I’ve refrained from commenting much on the state of the economy over the last couple of years because it seems to have been largely irrelevant to the direction of many widely followed markets. While bonds, particularly the highest quality bonds, have continued to rally over time, par for what you’d expect in an economy facing deflationary pressures, on a day to day basis, bipolar risk on/off reactions have held sway. And even though there is no reason to expect anything better that a weak recovery in the wake of a balance sheet recession afflicting the world’s advanced economies, a peculiar tendency to look to ordinary recessions for comparisons plus undue faith in the confidence fairy has led many commentators to draw trend lines through improving data series and declare it to be a recovery. However, we seem to be at or may even have passed an inflection point, and policy makers seem remarkably unprepared to take action.
While the result may indeed be a technical recovery, with official unemployment at over 8%, and U-6, the broad measure of unemployment, showing more deterioration of late than the headline figure (it’s now at 14.9%), there was hardly much cause for cheer. Both in 2010 and 2011, improvements in economic performance that were hailed as real recoveries faltered. With youth unemployment high, working young adults saddled with high student debt loads, household formation low due to more multi-generational households and older adults contending with diminished wealth thanks to hits to home prices and retirement savings, consumers were not able to be the drivers of renewed growth unless their wage and employment situation improved in a marked fashion. And that just isn’t happening.
What seems to have happened in the last week is that enough “unexpected” data releases, accompanied by a “recession is on” call by the widely-read ECRI, have led some analysts who were on the recovery side of the fence to rethink their view. The ISM manufacturing index went into contractionary territory in June. Some commentators tried arguing that the weak jobs release of last week really wasn’t so bad, since it showed an increase in hours worked and more temp hiring, which they argued would be converted to permanent jobs. But a report by the National Association for Business Economics undermined that hope. Its survey showed that companies had cut their hiring plans. 39% of the respondents intended to add staff in the next six months back in March; as of June, that’s fallen to 23%. continuing bad manufacturing results out of Europe, an “unexpected” 0.5% fall in retail sales (the third monthly decline in a row, and April’s negative result was revised downward) show a broader picture of serious weakness (note Michael Shedlock’s early warning on a sharp falloff in auto sales). Similarly, we’ve been skeptical of reports of a housing recovery, based on widespread evidence of large amounts of “shadow inventory” (as in price improvement was due to manipulation of supply). That was confirmed last week by reports from CoreLogic and Realtytrac. Some analysts expected spending to get a boost as gas prices fell, but the one-two punch of a mild winter (less snow) and a scorcher summer means higher food prices, which may substantially offset the relief provided by lower fuel costs.
This grim news comes as the IMF trimmed its growth outlook a tad, but warned that “rapid policy action” was needed to keep things on track. Of course, some of the increased willingness to use the “R” word is the usual suspects, like Bill Gross, trying to increase pressure on the Fed to Do Something.
Nouriel Roubini is predicting 1.2% growth at best for the second quarter. Ed Harrison pointed out on his Credit Writedowns Pro service that manufacturing ex autos is already in recession and that inventory building on the basis of the expectation of continued demand is the only thing that is keeping the US out of an actual recession. We’ve had falling disposable income with households initially treated as a blip (they went into savings and/or increased credit card debt). But as Ed also points out, without a change in incomes, you eventually see the decline translate into a fall in retail sales. And that’s where we seem to be now.
The way out of it would be to have government spending make up the slack. but that remains anathema; indeed, DC is fighting over how much to blunt the impact of the so called fiscal cliff, the cut in stimulus that will result if Bush tax cuts and recessionary spending measures expire at the end of 2012. Even if the full 3-5% GDP hit is forestalled (my tax mavens point out that large sections of the tax code are renewed each year, so the drama may be a tad overplayed), the continued talk of a Grand Bargain suggests that bloodletting from an already weakened patient is still on. And this cheery scenario of course does not consider the big uglies lurking in the wings, like a Eurozone crisis of some sort (Creditanstalt 2.0) or an attack on Iran (even with a new pipeline reducing the importance of the Strait of Hormuz, it’s still an important choke point, and Saudi refineries are also within striking distance of Iranian missiles).
As I keep saying, it would be better if I were wrong, since I live in the real economy, but if you want a happy ending, you may need to go to the movies.
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Who the hell can afford to go to the movies?
The Revolution is being delayed by online porn anyway.
LoL! I’m beginning to think the online porn is being financed as a risk mitigation.
who even needs the movies?
I watched all of “Don Juan de Marco” on Youtube and Pirates of the Carribean on a DVD (all 3 of them!).
That’s the problem with the economy. All you need are machines these days, more and more, and people less and less.
there’s nothing at all for most people to do. So society has to make up stupid stuff, like marketing work or handing out flyers on the street or being a proprietary trader, just to give people things to do.
We don’t even need government spending to help aid a recovery. We just need the government to leave people alone! California’s fledgling Medical Marijuana industry was helping vacant store fronts becoming leased and occupied. Over 125 millions of dollars of state tax revenue was collected from the clinics, with far more revenue going to local cities and Counties.
Then, with people working jobs growing, selling, keeping an inventory, and selling the product, there were many jobs at hand. Not only did that mean increased consumer spending, but it also meant fewer people on Food Stamps and AFDC.
At first, Obama seemed to understand this. Then someone twisted his arm, or whatever, and now many of the clinics have been closed, with owners facing fines and even imprisonment. And some 3,500 people have lost well paying jobs, which will not be replenished any time soon.
The med marijuana users themselves have been told not to worry: if they have a valid prescription, they can obtain the product through a grower in the United Kingdom! So it can’t be that the government feels pot is immoral -they are willing to keep seeing that it is supplied, as long as that is done on an outsourcing basis!
Sheldon Adelson is to the porn industry as Exxon is to Global Warming.
If this recession comes, as it seems more and more likely is the USA going to have a recession every 3 or 4 years until debt levels are resoanable again? What folks here think?
Assume no major policy changes (just more of the same) to answer that one.
Dear Ricardo;
To this jaundiced eye, what is building up ‘over the horizon’ is more likely to be a big D depression rather than a small R recession. Espania already is wrestling with depression era unemployment, and set to impose yet more contractionary economic and financial policys. (What was the Spanish unemployment rate during the 1930s anyway?) The rest of the west, with the notable exception of Iceland, is following the Austerian ‘no trumps’ bid. What could go wrong?
“If this recession comes”…not being much of an economist, I simply cannot understand why anyone would buy into “The recession is over, they recsssion is on, the recession is over, the recssion might come back” scenario.
Out here in Reality Land, we have been in a Depression since Oct. 2008, at least, and it has never stopped, and is just slowly getting worse. I think it is “The Quiet Depression”, because individuals do not want to discuss their personal financial crises. Most people I know are hanging on by a thread, if not quietly flaming out entirely.
Just because the MSM and their enabling pundits with their fancy analyses and hogwashed charts keep the con going, doesn’t mean that the facts aren’t known by the rest of us.
A rose by any other name, is still a rose, and so is a Depression.
At some level, that’s a state vs flow problem. At some level “recession” is defined as the economy activly getting worse. So the “recovery” starts as soon as thing stop getting worse. And by many measures they have. But they also haven’t come close to returning to the heights that they were operating at before the recession.
Officially, the recovery is on until Jamie loses his job.
Dear Ohmy,
You are sure on target about the depression level stress. The lack of push back is due to the lack of union strength and a corrupt Democratic party. Students are way over their heads in debt and have no one to follow. The professorate is bought off and irrelevant, finding word play so much more exciting than political engagement.
Your comments are matching my thoughts today, as I was thinking the surest indicators of the Democratic Party having ceased to exist is that President Obama, Chris Hayes and Noam Chomsky go around the country acting as the apologists for Wall Street (and yup, whenever they claim it’s “the culture’s fault” or “it’s the fault of the sysmtem” they are excusing some mighty big crimes.
Noam Chomsky who actively supports the Occupy Wall Street movement IS NOT an apologist for Wall Street.
Noam Chomsky apologising for Wall Street? I would like to see clickable links to stories about that.
As these others say, Hedges and Chomsky do not apologize for WS-quite the opposite.
not sure we really recovered from the 2001 recession, the jobs number recovered, all that ever happened was customers going into debt, to rescue the economy, while business held back
I agree that the slide to this economic doldrum was from the turn of the century.the tech bubble burst,9/11 put a nail in the coffin.people might not have faced it yet.since then it has had bubbles,speculation,market manipulation and political equivocation pretending that it wasn’t a cliff we are heading for.We are stuck in the monkey trap.Our lives are dictated by large financial intrests.They don’t want to let us get on with anything they can’t make money from.So the myriad of solutions to our collective predicament are deemed unrealistic.The experts have deemed them so.while other experts offer up…quantitative easing,the age of information jobs,homeland security,and a fascist dream of a healthcare sysytem…..
“the enemy of knowledge isn’t ignorance,it is the illusion of knowledge”
It’s simple. They shipped our jobs overseas. In that sense it’s a “structural” depression. The debt binge masked it for awhile, is all. Till someone convinces me otherwise, I’m saying that what we have now is the result of the deindustrialization of the US.
