This page has been archived and commenting is disabled.
On the Fed and WFP
The most disappointing element of Friday's NFP report was the drop in Work Force Participation (WFP). This important measure of the labor force fell to a 31 year low. A look at the details shows things are even worse than the headline report. Consider this chart of WFP for two groups; workers 22-55 (white) and those 55+ (brown). The lines crossed in 2002. The negative gap has widened every year. It's fallen off the chart the past three years.
.
This chart describes a real crisis for America. The long term consequences to the economic health of the country are tied up in this chart. All long-term macro economic analysis of the USA assumes that the current crop of younger workers will evolve to be a productive group for the rest of their lives.
The hope belief is that the younger members of the sub 55 group will have babies and buy houses. As they prosper, GDP will grow, tax revenues will rise. The younger workers of today have a very big burden on them. In future years they must generate tax revenue for Washington as D.C. has made very big promises on Social Security and Medicare that can't be met unless this crop of workers succeeds.
There is not a chance in hell that younger workers are going to prosper looking at this chart. As a result, future tax revenues will be less than planned. The economy will lag well below potential. Ultimately, the lines will cross; major cutbacks in entitlement spending will have to follow. This outcome is written in stone unless the trajectory of younger employment changes.
What to do about this problem? I don't think there is an easy answer.
One solution to the lack of upward mobility for those 55 and under would be to get more of the 55+ folks out of the workforce. The exact opposite is happening. Older workers are putting off retirement in droves. They have to. Their primary nest egg, their home, has turned into a liability. They are too old to invest all of their money in stocks, and there is no income to be had in a world of perpetual ZIRP. So they continue to work.
Lowering the minimum retirement age from 62 to 60 would change the direction of the lines. I advocate this, but the problem is that early retirement means lower Social Security monthly checks. I doubt that many could afford to retire on the meager income that SS would pay at age 60.
As a policy matter, the country is going in exactly the opposite direction. Republicans, Democrats, the Fiscal Commission and even the AARP have all been pushing for an increase in the retirement age. This may be necessary to "Save SS as We Know It", but more older workers means less opportunity for younger ones.
The only real solution is to magically make the economy grow. The rising tide would lift all the boats. But the country has been pushing the string on efforts to stimulate the economy for the past decade. Those efforts have not worked.
This takes us to Ben Bernanke and what he and his cohorts will decide to do next week. The betting is that Ben is going to act. One thing that Ben is likely to do is extend the ZIRP language for another year or two. Bernanke believes that a promise to keep interest rates pegged at zero until the latter part of the decade is what's needed.
Over the next four years over 10Mn people (and their spouses) will reach retirement age. Many of those people will have this conversation:
Honey, we've saved some money for this day, but sadly we can't get any return on what we saved, so we have to put off retirement, and work for another two years or more. Sorry.
How many people will say this and act accordingly? 20% sound about right? That's two million jobs that the sub 55 group will not get. The lines on the chart will get wider and wider and the future will get dimmer and dimmer.
One could not find an economist (of any stripe) who would not agree that the trends represented in the chart constitute a serious long-term threat.
Over the past few months Bernanke has made comments regarding the risks of sustained ultra-low interest rates. He has done a poor good job of informing us as to what those risks are, and what are their consequences. I've attempted to describe one of those risk here. I'm convinced that the +/- 55 WFP chart will deteriorate further in the next few years. Perpetual ZIRP will contribute to this very negative trend.
Bernanke knows this. I wish he would admit to it.
.
»
- advertisements -
I think Ben needs a new survey team, the one he has now is completly lost in the woods.
hitler was a bad bad boy...i wish he would have admitted it before he killed himself...?! why. why would ben tell the world he is screwing the little guy over and bailing out the 1%? man these stories are like little children tantrums....?
