heartbreaking. Is it an unrealistic
portrayal of life in the US early Sixties? Not really. Yes,
it overlooks racial prejudice and endemic hypocrisy and under-the-surface
spousal/child abuse and lots of other societal maladies. But
having been there at the time, I can tell you that it gets the
temper of the times right. The US was on top of the world, and
reality still could defeat illusions.
People weren't wealthy, but society was. With so much more money
in a few pockets, that society is now a dream.
Even so -- look behind the paint and you'll see that a lot of the
cars would have been salvaged from the junkyard and mod'ed by teenage
mechanics. We didn't need as much stuff done/made for us in those
days -- but we were taught to need more and more as the wealth allocated
to society become less and less.
ResistanceIsFeudal:
Bob Dobbs wrote:
We didn't need as much stuff done/made for us in those
days -- but we were taught to need more and more as the wealth
allocated to society become less and less.
An unintended consequence of the specialist/expert society that
embeds so much of that expertise into its technology and lifestyle
is our growing and nearly utter dependence on those with that specialized
knowledge just to live a normal modern life. This suggests that
'normal modern life' is a pretty radical deviation from normality
lawyerliz:
See, people still want to buy a house. . .even guys. It's genetic.
And population fell severely in Europe when Rome fell. Not fun for
those who starved.
The Brits was no able to make it back to were they were before they
were conquered.
It's not a good idea to get too complex.
Bob Dobbs:
ResistanceIsFeudal wrote:
An unintended consequence of the specialist/expert society
that embeds so much of that expertise into its technology and
lifestyle is our growing and nearly utter dependence on those
with that specialized knowledge just to live a normal modern
life.
The growth of the two-income family also caused us to need more
services -- all the things that would have been done withint the
family, but for which there was no longer time. I'm glad for women's
rights, but that whole two-earner thing was a poison pill concealed
by a thin layer of virtue. If it ever was simply "you can," it quickly
turned into "you have to."
... Companies have hired more temps for four straight months. But
they remain reluctant to make permanent hires because of doubts about
the recovery's durability. Even companies that are boosting production
seem inclined to get by with their existing workers, plus temporary
staff if necessary.
... the main obstacle is that employers lack confidence that the
economic rebound has staying power. Many fear their sales and the overall
economy will remain weak or even falter as consumers spend cautiously.
Companies also worry about higher costs related to taxes or health care
measures being weighed by Congress and statehouses. That's what Chris
DeCapua, owner of employment firm Dawson Careers in Columbus, Ohio,
is hearing from clients. DeCapua says corporate demand for temporary
workers has surged. That's especially true for manufacturing-related
jobs involving driving forklifts, assembling products, packing merchandise
and loading it on trucks. That demand hasn't spilled over into a demand
for permanent workers, and DeCapua doesn't see it turning around anytime
soon.
"There is so much uncertainty, and when there is uncertainty, people
and companies hold onto their checkbooks," DeCapua says. Companies "don't
want to hire permanent workers and then have to turn around and get
rid of them six months later," he says.
... ... ...
For years, economists have regarded increased hiring of temp workers
as a bridge between no hiring and healthy job creation. It meant employers
would soon expand their permanent payrolls to keep up with rising customer
demand.
After the 1990-1991 recession, for instance, gains in temporary hiring
starting in August 1991 led almost immediately to stepped-up permanent
hiring. And after the 2001 recession, temporary hiring rose for three
straight months in the summer of 2003. By September, employers were
adding permanent jobs each month.
Now, because this recovery seems more tepid and fragile than previous
rebounds, temporary hiring may have lost its predictive power, economists
say.
"I think a lot of it is manufacturing," says Mark Zandi, chief economist
at Moody's Economy.com. "It may be that
manufacturers are relying more on temps than in the past because they
are more unsure about the ongoing demand for what they produce."
Employers added a net 52,000 temp jobs in January — the fourth consecutive
month of gains. Over that time, total U.S. jobs shrank by 106,000. Employers
have managed to boost productivity by squeezing more work out of their
existing staffs.
For the unemployed, temporary jobs provide
a paycheck at a time when the unemployment rate remains near double
digits. Still, these jobs generally offer few or no benefits.
Use doubles from 13 million to 27 million Americans
Increase in use not seen among blacks
More Americans may accept diagnosis of depression
Use of antidepressant drugs in the United States doubled between
1996 and 2005, probably because of a mix of factors, researchers reported
on Monday.
About 6 percent of people were prescribed
an antidepressant in 1996 -- 13 million people. This rose to more than
10 percent or 27 million people by 2005, the researchers found.
"Significant increases in antidepressant use were evident across
all sociodemographic groups examined, except African Americans," Dr.
Mark Olfson of Columbia University in New York and Steven Marcus of
the University of Pennsylvania in Philadelphia wrote in the Archives
of General Psychiatry.
"Not only are more U.S. residents being treated with antidepressants,
but also those who are being treated are receiving more antidepressant
prescriptions," they added.
More than 164 million prescriptions were written in 2008 for antidepressants,
totaling $9.6 billion in U.S. sales, according to IMS Health.
Drugs that affect the brain chemical serotonin like GlaxoSmithKline's
<GSK.L> Paxil, known generically as paroxetine, and Eli Lilly and Co's
<LLY.N> Prozac, known generically as fluoxetine, are the most commonly
prescribed class of antidepressant. But the study found the effect in
all classes of the drugs.
Olfson and Marcus looked at the Medical Expenditure Panel Surveys
done by the U.S. Agency for Healthcare Research and Quality, involving
more than 50,000 people in 1996 and 2005.
... ... ...
The rise in antidepressant prescriptions also is seen despite a series
of public health warnings on use of antidepressant drugs beginning in
2003 after clinical trials showed they increased the risk of suicidal
thoughts and behaviors in children and teens.
In February 2005, the U.S. Food and Drug Administration added its
strongest warning, a so-called black box, on the use of all antidepressants
in children and teens.
Nick Rowe wonders "why human labor didn't go the same way
as horse labor":
Of horses and men, by Nick Rowe: As a teenager I read
Kurt Vonnegut's novel Player Piano. It's stuck in my economist's
mind ever since. It describes life in the near-future when technology
and machines have destroyed the demand for nearly all human labor,
except for the labor of a small, highly-educated minority. The vast
majority of the population would be unemployed, but for government
make-work projects.
The book was published in 1952, so Vonnegut's near-future is our
recent past. It didn't happen. But could it happen?
You can try to answer that question by playing with production functions...
Or you can think about horses.
When horse-power became cheaper than human-power, horse labor replaced
human labor. When steam-power in turn became cheaper than horse-power,
horses in turn became replaced. The demand for horse labor rose,
then fell. If the population of horses had kept growing at the same
rate as the population of humans, most horses now would be redundant,
with just a small elite minority of horses employed in very special
jobs. Improving technology did in fact drastically reduce the demand
for horse labor. If Kurt Vonnegut's novel had been about horses,
it would have been a historical novel, not science fiction.
It happened to horses; why couldn't it happen to humans?
It's true that humans own the means of production (including their
own labor, and horses' labor), and horses don't. That's important,
because humans will therefore (at least in aggregate) reap the increased
income from any increased output, even if human labor no longer
has value. But for a human who owns only his own labor, that is
little consolation.
New technology destroyed the demand for the labor of horses. There
is nothing that makes it impossible for new technology to destroy
the demand for the labor of humans. It hasn't happened yet, but
it might. What's surprising, or what ought to surprise us, is that
it hasn't happened yet. ...
The only reason I can think of why Kurt Vonnegut's novel never came
true, why human labor didn't go the same way as horse labor, is
this: humans are a lot more versatile than horses.
Will human versatility always be enough to dodge and weave around
all possible changes in technology, forever? I doubt it. Forever
is a long time.
I've thought about Vonnegut's scenario too and my conclusion
is that humans are able to provide something that just isn't replaceable
by any technology in the foreseeable future. Humans are able to
tell stories and create designs that are useful and demanded by
other humans. That is while actual physical labor can be replaced
by machinery, the creative aspect cannot.
There is a continuous demand for entertainment. Good stories,
whether in the form of books, movies, videos, etc. will always be
needed. Design and style will also continue to be a major factor.
A machine can make a dress, but what should it look like? What colors
should it have? Home interior design and landscaping are all extensions
of the same concept.
And a friend pointed out that human
labor will never go away if using it also conveys some sort of social
status. Handmade objects still receive a premium,
but only if they are high end. In the future, it may become fashionable
to build a house in the old style, with humans. Or employ a human
housekeeper rather than the Cleanmatic 5000 machine. I can't imagine
that certain services would be better without human interaction.
Perhaps lower end places will have machine only employees, but higher
end luxury shops will still give the human touch. Like with a waiter.
Of course the quality of service will have to be in line with the
high end expectation (handmade is only appreciated with high end
items). For the people worried about exploitation, high end service
requires high end pay.
reason said in reply to Reality Bites...
Yes, all well and good, but this doesn't necessarily apply
to every human. The majority of humans aren't good at making stories
that other humans like. And with modern information technology absolutely
everyone can read the same few stories (ask Joanne Rowling about
that).
kharris said in reply to reason...
Yes to both. In the narrow sense of selling a piece of entertainment,
technology and the tendency toward fads combine to produce superstars.
However, if we think of the broader ability to please and manipulate
rather than the narrower ability to entertain, then Reality Bites'
point works, I think.
Humans are the consumers that must be pleased. Humans are the
bosses whose will must be translated into action. Humans share culture
and that gives us a big advantage over machines in pleasing ideosyncratic
consumers and bosses
reason said...
Everyone should read Herman Daly "Beyond Growth". It should be
compulsory reading in economics courses. He argues that eventual
aim of our economic systems should be to do AS LITTLE AS POSSIBLE
while maintaining our capital.
The sharpest revision was for March; taking jobs lost in that month
to -753,000 versus an original Bureau estimate of -663,000.
jswede:
U-6 declined to 16.5% from 17.3% seasonally adjusted.... non-adjusted
it increased to 18.0% from 17.1%... I'll wait for the revisions,
but I'll take a stab and say the adjusting was overly optimistic.
starstrike:
It is all made up along with GDP as well I mean that is a good
laugh if you ever wanted to have one. U6 in the US must be closr
to 20% now, right? I think we will reach the tipping point soon
of distinct but isolated social unrest.
VP:
Hard to get the impression it's anything other than all made
up?
the U.S. economy has lost 8.4 million jobs since the recession officially
began in December 2007, a sharp upward revision from 7.2 million previously
reported; that includes 930,000 jobs more than previously estimated
in the 12 months ended March 2009.
In addition, the ranks of the long-term unemployed swelled to over
6 million and the number of "discouraged" job seekers rose to 1.1 million
vs. 734,000 a year ago.
Looking at the report, one might logically ask: If jobs growth was
minimal (or non-existent) and the labor force grew -- meaning more people
are officially being counted as looking for work -- how did the unemployment
rate fall?
"The payroll data and the unemployment rate come from two separate
surveys, which explains some of the divergence in the data," writes
Diane Swonk, chief economist at Mesirow Financial, attempting to explain
this conundrum. "The drop in the unemployment rate was particularly
surprising, as it was predicated on households reporting an increase
in employment. This could be capturing the self-employed doing slightly
better than they had been, but it is still puzzling."
Peter Boockvar of Miller Tabak notes the household survey, which
is part of the unemployment calculation, showed jobs rose by 541,000.
So, yes, there are quirks in the data, and even some of the pros
found this morning's report a bit confusing. The report is a bit of
a Rorschach test, with something for bull and bear alike to point to.
The bottom line: "The recovery that we began to see in the summer
of 2009 continues, and we will soon reap some benefits in terms of jobs,"
Swonk writes. "That said, the jobs recovery is expected to remain muted
and the economic recovery is still subdued relative to those of the
past."
MichaelB:
Unemployment has went up not down you have to gain 120K a month
just for population growth to stay even. They are using the 1994
trick of not counting the long term 1 year or more discouraged unemployed
people to lower the U3 and the U6. Their numbers have become a joke.
Unemployment is really about 22% now in reality.
san:
The real unemployment rate is those in the population of working
age who are not paying tax. Middle class tend not to sign on as
unemployed and are not counted.
Douglas:
You guys don't understand. The Gov numbers are correct. It's
not a lie. The deception is the way
we count the unemployed. All those smucks who were
laid off 18 months ago and still haven't found a job won't be counted
in the stats. Only those who are filing for unemployment are counted.
Just wait until April 2010, Our unemployment rate will REALLY improve
when the a majority of the 403,000 who were laid-off in Oct 2008
will no longer be counted. -- Now watch me pull a rabbit out of
my hat.
Notable among three of the PIGS are their relatively small populations,
and small contributions to either world or European GDP. While Spain
has a population over 45 million, Portugal and Greece have populations
roughly equal to a US state, such as Ohio–at around 10 million. And
Ireland? The Emerald Isle has a population similar to Kentucky, at around
4 million. While the PIGS are without question a problem for Europe,
whatever problems they present for Brussels are easily matched by the
looming headache for Washington that’s coming from large, US states
such as California, Florida, Illinois, Ohio, and Michigan.
