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Job Creation is Still on Vacation
If I have learned one thing from 40 years in the financial markets, it’s that traders demand instant gratification. So when the July nonfarm payroll showed a loss of 131,000 jobs, an unchanged unemployment rate at 9.5%, and total unemployment of 14.6 million, you can count on them to head for the exits.
You can blame the government, as usual, which chopped 202,000 jobs, including 143,000 census workers. The state and local governments are emerging as a big problem, which cut 50,000 jobs, including 38,000 teachers, and are shoveling money out of the economy faster than the feds can shovel it in. Just when our leaders are pointing to education as our economic salvation, we are packing 45 kids into classrooms with broken computers, missing textbooks, and depleted teaching supplies. Should I be surprised that the girl in my local FedEx office doesn’t know that Tokyo is in Japan?
The scary thing is that the drag from the states and municipalities is a long term structural issue that has only made a few halting baby steps towards solution. In terms of management efficiencies and pension benefits, they are about where corporations were in 1980. Decades of cutting and reorganization are ahead of them. Some analysts see 250,000 in further cuts from them just in the next 18 months.
Of course companies don’t want to hire in front of a diminished long term GDP growth rate of 2% which I have been advertising ad nauseum in these pages. Just emerging from the near death experience of the century, they will only hire a few temps which they can jettison at the first sign of trouble. What’s the point of ramping up production when there are no new customers? This is why we saw a pitifully small increase in private sector jobs from 31,000 in June to 71,000. Forget about uncertainty. That is the political red herring of this election year.
I think we are suffering from permanent unemployment at the current levels, much like Germany saw in the eighties and nineties. If you are out of this economy, you are out for good, not exactly inspirational news for business. There is nothing either political party can do about this but blame each other, which we will hear a lot of in coming months.
My pet solution is for the government to borrow $1 trillion for ten years at the current, impossibly low interest rate rate of 2.88% and rebuild out entire aging, dilapidated interstate system. When I drive across the Oakland Bay Bridge into San Francisco it is a little disconcerting to see the blue water below shimmering through the cracks in the road. Using conventional multipliers, this would create 35 million jobs heavily weighted at the blue collar end of the skill spectrum where we need them the most. These jobs can’t be exported to China, and all 50 states will be in for some serious dosh.
This is an easy, efficient way to solve our employment nightmare. It is affordable, as it would only add $28.8 billion to our budget deficit, mere pocket change these days. I therefore don’t ever expect the idea to see the light of day.
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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Madman...I left the Bay Area traveling Interstate 50 across California to go backpacking near Tahoe. Didnt get 2 miles before seeing massive road construction boondoggles that were uneeded. It is a four hour drive, and I must have passed at least 15-20 projects. It was a little sickening---CA has a $20 billion dollar deficit, and these road improvements were obvious "make-work" pork---with very few workers, but tons of heavy equipment on site. All these projects: and the economy still sucks ass.
Job creation IS still on vacation..along with common sense. We will end up with some impressive roads, but when gasoline costs double in a few years, very few will be able to enjoy them. Some of these projects were as obscene as a bridge to nowhere.
While at the post office mailing a parcel to New Mexico I was told by a postal clerk that 'there in no such place as New Mexico, there is only Mexico'.
At first I thought the clerk was making a joke...but he wasn't. We argued about it until another clerk came over said to the one waiting on me that the correct New Mexico zip code is blah, blah, blah...for Roswell, weighed my parcel, and told me the shipping charge. The clerk that had been wrong was red faced and sullen and did not apoligize for being an azzhat.
How does one get a job in the post office not knowing that New Mexico exists? Maybe that clerk thinks there is only York, Jersey, and Lebanon but nothing with a 'New' prefix?
This is exactly the bullshit you can expect from people who trade paper for a living and consider that and their % skim to be 'work'.
