There’s a remarkable amount of optimism in the US financial media given the underlying health of the economy. Of course, the sort of short term investors that have come to dominate securities trading had been in a “risk on/risk off” pattern for a protracted period before commodities weakness and the remarkable run of the Nikkei has led to some renewed focus on relative values of various macro plays. But the markets are still dominated by an underlying faith in the willingness of central bankers to protect the backs of investors and limit any downside (while, ironically, many of these same investors howl about ZIRP and QE, which were clearly intended to goose the value of financial assets and real estate, with the hope that would lead to more consumer spending).
And why shouldn’t the professional investors (as opposed to widows and orphans who can no longer rely on low risk bond investments to produce adequate income) be pleased as punch? This recovery may be nothing to write home about, but it sure has served those at the very top of the food chain extremely well. Remember, the income gains in this tepid rebound have gone entirely to the top 1% while the rest of us as a whole have lost ground. And aggregates like that mask increasing distress among at the bottom of the economic ladder. For instance, in New York, a city that has benefitted more from the tender ministrations of the Federal Reserve and Treasury than most cities in the US, the number of poor and near-poor increased in 2011. From the New York Times:
The rise in New York City’s poverty rate as a result of the recession has apparently eased, but not before pushing nearly half of the city’s population into the ranks of the poor or near-poor in 2011, according to an analysis by the Bloomberg administration.
That year, according to the city’s measure, about 46 percent of New Yorkers were making less than 150 percent of the poverty threshold, a benchmark used to describe people who are not officially poor but who still struggle to get by. That represents a rise of more than three percentage points since 2009, when the nation’s recession officially ended.
And with so many left out of the fruits of what growth there has been, there’s a real possibility that the economy will move into stall speed. And the econopundits are finally waking up to the fact that the slowdown in the rest of the world will drag on the US. 25% of S&P earnings come from Europe, for instance. From the Wall Street Journal:
Troubles overseas are threatening the U.S. recovery for the fourth year in a row. This time it’s weakening economies abroad, rather than tumbling financial markets, signaling turbulence ahead.
U.S. exports of goods to the European Union are declining outright. Growth in overall U.S. exports has been sputtering for months, after a three-year postrecession surge. And major U.S. companies are reporting increasingly dour overseas outlooks tied to the recession-plagued euro zone and slowing growth in other leading economies such as China.
The renewed fears of a global slowdown come after months of hope that a stronger recovery was finally taking shape.
“Every now and then you see a glimmer, things seem to improve, and then a little bit of bad news comes,” World Bank chief economist Kaushik Basu said….
And this is before you get to the fact that the gangrene of European austerity is reaching the core, yet the only debate among the powers that be is whether to ease up a bit, not whether to change course completely. And political fissures are widening. Italy is the one country that Germany can’t push around much because it could credibly leave the Eurozone. Luigi Bersani, the center-left leader that the Troika had hoped would win the Italian elections, was ousted by his own party in a series of votes over Parliamentary leadership, leading to the re-election of Giorgio Napolitano as President. This development is seen to favor Berlusconi, who has advocated leaving the eurozone. People came to the streets as the vote was announced and Beppe Grillo called for protests, although he said he could not travel in in time from the north to join.
Now the optimists are touting housing and shale gas as the drivers of recovery. Yet we are at risk of seeing a repeat of the pattern of 2010 through 2011, in which growth in the first three months fades, leading to the question as to how much of that growth was an artifact of seasonal adjustments that don’t fit well with an economy in a balance sheet recession. And the high profit levels that stock mavens have celebrated are part of the problem. We’ve never had a recovery where the labor share of GDP growth had been so low. Some stock-watchers have also pointed to Warren Buffett’s remark in 1999:
In my opinion, you have to be wildly optimistic to believe that corporate profits as a percent of GDP can, for any sustained period, hold much above 6%. One thing keeping the percentage down will be competition, which is alive and well.
What appears to have changed since then is major industries becoming more concentrated (banking is a prime example), leading to oligopolistic pricing, which is rent extraction, pure and simple.
In addition, Paul Krugman reminds us this evening that cutting government spending when the economy is less than robust is a sure path to a slowdown. And he stresses an angle that is often treated as secondary in policy discussions, namely, the way the long-term unemployed are effectively permanently unemployed. The usual excuse offered is that their skills have become stale, but Krugman contends that the real issue is pure and simple prejudice:
The key question is whether workers who have been unemployed for a long time eventually come to be seen as unemployable, tainted goods that nobody will buy. This could happen because their work skills atrophy, but a more likely reason is that potential employers assume that something must be wrong with people who can’t find a job, even if the real reason is simply the terrible economy. And there is, unfortunately, growing evidence that the tainting of the long-term unemployed is happening as we speak.
One piece of evidence comes from the relationship between job openings and unemployment. Normally these two numbers move inversely: the more job openings, the fewer Americans out of work. And this traditional relationship remains true if we look at short-term unemployment. But as William Dickens and Rand Ghayad of Northeastern University recently showed, the relationship has broken down for the long-term unemployed: a rising number of job openings doesn’t seem to do much to reduce their numbers. It’s as if employers don’t even bother looking at anyone who has been out of work for a long time.
To test this hypothesis, Mr. Ghayad then did an experiment, sending out résumés describing the qualifications and employment history of 4,800 fictitious workers. Who got called back? The answer was that workers who reported having been unemployed for six months or more got very few callbacks, even when all their other qualifications were better than those of workers who did attract employer interest.
So we are indeed creating a permanent class of jobless Americans.
Another open question is the odd continued rise of stock prices even as corporate earnings weaken. Why are investors paying more for companies whose earnings are declining in aggregate? In normal bull markets, you see a new leadership group emerge, and late in cycle, investors increasingly favor conservative stocks. This time the leaders are defensive plays, high quality companies that pay healthy dividends. While bulls say that this is predictable given ZIPR, we’ve had ZIPR for years now. Why should these stocks be worth more now?
Now of course, the short answer is simple: it’s the momentum, stupid. Many fundamentally-oriented investors have been licking their wounds. And the nature of momentum-driven investing is that it can work longer than more sober-minded souls would think possible. When this disconnect ends is anyone’s guess. But markets like this suggest that even more caution than usual is warranted.
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What we are seeing is an attempt by the banksters to recapitalize the wealthy, corporations and the banks while at the same time deal with peak oil production and the inevitable economic contraction that peak oil production initiates.