I’ve identified seven large US states by four criteria that are sure
to cause trouble for Washington’s political class at least for the next
3 years, through the 2012 elections. These are states with big populations,
very high rates of unemployment, and which have already had to borrow
big to pay unemployment claims. In addition, as a kind of Gregor.us
kicker, I’ve thrown in a fourth criteria to identify those states that
are large net importers of energy. Because the step change to higher
energy prices played, and continues to play, such a large role in the
developed world’s
financial crisis it’s instructive to identify those
US states that will struggle for years against the rising tide of higher
energy costs.
First, let’s consider a large state that didn’t make my list. Texas
didn’t make the list because its unemployment rate has not risen high
enough to reach my cutoff: a state must register broad, U-6 underemployment
above 15%, and currently Texas has only reached 13.7% on that measure.
Also, Texas’s
total energy production nearly perfectly matches its total energy
consumption. Of course, Texas has indeed had to borrow more than billion
dollars so far to pay unemployment claims, thus technically bankrupting
its unemployment trust fund. That meets my criteria. But, it’s instructive
to note Texas’ energy production capacity in this regard, as that produces
dollars. And one of the big reasons US states are under so much pressure,
like their European counterparts, is that they cannot print currency.
Being able to produce
oil
and
gasis
the next best thing to printing currency. So, Texas doesn’t make my
list.
The seven states to make my list are California, Florida, Illinois,
Ohio, Michigan, North Carolina, and New Jersey. Each has a population
above 8 million people. Each has had to borrow
more than a billion
dollars, so far, to pay claims out of their now bankrupt unemployment
insurance
fund. Also, each state currently registers
broad, underemployment above
15% as indicated by the U-6 measure for the States. And finally,
each state is a large
net importer of either oil, natural gas, electricity, or all three
of these energy sources.
Let’s consider the overall predicament for
residents of states like California, with
its epic housing bust, Ohio and Michigan
at the end of the automobile era, or North
Carolina and New Jersey in light of the
financial sector’s demise. Not only have
states such as these permanently lost key
sectors that once drove their economies,
but, residents in these states are over-exposed
to structurally higher energy costs. The
prospect for wage growth in the United States
is now dim. We are already recording year
over year wage decreases in real terms.
The culprit? Energy and food costs. My seven
states are squeezed hard at both ends: no
wage growth at the top, and no relief through
cheaper energy costs at the bottom.
US
wage growth in real terms has been stagnant
for years. And the most recent decade of
higher oil prices has been particularly
punishing to states over-leveraged to the
automobile like California, Florida, and
North Carolina where highway and road systems
dwarf public transport. While it’s true
that states like Ohio and California produce
some oil and gas, the size of their populations
overwhelm any production with outsized demand
for electricity and gasoline. In contrast,
and as I mentioned, it will be revealing
to see how this depression ultimately plays
out in such states as Colorado, New Mexico,
Wyoming, Oklahoma, North Dakota, and Louisiana
which are all net exporters of energy.
Were it not for peak oil, gasoline prices
would have fallen to a dollar during this
depression as oil returned to the lows of
the late 1990’s–if not even lower. Petrol
at 90 cents a gallon would begin to chip
away at the painfully decreasing spread
between punk wages and energy input costs,
currently endured by underemployed Americans.
Natural gas and coal prices are also much
higher than they were at the lows of the
1990’s. And I need not remind: while energy
prices are very 2010, the American workforce
has lost so many jobs that our labor force
has indeed returned the 1990’s.
21st century energy prices overlaid on
a 20th century economy? That’s no fun at
all. The mainstream economics profession,
perhaps unsurprisingly, still does not pay
enough attention to the interweaving of
long-term stagnant wage growth, higher energy
inputs, and the resulting credit creation
that OECD countries took as the solution
to resolve that squeeze. Given that one
of out of eight Americans takes food stamps,
a visit to states like Illinois, Florida,
Ohio, and North Carolina would reveal that
the difference between 15 dollar oil and
75 dollar oil, and 2 dollar natural
gas and 5 dollar natural gas is large.
My seven states of energy debt represent
a full 35% of the total US population. As
with other US states, they face looming
policy clashes between protected state and
city workers on one hand, and the growing
ranks of the private economy’s underemployed
on the other. The recent circus at the
LA City Council meeting was a nice foreshadowing
that the days of unlimited borrowing by
governments–against future growth based
on cheap energy–is coming to an end.
Washington can print up dollars and fund
these states for years, if it so chooses.
But just as with the 70 million people
in Portugal, Italy, Greece and Spain, the
108 million people in these seven large
states are probably facing even higher levels
of unemployment as austerity measures finally
slam into their cashless coffers, and reduce
their ability to borrow.
"The BLS is stuck and does not know how to fix its model." - Mish.
The reason for the drop in the household rate
to 9.7% is that the estimate of the total population in the US was increased
in January.
The January NFP number came in at -20,000, a mere 5k away from Goldman's
-25,000 estimate. Consensus was for +15,000. December, as all prior
months, saw an expected major downward revision to -150,000 from
-85,000. The January Birth/Death adjustment was for -427K from +25K
in December. Despite a deterioration in every metric, the unemployment
rate dropped from 10.% to 9.7%, even with a consensus at 10.0%.
A glitch in the excel model is further corroborated when one considers
that the civilian labor force participation rate actually rose in
January from 64.6 to 64.7. Yet a number that avoids some of the
constant fudging by the BLS, the Non-Seasonally Adjusted number,
hit a new recent record: instead of 9.7%, this number was 10.6%,
a 0.9% increase from December! The same can be seen in the U-6 data.
NSA U-6 is now at a record 18%, even as the seasonally adjusted
number declined to 16.5%.
Anonymous
The reason for the drop in the household
rate to 9.7% is that the estimate of the total population in the
US was increased in January. If they had kept the
same population data they used in December the household rate would
have been 10.6%. There was no growth in jobs.
Stuart
These figures are becoming less and less meaningful in every
release. They are much more a political tool for the puppet masters
to roll out than they are a true economic indicator.
Andrei Vyshinsky :
Yes, and particularly now when the "recovery" worm appears to
have turned. What to do now when the market is beginning to tank
again and a second dip at some point later this year seems all but
assured. Like undertakers, these maggots will do just anything to
put some rouge on the pallor.
MongNutter :
so.... Is this a blatant lie / act of deception or just more
purposeful obfuscation? Is the non-seasonally adjusted # plucked
out of thin air?
nedwardkelly:
Not sure how to take the Temp agency rise... Hiring temp workers
is more expensive long term, more cost effective short term. There's
work that needs to be done, but apparently businesses are willing
to pay more short term to avoid a longer term commitment. That's
confidence!
SDRII :
Meme is that temp is a leading indicator hence the hgihlight
in the BLS report. The number itself is immaterial, it is the transmission
mechanism to fit the narrative. On the other hand good thing for
the +42 retail blowout. Of course wouldn't know it from th store
closing or revpar or rest traffic indicators.
nedwardkelly:
Meme is that temp is a leading indicator hence the hgihlight
in the BLS report.
Right... I guess I shouldn't have been thinking "what does this
particular number mean" I should have been thinking "what is their
motivation for including this particular number in the report"
KidHorn :
9,000 of the temp workers are for the census.
chinaguy:
Yes, 52,000 temp jobs added in January including 9,000 temp census
workers in January. Big "F"ing deal.
It is pretty hard to augue that these temp jobs are hired in
a prelude to full time employment when hours worked are less than
34 week.
U6 is at 18%. Working part time (w/ no health benefits) for low
wages is not a job which will add to the economy.
The survey size of the household date is about 1/8th the size
of the BLS data and not reliable at all......as if the BLS data
is reliable!
bobby02:
No offense and don’t get me wrong, I’m not defending the government’s
data. It’s just the 95% of the posts in this (and other) threads
see government conspiracies, lies, manipulation everywhere. It may
be so, but before make such a strong accusation, I think it wise
to at least look at the original data, something that clearly very,
very few actually do. For all the criticism of CNBC, it seems to
be the principal news source of many.
Your post is predicated on a false statement, namely “Job losses
every month . . . yet unemployment rate improves” when the data,
accurate or not, clearly shows gains.
Both surveys have their pluses and minuses and neither is perfect.
Still, is nice to have some measure of unemployment. (All the alternatives
I have seen, liking counting want ads, don’t seem better.) That
the methodology behind these indexes is flawed, producing bizarre
results, is not proof of any conspiracy, but rather indicative of
the shortcoming of modeling, sampling and economics. (In some cases
there is political pressure to generate desired numbers, like with
the CPI, but that concerns the methodology, not massaging of the
sequential data.)
I agree with your characterization that the report is generally
negative, with only a few, small bright spots.
The official unemployment rate is 9.7%. However, if you start counting
all the people that want a job but gave up, all the people with part-time
jobs that want a full-time job, all the people who dropped off the unemployment
rolls because their unemployment benefits ran out, etc., you get a closer
picture of what the unemployment rate is. That number is in the last
row labeled U-6.
It reflects how unemployment feels to the average Joe on the street.
U-6 is 16.5%. Both U-6 and U-3 (the so called "official" unemployment
number) are poised to rise further although most likely at a slower
pace than earlier this year.
Looking ahead, there is no driver for jobs and states in forced cutback
mode are making matters far worse.
The 911 slogan of Never Forget needs to be applied to this form of
domestic terrorism as well.
km4:
Applaud Neil Barofsky whose report warned that TARP supports
mean the government “has done more than simply support the mortgage
market, in many ways it has become the mortgage market, with the
taxpayer shouldering the risk that had once been borne by the private
investor.”
but color me skeptical on this
what American taxpayers got…
the financial burden
what 19 too greedy to fail banks got…
$12 Trillion in TARP with no burden due to American taxpayers getting
the financial burden
Neil Barofsky, Elizabeth Warren, Paul Volcker, Elliot Spitzer
trotted out for ‘dog and pony’ but we know who still rules the roost…..the
Vampire Squid from Hell
Their previous forecast was abysmal. 8% PEAK! Who believes them ?
How about 8% in 2020 ? See
Mish Unemployment Projections Through 2020 - It Looks Grim. During the
GD, any 18 year old and older man not working was considered unemployed.
Using GD unemployment criteria, we're probably close to GD levels for man
workforce. The saving grace today is massive government transfer payments.
Feb 01, 2010 | CalculatedRisk
As part of the annual budget, the Obama Administration released the
underlying economic assumptions too (see
Page 13 of PDF)
For GDP, they are forecasting real GDP growth of 2.7% in 2010, followed
by 3.8%, 4.3% and 4.2% in 2013.
For unemployment, the forecast is for an average of 10% in 2010,
with a decline to 9.2% in 2011, 8.2% in 2012 and 7.3% in 2013 as shown
on the following graph:
Click on graph for larger image in
new window./
The blue line is the actual historical monthly unemployment rate.
The red line is the Obama Administration annual forecast.
Based on this forecast, the current "human
recession" will last for several years for many Americans.
The 102,254 consumer bankruptcies filed in January represented a
10 percent decrease nationwide from the 113,274 consumer filings
recorded in December, according to the American Bankruptcy Institute
(ABI) relying on data from the National Bankruptcy Research Center
(NBKRC). NBKRC’s data also showed that the January 2010
consumer filings represented a 15 percent increase over the 88,773
consumer filings recorded in January 2009.
“While January represented a drop in filings from the previous
month, high unemployment rates, unsustainable mortgage burdens
and other economic stresses will push more consumers to seek the
financial relief of bankruptcy in 2010,” said ABI Executive Director
Samuel J. Gerdano. “Consumer filings this year will likely
surpass the 1.4 million consumer filings recorded in 2009.” emphasis added
Nonfarm private employment decreased 22,000 from December 2009 to
January 2010 on a seasonally adjusted basis, according to the ADP
National Employment Report®. The estimated change of employment
from November to December 2009 was revised by 23,000, from a decline
of 84,000 to a decline of 61,000.
The January employment decline was the smallest since employment
began falling in February of 2008.
Note: ADP is private nonfarm employment only (no government jobs).
Planned layoff announcements at major
U.S. corporations increased 59% in January, reaching 71,482 from
a nine-year low of 45,094 seen in December, according
to the latest job-cut tally by Challenger Gray & Christmas.
It was the first month-to-month increase since July, the outplacement
firm reported Wednesday.
Layoff plans ran 70% lower than the 241,749 announced in January
2009, which was a seven-year high..
The BLS reports on Friday, and the consensus is for a small net gain
in payroll jobs in January, on a seasonally adjusted (SA) basis, and
the unemployment rate flat at 10.0%.
The relatively strong ISM manufacturing
and ADP reports suggest a positive BLS number on Friday.
Turbo:
January is the only month of the year with a significant negative
(~ -170k) birth-death adjustment, which argues against the positive
number consensus. Of course that just makes it more likely the BLS
will "adjust" their methodology this month.
Rajesh:
Turbo wrote:
January is the only month of the year with a significant
negative (~ -170k) birth-death adjustment, which argues against
the positive number consensus.
I think the revisions to 2009 will shock the market as the B/D
numbers begin to reflect what actually happened.
volker the viking:
Rajesh wrote:
I think the revisions to 2009 will shock the market as the
B/D numbers begin to reflect what actually happened.
same way all the revisions to GDP did ;-)
MrM:
The BLS reports on Friday, and the consensus is for a small net
gain in payroll jobs in January, on a seasonally adjusted (SA) basis,
and the unemployment rate flat at 10.0%.