Essentially, the vast majority of our society believe the "broken glass fallacy" to be false. The is easy to understand when you consider the same people believe Jesus is the son of God, born of immaculate conception and resurrected from the dead. People, please !!. Your parents eventually told you Santa was a lie. You were supposed to extrapolate on that .... Tooth fairy = lie. Keynesism = lie.
The jobs are gone because TPTB decided everyone but themselves needed to play the great global wage arbitrage game. Posters have already alluded to this end game. Hey, UAW guy. You lose. Teamster, you lose too. SEIU ... Beunos nochas. Dockworkers, you next. Cops and teachers, join the party.
The only solution is Smoot Hawely. Constitutionally allowed excise tariffs. Do what Brazil, Korea, Japan and China do. Build it there and sell it there or fuck off.
Absolutely correct! That's why I also came to the conclusion that listening to hedge fund experts is a monumental mistake to solving global economic crisis. People like Tyler Durden, Eric Sprott, and others of the same ilk who only understand profit they can skim, will never come up with a real solution to real economic crisis.
The real issues of global wage arbitrage, income inequality, taxation and wealth accumulation will never be addressed. The only solution that these types will come up with will be to gut social security, medicare and austerity.
Allrighty Limron... Glad u didna make me talk about engineers, accountants etc. also easily outsourced and insourced thanks to Billy Gates and Wipro H1b programs...
Here is what the shills from WallStreet said about Peter 'Nostradamus' Schiff.
http://www.youtube.com/watch?v=zz_yw0kq3MM&feature=youtube_gdata
to put America back to work, you first need to remove the CFR ivy league princes of economic theory..
any answer to our problems must be simple and strait forward or else it misses the elegant theory characteristic.
try riddling this:
1. massive tariffs on manufactured goods at least equal to the 20% plus on current American made products charged across the world.
2. expanding energy production via Nukes and the evil drill drill drill no more sanctuary off limits lands..
There are more ..simple and direct in providing jobs and a healthy economy here not an outsoourced hell the elites
have created..
simple but totally alien to those currently in poweer.
overmedicatedun...
I found some excerpts from R. Buckminster Fuller's Critical path.
http://www.maebrussell.com/Critical%20Path/Critical%20Path%20excerpts%20...
http://peakenergy.blogspot.com/2009/02/buckminster-fullers-critical-path...
With legal planning of their lawyer-advised banking leaders, the "haves" have now succeeded in cornering all the world's monetary gold as well as the preponderance of the world's petroleum resources - along with their refineries and world-around petro-delivery systems together also with acquisitions of all the atomic power-generating plants, originally paid for by the US taxpayers - and thereafter in severing the monetary system from the wealth system while marking up the negotiable equity value of gold and petroleum tenfold.
They also have contrived their own game of international monetary banking of international balances of trade and credit accounting, greatly aided by the priorly established existence of 150 "sovereign" nations around planet Earth.
That division of world political power into 150 sovereign nations is a consequence of thousands of years of successive and individually independent contriving of history's most powerful leaders. The number-one strategy of the successful leaders of history's successively established supreme socioeconomic control systems has always been to induce the spontaneous self-divisioning of those designed to be conquered and to keep them spontaneously self-dividing and their divisions lethally interarrayed against one another in order to keep them conquered.
The longer the self-divisionings can be self-perpetuating, the more spontaneously are the divisions accepted institutionally by the successive generations as being "natural" divisions ... The prime vulnerabilities of humanity, which make it subject to spontaneous self-dividing, are those of different speech patterns, skin color, religions, social customs, class or caste systems, political preferences and all varieties of individually unique "troubles", suffering and discontent.
The historical consequence of this aeons-ago-commenced employment of this grand strategy of 'divide to conquer and keep divided to keep conquered" accounts for the "natural" acceptance today by world peoples of the seemingly "God-given" existance of 150 sovereign nations of the world and their respective geographical division of all the world's dry land. ...