What we see is the managing of this economic decline to the advantage of the elites. Rather than right off trillions in bad debt owned by the elites they will make good on that debt through austerity and under-reporting inflation …
They are managing this economic decline by misreporting stats for the banks and the economy. You will notice that these economic air pockets will coalesce around heavy oil demand. So far they have reduced Brent to around $100. Now it will be their job to once again restart what growth they can.
We will see this scenario play out year after year until it just doesn’t work anymore and financial chaos takes place at which time they will institute fascism and a police state to secure their power … We have already seen the loss of rights and the implementation of militarized local law enforcement.
Had they written off the bad debt over the last few years, a large number of pension plans would have collapsed.
So this asset bubble is not just propping up the 1% it is also propping the next 19%.
Saving the pension plans would have been cheap. There is already a mechanism (underfunded) in place to reorganize pension liabilities.
The Pension Benefit Guaranty Corporation (PBGC) could have been fully funded to take care of almost all pension obligations.
As it stands the pensions already got clobbered by the AAA rated derivatives that these thieves sold. What should have happened was the victims be made whole … Not the Banksters.
I don’t believe in a fully funded pension system. I believe it should be pay as you go. And if you want more than the base, you save on your own without government interference.
IMO, we have this bankster problem with Wall Street because of these big pools of money that attract thieves.
So I don’t believe that bailing out the pension plans would have been any better. A bailout is a bailout. It leads to malinvestment.
Saving the pension plans because of bankster fraud is hardly a bailout … There are however other weaknesses in the Pension Plan system.
I will say that Pension Funds use far too optimistic growth scenarios for their actuarial calculations and this must be remedied.
I you write down bad debt and adjust assumptions, a large number of pension plans will collapse. They are already tinkering with SS and the anger is being felt… imagine with pensions at large.
I don’t think it is a small problem.
Whether you print or tax to fund these underfunded plans, you are essentially taking money from workers and giving it to retirees.
That would not be so bad if the 35-50 group was growing relative to dependents. But it’s the opposite, we are going from 5 workers per retiree to 3 workers per retiree.
You are “taking money from workers and giving it to retirees”?
I think not.
The idea is to take money from the oligarchs and give it to both the workers and the retirees, and in the bargain increase both aggregate demand and aggregate production of real resources, not the production of worthless paper and financial instruments.
If a worker is serving the retiree who has a funded pension, that means he gets a chunk of that wealth with the transaction. The retiree’s wealth shrinks while the younger generation’s wealth increases. We get the transfer of wealth from one generation to the next.
If a worker is serving the retiree who has no pension, that means the worker is paying for himself and the retiree… and the retiree gets to keep the assets he should probably be forking over to the younger generation. That means the non-working population gets to decide how a large chunk of the economy evolves.
Historically, it has been the working population who has decided how the fruits of their labor got spent… if they cared about their parents, they would take them into their homes or help them out with their expenses. If not, we got poorhouses.
That problem will only grow as the number of workers per retire goes from 5/1 to 3/1.
It’s not all about the 1%. There are physical demographic constraints that no one wants to acknowledge.
The Western world has been living above its means for a few decades now. While shipping some good jobs to foreigners, Westerners kept on consuming to their little hearts’ content. The chickens are coming home to roost whether we like it or not.
The population did not adapt and thought the gravy trains would stay here forever. And now we are still clining to lifestyles that are long term unsustainable. However, most Westerners think it is totally normal to consume such a big chunk of the world’s resources while other countries slave around for us.
The pension system has always been based on the younger generation funding the older generation’s pension but the retirees are living longer, their lifestyle are still too big for long term sustainability and, to add insult to injury, for the next couple of decades the number of workers per retiree will be declining.
The 1% issue is important but it is not the only one.
@ Moneta
You make it sound as if the deindustrialization of the United States was not deliberate and intentional, and if somehow this created good jobs in countries like Mexico and China.
You are mistaken on all counts.
…moneta’s tome’ is reminiscent of Colin Powell’s, advising bushitters they MUST invade Afganistan BEFORE Iraq…to have ANY credibility…
before taking $$$$ from VICTIMS, hold accountable BANKSTERS who perpetrated “criminogenic control accounting FRAUD”, so defined by William K Black-Michael Hudson-Robert Johnson…
BTW, your comparison is absurd and an awful tactic. I hated Bush with a passion. In fact, no single party reflects my views.
I look at what is going on and try to determine which squeaky peddler will get the grease. Do I like the peddlers? No, but in our current system, the peddlers win.
All my life I have been called either a commie or a socialist and this from Canadians. Now I am being called a neoliberal? What a farce.
In this brouhaha of the 99%, what we hear is that QE and austerity must stop, rates must increase so retirees can get better returns on their investments, but real estate can’t go lower and pensions should be sacrosanct. We are not looking for a juggler but a magician.
The reality is that most people want to keep the status quo on what benefits them. Well, another reality is that the elite put a wrench in the works and the system is fubar. Even if you take it all away from them, you still have a system in disrepair because malinvestment has been going on for 3 decades at least.
You can double your SS payments and bailout all the pension plans and the system will still burst at the seams. Why? Because 3 decades of efforts were put at the wrong place.
The boomers’s retirements should have been planned decades ago but everyone preferred to invest in big houses, cars and stuff that ends up in the dump.
Maybe. The thing is that when I entered the market in the early 90s, I kept on questioning everything and I kept on being told to stop trying to reinvent the wheel and to be more optimistic.
This always came from the older group no matter which part of the wealth curve they were.
So even if it was intentional, people drank the Kool Aid and no one fought. And now we need to rebuild.
Every now and then, 1 generation needs to sacrifice. There is no free lunch. Time will tell which one it will be.
Hi Moneta, Your experience with older colleagues has reminded me of an old policy of the Dutch East India Company. On sending a young officer out to Java, he was told to work hard, live on his salary, buy Company stock with his purplus and in due course retire to Amsterdam to enjoy his dividends.
There was indeed a free lunch for retired staff then.
Some very good stuff in this piece.
On unemployment, as business becomes increasingly concentrated, monopolistic employers cut staffing to increase rent extraction. Big business prefers young workers for their greater energy and malleability and optimism about personal prospects and of course lower cost. Like the military, big business has erected systems designed by geniuses for execution by id*ots, so inexperienced help really has little downside for them.