Bloomberg quotes slightly different consensus figures:
Prior Consensus Consensus Range
Nonfarm Payrolls - M/M change -85,000 0 -40,000 to 75,000
Unemployment Rate - Level 10.0% 10.1% 9.9% to 10.2%
Average Hourly Earnings - M/M change 0.2% 0.2% 0.1% to 0.2%
Average Workweek - Level 33.2 hrs 33.2 hrs 33.2 hrs to 33.3 hrs
Mohamed A. El-Erian, whose firm runs the world’s biggest mutual
fund, said the largest stock market decline in 11 months may worsen
amid persistent U.S. joblessness and economic growth that trails
analysts’ forecasts.
Mel:
Cinco-X wrote:
There's only one problem: The consensus is wrong -- or
at least vastly simplified.
The crisis started with guns/butter in Vietnam--the idea that
war doesn't have to be painful to the non combatants. Then came
payback with needed Volker inflation. Now Reaganomics entered--reapportion
the pie--let the rich have more cake--Greenspan kept the masses
unaware and quiet.
Funny how rearranging the furniture doesn't impress Adam Smith--now
we have wild deficits and terrible income disparity--hoocoodanode?
To quote Allen--Someday this war is gonna end.
bearly:
Why all the grousing about hours worked ? Put on that happy face.
Think how efficient we have become as a nation!
And I mean seriously, who should these mega-corporations care
about more: The hedgefunds and propdesks that hold their shares
for a few milliseconds or employees that have worked there for 15+
tears ?
Nanoo-Nanoo :
I call BS in the EXTREME. AIG is owned majority stake by taxpayers....So,
they are more valuable than the POTUS?
WASHINGTON – Executives in AIG's financial products division
are getting $100 million richer, and the White House pay czar calls
the bonuses "outrageous."
However, Kenneth Feinberg said the payments are contractual obligations
entered into years ago. And he pointed out that AIG executives have
pledged to repay $39 million out of $45 million in previous bonuses
to the U.S. Treasury.
The insurance giant was hit hard by Wall Street's meltdown in
2008 and still hasn't repaid all of the $180 billion the government
gave to rescue it from financial disaster. Feinberg told ABC's "Good
Morning America" on Wednesday that he is using whatever leverage
he has to get that money returned to the taxpayers.
Feinberg said the contracts that obligate the company to pay
the bonuses expire in March.
To state the obvious, this has not been a good year for labor:
Wage and Benefit Growth Hits Historic Low, Wall Street Journal:
Wage and benefit costs, both before and after adjusting for inflation,
grew more slowly in 2009 than in any year since the U.S. government
began tracking data in 1982, as double-digit unemployment weakened
workers' ability to command higher pay.
In the past 12 months, the cost of wages and benefits received by
workers other than those employed by the federal government rose
1.5%, according to the Labor Department's employment cost index.
In the same period, consumer prices rose 2.7%.
Adjusted for inflation, wages and benefits fell 1.3%... The inflation-adjusted
cost of wages and benefits at the end of 2009 stood just 1.1% higher
than at the end of the previous recession in 2001, the Labor Department
said.
The Employment Cost Index measures the cost of labor independent
of the influence of changes in compensation caused when high-wage
sectors grow more or less rapidly than low-wage sectors. Unlike
widely cited data on wages, the index includes the cost of benefits,
which account for about 30% of total compensation costs. ...
Private employers' health-insurance costs rose 4.4% in 2009, after
increasing 3.5% the year before. The 2009 increase, though, was
the second-lowest rate of increase in more than a decade, according
to the survey. The Labor Department noted that this reflects, in
part, employers' reducing their contributions to employees' health
insurance or switching to lower-cost health plans. ...
Selected Comments
Anne from Chicago:
Outside of Wall Street, looks like most people are working to
stand still (or lose ground.) Interesting how the rescue of "the
economy" is working out for us all.
km4:
and it's not likely to get better no matter what Dems and GOP
assclowns say....
30% of US workforce are already temps contractors, consultants,
part time workers etc. that has resulted in:
The elimination of benefits. A complete shift of risk to individuals.
Costs are rising fast (often many, many times the rate of core inflation)
and one slip puts you into bankruptcy.
Record levels of job dissatisfaction (waiting for the next great
project never happens on your schedule).
Stagnation or a steady erosion of income at best (many see an
immediate drop in income or long periods of unemployment between
gigs with a shift to temporary status) due to pressure from off-shoring
and automation.
Those are the facts of the matter!
Fred C. Dobbs:
GDP up, wages & benefits down. Are the Rich getting richer? Yes!
Is this a great country, or what?
Jobless Turn to Family for Help, Often With Complications
By MICHAEL LUO
WARRENTON, Ore. — After Jean Ley lost her job as a mental health
counselor in June 2008, she quickly realized how limited her options
were. She had little savings. Unemployment benefits were not going
to be enough to pay her bills. She was at risk of losing her home
here on the Oregon coast.
As a last resort, Ms. Ley, 62, turned to her family. Her older
brothers conferred with her son, Matt, and agreed that one of them
would help pay her bills if needed.
But the assistance proved more than temporary. A year and half
later, her son’s regular payments covering her mortgage and occasional
emergencies, like a car repair or arthritis medication, have proven
to be her bulwark from economic catastrophe.
“If my family weren’t able to help me out at this point, I wouldn’t
have a home,” she said. “And I would be struggling.”
As joblessness persists, credit cards max out and the government’s
safety net has grown thin, many Americans have turned to a patchwork
quilt of family members and friends to stave off eviction, keep
their electricity running or cover an unexpected medical bill. It
is an underground banking system, complete with lenders and borrowers....
Reality Bites:
"The Employment Cost Index measures the cost of labor independent
of the influence of changes in compensation caused when high-wage
sectors grow more or less rapidly than low-wage sectors. Unlike
widely cited data on wages, the index includes the cost of benefits,
which account for about 30% of total compensation costs. .."
Gee, high paying sectors are growing slower than low wage sectors.
Our high wage sectors are concentrated in technology, including
bio-tech and systems management. Yet we still have a bunch of people
who refuse to acknowledge that IP goods deserve the same protections
as tangible goods. They would be outraged if pirates, perhaps operating
out of Somalia, were able to steal hundreds of billions of dollars
worth of our tangible exports, yet are perfectly fine and perhaps
even join the ranks of the pirates when it comes to IP goods.
It's no mystery why wages have been stagnant, the entry of more
than 2 billion people into the global economic system created competitive
pressures that will last for decades to come. Those who want a return
to the old style manufacturing economy blind themselves to the fact
that workers in these industries have to compete with 2 billion
other workers now. Wages should equalize for all workers who do
the same job, and that means wages for manufacturing jobs will continue
to stagnate or fall for the foreseeable future. There is no future
with old manufacturing processes! The high wages paid in the past
are in the past, never to return again!
Maybe these people don't understand that these old manufacturing
processes were revolutionary in their day and represented the forefront
of technology in the past. Perhaps that's why they were able to
command high wages in the past? Now that such technology is old
and dated, being adopted by every country, those who continue to
work in that arena can't be compensated like they would be if they
were in an industry that represented the same technological gap
of old, today?
Simply put, to earn high wages, people must be in industries
that face little competition and yet produce goods in high demand.
Our software, digital technology, biotech, and other companies fit
that mold because other countries haven't caught up to that level
yet. It only makes sense that people would try and grow and protect
these companies, if there is merit in any protection at all. I can't
understand the thinking behind those who pine for harsh tariffs
and retaliatory measures to save low value manufacturing jobs, but
will not even acknowledge the existence of already established rights
when it comes to high value manufactured IP products. It is these
jobs that are important and are the future for American labor. WTF?
Go on and live in the past, behold the past glory of the Model-T
and past American technological dominance. Is it any wonder why
you continue to be ignored, why your ever louder cries of returning
to a time long past go unacknowledged? The world moves on, how many
years does it take for someone to learn that concept? Sadly some
will never learn, which is why they should be ignored; now only
if those people had the wisdom to understand that truth.
Fred:
To earn high wages, workers must be productive. American manufacturing
plants producing commodities can be quite productive and the workers
there will often earn very high wages. Think commodity chemical
plants.
How does protecting IP benefit productivity? What it really does
is encourage useless expenditure on lawyers. I am quite familiar
with IP since that's how I made my own pile. And yes, I manipulated
the patent system to my own advantage and meanwhile I wasted enormous
amounts of my own and other people's time and money on legal manueverings.
Furthermore, money had NOTHING to do with the underlying IP. I did
my inventing and started my business because of a desire to show
off my abilities to my peers. The same sorts of non-monetary motivations
that leads to all of us producing IP when we post on this blog and
the reason Dr Thoma hosts this blog. Fame, glory, the thrill of
impressing friends or humiliating enemies, as the case may be, are
far more powerful motivators than money. None of Galileo nor Newton
nor Einstein pushed their brains to the limit to uncover the secrets
of the universe for money.
Money is sometimes necessary to motivate vulgar activities related
to IP. For example, to motivate someone to take a design and actually
manufacture it. But the amount of IP protection necessary to encourage
that sort of activity is trivial compared to what the current IP
system provides.
As usual, you don't have a clue as to what you are talking about,
but are rather fighting on behalf of the rentier class. I this case
the rentiers of the IP legal-lobbying industrial complex.
A third political party is emerging in America. Call it the I’m-Mad-As-Hell
party.
It’s a mistake to see the Mad-As-Hell party as just a right-wing
phenomenon – the so-called Tea Partiers now storming the gates of the
Republican Party. There are plenty of mad-as-hellers on the left as
well – furious at Wall Street, health insurers, pharmaceutical manufacturers,
and establishment Democrats.
Mad-as-hellers don’t trust big government. But they don’t trust big
business and Wall Street, either. They especially hate it when big government
gets together with big business and Wall Street – while at the same
time Main Street is in shambles and millions of people are losing their
jobs and homes.
First it was TARP, the giant bank bailout that seems to have made
Wall Street flush again — so flush the Street is now distributing giant
bonuses as if the crash it brought on never happened.
Then came the stimulus package, replete with earmarked goodies for
every corporation big enough to hire a team of Washington lobbyists.
And then it was health care, which to some people looked like a sweetheart
deal between government and Big Pharma and big health insurers.
To the Mad-As-Hell party, the biggest event last week wasn’t Scott
Brown’s upset victory in Massachusetts. It was the Supreme Court’s decision
in Citizen’s United vs. the Federal Election Commission, allowing
corporations to spend however much they want on political campaigns.
True mad-as-hellers see this as inviting even more collusion between
big business, Wall Street, and big government – and against the rest
of us.
With the mid-term elections months away, both Republicans and Democrats
are scrambling to embrace the Mad-As-Hell Party as their own. Republicans
are hoping the mad-as-hellers forget the gushing corporate welfare of
the Bush administration and the last Republican congress. And Democrats
have become born-again economic populists, blaming the nation’s problems
on the same “fat cat” bankers and corporate lobbyists they’ve been cozying
up to for years.
If the Mad-as-hell Party helps get money out of politics it will
do a world of good. I might even join up. But if it just fulminates
against the establishment, forget it. Wrecking balls are easy to wield.
Rescuing our democracy is hard work.
Issue Number One -- the overriding concern that will determine more
than anything how many seats the Dems lose next fall -- is jobs. If
unemployment is 10 percent or more next November, the Dems are in danger
of losing the House and will almost certainly be short of the 60 votes
they need in the Senate.
But why would employment be 10 percent or above next November? Surely,
you say, there are enough signs of recovery that we can count on a lower
rate. Don't be so sure. Here are likely scenarios, with my probabilities:
Double-dip recession (10
percent likelihood). The commercial real estate market craters, carrying
with it hundreds of regional banks and exposing how much junk is still
on the books of major Wall Street banks. This triggers a long-awaited
"correction" in the Dow and pushes the nation into another recession.
Job losses rise. By November, the unemployment rate is back over 10
percent.
Stalled recovery (20 percent).
Fearing inflation and overly confident of the strength of the recovery,
the Fed stops buying up debt instruments and starts raising rates. These
acts choke off the recovery. Unemployment remains at 10 percent.
Jobless recovery (40 percent).
The stimulus remains in full force, the Fed keeps interest rates low,
firms replace inventories and expand production. But with the average
workweek hovering around 33 hours, employers don't add new jobs; they
just have current workers put in more hours. Result: No drop in unemployment.
Solid recovery (20 percent).
Demand surges, employers decide to expand capacity. But they don't add
American jobs. Now that foreign workers have access to much of the same
equipment and can be linked up to the U.S. so cheaply through the Internet,
employers outsource abroad. Result: No drop in unemployment.
Strong recovery (10 percent).
The recovery is strong enough for employers to start hiring American
workers. Many jobless Americans who have been too discouraged to look
for work to begin looking again. But because the BLS household survey
(on which the official level of unemployment is based) depends on how
many Americans are looking for work, the paradoxical result is for unemployment
to remain in double digits.
The [Current] Republican Party has abandoned
any serious approach to the nation’s biggest problems, economic or otherwise.
It may be resurgent, but it’s not a serious party.