The plotted curve of the rate of gain for increasing proportions of all humanity being thus swiftly advantaged by the doing more for more people with less and less matter and energy per function - all accomplished with computers, satellites, alloys, etc. - indicates that 100 percent of all humanity will be thus advantaged before 2000 A.D. In less than twenty years (less than one generation) all humanity is scheduled by evolution (not by any world planning body) to become physically more successful and,metaphysically more interestingly occupied than have any humans ever been in all known history-provided that humanity does not commit ignorance-, fear-, and -panic-induced total-species suicide.
Why might they panic? All the present bureaucracies of political governments, great religious organizations, and all big businesses find that physical success for all humanity would be devastating to the perpetuation of their ongoing activities. This is because all of them are founded on the premise of ameliorating individual cases while generally exploiting on behalf of their respective political, religious, or business organizations the condition of nowhere- nearly- enough-life-support-for-all and its resultant great human suffering and discontent.
Reason number two for fear-wrought panic is because all of the 150 nations of our planet are about to be desovereignized by evolution; that is, they are about to become operatively obsolete - about to be given up altogether. There are millions in the U.S.A., for instance, who on discovery that their government was about to become bankrupt and defunct would become activist "patriots," and might get out their guns and start a Nazi movement, seeking dictatorially to reinstate the "good old days." If people in many of the 150 nations succeeded in re-establishing their sovereignties and all the customs-barrier, balance-of-trade shacklings, it would soon be discovered that the 150 nations represent 150 "blood clots" imperiling the free interflowing of the evolution-producing metals and products recirculation as well as of the popular technical know-how disseminating.
Gully---Well done! I read Critical Path @ 25 yrs. ago, and always remembered the passage recommending people be paid to stay at home. Thought it to be clever back then...Think it to be crucial to survival now. To claim that 10% of the people do 90% of productive work is an understatement, and IMHO, it is the chaffe---not the wheat that is doing the reproduction. Bucky was way ahead of his time---a luminary amongst apes.
I went through your links looking for that sentence. Imagine how the world has changed--the population increase, failed education, diabetes/obesity increase, peak oil and climate change. Nothing new under the Sun. Ironic.
the reason that dumbass bitch at fedex doesn't know that tokyo is in japan is because she is a lazy whore....no one taught me that tokyo is in japan, or that madagascar is off the coast of afrika, or that shangri-la is in lala land or where timbuktu is...the education racket didn't have a thing to do with her ignorance...even though it is a fount of ignorance and lies....
tony bonn
Dumb and lazy are two different things.
Matter of fact there are lots of variables on how and what people learn.
I wouldn't go off on the Fedex chick for not knowing basic Geography, some people just can't grasp that.
Yeah, and some people spend 22 years not reading books or looking at maps - instead listening to whore music from lady gaga and watching American Idol.
Maybe we could lease the interstate sytems to a Major contractors for a period of 10 years. All rules, speed limts, flow inovation, road and bridge maintence would be their responsiblity. The contractor would pay rent to the states and collect tolls.
That probably would not fly due to litigation. It would be nice to be out from under the regulatory burden, especially with regard to speed limits and speed traps, but the insurance companies would step in and nix the whole business, the same way they did in Montana. The fuckers have us by the balls, that is what fascism is all about.
Traders heading for the exits?!
The Dow went down 150 points on Friday and then recouped a large chunk of it in the last hour. It's now heading for 10,700 again.
Now, OK, this may be on the expectation of QE2 (although why will the Fed NEED to do it if the market is still holding up anyway. all its representatives need to do is couch their terms carefully and keep the expectation there?), but I would hardly call it heading for the exits!
DavidC
You're not very clear about one detail: do you want these construction workers to know that Tokyo is in Japan, when they apply for the job? or do you plan to do a McDonalds type courseroom class, so they learn Tokyo is in Japan by the time they finish the job?
I say get rid of hedge funds. The only reason a business should come in to existence is that it has CUSTOMERS. North Carolina has two great examples. The Angus Barn restaurant, where the Belk family stayed up all night washing dishes, the opening was so successful. SAS, Statistical Application Systems, where CEO Jim Goodnight has a billion dollar corporation that he steadfastly REFUSED to take public.