If we slide into a recession in 2013, that would be fairly normal for business cycles during Industrial Depressions: a severe financial crisis, a recession longer than a year, a sluggish recovery, then another recession.
That is, an Industrial Depression often includes a relatively short, and/or sluggish, recovery bookended by recessions. Certainly the Great Depression of 1873-1879 was one extended recession, but in the 1890’s we had the Panic of 1893 and the Panic of 1896, and despite the recovery between, we stayed far enough from full capacity utilization to describe the whole period as the Great Depression of 1893-1896.
And we had the 1929-1933 Hoover Recession and the 1937-1938 Roosevelt Recession, with the New Deal recovery in between far too weak to right all the broken balance sheets left by the debt explosion of the 1920’s and then the bank runs that followed in 1930, 1931 and 1932.
YS:” … even with a new pipeline reducing the importance of the Strait of Hormuz, it’s still an important choke point, and Saudi refineries are also within striking distance of Iranian missiles.”
So are the new pipelines.
Giggle.
If we get to the point of fending off “Iranian missiles,” people’s priorities will be less Disney Cruises and more dried food. Pipelines and refineries probably have much, much more vulnerability to non-state actors (which would be damaging enough), but combat operations between the US and Iran would finally bring the war home to Americans.
There are plenty of of mundane impediments to liquid fuel production that we are still awaiting. Aside from infrastructure issues, a large oil field could crash precipitously in the short term, which would disrupt production as much as any missile. Probably moreso. Who do we bomb when that happens?
“If we get to the point of fending off “Iranian missiles,” people’s priorities will be less Disney Cruises and more dried food.”
Well put. And I think that’s the exact reason we are now, what, seven years into this crisis already?
Israel wants to surgically strike. The US says, hold on little buddy, let us reconnoiter the situation first.
So we recon the situation while building enough striking power in the region to threaten the Holy Trinity itself, but the intell coming back is consistently crystal clear, there is no feasible way to “take out” Iran before they launch their missiles.
We are stymied. We know it, and Iran knows it. Unless we’re willing to go nuclear, Iran can pee on our parade indefinitely.
Here’s hoping our parade continues to get peed on … and itchy trigger-finger Israel keeps their pistol in their pocket.
This is ridiculous. Ask yourself when the last time was Iran made an offensive first strike against another nation…something like two or three centuries ago. Not likely to happen. On the other hand, when was the last time the U.S. or Israel made an offensive first-strike against another country?
I think he’s anticipating a US or Israel first strike and remarking that should that happen Iran can and will counterpunch effectively.
I tend to believe that we have the anti-balistic missile capability to fend off Iranian missiles headed our way: If an attack happened which I tend to doubt–Too much disruption to the global economy and American domestic political exhaustion from Iraq and Afghanistan–the bigger problems would potentially be suicide bombers in western europe and possibly within the borders of our country and Iranian missles hitting the Saudi oil fields and driving oil prices through the roof.
I think we can tolerate a nuclear Iran (but our political leadership won’t say so–AIPAC contributions would dry up–and the Israelis are a question mark: Their government is divided on the issue, but leaning toward not attacking, while their military doesn’t want to do it eventhough they speak of their capability to do so.
Dear Max424;
As an aquaintance of mine who once worked in the Pentagon put it, “The key to Arabia is water.” Those desalinization plants are much more important than any oil installation. Everything else depends on them.
Don’t doubt it, ambrit. I think there is something like one hundred desalination plants located on the peninsula. If you knocked out just half, it would certainly create tremendous hardship, and possibly even economic ruin, for the half dozen –or so– countries located there.
But if we’re talking only the economy of the US, then the true worry would be a missile strike against the Kingdom’s oil facilities and attending infrastructure.
Iran can shut down the global economy, with one quick missile barrage, anytime it wants. That is the true source of high tension –for everybody but Israel, that is.
All the other crap is just smoke being blown up the asses of the sheeple … and the sheeple’s, sheep-like media.
Think you seriously underestimate US first strike capabilities already in place, and overstate Iranian capabilities to respond – every square metre of Iran has been under satellite surveillance for decades, and it’s already been stated officially that Iranian sites targeted exceed 10,000. The US can readily hit double that to follow up.
In addition, the world is awash in oil, and will be for several years at least. Any damage (and it would be minimal) to Saudi production could be handled.
Obama would of course prefer Iran capitulate – after Syria is routed. But if that hasn’t happened by Spring 2013, Iran is back front and centre assuming Netanyahu is still in charge. Obama, quite obviously, is not at all averse to major violence. The political calculation was “hold off until post-election”. With Obama back in, I would expect Iran to (again) seek a practical, real compromise. It will all hinge on whether Israel is interested in peace at all. The harder Iran is squeezed, the more difficult it will be for them to climb down from their position. It’s not at all clear at this point if anything Iran proposes will be treated seriously, or if the planning for this war is now irreversible.
Dear Fiver;
The flaw in your arguement is that you assume that the oil market is strictly logical and mechanistic. The elites have always shown the tendancy to ‘take advantage’ of alarums and shockkus for their own personal gain. The psychological shock of Mr. and Mrs. Market realizing how fragile he Middle East is will be enough to trigger a Fear Surcharge in the energy sphere. Not actual flows, but anticipated flow restrictions will drive the market. As for a nuclear Iran, well now, we already have nuclear India, Pakistan, and Israel, not to mention the Bear to the North. Oh, and what about Irans big oil trading partner, China? This is no simple smash and grab heist. The Great Game has been a favourite pastime of Shahs, Kings, Emperors, Emperesses, Prime Ministers et cetera,for ages.
“Think you seriously underestimate US first strike capabilities already in place, and overstate Iranian capabilities to respond…”
I NEVER underestimate US air power, as I think the host of this blog would attest.
That said, the US can eliminate only tiny fraction of Iran’s vast array of missiles with a conventional first strike, no matter how comprehensive that strike is.
Here’s a decent primer on Iran’s military capabilities.
http://www.theoildrum.com/node/8956
“In addition, the world is awash in oil, and will be for several years at least. Any damage (and it would be minimal) to Saudi production could be handled.”
Nonsense. One thousand missiles plowing into Saudi oil facilities and the Kingdom is no longer an exporter.
The resulting oil shock would be at least 3 to 4 times greater than the 79-80 shock, when barrel prices more than doubled.
One thing is clear (to me at least), we are literally chomping at the bit to attack Iran.
If we felt assured that we could eliminate a majority of their missiles with a first strike, we would strike.
But we are not assured.
A direct US attack on Iran is inconceivable, for the simple reason that Russia will not allow it. The Cold War is not entirely over.
The insane lunatics in Israel might attack Iran, but if they do the US will have to back off and pretend that it’s not involved.
Reply to Ambrit,
Nobody on NC has argued more strongly that such phenomena as oil “prices” and “markets” in general are grossly manipulated on behalf of the Wall Street/Washington (and its junior, junior London partners). I did not say there would not be a “shock”. What I did say is that it could readily be mitigated/absorbed. I will add that any “shock” will of course be managed in whatever manner the criminal class who run the US determine is of most benefit to themselves via their primary tools, those entities we still absurdly insist on calling “markets”.
Reply to Max424
1) The Oil Drum is hardly the “go-to” info source on the subject of Iranian military capabilites. The piece you cite is reminiscent of so, so many I’ve seen in the past hyping up “enemy capabilities” going back to Kennedy’s frigging “missile gap”. Recall Gulf War I (or II, or the entire dumptruck of lies wheeled out for the “war on terror” in general) for a more recent instance – that first Gulf War was a massacre, not a war. I’ve followed Oil Drum off and on for years, and find they are so heavily invested in anything supportive of the theme of permanent “oil crisis” as to be necessarily taken with a major grain of salt.
2) If there was any chance AT ALL that a large portion of Saudi production could be taken out, neither Israel nor anyone else would even dream of real war. As you note yourself, quite the reverse is the case: read even Haaretz (the once “leftish” paper) regularly and you’ll see that Israel has no shortage of senior current and former government and military officials keen for a go, many of whom have stated publicly Israel is quite capable of handling Iran on its own (of course on the assumption the US is immediately “in” should they fall short, but still, the point is made). The very few high-profile officials who oppose a strike all say “for now” (i.e., Iran CAN NOT have a nuke).
Here’s a counter piece to yours:
http://shashankjoshi.wordpress.com/2012/04/02/iranian-retaliation-and-arab-oil/
The entire document is available in pdf. Note the arguments explicity dealing with just how difficult (3,300 missiles) it would be to impede just 1 major Saudi stabilization towers and reduce flow significantly. Other targets are even harder to take down for periods extending into months.
Do NOT get me wrong. I detest the entire notion of any attack of any kind on Iran – they quite rightly ought to pursue a nuke given the power realities in the region, where things like the Israeli sneak attack in 1967 and subsequent Occupation, or US destruction of entire countries, are considered “just” within the appalling context of US/”Western” Imperial powerthink.