Job losses, stagnant or reduced wages over the past decade, and
the loss of home equity when the housing bubble burst have combined
to take a horrendous toll on families. “Suburbs
gained more than 2.5 million poor individuals, accounting for almost
half of the total increase in the nation’s poor population since 2000.”
“Labor market conditions for 16-19 and 20-24-year-olds in the city
of Chicago in 2009 are the equivalent of a Great Depression-era, especially
for young black men.”.
In 2008, a startling 91.6 million people — more than 30 percent
of the entire U.S. population — fell below 200 percent of the federal
poverty line, which is a meager $21,834 for a family of four.
the proportion of American
marriages in which the wife makes more money rose to 22% in 2007 from
4% in 1970.
Job losses, stagnant or reduced wages over the past decade, and the
loss of home equity when the housing bubble burst have combined to take
a horrendous toll on families who thought they had done all the right
things and were living the dream. A great
deal of that bleeding is in the suburbs. The study, compiled by the
Brookings Metropolitan Policy Program, said, “Suburbs gained more than
2.5 million poor individuals, accounting for almost half of the total
increase in the nation’s poor population since 2000.”
Democrats in search of clues as to why voters are unhappy may want
to take a look at the report. In 2008, a startling 91.6 million people
— more than 30 percent of the entire U.S. population — fell below 200
percent of the federal poverty line, which is a meager $21,834 for a
family of four.
The question for Democrats is whether there is anything that will
wake them up to their obligation to extend a powerful hand to ordinary
Americans and help them take the government, including the Supreme Court,
back from the big banks, the giant corporations and the myriad other
predatory interests that put the value of a dollar high above the value
of human beings.
The Democrats still hold the presidency and large majorities in both
houses of Congress. The idea that they are not spending every waking
hour trying to fix the broken economic system and put suffering Americans
back to work is beyond pathetic. Deficit reduction is now the mantra
in Washington, which means that new large-scale investments in infrastructure
and other measures to ease the employment crisis and jump-start the
most promising industries of the 21st century are highly unlikely.
What we’ll get instead is rhetoric. It’s cheap, so we can expect
a lot of it.
Those at the bottom of the economic heap seem all but doomed in this
environment. The Center for Labor Market Studies at Northeastern University
in Boston put the matter in stark perspective after analyzing the employment
challenges facing young people in Chicago: “Labor market conditions
for 16-19 and 20-24-year-olds in the city of Chicago in 2009 are the
equivalent of a Great Depression-era, especially for young black men.”
The Republican Party has abandoned any
serious approach to the nation’s biggest problems, economic or otherwise.
It may be resurgent, but it’s not a serious party. That leaves only
the Democrats, a party that once championed working people and the poor,
but has long since lost its way.
It is good to see that the downturn in employment is being counteracted
by robust hiring and promotion in the cost-plus, quasi-governmental,
financial service sector, or more specifically, a bull market in central
banks managing subidies to the banking sector.
It appears that this flurry of promotions and hiring is for the new
group that will oversee the bank's investments in Maiden Lane III and
of course, AIG.
Ah, to be employed in a cost plus monopoly. What a sinecure.
NY Fed New York Fed Creates New Group
and Names Sarah J. Dahlgren Executive Vice President and Head of Group January 21, 2010
NEW YORK—William C. Dudley, president and chief executive officer
of the Federal Reserve Bank of New York, announced today the formation
of a new Special Investments Management Group. The Bank’s board
of directors promoted Sarah J. Dahlgren to executive vice president
and named her as head of the new group. She will also become a member
of the Bank’s Management Committee.
This move represents an additional enhancement to the Bank’s governance
and risk management in light of the tremendous expansion of the Bank’s
balance sheet over the past eighteen months by separating out the management
of the new investments from the Bank’s financial risk management.
Among the Group’s responsibilities will be managing the Bank’s
credit extension to AIG and its Maiden Lane LLC portfolios.
Ms. Dahlgren has been the senior vice president in charge of the AIG
relationship since September 2008. Prior to that, Ms. Dahlgren was responsible
for the relationship management function in the Bank Supervision Group,
with oversight responsibility for the Group’s portfolios of domestic
and foreign banking organizations. Previously, Ms. Dahlgren was responsible
for the Bank Supervision Group’s information technology and payments
systems exam programs, as well as its Year 2000 readiness efforts....
NY Fed New York Fed Names Seven Senior Vice Presidents
and Ten Vice Presidents January 21, 2010
NEW YORK – The Federal Reserve Bank of New York announced that its
board of directors has approved the promotion of seven senior vice presidents
and ten vice presidents.
NY Fed New York Fed Names 11 Assistant Vice Presidents
and 29 Officers
January 21, 2010
NEW YORK—The Federal Reserve Bank of New York announced that its
board of directors has approved the promotion of eleven officers to
assistant vice president and named twenty-nine new officers at the Bank.
We're
just sitting around, waiting for wages to be pounded down by stagnation
and prolonged high unemployment.
A dead mall is not going to generating many jobs, until it has been re-purposed.
Think back to the "good old days" before the crisis. Wall Street
was waxing on about the "Goldilocks economy." Economists referred to
"The Great Moderation." A few pundits spoke excitedly about "the greatest
story never told." Some even proclaimed it the "Bush Boom." And all
the while, as the Brookings Institution reports in
"The Suburbanization of Poverty: Trends in Metropolitan America, 2000
to 2008," the ranks of the worse-off were spreading far and wide.
An analysis of the location of poverty in America, particularly
in the nation’s 95 largest metro areas in 2000, 2007, and 2008 reveals
that:
By 2008, suburbs were home to the largest and fastest-growing
poor population in the country. Between 2000 and 2008,
suburbs in the country’s largest metro areas saw their poor
population grow by 25 percent—almost five times faster than
primary cities and well ahead of the growth seen in smaller
metro areas and non-metropolitan communities. As a result, by
2008 large suburbs were home to 1.5 million more poor than their
primary cities and housed almost one-third of the nation’s poor
overall.
Midwestern cities and suburbs experienced by far
the largest poverty rate increases over the decade.
Led by increasing poverty in auto manufacturing metro areas—like
Grand Rapids and Youngstown—Midwestern city and suburban poverty
rates climbed 3.0 and 2.2 percentage points, respectively. At
the same time, Northeastern metros—led by New York and Worcester—
actually saw poverty rates in their primary cities decline,
while collectively their suburbs experienced a slight increase.
In 2008, 91.6 million people—more than 30 percent
of the nation’s population—fell below 200 percent of the federal
poverty level. More individuals lived in families with
incomes between 100 and 200 percent of poverty line (52.5 million)
than below the poverty line (39.1 million) in 2008. Between
2000 and 2008, large suburbs saw the fastest growing low-income
populations across community types and the greatest uptick in
the share of the population living under 200 percent of poverty.
Western cities and Florida suburbs were among the
first to see the effects of the “Great Recession” translate
into significant increases in poverty between 2007 and 2008.
Sun Belt metro areas hit hardest by the collapse of the housing
market saw significant gains in poverty between 2007 and 2008,
with suburban increases clustered in Florida metro areas—like
Miami, Tampa, and Palm Bay—and city poverty increases most prevalent
in Western metro areas— like Los Angeles, Riverside, and Phoenix.
Based on increases in unemployment over the past year, Sun Belt
metro areas are also likely to experience the largest increases
in poverty in 2009.
Over the course of this decade, two economic downturns translated
into a significant rise in poverty, nationally and in many of the
country’s metropolitan and non-metropolitan communities. Suburbs
saw by far the greatest growth in their poor population and by 2008
had become home to the largest share of the nation’s poor. These
trends are likely to continue in the wake of the latest downturn,
given its toll on traditionally more suburbanized industries and
the faster pace of growth in suburban unemployment. This ongoing
shift in the geography of American poverty increasingly requires
regional scale collaboration by policymakers and social service
providers in order to effectively address the needs of a poor population
that is increasingly suburban.
Unfortunately, the prospects for employment aren't so good:
To sum up my remarks and conclude, I think we can gain insights
on this recovery from the experience and trends of the past.
Certainly for economies that experience substantial financial shocks,
recovery is normally quite slow. While inventory rebuilding
will likely provide some spark, the strength of underlying demand
as government stimulus subsides is an open question.
The employment picture overall has improved, and the outlook is
certainly much brighter than one year ago. Layoffs are abating,
although many firms are not yet ready to do new permanent hiring.
Any significant hiring will likely have to wait while current labor
resources are more fully utilized.
So it appears that this recovery will likely experience only a slow
improvement in the employment picture, and that the unemployment
rate will remain quite elevated during the early phases of the recovery.
GDP growth is expected to be strong enough to produce some employment
growth, but that rate of employment expansion will not likely be
rapid enough to put a large dent in the unemployment rate.
Our research and analysis at the Boston Fed suggests that with significant
capacity in labor markets, wages and salaries and the ability of
businesses to increase prices are all likely to be restrained, resulting
in little immediate inflationary pressures. In my view this
should allow for accommodative monetary policy to continue to support
the economy until the underlying demand of consumers and businesses
becomes self-sustaining.
Here are a few graphs from the presentation:
Have recent political events helped the administration to finally
realize that labor markets and the unemployed need more help? I wish
I could answer with an enthusiastic, yes, the administration has learned
this lesson. But while there's
some evidence the administration recognizes both the political and
economic importance of addressing the unemployment problem, we'll have
to see how hard the administration pushes for proposals that might help
create jobs or ease the consequences for those who cannot find employment
despite their best efforts. (They could start by pressuring the Senate
to quickly take up and
act
upon the very modest job creation bill the House has already passed.
Until the administration at least does that, it's hard to take the proclamations
about job creation seriously.)
Update: Paul Krugman:
A Note On The Economy: Quite aside from everything else going
on, the economic recovery isn’t looking very good.
Unemployment claims are stalled at a level that bodes ill for
for the overall employment picture (don’t count on falling unemployment
until that number falls well below 400,000). And the
10-year bond rate, which is my personal index of the market’s
expectations about recovery, has been falling off again after rising
for several weeks.
No reason to panic — but it does look as if this recovery is
going to be jobless for quite a while.
Maybe there's no reason to panic, and perhaps it's
too late to do much to boost employment at this point (though I
think we should still try, and as just noted, we can still give more
help through income maintenance and other programs to those who are
trying to find work, but are unable to do so, and this will have indirect
job creation effects). It's frustrating to watch the slow recovery of
labor markets when there's something that could have been done about
it if there had been a bit more panic about the coming unemployment
problem months ago.
Oh, one more thing. Given the poor outlook for employment, why are
we even talking about raising interest rates or balancing the budget
now? It's too soon for that.
I really wish they would stop using the phrase
"financial crisis," which implies that lending supply is constrained,
when the issue is over indebtedness and inflated asset values, which
work to discourage consumption. Policies designed to prop up asset
values may make the pain less sharp, but they will also slow needed
adjustment. Robust growth will not return until asset values come
into line and blance sheets are repaired. The strategy appears to
be to wait until we outgrow the imbalances, which bodes for slow
growth over an extended period.
It's pretty useless to use post-war cycles, with
no liquidity crisis and no overwhelming debt overhang, to predict
the future from this recession.
Larry:
I think we had one, when everybody panicked a
couple of autumns ago. But that was then. Now we have a liquidity
trap and a huge underwater mortgage hangover, plus a policy regime
that is completely unpredictable (cf Brown/Coakley.)
Bam's problem is that the same people who are
outraged about the slow recovery and his evident lack of focus (re
jobs) are even more outraged about the solution he chose (stimulus.)
He either has a heck of a sales job, or he's got to come up with
another (monetary?) way out of this. If he had a Sumnerian epiphany,
the economy might get back to normal in a Massachusettes (sic) minute!
Bruce Wilder:
I'm with don. "Financial crisis", to me, sounds
a panic and a seizing up, when all that is past, and we are dealing
with a serious debt-deflation, which built up over many years. The
policies adopted to rescue the banks from insolvency are predictably
taxing the economy. (And, past recessions induced by Fed tightening
against inflation aren't going to be much help understanding the
present dynamics.)
The present economy reminds me of my grandmother's
rueful "grace" at the dinner table: "three pieces of meat for the
four of us, thank god there's no more of us".
On the financial side, deny-and-extend seems to
be the policy rule of the day. That's foolish enough.
But, on the real economy, the obvious point that
there just isn't enough "capital stock" to usefully employ the full
labor force. Take the actually unemployed and underemployed together,
and that's 10% to 15% of the labor force. If we started shedding
jobs from health care and the financial sector, that might be another
5%, who ought to be finding new employments.
We cannot count on the kind of spontaneous recovery in employment
that typified most post-WWII recessions, where the country just
went back to building more suburbs, and stocking them with houses
and cars and schools. That ready-made paradigm is completely played
out in most of the country. We really need a major effort to re-structure
the economy, to build infrastructure and a skeletal framework, within
which the economy could resume growing (or progressively developing
in a sustainable fashion). We need some substantial re-structuring,
before "spontaneous" private sector recovery is even possible.
Otherwise, we're just sitting around, waiting
for wages to be pounded down by stagnation and prolonged high unemployment.