Few are DEMANDING an end to NIRP, it's KILLING the economy by KILLING SENORS(literally) and keeping the 55+ working, while DESTROYING A GENERATION OF SAVERS, only Jim Rogers, so far has the guts to say this, of all the spinless bastard bought-off pundits,( the fastest-growing careers in America, I'm sure of that.)
As it stands now, the 55+ group will retire into poverty. More than half don't have anytning saved, their houses are under water, etc... But, how about the following. Make 50 the new retirement age and make it mandatory! Everyone, including politicians and bankers!! Freeze or reverse medicare costs for this age group. Massive programs to house and nurse this trance through retirement that wish it. All of a sudden all those unemployed kids now have jobs and a future. The groups that caused the problem are put to pasture.
Big fan of "Logan's Run", ain't ya?
The bankers and politicians have to know all about what is taking place otherwise they would not be pouring money into DHS, TSA and local police departments like they are. They would not do these things because they cost a lot of money that is not there. They know what will be taking place. And, the only way they can know is if they are the ones bringing it about.
Scary. Especially so considering that 16% of the active workforce draws government pay. Another 20% or more is engaged in non-productive work, such as trading pieces of paper. How many productive workers support each non-productive person (in retirement, on welfare, or on the .gov payroll)? No more than two, that's for sure.
What's scarier is what Bruce didn't write about. As it becomes more difficult for middle-class Americans to start a family it remains just as easy for lower class Americans to start a family. With WIC, EBT, Medicaid and an array of other do-gooder programs here to pay for their offspring they have no reason to change their habits. It is amazing how many different ways the middle-class is being screwed.
Sadly, the middle clas continues to cut its own throat. It continues to believe in the Republicans and Democrats. It continues, most of all, to believe in government as the solution, not the problem. The realization on how completely anti-Ameridcan it is to believe in the benificence of the government continues to elude them. Until they realize that government cannot be trusted, and must be as small as possible, their problems will only get worse.
Sadly, the middle clas continues to cut its own throat.
Darwin would have something to say about that.
But, but...FDR! Him what saved us from the Great Depression...pretty amazing when you consider he couldn't even walk or stand without assistance. </sarc>
Every ox must be gored.
Bruce, you mixed up the line colors in your text:
it should read
workers 22-55 (white) and those 55+ (brown)
Right. Always was color blind. Fixed. Tks.
Now to your article:
I call bullshit.
The under/over 55 WFP rate has no meaning if you don't at first start comparing it with the age cohort size change.
The biggest problems of the younger member you don't even mention:
- burdened with student loans
- lots of good paying jobs are still leaving for overseas
- it's always easier for old folks to hold on to a job than for young ones to get into one
Lowering the minimum retiring age is a political "fix" that will change very little, and what change it does is short-term beneficial but long-term disastrous.
I would expect better from you, Bruce, than to post such a junk proposal.
You should state clearly that the young members will not be able to carry that imposed burden anyway, but all you're doing here is search for ways to squeeze as much as possible out of them.
Social Security gets taxed before student loans get paid.
The problem that you're missing is that +55 cohort took on a lot of the student loan debt to send their kids to college. Or they co-signed the loan.
and QE wouldnt be political at this juncture? Lets play connect the dots
You say:
all you're doing here is search for ways to squeeze as much as possible out of them.
Actually, my intent was quite the opposite.
Who burdened students with student loans? Martians?
Liberal professors and administrators running these ***king SCAMS called "universities?" Their parents were no help either. It is child abuse to let their kid take out huge loans for joke degrees. F them.
Some of us worked like dogs with 35 hour a week jobs and full course loads.
35 hrs a week? who the fuck puts in 35 hours and calls it full time? Government workers(and I use the term "workers" loosely) are the only ones I know of who consider that full time. 40 hrs is the norm for most slaves and more if your a salaried slave. So where do you work? A government shill who also takes a full course load of what? A Free government edumacation Freddie? Are you going to a fine Conservative collage like Harvard? Where all the smart liberal financial .phds come from?
I thought you were just a racist but now i know what your real job is especially when you keep blaming liberals for the fucked up USA.
