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It’s Tough to Put Lipstick on this Pig
President Obama could not have looked more morose in reacting to the news that the December nonfarm payroll showed a further loss of 85,000 jobs, taking the unemployment rate to 10%.
It’s really tough to put lipstick on this pig. Some 4.2 million have lost jobs on Obama’s watch, and 7.2 million since the recession began in December, 2007. Total unemployment now stands at 15.3 million, and 25 million if you used the U6 figure that includes discouraged workers. Some 661,000 dropped out of the workforce, the duration of unemployment lengthened, and what real hiring did occur, was only among temporary workers, who gained 47,000 jobs.
These are not exactly the sort of numbers that are going to send you shooting out of the blocks in the sprint towards the midterm elections. It is screamingly obvious now that while big business has stopped large scale layoffs, they are just plain not hiring. Perhaps they see the same thing as me, the deadening impact of a slowdown in government spending, or worse, a double dip recession, that would kill them if they started adding overhead now.
They have also probably figured out that starving, bankrupt consumers don’t buy much. Perversely, this means that productivity will keep soaring, as will corporate profits, which is how the stock market was able to hold its own today, despite the dismal figures.
There is no doubt that the administration will take the message home that not only was the last Keynesian inspired stimulus package too small, another one is needed immediately. But you can bet the next one will be far more jobs focused than the last, which had more pork than a Chicago slaughterhouse. How about a new interstate system? That would be nice. Conservatives will be outraged, insisting that the only way to economic salvation is to put more money in consumers’ pockets though tax cuts.
This will certainly mean bigger deficits, followed by more borrowing, and then higher taxes. It also makes the Fed’s public discussion about winding down quantitative easing a bit awkward. Expect zero interest rates to take on a new lease on life.
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You are a moron that doesnt understand:
- modern money
- fractional reserve banking
- assets/liabilities e.g. fed balance sheet
Government spending goes directly into the private sector moron. I didnt say it is the best allocation of money but it ends up in the private sector none the less. If the government creates a job for you: Sr. Moron and pays you 100,000 dollars of money printed out of thin air, this money to you and the private sector economy is real. The question Mr. Moron is how much of this can happen before money is debased and inflation/dollar devaluation takes place. So bottom line: Government spending doesnt take capital away. You are very confused
You are right my friend the stimulus does go to the private sector. However, those who get it are the favored sons and daughters. There is no trickle down to you and me.
Then, these misallocated moneys got to speculative markets. When the stimulus stops, they know it first and they get out of the speculative bubbles before anybody else and you are holding the bag. Your 401K was 50% down, it is now 85% down.
So, yes you are right but the results are not.
Have a nice day
You touched it, but still missed it big time. It's not just the simple "use" of capital. It's EFFECTIVE ALLOCATION OF CAPITAL.
Refer yourself to the broken window fallacy http://freedomkeys.com/window.htm and http://en.wikipedia.org/wiki/Parable_of_the_broken_window if the first link didn't do it for you.
This is equivalent to government misallocation of capital. I guess it's slightly less destructive to give it to Wall St. than say, the defense industry... Except we might get some new technology out of the defense industry, and a few products to sell to other countries (just so long as nobody uses them).
Also see http://en.wikipedia.org/wiki/Unintended_consequences
I guess we are saying the same thing but your comments were printed first
"Government spending goes directly into the private sector moron."
Hahaha, like what? Like injecting tax payer's money to prop up an overpriced housing market so that individual buyers are lured to more expensive mortgage traps? Or saving zombie GM / CRYSLER that should have gone under b/c of their own bad management. That's how you want government to run economy?
You are simply cluelss to think government wasting your money propping up a failed business is sound investment. In order for a healthy economy to grow, capital should fly to the productive sector, and it should be decided by market forcing not those "modern money, fractional reserve banking, fed balance sheet" garbage you loved so much. If those things actually work, we would not be in this mess in the first place, dumbass.
Understanding money is important, but human nature even more important. That money, more often than not ends up in the hands of the politically connected looter class, pays for programs, entitlements, and govt funded projects.
I drove by a AR&I Act funded fwy "project" today. Contruction signs everywhere, no signs of construction anywhere. Literally.