It must have occurred to many by now that economic history repeats itself. We had the Twenties during the Nineties and Early Oughts. Now we have the Thirties, with the major difference being that the Fed this time has saved the banks by ZIRP and the purchase and collateralization of worthless bank held assets. This seems to be ‘the second time as farce’, which was Marx’s characterization of Louis Bonaparte’s recapitulation of his uncle’s grasp of France.
This financial slight of hand has enabled continued looting to a drumbeat of government public relations and propaganda. Once again, we have more than twenty million unemployed but the Gomint has developed ingenious ways not to count a huge number of them. Only WWII really ended the last Depression. There doesn’t seem to be much to gain by invading either Mexico or Canada. We aren’t accomplishing anything positive in the Middle East despite a huge waste of money and a steady stream of casualties. Could it be they’ll try Africa next?
Getting the American economy moving again would probably require a one off distribution of about $100,000 per tax paying citizen. Failing that I expect we will just continue spiraling down
Agreed with all.
I find continued discussion of ‘the recovery [sic]’ simply maddening, as for the bulk of the population there is no recovery. But this ‘recovery’ meme fundamentally rests on a proposition, which though one true, is no longer operative. This is that there is a single ‘economy’ in the US. You know, an economic process which involves us all. There are instead _two economies_, since the 1990s, but certainly since TARP. There is the state-funded oligarchy, who have unlimited access to dirt cheap or free capital to speculate endlessly, with any losses made up by the state, i.e. corporatism for the rich. Then we have ‘the economy’ where everybody else struggles with weak incomes, no incomes, and declining asset prices in the main. We have a two-tier economy,. Those aided by the state are making out like the bandits they are. Everyone else is struggling at best. Of course the media continues the meme that ‘we’re all in this economic thing together’ when manifestly that is _absolutely UNTRUE_. But why, friends, do we continue to repeat an oligarch-enabling false meme.
There is a condition of free money for the rich which has no real name in present political economy as we discuses it. And there is the insult of austerity for the other 99+%. Please, let’s _stop_ talking about these conditions as if they, in any way, represent a common condition or even different places on a common spectrum. That has ceased to be the case.
The media is just telling people what they want to hear. During the depression they could not stop talking about how prosperity was around the corner. Every little bit of good news was amplified in a giant echo chamber.
But hey, it wasn’t all bad. Then again not everybody likes apples as much as i do!
TARP, QE (infinitum), ZIRP policies show just how desperate this economy is…and how desperate those “at the top” are trying to save themselves……while the rest of us will be reduced to scrabbling for the scraps.
It is so obvious as to preclude any more discussion……
The deep, “….contradictions of capitalism” plus a failed system of law and societal awareness will drag our “….Western style of ‘democratic capitalism'” into the abyss….
Where is will stop is anyones’ guess….
Stay tuned….
And yet, if you tried to end QE or ZIRP, it would be considered ‘austerity’. I honestly don’t get what we are doing – of course those first in line for this almost free money will benefit greatly, everyone else not so much. Someone I read likened this to standing a block away from your burning house with a garden hose and hoping some of the water reaches it.
Interestingly, there is a similarity between the population pyramid of the 30s and today.
Because of WW1, the most productive cohort (35-50) shrank in the 30s relative to the number of dependants… just like what is starting to happen today with Gen-X and Gen-Y picking up the baton.]
You can not expect s strong economy when the highest earning cohort is shrinking relative to the number of dependants and you did not properly plan for it.
If one takes a look at studies like Peter Turchin’s “War and Peace and War” that examine distribution of resources over long periods of time, what one finds is that when the number of workers declines, there is more demand for them, and as a result their share of the pie, of the aggregate national product, increases. Fewer workers is good for the workers’ economy, bad for the economy of nobility and oligarchs.
However, when a nation has free trade, free capital flows, absentee ownership in foreign nations (all backed up by the instruments of violence of the state, paid for of course by the working-class taxpayers) and essentially open borders to import as much domestic labor as needed, this can mean nothing but an impoverished working class.
People did not used ot have access to credit liie today so they lived on a monthly basis. It used to be pay as-you-go.
We’ve never had a system that used 40 years discounted cash flows the way we do now… all these discounted cash flows are currently aimed at emptying the young peoples’ wallets to fund the current excesses.
Maybe they will be in demand but will they have anything left on their paychecks at the end of the month?
Moneta,
You are off on bunny trails.
You want to blame pensioners for problems that are being caused by the transnational capitalist class.
We might have 1% issue but I also believe there is a huge demographic issue that no one wants to acknowlege.
We are going from 5 workers per retiree to 3/1 in an economic system that depends on a growing cohort.
I’m Gen-X, I am starting to feel the sandwich effect as are most of my friends… and we are still at 5/1.
@ Moneta
Almost all of the benefits of the increases in productivity in the United States, and indeed in almost the entire world, have accrued to capital, and not to labor, over the past 30 years.
You are parroting neoliberal propaganda.
I have been called a commie, a bleeding heart liberal and now a neoliberal.
I see a trend.
Moneta,
Your ideas lack a sense of social justice as well as economic and political justice. In that respect you do resemble a neoliberal. Under a laissez-faire system there is not a modicum of sympathy for the weak and poor people of our society. They are seen as a burden that weighs down the strong.
This should all sound very familiar. The results have proven to be just as disastrous as they have in the past. Reiterating this travesty of justice will not solve the fundamental problems we face.
TBTF is effectively the immanence of the GOP, in its earthly form of oliGOPoly.
Everything and everyone will be sacrificed to protect the interests of the oligarchs. Economics of genocide, effectively.
We’ve seen this movie before. It’s one that Mike Davis, in Late Victorian Holocausts, for example, has laid out straight.
Which is what is so worrying about the casual increment in support for the Farage types, as we wind back to race versus class for the nth time.
..moneta may see “trend”, but does she have any idea to what “neoliberal” properly refers?? From Mexico is accurate…
“the re-election of Giorgio Napolitano as President […]”
Napolitano is an ex-communist and politician of the left. There is no reason to think that he favours Berlusconi.
That’s not what Reuters says, and I linked to the piece:
As most of parliament cheered his re-election, demonstrators protested outside. By evening the crowd had swelled as thousands of people vented anger at an outcome that was widely seen as perpetuating the grip on the country of a discredited political class and favoring centre-right leader Silvio Berlusconi.
http://www.reuters.com/article/2013/04/20/us-italy-vote-idUSBRE93I08I20130420
So as I read it, Reuters is reporting on local reactions. I didn’t say he favored Berlusconi, the development favored Berluscioni. I don’t have more detail, but I infer that it was Berlusconi’s block + defectors from the PD, and if so, Berlusconi’s faction would have more votes in the coalition.
