Unemployment at 10.2%

[guido911]

Sure glad that stimulus bill got passed, after all it was about J-O-B-S, right Joe:

Countdown to "Reagan's rate was higher" (without a 1T stimulus)  3...2...1

[we vs us]

As crappy as it is, most everyone has been anticipating unemployment cresting 10%, stimulus or no stimulus.  It's a lagging indicator, so it's still sinking as other measures of the economy are starting to turn upwards.  For instance, if you look at the primary yardstick by which recessions are measured -- two or more down quarters of GDP -- we're on a pretty strong path to recovery (as reported last week, GDP in the 3rd quarter grew something like 3.6%).  There're other good markers of recovery out there, too -- new home starts, durable goods orders, existing inventories, all are inching out of the red zone. 

IMO, it's impossible to blame or praise the stimulus at this point.  Waaaay too premature.  As someone who saw the need for an even bigger stimulus package, I'm inclined to see the glass half full, but I can definitely admit that it's too early for a full accounting.

[guido911]

As crappy as it is, most everyone has been anticipating unemployment cresting 10%, stimulus or no stimulus.  It's a lagging indicator, so it's still sinking as other measures of the economy are starting to turn upwards.  For instance, if you look at the primary yardstick by which recessions are measured -- two or more down quarters of GDP -- we're on a pretty strong path to recovery (as reported last week, GDP in the 3rd quarter grew something like 3.6%).  There're other good markers of recovery out there, too -- new home starts, durable goods orders, existing inventories, all are inching out of the red zone. 

IMO, it's impossible to blame or praise the stimulus at this point.  Waaaay too premature.  As someone who saw the need for an even bigger stimulus package, I'm inclined to see the glass half full, but I can definitely admit that it's too early for a full accounting.

Well of course you would look at this issue as the "glass half full". You viewed the prior administration's handing of issues the same way.

[Hoss]

Well of course you would look at this issue as the "glass half full". You viewed the prior administration's handing of issues the same way.

Possibly because the leader of the prior administration was inept at best?

Wait, who was the leader of the prior adminstration?  Bush? Cheney?

But I digress, I'm talking to myself.

[we vs us]

Well of course you would look at this issue as the "glass half full". You viewed the prior administration's handing of issues the same way.

You seem to be insinuating that maybe I'm a hypocrite, or am irrationally biased against GOP solutions or something.  Or maybe you just can't control your tone anymore when talking to people who come from another side of the spectrum.  I don't know.  

I didn't disagree with the prior administration out of ignorance or blind hate. I did it after fact-collection, a lot of reasoned debate, and soul-searching.  And you know what?  I can tell you unequivocally that the Bush Administration is one of the worst in American history.  Pretty much bar none. I'm not going to rattle off all of my reasons for deciding this, but rest assured it didn't just pop into my head one day, or after registering a username over at DailyKos.

So yeah, considering where we've been and where we could have been by now, if the Obama Administration is trying to move the government competency goalposts back even incrementally, I'm going to see the glass as half full.

[cannon_fodder]

Government spending doesn't "create jobs", it can subsidize temporary jobs but it can't create real jobs.  If the government barrows and puts $1,000,000,000 into the private sector and claims it creates 2 jobs - by necessity the government will have to remove $1.5 Billion from the private sector to repay that debt.  Do we ever hear about how the government "cost 3 jobs" in paying down that debt?

It's a two way street.  If putting money into the economy creates jobs, taking money out must eliminate jobs.  Ergo, not a real solution (lets we spend $1 brazzillion and employ everyone, yay!). 

If the calculation is made that creating 2 jobs today at the expense of 3 jobs tomorrow is worth it, so be it.  In a true crisis that may be true.  But I highly doubt the government actually thinks such a thing through.  That applies to Obama, Bush, and everyone else equally.

Remember when stimulus money was going to be used for infrastructure (which could be seen as an investment in an economic future)?   Pretty sure most is going to bail out large companies, pet projects, and handouts.  *sigh*

[guido911]

You seem to be insinuating that maybe I'm a hypocrite, or am irrationally biased against GOP solutions or something.  Or maybe you just can't control your tone anymore when talking to people who come from another side of the spectrum.  I don't know.  

I didn't disagree with the prior administration out of ignorance or blind hate. I did it after fact-collection, a lot of reasoned debate, and soul-searching.  And you know what?  I can tell you unequivocally that the Bush Administration is one of the worst in American history.  Pretty much bar none. I'm not going to rattle off all of my reasons for deciding this, but rest assured it didn't just pop into my head one day, or after registering a username over at DailyKos.

So yeah, considering where we've been and where we could have been by now, if the Obama Administration is trying to move the government competency goalposts back even incrementally, I'm going to see the glass as half full.

Really. Huh. Well did you apply a lot of that "reasoned debate" and "soul searching" to reach your conclusion that the glass is half full KNOWING that Obama lied this country into a nearly 1T bogus stimulus. Obama told us that passing that disaster would keep unemployment below 8%. And another factoid you can omit from your contrived soul searching comes in the form of this quote:

"The government's economic stimulus spending has already had its biggest impact and probably won't contribute to significant growth next year."