Wow two examples out of a whole state! And one is a restaurant! I lived around that area, I found it to be a high-tech graveyard. I finally gave up and moved out of state. Someday we will find out where all the tax monies went in North Carolina, something stinks to high heaven there, and it isn't just the overflowing pools of hog waste.
MadHedge, you are mistaken.
First I am surprised you didn't check your facts on the unemployment rate in Germany. The only reason it dropped from the chronic 10% it has had for well over a decade to the 7.5-8% (btw, a rate to aspire to?) is that the government fudges the numbers. They pay German companies to let their employees "take vacation" as a special one-off subsidy which allows the company to report the not-working employee as "employed". This statistics pumping subsidy will expire end of this year and the vacationing employees will instead become unemployed, officially.
Germany's employment machine is the export sector. Germany's exports have dropped 28% in the past 3 years and the forecast for 2011 is another drop of 5-8% over 2010. You can't employ people when the export economy is tanking.
Rebuilding the interstate, or any big infrastructure is nonsense in terms of increasing employment to any significant degree. Highway construction accounts for about 5% of the total US construction workforce (ie about 350,000 of the 7 million) where total 2010 highway construction budgets are estimated to be around $83 billion (btw, flat to 2009 - so much for "shovel ready stimulus"). So let's be generous and pump up the 83 billion to Washington style 830 billion in highway spending. With interstate construction costing about $15 million per mile, the 800 billion ought to cover the entire system across the U.S. (about 50,000 miles). At most, 3.5 million additional - temporary - jobs will be created. It would be much less since increasing highway spending doesn't proportionally increase labor input (if you build 1 mile with 50 workers you can also build 2 miles with 50 workers...).
I have no idea what "conventional" multipliers you are using. Even the multiplier used by Mark Zandi applies 1.59x. 35 million jobs?? We have already spent 135 billion from stimulus money on road infrastructure and construction employment in that sector has remained flat to 2009. What multiplier??
DOW and SP500 weekly charts update :
http://stockmarket618.wordpress.com
I thought we tried this already?
Print a trillion - give it the bankers- and they'll spend it, spreading it evenly around the economy in flash re-furbs, flash cars, cosmetic surgery, housekeepers & chauffeurs, exotic meals, private jets, expensive lawyers and hangers-on. The trickle-down economy in all its glory. A share in the wealth for all.......
It didn't work? How come?
Any expenditure has to be 'productive' and 'add-value'. Basically if you can't get the sun to grow it or dig it out of the ground, you have to produce something tangible and export it, or at least get a foreigner to pay for it. Anything else is just service-economy and effectively worthless.
You can argue that a good education will give long-term value to committed students in their working life later (if they can get a job), but you can't argue that a very inefficient education system spends its money wisely and well.
Thanks for the suggestions, but I think I'll ask somebody who can come up with some better solutions, like my 4 year-old son. Create blue collar jobs by rebuilding the interstate system? So in your world blue collar means idiot drone laborer? No need to train them, right? Just put a shovel in their hand and tell them to get to work? I suppose our 22 year-old female receptionist that we laid off last year will suddenly put on a hard hat and become a paver or concrete finisher?
And if you want to talk red herrings, let's start off with the ridiculous student/teacher ratio being some magic barometer for quality education. Have you ever stepped foot into a college lecture hall? If so, you'd know that you'll see one face and the back of 500 heads. Somehow they are able to learn...
I've grown weary of the notion that teachers are all modern day Audie Murphys, brave souls one and all, willing to sacrifice their lives for their students...oh yeah, and 4 months of vacation every year, and a 6 hour work day, and a fat pension that would make the cats over at Enron blush.
Labor is but one item on a virtually endless list of stuff my company isn't buying...stuff we don't need. Selling to the highest bidder is common sense, and when a company can sell its dollar for 10 widgets, or sell it for 1 widget and a mountain of red-tape, which should they choose? The best outcome of all of this would be the final nail in the coffin of unions...one and all.