There would still be a “schock” of course – but a very, very profitable one as per the usual suspects.
So Ambrit. Just to recap water. The Khyber Pass area and the finger of Afghanistan into the highlands of western China and up into almost a no-man’s-land of the Himalayas. Geography maps and resource maps are really 98% of the important information. All the runoff down into Pakistan last year causing unreclaimed devastation. All the water that could have been used productively. And Saudi Arabia going dry.
Sto, “Just to recap water” — recall:
“AARONSOHN’S Maps: The Untold Story of the Man Who Might Have Created Peace in the Middle East” by Patricia Goldstone (Orlanddo, etc., Harcourt, Inc., 2007).
Then came Lawrence, the “savior.”
By my experience, contracting, temping, bodyshopping is not only here to stay, it’s extending its reach further and further into the job market. Contract jobs mostly don’t lead to direct hire.
Several years ago, I was offered a direct hire from a contract, but I couldn’t afford to take the pay hit and the direct hire was into another contracting company in one of those Byzantine legally-independent-company-wholly-owned-by-humongous-multinational arrangements. A wholly owned, and controlled, but technically, legally separate company entirely devoted to supplying bodies to other wholly owned, and controlled, but technically, legally separate companies under the grand direction of the (German) mothership. What I saw was one enormous pool of money sloshing around among wholly owned companies. And you have no idea, or maybe you do have an idea, how absolutely crappy the service attitudes are when people understand that they’re servicing captives. In these kinds of arrangements, certainty breeds disregard.
But I digress. Temp labor is another responsibililty dodge that companies have eagerly adopted. It puts employees into the same category as rented equipment–which they are.
We’re leading industry…
Our company is in a large office suite complex, about 20 small companies, and I was talking to the manager the other day. She said that ALL of her tenants had let their leases expire and were going month to month. They are ALL waiting for December to decide whether to move, stay, or close up shop. In the meantime, none will hire.
I don’t think the BLS can fudge the numbers enough to make the next 4 months look good for his excellency, BHO.
I’m negative neutral, here, I detest both major party candidates. But the economy isn’t going to improve with either. It’s the social services and cutting back/off of that will tilt slightly this way or that. The war on women and on the working class will continue unabated: the Republicans will lead the charge, with a few Democrat confederates, and the Democrats will wring their hands and do nothing to counter.
Tell me about it..The state legislature of Illinois has voted against the poor once again. Dental care has been removed under medicaid. The plan is fairly simple, deny dental care, eventually the poor won’t need SNAP benefits, how do you eat without teeth? The politicians in Illinois, (I refuse to call them public servants) are the scum of a pond, the slime on a rock…….
Corporations and private contractors ravenous at the taxpayer trough while the weakest of humanity live under bridges and in cardboard boxes
Dear CB;
I may be ‘preaching to the choir’ here, but, rented equipment doesn’t have the ability to walk off the job, or organize to strike, much less actually battle the employer, or his goons. It’s all a matter of ‘consciousness’ raising. Right now, Americans are too frightened of losing what they ‘have’ to fight. When the Austerian wave washes them clean; then they’ll have no more excuses.
I could agree more with this. The grimmer things get for the working class, the more they’ll be willing to question and come to the conclusion the capitulation doesn’t work.
Right now, the American worker is playing defensively and losing. Time to go on the offense en masse.
I couldn’t agree more with this. The grimmer things get for the working class, the more they’ll be willing to question and come to the conclusion that capitulation doesn’t work.
Right now, the American worker is playing defensively and losing. Time to go on the offense en masse.
People will hate what condemms them to misery, but they won’t know what to replace it with. Only organizations, which represent different class interests, can attempt to win people over to their programs.
Just as Ives said that Hollywood is for happy endings, there is no guarantee that the “good guys” (your class interests) will prevail.
Well, exactly. This is what usually happens. Mass public anger guarantees the overthrow of the existing government, but that usually just means that some other thug will take over.
The Communist Revolution in Russia was hijacked by the Bolsheviks (the smaller and less representative group), and ended up in the hands of Stalin.
Despite that, it was still an improvement over the Tsars — but it sure wasn’t what people were looking for when they backed the revolution in the first place.
This is typical, historically. Sometimes it goes even worse, but usually that only happens when there’s foreign interference (as in Afghanistan, Iraq, Vietnam, Somalia).
By “even worse” I mean “degenerates into decades-long civil wars”. Compared to that, the rise of a new dictator is better.
The crappy attitudes of those temps in many cases are provoked by bad treatment from management and in some cases permanent co-workers. They know they can get away with it because the temps don’t have the same rights as the permanents of going through a bureaucratic HR process to defend themselves and can be kicked out the door at the drop of a hat or an indiscretion.
Its not just corporate temps. Federal government is full of contractors–the number of non defense federal employees is not much chaged from 1970. Its a bunch of contractors on 1 year contracts with option for renewals for 4 years. “Consultants” and contractors are glorified temps. Go to any federal agency in D.C. and at times the contractros outnumber fed employees 3 to 1. The benefits suck (3 weeks PTO) and as feds retire often the position becomes a contractor gig. Its everywhere…
Isn’t it the same in “academia” – following the “Private-for-profit” model of Phoenix UniversityNot and such?
It is. At the private for profits the instructors (or learning facilitators at Kaplan of the WAPO) earn 1500 per course–and they have to suck up weeks of unpaid training. Unis now rely on adjuncts for up to 60% of teaching and they are treated abysmally. It is bad everywhere……and going to get worse.
$1500! Wow, those are 50% better than … oh, wait, you are probably talking per semester per class, not per quarter per class. Never mind, that’s the same rate.
4hr class, 1hr “office” once available to cover some of the prep and grading, over the past three years half or more taken by additional admin loaded on top, 2-4hrs prep/grading required to do the class right. The only thing more horrendous than teaching at one of those where people let themselves be exploited and work 8hrs for 5hrs pay is teaching at one where they don’t, because they’ve cut down actual teaching/feedback/prep time to the time paid for and the students come into your class without having acquired any learning skills in any of their previous classes.
Yep. Phila Navy Yard being one example. I can’t defend the older direct hire arrangement as better, I knew too many of those people, but these days the Yard is mostly contractors. Given the conditions of employment under the older system, taxpayers may be getting more for their money today. The M-I question for me is whether the money should be spent, at all. It isn’t helpful to do something more efficiently that shouldn’t be done at all.
The crappy attitudes I referred to are the result of servicing “customers” who can’t go elsewhere: by corporate fiat, for anything an independent-but-completely-controlled company can supply, that’s who gets the business. There is a stagnant pool of money endlessly circulating in these arrangements and I’d be interested to know what percentage of revenues within each independent-but-completely-controlled company is pool money and which from “legitimate” outside customers.
I had to deal with a leasing “company” and at the managerial level, the indiffernce was, um, notable. The manager just disappeared. Maybe he was putting his energy into the customers who could take a walk if service wasn’t to their liking, but he certainly wasn’t perfoming for us.
CB, can you say “piece work in perpetuity?”
Silicon Valley is full of this kind of behavior. All those shiny wonderful fun tech companies have back office operations run by temps and contractors from bodyshops, many of them here on H1b visas.
Of course, the economy has been restructured to more and more temp jobs, and contractor jobs, and fewer and fewer fulltime, year-round employment positions, with each and every “jobless recovery.”
Back in 1990, the French government most honestly reported that they were restructuring their economy so that one-fifth of the jobs base would be temps — later, when the vote for equal benefits and pay came up in the Euro Community, it passed because France voted for it, while the UK, Germany and Denmark voted against!
So, when looking at real numbers and hardcore data, there’s something like one-quarter the actual number of full-time, year-round employment jobs today in America compared to the 1980s, and we sure have a larger population today?
Real unemployment, to correlate correctly with the Census data, should be from 22% to 28%, at least (1 out of 2 Americans at the low-income, poverty or below-poverty level).
We live in a place where the government prints up money at will and then bullies other countries into taking it in exchange for things like oil, goods, and services. Since others around the world are finally starting to get fed up with that system, I should think that the US economy from here on is screwed no matter what happens.
As for increasing government spending during a recession… well that is the standard Keynseyian prescription. But sadly, when the real, physical economic outpout of the world is collapsing due to actual resource constraints, Keynseyian financial trickery will at best stave off the collapse for a year or two, at the expense of drastically compounding it. But then I guess Dimitry Orlov was right: people would just prefer to live extravagantly right up till the last moment possible and then sit quietely in the dark in dark clothes.
Sir;
I believe you are being diliberately obtuse. FDR was facing not only a financial economic crisis, but a nascent civil disturbence. He saw it and acted, to preserve the Capitalist system. The present bunch of goons are nowhere near as clear sighted as FDR and his Brains Trust were. The proof that Keynsianism worked is that we’re here and able to argue about it all. What if America had collapsed into a crypto fascist state and Hitler had had his way in Europe? (There is an entire flavour of science fiction fantasy devoted to such speculations.) The best being, Phillip K Dicks’ “The Man in the High Castle.” Ward Moores’ “Bring the Jubilee” runs a close second.
