Stagflation Nation

[we vs us]

Who gets to determine how many workers?

The market. But not completely. There's always been input from the government -- and when I say input I mean policy levers, like interest rates or tax breaks, etc.   And there's no perfect or magic number of workers, but economists think 6% or so unemployment is acceptable to maintain demand in a modern economy. 

Currently the market is determining how many workers it needs.  Undoubtedly the unemployment rate is just right from a market standpoint based on current demand.  From a societal standpoint, however, the amount of workers working is unsustainable and will create lasting --possibly decades long -- negative effects. 

So, are we a nation subject to the whims of the market?  Or is the market subject to the control of our nation?

[guido911]

And wevsus I think nails the problem. If companies do not need workers now, why have them? Seriously, pay people to stand around and do nothing? That's what our government is doing now with the extensions in UE benefits. Let's be honest here. The two-plus year ago stimulus didn't deliver, extending the Bush tax cuts six months ago appears to not be working, QE has not worked, so what's left? Punitive measures by the government for shipping jobs overseas? Increase tariffs on imported goods? I don't know. Without a demand, there is no need for supply.

[Teatownclown]

And wevsus I think nails the problem. If companies do not need workers now, why have them? Seriously, pay people to stand around and do nothing? That's what our government is doing now with the extensions in UE benefits. Let's be honest here. The two-plus year ago stimulus didn't deliver, extending the Bush tax cuts six months ago appears to not be working, QE has not worked, so what's left? Punitive measures by the government for shipping jobs overseas? Increase tariffs on imported goods? I don't know. Without a demand, there is no need for supply.

QE worked (see interest rates)....there's demand, manufacturing is picking up. The past 10 days have been the best for the markets in two years. The Bush tax cuts did not work in the first place.

Looks like Apple wants to cut back on what they do for their own employees and let me guess it's designed to help their bottom line. So, for all you Macheads: Mac Stores Tell Workers, Instead of Giving You Health Care, Working for Apple 'Should Be Looked at As An Experience'
Apple tells its workers it's time to 'work different' -- and that means unfair compensation and benefits.
http://www.alternet.org/economy/151465/mac_stores_tell_workers%2C_instead_of_giving_you_health_care%2C_working_for_apple_%27should_be_looked_at_as_an_experience%27/

Your stuff lacks merit, GreedOh. And wevsus, the big boss man makes all determinations unless there's a unified employee group.

[nathanm]

From a societal standpoint, however, the amount of workers working is unsustainable and will create lasting --possibly decades long -- negative effects. 

Most especially because the excess unemployment (relative to the 6% figure) is confined mostly to minorities. I'm not talking negative economic effects, I'm talking uprising. People will only take an imbalance like that for so long before it turns into unrest.

[guido911]

Most especially because the excess unemployment (relative to the 6% figure) is confined mostly to minorities. I'm not talking negative economic effects, I'm talking uprising. People will only take an imbalance like that for so long before it turns into unrest.

Where will these people direct their "unrest"? Is it the government or will they start picketing homes of mega-corp CEOs that are not hiring? Or will it be anyone with a job? I just don't know if there is a discernible bogeyman.

[guido911]

Your stuff lacks merit, GreedOh. And wevsus, the big boss man makes all determinations unless there's a unified employee group.

My stuff? That's what Alan Greenspan said in an article I posted. I'll call and let Mr. Greenspan know that T, the noted economic scholar, takes issue with him. I would like you to source where manufacturing and demand are up (not convinced that it is, especially since I will not take your word for it) because of QE. I can see a connection between QE and the rising stock market, mainly because the extra cash is heading there instead of getting people to work.

And last I heard, all the cash that the fed flooded our economy with was being hoarded.

http://www.bloomberg.com/news/2010-10-27/orders-for-u-s-capital-goods-fall-signaling-less-investment.html

[nathanm]

Where will these people direct their "unrest"? Is it the government or will they start picketing homes of mega-corp CEOs that are not hiring? Or will it be anyone with a job? I just don't know if there is a discernible bogeyman.

