nation-x

I typed this up last night for a Republican friend who is trying to convince me to vote Republican. I decided to post it here while I eat lunch.

First, When Obama took office we were losing jobs at a crazy rate.

August 2008: 84,000 - Unemployment Rate 6.2%
September 2008: 159,000
October 2008: 240,000
November 2008: 533,000
December 2008: 524,000
January 2009: 598,000
February 2009: 651,000
March 2009: 663,000
April 2009: 539,000
May 2009: 345,000
June 2009: 467,000
July 2009: 247,000
August 2009: 216,000
September 2009: 263,000
October 2009: 190,000
November 2009: 11,000
December 2009: 85,000 - Unemployment rate 10%

Total Job Loss during the period above was 5,815,000 jobs lost. From Dec 2007 to Dec 2009 there were a total of 8,467,000 jobs lost. I am pointing this out for perspective.

As you can see, an awful lot of jobs were lost from Aug 2008 to Dec 2009. At this point, the stimulus had started to pay for projects and is continuing to pay for projects... estimates are that this will continue through 2011. The current unemployment rate is 9.1% and job losses have fallen dramatically from the numbers we saw in 2008-2009. I think it is reasonable to say that the job losses incurred during the period above cannot be attributed to anything that Barack Obama did... those job losses started before he took office and he did not create the situation that caused them.

The point of the stimulus was to stop the accelerating rate of job loss. It is clear, by the numbers, that the stimulus did exactly that. The unemployment rate has stabilized and improved slightly since Dec 2009.

Since July 2009, the Private Sector has added a total of 923,000 jobs (above job losses). However, the Public Sector has lost 378,000 jobs (Firefighters, Policemen, Teachers, etc).

You can see where I got my data here: http://data.bls.gov/pdq/SurveyOutput...=CES0500000001

Here is where the interesting part comes in... Corporations are making record profits but aren't hiring.

http://www.bcg.com/media/PressReleas...d=tcm:12-76679
http://www.bcg.com/media/PressReleas...d=tcm:12-77753

There are a number of reasons why this is happening. I suspect the biggest reason is that we still haven't seen Commercial Real Estate take the hit that the Residential Real Estate market took. I think this makes investors very nervous. In addition, the current market isn't creating enough demand for increased production.

President Obama realizes that this is happening... so what he proposed is that we build a new market to create jobs in clean energy products. That effort has met every form of resistance that the Republicans can muster because it will directly affect oil and coal companies in the long term. Unfortunately, most of these companies don't see it as an opportunity... even though most other nations (including China) have boosted investment in that market to compete.

On another front, the Administration has tried to make significant investment in improving our rail system to streamline logistics. It is much cheaper and much faster to ship via rail than via trucks. It also saves alot of traffic on our highways. It also assists in getting products to market faster... especially if you are exporting. Our logistics infrastructure is old.

Additionally, the Administration has pushed for investing is improving our electrical grid and broadband access nationwide. Just recently, here in North Carolina, the Republican controlled legislature has been attempting to block those efforts to improve broadband access at the behest of Time Warner Cable (who have a monopoly here).

All the while, Republicans in Congress are protecting oil and coal companies, protecting the wealthy, and protecting the military industrial complex while pushing for more and more cuts to safety net programs and other domestic programs that have very little effect on the deficit or debt (besides Medicare/Social Security). Their idea of "job creation" is to give more tax cuts to corporations and wealthy individuals who have seen a 280%+ increase in earnings over the last decade but haven't created jobs here in the US.

The total NET WORTH of the US (assets after liabilities) is $56 Trillion. Roughly 85% of that $56 Trillion is owned by the top 10% of earners. Republicans like to talk about Wealth Redistribution... but they fail to mention that, since Reagan, there has been an immense amount of wealth transferred from the bottom 90% to the top 10%. There is a simple reason for that... the people with the means have the power to manipulate the system and they have been accelerating that pace.

History is important and in our history and we already experienced this type of rogue capitalism in the form of political entrepreneurs. There is an important distinction between market entrepreneurs and political entrepreneurs. Market entrepreneurs earn their money the old fashioned way through actual market capitalism and competition. Political entrepreneurs use their economic means to manipulate the political system so that they can manipulate the market and eliminate competition. In the early 1900s they referred to them as "Robber Barons".

This is the biggest threat we face as a nation, in my opinion, and as long as Republicans continue to defend political entrepreneurs they can't get my vote (same goes for any Democrat who does the same).

Agent 488

was busy at olive garden last night.

woj

cliff notes?

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DateDoc

No President since FDR has been re-elected when unemployment is over 7.2%.

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Kiopa_Matt

I don't anymore. I think the common working man in the US just got fucked with a giant red, white, and blue pole even harder thanks to the stimulus.