The present day goons unlike FDR have a massively advanced surveillance and police state apparatus, CIA, NSA, etc. to keep tabs on and disrupt the institutional opposition to the corporate state, so it saves them the trouble of increasing the size of the crumbs to cool out the street action. No raised consciousness necessary.
Agreed and I don’t think the power of internal state security is fully appreciated. The first group to seriously challenge authority will find out what Homeland Security was actually established to control. State Capitalism will not be kind.
Jim
The power of our internal security forces is essentially nil.
They’re not *competent*.
I don’t deny that there *have been* powerful internal security forces in various countries in the past. But here and now, we have a *large* and *violent* internal security force — this *is* pretty much a police state — but they are *really really bad at knowing who to aim their guns at*. Which means that they are extremely powerless.
The people who are actually organizing to change things (and I’m sure they exist) probably aren’t afraid of the internal security forces, because the internal security forces are obsessed with harassing people who chalk on the sidewalk or altruistic long whistleblowers — or the internal security forces are simplybreaking down the wrong doors.
Now, this means we’re heading toward a sort of dystopia, but it’s not the totalitarian dystopia, it’s the Kafka-esque comedy-of-errors dystopia.
Agreed. They are getting rid of the few crumbs they threw average Americans over the last few decades:
1. Social Security
2. Pension system. Many people got punked and lost their pensions but this was a good system for the people that benefited.
3. Public Education System
4. Public and Quasi-Public Utilities like power, phone, and cable. We pay more for fewer services than in the past.
5. Public parks–America actually has a lot of good federal, state, and local parks. These are declining.
These were the goodies the capitalists dispensed to stave off socialism, imho.
Now the deal is being walked back and we will be like Africa before Kadafy helped bring an African owned satellite system to Africa–paying rents to colonial masters.
Walking the deal back with the death of a thousand cuts with change that I can con you into believing or the meat cleaver approach with the Smooth Mormon.
And some areas seem designed to blow up. The pension, social security, medicare, and medicaid systems all take present money and promise services/money in the future.
Guess how that ends up for the people that prepay?
Removing the goodies which were provided to stave off socialism is *stupid*.
The automatic popular reaction is to demand socialism, and it will happen quite soon, much to the surprise of the 0.1%.
Of course, it’s hard to actually *get* socialism, but it means that any populist-talkin’ would-be-dictator can mouth the words of socialism and ride them to dictatorship. And you can bet that such a dictator will happily murder all of the useless, worthless old elite; such warlords are practical men.
In fact, most of us will probably breathe a sigh of relief when the dictator takes over, because a bunch of things will get *better*.
It’s only after a few years that people will begin to complain about what we will have lost.
No kidding. With an overall “security” budget well in excess of a $trillion, and the lines between internal and external “threat” effectively erased, the idea of any serious challenge to the existing elite power is very nearly fantasy at this point. Drones, for instance, are being deployed all over the US just as quickly as all over the planet.
It totally amazes me that most educated people are still all but oblivious to what truly is an existential threat to democracy, civil liberties, a functioning legal system and much, much more. If a society accepts great evil done unto others in its name, it cannot but expect such evil to come home to roost:
http://www.commondreams.org/view/2012/07/17-3
http://www.commondreams.org/view/2012/07/17
“(FDR) saw it and acted, to preserve the Capitalist system.”
Now that is comedy gold.
I’ve come to believe it’s true. FDR understood that the system was so stressed it could blow up completely and end up, finally, in another systemic universe. So, he did what he could with softening social and financial hedging to relieve the pressure and ensure that the prevailing system prevailed. FDR was an eminently practical man.
ambrit, where would your blood pressure be without freedomspeech at NC?
NC for the health of the nation!
Dear LBR;
I’ve always argued that NC is a public utility. Mz Smith as Chief Epiphanophant to the Nation. There, that’s worth a ten point drop all by itself.
Love, Ambrit.
Other countries are fed up with a fiat system? That’s silly.
You want to go to a gold standard or something?
As far as government spending . . . if the spending is done in a way that goes into the economy for the bottom 75% then this is good.
If we “printed” dollars for jobs, or to pay for social security, health care, and other ‘good’ things . . . I welcome any inflation. We just “printed” tens of trillions of dollars to give to bankers. This is bad printing and hardly resulted in much inflation. But if we gave $10 Trillion to the people, average people, it would be good.
Blaming the fiat system is misguided.
“But if we gave $10 Trillion to the people, average people, it would be good.”
Jeebus, good for whom?
What’s so hard to figure out?
It’s good for the people that get the $10 Trillion, just like it was good for the rich criminals that got tens of trillions of dollars that were printed since 2008.
And unlike that stimulus, a people’s stimulus would end up in the people’s pockets, benefiting the people. See?
For instance, printing money on Social Security would more broadly distribute stimulus to the people in a much fairer way. The beneficiaries would spend these dollars in the local economy. And noone should have to pay taxes for Social Security (or Medicare/Medicaid)!! No withholding taxes. We should print the benefits directly (without passing through a BofA debit card for instance). Think how stimulative this would be for local economies if working people (and the businesses that hire them) won’t have to pay employment taxes (I presume this would mostly benefit small business as larger businesses may not be harmed too much by withholding taxes???).
Same thing with health care spending. Instead of throwing us to the wolves in the rigged ‘private’ market, we would all be better off if health care were provided/paid by the government. This is beneficial ‘printing’ of money because it goes to the broadest number of people. Now bankers and insurance companies are parasites sucking undue profits from the body politic.
Printing on these two areas alone would be what? A couple trillion a year (just to throw my best guess out there)? Then let’s throw in a $1 Trillion/year jobs program (with a minimum wage of $16/hr job guranteed for all). That’s about $3 Trillion a year.
We would be better off doing the above over 10 years instead of propping up the banks using tens of trillions of dollars.
Btw, I’m also interested in doing forced write-downs like someone like Mish would suggest. It sounds like Mish would use government bankruptcy laws (or similar laws) to break up to the TBTF banks. But I say lets’ simply nationalize the 14 or so TBTF banks by seizing them via eminent domain. Let’s have one hearing where we determine the value of these monsters and pay the owners whatever they’re worth. If they are worth a negative value then let’s pay them $1 and be done with it. Wipe out these banks and put in the old requirements for banks.
And let’s have a national contest for the citizen that gets to deliver the $1 payment to the banks . . . on behalf of their government.
Now that’s a lottery I may want to participate in.
Mr. Dimon, may I present the full and final payment for your piece of shit criminal organization. This is in lieu of the right proper hanging some want to give you. Good day sir.
?
I think I may have made the italics run wild . . . don’t know . . . this is what I get for trying to be fancy.
Me, for one. I’m on SS and losing my savings month by month to keep a roof over my head, necessities paid. I’m close to tapped out and some cash from the government that spends trillions floating the big financial players–and deploying the military/security state–would be just the ticket.
At last reading Paul Roberts’ _The End of Food_. Lately fiat currency has allowed the US to provide support to the big international food players, and they could fall back on that support when they imposed fiat wholesale prices for food commodities. They could change strategies as they needed. The tilt of the local “playing fields” where agricultural development policies had to work could be flipped from extreme to opposite at a whim. Policies that might open some space between producers and bankruptcy get scambled before they can work. People might be a little peeved about fiat currency.
Thanks. I guess my statement above may have been too absolute. I can see problems with a fiat system.
I just have bigger problems with having a private central bank and issuing debt and going on a gold standard. I would rather the government issue and spend its own fiat and do so in a much more egalitarian way. The Austrians would get rid of the private central bank but impose a gold standard, no?
But I am interested in learning more about alternative money or exchange systems . . . etc.
I’m intrigued by a theory (way above my competence, but intriguing) that the discovery of American gold caused a huge European expansion and the Industrial Revolution. The argument would go that Europe had operated since Roman times with price levels at which the existing supply of gold and silver at the customary velocity was “used up” paying for the status quo level of economic activity. A new supply of money that no-one had had before made it possible to do things that no-one had done before, with the results we see.
Fiat money would give a society the chance to try similar things without having to wait for the discovery of a New World first. Problem is to make sure society sticks to doing the good things.
But sadly, when the real, physical economic outpout of the world is collapsing due to actual resource constraints, JGordon
It isn’t. What is collapsing is aggregate demand because people have to pay down debt to what is essentially a government backed counterfeiting cartel.
Ever hear of Occam’s Razor? Your reasoning needs a shave?
But whose demand is doing the collapsing? Wealthy country middle-to-lower-middle class demand is indeed constrained, while upper income and the poor carry on pretty much as per. That wealth can readily be redistributed internally assuming some smattering of moral fibre and political will amongst the educated, but
There is no way, as in NONE, that the wealthy “developed” world can remain this “wealthy” vis a vis the “developing” world without maintaining ongoing, massive, cheap extraction of the global poor’s resources and huge value multiples delivered courtesy of labour and environmental arbitrage. Any future that is even reasonably fair, just, etc., globally means anyone in the top 40% (at least) in the “West” will have to ratchet down their expectations in proportion to their “wealth”, therefore consumption as currently understood.