Some analysts have been hailing recent increases in part-time
workers as good news since many of them will end up being hired permanently
once firms realize the recovery is on solid footing. For example, Calculated
Risk
says:
The thinking is that before companies hire permanent employees following
a recession, employers will first increase the hours worked of current
employees and also hire temporary employees. Since the number of
temporary workers increased sharply, some people think this might
be signaling the beginning of an employment recovery.
But, CR says, be careful:
However, there has been some evidence of a shift by employers to
more temporary workers, and the saying may become "We are all temporary
now!", so use this increase with caution.
In recent work, David Autor and Susan Houseman throw "cold water
on the notion" that temporary workers turn into full-time workers, and
they support the cautious interpretation CR talks about:
Temporary gains, by Peter Dizikes, MIT News Office: While the
U.S. economy struggles, one form of employment is on the rise: Temporary
jobs. In December, the country lost 85,000 jobs overall, but added
47,000 temp positions, according to the Bureau of Labor Statistics.
Increasingly America relies on these contingent employees — or “disposable
workers,” as BusinessWeek put it in a recent cover story.
For many workers, these jobs are stop-gap measures, but social scientists
have long floated another idea: That temp positions help low-skill
workers to acquire experience and eventually join the permanent
workforce in better long-term jobs. Now, a new
working paper co-authored
by MIT economist David Autor throws cold water on that notion. Not
only do many temp employees struggle to find long-term or “direct-hire”
work, the study says, but holding a temp job generally lowers a
worker’s employment and income prospects over time.
“Temp jobs have some initial positive impact,” says Autor. “But
not only do they end quickly, they tend to displace what a person
would have done instead, either taking a direct-hire job or engaging
in the kind of search that could lead to a direct-hire job.” ...
This made think I should reconsider some of the job creation strategies
I've been promoting, but perhaps these results don't apply more generally?:
To be sure, a valid question is how broadly these findings apply,
given Michigan’s acute economic struggles. However, as Autor notes,
the study’s data starts when the state economy was growing in the
late 1990s, then continues through the slump of the early 2000s
and the subsequent rebound; it ends before the current recession
began.
Moreover, Autor and Houseman believe there is no regional bias in
the study because the overall figures for people finding both temporary
and long-term jobs through Work First in Detroit closely match the
equivalent data for other regions, including North Carolina and
Missouri. The researchers also say temp workers fared no differently
in the production-line jobs associated with Michigan than in the
kinds of clerical jobs found everywhere.
But Autor gives an important qualification that may give some hope
that these kinds of programs will be more effective when used to combat
unemployment in a recession -- where many of the laid-off workers are
skilled -- as compared to trying to find employment for low-skilled
workers who experience extended unemployment spells:
“I don’t think it’s anything specific about Detroit, or the type
of work in which temps are placed,” says Autor. “In terms of the
external validity of the conclusions, my main concern is how this
relates to a more skilled population. There we don’t have a clear
answer yet.” It is possible that temp jobs for people with college
degrees do lead to greater opportunities and earnings — something
the researchers would study if the right data set presents itself,
Autor says. Given the way America’s temporary workforce keeps growing,
there may be plenty of those numbers for Autor to scrutinize in
the future.
This isn't really new. The US workforce (and Japan's and Europe's)
have been increasingly temporary for many years now. Even most 'permanent'
jobs don't have the protections of seniority etc., and are basically
temporary in nature.
One
can definitely see this in the universities, with the reduction
in tenure-level jobs, and the increase in lecturers.
Bruce Wilder said...
It seems to me that the increase in temporary employment ought
to be read against other labor market trends, to see if we can perceive
a larger whole.
And, we ought to do that, both for the short-term analysis of
the business cycle, but also for the broader analysis of a changing
employment relation and social structure.
I think a lot of what we are seeing, short-term and long-term,
implies a shrinking capital stock, which is depressing marginal
productivity and wages, but which also has fewer "positions" available.
I don't subscribe to the lump-of-labor idea, but I do think a
lot of work is highly structured by technology and associated dedicated
capital investment, and substitution possibilities between capital
and labor at the margin can be quite limited. If you have 10 farmers
and 4 tractors, four farmers are going to have the means to be highly
productive, and make a living wage, and 6 farmers are going to be
consigned to marginal, low-wage opportunities at best.
A lot of the capital stock is intangible, and we don't do a good
job of measuring even the tangible part (aka "capacity"),
but the Bush boom, with so much investment
was concentrated in unproductive uses, may have left us with an
inadequate capital stock. And, a prolonged depression,
in which Americans work in debt peonage to Goldman Sachs, isn't
likely to add to it.
There are a number of leading economists -- Ned Phelps comes
immediately to mind -- who have long advocated policies to reduce
wages, and I have no doubt that a number of others, including Mark
Thoma, can be enlisted to puzzle earnestly, while advocating ameliorative
policies to accomplish the same end.
Marx would recognize the new reserve army of the unemployed
as a means to drive wages down, while average productivity continues
to rise, as a way to generate surpluses to be channelled into executive
bonuses, without unduly upsetting the capitalists.
kievite:
The whole sectors like IT were decimated by outsourcing.
In IT some senior positions are still available in the USA but
the requirements are really high and competition is brutal. Entry
level positions are mostly filled by H1B candidates who are slaves
of the system.
Essentially people who have spent five or more years getting
the degree at the university and then five or more years in workforce
are pushed to temp jobs or to other sectors of economy. So all this
talk about education as a way out of the current crisis is by-and-large
pure hypocrisy.
Waiters/waitresses with good knowledge of calculus or C language
is just a cruel joke.
As for temp IT jobs the payment is on the level of Wall Mart
jobs. Actually Wal Mart jobs are less stressful.
I really start hating the system...
In a sense all important policy players who helped us to get
into this hole including Helicopter Ben should lose their jobs to
feel the results of their stupid policies (I would also close Chicago
University economic department and Harvard Business School as they
are not simply useless but actually really harmful ;-).
Generally the rule when each tenth economist should lose the
job when unemployment climb another one percent might be useful
for keeping economists honest and less subservient to big business.
The unemployment rate is 10 percent and
almost certain to rise further in the months ahead. This is truly a
disaster. If anyone questions whether 10 percent unemployment is a big
deal, consider that the first stimulus to boost the economy was passed
in February of 2008 when the unemployment rate was 4.8 percent. We are
now looking at an unemployment rate that is more than twice the level
that was high enough to prompt George W. Bush to sign a stimulus package.
There is an incredible complacency about this unemployment
rate around Washington even though all the official projections show
it remaining high years into the future. For example, the Congressional
Budget Office projects that the unemployment rate will not fall below
7.0 percent until well into 2012 and will not return to normal levels
until 2014. Perhaps, if more of the people in policymaking positions
faced unemployment they would be more concerned about the problem.
The especially disturbing part of the story is that
we do know how to get the unemployment rate down. In principle, we could
create demand through another stimulus package, with the government
directly or indirectly creating the demand needed to employ many of
the 15 million unemployed workers. For political and superstitious reasons,
a stimulus package large enough to substantially boost demand does not
seem feasible.
However, we can also go the route that has proven
successful at keeping unemployment down in Europe: work-sharing. The
concept is very simple. Instead of paying workers unemployment benefits
when they are not working, we pay companies to keep workers employed,
but working shorter hours at pretty much the same pay.
In Germany, under a typical
arrangement, if the workweek is cut by 20 percent, then the government
picks up 60 percent of the lost pay (12 percent of total pay), the company
picks up 20 percent (4 percent of total pay) and the worker ends up
taking home 4 percent less than they had previously, even though they
are working 20 percent fewer hours.
This strategy has proven remarkably successful. In
Germany, the unemployment rate has not risen at all during this downturn
even though its GDP has actually fallen more than in the United States.
In the Netherlands, which also has had a larger fall in output than
the United States, the unemployment rate is below 4.0 percent.
Work-sharing is not just a foreign concept. Seventeen
states have work-sharing programs tied to their unemployment insurance
system that have saved a total of more than 300,000 jobs. There are
bills before Congress (introduced by Jack Reed in the Senate and Rosa
DeLauro in the House) that would provide funding to expand work-sharing
in the states that already have it and to provide start-up money in
the 34 states that do not.
This legislation could make a substantial dent in
the unemployment rate, but it is possible to go further. Rep. John Conyers
has proposed a bill that would provide a tax credit to employers that
reduced their workers' hours while keeping their pay unchanged. The
credit would cover up to 10 percent of annual compensation or $3,000.
This credit could be used to pay for any form of reduction in hours,
including family-friendly policies such as paid family leave, paid sick
days or paid vacations, in addition to shorter workweeks.
A Conyers-type tax credit could also be targeted
to disproportionately benefit hard-hit areas like Cleveland. Instead
of being limited to 10 percent of work-time and $3,000, in areas of
especially high unemployment the credit can be allowed to cover 20 percent
of work-time and $6,000 of compensation. The rates could even be set
higher in order to provide a larger boost to employment.
Polls show that the public is angry at the country's
leaders. They have every right to be. The policies put in place have
made the Wall Street banks more profitable than ever at a time when
the unemployment rate is 10 percent and we are seeing close to two million
foreclosures a year.
The refrain that we should be thankful we didn't
have a second Great Depression doesn't cut it. The only reason that
anyone is even talking about the Great Depression is because of the
ineptitude of our economic policymakers and the greed of the Wall Street
banks.
We know how to fix the problem. Instead of double-digit
unemployment, we could be enjoying shorter workweeks and longer vacations.
We just need a Congress that cares as much about ordinary workers as
it does about the millionaires and billionaires on Wall Street.
"there is a correlation in government between the creation of long-term
liabilities and the propensity to rely on fantasy math. "
Jan. 20, 2010 | Bloomberg
Everyone seems to know the current path of federal fiscal policy
is a deathtrap over the long term. What’s peculiar is the relative inattention
to the balance sheets of state and local governments.
Hidden behind accounting fictions, the politically unspeakable reality
is that public employee pension systems are under-funded by more than
$2 trillion. Add more than $1 trillion in
unfunded health-care benefits for retired public employees, and state
governments face protracted structural deficits ranging from challenging
to insurmountable.
Unfunded promises are the equivalent of government debt.
The burden of promises made by state governments to their employees
-- effectively an invisible wealth transfer from future taxpayers to
current and prospective public-sector employees -- amounts to about
one quarter of U.S. gross domestic product.
The strength and durability of the current
economic recovery are unknowable; that state and local governments,
which employ one in nine workers, will be a drag on that recovery is
certain.
"These days, unfortunately, we are still reading of the persistence
of unethical or at least “questionable” behaviors of some key players in
the financial industry. Some of these organizations are rewarding their
executives with higher salaries and bonuses, while 10% of the American workforce
is unemployed thanks to “miraculous lending and financial engineering” practices."
This guest post is by Ivo Pezzuto, Professor at the Swiss Management
Center University (SMCU) in Zurich, Switzerland, and an experienced
observer of the global financial services industry.
I share the analysis of most economists and observers that the following
are among the main causes of the current global financial crisis:
the U.S. Federal Reserve’s low interest rate policy at the beginning
of the last decade, the resulting credit euphoria of both lenders
and borrowers;
the more ”relaxed” credit initiation and control policies and
procedures of lenders;
the “exotic” innovative features of some mortgage lending products;
the overwhelmingly optimistic view of future house prices which
prevailed in the market that has led to both the housing and the
mortgage lending bubbles;
the widespread use of badly controlled (OTC trading) innovative
financial engineering tools (i.e., derivatives, securitizations,
CDS, CDO, MBS, RMBS, CLO, etc.).
Imbalances, exchange rates and interest rates differences between
the US and other emerging economies and the resulting speculative
trading and arbitrages.
As I reported on October 7th, 2008 in my SMCU working paper (ISSN
1662-761X), however, from a more thorough and in–depth analysis of how
the U.S. subprime mortgage loans crisis has originated and evolved,
it seems to me that this dramatic financial and economic event might
not have been generated only by the above mentioned items.
My assumption is that many bankers probably knew quite well what
was really happening to their subprime mortgages portfolios and why.
These explanations are reported in my SMCU working paper which can be
downloaded free-of-charge from
this link, or reading my chapter (chapter
16) in the forthcoming book of
Robert W. Kolb,
Professor of Finance/Frank W. Considine Chair of Applied Ethics at the
School of Business – Loyola University Chicago.
These days, unfortunately, we are still
reading of the persistence of unethical or at least “questionable” behaviours
of some key players in the financial industry. Some of these organizations
are rewarding their executives with higher salaries and bonuses, while
10% of the American workforce is unemployed thanks to “miraculous lending
and financial engineering” practices.
I am not against in principle granting employees and executives generous
bonuses if they are well deserved. I just hope that after such a dramatic
crisis, there will be more rigorous attention to reward only those who
have actually worked to improved general economic conditions and not
only their personal wealth through financial speculation.
The overlay of the unemployment rate on the graph (green) suggests
that asset bubbles push down the unemployment rate, and then when the
bubbles burst, the unemployment rate increases significantly. There
are other factors too, but the bursting of the bubble probably leads
to higher sustained unemployment because many workers have non-transferable
skills and need to acquire a new skill set.
A good example of this would be construction employment in the recent
bubble.
... ... ...
As we know, there were bubble in both residential and non-residential
investment. This pushed up both key categories of construction employment.