Who said this? Why Obama's own chair of his Council of Economic Advisers Christina Romer. In other words, Obama's administration admits that the stimulus' impact is over so you can back pocket that passing "premature" judgment crud.

Now, I am not calling you a hypocrite on this issue, I am calling you (and the band aid conga line that will start forming to defend you) out because you will go to any length to defend this administration. Finally as to "tone" control, I gather you do not think that 10% unemployment, persons on food stamps being at near record highs, and home foreclosures likewise being at near record highs does not merit a little "tone" in this debate.      

[Conan71]

I'm simply trying to figure out how the Obama administration went from 625,000 jobs "saved or created" (boy there's a statistical cop-out that's impossible to track) to 1mm today.

At least 26,000 of those counted as "saved or created" turns out were bogus:

"California State University officials reported late last week that they saved more jobs with stimulus money than the number of jobs saved in Texas – and in 44 other states.

In a required state report to the federal government, the university system said the $268.5 million it received in stimulus funding through October allowed it to retain 26,156 employees.

That total represents more than half of CSU's statewide work force. However, university officials confirmed Thursday that half their workers were not going to be laid off without the stimulus dollars.

"This is not really a real number of people," CSU spokeswoman Clara Potes-Fellow said. "It's like a budget number."

..."On the flip side, about 500 California employers receiving stimulus funds reported creating work for less than $15,000 per job. California State University is the largest example of this – it spent about $10,000 per job. In another example, the state Employment Development Department reported creating the equivalent of about 12,000 jobs for around $7,000 apiece.

Most of those EDD jobs were temporary and went to youths who would otherwise have had trouble finding employment, said Liz Clingman, deputy division chief in the EDD's work force services division."


http://www.sacbee.com/topstories/story/2309303.html

[guido911]

Conan, this is a way one commentator discussed the meaning of jobs saved or created:

"I saved three lives yesterday morning. No, make that four; possibly five. You see, I was driving my car to work and there were these people crossing the street in Times Square. And I could have run them over but I didn't. So, I'm claiming that those four people, possibly five, are here today because of me."

http://www.nypost.com/p/news/business/obama_gibberish_on_jobs_makes_my_p9CpOlWcwRU9p3DTyobUgM

In the past three weeks, Obama's administration has announced jobs related to the stimulus went from about 30,000 to over 600,000 to 1 million.

All I know is that unemployment is over 10%.

[Conan71]

Government spending doesn't "create jobs", it can subsidize temporary jobs but it can't create real jobs.  If the government barrows and puts $1,000,000,000 into the private sector and claims it creates 2 jobs - by necessity the government will have to remove $1.5 Billion from the private sector to repay that debt.  Do we ever hear about how the government "cost 3 jobs" in paying down that debt?

It's a two way street.  If putting money into the economy creates jobs, taking money out must eliminate jobs.  Ergo, not a real solution (lets we spend $1 brazzillion and employ everyone, yay!). 

If the calculation is made that creating 2 jobs today at the expense of 3 jobs tomorrow is worth it, so be it.  In a true crisis that may be true.  But I highly doubt the government actually thinks such a thing through.  That applies to Obama, Bush, and everyone else equally.

Remember when stimulus money was going to be used for infrastructure (which could be seen as an investment in an economic future)?   Pretty sure most is going to bail out large companies, pet projects, and handouts.  *sigh*

Actually, there's a lot of stimulus money being spent on waste water treatment plant upgrades, fuel and energy efficiency programs in hospitals including the VA system (though there's been a rolling system-wide upgrade on-going for at least four years prior to any stimulus bills being passed).  Our northside treatment plant already had an upgrade planned, which was going to be funded by the city, I do believe.  However, the Fed'l government came in and started spending money like drunken sailors on WWTP projects. Why have they targeted that, I'm not sure.  Essentially, they are replacing some aging equipment and adding some redundancy, not really making the effluent any cleaner, at least on the Tulsa and Lawton projects I've looked at.  There's many smaller ones and many road projects which are slated around the country, and more infrastructure improvements rumored.

Of course, a lot of this benefits trade unions who typically support which party?

As a tax-payer, I think the porkulus spending sucks, as a business person, it's created some great opportunities for me while the private sector companies I usually do business with are scaling back large capital expenditures for the time being.  Word around the campfire is even though consumer spending and GDP numbers are looking better, it's going to be about two years until things return to normal in manufacturing and oil patch spending on improvements and new facilities.

Of course that doesn't take into account the sh!t that's about to hit the fan in the commerical real estate market which could really skew and delay a solid recovery.

[we vs us]

Government spending doesn't "create jobs", it can subsidize temporary jobs but it can't create real jobs.  If the government barrows and puts $1,000,000,000 into the private sector and claims it creates 2 jobs - by necessity the government will have to remove $1.5 Billion from the private sector to repay that debt.  Do we ever hear about how the government "cost 3 jobs" in paying down that debt?

It's a two way street.  If putting money into the economy creates jobs, taking money out must eliminate jobs.  Ergo, not a real solution (lets we spend $1 brazzillion and employ everyone, yay!). 

