Former OMB Director Debunks The Economic Recovery Myth

Tyler Durden's picture

There is propaganda, and there are facts. For anyone seeking just one concise, definitive and completely true (as in fact-, not hope- based) explanation of what has happened to the American economy in the past 2 years, we suggest this presentation by former OMB director David Stockman, whose 10 minute appearance on the CNBC's strategy session left the hosts with absolutely nothing to retort. Among his observations: the government sector for the first time in history is shrinking: "the reason is that governments are broke... we are going to have to cut back government employment." And it gets scarier: "if you take core government plus the middle class economy (65 million jobs), that's the breadwinning economy, if we take some numbers - how many jobs in the "core economy" in November - zero; how many jobs since last December: net zero; how many jobs since the bottom of the recession in June 2009: still a million behind from when the recession ended." As to whether the economy can grow without employment growth: "I can't imagine how it can because employment growth generates income growth which is the basis for spending and saving ultimately and we are not getting income growth out of the middle class." And the stunner: the job "growth" has come almost exclusively from the part-time economy (two-thirds). Why is this a major problem: "there is 35 million jobs in that sector, with an average wage of $20,000 a year: that is not a breadwinning job, you can't support a family on that, you can't save on that. Those jobs will not generate income that will become self-feeding into spending." As for the biggest condemnation, it is reserved to what Zero Hedge has been claiming for two years now is a completely broken market: "I can't explain the market... I don't know what it is pricing today, I don't think the market discounts anything anymore, it is purely a daytraders' market that is trading off the Fed, trading off the headlines. One day it is manic, the next day it is depressive, and we can't draw any conclusions." And scene.

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unky's picture

Can support a family on $10,000 already if neccessary

But thats not the point, the more the better of course...

WaterWings's picture

In Mongolia or Bolivia.

scatterbrains's picture

I'm thinking about starting up a trailer park reit or pop up camper reit. Fill that 20k a year nich that's growing. Maybe offer check cashing in exchange for my Wally coins exchangable at my Wallymart.


delacroix's picture

lots of unused rv's, will be getting some use, in the future. building an rv park, would be serving an expanding need. easy to move, cheap to insure, and most are owned outright. energy effecient too. thinking of buying a toybox 5th wheel myself.

aerojet's picture

Um, no.  The cost of upkeep on RVs is insane.  They are not cheap to operate and they don't do well in the cold.

revenue_anticipation_believer's picture

STOCKMAN, DAVID Office of OMB liar with photographic memory when he was 1981 backing up the Reagan Revolution...

thereafter, based on his Harvard Divinity Degree, and National Recognition factor, he was set for life with civilian jobs, ALL of which he fucked-up...finally 2007 being charged with malefeasance into bankrupcy and destruction of 15,000 jobs of the company he lead, incompetently...

observe his shoulder shrugging, i dont know, 'buy gold..'forgive him, for he knew not what he did in 1981, nor took any responsibily for his running his company into bankrupty 2007...

Oh, yes, i remember HIM the whiz kid, brought to the woodhed because he'd flubbed his lines, and TALKED without vetting very very wrongest National Magazine he could not have chosen worse...a naive child (i was happy, so i knew what cards were being dealt in the 'supply side' party line OMB story..).

early 'genius' thereafter a complete 'less than zero'

Even CNBC personnel dared not agree nor contradict him..seeing that they were dealing with an empty husk, repeating empty things without depth, knowledge, concept...pure literal minded Bible thumper asshole..

i-dog's picture

The reds may have junked you, but there's no getting away from his most telling line in the interview: "I don't have a prescription for this" [how to get out of the jobless rut]. He's a fucking moron if he has no idea how to rebuild an economy that has moved all its manufacturing and technology offshore while doubling the size of government employment (much more than doubled if you factor in the salary differential to the private sector).

Winston Smith 2009's picture

At one point in the video, he states that the massive loss of well paid jobs was due to the gutting of our manufacturing sector through offshoring. That implies that his answer would be to try to restore them which he also states in the video when he mentions restoring our competitiveness. However, he has no prescription on _how_ to to this.

He may have a lousy track record and be one of the idiots responsible for where we are right now, but that doesn't mean that he can't now properly see the real reasons why were are in the position we are now in and how we will not come out of it without huge numbers of well paid jobs that are simply not on the horizon.

jmc8888's picture

I guess the whiz kid has never heard of tariffs.

jakethesnake76's picture

Sounds personal there Bro lol , he should have defended the idea of bringing our Jobs back from over seas my friend use to joke that we would eventually all sit around and shine eachothers shoes and thats about what it's come to now :( ya its niece to get cheaper JUNK from wally world made in china but i'd rather buy the same thing from my neighbor and both of us have a good paying job. we been going the wrong direction on this fo along time.

jimijon's picture

If you're serious I can make an App for that!


rosiescenario's picture

....IMHO, a more upscale type of pawnshop, one that has a shopping mall presence could become the new "category killer"...

