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Hint: Times are Bad |
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The vast wasteland that the U.S. economy has become hasn’t given a lot of room for hope. Positive reports about the decrease in increases of unemployed numbers really just doesn’t excite anyone. Telling statistics, instead, are about increased savings as workers prepare for a bleak future.
Dr. Krugman takes a page from Pres. Obama’s own book, and urges a big boost for the economy before we lose more ground still.
… many members of my profession are playing a distinctly unhelpful role.
It has been a rude shock to see so many economists with good reputations recycling old fallacies — like the claim that any rise in government spending automatically displaces an equal amount of private spending, even when there is mass unemployment — and lending their names to grossly exaggerated claims about the evils of short-run budget deficits. (Right now the risks associated with additional debt are much less than the risks associated with failing to give the economy adequate support.)
Also, as in the 1930s, the opponents of action are peddling scare stories about inflation even as deflation looms.
So getting another round of stimulus will be difficult. But it’s essential.
Obama administration economists understand the stakes. Indeed, just a few weeks ago, Christina Romer, the chairwoman of the Council of Economic Advisers, published an article on the “lessons of 1937” — the year that F.D.R. gave in to the deficit and inflation hawks, with disastrous consequences both for the economy and for his political agenda.
The well-being of the country is at stake. The lesson has been learned before, and denial is not keeping the larder stocked in the nation’s jobless households.
# Average workweek fell to a record low and weekly hours also fell. Aggregate hours fell including in the manufacturing sector. Average hourly earnings rose 2.7% y/y and weekly earnings rose only 0.9% y/y . The diffusion index fell indicating that more number of industries shed jobs. The unemployment duration rose to a record 17.9 weeks. Around 29% of the unemployment workers have been so for six months and over 52% of the unemployment workers have been so for three months. (U.S. Bureau of Labor Statistics)
(snip)
# In the last two recessions though initial claims peaked just before the end of the recession, then stayed elevated for a long period following the recession - a jobless recovery’. There is a good chance this recovery will be very sluggish too and claims will remain elevated for some time. (Calculated Risk Blog)
# Firms are trying to maintain profit margins by cutting labor costs. Job losses and rise in unemployment rate will continue through 2010 with a slow start in hiring (jobless recovery). Firms will begin by hiring part-time and temporary workers first before hiring full-time workers.
With news like yesterday’s, investors dumped more stocks. Without consumers, the economy is dead in the water.
The individual workers’ vital place in the economy at last is being seen as the mainstay of a consumer economy by the general public as well as by the left. With job loss and salary shrinkage over the previous decade, we lost the impetus for growth. Returning to viability will take a long time, possibly another decade, to build back up.
The lessons may fail to sink in for the obstructionist element, which is a good way to tell which can be trusted with the country’s future. The recent past has provided excellent, painful, object lessons in who not to trust.
Simple, dependable, test; anyone telling you taxes are the problem and the answer, is hyping a fraud, and isn’t guarding your interests.
(This post also at http://cabdrollery.blogspot.com/ )
You state “Simple, dependable, test; anyone telling you taxes are the problem and the answer, is hyping a fraud, and isn%u2019t guarding your interests.” Pray tell how raising taxes on indiviudals already broke helps the economy?
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Agreed.
The thing is, the latest economic disaster comes after 40 years of Repukelickin’ & DINO attacks on the American standard of living: Union-busting, exporting jobs, opening US markets to foreign corporations without reciprocity, shifting the tax burden from the corporate rich to the middle classes, ever-rising prices and shrinking real wages, dependence upon credit, destruction of the social safety net, neglect of our infrastructure: transportation, healthcare, education, etc: The whole “conservative” program for prosperity, and it all failed.
It’s all out in the open now: DINO’s & Repuke’s agree that our government is nothing but a cash machine for the corporate rich, fed by the rest of us who have no access to that cash. I had hoped that Obama was playing rope-a-dope, letting Wall Street have its’ way until things reached crisis point, but we’re past that now and he’s still following the lead of the Clintonista’s and Bushies. Well, there’s only sixteen months to the midterm elections. It’s time to start identifying our friends and our enemies.
A “socialist” is just a moderate who lost his or her job or business in a crash, and wants to use his or her government to fix the mess in a way that benefits working people. A Fascist is just a Republican who lost his or her job or business and wants the corporations to take complete control of the government in his or her deluded hopes that he or she will be better taken care of by the “free market.” We’re headed for a real confrontation, and I doubt that our “representatives” in DC understand that. If the economy isn’t back on track by this time next year, some apple-carts will be upset in NOV 2010. Let’s hope we don’t find ourselves scrambling for apples to sell or to eat by then.