If the calculation is made that creating 2 jobs today at the expense of 3 jobs tomorrow is worth it, so be it.  In a true crisis that may be true.  But I highly doubt the government actually thinks such a thing through.  That applies to Obama, Bush, and everyone else equally.

Remember when stimulus money was going to be used for infrastructure (which could be seen as an investment in an economic future)?   Pretty sure most is going to bail out large companies, pet projects, and handouts.  *sigh*

I've read that a lot of the stimulus has gone to making up deficits at the state level, and hence hasn't gone to making as much "new" stuff happen as keeping things from being cut.

You have to clarify for me why federal budgeting is so strictly a zero sum game. I don't see why money dumped into the private sector as stimulus automagically has to be taken out again ASAP to pay debt.  The federal gov, unlike every other actor in the economy, has the ability to print money -- to essentially create value out of nowhere.  And in this environment, where literally trillions of dollars in value have evaporated over night, that's THE crucial economic role.

Also, government spending doesn't happen in a vacuum.  As Conan said, stimulus money of one sort or another is bridging his revenue gap till (hopefully) private industry gets spending again.  Meaning that, even if the stimulus is essentially a loan from the gov to the economy (which seems to be what you're describing), that loan can keep the wheels moving till the engine gets started again. 

[bokworker]

we vs us... I'll take a stab at your question. True the federal government has the power to print money but the creation of new money does NOT create value out of nowhere. Printing more money in the absence of wealth being created merely devalues the currency already outstanding. At a very basic level it is as simple as the concept of supply and demand. What happens as the supply of any good is increased (in this case money) without a corresponding increase in demand (in this example wealth)? The price falls. Do we really want to debase the value of our currency? Who benefits from that? Only one type of person that I know... a debtor. If I owe money and the value of that money falls then I am repaying my debt in the future with less valuable dollars. What do debtors do to protect them against this debasement? Charge interest. And what happens if the outlook for currency devaluation goes up? Yep, the interest that lenders will demand to compensate for this increased risk goes up? Who is the biggest debtor in the world now? the US government. who are our lenders? Materially our lenders are now our international trading partners... China and Japan the 2 largest. Now here is the tricky part.... when you are a borrower whose perception of your creditworthinesss matters? Your lenders. If China and other foreign governments are our lenders then we have to care about THEIR perception of our creditworthiness. That puts us in a very dangerous position. As it now stands roughly 50% of the entire amount of outstanding US soveriegn debt matures in the next 12 months. Why is that bad when short term interest rates are low? What happens if the willingness of these foreign investors to reinvest all of these maturing bonds lessens? Then interest rates could go up..even though our economy is not good. And higher rates would be very bad for our domestic economy. The Fed can control short term rates up to a point but ultimately they cannot tell investors to buy our bonds. It is only the confidence that we will not continue to debase our currency that keeps them in the market to buy our debt.


Is hyperinflation from a continually debased currency a certainty? No. Like any borrower if the money is used to invest in projects that have a higher rate of return than the cost of the debt then the debt is repaid and "wealth" is generated by the use of the money. However, if the rate of return from the investment is less than the cost of the debt then you have destroyed wealth.


Without making a partisan comment on the direction we are going the only question to be answered is "Is the Federal government going to take all of this money they are borrowing and invest/spend it in a way that the ultimate return will be greater than the cost of borrowing?" In general the crux of the disagreements between those that agree or disagree with our current direction come down to the confidence we have in this question being answered in a positive manner vs. a negative manner.

[guido911]

Well written and reasoned post bok. Big +1.

[FOTD]

How the Iraq War Destroyed the US Economy
by Len Hart, The Existentialist Cowboy

" As I have maintained for years --military spending is a waste. Millions spent building a tank, for example, is money sucked down a black hole. The rank returns nothing on the investment and will, inevitably, be blown up! We could just throw our dollars upon a heap, set fire to them, and cut out the middle man!
Military spending slows economic growth, increases the budget deficit, increases the trade deficit as can be seen, in fact, in US's NEGATIVE Current Account Balance, formerly called the 'balance of trade deficit'. "


http://existentialistcowboy.blogspot.com/2009/11/how-iraq-war-destroyed-us-economy.html

[Conan71]

How the Iraq War Destroyed the US Economy
by Len Hart, The Existentialist Cowboy

" As I have maintained for years --military spending is a waste. Millions spent building a tank, for example, is money sucked down a black hole. The rank returns nothing on the investment and will, inevitably, be blown up! We could just throw our dollars upon a heap, set fire to them, and cut out the middle man!
Military spending slows economic growth, increases the budget deficit, increases the trade deficit as can be seen, in fact, in US's NEGATIVE Current Account Balance, formerly called the 'balance of trade deficit'. "


http://existentialistcowboy.blogspot.com/2009/11/how-iraq-war-destroyed-us-economy.html

I'll agree there are places I'd rather see money spent than on wars, but Len Hart has zero clue about economics if he figures the money spent on a tank is "sucked down a black hole" and has zero bearing on the economy.