It is precisely anticipation of this rather obvious, looming scramble for the global “high ground” of assured, affordable resource wealth, most certainly including assured supplies of food, that now shapes policy in all major global power centres (US, China, India, Russia – note Israel (apart from its considerable influence in the US), the UK, France, and perhaps Pakistan have global power “reach” only insofar as they could threaten some lunatic form of nuclear hari kari capable of setting off nuclear winter).
JG, correct, they continue to believe “the won’t come for me.”
You’re repeating the same silly nonsense about Keynes, indicating you’ve never read his works.
Keynes was only about tweaking the economy during especially bad times, and most of his points weren’t adopted at Bretton Woods, especially the most fundamental monetary ones (basing sovereign value and wealth on a basket of resources, etc.).
Keynes was definitely not about restructing the entire GDP based upon a Fantasy Finance sector. (And I’m not a particular fan of Keynes, nor capitalism.)
The last crisis on this scale required the stimulus of World War II before the system stabilized. Remember, New Deal policies were not sufficient to restore demand. This particular downward spiral looks set to continue for a much longer period than 3 or 4 years.
Bear in mind that US financial elites have a much stronger committment to class war than to economic recovery. The compulsion to destroy wages and any remaining social rights is overwhelming, and will ensure the decline continues.
The great depression can’t be broken down into 2 declarative sentences with no supporting facts.
Try again.
Actually, I thought Austin F summed it up pretty well in two.
After 6 years of extremely tepid New Deal “spending,” unemployment was still at 17% in 1939. It wasn’t until the real stimulus kicked in, the pre-war build up period that began in 1940, and expanded all throughout the first 11 months of 1941, that the unemployment rate finally, and begrudgingly, dipped below 10%.
In 1942, government spending was increased 5 fold, and that was that. Within three months, poof, no more unemployment, no more depression.
Agreed. This country is too full of misers, ignoramuses and the selfish rich to ever pull out a true stimulus; short of the “need” required by a massive war. And given there is no one to threaten us like Germany did in the late 30’s to early 40’s, it looks like we’re in for one long-ass depression. After another 4 years of stagnation and failure, there will be calls for government to “do something”, and it will make a weak stab at some kind of stimulus that will be ineffective and we will continue to roll along in misery and privation. I don’t really see any end in sight for this mess. And if global warming fulfills its promise and peak oil really hits we are in for one long great! depression.
YF, our Masters have perfected War Profiteering for the 1% at the expense of the 99% — no more need to share the spoils of war with We the People, except for the Deep South and Deep West M-I States that offer cheap “White” labor.
“All profits for the .01%+.99%Agency; All losses for the 99%. – TINA”
A link to that War-for-Profit “Deep State” has already been provided by another, repeated below:
http://aangirfan.blogspot.com/2012/06/alan-turing-and-deep-state.html
As an addendum to LeonovaBalletRusse’s comments,
The Master Class has always declared the wars; the Subject Class has always fought the battles….
—Eugene Debs
Military spending leading into ansd thru WWII was new money into the economy. Military spending today is old money poured out of the economy for decades.
I am thinking we’ll see wars of common consent, or, luke-warm wars, like Iraq and AfPak but with another major power instead of the Taliban, where major economies agree to fight one another with a lower level of lethality, with things like some production centers off the target table. Like Vietnam, except only battlefield soldiers can be killed, but workers spared, with controlled population rotation through both. Africa a good place to do this. Not to think it’s a good thing; it just seems somehow ‘rational.’ Seems sci-fi, I realize. Combine Brave New World with 1984.
To add to Max24’s comment, New Deal spending was significantly offset by cuts at the state and local level (sound familiar)? So the net impact was blunted, and was not sufficient to pull the economy out of its ditch.
Government jobs per se are not needed; government money IS. Remember, George W Bush sent out “stimulus” and I don’t recall anyone complaining about “big government.” How could they? Sending out money requires no increase in the size of government. And did anyone send the money back?
“stimulus checks” that is. And why hasn’t Obama copied that?
Just so everybody knows, I’m not in favor of going to war to stimulate the economy.
Economically, WWII is instructive because, clearly, it was the spending that got us out of the depression, not the war. The war was wasteful. We spent numerous billions –when billions meant something– on killing machines that at war’s end, we immediately scuttled, abandoned, trashed or decommissioned.
I’d rather spend our money on something that is lastingly useful, like wind farms. I was driving by one the other day, and looking up, I thought, Damn, but those are some bad ass m*therfuckers. If one of those puppies fell it would wipe out whole rural communities.
Just kidding. I was really thinking, Look at those big, beautiful aerodynamic creations. Those monster turbines sit like noble sentinels, guarding our valley passes against the influence of people like the Koch brothers, and the insane fracking lobby.
I felt a kinship. Man and windmill … vs the Evil.
Max,
I think flattening the entire competition while bleeding the Russians dry just might’ve had something to do with the “success” of FDR/Keynesian economic policy – no surprise, really, given planners were drawing up the subsequent “American Century” well before the war started.
Consider how effective the policy would’ve been viewed then or now had the US been defeated (little chance of that, btw) and then “contained” in its own territory with an enormous, defeated military to welcome home.
There are a couple of very big unstated assumptions that underpin this particular historical argument for Keynesian policy – the liberal/”progressive” nostalgia for their now almost mythical Golden Age is highly selective. The “We’re all in this together” (except blacks, or aboriginals, or poor whites, or women in many respects, or..) temper of the times lasted roughly as long as the advantages that total economic dominance wedded to historically unmatched military/geopolitical power brought to domestic corporate and institutional elites. Ever since oil (Carter) and Japan/Germany (Reagan) re-introduced non-Cold War competition from the rest of the world, the socioeconomic portion of that “We” has been relentlessly undermined as the moral/ethical character of the same elites that can so blithely destroy most of the Muslim world come more and more to see their own populations as nothing more than objects to be “managed”. I see no chance of actually resolving the underlying causes of this gathering global failure for the majority of Americans that does not entail ditching the Empire.
Good analysis,
I am just wondering if this is a big one or there are going to be several small ones inside a general depression.
Anyway, at some point the popular pressure will be huge and something radical will be done even if it is just to preserve the system for a little while longer.
Some badly concocted debt jubilee will be used? That would be my first guess.
At that time, the Federal Government had a VERY clean balance sheet. The propaganda of the day bragged that the US had “the world’s soundest government finances”. Coming up with the money for a “stimulus” on the scale of WWII today in our current debt situation would be a completely different ballgame. If possible at all, the likely side effects would probably include a nasty bout of hyper-inflation.
You mean how the U.S. “printed” tens of trillions of dollars from 2008 to now to give to the top 1%?
Where’s the nasty inflation?
I say we simply print 1/2 of that and give it to the bottom 75% instead of rich criminal bankers.
Why do you hate America? :)
You answered your own question. Since all the “stimulus” money so far has gone to the top 0.1%, there has been no hyper-inflation – except in ultra high-end real estate and the kind of art “masterpieces” that the 0.1% like to collect. Didn’t some hedge fund scumbag just pay over $100 million for “The Scream”?
IF a universal bailout was combined with a ban on further credit creation (a 100% reserve requirement for the entire banking system) then the bailout could be metered to just replace existing credit debt as it is paid off. Where then is the price inflation risk?
Well, and home prices and commodities and health care insurance and food all seem to be rising because of this stimulus–or higher than they would otherwise be.
If we did bottom up stimulus and no stimulus at the top I don’t know how different it would be, and it may even be better (like similar food prices and lower house prices?).
Bottom up stimulus at least solves the debt problem while top down just adds price inflation as the banks use the new reserves to speculate in commodities.
Hyperinflation is just not gonna happen, especially with no labor bargaining power. Ed Harrison debunked that idea in an earlier post:
http://www.nakedcapitalism.com/2011/04/what-are-the-preconditions-for-hyperinflation.html
Hyperinflation is just not gonna happen, Yves Smith
I don’t keep up with them anymore but I imagine the Austrians are dying of frustration that their predictions have failed. Serves em right, the fascist gold-standard loving pseudo-libertarian hypocrites!
Well, if our government were to decide to embark on a WWII style/size “stimulus” – financed mostly by money printing – which produced something close to full employment, I would be very hesitant to rule out hyper-inflation as a likely side-effect.
Hyperinflation requires either endogenous (the banks) or exogenous (the Federal Government) money creation if MV = PY since Velocity (V) cannot continually increase nor is aggregate output (Y) likely to continually fall.
So hyperinflation depends on money or credit growth and both of those can be controlled by Congress.
This bears repeating.
Bear in mind that US financial elites have a much stronger committment to class war than to economic recovery. The compulsion to destroy wages and any remaining social rights is overwhelming, and will ensure the decline continues.
I disagree. I think they are frightened by a disintegrating economy but think TINA to stupid austerity.
“I disagree. I think they are frightened by a disintegrating economy but think TINA to stupid austerity.”