Gully Foyle's picture

Can You Live On $12,000 Per Year? 20 Tips Towards Frugality

Time was when you could actually work a minimum wage job full-time and get by. Two jobs, and you could raise a family. Nowadays, it's nearly impossible, but some people seem to be making an attempt at living under the median line. The movie The Pursuit of Happyness is an example of what persistence can do to move you from having nearly nothing towards being such a success that someone makes a film about you.

I'm not sure if someone will make a movie about Donna Freedman, but people are writing about her decision to intentionally live on $12,000 per year. She seems to be not only coping but in control. Is it really possible? As someone who did it on about $10,000 a few years ago, for about 3 years, I'd say it was possible then, and still might be so today, but only in some cities. You'd have to give up anything that wasn't absolutely essential. It's not necessarily enjoyable, to be honest, but if you eat properly, you can at least maintain your health.

Here are some tips, if you find yourself in a similar position or just want to save money for a trip or investment or what have you.

  1. Immerse yourself in frugal-mindedness.
    Screw people who call you cheap (you know who you are). This is the only way to cope. If you can't achieve this state of mind, forget about living on the cheap.
  2. Mend clothes and reuse, or wear layers.
    At home, I wear longjohns/ thermal underwear with ripped jeans. Why not? The pants are still wearable and no one is going to see me except family and the dogs and cats. The #1 rule of frugality: use what you have for as long as possible.
  3. Be a coupon clipper.
    Master the art of coupon clipping, but only save coupons for items you actually use. Don't start buying something different just to "save" money. If you can't find the regular weekly flyer, ask a store/ supermarket clerk, as there's usually a stack on hand somewhere. Rule #2: save whever you can, but only buy what you need.
  4. Buy only on sale and double up.
    I used to buy quality oxford shoe knockoffs at $32 apiece when department stores sold pretty much the same for $50-90. I would buy 3-5 pair and alternate their use. They'd last years like that because they had time to breathe after a day of use. Had I not, I probably would have had to buy 6-7 or more in the same time. It's a small savings, but it does add up when you're on a budget.
  5. Give up meat or reduce quantities.
    I'm not proselytizing on being a vegetarian (I used to be one, but am not currently). Meat protein is generally more expensive than vegetable protein. Though you'll have to learn some new recipes. The two most suitable cuisines are East Indian and Chinese, and combinations inbetween. Food and rent are likely your two biggest expenditures. When you're budgeting $12,000/yr, obviously every dollar counts.
  6. Buy from the farmer's market.
    I've been to big ones and small ones and they always have prices to beat supermarkets. Sometimes, at the end of the business day, vendors will take offers on what's left. Freeze any portion you don't need. I also find some Asian markets to be very affordable. I lived in an area where there was a new Farmer's Market 30 feet from an Asian market. Every Saturday morning, I'd take my Friday night tips and buy all my groceries for the week, then make dishes that would last a few days and thus reduce the cost per meal (as well as prep time).
  7. Go to the food bank.
    Or if that troubles you, if you have a weekday where you can help out, volunteer in a soul/soup kitchen. You can do some good and a get a free meal at the same time. Some soul kitchens are also food banks, and you could take a few canned or dry goods at the end of your volunteer shift.
  8. Share a dwelling.
    Sometimes, that's not an option, but if you can sub-lease part of your living space, you could save close to half your rent. It's either share, or live in an infested place in some cities. Or move in with a family member. I prefer living on my own, so I had given up my cable TV and cell phone for a while. I didn't need them, and the Employent Centre down the street offered free voice mail and 1 hour of Internet access daily. Now, of course, I must have my Internet.
  9. Make it yourself.
    Need a bookshelf? Many hardware/ lumber stores have scraps that they will not only cut to your measurements but also deliver to your home. You just need a measuring tape, some good nails, glue, a hammer, and maybe a few small clamps. At the least, hammer, nails and tape. You can also by perfboard kits for shelving which are easy to put together. Not as fashionable, but you're being frugal.
  10. Haggle.
    In some countries, it's expected. Not so much in the USA, but you can sometimes get away with it. The worse that can happen is that the seller will say "no". They might also look at you funny. See tip #1. Haggling for smaller prices works at flea markets and garage sales. You develop a sense for where you can haggle.
  11. Go to flea markets.
    You can find a lot of "gently used" items in great condition at large flea markets. Beg a friend to drive you and go early. If you also find some bargains that you can fix up, it's worth it. (You could even fix and resell.)
  12. Use VoIP.
    Why pay for long distance when you can make some calls either for free or for a lot less than with your regular phone company? If you have access to a computer and the Internet, some options to explore are Skype, SightSpeed, Jajah, and Gizmo Project/ GizmoCall. Some of these only require a computer to register; you can use a regular telephone after that.
  13. Watch TV online.
    Can't afford/ don't want to buy both a TV and computer? Depending on where you live, you might be able to watch most of your fave TV shows online. There's also free IPTV (Internet TV) software like Joost and Babelgum, which are not yet available to the general public, but will be.
  14. Take free courses.
    Donna Freedman mentioned that she chose her current situation and went back to school. But why pay for courses when they're free at the Open Courseware Consortium and at various universities.
  15. Double up on laundry.
    Buy a few extra items of clothes (on sale or at bargain stores of course) and take longer between laundry sessions. Remember, every dollar counts.
  16. Get the most for your money.
    This weblog IS about online savings accounts, so I always include such a recommendation. It may be unlikely that you are saving much at your income level, but if you've become frugal-minded, you might find you can squirrel away 5% into an online savings account. Removing it from easy access means you're less likely to spend it. Remember: compound interest!