It's unadulterated ignorance like this that discredits real conservatives with actual ideas.
When the hell was the last time you were in a school? I went to school from 7 AM to 3PM every day from late August to mid June and I didn't even do sports. 8 hours and nearly 10 months sure is a far cry from your ridiculous claims. And comparing 5-digit pensions with guys who stole tens of millions upon tens of millions? That's rich (pardon the pun).
Unless you were trying to use your poor memory and math skills to demonstrate how lousy your teachers were?
Boy, somebody sure got their hackles up over that one. Is Mommy or Daddy a teacher? Maybe you're living in their basement until you finish up your 5th year of your Masters so you can be a teacher?
I don't give a flying shit how many hours a day the BUILDING is open. Maybe your calendar is different than mine, but mine has 12 months, and when you take 3 weeks in June, July, August, and 1 week in September, that leaves 9 months. When you add in Christmas break, spring break, and 20+ holidays and "inservice days" that brings it down to 8 FUCKING MONTHS ASSHOLE.
And yeah, I'll stand by my assertion that some jerk-off pulling down 80% of his/her HIGHEST YEAR pay as a pension is bilking the taxpayers. Here's a glimpse into the mentality of these 'unsung heroes'...
http://news.yahoo.com/s/ap/20100806/ap_on_re_us/us_milwaukee_teachers_viagra
Not to mention that you're not working for the entire 7AM to 3PM time period...
Planning periods, free blocks, etc, are all time off that teachers have during this time.
Not to mention that they get off every martin luther king day, and all the other holidays that "normal" people don't get off.
Plus Spring break, Winter break, Roshashanna break, teachers are too lazy to teach break, etc.
School here...my wife is a teacher...is seven hours a day, although most teachers are not actually having class about 20-25% of the day. Early June thru early Sept off plus sick days, personal days, holiday vacations, etc.
I'm sorry, but there is no polite way to put this. You are extraordinarily dense. How can someone correctly identify two glaring national problems yet get the solutions so wrong?
The problem with our schools is not money. No one can make a serious, fact-based argument for more money in K - 12 education. We've tripled the money going into the schools since 1970, and there has been no appreciable improvement in learning. None.
The problem is a completely disfunctional bureaucracy, both teachers and administration. The problem is rigid ideological conformity in teacher's colleges. The problem is pathological aversions to accountability by principals and teachers. The problem is unproven fad-based curriculums, the problem is textbooks full of puffery and lies, the problem is privileging feeling and esteem over facts and accomplishment.
Most of all, the problem is a conflict of goals between the parents and the educrats; one sees the mission of school as providing useful knowledge and skills for a child's future (whatever path it takes), the other sees school as only a feeder system for colleges, a sorting mechanism to separate the usefully malleable from the too-dumb-to-matter, who are dumped out into the world without a single useful skill (why do you think the educrats have eliminated vo-tech? Those kids don't matter to them, they're not college material. And we'll outsource their jobs anyway.)
But the problem isn't money.
Infrastructure is a mess for similar reasons. The bureaucracy has taken over, and their priorities run counter to the public's interests. So little of the money spend on infrastructure actually goes to pavement, pipes, or powerlines.
First the bond guys get their cut. Then the civil engineers go to work (good) and design the thing. They send dozens of copies to dozens of agencies for approval (which never comes the first time), and those agencies send it back for revisions. Repeat. Repeat. Repeat. Repeat. Repeat another ten times. Repeat again, just because they can. Insert litigation here. Resolve litigation, and then begin approval kabuki dance all over again.
At this point, you should've spent well over half of the money, and you haven't even sent it out for bids yet. But remember, the important thing is for the lawyers and the bureaucrats to justify their jobs. Cost to the taxpayer? Fuck them.
So yeah, we need to work on education and infrastructure. But no more money to either. Take a wrecking ball to the whole bureaucracy and rebuilt it to serve the public.
