RSS Feed MenuFor the last few weeks, all the talk in the Beltway media has been about how the economy has bottomed out and the worst is over, etc. “(A)ctions we’ve taken in the first six months have helped stop our economic freefall,” President Obama said after it was announced that unemployment in July had unexpectedly ticked down from 9.5% to 9.4%. “We’re losing jobs at half the rate we were at the beginning of the year.”
The trouble is, I just can’t seem to reconcile all this happy talk with the actual economic data coming out of Washington. That unexpectedly rosy unemployment number that Obama bragged about is a case in point. The reason the unemployment rate fell in July was because the number of people looking for work fell even faster than the number of people losing their jobs. It’s a bit like a school superintendent bragging about increasing the graduation rate in his district 25% while neglecting to mention the dropout rate had soared 75%. That same unemployment report, by the way, noted that the number of people out of work for more than 27 weeks had surpassed five million, up from 4.4 million in June. Americans are seeing the return with a vengeance of a phenomenon long thought to be a thing of the past: long-term unemployment. (I personally know a Wall Street banker who has been out of full-time work since Christmas 2006, and he’s far from alone.)
The beat goes on. Consumer bankruptcy filings were up 34.3% in July over a year earlier, to the highest levels since a flurry of filings in 2005 right before the bankruptcy laws were made much more creditor-friendly. Retail sales “unexpectedly” fell in July, in spite of the unexpected (there’s that word again) success of the “cash for clunkers” program. Colonial Banc Group “unexpectedly” (sigh) became the largest bank failure of 2009 last week. And did I mention that I had a conversation recently with a partner at a large New York law firm who told me that a tsunami of retail property foreclosures is gathering steam? Look for that piece of “unexpected” bad news in coming months.
I know, I know. The stock market is up, and we all know the stock market is a leading indicator, yadda, yadda, yadda. The rally sputtered a bit late last week, however, as it seems to do every time the Dow flirts with 9400. Still smarting from their stock market losses of last fall, Americans are saving at rates not seen since the last recession ended 16 years ago. I think it will be some time before they jump back into the market with both feet.
Just as Hurricane Katrina was a stand-in for Americans’ frustrations with Iraq and the GOP Congress’ fiscal incontinence, I suspect the healthcare town brawls are a stand-in for many Americans’ frustration with the economy – and with President Obama’s handling of it. Poll after poll shows far more Americans worried about their economic future than about health policy. Yet they see their president expending vast amounts of political capital and intellectual energy on what most perceive as a second-tier issue. No wonder many are prepared to believe in hidden agendas. Cap and trade, Obama’s other signature domestic initiative? A Pew Research Poll way back in January showed climate change coming in 20th on a list of public concerns, below declining morals and the influence of lobbyists. (Terrorism, by the way, which the Obama administration seems determined to ignore, came in third.)
The Obama administration, of course, insists that things would be even worse if it had not pushed through its gi-normous stimulus package earlier this year. Maybe. But now news is coming in that ought to be the ultimate insult for American economic pride: The Wall Street Journal reported Friday that supposedly sclerotic Europe actually seems to be on the cusp of recovery,with both France and Germany showing small, but real, second quarter growth. Nicolas Sarkozy and Angela Merkel, of course, famously refused to follow Obama down stimulus alley. The second quarter numbers could be a blip, of course, but if it continues and Europe appears to be getting back on track while the US marches toward double-digit unemployment, our president is going to have some ’splainin’ to do.
gspurlock // Aug 17, 2009 at 1:27 pm
It is really important to keep this in the public eye. We can still and need to repeal all of the unspent funding in the Stimulus Package, the Omnibus Spending Bill and to recall the Budget for a major pruning job.
As long as the threat of socialism, which this spending represents, hangs over our nation, the markets will not recover, nor will the economy. They want to recover. Americans are all about re-inventing themselves and about growth and wealth creation, but socialism and our current presidential administration are diametrically opposed to growth and prosperity.
Best regards,
Gail S
http://backyardfence.wordpress.com
Spartacus // Aug 17, 2009 at 1:37 pm
gspurlock wrote: “We can still and need to repeal all of the unspent funding in the Stimulus Package, the Omnibus Spending Bill and to recall the Budget for a major pruning job . . . long as the threat of socialism, which this spending represents, hangs over our nation, the markets will not recover, nor will the economy.”