Of course, these tips haven't taken into account that you might have a dependant, in which case you might want to budget some life insurance. Now just because you are getting by on a budget doesn't mean you can't earn some extra money once in a while. Here are a few ways to earn a bit extra that are ideal for a frugal mind:

  1. Make it yourself and sell it.
    One artist I knew would bang together special tray-like art frames with 1x4" pieces of used wood and make "found art" with various objects and glue. I doubt she spent much money on them, and her pieces were between $150-350 each. She was very good at what she did, employing a skill similar to scrapbooking. She did sell a few pieces per year, after local cafes displayed her work. Making found art is also considered a therapeutic activity.
  2. Start a blog.
    If you have reasonably good communication skills and access to the Internet, consider starting a weblog. Be somewhat focused. By doing so, once your site has been established sufficiently, you may qualify for services such as PayPerPost, ReviewMe , SponsoredReviews or LoudLaunch to get paid for reviewing an advertiser's product or service. A frugal-minded person is often an ideal candidate for writing consumer reviews. Some people are earning as much as $1,000/month with such opportunities, though most people probably don't. Your blog could even be a pf (personal finance) blog and you could slap on some Google AdSense or Chitika ads for possible future revenue.
  3. Be an online tutor/ advisor/ personal coach.
    Sites like Tutors Without Limits offer a great framework for earning a bit extra by tutoring students around the world. You set up your profile on their site and use the free Skype VoIP software to hold audio/ video tutorial sessions with one or more students. Payment is with PayPal, though not all countries are represented yet. A similar service is through Bitwine, which is an addon (plugin) for Skype, though it's not just for tutoring. If you don't have regular access to a computer, you might consider Ether.
  4. Mystery shopper.
    Some stores hire people to shop and report back on the behavior of store clerks as well as scan for shoplifters. The frugal-minded shopper will likely enjoy this. I can't pretend to know where you start to find this sort of work, but I suggest you ask around at large department stores.
harveywalbinger's picture

To fight the power, one must first understand what power is...

Popo's picture

Jesus dude. Quit hijacking the fucking post and learn some netiquette. Post a link. Post an excerpt. But what you do is just annoying.

Gully Foyle's picture

WaterWings = Popo


Why do you need to post as two seperate people? Need to defend your weka intellect much?

Gully Foyle's picture

How to Live on $10,000 a Year By an eHow Contributor I want to do this! What's This?

Since the United States considers an income of $10,000 to be below the poverty line, living on this amount of money is both a serious reality and an incredible challenge. Use these money-saving methods to make a hard living a little easier. Read on to learn how to live on $10,000 a year.

Difficulty: Challenging Instructions
  1. 1

    Create a budget. Budgeting allows you to plan for the best and worst case scenarios. Not only will it help you feel organized and in control of your cash, but a budget will also minimize those panicky moments.