Good question, which I don't have an answer to. And I'm probably wrong, it turns out. The UE rate among black people is always higher and almost always significantly higher, the exception being at the peak of the business cycle. Right now the differential is around 8%. Sadly, UE among blacks has been going up for the past few months while it drops among whites.



(blue line is the difference between the unemployment rate between blacks and whites, while the red line is the raw unemployment rate for blacks)

[Teatownclown]

My stuff? That's what Alan Greenspan said in an article I posted. I'll call and let Mr. Greenspan know that T, the noted economic scholar, takes issue with him. I would like you to source where manufacturing and demand are up (not convinced that it is, especially since I will not take your word for it) because of QE. I can see a connection between QE and the rising stock market, mainly because the extra cash is heading there instead of getting people to work.

And last I heard, all the cash that the fed flooded our economy with was being hoarded.

http://www.bloomberg.com/news/2010-10-27/orders-for-u-s-capital-goods-fall-signaling-less-investment.html

I read a lot of stuff, Guido. It takes me longer to process and recall.....especially on holidaze. Here:
Manufacturing Gains Stir Recovery Hopes http://online.wsj.com/article/SB10001424052702304450604576419622090057588.html

"An uptick in manufacturing broke the string of weak numbers that have raised fears the U.S. economy is stalling." read it and weep...not what you want to hear.

[guido911]

Good question, which I don't have an answer to. And I'm probably wrong, it turns out. The UE rate among black people is always higher and almost always significantly higher, the exception being at the peak of the business cycle. Right now the differential is around 8%. Sadly, UE among blacks has been going up for the past few months while it drops among whites.



(blue line is the difference between the unemployment rate between blacks and whites, while the red line is the raw unemployment rate for blacks)

I sure as schmidt hope it's not racism. That's not what your suggesting is it?

[nathanm]

I sure as schmidt hope it's not racism. That's not what your suggesting is it?

I won't venture a guess beyond saying that, on average, black people have lower education attainment than white people, and that educational attainment has a strong negative correlation with being unemployed. I don't believe that active racism is what it used to be. I think that there is still plenty of stuff going on that is racist in effect, although not in intent, as I've written about previously.

[guido911]

I read a lot of stuff, Guido. It takes me longer to process and recall.....especially on holidaze. Here:
Manufacturing Gains Stir Recovery Hopes http://online.wsj.com/article/SB10001424052702304450604576419622090057588.html

"An uptick in manufacturing broke the string of weak numbers that have raised fears the U.S. economy is stalling." read it and weep...not what you want to hear.

Oh, there's been an "uptick" in manufacturing. Great news. Is it tied to QE as T argued? I would seriously like to know how the fed's buying up treasuries and printing money has resulted in the uptick in manufacturing almost 8 months after QE2 was undertaken. And by the way, all I see are the investors getting pretty excited by this news--which I kinda like to.

Incidentally, I especially liked how T, as expected, would with certainty say that extending the Bush tax cuts, which was after QE2, was in no way a reason for the uptick. If you want a temporal proximity for the improvement, it would be easier to argue that the repubs taking over Congress was the reason more so than QE. Of course, I have no idea, as opposed to you two geniuses.

[guido911]

I won't venture a guess beyond saying that, on average, black people have lower education attainment than white people, and that educational attainment has a strong negative correlation with being unemployed. I don't believe that active racism is what it used to be. I think that there is still plenty of stuff going on that is racist in effect, although not in intent, as I've written about previously.

Oh it's out there, all right. Believe me. I have been on the front lines of some of these discrimination cases--on both sides. I tell all of my clients, though, that nothing would make me happier than being out of business in this area, and I mean it. Such is not the case as I'm as busy as ever.

[Teatownclown]

We Knew They Got Raises. But This?

http://www.nytimes.com/2011/07/03/business/03pay.html?_r=1


Executive pay seems to be based on whatever the previous company directors once created. That's not the rule but is quite obvious there exists a wide gap between employee pay and executive pay.