Really? That’s not what actual economists are saying. Where do you get all of this black magic and voodoo thinking?
http://www.nytimes.com/2009/08/07/business/economy/07stimulus.html?_r=2
SFTor1 // Aug 17, 2009 at 1:39 pm
Hi Gail: so who has said anything about socialism. You are simply misusing the word. Socialism is government ownership of the means of production, combined with central planning.
There is nothing “socialist” about the Obama Administration. It is solidly capitalist.
balconesfault // Aug 17, 2009 at 1:49 pm
Yeah – let’s repeal the unspent funding in the Stimulus Package.
You know, not all cliffs are like Thelma and Louise, or Roadrunner cartoons. For a lot of cliffs there is a steep downslope before the sudden dropoff.
What’s that mean? In the former case, as we’ve seen in so many movies … if you stop in time, you sit there at the edge, safe, until you back away from the edge.
In the latter case, even after you’ve come to a stop before going over the edge – if you take off the brakes before you’ve done the hard work of pulling yourself back up the hill, you’ll immediately pick up speed and go right over the edge.
Krugman, et al, wanted a stimulus package that would not only bring us to a halt, but would rapidly pull us back to the top of the hill and safety. Obama settled for a half step, that leaves us still perched precariously, but gives us a chance to avoid calamity if we knuckle down and get to work. The Republicans were pretty much willing to let us go over the edge … perhaps believing that that looming precipice was just a dip before an uphill we couldn’t see yet, perhaps believing that we could fly, perhaps just believing that a good crash is needed from time to time. And now they’re advocating taking the brakes off so we can speed up again?
Repeal the Stimulus? Has everyone heard of Colonial Bank yet?
ottovbvs // Aug 17, 2009 at 1:57 pm
gspurlock // Aug 17, 2009 at 1:27 pm
“We can still and need to repeal all of the unspent funding in the Stimulus Package, the Omnibus Spending Bill and to recall the Budget for a major pruning job.”
……….It seems to have escaped your notice that the economy is still fragile and we have 9.4% unemployment plus the need to create about 125,000 jobs a month just to stand still…….only about $150 million of the stimulus has been spent so far and the bulk of it will unfold between now and the end of 2010 thus helping to bring unemployment……we know the goal of Republicans is unemployment in the low teens so they can scream failure which after all is why they really opposed the stimlus program……you’re going to disappointed the economy will be chugging along quite nicely by next summer
ottovbvs // Aug 17, 2009 at 2:01 pm
……….Spartacus, sftor and balconesfault: read that attachment of mine at 22…… it’s hilarious and all numbered…….all we’ll have to do in future is say something like Paranoid 7!!
balconesfault // Aug 17, 2009 at 2:11 pm
“There is nothing “socialist” about the Obama Administration. It is solidly capitalist.”
Well, if the Obama Administration and Dems were as socialist as some think, we’d have a few nationally owned banks making loans to businesses and individuals these days, instead of pumping hundreds of billions into the existing system with the hope that they’ll do that, instead of using the money for implementing new Wall Street gambling techniques (as Goldman Sacks seems to have done with some success recently), paying huge executive bonuses, or increases in dividends.
There were some people advocating exactly that last fall – Government funded locally managed community lending boards to buy portfolios from lenders headed for bankruptcy, renegotiate with the goal of stabilizing community property values, and become the lender of first resort when the private sector froze up lending. The combined effects of TARP, the Fed funding private buyouts of large investment companies, and the stimulus package have actually helped quell that movement towards real socialism, at the same time largely spending money to reinforce the private sector.
LFC // Aug 17, 2009 at 2:18 pm
<sinz54 said… A *major* challenge for democratic societies is whether they have the will to PREVENT bubbles from growing to the point that they burst. So far, the record is not encouraging.
Not sure I fully agree with this. The bio-tech bubble under Reagan and the dot com bubble under Clinton were organic. On the latter, Greenspan should have said “irrational exhuberance” much more often, but generally the government should only get just so involved with them.