No more money.
three chord sloth
Two points you missed.
Parents are not active in their childrens lives. They just don't give a shit and look to blame anyone but themselves for their childs failure.
Dennis Leary said that most kids diagnosed with Autism and ADD are just plain stupid. That parents don't want to recognize that fact.
Before Teachers on your list should come parents.
Second, as a result of Feminism we have lost top notch Female teachers and Nurses. Previously women were limited in their job choices, all the high quality educated women chose either Teaching or Nursing.
Now that women have more options they have moved beyond those professions.
Unfortunately they sure have. Carly Fiorna comes to mind. Martha Stewart. Christine Frohmer. Diasters, all.
Good points, guys. And sorry about the length of my rant; there's just so much worthy of slamming out there.
I have moved firmly to the "government is our enemy" camp over the past few years. It needs to change, NOW, and the "experts" who built it and the parasites who man it need to shut up and get real jobs in the real economy. The importance of their comfort and life plans have dropped to zero; they need to get out.
Education: agree. Teachers and administrators now expect to be paid as highly trained specialists or managers and corporate CEOs (maybe they are right, but it places a high burden on taxpayers). It seems they think more about getting their share of tax money and retiring at 55 with a full pension and full medical than educating kids. Nothing is too good or too high of a price for them and the schools because: "after all, don't you want the best for your children?"
Infrastructure and business in general: Too much friction in the pipe caused by too many people doing too little productive work. The need is not yet great enough to cut through the crap and just do it. Waste creates jobs.
ok, we'll rebuild the interstate system. and who the heck will use it if the commerce is down and gas is getting too expensive?
one thing you got right is that it will take at least 10 years to rewbuild it. hey, it's been ove 15 months since "someone" decided to repave the road that drive to work every day. typical 2 lane road, and expand it to 4 lanes. it used to have 45mph limit and not once did i see traffic on it. as i said, after 15 months the road is like a washboard, with asphalt joints, potholes and manholes that stick out 2.5" above ground. if you blink, you'll drive off the road, extra 2 lanes won't save you. and the speed limit in 25mph now!! one jogger already was killed by a car, becasue the sidewalk was blocked.
anyway, in china they put up a 40-story skyscraper in the same 15months, and probably lay down 50miles of highway as well. here, i hardly ever see construction workers on site, but i've heard they all make overtime and take hoem well over $100k. it's nice to be a union member during the obummer administration.
the bottom line is this: Dear Mad Hedgie,
i suggest that you keep a car on either side of the bridge, and take a private helicopter to fly over the Bay. I know in a few weeks there will be a alrge numebr of very well trained 'copter pilots coming back from Iraq, you should hire one or two of them. as WikiLeaks has shown, they are good. really good. and don't drive over that dilapidated bridge.
MHFT, you writing is solid and your narrative is always colorful. But at the end of the day I just can't get on board with your logic.
Spending another trillion would just be throwing the money down a rat hole. The government is too corrupt to implement infrastructure spending without massive graft. It would only serve to line the pockets of the henchmen of the ruling socialist elite.
I think that we should start two wars nobody wants and spend the trillions that way.
When, we can build schools for Iraqis instead of Americans.
Oh wait, that already happened? We're still doing it? Oh, good...
Bravo, Johnny!
+1000.
Buy gold!
More deep thoughts from MHFT. Sigh.
"If I have learned one thing from 40 years in the financial markets, it’s that traders demand instant gratification".
Amazing revelation, we can only hope the next fourty years are as enlightening.
This is not much better than paying people to dig holes. Why not privatize the infrastructure instead?
Austrian School of Economics. Look into it.
The "solution" you described has more or less already been tried by Obama and crew... see http://www.recovery.gov.
The problem with infrastructure spending is that most of it is "make work" type of jobs that don't actually produce anything, and they are on a temporary basis at that. Once a job is finished, the workers are out of work again. Sure, they probably put the money back into the economy by spending it, but is there really any net productivity gain? Is it profitable? I think not...