Why should it all originate from a politically appointed (thus politically motivated) monopolisitic counterfeiter in the first place? You compartmentalise the ship so the action of one group of morons doesn't sink the entire ship for the rest of us morons.
Slapping a little lipstick on this pig is probably the easiest thing to do right at this time, it makes an ugly duckling easier to look at, even if you have to do it by candlelight, sorry no grocery bags allowed. But, puckering up and slippin the bitch some tongue will take some fortitude, or one sick perferted desperate old fart. Has anyone seen Larry Summers lately?
So what if productivity soars? Stocks are valued on aggregate profits; not on profit per worker. The only "devil's arguement" you could make to justify rising equity prices in such an environment is that the strong who survive have less competition and more eventual pricing power. But, normally, this would provide some support, not lead to a roaring bull market. No, all we see is the result of money frantically searching for some return (other than zero).
The only "real" productivity is that from offshore LABOR arb - meaning off shoring Jobs to India and MFG to China, Nam, etc. still have 60% left [meaning would need to tank the $ that much VS the Rupee, etc]...and if the US Gov. mandates EPA, more restrictions, etc - it makes the value prop to offshore more MFG and Labor that much stronger...
The problem is - what is the US work force "supposed" to work on? (from a value prop) that will not require massive GOV funding or Wall St. credit creation? [B/C the con is known] - ignorant to expert over night for many.
Is our Gov. strong enough to "fund" say "green energy" to the same extent GSEs have been funded? For how long can our Gov. continue funding with out net offhsore buying of the debt? And - ultimate forced decouple of the world Res. and likely world conflict as the void is filled.
Then again, what do we really need to be doing? The internet is the most socialist / deflation machine known in world history.
The Green thing would have worked - if we could have effectivly
"Taxed" India and China to fund America - but they said F-off - we need to build physical infrastrucre faster then you/
as these populations value life / safety more - as they are wealthier - it is possible, the contraction of America that ignites conflict in the transision [power vacume] - will be able to re-assert itself - kind of like selling the VOLVO brand - but, really, our "Cost" for Volovo as a % of global output is getting to be a non-starter.
If we don't start producing our own stuff, we are spinning our wheels.
Shuffling paper and selling each other stuff and services eats up capital.
Collapse of the system is near.
Way out through technology and chemistry only.
Where are the brains?
Why the brains aren’t finding solutions?
Are they all concentrating on IPods?
Are they ideologues?
Most of them became HFT/Quant programmers.
Let's ask Sergey.
Those thinking the Fed has any intent of withdrawing QE and money printing are dead wrong, read the last FOMC minutes. A second MBS program is coming with Stim 2.0, as prescribed by the "excellent" doctor Krugman.
The Fed is fixated on only 2 things now: maintain QE/ZIRP to allow the banks to earn their way out, and devalue the USD.
The first will not work beyond this year because Japan has proven it after more than 10 years of on and off QE.
The second - devaluing the USD to make US goods/services more competitive will also not work because
a)the politicians do not realise after decades of looking after bankers' and assorted lobby groups' lobbying protectionist lies, that america is not making anything that foreigners want to buy. Intel's chips are 50% made in Asia, Boeing's parts are from Japan/Korea, Pfizer's next drugs are made in India and researched there too. O iPhone is made in Taiwan/China. Of course our GM/Ford make great cars, but only for some Americans
b) it makes commodities, denominated in USD, more expensive for ourselves and not more expensive for our competitors. We'll end up in stagflation, our competitors are happy to supply us whatever we can still afford, use the funny money we print to buy up our assets, our real assets and not some funny Treasury toilet paper (actually its so poor quality it wouldn't be fit to wipe anyone's ass)
Zenon you are spot on.. liquidity definitely spilling over into equities
This little Wall Street piggy went to market,
Thousands of little piggies stayed home,
This little Wall Street piggy had roast beef,
Thousands of little piggies had none,
This little Wall Street piggy and the Fed put on lipstick, Thousands of little piggies wore none,
This little piggy and the Fed rigged the market, Thousands of little piggies got slaughtered.