Same as when the US went into Iraq. Billions upon billions of government dollars were dolled out to corporations for reconstruction projects in Iraq. Then Obama gets into office, and says, "fucken eh, let's do that here too!". Stimulus passed, billions dolled out to corporations, and the common working man is still struggling, while the economy remains in the shitter.

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Agent 488

unemployment stats are a joke. real unemployment numbers are much higher, plus some months up to 500,000 people give up looking for work and are not counted as "unemployed" any more.

you have as much an idea figuring out the real unemployment stats in the US now as you did under soviet russia and pravda.

DaddyHalbucks

Have you looked at the rising number of foreclosures? The huge inventory of distressed properties? Our country's debt? The percentage of the budget spent on bloated/ mismanaged/ fraudulent social programs?

The market has has no confidence in Congress or Obama.

The word on the street is that things are still bad bad bad, if not worsening.

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TripleXPrint

Here you go, I'll save you the time....

Look up the Gramm-Leach-Bliley Act. Then look up subprime loans. All the answers to why we're in this economic shit storm is there. And thank GOD all of those executives had golden parachutes. Phew...God forbid they suffer for the fucked up situation they got us into.

P.S. Democrats AND Republicans are both to blame.

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mountainmiester

Thank you and yes. over 500 people in Washington in fact that are fucking this all up. They fuck it up and then tell us if we reelect them, they can fix it. What a great scam.

One of my favorites though is that no one and i mean absolutely no one can prove or disprove the stimulus worked. That to me makes it a scam. If I told you to take a shit on your front lawn then never mow it, you will never have a polar bear eat your face.

Two years later I come visit your house and see your over grown lawn and the pile of dust that was once your shit where you tell me the idea worked...no polar bear ate your face....suckah!

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nation-x

Obama never said that the stimulus would solve all fo the problems... in fact, he said it wouldn't. It did, however, stabilize the economy to prevent it from becoming even worse.

Agent 488

the job numbers you are building a case for recovery are flawed.

96ukssob

then what was the point of doing it then?

the only reason why i bought my house was for the tax credit "stimulus" that was offered

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nation-x

before I posted this I had assumed that most people on GFY wouldn't read it....

IllTestYourGirls

But what people fail to realize is worse would have been better. Let it crash then rebuild not band aid it together and have a 20+ year "recession". Which is what we have now. Adding debt to pay off wall street, insurance companies and banks, inflating the money supply to the point that we will need 20%+ interest rates to stop hyper inflation, while fucking the middle class for the next 20 years. He/Bush did nothing but prolong the crash and destroy the dollar. That is not success or progress.

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BFT3K

http://www.addictinginfo.org/2011/01...-have-blocked/

http://www.cnn.com/2011/WORLD/meast/...ex.html?hpt=T1

http://www.guardian.co.uk/environmen...ergyefficiency

nation-x

GregE

It took over twenty years and a world war to "rebuild" from the last great depression.

Even Bush wasn't stupid enough to want to go there again.

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TripleXPrint

Great sources!!! Got anything from Moveon.org? They're pretty moderate and in the middle.

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_Richard_

heard something about 'job classification' being screwed with.. ie, jobs at mcdicks were considered to be the same as jobs in manufacturing

IllTestYourGirls

You're right it took that long because FDR tried to keep things afloat, just like Obama is now. It did not work then, it will not work now.

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Sly

I've seen new theories that the housing tax credit is partially at fault for the terrible real estate sales year we are seeing now.

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Houdini

Exactly. If we truly believed in capitalism, we would have let it fail and then rebuilt. Pumping money into the supply was the complete opposite of a capitalist market. Instead, the Fed dropped the interest rate to zero, banks used all that free money to invest in the stock market, instead of using it for public loans, which in turn propped up the stock market artificially, and now we will see it fall once again because our economy can't support these levels. The public, like always, will be holding the bag wondering what happened. Nothing was fixed from the previous crash, derivatives (which caused the mess in the first place) still exists. Now we have the debt which has increased tremendously, we're seeing higher commodities, and now the Euro is unstable as well.

The White House is already in full force today, "Bumps on the Road to Recovery." lol Don't worry, it's only temporary....

Kiopa_Matt

You can't really use that example though, because if anything, the stimulus was the purest form of capitalism. Who do you think initially came up with the idea to hand over tens / hundreds of billions to corporations? It wasn't Congress. It was capitalists capitalizing.

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ThatOtherGuy - BANNED FOR LIFE

Want to solve the financial crisis? Cut defense spending by 12% for 5 years.

Problem solved.

GregE

What ended the depression was full employment during the war.

Our subsequent prosperity can be credited to the near full employment we enjoyed throughout the bulk of the following 30 plus years.