  2. 2

    Treat frugality as if it were a challenge. Life is not a game, but as humans, we tend to become more passionate about things when our competitive drive has been sparked. Think of coupons as bonus tokens and free entertainment events as scoring something for nothing. The grand prize to living on $10,000 a year is not much, but losing this challenge can mean serious consequences like debt and bankruptcy.

  3. 3

    Buy generic foods, eat at home, purchase cheap produce and forget about the meat. Changing your eating habits is an easy way to cut costs. Generic brands will run you several dollars cheaper than brand names. Save cash by eating at home. Buy produce from farmers' and Asian markets. Eat plenty of pasta. Save meat for special occasions. Food pantries also provide free food for people earning a low income.

  4. 4

    Live with others. Although this may be a major adjustment, cutting down your rent can make living on $10,000 easier. Consider living in a co-op (a home shared by a small community of people) or renting an apartment with three to four other people to cut housing costs.

  5. 5

    Be your own Martha Stewart. Save hard-earned cash by becoming a jack-of-all-trades handyman (or woman). Make your own furniture, or try to get by without it. Make your own clothes, or purchase inexpensive clothing at Goodwill outlets or garage sales. Ask yourself what is necessity and what is desire and then attempt to create those necessities in creative ways.

  6. 6

    Study your health care options. If your employer does not provide insurance, explore what your state may provide. Many states offer low-income health insurance; this is usually basic insurance at a much lower monthly cost. Ask your doctor or employer if your state has this option. Check your local yellow pages for free clinics or county hospitals. They often provide health care for people who are uninsured or need to pay on a sliding scale.

  7. 7

    Save money in a high-interest savings account. No matter your income, a small portion of every paycheck should go to savings. A standard amount is 10 percent, but this may vary based on what you can afford.

Tips & Warnings
  • Local newspapers and publications almost always provide a weekly calendar with a variety of activities, festivals, classes and entertainment. Scour your paper for free events, and you'll be surprised how much fun you can have without your wallet.
  • There is a government act called the Emergency Medical Treatment And Active Labor Act. Under this act, hospitals and emergency rooms cannot turn down patients who walk through their doors in a state of emergency. You can go to the hospital in an emergency situation, even if you can't afford health care. However, hospitals can discharge you immediately once the "emergency" has been stabilized. Be prepared for this.
  • Visit flea markets, farmers' markets and garage sales. This is a cheap form of entertainment and an even cheaper way to pick up some must-haves.
  • Ignore the brand name cleaning products and mix your own at home. Jugs of ammonia, bleach and white vinegar are always dirt cheap. (Whatever you do, don't mix those three together.)
  • You don't need to become a hermit to live frugally. Don't cut out all forms of entertainment in the name of saving money. For example, don't deprive yourself of the movie theater to save a buck. Head to the dollar theater instead. Decreased happiness and a lower quality of life won't help meet financial goals.
WaterWings's picture

Jeez, dude. Back to your hijacking with long, pasted posts.


Gully Foyle's picture

WaterWings = Popo


Why do you need to post as two seperate people? Need to defend your weka intellect much?

merehuman's picture

sleeping bag, spare change of clothes, piece of plastic for rain and one meal per day if lucky. more that 20 years of that when i was younger.

And no expectations. But it does bring one closer to the spirit, too bad it takes humbling and giving up to get there.

the mad hatter's picture

here's my howto guide for living on $10,000 a year:

1. Live in a cardboard box.

2. Educate yourself/get a skill.

3. Make money with said education/skill.

4. Upgrade your cardboard box to a double walled cardboard box.

5. rinse, repeat.

Kopfjager's picture

Or just go into porn.  Don't worry about how you look--somebody will find you attractive.  

Vergeltung's picture

yeah, that's totally regionally dependant man.

Spalding_Smailes's picture

All the sheeple who had taken out loans.

Lets see I make $800 per week & my wife makes $1,200 per weeks. Lets go out and buy a 3,000 sq house, lets get a small boat, 2 cars, cable, lets go out every Friday night to Gibsons with our friends, hair & nails sweet !!! Lets take some money out of our house & go to St.Martin .... New car every 3-4 years.

Maybe we should invest in the stock market or buy some investment property. Lets take on some debt, keep up with the Joneses ... 24/7 over the last 25 years. Leverage city.


Total Stupidity, hold up the mirror America.


I turned off the tv a long time ago, came across the credit crisis while surfing the net, reading, got out of debt in 2003-4. This credit crisis started after the Nasdaq blew up ....

Crisismode's picture

Exactly WTF did you junkers find wrong with what this guy said.





merehuman's picture

must be alot of jealous folks junking you. Fuck them!