@F. Beard:
Elites are not monolithic, even in the US. You correctly characterize some of them. However, class warfare and protection of accumulated wealth are real stated policy goals of a significant proportion of our wealthiest citizens. It’s not just the bankers.
In particular, truly wealthy elites are strongly motivated to protect their own interests in a bad economy, even at the expense of a recovery. Only very serious externalities, such as the fear of Hitler, can focus their attention.
Along with Paul Krugman, I favor a manufactured alien invasion hoax to provide rapid recovery and full employment.
The politics of the matter are quite complex, but a key indicator that the tide is turning will be when certain wealthy individuals start “class defections” by coming out in favor of direct wealth creation for the lower classes. Many retired Wall Streeters from the ’90’s and 2000’s are already in this camp, but their influence is low.
when certain wealthy individuals start “class defections” by coming out in favor of direct wealth creation for the lower classes.
The wealth is already there; only money is needed to access it.
a, the .01% are the “Top Out of Sight” (Fussell), their .99% Agents are their “dirty work” SS fronting as the 1%.
Elites are not monolithic, even in the US.
Couldn’t disagree more! Ever heard of the Transnational Capitalist Class? The senior capital pool owners?
From the city level to the nation-state, to the global — they are indeed monolithic, but they do have their internecine battles, no doubt, but more of those battles are simply staged for our bewilderment.
Take the city of Seattle. An article details the inner workings at the city level, and it certainly sounds and appears historically to be most monolithic.
http://www.thestranger.com/seattle/Content?oid=219140
As the P-I associate publisher, Bunting (who did not return my call) knows, since he’s a member, the CDR is a private-membership group that meets for private lunches at the snooty Washington Athletic Club (WAC) every Monday.
Its explicit purpose since its formation (by the chamber of commerce and the publishers of the dailies back in the 1930s) is to bring together the city’s media, political, and business elite behind closed doors for off-the-record discussions. This type of environment helps lock in the moneyed class’s hold over civic affairs, fostering a clubby atmosphere between lawyers, developers, consultants, Fortune 500 executives, and the top editors and executives in Seattle’s media.
{Wasn’t Seattle where they hosted that failed WTC convention back in 1999?)
Watched an interview with Aldous Huxley yesterday; among several intriguing statements, was his idea, (addressing the classes in Brave New World), that while the underclasses are always controlled, regimented, ‘tamed,’ the elite throughout history has always stayed ‘wild,’ as he put it, has reserved unto itself the full swing of darwinian jungle behavior, which makes them also dangerous and unpredictable, capable of causing great damage. His 1958 interview with Mike Wallace (a diff. from above), is amazing in its prescience. A real visionary genius.
Nonsense! Eric Patton is completely correct.
The primary method for profits, the greatest profit margins, derive from labor deflation through labor arbitrage (offshoring jobs, etc.), which ensures the greatest profit to the .01%.
Even Goldman Sachs’ economists mentioned that in a NY Times piece back in 2009.
It’s always been standard practice and always will be until pushback.
Note the Nike example: when Phil what’s-his-face offshored all those Nike jobs, they increased their own salaries and perks, while maintaining the same prices for their product.
That’s SOP for the plutocracy. That’s part of the reason the Du Pont family founded/created the American Enterprise Institute, the Koch’s the Cato Institute, and so on.
“It is not enough to succeed. Others must fail.” Gore Vidal
I think you nailed it, Austin and Eric. It’s actually about relative to absolute power NOT wealth or its creation. Vidal’s maxim neatly captures the bankrupt mentality of Neocon banksters and Scionists, whose relative wealth and power requires the dispossession and disempowerment of others. Their playbook is the Shock
Doctrine, the creative destruction of disaster capitalism, making the economy scream. To them war is peace, slavery is freedom, torture is delight, depression is recovery, etc. Shared prosperity is anathema to their species.
Looking around at the mass hysterical blindness afflicting a vast percentage of Amereicans, it appears we’ve achieved Orwell’s dystopian doublethink:
“The power of holding two contradictory beliefs in one’s mind simultaneously, and accepting both of them….To tell deliberate lies while genuinely believing in them, to forget any fact that has become inconvenient, and then, when it becomes necessary again, to draw it back from oblivion for just as long as it is needed, to deny the existence of objective reality and all the while to take account of the reality which one denies.”
I don’t think they enjoy our pain (though down the ladder some of the hirelings most certainly do). I don’t think they care about “us” at all, other than as problems to be managed – as remotely as is possible.
AF – “much stronger commitment to class war” — they have been “perfecting” it since Versailles (.01%+.99%Agency = 1% v. 99%), and they are have all but returned to us to the Global Feudal System, so why would they stop now? They now are in their “home stretch,” and they mean to “win” by hook or crook.
Glad you are back :)
The credit/macro doomsday-machine-unfolding-story is easier to experience if accompanied by your thoughts (and a bit of wine).
…or soggy raisin bran and jet black coffee.
… cold spaghetti and Diet Dr Pepper. It seems appropriate somehow.
Since I had the stents put in it’s oatmeal with tea for me. The news is still good for ten points blood pressure surge for me.
Good morning Sunshine!
good luck with your stents Ambrit; do an occasional cod liver oil capsule – it helps with mobility like you can’t believe
Another for oatmealbut add with a hit off the pipe. No work for me and it’s raining again in Seattle. We live in interesting times. Hold on, the ride is just beginning. It’s bad but there is light at the end of the tunnel. Treat your fellow worker brother/sister with kindness.
Dear STO;
Thanks for that suggestion. Such displays of caring make an immense difference in the psychic health of an individual. I’m into flax oil, garlic capsules, d-alpha Tocopherol E, D 3, a B-50, valerian, some St Johns Wort, and a few other homeopathic things. I do do the Big Pharma beta blocker, angiotensin reuptake inhibitor, and blood thinners. That’s one big reason why I get so worked up about the NeoCons. A hundred years ago I would have been dead already. The Goon Squad seems H— bent on dragging us back to those times. That’s what I can’t abide; selfishness that thrives on the pain and suffering of others.
I like the Vulcan greeting: “Live long and prosper.”
Yours, ambrit.
For a large portion of the US population, the recession has never gone away since 2008. The public discourse about economics seems totally Martian; it has no connection to the reality lived by us.
Politician pretend to care about the economy, but are actually engaged in a large scale class warfare where the rich attack the non-rich and the non-rich have hardly mounted a defense. The administration, except for some negligible lip service, participates in the attack.
As always, Yves is right (on the left).
It seems to me that what little of the Federal monetary stimulus that ends up at street level ends up flowing uphill very quickly nowadays. The only real solution is to fix the system itself. Federal monetary stimulus, even with a massive war effort (and based on the example of the Iraqi War), would still flow quickly back to the top under the present regime.
As time goes by it seems that the only solution is Nouriel Roubini’s recent suggestion of what the future might hold – Bankers in prison or hanged in the streets.
+1
I’ve been hoarding rope for this very purpose. Just say when.
The only real solution is to fix the system itself.
I agree with this. But I think we need to be clear what we mean by “the system.” The problem is capitalism. If we agree on this, then we need to posit a solution — a replacement for capitalism.
I think the only answer that makes sense is parecon (participatory economics). Such a solution would, however, required acknowledging the existence of a third economic class besides owners and workers — something the left shows no appetite for, since it largely is that third class: the coordinator class.
EP, please see my link to “Voltaire’s Bastards” below, re “Capitalism” not.
In “The Rising”, James H Kunstler writes: “The word lamppost is popping up lately with alarming frequency in connection with the word banker in all kinds of respectable places, and I don’t think this refers to, say, men in Armani suits searching for their car keys where the light is shining on the sidewalk after quaffing a few rare cuvee jeroboams of Louis Roederer Cristal.”
Because Place-Holder’s Ministry of Justice is a little too busy with the drug war, gun-running, and athlete-steroid use, LieMore crimes will just have to wait.
BTW, Does anyone know where Obama’s chief bribe-bundler, Jon Corzine, is hiding? At the Ministry itself? How hard can it be to track the chain of custody for a billion dollars stolen all at once? Where are the subpoenas? Is JC’s secretary still breathing? Did Obama’s campaign just get a massive new cash infusion?
Kunstler again: “As the reality of total, comprehensive bankruptcy simmers up, perhaps a critical number of citizens stop forking over their quarterly taxes – since it would be the same thing as pounding sand down a rat-hole. Then, things really go south governance-wise. The next revolution in North America could make 1793 Paris look like an Ace of Cakes episode. Lamppost lynchings will seem too merciful.”
http://kunstler.com/blog/2012/07/the-rising.html
DT, sharp. Is BIS running scared, slamming Fed and G8 Banks “Just in Time?”
DT, is Google dutifully shunting those searching to those guys in Utah?
strange fruit
During the Great Depression, the U.S. had a huge idled productive capacity. This made it fairly easy for economic stimuli to effectively put idled workers back to work, who would spend, and in turn provide even more stimulus to the economy.