The point became lost in translation, dmn. It’s not that Napolitano will, himself, aid Burlusconi but rather that the internal fragmentation of the Left bloc which led to Napolitano’s candidacy will enhance the advancement of the Right.
[from Italy]
As a matter of fact, Napolitano is expected to build a “responsibility” government in order to stave off bankruptcy, by joining the right side of the center left party with Berlusconi’s party.
But, there is some chance that the center left party splits in two and allies with Grillo, who is more likely to exit the euro (even Grillo anyway never really said that he wants to).
In this case, Grillo + leftish part of the center left would likely be able to force new elections.
As a side note to Yves Smith: you strongly overestimate the “euroskepticism” of Berlusconi.
Division has always been the bedevilment of the “left”, defined as those who think independently, the anti-authoritarians.
You can probably see why division is always a problem for the “left”, when I put it that way.
Anyway, here’s hoping that Grillo wins and is willing to use his victory.
Giorgio Napolitano de facto installed the technocratic government of Mario Monti, a previous neoliberal adviser to Goldman Sachs and UE financial institutions; he gave the ultimate greenlight to a number of Berlusconi laws, which were detrimental to both students’ and workers’ rights; he pushed more than anyone else in the Italian political elite to bomb Libya; he introduced the CPT (now CIE, nationwide detention facilities in which clandestine migrants are kept for months, even without commiting any offence, and deprived of their basic rights) when he was Minister of the Interior; and he always championed the corrupt parties’ appetites against the longings of direct democracy of the movements.
The hissing sound of Europe’s soul leaving the corpse of what used to be its economy.
“Died at the prime of its life (well) due to excessive self-flagellation. A psychological disorder called the Merkel/Schäuble Dummkopf-syndrome. May its fate serve as example for generations to come”.
Merkel/Schäuble Dummkopf-syndrome is really their attempt to save Germany’s banksters. It is no secret the German Banks lent heavily to the southern EU.
This whole charade has been the massive transfer of wealth from the south to the north to recapitalize banks that should have been nationalized …
Ask anyone who knows and they will tell you where those so called bailouts of Greece, Ireland, Spain etc went … to pay off bad loans made by German, French and British Banks … duh …
The whole thing is steal finance. What puzzles me is how Germany is still an export “powerhouse.” China is a willing partner in this shell game to make ECB bond buying legal, right? Even tho’ the last thing China needs is more cars. Hmm, must be some other technology bribing the Chinese. Anyway, Germany is giving all the debtors the interest to make their payments. Schauble (Ich kann nicht mein umlaut finden.) was recently on a NYC panel – (must have stg to do with the delegation of irate Eurobanksters wanting their money back from having been defrauded with MBS, and Jeffrey Sachs is mediating. No word yet?) – and he was almost giddy in a muted kinda way; it was bizarre. He hemmed and hawed as expertly as Larry Summers. But he managed to make everyone believe he had lots of faith in the EU/EZ.
…stealth finance
I was totally down with ‘steal finance’, brings it all closer to home. Yeah.
In my opinion, the most important assertion in this post, which I agree, is that growing inequality, or as you put it, economic growth concentrated in the top 1%, readily reduces growth potential. I think few economists agree with this view arguing there is no empirical relationship between inequality and growth.
They’re paid not to see. Loosing their job would improve their sight.
To a certain extent, econs working in the private sector have deluded themselves into thinking globalization has broken the connection between balanced income and sustainable growth. A good example of that is a report that Goldman-Sachs’ analysts produced ~2006 or 2007 arguing to their clients that focusing purely on cultivating wealthy customers would not only be viable but a winning strategy going forward given the extreme inequality typifying the world even before the GFC. That report was the impetus for many rather foolish shifts in corporate policy around the same time; the infamous campaign by Walmart to rebrand up-market is the best example, but they certainly aren’t the only one.
The fallacy is obvious. As Robert Reich points out in Aftershock, Physics would make it nigh-impossible for the consumption of the rich handful to equal -let alone surpass- the consumption produced by a more equitably waged middle-class multititude even IF the rich weren’t tempramentally disposed to hoarding, instead of spending, their money in the first place, and even IF human satisfaction in general didn’t decrease rapidly after the first indulgence. The wealthy need a healthy middle class to keep the economy going both globally and locally in thier “home” countries, but they don’t want to need it and they certainly don’t want the equitable incomes necessary to get it, so they’ve latched on to silly ideas justifying thier prejudices; unfortunately, there are more then enough academics desiring to join their ranks who are willing to flatter those foolish ideas.
Yes. +1.
‘Another open question is the odd continued rise of stock prices even as corporate earnings weaken. Why are investors paying more for companies whose earnings are declining in aggregate?’
Wall Street analysts have spent decades claiming that ‘it’s all about earnings.’ But the multiple applied to earnings (i.e., the P/E ratio) is equally important. When interest rates are low as they are now, the P/E tends to be higher than when interest rates have risen.
Dr Hussman has pointed out that at low interest rates, the duration of stocks (the weighted average number of years over which you receive future earnings and dividends) is around 60 years. Low earnings in a particular year have almost no effect on the discounted value of the next 60 years’ earnings.
As an illustration, many major bull markets have started when earnings were depressed. In early 1991, earnings on the Dow 30 stocks actually went negative. Nevertheless, stocks spent the entire decade cranking higher.
Both Wall Street and the MSM adopt the conceit that markets can be explained, by starting with earnings and then reasoning about what’s going to happen in the economy. This simply doesn’t work. Probably half of market movements can be accounted for by herding, which can be rational in the mid-phase of cycles, but irrational at the extremes.
Contrary to Napoleon Hill, one can’t ‘Think and Grow Rich’ in the markets. Better just to count the beats-per-minute of the song the deejay’s playing now, and groove with the other dancers till the music stops.
What drove the price of assets, including stocks, in the 1980 to 2007 era was the rapid increase in private debt. Private debt is now at unprecedented levels, even higher than it was during the Roaring Twenties.
What has sustained asset prices since 2007 are TARP and and the various QE — cash for trash — exchanges.
One could legitimately argue that deregulation led to the unprecedented increase in private debt between 1980 and 2007 (and the concomitant increase in asset prices), and massive, unprecedented government intervention in the form of subsidies to the financial sector have kept the debt structure in place since 2007 (and concomitantly the price of assets).