Guido, how can you possibly attribute the recent uptick in manufacturing to the extension of Bush tax cuts when the only beneficiaries are yacht and corporate jet owners? The reason for the uptick in manufacturing is directly related to confidence and less fear. Low interest rates brought on by QE2 have facilitated that momentum in confidence. The wobbliness banks experienced in 07 and 08 have become settled due to quick and decisive actions taken since TARP which includes several other government actions non of which singularly cured the disruption from the housing debacle. But the fear factor of banks failing has diminished substantially. You can continue to politicize short term activity but be prepared for a long road to hoe. To place blame at Obuma's feet for the soft economy just acts as a cover-up for congress' incompetence, their unwillingness to put aside partisan politics for the people's welfare. The Clinton tax brackets need to be re instituted after Jan. 1, 2012.

  It will be stagflation nation for many years especially with the widening gap between the haves and the have nots. For many years now, it's employees who have been scapegoated for the cost to wall street bottom lines. It's been taxes supposedly creating corporate hardships. Could it be there are other culprits? Executive pay, poor future planning, greed, lack of cost containment, lousy marketing, horrid decision making at the top, etc. all have a bearing on a corporation's ability to perform. This economy is a culmination of past leadership's failure to foresee the reckless ways of our corporate culture. And to top it off SCOTUS has handed wall streeters the ability to buy elections.

Don't think you can blame Obuma for what's happening right now.

[guido911]

We Knew They Got Raises. But This?

http://www.nytimes.com/2011/07/03/business/03pay.html?_r=1


Executive pay seems to be based on whatever the previous company directors once created. That's not the rule but is quite obvious there exists a wide gap between employee pay and executive pay.

Guido, how can you possibly attribute the recent uptick in manufacturing to the extension of Bush tax cuts when the only beneficiaries are yacht and corporate jet owners? The reason for the uptick in manufacturing is directly related to confidence and less fear. Low interest rates brought on by QE2 have facilitated that momentum in confidence. The wobbliness banks experienced in 07 and 08 have become settled due to quick and decisive actions taken since TARP which includes several other government actions non of which singularly cured the disruption from the housing debacle. But the fear factor of banks failing has diminished substantially. You can continue to politicize short term activity but be prepared for a long road to hoe. To place blame at Obuma's feet for the soft economy just acts as a cover-up for congress' incompetence, their unwillingness to put aside partisan politics for the people's welfare. The Clinton tax brackets need to be re instituted after Jan. 1, 2012.

  It will be stagflation nation for many years especially with the widening gap between the haves and the have nots. For many years now, it's employees who have been scapegoated for the cost to wall street bottom lines. It's been taxes supposedly creating corporate hardships. Could it be there are other culprits? Executive pay, poor future planning, greed, lack of cost containment, lousy marketing, horrid decision making at the top, etc. all have a bearing on a corporation's ability to perform. This economy is a culmination of past leadership's failure to foresee the reckless ways of our corporate culture. And to top it off SCOTUS has handed wall streeters the ability to buy elections.

Don't think you can blame Obuma for what's happening right now.

If you took the time to think about what I wrote, you will realize that I have no idea why there is a recent uptick. There are some like T who know for certain what is not responsible--the Bush tax cuts. That's all.

At present, Obama has had the time to see whether his ideas that he and his filibuster-proof Congress implemented would work. He got his stimulus, QE, QE2, his extension of the Bush tax cuts, the numerous bailouts (Bush got his too), and each has not had the desired effect. Instead, we have the gaffer-in-chief Biden telling us about "recovery summer" last year and Obama telling us after we spent almost $1T on shovel ready jobs that those shovel ready jobs were not shovel ready. Do blame Obama? Absolutely. Do I want to? Absolutely not. I want whatever is wrong fixed and I honestly do not care who gets the credit.

[nathanm]

Given the timing, I the Bush tax cuts don't fit. QE fits a little better, but it probably has more to do with the weak dollar than any particular policy (although QE has kept the dollar relatively weak..I still think it's bad policy in the current environment).



Clearly the first round did nothing. Maybe the second round slowed the loss of manufacturing jobs, but this graph isn't a clear indicator of that. It's also pretty clear that the "uptick" is weak at best.