It's all about jobs, or the lack thereof, and unfortunately neither Hoover, Roosevelt or Obama could, or can, count on big business to create enough decent ones without a good kick in the ass.

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u-Bob

First of all; I'll keep this short since I've got a couple of things to finish this weekend and as some of you already know by now: I tend to lose track of time when engaging in discussions on economics (I'll be back in full force on Monday to defend the Austrian School and the free market)

1. nation-x: I'm glad to see you are making a distinction between what you call "market entrepreneurs and political entrepreneurs." I hope you realize that those corporatists (political entrepreneurs) aren't just in bed with members of the GOP but with politicians of all parties. While they may be targeting a different audience, there is in essence no difference between a republican or a democrat. They all want more power to be able to implement what they think is best and neither of them will really oppose the other one when the other one 's in power and expanding the power of the state because he knows (or hopes) that one day he'll be the one pulling the strings and be able to use that position of power.

2. nation-x: Redistribution of wealth doesn't make anyone wealthier. Redistribution of wealth amounts to a redistribution of capital and thus consumption and destruction of capital. The important thing to understand here is that capital is not just money. Capital or capital goods are goods that are intended to be used in the production of consumer goods or other capital goods. Redistributing capital only leads to decreased production and higher prices (because supply will be down).

3. nation-x: from several of your posts I get the impression that you believe the Keynesian (or Marxist or another of the consumptionist theories) view that demand (=spending) is what drives the economy. It's not. What drives the economy is entrepreneurship.
Government intervention in the economy hinders entrepreneurship. Central banks (government sanctioned institutions) adjusting the interest rates are what causes mallinvestments.

4. If the stimulus had worked than we would have seen spectacular growth by 2010 like the neo-Keynesians such as Kruggman predicted and there wouldn't have been any need for a second round of quantitative easing (which is coming to an end right now) and there wouldn't be any need to talk about a possible third round of quantitative easing to be started in September.

5. GregE: WWII and government intervention was not what ended the great depression. The whole reason the depression of 1929 ever became "Great" is because of government intervention. Whoever heard about the depression of 1920? No one. Why? because it took less than 18 months to recover. Why? because there was hardly any government intervention.

6. instead of typing some more I'll let Keynes defend government spending and Hayek defend the free market:

sperbonzo

Truly outstanding post



.

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MaDalton

you just outsmarted 99.9% of GFY

including me

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wig

I'm curious what you think this would have actually looked like?

I mean, unless you don't have a pot to piss in, no money in the bank, no real assets other than your bomb shelter, guns, MRE's and a bag of silver, why would you think "letting it crash" would be preferable?



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nation-x

You are correct in your assumption that all parties service political entrepreneurs. However, there is a distinct difference between the parties... The Republicans have made it a religious doctrine to do everything in their power to support political entrepreneurs while the Democrats are the sole sponsors of legislation to limit their influence on government. Now, that said... it's never really black and white because each member of Congress has their own issues... however, you need look no further than Jack Abramoff and Tom DeLay for a perfect and unequivocal example. In addition, I would point you to the fact that Boehner revived the K Street Project as soon as he became speaker.

Bullshit... what do you think caused the financial meltdown? If you say Fannie and Freddie you need to spend some more time educating yourself about what really happened. Take a couple of hours and watch "Inside Job". these false assumptions on your part are why you think that Austrian economics even applies because Austrian Economists think that housing caused the crisis. At this point, it is clear that fraud on the part of the big investment banks and insurance companies caused this problem and not interest rates.

First of all, I can tell by this part of your post that you don't have the first clue as to what Hayek's theory is OR it's limitations (and why no real economist would apply it to the US economy). You certainly don't understand Keynes theory either. I will elaborate more later on in this post.

That isn't even close to true either. Really, exactly what Barack Obama said would happen has happened. They stabilized job losses and added more than 2.4 million jobs in the private sector. If you read the OP you would see that we lost almost 8.5 million jobs... so we have a ways to go yet. In addition. Krugman (and Milton Friedman - The father of "Trickle Down") called for additional stimulus... so your assertion about what he said is purely false.

Here is the falsehood of that video and in your assumptions about Hayek's theory. You said "Government intervention in the economy hinders entrepreneurship." and Hayek agreed with that, however, the flaw in Austrian economics is monopoly. This is a well known flaw. In addition, Austrian economics is not even a proven theory and even Austrian School economists will tell you that. The reason for it is that the theory is based on Praxeology AND the fact that we have a central bank. That is the Achilles heel of all arguments that Republicans make when it comes to Hayek's theory and really is indicative of most of their arguments about almost anything... They love to pick out the part they like and ignore the part that they don't like OR pick out the part that they don't like and ignore the part that they like.