Contrast this with the latest real estate bubble. That wasn’t really organic, that was government driven. Greenspan decided that near 0% interest rates for a record length of time were a really good idea. Bush’s OCC, who had never stuck their noses into this arena, shut down predatory mortgage investigations in 22 states. 50 state attorney generals asked them to back off, but the OCC claimed jurisdiction … and then refused to investigate anybody. Bush’s OTS and SEC actively avoided upholding existing regulation. And nobody in the administration even mentioned that a deb derivatives market “worth” $64 trillion was probably a bad idea when the entire U.S. debt market, ever mortgage, car loan, credit card, etc., was worth about 1/3 that This was a bubble crafted and encouraged oh so carefully by the administration, and now we’re paying the price.
So the government should gently nudge on organic bubbles, but they should be bitch-slapped into next week when they intentionally create them to create the false aura of economic prosperity(in order to win political points at the long-term expense of the nation.
LFC // Aug 17, 2009 at 2:23 pm
balconesfault said… The Republicans were pretty much willing to let us go over the edge … perhaps believing that that looming precipice was just a dip before an uphill we couldn’t see yet, perhaps believing that we could fly, perhaps just believing that a good crash is needed from time to time.
No, they believe that they can score political points by blaming the Dems for the economy they created. After all, it’s MUCH easier than actually taking responsibility for your own failures.
Spartacus // Aug 17, 2009 at 2:47 pm
Otto, I read your link and it’s exactly on point – especially #9 – Accepts all demonstrated evidence.
Spartacus // Aug 17, 2009 at 2:48 pm
Oops. I cut and pasted incorrectly. Here’s #9:
Will not face evidence that destroys his theory.
ottovbvs // Aug 17, 2009 at 3:18 pm
Spartacus // Aug 17, 2009 at 2:48 pm
………you have to differentiate as the list does between the rational and paranoid…….it’s uncanny how well it fits certain contributions though…… don’t you think?
barker13 // Aug 17, 2009 at 3:59 pm
Re: Gspurlock // Aug 17, 2009 at 1:27 pm (#26) –
“We can still and need to repeal all of the unspent funding in the Stimulus Package, the Omnibus Spending Bill and to recall the Budget for a major pruning job.”
Yep. IF Republicans can take back one or both Houses of Congress next year we can start reversing the spending binge as early as 2011.
(*SHRUG*) It’s 2009.
(*SHRUG*) It’s gonna be one tough year and a half.
Republican candidates better campaign on cutting spending. If they do they’ll win. No everywhere, obviously, but in enough places.
Re: Spartacus // Aug 17, 2009 at 1:37 pm (#27) –
Spart. You need to be reading other economists and financial experts! (*GRIN*)
Hey… I recommend John Tamny, Peter Schiff, sites like the Ludwig Von Mises Institute and LewRockwell.com
Also… as always… use your own common sense and judgment. If something an “expert” says just doesn’t make sense to you… perhaps there’s a reason. Perhaps the “expert” is full of $hit or just plain wrong. (*SHRUG*)
http://www.europac.net/externalframeset.asp?from=home&id=16962&type=schiff
BILL
Spartacus // Aug 17, 2009 at 4:13 pm
Otto: “how well it fits certain contributions though…… don’t you think?”
Absolutely. As I’ve said many times before, the Right has become a slave to its ideology. The GOP policies over the past 30 years (which were all sold as an implementation of their ideologies) have resulted in bigger govt, more deficits, falling personal incomes, weakened international standing and more government intrusion.
They can’t escape the fact that their ideologies, when translated into actual policy, resulted in failure, yet they’re unwilling to accept that other ideologies/policies have succeeded, as demonstrated in Europe and even in some states here. When presented the empirical data, they quickly retreat to theories and ideologies while ignoring the real-world facts. They simply cannot come up with solutions for practical problems without offending their ideology.
It’s like still believing the world is flat and the sun revolves around the earth.
barker13 // Aug 17, 2009 at 4:19 pm
Re: Barker13 // Aug 17, 2009 at 9:03 am (#11) –
File Under: “I wish it were otherwise.”
http://online.wsj.com/article/SB10001424052970204251404574344700380597382.html
I respectfully suggest you click on the link and read the piece.