But since then, the U.S. has simply eliminated a tremendous fraction of its manufacturing jobs, so I don’t see how just throwing money at the problem will do anything more than provide short term employment for Americans who, ultimately, spend cash on Chinese-made trinkets.
Without a comprehensive plan for ensuring that Americans have productive employment, any discussion of the relative merits of various fiscal or monetary policy changes is of little more value than rearranging deck chairs on the Titanic.
I agree (or as they say, “+1”).
About that sucking sound…
It is not the sucking sound of air leaving the economy, it is the flutter of the wings of the confidence fairy being driven from the minds of Vanilla Greed for Profit by Mr. Reality.
Mr. Reality is awakening the Vanilla Greed for Profit folks to the fact that they have had their clocks cleaned by Pernicious Greed for Destruction. Evilism is being destroyed, with a few — a very few — of the more aberrant Evilist sociopaths being subsumed into Xtrevilism. We passed the inflection point many years ago. It was well concealed by the Noble Lie of Xtrevilism. The disease mutates and spreads rapidly now.
Again, it is not a “bloodletting”, it is a cancer. If you really want to report about it realistically change the name of the web site to Naked Cannibalism, that is what you get when the rule of law — our moral code — gets corruptly purchased and trashed. This is at its heart a moral struggle, not an ‘economics’ struggle.
Those that think Vanilla Greed for Profit will suddenly wake up and turn the tide here on Xtrevilism do not understand the nature of the disease. Redemption can only be forcefully administered to either faction.
If you want a happy ending DON’T go to the movies. All you will get there is further brainwashing to the ‘Greed and Evil are Good’ meme, well salted with a big dose of wealth adoration. Gag me with a spoon — yuk!
“The way out of it” is to get out on the streets and begin the proactive election boycotts and a Constitutional rewrite. It is time to salvage any usable files, reinitialize the hard drive, and boot a new system of Fairism that respects the rights and freedoms of all individuals, not just the aberrant sociopathic sick Xtrevilist few.
Decepion is the strongest political force on the planet.
WC – excellent “Metamorphosis” – “Naked Cannibalism”
Yves will like this, I couldn’t reply in the links page so I am posting it here.
About the comments of Yves on the AIDS link, some good news:
A big public Anti-retroviral factory will open in Mozambique next saturday, 21 of july. It was a 100 million dollar investment from the government of Brazil and Vale mining company. It will initially be capable of serving the whole country and after two years the whole of Sub-Saharan Africa.
This should bring costs down significantly. That is Soft power from Brazil.
http://www.macauhub.com.mo/en/2012/07/16/anti-retrovirus-medication-factory-in-mozambique-to-open-saturday/
Really interesting–thanks!
Ives post reminds me of the famous interview of Sir James Goldsmith on Charley Rose back in 94. He was of the view that global trade and free moving capital served the growth of several indicators (S&P, Share Price, Profits, GDP) and not real peoples lives. He noted you can have health in the indicators simultaneus with immiseration of people. His foil was laura tyson then of the clinton adminitration noting how trade deficits and wage stagnation were only temporary things to be corrected soon enough……..
Sad thing is that so many people want solutions. We do a good service by pointing out the problem (and helping some confront reality) but americans want solutions and the fact is that much of humanity’s issues are insoluble. The economy will not get better its worse than the media/government let on and no I have no solution and frankly nor does anyone else. We are suffering the consequences of the solutions proffered by the Greenspan Fed and the “policies of the Reagan, Bush Clinton years….
Love the references to the great depression. We hardly know what is going on now and its always interesting to see the great depression references and the whole FDR thing. That whold episode was of course glamorized and simplified and a staple of classroom dogma and I imagine the reptile part of the brain will go back to those myths to seek solace in uncertain times–a great leader given the right powers and virtues will get us out of this if only we had another FDR. Close examination would probably yield that the FDR policies were at best a mixed bag and that luck and the fact that all competitors were reduced to ruble could explain a bit. So to the fact that entitlements were teeny and that world population was 1/4 of what it is today. Markets were also slower and finace system less sophisticated….I digress.
C.R.,
Here is one idea I think will help. We need to research and openly name members of the “deep state” and disseminate that research as widely as possible. Politicians are the servants of those who run the deep state, (although some like the elder Bush and Cheney, are part of it while pretending to participate in “democratic” politics).
We can more effectively use peaceful citizen protest against the power elite if we know who they are. (Personally, I’m seeing who is buying handcrafted butt plugs with the presidential seal on the end!) Seriously, I do think knowing who is actually making decisions would be helpful in understanding how to turn things around.
That is a really good idea.
Starter link here for a lot of the key names…
http://aangirfan.blogspot.com/2012/06/alan-turing-and-deep-state.html
Deception is the strongest political force on the planet.
WC, thanks for great, comprehensive link. Connect:
Also, we can’t forget Clark Clifford’s role with BCCI. They don’t mention the Kashoggi connection with New Orleans CIASaudi criminal hub. Dig deeply into those contracts that Curtis & Davis copped for Riadh development, and WHY.
Bush Dynasty is leitmotif for Crimes of the Century through 2012. “Pathocracy.”
“TRADING WITH THE ENEMY: The Nazi-American Money Plot 1933-1949” by Charles Higham;
“CONJURING HITLER: How Britain and America made the Third Reich” by Guido Giacomo Preparata;
“AMERICAN DYNASTY: Aristocracy, Fortune, and the Politics of Deceit in the House of Bush” by Kevin Phillips.
Will these dynasties find no place to hide? Will BIS spill the beans to save itself for the next hundred years? Does the Money God require Big Sacrifice?
FDR wanted to fix things, so he threw everything at the wall — he basically implemented every proposal anyone had suggested, except for the contradictory ones, and he did so very quickly.
About half of them failed. He abandoned those and expanded the ones which worked. With the benefit of hindsight, we know which ones worked, and a government which was actually trying to help people could start by copying the ones which worked.
We have a political problem in that our government is largely controlled by people who are ideologically opposed to actually helping people; so see the previous comment for one way to try to deal with that.
. . . and you didn’t even mention how the growing likelihood of sequestration will strangle public demand, the increasingly weak engine of American growth.
Next year will NOT be pretty.
Laborers knowing that science and invention have increased enormously the power of labor, cannot understand why they do not receive more of the increased product, and accuse capital of withholding it. The employer, finding it increasingly difficult to make both ends meet, accuses labor of shirking. Thus suspicion is aroused, distrust follows, and soon both are angry and struggling for mastery.
It is not the man who gives employment to labor that does harm. The mischief comes from the man who does not give employment. Every factory, every store, every building, every bit of wealth in any shape requires labor in its creation. The more wealth created the more labor employed, the higher wages and lower prices.
But while some men employ labor and produce wealth, others speculate in lands and resources required for production, and without employing labor or producing wealth they secure a large part of the wealth others produce. What they get without producing, labor and capital produce without getting. That is why labor and capital quarrel. But the quarrel should not be between labor and capital, but between the non-producing speculator on the one hand and labor and capital on the other.
Co-operation between employer and employee will lead to more friendly relations and a better understanding, and will hasten the day when they will see that their interests are mutual. As long as they stand apart and permit the non-producing, non-employing exploiter to make each think the other is his enemy, the speculator will prey upon both.
Co-operating friends, when they fully realize the source of their troubles will find at hand a simple and effective cure: The removal of taxes from industry, and the taxing of privilege and monopoly. Remove the heavy burdens of government from those who employ labor and produce wealth, and lay them upon those who enrich themselves without employing labor or producing wealth.
Being an employer of labor doesn’t make you one of the good guys. Right back to Malthus and Ricardo, employers of labor have employed labor for as little money as they could. I know this will come as a shock to some, but the workers don’t actually for the most part want more and more work, what they want is to work for more and more money. There’s a difference. Employers who employ for less and less money are not doing anyone except themselves any favors. Employment is not an act of generosity on their part.
In nineteenth century England there was a fight between capitalists and landlords over wheat tariffs. The landlords enjoyed the benefit they got from being monopoly providers of food the workers needed to live (it was so profitable, wheat was being grown up hillsides where today it is totally uneconomic). Capitalists wanted to open the market to cheaper food from mainland Europe. Did they want the workers to be able to eat better from the wages they paid them? No, they wanted to pay the workers less for enough food to live, for the same work. Owners of capital assets and employers of labor were no more on the workers’ side than owners of real estate and collectors of rent were.
To correct your saying, the mischief comes from the man who does not give employment for good wages.
JS, as long as “the profit motive is the only motive” and “winning is the only thing” nothing will change. Ayn Rand’s “Capitalism” ENSURES Pathocracy in toto.
“What seems to have happened in the last week is that enough “unexpected” data releases, accompanied by a “recession is on” call by the widely-read ECRI, have led some analysts who were on the recovery side of the fence to rethink their view.”
At this moment in history – when we know everything from the markets to LIBOR is being manipulated – why should the average person believe ANY number put forth by ANY person/institution whose existence is inextricably tied into a system whose survival they depend on.