This is neoliberalism in practice, and there’s really nothing new to see here, even though most Americans and Europeans remain the victims of elaborate propaganda and police state operations which have, thus far, prevented them from seeing what’s going on. This too, however, will pass.
We have seen the same pattern play out various times since 1980, the size of the debt bubbles and the bailout of the financial sector growing exponentially with each successive bailout. Up until now, it was the common people in countries in Latin America, Asia and the former Soviet block who shouldered the burden of austerity and thus the bailout of the financial sector. Now, however, the debt burden is so great that it is being demanded that the commoners who live in the core countries — the US and Europe — share part of the burden. There is this factor plus the fact that the countries of the Southern Cone of South America have achieved a degree of sovereignty and autonomy, are in open revolt against neoliberalism, and are no longer inclined to put the gun to their own heads and pull the trigger in order to save the transnational capitalist class.
Well put. Perhaps we will next be invading the Southern Cone?
“One could legitimately argue that deregulation led to the unprecedented increase in private debt between 1980 and 2007 (and the concomitant increase in asset prices), and massive, unprecedented government intervention in the form of subsidies to the financial sector have kept the debt structure in place since 2007 (and concomitantly the price of assets).”
Notwithstanding your point, the secular decline in interest rates over that period had an awful lot to do with the increase in private debt. Yes, credit conditions loosened through weaker regulations in some cases, but the fact that mortgages went from 15% to 5% over the course of 30 years (and corresponding treatment of houses as ATMs) had an enormous impact.
P/Es are unreasonably high right now. To put it another way, returns on stocks are quite low by historical standards.
Jim,
I’m quite aware of the impact of low interest rates on NPVs.
You are missing my point. We have have ZIRP since the crisis. S&P earnings have been falling since 1Q 2012. Yet the S&P has continued to rise.
So why, with the same general valuation environment, are people paying MORE for falling earnings? I don’t see any compelling reason to see rising earnings ex in specific sectors/companies.
John Hussman makes an observation that there is a strong correlation between record corporate profit margins being 70% above historical norms and the record government budget deficit as a percentage of GDP. But, if the government budget deficit shrinks as a percentage of GDP, then record corporate profit margins will mean revert in a manner that could prompt a multiple compression, a revaluation of the stock market. Hussman notes that “fiscal policy creates a deficit that must emerge as a surplus – specifically as elevated corporate margins, creating the illusion of “yield” that is not, in fact, durable.” Hussman frames record corporate profit margins as “illusory” and “unsustainable” precisely because of the strong correlation to US deficit spending as a percentage of GDP.
The current path trajectory of US gov’t deficit to GDP is shrinking to less than 3% after peaking above 8%. The government budget deficit is shrinking faster than anticipated. Risk is, record profit margins shrink will faster than anticipated. Profit margins shrunk 2% in the 2000 bear market, 3% in the 2007 bear market. But with deficit spending peaking near 8% of GDP (about 3x or 4x greater than the deficit spending peaks in 1990s and 2000) the possibility exists profit margins may shrink more than 3%.
Sounds like trickle down to me.
Government spending accrues directly to the bottom line of the transnational corporations, and helps no one but them.
Of course, you are assuming that profit margins will not be sustained by creative accounting. Figures don’t lie but liars figure.
If you look at the last few cycles, you will notice that the market only tanks when corporate profits-to-GDP drop to low very levels…. if history repeats itself, we still have a few quarters of strong equity markets since corporate profits-to-GDP are still up there.
Interesting as usual.
However, here is another take on the issue of the long-term unemployed, and the apparent disconnect between the unemployment rate and job openings.
The main reason that employers don’t hire the long-term unemployed, is because they can. With hundreds of well qualified applicants for each job, employers are free to be as picky as they choose. Let the supply of labor tighten up, let employers compete for workers rather than the other way around, and this problem will resolve itself overnight.
It should also be pointed out that, increasingly, more and more job postings are fake. Yes, really. Companies are advertising positions to provide cover for bringing in H1-B or other sources of foreign workers, or covering their legal bases before they hire one of their friends, etc. In these cases there are ads, but nobody has any chance of getting these jobs because they are already taken. I have seen this myself: when I have inside knowledge more than half the ads are fake. Also, a lot of companies are advertising for ridiculously narrow job skills with impossible levels of seniority, possibly hoping to get someone really experienced for cheap, but there really isn’t an open position per se, and no matter that someone could easily do the job there is almost no chance of their getting hired.
Oh yeah, you name it. Public Utilities, AARP, Fannie, Freddie IBM, Microsuck, etc, etc. Capital harvests cheaper labor from Hyderabad to Chennai and elsewhere. Big corps and their lawyers can’t keep their port holes closed, chanting ‘We got skilled labor here, we got skilled labor here!! Let them in!!’ But what they won’t similarly announce is that these workers must be brought in under corporate preferred immigration control, thus lower pay, and the workers have a built in deportation clause when they toil at the company store.
Big companies can’t let the fat white slobs, fat indian slobs and fat talent from anywhere else put the squeeze on corporate dictatorships. Solidarity, and occupation, whether from housing to the workplace, scares the pants off the oligarchy.
But wait! They are adding intangibles to GDP! Economy will show growth of 3%!!! Its all good says Dr. Pangloss!
I don’t understand why President Obama doesn’t propose a tax cut for the working poor. Letting the payroll tax holiday expire for the poor was such a disastrous move.
Since the working poor can’t do anything for Obama, why should he do anything for them? Well that’s apparently how he sees it.
Proposing the policy in the first place was a disaster because it meant inevitably one would have to end it or attack Social Security. The money was allotted in small payments over time which meant it was largely eaten up by higher prices at locations such as Wal-Mart. The money was removed from Social Security which is there money. This was no different than Bush’s privatization plan except Obama helped out Wal-Marts of the world instead of going directly to Wall Street.
He could have proposed a tax credit or proposed direct spending. No, he sought to undermine a popular and successful program. Gee, he could have just proposed funded, unfunded mandates instead of the plan of the Heritage Foundation.