Since the recovery in residential construction will probably be sluggish,
and private
non-residential construction spending is declining rapidly - construction
employment will probably continue to decline even with more public spending.
A construction industry group is now
arguing that almost one-in-four construction workers is unemployed.
But that reality is many of these jobs are not coming back any time
soon because the bubbles in residential and non-residential investment
pushed construction employment up way too high - and now many of these
"unemployed" construction workers will need to develop new skill sets
and find alternative employment.
This wasn't the workers fault - they were just responding to the
market demand, and construction employment was probably the highest
paying job available. However this does suggest that the Fed needs to
consider asset bubbles when trying to follow their dual mandate of price
stability and maximum sustainable employment.
Asset bubbles play a key role in employment, and trying to clean up
after the bubble is short term thinking and is not promoting sustainable
employment.
Selected Comments
double inverse recession:
"maximum sustainable employment."
Everything is the same as nothing. If you want everyone to be
employed, then their jobs will be meaningless. These were credit
based jobs, the money came from shadow banking and has now disappeared
into the ether. It's hiding until shadow banking finds its next
group of corpses to suck dry. You can almost hear their next puppet
president's election songs. "More banking for jobs, they'll take
care of the economy, just sit back and let us determine your future
with consumer-conglomerate-servitude".
To win a RICO suit, a plaintiff must show a “pattern of racketeering
activity” that included at least two acts within 10 years of
each other. Among the crimes that can establish the pattern
is mail and wire fraud, two of the broadest provisions in the
federal criminal code.
Although it began as a provision aiming at organized crime,
RICO have moved far beyond its origins. Civil RICO suits have
included those against H.M.O.’s, banks, insurance companies
and indeed anyone who enters into a contract that is later breached.
While it has been used less frequently in divorce cases, the
provision can certainly be the basis for a claim.
ac
We live in frightening times when you hear officials in China
suggesting that they have to create bubbles in order to pacify their
citizens.
"The Return of Depression Economics and the Crisis of 2008"
We're simply returning to the same kind of bubblenomics that
created the crisis to begin with.
This is what happens when you have a society that lives in and
ideological and moral vacuum: They essentially become a giant mercenary
force that has to be constantly bribed so they don't turn on each
other and rip themselves to pieces.
Welcome to the new America.
double inverse recession:
We should be retraining workers with redundant skills instead
of bailing out banks. We should be removing subsidies from farming
and using the money to train farmers in agribusiness IT and create
R&D farms for their state universities. We should be spending our
stimulus on projects that yield strategic options, not meaningless
$2500 credits to online universities. We have a lot of solutions
to unemployment but they all involve the reduction of asset and
commodity prices via reduced market intervention. Whoever is stopping
the reallocation of capital and price discovery is stopping the
recovery.
Comrade Misean is Dope:
double inverse recession wrote:
We should be retraining workers with redundant skills instead
of bailing out banks.
Is that the Imperial We, as in We are not amused? Cuz otherwise,
seeing as how YOU can't possibly know enough to do any such thing,
perhaps the individual should take care of his own retraining and
what not. Just a thought.
km4:
Net Net: without bubbles we get U6 unemployment around 18 - 20%
Why ? America's dysfunctional economic system is now almost totally
dependent on increasing debt, faux GDP growth, ponzi schemes and
bubbles
Obama game plan: keep 'extend and pretend' ruse of going with
plenty of with view from MSM and Congressiters or else the gig is
up and the public actually becomes restless and may take action
crazyv
Sebastian wrote:
"It was all Greenspan's/Bernanke's/Paulson's/Banksters' fault
argument looks ridiculous.
--------------------------------------------------------------------------------
I think the operative word is "all". I completely agree with
you that it is not all their fault. But merely because it was not
"all" their fault doesn't mean that it wasn't their fault. I think
the big difference between J6P who was also at fault is that J6P
wasn't paid by the tax payers to avoid this kind of problem nor
had responsibility to avoid this problem.
I do think that Obama missed an opportunity in not using this
crisis as a reset motion an opportunity to speak truthfully to the
American people and while hanging the bankers making it clear that
individuals bore responsibility as well. Instead he elected to let
the bankers and J6P go free.
NOTaREALmerican:
Comrade Misean is Dope wrote:
perhaps the individual should take care of his own retraining
and what not.
In a fantasy based Libertarian world, yes. But, I think the point
was that; assuming that socialism/fascism is the only possible reality
based economic system THEN "we" would have been better off spending
the loot on retraining than Banksters.
Jim A.:
It's interesting that employment is better correlated to price/rent
ratios than to price/earning ratios. The exception being the '93-'00
tech bubble. This suggests (not surprisingly) that construction
creats more jobs than investment returns. We spent a decade and
all we've done is replace dark fiber (optics) with dark (condo)
towers.
EvilHenryPaulson:
Jim A.
More correctly it suggests that for the past 30 years the US
economy has been rolling from one debt vehicle to the next until
there was no new vehicle to refinance a multi-decade debt bubble.
Don't forget some of the preceding ones like Latin America, junk
bonds, S&L, Asia.
You overlook the growth in the labor force during the 90s, and
that employment for every decade since the 1940s has grown by about
20% except for the 2000s when it grew zilch.
Establishment Survey Data: Nonfarm payroll employment
edged down (-85,000) in December, and the unemployment rate was
unchanged at 10.0 percent, the U.S. Bureau of Labor Statistics reported
today. Employment fell in construction, manufacturing, and wholesale
trade, while temporary help services and health care added jobs.
Household Survey Data:
In December, both the number of unemployed persons, at 15.3 million,
and the unemployment rate, at 10.0 percent, were unchanged. At the
start of the recession in December 2007, the number of unemployed
persons was 7.7 million, and the unemployment rate was 5.0 percent.
(See table A-1.)
• Total lost jobs lost since the recession began in December
2007 is 7.2 million.
• This is the worst recession in terms of employment and jobs
lost, both in actual numbers, and as a percentage of all jobs, of
any cycle since World War II was ending in 1944-45.
Gainers and Losers:
Factory payrolls down 27,000
Auto manufacturing and parts industries down 4,900
Construction jobs fell 53,000;
Retail payrolls decreased by 10,200
Service industries (banks, insurance companies, restaurants)
subtracted 4,000 workers
The current speculation about town is that NFP will be a positive
number; Some folks have even surmised that due to certain seasonal adjustments,
we could see a
300k+ print.
This is all irrelevant nonsense. Out
of a Labor Pool of 143 million people, the net change in monthly gains
and losses of 5 to 6 figures is a rounding error, an irrelevant, erroneous
estimate, subject to significant future revisions and extensive modeling
errors.
Rather than speculate what the monthly 0.001% change in the labor
pool will be — that is 14,300 people out of 143 million — lets consider
will and won’t be important from today’s release.
We usually look at 3 employment factors to give us insight into what
is going on below the headlines — Temp Help, Hours worked, and wages.
Today, we will add a fourth that becomes relevant during the recovery
phase of the economy — changes of those people Not in Labor Pool (NILFs).
1. Any improvement in temporary labor tells us that businesses are
tentatively feeling out the economy, adding personnel because it will
support greater sales. They test the waters with temps because it is
the least expensive way to add production at the loest cost. (No HR
costs, Retirement, Benefits, etc.)
2. Improvements in Hours worked informs us that businesses are doing
more than showing confidence — they are adding hours in response to
customer demand. This implies that a virtuous cycle of consumer spending,
business capex, and additional hiring will follow. Of all the components
of the Employment Situation report, hours worked may well be the most
important. It has been at or is near record lows during most of 2009.
3. Wages reflect the supply demand balance between workers looking
for jobs and employers needing labor. The wage number tells us which
side has the upper hand, supply or demand. For most of the 2000s, it
has been low demand controlling the ball.
4. Lastly, let’s look at the NILFs:
During the 2002-08 cycle, I frequently
noted that unemployment data wad falling for the wrong reason — it wasn’t
that more people were getting jobs, it was that the labor pool was shrinking.
During a recovery, the opposite could happen. From sometime
in 2010-12, we could very easily see Unemployment go up as more people
return to the work force.
Currently, 5.6 million aren’t in the
labor pool who were a few years ago. These are the people who have given
up looking for work, and have exhausted their UE benefits — thus, they
aren’t counted in the labor force.
As Mark Gongloff notes, “when they start looking again, as they
typically do in recoveries, they will rejoin the labor force, competing
with the roughly 9.9 million people drawing benefits. That alone will
raise the unemployment rate again.”
As you may know, and as we suggested the other day, the ADP report,
based on payroll data from American business, showed a loss of 84,000
jobs in December, versus expectations of a loss of only 75,000 jobs.
We also suggested that this Friday's US Non-Farm Payroll Report will
be a positive surprise, at least 10,000 or so jobs to the good. Here
are the details.
The Imaginary Jobs component, also known as the Bureau of Labor Statistics
Birth-Death Model, will contribute approximately 72,000 jobs allegedly
created by small businesses with less credible evidence than a Bigfoot
or an Elvis sighting.
Not that they are always positive. Each January there is an enormous
job loss shown here, in the neighborhood of about 350,000 jobs. The
reason they do this is because the seasonal adjustment factor is so
huge in January that this imaginary jobs number does not matter, since
it is subtracted (and added) from the numbers prior to the seasonal
adjustment.
We can expect this model to continue to show positive annual jobs
growth until the End of Days, and perhaps longer than that if there
is fireproof paper in the afterlife.
The 'headline jobs number' which is the Seasonally Adjusted Number
will be a positive 58,000 jobs, and provide much joy and exultation
in Washington and on Wall Street. Pundits like Paul Krugman will caution
that the economy is still fragile and a second stimulus bill will be
required to insure these positive gains.
What is the basis for these projected numbers? The same basis used
by the BLS - nothing. At least nothing connected with the real world.
These are the numbers that bureaucrats might mindlessly crank out in
response to the desire of their bosses for certain targets, a phenomenon
well understood by most corporate financial staffs.
We drew the trendline on that chart earlier this year, assuming that
the government would wish to show a steady job increase with a positive
number by December, or at least January. So far we have not been disappointed,
although there have been quite a few revisions along the way.
There will also be revisions this time again, with some jobs added
and borrowed from prior months to help make this latest number seem
believable.
So, let's see how it really turns out. Am I being too cynical? I
used to spend many hours estimating these numbers and potential targets,
but this month I decided to go with the trends. Not trends in job growth,
but trends in the general corruption of nearly all financial and economic
data in the US, from the government, the banks, and the kleptocracy.
Perhaps the numbers will be realistic and credible this time, and
I can be pleasantly surprised.
And perhaps the Obama Administration will begin to deliver the promised,
genuine financial reforms.
Here are the results of the reader poll. Thanks to the 4,518 people
who participated!
The first question was the outlook for GDP growth in 2010.
Readers who participated in the poll tend
to be pessimistic, with 57% expecting a double dip recession, and another
30% expecting real GDP growth to be below 2% in 2010.
Usually the economy grows very quickly after a severe recession. As
an example, following the '48/'49 recession, the economy grew at a double
digit growth rate for the first three quarters of the recovery. In the
2nd half of 1959, the economy grew at a 9.7% rate, and in the year following
the '73/'75 recession, GDP increased 6.2%.
Since this was the most severe recession since the Great Depression,
a normal recovery would probably be 8%+ real GDP growth for a year or
so. That isn't going to happen. Even a 4% growth rate would have to
be considered sluggish by historical standards.
I'll post more on the reasons for my outlook, but
I think the U.S. will avoid a double dip
recession, and 2010 GDP growth will be in the 2% to 3% range.
The second question concerned the unemployment rate at the end of
2010 (December 2010).
Most poll participants (70%) are expecting
the unemployment rate to be at or above 10% at the end of 2010.
I think it might be close, but I agree with the majority on the unemployment
rate (still double digits in Dec 2010). There will be a temporary positive
impact from the 2010 Census, and I expect another stimulus package (labeled
a "jobs package") to be announced in the next few months - and maybe
that will push the rate down below double digits.
I'll have more in the next few days. Thanks again for participating!
I hope most of us are too pessimistic.
Selected Comments
Doc Holiday:
The poll is interesting, because I have seen the future.
I live in an area in the PNW which
is seeing the impacts of what I think is a somewhat universal phenomena,
which I continue to refer to as the post-internet society (PIS).
PIS has to do with small business and Mom and Pop-type stores disappearing
like dinosaurs, as a result of BIG BOX Walmart-like global chains,
which have massive scale which expose the inefficiency of small
operations.
The big boxes -- in addition to the internet and its influence
on cottage-type retail sales will have a huge impact on commercial
real estate going forward, which will influence GDP growth and employment.
PIS is impacting my community, as we see bankruptcy after bankruptcy
from small ineffective and inefficient businesses which assume that
drive-by traffic will support their retail sales; the un-employed
drivers are not stopping to buy, and this auto traffic pattern mimics
internet hits; people bypass the little guy as they look for ways
to save cash. Small business in America is dead and that will cause
commercial real estate to stagnate as well as place pressure on
employment.