Simply put, we need to produce quality goods at competitve prices and export them to reduce our trade deficits... this is the only sustainable path to long term "recovery". And I do not see this happening any time soon, if ever.
Also, I am sick and tired of this term "create jobs". No entity can just "create jobs" out of nowhere unless there is a reason to. Or in other words, if there is no demand (which there isn't right now) then "creating jobs" doesn't make any sense, it isn't profitable, and it isn't productive. The only way the U.S. will ever start "creating" actual sustainable jobs is if there is enough aggregate demand to do so. Any other jobs are just a waste of time and money. The government is trying to create demand, and this is impossible.
Yeah, but... That spending moves GDP, and that is the goal. The ephemeral number is all important. The problem is that GDP is nobody's asset. It's just a number. You and I can sell the same widget back and forth between us ad infinitum and it adds to the GDP. The jobs "created" are secondary. It is the appearance of prosperity that counts, it induces confidence, doncha know.
Yeah - great idea. Let's borrow money to get us out of our debt-induced coma. More big government to cure us from more big government. I think we have tried this long enough, haven't we? Any new ideas out there? Bueller? Bueller? Bueller?
I expect no innovations to come from the current generation in power. One need only look at all the retro junk coming out (e.g. cars) to see that the Boomers ran out of ideas sometime in the 1980s. I mean, seriously, V-8 Camaros and Dodges that look like the ones from the 1970s? The originals were better, they should have stopped. The Rolling Stones need to stop, too. It's over, guys, it's just so over for you.
It is all Keynes, Keynes, Keynes, bang your head against a wall doing the same thing forever while expecting a different outcome. Meanwhile, the problems persist and become ever more acute.
When oil is permanently above 150, which will probably be in a couple years, we will then start creating jobs by the millions. Why? Because then companies won't be able to take advantage of the global wage arbitrage because it will be too expensive to ship manufactured goods and food half way around the world. It will also make your highway spending moot with the accompanying gas prices. Our world is about to get a whole lot smaller as it will be cheaper to make "cheap crap" locally.
Unfortunately from the bit of analysis that I have done, oil price and transportation are only a part of it... and I am pretty sure that $150 oil is not high enough to make a difference unless China starts adding industrial overhead (taxes, regulatory compliance, pensions) the way that the US has piled it on.
Unfortunately the US no longer has the equipment and raw material suppliers required to feed and grow industry so that will have to be recreated as well. It is at least a 10 year process.
And we have lost technology momentum by outsourcing that as well.
I think Krugman had this idea already.
But, why stop at replacing the entire Interstate system. Borrow another trillion (at low interest rates) and lets head back to the moon. That will employ millions of engineers. Hell, borrow another trillion (at low interest rates) and build maglev trains into everybody's garages. That will employ millions more shovel people and engineers (of two kinds). Hell, interest rates are so low lets borrow 10 trillion and payoff everybody's mortgage. Oh hell, interest rates are so low lets borrow 20 trillion and put solar panels on every building in the country. Oh hell, with interest rates this low, lets borrow 40 trillion and invest it in solar stocks which will increase so much it will pay off all the trillions borrowed in the previous sentences.
The biggest flaw in any Keynesian economist, in my opinion, is their inability to recognize productive and non-productive business activites. Rebuilding an interstate system would do nothing but delay the inevitable. The core issue is that we have more non-productive business activites (aka Does not produce any real productivity gains) than productive business.
In my opinion, economists need to go back to the basics and remind themselves that we only live better today than our grandparents simply because of productivity increases, and not because of financial innovation, or addition credit expansion. Until the existing non-productive system is purged, our current problems will remain. The only thing they are doing now is trying to protect the existing players from realizing their losses.
+1!
Although there are quite a few that live better than their grandparents (heck, better than most on this planet) due exactly to financial innovations. They are a few, but unfortunately they are also the ruling plutocrats that decide where this sinking phuckboat is heading.