Originally, the pay roll tax was imposed because employers/FDR understood employees needed X amount of money to live and come to work which they were already paying. The pay couldn’t be cut anymore or they wouldn’t come to work. The payroll tax was a way of diverting profits to the existing workforce instead of sticking it in a vault or using it for speculative purposes. The money would be redistributed through Social Security increasing money velocity and raising wages as you actually encouraged people to leave or stay out of the work force. It was one of those things which should never have been touched. Instead those profits which should be doled out to the elderly and infirm in exchange for future payments went right back into the hands the super wealthy.
It was incomprehensible idea in the first place, and its best that be forgotten as soon as possible because some people don’t understand prices of things you pay for aren’t determined by enlightened, psycic robots.
James Galbraith: “What is true of government as a whole is also true of particular programs. Social Security and Medicare are government programs; they cannot go bankrupt, and they cannot fail to meet their obligations unless Congress decides–say on the recommendation of the Simpson-Bowles Commission–to cut the benefits they provide. The exercise of linking future benefits and projected payroll tax revenues is an accounting farce, done for political reasons. That farce was started by FDR as a way of protecting Social Security from cuts. But it has become a way of creating needless anxiety about these programs and of precluding sensible reforms, like expanding Medicare to those 55 and older, or even to the whole population.”
Tyler:
You are correct that Social Security benefits are not dependent on FICA taxes in order to be paid.
The federal government budget operates on a cash basis. It is unable to accrue benefits for future liabilities. SS is nothing more than general taxes for the general welfare.
Even the FASAB (the accounting advisor for the federal government) considers payments to beneficiaries above and beyond the duties of the federal government. In other words, paying benefits to SS beneficiaries is a favor bestowed on the public by their generous federal government. How could it be otherwise?
Don Levit
I’ve been wondering how we would get to the point of not being concerned about people cherishing gold and silver, not conerned about murder (wars, people to people, suicide bombings), theft (wallstreet and other), public sexuality (leaders of France, Italy, Caribean vacations where anything goes), and elevating supernatural (mediums, future tellers, etc)…children hating their parents ( retired vs young workers), increase in intensity and frequency of natural disasters….
Deliberate manipulation by the 0.1%, partly.
On Silver Bullets
It seems that the latest round of QE is not helping the economy. One might well ask: was it ever (really) expected to? Or is it simply more ‘foaming the runway’ for the banks and political cover for unpopular measures.
Consider:
In August 2010, a few months before the expiration of the Bush tax cuts (at end of 2010), Bernanke announces QE (he attempts to explain QE in a strange interview in Nov2012). In last minute negotiations, the Bush tax cuts are then extended. The Fed also institutes a campaign for ‘transparency’: ostensibly providing guidance, but also raising the media profile of the Fed. (Hey, look over hear! We’re helping the economy!)
Then a few months before the expiration of the Bush tax cuts, Bernanke announces another round of QE: $85b/month until unemployment comes down (using official stats – which isn’t too difficult as people fall off the roles). The ‘fiscal cliff’ is later resolved in a manner that is rather favorable to the wealthy while automatic ‘Sequester’ austerity kicks in a few months later.
(Note: As I’ve pointed out previously, the Sequester’s military cuts are easily reversed as soon as there is a crisis. Not surprisingly, Corrente (Lamberts blog) has noted efforts by the Obama Administration to reverse the Defense cuts.)
The Bernanke Ensemble plays an extraordinarily accommodating tune for the political song and dance that we have witnessed.
Just a note: I realize that there may have been some benefit to QE but that is faint praise when expectations that the “Fed is riding to the rescue” has impeded necessary fiscal measures.
Productivity or “efficiency” (aka profit) is the culprit. A very small profit is all that a balanced (equitable) economy can tolerate. Consider the two pig farmers in Appalachia: One of fallen English aristocratic lineage who starves his pigs or feeds them atrocious garbage and then gets pissed off they didn’t gain any weight so the next year he puts them on a diet before he kills them. Versus the farmer from Wurtemburg who fed his pigs with wholesome food in abundance, always gave them clean straw, fresh water. His pigs gained weight without antibiotics. But the next year, because the crappy pigs were so cheap, he couldn’t compete and went out of business…Ah… capitalism, such a wonderful thing.
Susan TO, I am so stealing this.
Great example. Of course the system is riddled with perverse incentives that are now at the point where they feedback on each other making any scenario for economic growth pretty unlikely.
I don’t agree. Workers have not seen the benefit of their increased productivity. Real wages have remained stagnant. Productivity by itself is not the issue. The squeezing of workers wages is. This factor is what led to the explosion of debt.
They increased productivity came from widespread use of labor-saving technology, not from workers creating more value. Once one accepts that fact, it’ll seem natural that the fruits of the labor technology are accruing to business, and owners of capital. The workers who develop the technology, if they didn’t hold patents, or held stock,only gained only a small part of the gains from technology.
They increased productivity came from widespread use of labor-saving technology, not from workers creating more value. Once one accepts that fact, it’ll seem natural that the fruits of the labor that technology is being used to perform are accruing disproportionately to business owners, and owners of capital. The workers who develop the technology, if they didn’t hold patents, or held stock,only gained only a small part of the gains from technology.
Yup, technology makes a useful scapegoat. Alas, technology can not be blamed for the political and economic policy we’ve endured the last thirty years. It was not responsibility for the Fed’s interest rate policy. Nor Congress’s preferential tax treatment of capital gains. The massive amount of corporate downsizing that has taken place increased worker productivity at the expense of the actual workforce. The same could be said over the de-industrialization policy this country has pursued.
All of these factors denied the gains that should have rightfully accrued to the working classes. And not Capital.
The entry of large pools of labor into the market has pretty much destroyed any bargaining power the workers struggled to gain before global labor markets began the economic integration process called globalization. Emerging forms of technology, like the internet, have made it possible for capitalists to manage workers far away. Emerging forms of technology, like the internet have made it much easier for capitalists to to move capital around…usually to the cheapest place to manufacture.
As I’ve pointed out in previous posts, the purchasing power of the working classes was deliberately destroyed through the policy of the Federal Reserve under Paul Volcker’s leadership. Technology played little to no role in this process.
What you’re talking about was all made possible by the policy of laissez-faire that governments around the world adopted in the wake of the fall of the Soviet Union. There is nothing inevitable about the global integration of labor markets. Nor is it anything that cannot or will be undone.
All the major economic zones: the US, China, Europe, and Japan have been showing weakness for months to years.
Lambert wrote about narratives yesterday. In the world economy and national economies, we have one narrative of business as usual. We have hit a rough patch but are working, slowly, through it.