I would also point out, that the disparate reality between rich
and poor and the explosive nature of stock market gains, will at
some point soon result in a swing towards equilibrium (reality)
-- which in my opinion, suggests the possibility of a double-dip
recession or at least stagflnation.
sm_landlord:
wally wrote:
It's not that I want stagnation and misery, but I think that
unless the pressure stays on for a while
there will be no political initiative to fix fundamental problems
and I don't want to see us charging off into another boom-bust.
Well, get ready for it. The problems are not going to get fixed.
Instead, they will papered over.
Expect another boom in about ten years.
Comrade Kristina:
I feel the same way wally fwiw. I don't see any significant changes
in the financial sector that will stop a repeat of what just happened
on an even greater scale next time. Pain is the only thing that
ever brings about real change. See the last Depression and New Deal
for reference points.
JP:
crazyv wrote:
why on earth would you be a small business owner if you
were more pessimistic than the Calculated Risk readers?
I can answer that one: I'd rather have customers paying me than
having some clown who pretends to understand business.
NOTaREALmerican:
lawyerliz wrote:
things get better
Interesting question.
I would say "never" if you meant, when will the US have a multi-party
form of government.
Economic? Would be post next-bubble-pop. (I have no idea when
it will pop)
Black Star Ranch:
"Ok: how soon will things get better:"
..........I think US businesses be like some Mexican business
areas - everything will start looking like things were better many
years ago.
ResistanceIsFeudal:
Comrade Kristina wrote:
I feel the same way wally fwiw. I don't see any significant
changes in the financial sector that will stop a repeat of what
just happened on an even greater scale next time. Pain is the
only thing that ever brings about real change. See the last
Depression and New Deal for reference points.
I don't see a repeat in the future
at all... if we fail to resolve the systematic flaws in any meaningful
way, we are simply setting ourselves up to complete an even longer
and more devastating cycle.
As it stands, we're at Depression-level phenomena re-appearing.
Do we want to really roll the dice, and try for a Dark Age?
Comrade Kristina:
Yeah, pretty consistent with those numbers. Of course Christmas
gave me a big boost. I had a GREAT week last week. This week is
holding steady. I'm interested to see what happens after the holidays
are over. We usually get an income tax boost the beginning of February.
Doc Holiday:
New figures show (another) drop in Mexicans coming to the US
/ The Christian Science Monitor - CSMonitor.com
In the US, some 7.2 million jobs have been lost since December
2007. The foreign-born population has been the hardest hit.
From 1994 to 2007, employment among immigrants was higher than
that of natives, reaching 66 percent in 2007 compared to 63
percent for natives. But from the start of the recession through
the first half of 2009, unemployment among immigrants rose to
9.2 percent (from a low of 3.4 percent), according to a Migration
Policy Institute report, “Tied to the Business Cycle: How Immigrants
Fare in Good and Bad Economic Times,” released in November.
The native unemployment rate stood at 8.3 percent.
In certain sectors such as construction, which depends heavily
on Mexican labor, the unemployment rate grew to as much as 17
percent in the first half of 2009.
poic:
government debt is the last bubble. We won't get another chance
to fix things. It will be fixed for us from outside the US. But
Japan shows how long you can blow a government debt bubble for.
Comrade Kristina:
I think we just said the same thing RIF. I don't WANT all those
bad things to happen, I just don't see that anything has been done
to stop it. Without maximum pain which causes maximum outcry of
the public, nothing will get done.
patientrenter:
ResistanceIsFeudal wrote:
we are simply setting ourselves up to complete an even
longer and more devastating cycle. As it stands, we're at Depression-level
phenomena re-appearing. Do we want to really roll the dice,
and try for a Dark Age?
I feel that there has not been enough research on the Dark Ages,
and people may have overstated the bad part. This may be a golden
opportunity to find out.... Let's go for it!
sm_landlord:
Comrade Kristina wrote:
I'm interested to see what happens after the holidays are
over. We usually get an income tax boost the beginning of February.
Hmmm... Interesting. People who lost jobs last year will probably
end up over-withheld. You might see a bump from tax refunds, assuming
that the unemployed can afford to patronize your establishment on
their unemployment checks.
Comrade Kristina:
In certain sectors such as construction, which depends heavily
on Mexican labor, the unemployment rate grew to as much as 17
percent in the first half of 2009.
Which kind of kills that whole argument about how they are doing
jobs that Americans won't do...but we already knew that
My husband works in the construction industry and has seen first
hand how wages/jobs are affected by illegal labor. They will work
for half of what an American will on average. Of course they don't
bother with things like levels so the workmanship is sketchy at
best but when you are slapping up half million dollar condos who
cares if anything is level?
poic:
"I feel that there has not been enough research on the Dark
Ages, and people may have overstated the bad part. This may
be a golden opportunity to find out.... Let's go for it!"
Pluses were savings rate went up, everyone (who was left) learned
to live within their means and everyone (who was left) learned to
treasure their family (if it still existed).
There's got to be a few more pluses as well.
Mork from Ork:
If contrarian analysis still works (and it does!), we will see
a real boom year in 2010. And then the "hoocoodanode" goes to the
bears.
sm_landlord wrote:
Instead, they will papered over.
There is just too much grist in the mill to paper over at this
point. Too much money not going anywhere.
Too much gov money gong down deep holes.
Too much under/unemployment.
Too many houses.
Too many stores.
Too many hotels.
Too many resturants.
Our standard of living is decreasing each year whether by inflation
or deflation. We will spend less, earn
less and stop buying all that junk we don't need.
poic:
"a real boom"
There's definitely going to be a "boom".
EvilHenryPaulson:
lawyerliz
The moment Bernanke moved into assets
other than Treasuries or Agencies, he bought a one way ticket for
a trip he had long dreamed about and implored Japan to take. He will play with the accelerator by speeding up and
slowing down purchases, but he will never touch the brake until
there is a heaping of inflation.
Commodity prices won't be enough, because as Bernanke has pointed
out at the Fed before that there is (or has been) a low correlation
between input prices and consumer prices. Supposedly consumer price
inflation is the be all and end all, at least according to Bernanke.
He's going to risk the trust and
credibility of the USD.If and by the time he backs down, it will be too late to sell
the trash without a huge loss that does cause the trust to disappear.
Trust is a funny thing, it's not a linear function where you have
53% trust in the currency it's more of an all or nothing kind of
thing.
Summers has a better idea of what's going on, and through fiscal
measures he might be able to save Bernanke from Bernanke. But Summers
is full of hubris.
Then no matter what anyone does domestically, there is the rest
of the world to negotiate with.
Canada might be exciting in 2010. Not in a good way.
They're feeling pressure to raise interest rates. Justifiably
so. But there is a housing bubble that was inflated further by the
(early for Canada) rate cuts, and waiting to bust. Sensitive to
commodities too. Would be exposed to a bankruptcy of Ford or Sears.
Might end up having to raise interest rates, and then cut them again
within the same year. Which the Bank of Canada is loathe to do.
EvilHenryPaulson:
Mork from Ork
Have you ever pondered why when rates are at all time lows, so
is demand for borrowing?
Ask yourself real questions instead of attributing a market price
some kind of omniscient power
km4:
@wally (profile) wrote on Thu, 12/31/2009 - 2:32 pm
"I hope most of us are too pessimistic."
I don't. It's not that I want stagnation and misery, but
I think that unless the pressure stays
on for a while there will be no political initiative to fix fundamental
problems and I don't want to see us charging off into another boom-bust.
And that is just what we will do as a result of the current manic
efforts to restore the unsustainable.
I agree there is no political will to fix fundamental systemic
economic problems so we get more of and corporatocracy for the elites
as America gets closer to banana republic status while Obama preaches
but I'm very optimistic for my personal consulting endeavors which
revolve around working with select disruptive software startups
pavel.chichikov:
Colorado's minimum wage becomes 1st in US to drop - Yahoo!
News
pavel.chichikov:
The economy will fly like Icarus next year.
patientrenter:
Doc Holiday wrote:
curious as to why CR uses a server located in Frankfurt Am Main,
Germany?
CR is really an employee of the Bundesbank, currently on undercover
assignment to the epicenter of the global lending bust in California.
EvilHenryPaulson:
Comrade Kristina, lawyerliz
Ahh yes, Proroguing it's called. The incumbent minority government,
the Conservatives aka Tories and formerly known as the Canadian
Alliance, has gone from spend everything just in case they lose
an election (new government can be formed, or elections forced at
any time) to cutting spending so they don't have to raise taxes.
Word is they are hoping to force an election before they have to
look bad and/or while the opposition parties are unprepared for
an election. So the outcomes are 1. humiliate the opposition and
parliament/senate are on vacation until March, 2. early election
is called, 3. opposition parties join together and form a new government
(last time this did double duty associating parties not liked in
different parts of Canada with each other, and offended people who
didn't know the election doesn't directly form the government)
lawyerliz:
I had this hope (born from ignorance I see) that in addition
to being more polite, that Canadians were ever so slightly better
at economics and politics. Oh well.
pavel.chichikov:
It's 78 in Miami and I'm F'ing tired of cold weather and now
rain! ..... :fire: :sun:
Just went for a short hike in the woods. Granular snow/ice on
the trails, temp about freezing point. You get used to it, and it
makes home seem snug.
"The irony, of course, is that Republicans want to cut spending and
reduce the deficit. If they had their way, we'd have double-digit unemployment
as far as the eye can see."
Double-dip
recession (10 percent likelihood). The commercial real estate
market craters, carrying with it hundreds of regional banks and
exposing how much junk is still on the books of major Wall Street
banks. This triggers a long-awaited "correction" in the Dow and
pushes the nation into another recession. Job losses rise. By November,
the unemployment rate is back over 10 percent.
Stalled recovery(20 percent). Fearing inflation and overly confident of the
strength of the recovery, the Fed stops buying up debt instruments
and starts raising rates. These acts choke off the recovery. Unemployment
remains at 10 percent.
Jobless recovery
(40 percent). The stimulus remains in full force, the Fed keeps
interest rates low, firms replace inventories and expand production.
But with the average workweek hovering around 33 hours, employers
don't add new jobs; they just have current workers put in more hours.
Result: No drop in unemployment.
Solid recovery
(20 percent). Demand surges, employers decide to expand capacity.
But they don't add American jobs. Now that foreign workers have
access to much of the same equipment and can be linked up to the
U.S. so cheaply through the Internet, employers outsource abroad.
Result: No drop in unemployment.
Strong recovery
(10 percent). The recovery is strong enough for employers to start
hiring American workers. Many jobless Americans who have been too
discouraged to look for work to begin looking again. But because
the BLS household survey (on which the official level of unemployment
is based) depends on how many Americans are looking for work, the
paradoxical result is for unemployment to remain in double digits.
In other words, I think the chances of unemployment being 10 percent
next November are overwhelmingly high. But although voters are acutely
sensitive to the rate of unemployment, they're also influenced by the
direction employment is heading. If it looks like jobs are coming back,
they may forgive a high absolute level of unemployment -- even one as
high as 10 percent. But if it looks like jobs aren't coming back, that
we may be stuck with a high level of joblessness for years, voters will
take out even more of their anxieties on Democrats next November.
The irony, of course, is that Republicans want to cut spending and
reduce the deficit. If they had their way, we'd have double-digit unemployment
as far as the eye can see.
Nice interactive map of vanishing employment, via
Slate:
Using the Labor Department’s
local area unemployment
statistics, Slate presents the recession
as told by unemployment numbers for each county in America. Because
the data are not seasonally adjusted for natural employment cycles
throughout the year, the numbers you see show the change in the
number of people employed compared with the same month in the previous
year. Blue dots represent a net increase in jobs, while red dots
indicate a decrease. The larger the dot, the greater the number
of jobs gained or lost. Click the arrows or calendar at the bottom
to see each month of data. Click the green play button to see an
animation of the data.
Mikausa:
Given globalization, the ten billionaires in the US, most have
created IT campuses in Bangalore, India. US jobs have been shipped
offshore to India and China, with the respective corporations enjoying
tremendous savings in labor costs.
Can we have a graphic for the count of US IT jobs in Bangalore,
India? That would be a gigantic glowing blue spot, methinks.
Jojo:
Looks like a virus attacking the host as time progresses!
Also:
Cool interactive maps from National Geographic here:
=============
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>> 1) The devastation seems to spare the “Red” counties more.
In a recession, the biggest job losses occur where the most people
live. So, the big red dots appear over the cities. (Since cities
tend “blue”, your observation is correct.)
We still need food and energy production. And there’s more of
that in the less dense areas.
wunsacon:
January 2nd, 2010 at 4:50 pm
Also, in the runup to the bust, the biggest job gains were in the
“blue” counties. Was that thanks to high taxes providing services
to draw in people and businesses?
(No, I don’t really think so. I’m just warning not to draw too
strong an inference from this chart.)
johnborchers :
January 2nd, 2010 at 8:09 pm
Somewhat off topic but have others heard of this? Have you heard
of this Barry?
This is a major move in this fund for someone to accept some
20% off the price on Friday with a market order.
SS :
RIGHT WING LOONIES UNABLE TO READ A CHART!
1. By 12/09 it is almost red everywhere;
2. the “blue” states, mostly the ones throughout the mid west
and rockies, have much smaller populations and less diverse economies
with large agricultural and mining sectors. The employment boom
was consequently less and since agriculture and mining have fared
relatively well the bust is proportionately less. Please note that
U.S. agriculture is highly subsidized as opposed to being highly
taxed.