After refusing credit cards all these years i now have one for sears. Only a hundred bucks. i dont like owing . period

merehuman's picture

must be alot of jealous folks junking you. Fuck them!

After refusing credit cards all these years i now have one for sears. Only a hundred bucks. i dont like owing . period

nate28jf's picture

BS.  My small 1 bedroom apartment is $630/month.  $630 x 12 is $7500 right there.  And I live somewhere where housing prices are pretty low.

Jasper M's picture


Not trying to pick a fight, but you can get 1 1/2 bedrooms where I live (Eastern Tennessee,a bit outside of Knoxville) for c.$400 a month.

(And we have no state income tax) 

A LOT of metros are relatively cheap, and people get to thinking they are among the cheapest. But frequently not the case. 

New_Meat's picture

Go Vols- (well excempt for p. manning of course '-)

But Mayo--He the man!  Hell of a playa'

- Ned

merehuman's picture

there are 3 guys living behind the am/pm. Just make sure you find your sleep spot during daylight. Overlook it and keep walking, make sure no one noticed come back later with your bag. Never leave your bag! It will be gone.

Always ask permission before using others waterhoses. In some neighbor hoods even if you ask they call the police on you. Essentials to carry are toilet paper and a water jug.  Anything beyond that is a luxury.

been in business these last 20 years but never forgot the lessons the road taught and learned to appreciate the value in the crap life passed out.

Its easy to laugh now.

snowball777's picture

A lot of Metros are cheap...for a reason; specifically, when the jobs available in the local economy don't support higher rents.

But I'm sure it's awesome, if you want to compete with half of the people in Wal-Mart for the same minimum wage job and go nowhere in life.

jmc8888's picture

A couple of places didn't go hogwild with the housing prices.  It is not repeatable for 300 million others.


Or we could all use a line like, 100 bucks lets you to live like a king in Haiti.  At some point, you have to live where you feel comfortable, and it has to be a situation that everyone can copy.

All this live on 10k crap is bullshit.  Sure you can.  But you don't have 80 hours a week trying to get the 'deals'.  Why play that little 'game'.  It's a bullshit one. Let's all jump through 10x as many hoops for the rest of our life.

Plus to live like that, you'd already need a paid off house, which most of the 300 million Americans, can't replicate.   300 million people can't buy generic foods, or else the price goes up.  Same thing with food banks, 300 million people, can't go to food banks.

Not everyone knows how to sew and do all sorts of handiwork around the house. Plumbing, roofing, car repairs, etc. 

Plus not one mention of anything extraneous.  Your wife goes to the hospital.  You get laid off.  I mean seriously, it's like these plans were written by an out of touch republican who thinks this plan will be enacted inside a vacuum.  It isn't. 

There are all sorts of ways, about 300 million of them, why living on 10k or 12k a year, ISN'T achievable. 

That's why you don't focus on bullshit monetary numbers, but PHYSCIAL economy. 

I bet a number of people read that it's possible, and said, ok it's possible, so why should the gov't give anything to these people, since it's possible to live on 10k a year.  Seriously.  People take this, and stretch it to their ideology, by the millions.  What fools.

fxrxexexdxoxmx's picture

My 3 bedroom house is 300 dollars a month. Unless you like wheat, corn, beans (soy), and live stock you would not like where I live.

No crime. No hate. But too many damn churches :)

snowball777's picture


And I'm guessing you have your own well and off-the-gridish setup?

midtowng's picture

If you live in a tent.

homersimpson's picture

Obviously this person doesn't live in the US - or he's absolutely full of...

homegr0wn's picture

Of course $10,000 can support a family! I absolutely agree. If the 10K is spread evenly into several piles, then a family of 3 or 4 could easily stand on the piles.

OH WAIT.. you're talking about another type of support. Oh, you're just stupid then.

1100-TACTICAL-12's picture

Recovery summer was so good can't wait, for Autum austerity.... Where is Harry Wanger when you need em...

Bill Lumbergh's picture

Unfortunately I do not believe he sees the bigger picture...a great analogy is a huge iceberg lurking below the surface with only a hint of ice showing from the vantage point of a boat...Harry is the captain shouting "Full steam ahead!".

hardcleareye's picture

How many years ago was that?

You cannot support a family on $10,000 today without substantial government assistance.

Just the health care cost alone for a family exceeds $16,000.  With a high deductible plan, yearly cost is $5,600 and a net exposure of $11,200.

An Amish Family cannot make ends meet on $10,000 and that is living as simple as it gets!!!