Against this, we have kleptocracy, wealth inequality, and class war. We have neoliberalism. We have the two economies, one real, one paper, Richard Kline points to above.
We always need to keep in mind and be able to differentiate between what we are told is going on and what is actually happening. It is all very schizophrenic.
Take the news –please. Sorry, couldn’t help myself. I no longer watch the news for the news. I watch it to see what the current propaganda lines are and try to work out where they are headed. The only news I get in the news comes after I unpack all the propaganda, see what’s left and apply my own analysis to it. And fairly often even when I do this, it is only later that I realize that there were one or two propaganda lines I missed.
I say all this because I realize how easy it is to get led off on tangents. The truth is we can not fix bits and pieces of the system until we are willing to fix the system as a whole. We can not fix pensions, long term unemployment, or anything else within the structure of the current kleptocratic economy. Just look at the history of the last few years. What has been fixed? Nothing, at least from the 99%’s point of view. And nothing will be fixed.
2008 established the pattern for anyone who was weak on the concept of kleptocracy. The rich and elites, our ruling classes in other words, looted the economy into a crash. Then they looted the crash. Now we see, even after all the bailouts going to the rich and corporations, further weakening in the economy. More recession, another crash somewhere in the offing, does anyone think that these won’t be looted too? And that the pattern will repeat itself until we stop it?
My dear Hugh,
Been watching you since old FDL times, oil prices etc. Your voice seems true when compared to facts observable. (Cue reverend mother) Sigh. Do not know how to proceed, only to connect with neighbours and hope that something will remain. And cheerio to you all!
Well the looting certainly is a fact but it only works up to a point. I think we are coming into a time, in the U.S. at any rate, when the looting will be less intense and some minimal restraint will be in order. I think there is a long term strategy here.
Real estate is being bought up by investment companies funded by near zero interest rates in something resembling a feeding frenzy. I think this has been Bernanke’s ace-in-the hole. Once property prices start to rise, as they have, the middle-class homeowner will tend to spend more because that’s what they are programmed to do. It will take a lot of lives off of hold (underwater homeowners often can’t move) thereby increasing dynamism in the economy.
Of course, this may well turn into another bubble for one last round of looting before our inevitable neo-feudal future but it will create breathing room for many people, including me that may last several years–perhaps four or five years.
I’d like to remind you that if we do go into a neo-feudal future — which is by no means certain — there will be a very messy transition period.
During this transition period, the future feudal lords (active, responsible people such as the Google execs) will be getting rid of the parasites who are currently running the major banks, etc. The parasites who are currently running the major banks, etc., do not have what it takes to be feudal lords.
What a cheerful thought. And of course, you’re right. Nobody said that the perps doing the initial “primitive accumulation” ended up on the thrones.
Wall Street vs. Google–should be a great fight!
Things will eventually give in Europe and it will not be a pretty clean Avalanche.
All sorts of dirty heavy stuff will be mixed up within it.
A crisis caused by corporate power willing to maintain and or increase their rate of profit relative to the worker drones.
http://www.youtube.com/watch?v=EbbUSsEcTFQ&feature=player_embedded
The reason for the rise in stock prices has to do with the fact there’s a lot of money in circulation with nowhere to go. Precious metals and other commodities look like they are in decline–mainly due to market manipulations by governments and international organizations. I believe they have fixed on a policy and that there is a plan. Austerity in Europe is very much about making the social welfare system leaner and a lot meaner and once that is done I think there will be more pro-growth policies by the end of this year–but it will depend on a U.S. recovery.
I’m optimistic because I see real-estate prices rising and that is, to me, the key indicator of the U.S. economy, not the stock market. Big investment firms are buying up properties in huge amounts–this will raise prices this year and fuel not just optimism but make wealth tied up in underwater mortgages more liquid. People will finally be able to make adjustments in life and move to where they can get the best job and so on without losing the equity in their houses.
Now, it’s possible that the real-estate boom which I see right in front of me may peter out and it may be just a small bubble–but real-estate bubbles last for years, generally. It’s also possible that Europe may deepen its financial crisis but, as far as I can see, they have it in hand. In my view, btw, the Euro crisis was, in a sense, staged to centralize power and I think it has mainly worked. The quick capitulation of Greece and Cyprus shows me that the Eurocrats are firmly in control. I believe once they have fully consolidated power and the U.S. economy begins to grow at something like a normal pace they will gradually ease away from austerity. I know that something more or less like this scenario is what the IMF had in mind in 2008.
Of course the other shoe may drop soon–which is the looming climate-crisis. But I think we have a few years to enjoy an Indian summer before the winter winds do blow cold (or hot in this case).
Rising real estate prices is not a positive for the economy. With rising prices to put a roof over ones head – less money is available for purchases of other needs. Wages have been stagnant and falling for most of the population. If you think rising prices creates an opportunity for people to become more liquid…it does not. They can possibly finance (take on more debt against equity in real estate) cash out but, it only increases their carry costs and increases bank income via interest against a larger pile of debt. Higher living costs translates into a need for workers (consumers) to earn more to cover the debt burden….if they do not, demand in the broader economy will fall. If they do earn more, costs will rise to produce and will not be competitive in the global economy….. export of labor will resume. Rising real estate prices is an indication of a weakening and less competitive economy…an indication of over-speculation in the means of living…not good.
“That year, according to the city’s measure, about 46 percent of New Yorkers were making less than 150 percent of the poverty threshold, a benchmark used to describe people who are not officially poor but who still struggle to get by. ”
Half isn’t enough for revolution. My usual estimate was somewhere between 75% and 80%.
Great article. I am an Indian who came here for my graduate school. As an Indian I understand the whole dynamics of outsourcing. This year the H1 Visa quota of 65k has been accumulated in the first 2 days of April not to mention the processing starts on April 1st.For the years before 2012,11,10,09 the number has hardly been utilized. Means the companies are outsourcing at a greater pace this year. That is total transfer of wealth from the American working class to the 1-20%. Pension is long due for discussions.Outsourcing was intially about the profits. Now its more about avoiding stiff regulations. Keeping skilled work out of americans hands is worst than any thing else. After a constant shift of skilled work to other countries, even a dumber in India gets wisdom and becomes smarter. The generation has passed where jobs have been passed over because of cheap labour. They are breeding smarter kids in a smarter environment. America has a lot to compete. I feel bad for the working americans. I really want to see what happens if the cost to complete equals the playing field. Would the companies still go to India to avoid regulations? Not sure. I don’t regret my move to the US. I have learnt alot and I will keep myself out of this web. I wish I could go back and change the corrupt society in India so that we don’t have to come to America in search of jobs. Columbus wanted to find us. He voyaged to India. But the Indians are in search of a place columbus found. Funny how round the world is.