3. Texas is “the” big oil state. Oil has fared well throughout
the bust but this has nothing to do with taxes.
4. If you are tryng to prove that right wing philosophies are
synonomous with a lack of education and thinking skills than good
job, otherwise not.
Suggestion, read more post less.
SS
johnborcherss:
IT and manufacturing jobs to Asia would be a big blue spot. That’s
what the last 5 years US growth was about. Moving jobs overseas
and setting up manufacturing there. Now what?
I did a calculation of unemployment compensation that the Fed
gov’t keeps extending. It looks with 10M people out of work on unemployment
insurance at an average of $300 per week that this costs some $3B
per week to the USG. Another year at this same rate costs $156B
not including all the lost tax revenue. I see a new a better stimulous
bill coming! Any ideas?
Steve Barry:
I see now why the bull/bear ratio is at 10 year highs. This chart
goes back to 05, but with some digging I have done, I’m pretty sure
it is at least a 10 year high.
January 2nd, 2010 at 11:42 pm
Steve. I like the Bull Bear ratio and also the VIX. I know when options
premiums go down but in reality when major uncertainty exists it’s normally
a good time to bet against the market. In the case with really low volatility
you can normally buy a put and call near the money 6 months out and
almost guarentee you will make more money on one than you will lose
on the other.
franklin411 Says:
January 2nd, 2010 at 11:47 pm
The “blue” phase in the area where I grew up in California was 2002-7…most
of those jobs were residential construction jobs and warehouse jobs
shipping Chinese-made goods from the Port of Los Angeles to Wal-Marts
around America. Frankly, I’ll be pleased as punch if those jobs are
permanently replaced by manufacturing jobs and warehouse jobs shipping
American-made goods to the rest of the world.
I know, I could have said “shipping American-made goods to China.”
But unlike most Americans since the late 18th century, I don’t believe
that the Chinese will ever open their market to our goods. Why should
they? They’ve got our manufacturing sector on the ropes.
Mike in Nola Says:
January 3rd, 2010 at 12:21 am
The chart seems consistent with what I’ve observed in Houston. What
SS mentioned about oil v taxes is true. Texas was the traditional home
of the oil industry, so there was a lot here.
People here thought it was protected by the oil industry, but that
only meant that it lagged in following the rest of the country down.
The oil companies are not as stupid as those buying oil futures and
are laying off people in droves because $80 oil is ridiculous and their
profits have gotten hammered in the past year. Plenty of empty storefronts
and houses for sale now. The real estate market is almost in panic mode.
A great many rentals on the market now as people have no prospect of
selling. It’s in the higher priced end also, so it’s not just investors
renting out houses as in the low priced markets in CA.
brasil61 Says:
January 3rd, 2010 at 8:29 am
comments closed on supposed “Climate Statistics” debate … why taking
up to much cyber pages..? interesting I posted this am ..the post was
printed ..then deleted ..and then a closed and thank you from Barry
dated yesterday was inserted ..cyberspace ..wow! ..my a.m. responses
never existed cool!
Sunday Night « Bruised Muse Says:
January 3rd, 2010 at 10:14 pm
[...] To have a gander of what we’re up against, browse over to The
Big Picture to read, Job Disappearance by County. [...]
Steve Barry Says:
January 5th, 2010 at 9:47 am
Good stuff…BR, I would like to see you write some threads on state and
local deficits as well. According to this, states are 120B in the hole
this fiscal year and another 260B the next 2 years. This may have a
bigger direct effect on your average reader than almost any other topic
out there.
“[A recession] is not a low probability event, 30 to 40 percent
chance,” [Paul] Krugman said today in an interview in Atlanta, where
he was attending an economics conference. “The chance that we will
have growth slowing enough that unemployment ticks up again
I would say is better than even.”
On the recession probabilities, I think Professor Krugman is warning
policy makers about complacency, similar to his Monday column:
That
1937 Feeling.
My guess is the U.S. will see sluggish growth in 2010, but will avoid
a recession. However I do think the unemployment rate ticking up from
the current 10% is a high probability event.
"But Bernanke should have been more forthright
about the Fed’s undoubted failures: Greenspan’s rejection of advice
about the risks of subprime lending, and the failure of top officials,
BB included, to recognize the housing bubble in real time.:
Wisdom Speaker:
Looks like Krugman is more than just a roast-beef eating, Nobel
Laureate, Princeton Professor and NYT blogger.
He's also a member of the Group of Thirty
Quite a list of members, they have (current list, from Group
of Thirty )... Intriguingly, quite a few are clearly entangled with
the
Paul A. Volcker Chairman of the Board of Trustees
Jacob A. Frenkel Chairman (also former vice-chair of AIG and former
governor of Bank of Israel...)
Geoffrey L. Bell Executive Secretary
Montek S. Ahluwalia (India, IMF...)
Abdlatif Al-Hamad (Kuwait...)
Leszek Balcerowicz (Poland...)
Jaime Caruana (BIS, IMF, Spain...)
Domingo Cavallo (Argentina)
E. Gerald Corrigan
Guillermo de la Dehesa Romero
Mario Draghi (Governor, Banco d'Italia; ECB...)
Martin Feldstein (you get the idea!)
Roger W. Ferguson, Jr.
Stanley Fischer
Arminio Fraga Neto
Gerd Häusler
Philipp Hildebrand
Mervyn King
Paul Krugman
Guillermo Ortiz Martinez
Tommaso Padoa-Schioppa
Kenneth Rogoff
Tharman Shanmugaratnam
Masaaki Shirakawa
Lawrence Summers
Jean-Claude Trichet
Lord Adair Turner
David Walker
Zhou Xiaochuan
Yutaka Yamaguchi
Janet Yellen
Ernesto Zedillo
Senior Members
William McDonough
William R. Rhodes
Ernest Stern
Marina v N. Whitman
merchants of fear:
It was all a 'low probability event' at one time...GD1, subprime
blowup, loans called in crushing huge investment banks, CRE collapse,
credit destruction, sustained dollar devaluation, savings and loan
crisis, 20% interest rates...didn't Krugman say 'the economic world
is a dangerous place.'
currency now -yogi :
The old 30-40-% trick. If there is, he says "I called it". If
there isn't, he says, "I called it", and if it isn't clear, he says
"I really called it."
dryfly:
CR sez...
My guess is the U.S. will see sluggish growth in 2010, but will
avoid a recession.
I agree - but only because we'll see a big fat Stimpak 2.0 just
in time to avoid Electageddon 2010. Then the question becomes how
far out does the next leg down have to be before they won't call
it a 'double dip'. Two years? More?
EvilHenryPaulson:
I don't think the Fed or Government will stop supporting the
mortgage market's "liquidity", at least for long (until such point
prices have fallen where perceived risk in a loan being under-collateralized
falls)
SNAFU:
Ponzi galore and what else is galore? Nobels in Economics! Devils
all.
Rob Dawg:
I said this yesterday. Where's my Nobel Memorial and roast
beef? I honestly don't know why we bother to pay PK any attention.
He's been nothing but wrong, unapologetic and downright nasty to
anyone who has been right in the face of his abject failures. PK
is a poster child for everything wrong with economics. If he wants
to help then a mea culpa would be the place to start.
Doc Holiday:
Bubbles are difficult to spot, because they are never small or
obvious:
Q: Stocks now are more expensive than they have been for most
of the last 60 years, based on price-to-earnings ratios. Why shouldn't
investors see them as inflated?
A: The reason we're trading at such an elevated P/E -- currently
86 for the S&P 500, compared with the historical average of 16 --
is that the most commonly used P/E ratio is based on earnings from
the trailing 12 months. And in the fourth quarter of 2008, the S&P
recorded its first loss ever in earnings. We don't expect that to
repeat itself.
Using estimates for 2010 earnings instead of the trailing 12
months, it is a more palatable 21. So the P/E based on trailing
earnings is a misleading indicator at the moment.
ROTFLMAO!
Doc Holiday:
The 10 Year treasury yield is like what, zero .... and the stock
market has earnings based on accounting fraud and synthetic manipulation
never before realized in world economics ...... and ahhh, I'm blacking
out again... what was the question?
CalculatedRisk:
dryfly, I think we will see Stimpak 2.0 (is that trademarked?)
in the next few months. After that it will be too late for the election.
For those who want the bullish perspective, see Liz Ann Sonders
at Schwab:
Turn, Turn, Turn … the Pages to a New Decade!
After reading that piece, I remembered an earlier post of hers
that I ridiculed (time has proven me correct). Geesh - this reminds
me of some of the Bear Strearns rubbish that I used to make fun
of.
TJ and The Bear:
Geez, this reminds me of similar clowns giving odds on the "first"
recession.
If I've said it once, I've said it a hundred times... the odds
of a depression are 100%, it's only people's awareness of it that
is rising.
Kaufman figures that most of the housing bubble is behind us,
that the U.S. economy in 2007 will grow about 2.5%, "and that sounds
pretty good."
But most of the growth will occur in the first half of the year,
with some slowdown in the second half. Similarly, he believes that
growth in corporate profits will be moderate and concentrated in
the first half.
Also see: YouTube - The Pixies- Monkey Gone to Heaven
At year-end 2007, the average account balance was $65,454 and
the median (mid-point) account balance
was $18,942 (Figure 6). There is wide variation in 401(k) plan participants’
account balances at year-end
2007. Nearly three-quarters of the participants in the 2007 EBRI/ICI
database have account balances that are
lower than $65,454, the size of the average account balance.
The median 401k plan has less than a year's salary in it. The
stock market gains for 401ks are highly disproportionate to the
uppermost quartile.
EvilHenryPaulson (profile) wrote on Mon, 1/4/2010 - 11:48 pm here's
a chart from Richard Koo's last book, http://img12.imageshack.us/img12/3006/kook.jpg
you are right to be concerned about inter-generational/sectoral/regional/etc
transfer of wealth/burden (which Koo never addresses btw)
but the basic breakdown is more spending and a bigger deficit, but also
more tax revenue and higher employment
given that this bubble was much larger than the one in the great depression
(in terms of on the way up at least), and given that at the very least
the main pillar of Federal/Federal Reserve policy is a devaluation of
the dollar (in order to supply inflation, more employment from exports,
etc), I don't see the outrage
before balance sheets are healed over, they'll have had to debase so
much they cause a domestic default and the primary loss of trust in
the USD
so even if policy is just to lure more foreign suckers into the USD
and minimize the domestic fallout, the deficit spending makes sense
but I say, just go all the way. let the bluff be called so the counter-bluff
can be called
The US is too big in terms of production and demand even after getting
fat on a multi-decade credit volcano
it dominates some economic niches, and has the capacity and capability
to move back into competition across the board
it has minerals, water, and food -- that's 2 more key commodities than
most energy exporting countries have
too big to isolate, and unlikely that any outsider will be able to take
over the US with a putsch whereby the new government is supposed to
repay old debts
the sooner losses are allocated and recognized, the sooner we can get
on with rebuilding savings and then onto what is hopefully indefinite
normalcy
This recession is really a depression The credit collapse and
the accompanying deflation and overcapacity are going to drive the economy
and financial markets in 2010. Food stamp usage is now up to a record 36
million.
WORDS WORDS WORDS, Thai.
Productivity is a big word in the economic temple. Just like in psychoanalytic
circles, it is a word that people throw around just to show that they
are part of the crowd of elite believers (who don't necessarily grasp
the "technical" definition of the word, or know anything about the historical/philosophical/ideological
implications of the word).
Laying off flesh and blood people so that you can trimphantly strut
and crow to your abstract stock market pals that you are more productive
is a lousy example of conservation of energy, Thai.
What happens to your topo when you adjust for abstraction ?
Saying that you're more productive, crowing it, while you're squeezing
your employees dry like little lemons, is that REALLY increased productivity
or is that.. ABSTRACT productivity ON PAPER ??
In my book, they're not the same thing
at all.
Yophat said...
Here is a better composed summary of what I just said...
The credit collapse and the accompanying
deflation and overcapacity are going to drive the economy and financial
markets in 2010. We have said repeatedly that this recession
is really a depression because the recessions of the post-WWII experience
were merely small backward steps in an inventory cycle but in the context
of expanding credit. Whereas now, we are in a prolonged period of credit
contraction, especially as it relates to households and small businesses.p>
http://blogs.reuters.com/felix-salmon/2009/12/10/is-this-just-the-beginning-of-a-depression/
...of course not all have bought into reality yet...
In a bold but risky year-end strategy, Democrats are preparing to
raise the federal debt ceiling by as much as $1.8 trillion before New
Year’s rather than have to face the issue again prior to the 2010 elections.
“We’ve incurred this debt. We have to pay our bills,” House Majority
Leader Steny Hoyer told POLITICO Wednesday. And the Maryland Democrat
confirmed that the anticipated increase could be as high as $1.8 trillion
— nearly twice what had been assumed in last spring’s budget resolution
for the 2010 fiscal year.
The leadership is betting that it’s better for the party to take
its lumps now rather than risk further votes over the coming year. But
the enormity of the number could create its own dynamic, much as another
debt ceiling fight in 1985 gave rise to the Gramm-Rudman deficit reduction
act mandating across-the-board spending cuts nearly 25 years ago.
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