Republicans love to espouse Hayek's theory but vehemently but oppose regulation just as vehemently. That is where the flaw in their logic lies.

Keynes, on the other hand, IS a proven theory that says when the private sector is unable to sustain itself due to lack of demand, or unnatural market influence that has caused an interruption of the market, it is necessary for the public sector to stimulate demand by encouraging cash flow AND you have just seen it work as I demonstrated in the OP.

DaddyHalbucks

If Keynes really were so great, we would not be in the mess we are in today.

I'd like to post a link in honor of Sir John Maynard Keynes:

http://secure.itsgonnahurt.com/track...cuMC4wLjAuMC4w

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nation-x

I am not saying Keynes theory is without flaws. It is largely based on economic history and our political/economic system is unique.

sicone

never mind, it seems I need to read things twice. Did not notice that they were the same time period

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wig

Manias and asset bubbles existed before Keynesian economics and central banking.

If they didn't, maybe you'd have a point.

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nation-x

I am not certain what exactly you are referring to... those 2 numbers are just to show the number of jobs lost before January 2010 and the 17 months was to show you where the job losses stabilized. That is why I put the unemployment percentage. The point is to show how many jobs were lost versus how many we gained (which I explained later in the post). Creating 8.5 million new jobs isn't something that can be done overnight... but what was important is that job losses are no longer outpacing job creation... the trend for the last 15 months straight has been fairly stable.

Just a note: Contrary to what some other people posted about the unemployment numbers they are not based purely on people who are currently claiming unemployment. They are based on census population numbers.

GregE

Nonsense. FDR was still president and (most of) his policies were still in effect when the depression ended. Full employment ended the depression.


And yet after more than three years of inaction by the Hoover administration the Great Depression only deepened.

The post WWI depression (of 1920) was a different animal.


Come 2012 whoever the republicans nominate will be getting the rubber glove treatment as well.

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IllTestYourGirls

This is why I stopped posting so much in these threads, U Bob usually says it much better than I can.

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buzzard

Nice A point thread. Wew... hook line and sinker

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wig

Well shoot for my easy question, then.



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nation-x

If you are interested in reading a comprehensive critique of Austrian Economics you should take a peek at this: http://econfaculty.gmu.edu/bcaplan/whyaust.htm

Before slip and say he is a liberal... you should know that his school is funded by the Koch brothers and he is about as Libertarian as they come.

http://en.wikipedia.org/wiki/Bryan_Caplan

IllTestYourGirls

It would have been very hard. But not as hard as what will happen in the next ten years when interest rates go to 20%+ USD is no longer the gold standard for oil and our debtors come calling for their money.

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IllTestYourGirls

What do you want me to say? Some people agree some people don't. One thing is for sure Keynesian economics has failed and has made economies very unstable.

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wig

That's pretty vague. I'm going to go out on a limb and say this is a large understatement.

I don't doubt that rates will move higher at some point, but you are offering an extreme speculation that may or may not unfold. You say this based on a future realization by the market based on things that are happening today as if you know something that the market as a whole does not. That's not very convincing.

I can certainly envision the dollar losing the dominant role that it has enjoyed, but your ending statement is either misstated or based on a lack of understanding of the debt in question.

First, they are creditors, not debtors. Second, there are no put options on treasury debt. The issuer sets the rules, not the purchaser. The best the creditor can do is sell it on the open market.

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wig

That's simply a bare assertion. If anything, Keynesian economics to this specific point in time saved us from a global deflation and depression -- something that you don't seem to appreciate.

I think the attempt was better than letting it collapse, even if it ultimately proves unsuccessful.


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IllTestYourGirls

Yeah was about to edit the debtor thing.

The 20% interest rate is using history as an indicator. 20% is actually on the low side of some economists projections. The fed will have to start reeling in the dollars at some point or hyper inflation will happen. You can not inject this much money into the system without a plan to reel it in.




If creditors are selling, they are not lending, where does that leave us? Printing more? Taxing more? Cutting more?

Im way to tired to be explaining this been working hard making money

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nation-x

I have serious doubts that the interest rate will ever be 20%.

wig

Yet in the face of all that you are saying, the market for 30 year treasury debt is almost at record low yields. That means that the market place which consists of every buyer of our debt is not yet scared to lend money at very low rates for extended periods of time.

It's true that if there is a sustained, strong recovery (which is no sure thing in the near future) the FED will have to mop up the liquidity.

It's also true that retired loans and defaults contract the money supply (ie; destroy money).

You are looking at one side of the situation and are not differentiating between the short end and long end of the yield curve. The market sets the rates out the yield curve, not the FED. 20% rates in the late 70's / early 80's was fed funds, etc.


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tony286

buzzard

Hoaxed

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V_RocKs

50 workouts without Tony the bozo dude in a leotard.