BILL
ottovbvs // Aug 17, 2009 at 4:23 pm
Spartacus // Aug 17, 2009 at 4:13 pm
…………..This is their big problem……they have chained themselves to a host of flawed doctrines and shibboleths that they (and that means people like Frum) inculcated into their followers and now they can’t break loose from them…….thus we have economic geniuses like Baarking and gspurlock who think it’s a good idea to slash spending in the middle of a recession……or that supply side actually works….or that attacking science based solutions is good policy……nuttiness has taken them hostage which is why if they’re still in this situation when it gets down to the short strokes of an election next year and given that the economy will be rolling along and Obama and the Dems will have all the pictures of the Republicans committing the crimes to stop it recovering they are in dire trouble
ottovbvs // Aug 17, 2009 at 4:27 pm
barker13 // Aug 17, 2009 at 4:19 pm
“File Under: “I wish it were otherwise.”
……..Weren’t Fannie/Freddie “nationalized” by the Bush admin?……..Summers and Obama are having to clean up the mess
Spartacus // Aug 17, 2009 at 5:46 pm
Barker: “Spart. You need to be reading other economists and financial experts! (*GRIN*)”
I typically just rely on Sinz:)
Seriously, you make a fair point. We all could pull out an expert here and there that will corroborate our specific view of things. It was not my intent to suggest that there aren’t experts who hold a different view, but I’m not aware of many with large followings who question the efficacy of govt spending during a recession.
barker13 // Aug 17, 2009 at 6:31 pm
Re: Spartacus // Aug 17, 2009 at 5:46 pm (#43) –
“I typically just rely on Sinz…”
(*GRIN*) Poor, poor, Sinz; he typically has more folks taking more shots at him from more different directions than even I could ever hope to aspire to.
“Seriously, you make a fair point. We all could pull out an expert here and there that will corroborate our specific view of things.”
It’s not that, Spart, it’s really not. I mean think about it… OBVIOUSLY I’m exposed on a daily basis to “mainstream” group think. While you can avoid “my” sources I can’t really “avoid” yours. (*SHRUG*)
(I know… I know… simplistic, yes… but you “get” where I’m coming from. Nor am I accusing you of not being well informed; you obviously are. I’m simply sharing some of my “go to” sites in terms of getting a wide range of views.)
(Oh… and by the way… LewRockwell.com – as one example – is a site where you’re as like to get what someone like Sinz would consider a “far Left” analysis from as a “far Right.” That’s the thing about so many of these discussions… sometimes the “far” Left and “far” Right are closer than the “moderates” are to EITHER Left or Right.)
“It was not my intent to suggest that there aren’t experts who hold a different view, but I’m not aware of many with large followings who question the efficacy of govt spending during a recession.”
I understand that. What I’m trying to get across to you is that most of these so-called “experts” are wrong – they’re just plan wrong. Whenever and wherever their prescriptions have been tried they’ve failed.
Spart. Understand. Greenspan… Paulson… Bernanke… Geithner… they’re all incompetents – at least if you look at the evidence, the outcomes, and then give them the “credit.”
Give my sources a try. Give ‘em a few weeks – maybe a month. See what you see. Heck… take notes… match your own predictions to theirs… and in a year or two compare the two.
Now I’m not speaking of any one guy or gal being 100% right all the time… but as I offered originally, there are folks like Tamny and Schiff whom I agree with 80%+ of the time and who have actual records to look back on to see how their predictions have fared over the years.
BILL
ottovbvs // Aug 18, 2009 at 8:51 am
barker13 // Aug 17, 2009 at 6:31 pm
“Spart. Understand. Greenspan… Paulson… Bernanke… Geithner… they’re all incompetents – at least if you look at the evidence, the outcomes, and then give them the “credit.”
………..yep Paulson, Bernanke and Geithner only averted the complete collapse of the US financial system but apart from that they are incompetent…….a bit late to the party perhaps but that’s the worst one can say about them……Greenspan was incompetent because he was the prisoner of ideology….take note Baarking…..it’s ultimately fatal