The essence of this is Economies grow to fall. We are destined for a big bubble. The market doesn’t make sense based on the real facts.
Thanks
looking forward to future shares from you…”The generation has passed where jobs have been passed over because of cheap labour. They are breeding smarter kids in a smarter environment.” Thank You.
The U.S. Over the Last 50 Years: A Snapshot from the 2014 Budget
http://conversableeconomist.blogspot.com/2013/04/the-us-over-last-50-year-snapshot-from.html
***The average math achievement score for a 17 year-old on the National Assessment of Educational Progress was 304 in 1970, and 306 in 2010. The average reading achievement score for a 17 year-old was 285 in 1970 and 286 in 2010.
***In 1960, 11% of those in the 25-34 age bracket were college graduates; in 2011, the corresponding number was 31.5%.
Cheaper labor, avoiding regulations indeed, I would add that it is also about diminishing the power of the middle/working class in general and creating/expanding the permanent underclass.
One question I have rarely seen addressed in these discussions is why does the economy have to be so dependent on consumer spending? The longer term goal of inflating assets is to get people spending, presumably at Walmart. This is not a sustainable strategy (economically or ecologically), it certainly will not help working Americans to increase the median wage. Are economists so devoid of imagination that they cannot conceive of product activity that does not include driving the SUV to Walmart to buy imported nonessential consumer goods?
I doubt that the US economy has always been so dependent on consumer spending. This seems like a relatively modern reality.
Krugman pontificateth:
“But while debt fears were and are misguided, there’s a real danger we’ve ignored: the corrosive effect, social and economic, of persistent high unemployment. And even as the case for debt hysteria is collapsing, our worst fears about the damage from long-term unemployment are being confirmed.”
I haven’t done my own bad attitudinal survey, but let’s say our managerial classes believe that 80% of American jobs are deskilling of a human being’s raw potential, and that 70% of people with jobs are actively being deskilled by them at any given moment in time.
The current assumption is probably that those who are “long term unemployed” were part of that deskilled 70%. The need to debunk that assumption is automatically part of such a job seeker’s task. That may mean actually leading with that as opposed to the “work experience” that makes up one’s now poisoned past.
This may be counterintuitive to most “job seekers,” but what we really have is an emerging prejudice against people who are employees. The only thing dopier than an employee is a unionized employee, which may be where this emergent prejudice originates.
But that’s only my second caveat about this line of thought about “prejudice against the long term unemployed.” My first caveat about it is that I would want to know the ages of the people involved.
Most of the people I personally know who lost their jobs during the crisis and haven’t gone back to work at all, as opposed to taking the hit and moving on from there, are those who were effectively “early retired” and, yes, I know that no social supports were put in place to effectuate that, although it was entirely predictable.
Given that said people are no longer earning benefits under the social security sacred cow, this means we’re not talking about their situation at all when we talk about employment or social security as presently constructed. Quelle surprise.
People a little younger than that probably need to make a midlife career change or at least find a way to sell themselves that way. Needless to say, no one wants that thrust upon them, especially if 80% of jobs are deskilling.
No one who has a job wants to think they’re actively deskilling themselves because what they want to think is that they’re already worth more than they’re paid, but it is entirely possible that the majority assumption about the primacy of “work experience” is wrong in the current “job market,” or at least limited.
Honestly, the only ways I’ve ever managed to evade being actively deskilled by my “jobs,” to the extent that I managed to pull that off, is by working above my “job
description” on top of my job.
Then we wonder why so many people work 60 hours a week, inhibiting the need to hire others. Or, technically, “we” don’t. But I have a long memory.
Nothing like feeling like you have to fight against your job, just to come out alive on the other side. Somehow, I suspect the damage “jobs” can actually do to you is something women know a lot more about. This is usually discussed under some other heading, but I think the idea that your “job” can hurt you more than it helps you should be mainstreamed.
The other group of people that I see being “long term unemployed” or chronically underemployed are people in their twenties. For a not unsubstantial portion of this age group, this has been a way of life for a few decades. This was already a new normal before the crisis.
The people who started Gawker did so because while they could readily land entry level media jobs, there was no place for them to go after that.
Personally, I wouldn’t have wanted to create something like Gawker, but I appreciate the spirit of the thing as well as the frank admission of how it came about. It’s good to talk about these things, instead of being made to feel like a failure. Gawker has also, due to the way political and economic events have unfolded over the past several years, become at times something a little more interesting. Is this outcome an entirely a bad thing?
So, how do you know if you’re looking at “prejudice against the long term unemployed” or prejudice against inert worker drones who aren’t thought to “add value” to the organization, which applies to us all unless we work overtime evading that construction, (like women who take office jobs)?
How do you distinguish “prejudice against the long term unemployed” from the new youthful normal in (un/under)employment, on one hand, and from age discrimination and a generalized “we don’t want to pay for anyone’s health benefits” on the other?
Here’s yet another story on social welfare benefits evasion by employers, who don’t want to insure workers under Obamacare:
http://chronicle.com/article/Colleges-Curb-Adjuncts-Hours/138653
Far better to wax hysterical and intimidate the “long term unemployed” than to examine the structural issues that have been rendering “jobs”– and the whole way we were raised to think about making a living– increasingly obsolete.
As far as Krugman per se is concerned, this a person who was a big fan of Obamacare because he wanted to punish the “free riding” uninsured amongst the underemployed and the self employed for allegedly showing up in emergency rooms and not paying their own way.
Before that he was a free trading global wage arbitrageur, despite the fact that we weren’t at anything like “full employment” in the 1990s when the “slacker generation” was stuck figuring out how to model the the new twenty something under-lifestyle into something that might look “normal” to their prospective babyboom hiring managers and “free trade” agreements were being fast tracked by Krugman Democrats in DC?
So, if I were Krugman I would belatedly change the subject to the “other guy” too. People who consistently advance government policy that we can accurately predict will destroy “jobs” shouldn’t get to wax morally self righteous about said lack of “jobs” later.
Krugman got exactly what he wanted. Krugman has a great track record working for the oligarchy. Whatever his interest in the deficit is, it is not about the “jobs” he helped destroy over the course of his career.