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Cosa, the rejection of the party that sucked the blood of working people is step one of reaction to its complete failure. I see Pres. O building back up the government it had torn apart and restocked with parasites. It will take some time.
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I see Obama restocking it with parasites, and Democrats morphing into Repukelickin’s. If it keeps up, they all go, in 2010 & 2012. Time is up.
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Cos and Ruth%u2014A more small minded and absolute ignorance of facts I don%u2019t believe I%u2019ve ever heard. The road to our current economic problems is very easy to see and follow if you can do away with unfounded rhetoric and malicious principals that have no bearing in fact. You so called evil corporations have built this country into what it is today. You Socialist and or Fascist agenda has failed everywhere its been tried. I guess the appropriate question would be %u201Cwhat are you going to do different than past Socialist/Fascist governments? At any rate here is a brief history of how we got to where we are today:
1) The economic collapse was started back in the 70%u2019s under Carter (Democrat) with the Community Reinvestment Act. While the goal of the act was good its actual implementation and the law of unintended consequences took effect in later years.
2) Fanie May and Freddie Mack were an outgrowth of the Reinvestment Act that essentially guaranteed subprime loans forced on lenders to make to insure racial diversity was included in the %u201C%u201D%u201DRight to Home ownership%u201D even if you couldn%u2019t afford the loan. (There is no right to home ownership!) Hence you had the mortgage market heat up making insane loans to sub prime borrowers and all guaranteed by Fanie May and Freddie Mack a quasi government entity backed by the taxpayer. (Democrat)
3) The very last day of the Clinton Administration, Clinton repealed a ban on previously illegal financial instruments called Credit Default Swaps (CDS). These instruments in effect securitized and insured all of the sub-prime mortgages into various securities that were then sold world wide. This is where Wall Street joined the party. You basically had crap (sub-prime loans) that Wall Street hired Astro Physicists, Mathematicians and financial wizards to figure out how to package these crap loans and turn them into gold. So, to this point you had a Democratic President (You have to assume since Clinton did it on his last day in office, he probably got a some kind of payoff in return) repealed the ban on CDS%u2019s and enabled Wall Street to compound the problem.
4) Sometime around 2004 (I%u2019m to tired to look up the exact date) Bush and his Treasury Secretary Paulson, both gave speeches warning the subprime mortgage market was out of control and needed to be regulated. The Democrats led by Barney Frank, Dodd and Schumer stopped the Bush Administration efforts to regulate and you got the now infamous Barney Frank comment %u201CDon%u2019t worry I am managing the situation.%u201D Dodd and Shumer also chimed in. It was later discovered that both Shumer and Dodd had received below market personal mortgages and Franks male lover was a senior executive at one of the mortgage guarantors (May or Mack %u2013don%u2019t remember which). Strictly a Democrat play later laid off and blamed on Bush, in spite of his attempts to regulate the industry.
Now you know the Cliff Note version of what got us into the mess today. It is 99% Democratic manipulation that created the mess, followed by Bush%u2019s first bailout attempt (a mistake) and significantly compounded by Obama. Had the free market been able to perform without massive government intervention from the time of the beginning of the subprime lending to today%u2019s unconscionable stimulus and bailout packages we would not be in as massive as a mess as we are today.
Foreign affairs is another liberal disaster that I won%u2019t go into now, though it is my area of expertise.
This is a long comment designed to show you what happended and hopefully lead you to some critical thinking I don%u2019t expect you to take my word for the above but I do expect you to critically analyze and confirm what I have said. You can then make an informed opinion rather than the party line you are spouting today. I will close by saying the Liberal tendency to bad mouth Capitalism is way out of line. If you analyze the situation, you will realize that Capitalism and only Capitalism, as practiced here, has raised the standard of living for the American citizen to the highest standard in the world today and in history. Not one Socialist government can make that claim. I am not for unfettered Capitalism, but I am in favor of giving Capitalism the benefit of the doubt when it comes to government interference.
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Please don’t feed the blithering idiot rightwing trolls. It interferes with their medication schedules.
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Cos - Talk about a troll– How do you wake up each morning and face the day? Don’t think I’ve ever run into a more hate filled individual that appears to know nothing about what’s going on around him, just shouts inane slogans– Your the perfect definition of a troglodyte. Do you have any opinions based on fact or just pure vile hatred for the world?