What is happening around the planet is that the elite are attempting to force humanity to accept their version of “reality” no matter what objective numbers and indicators may say.
This is the real war that is being waged.
If the rest of the world’s population can be made to be as stupid, docile and accepting in regards to the elite reality as are the masses of the exemplary U.S. citizenry then the elite realize there is literally no check to their power.
As Thatcher promulgated, There Is No Alternative and they meant it.
No matter how terrible the economy and life become for people, the masters will not abandon their fantastical worldview – they have too much invested in its existence and more than enough willing minions.
js, right: TINA: 1% Rentier DNA owns ALL. 99% owns nothing, not even their DNA.
We have a fair idea that speculation, exotic financial products, real estate bubble and regulatory capture caused our current situation. Why not tax those things that are destructive to our economy. A guy/company making 4 billion a year by transacting currency (essentially gambling) to make currency (wealth is not money) could be taxed at 90% and still make 400 million. Taxes used to be thought of as a deterrent to an activity – Tax economically destructive activities at a high rate. Every dollar a person puts into housing/food/survival is a dollar less that is available for consuming other products. We keep allowing prices to build (a fair percentage of those costs a result of speculative/gambling costs) to occupy a chunk of land- That can never end well. What of high frequency trading – how about a transaction cost for that – I do not see how owning a stock for a millisecond is ownership and it only serves to skim money for the top – it does not contribute to capital and labor – its just a skim of money that does not contribute to wealth production – derivatives, naked trades and all the rest – tax the economically destructive stuff at high rates. there is plenty of incentive to still do those things but by taxing it high the mis-allocations of money away from capital (machines, equipment, plants etc.) will be relieved.
Short answer: legislative and regulatory capture by the very actors that benefit most from such economically destructive activity. There’s knowing what to do, which we do for the most part, and there’s being politically willing and able to do what we know needs to be done, which we most definitely are not. And there’s no indication whatsoever that that’s going to change without a total systemic meltdown and an appropriate amount of bloodshed and loss of life. That’s where much of Europe is at already, and that’s where we’re headed at full speed as well. American Gladiator indeed!
“There’s knowing what to do, which we (mine) do for the most part,…”
It depends on what you mean by “we”. You may, I may, but we’re fairly rare studiers of blogs such as this. Most people I speak with know very little though they may have a strong opinion. They DO know their football, however. I wish those who read this stuff had the gumption to organize themselves. It would help to focus some attention. That doesn’t seem to be happening, yet.
Isn’t Jill Stein offering us the “alternative universe” of New Economics in praxis?
YVES, please explore the Green Party’s potential to move “We the Others: the 99%” into a different Real Economy on the ground, featuring networked local economies in C.21? Would you be willing to serve as a prudent, knowledgeable advisor to Jill Stein when it comes to the New Real Economy? What role might Catherine Austin Fitts and Abigail Caplovitz Field play here?
Isn’t the Green Party the ONLY Party with the POTENTIAL to lead us out of the Pseudo-Capitalist Bureaucratic (“Management”) System described below, in such deep, masterfully comprehensive detail?
http://www.amerian-buddha.com/lit.voltairebastard.16.htm —
“VOLTAIRE’S BASTARDS–THE DICTATORSHIP OF REASON IN THE WEST:
16. The Hijacking of Capitalism”
A profound understanding of the above will help the Green Party to SEPARATE ourselves from the Economic System that entraps us, and to LEAD “We the Others the 99%” to reach the light at the end of this foul tunnel.
GREEN to WIN 2012!
ERROR in LINK above, missing letter in “american” – Do-over:
http://www.american-buddha.com/lit.voltairebastard.16.htm
It seems that the confidence in the economy is dividing into 2 groups. Those that have kept their jobs and businesses and feel that although the economy is not great, it will probably not get much worse. The other group are the ones that have not been able to recover from the 2008 crises and have experienced financial pain for the last 4 years.
Until our economy can improve the prospects for this second group GDP growth will likely remain sluggish at best.
d, and I recently read that “94% of Americans are employed.” Doing what? Does this mean that 94% are securely employed? If this is so, the System remains.
Yves, Lambert? Anyone?
five hours or more per week–you are employed. You have to be part of the term employed. If you are unemployed and ran out of benefits you do not exist. If you do not participate, you do not count as employed or unemployed. Its well an Orwellian term LBR…..
this country, and all countries, runs the risk of its population going almost totally underground and working 40 hours or more a week off the books, out of the reach of the IRS, if everyone manages to look destitute enough, etc. Can’t find “money” if you don’t even know what the fuck it is…
Sadly most people in the U.S. do not have skills that are of value under the table–teacher, social worker, account executive, sales manager, bank officer, only workmen, small farmenrs, drug dealers, sex workers and undocumented workers seem to have the skills of value in an under the table transaction…I suppose the sex worker and drug dealer sector can grow.
See Bloomberg re Addiction to Foie Gras and “Duckeasies” – signs of times.
Anarcho-capitalists extract money and assets, not air, out of the economy. Supply-side marketing creates a demand for credit and stuff you don’t need or want, harvesting future spending power and leaving behind thousands of Beanie Baby Millionaires.
“I have some very valuable Beanie Babies but can’tfind anyone to buy them. Can you help?”. An unanswered plea found on the web. Bad news, at my flea market they go for three dollars a bushel
My calculations which are based on where employment would be if we were in a solid expansion indicate that the real unemployment rate is 12.6% and that real disemployment, that is un- and under employed (unemployed plus involuntary part time workers) is running at 17.6%.
As I have been pointing out here since the June report came out, if you look at the pattern of the seasonally unadjusted numbers of job creation, 5/6 of the net job creation for the year has already occurred.
I would also say that for the 99% there was no recovery from the recession beginning in December 2007. Remember that virtually all the gains from the so-called recovery went to the higher, indeed the highest, income brackets. So for the poor and middle class, the recession began 4 1/2 years ago and never went away.
Finally, none of this takes into account external shocks as Yves has noted. Europe is tottering. Contagion is spreading. Spain is where Greece was a year ago, Italy is where Spain was, and France is where Italy was. China too is a lot shakier economically than most people are willing to believe. And Chinese history furnishes many examples of the state being stable until it’s not and explodes. While it is a big news story that Saudi Arabia and the UAE have opened or reopened pipelines bypassing the Strait of Hormuz, it sort of misses the point that the pipelines would not make up for all the oil going through the Strait, nor that the pipelines themselves as well as both countries oil infrastructures could still be attacked either through missiles or sabotage. And of course Iranian production would be lost. So a war in the Persian Gulf would also be economically devastating. Think too what the speculators in the oil markets would do with such an excuse to spike up prices. And then there could be smaller events but with a big psychologogical impact. For example, the British have bungled security at the Olympics. A major terrorist event there could have wide impacts out of all proportion to actual casualties on the ground.
The British should just power on like Maggie and hire inspector Clouseau.
Movies?
First, of all they are making lousy movie and, other than a few big name actors and producers/ directors, a lot of people working in movie business are also struggling in Los Angeles (Hollywood.
Besides, movie theaters are retail businesses and the business seems to be severely down. In Westwood, which is supposed to be well to do part of West Los Angles, four long time movie theaters have closed since the financial crash. About two months ago, Acapulco, a Mexican Restaurant, finally kicked the bucket and closed after 33 years of business and having gone through several previous recessions. This is the way real movie is being played out regardless of what the banksters and politicians say. No need to go to theaters. It is all happening right here.
Policy makers are unprepared? Arguably not, as policy seems largely directed toward making the uber rich uber richer, and those creatures do well on the upside and the downside, after a few timing adjustments. All within the bounds of ersatz democratic good taste, of course.
It would be helpful if our officials, business “leaders” and pundits made clear that when they say “economy”, the fortunes of the investor class are meant. The miseries of wage slaves is beneath contempt and unworthy of comment.
This was a good article. Very true to the facts. The movie we need to see now, for a happy ending, is The Unbearable Lightness of Finance.
Lost my general comment on this and will briefly repeat:
Stick with my call for the US to have a better year than expected by those critics with a “negative” view like NC, or ZH, or Shedlock, even Krugman or any number of lesser “other blogger critics”. I continue to argue that the US is far better positioned than any competitor, and will remain so. Combined with a 1%-led decision to more gently ape fairness and embark on a MSM trumpeted “Surprise!!!” mix of Fed and fiscal money, an economy already picking up on its own by August 2012 gets a nicely placed boot in the butt to get Obama started on what will appear in this contorted, hard-right skewed universe to be quite “remarkable” initiatives that do seem to work, and not badly, for a couple of years, when there is no more containing the larger stresses and the whole thing buckles.
So after the third summer slowdown in a row, growth picks up to 2+% in Q3 and possibly 3% in Q4 with the “fiscal cliff” becoming a non-issue and sizable stimulus, either as extended or enhanced. And with the new Budget, get ready for some major pork.
The 1% are quite prepared to offer a better deal on crumbs. They didn’t get to their position by being gratuitously stupid.
Hey! I just wanted to ask if you ever have any issues with hackers?
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