Anyone who actually works 40 hrs knows should know there is no difference between parties as they all answer to their bosses the BANKSTERS. Your employer also?
Reread his sentence: "Some of us worked like dogs with 35 hour a week jobs and full course loads."
He both worked 35 hrs at a job and had a full college schedule. He "worked" in order to pay for school. That's pretty impressive to me.
40 hours a week is what I use to describe a slow week at work. I told someone that once (only working 40) and they told me “That’s what everyone works” I said oh yeah …… I forgot.
35 hrs give me a fuckin break!!!!!!!!!!!!!!! He seems to like that benefit of government liberal socialism.
Why do we continue to call these academics "liberal"? That is such a misrepresentation. They all seem pretty totalitarian in their desire to have big government tell us how to live our life. Tell me what is liberal about the public union goons that want to force us all into their gulags of lower learning?
As for the younger generation, can they be bothered to put down their god damn iPad, iPod, iWhatever long enough to be bothered with how badly the oldeer generations are screwing them? They are more concerned with updating Farcebook or Twitter than they are in how their country has been completely sold out to central planners and their cronies. Shut down Facebook and you might get a reaction. Try to talk to them about the massive debt that has been placed on their backs and you would be lucky to get an "OMG".
Liberal as a term has been subverted.
http://dictionary.reference.com/browse/liberal
http://conservapedia.com/Liberal
Libertarians are actually the political party that advocates liberalism. Not the democrats.
"Not the democrats."
What a muppet...
There are plenty of "blame the victim" arguments for auto loans, houses etc. Sure it's true but it's only half of the story. Whatever happened to "underwriting standards"? Whatever happened to "creditworthiness standards"? We all know the answer. The underwriter didn't give a damn because he could sell the loans to a bagholder and he knew it didn't matter anyway because Mama Socialism for Corporate America would bail him out at the printing press, and "austerity measures" would pay the difference.
So let's balance the argument a little.
maybe they should be able to discharge thru bankruptcy, at least then they take a credit hit but can move on.
Claiming the moral high ground for oneself will not help those student-loan carrying young members one iota in paying for all those baby boomers social security checks. Which was what Bruce's post is all about.
This would have made a great lecture for Bernanke's 4 part seminar at George Washington University.
It would even be a nice piece for the ever accomodating Jon Hilsenrath.
Don't think you'll see either, so keep up the good work Bruce.
The holy grail for the FED remains inflation which is not inflation.
Money printing and debt deleveraging together in the void.
Who would have thought Bernanke could be so Zen ?
Or crazy.
Doubt if the American oligarchs care very much for anything beyond the next few years ... they as well are probably of the view the US will not survive in anything like its current form.
So they are not 'planning' anything re Social Security etc. It is just keeping the game afloat for 84 months max, while they make their final moves with their US Empire tool.
And aside from that, the whole world is probably not far from the cusp of Karl Denninger's oft-said point ...
All government 'welfare', pension-type payments to the elderly included with everything else, needs to be paid out of current tax revenues in any given country. Period.
".. they are not 'planning' anything re Social Security etc. It is just keeping the game afloat for 84 months max, while they make their final moves with their US Empire tool. "
but but but .. that would be a conspiracy
and if you believe in conspiracies, then that means you support free markets and are therefore skeptical about
http://websites.psychology.uwa.edu.au/labs/cogscience/documents/Lskyetal...
from the paper: "conspiracist ideation contributes to the rejection of science. Acceptance of science, by contrast, was strongly associated with the perception of a consensus among scientists."
evidently the link was truncated
http://tinyurl.com/bl52u57
"NASA faked the moon landing—Therefore (Climate) Science is a Hoax: An Anatomy of the Motivated Rejection of Science"
Stephan Lewandowsky University of Western Australia
Klaus Oberauer University of Zurich and University of Western Australia
Gilles Gignac University of Western Australia
(in press, Psychological Science)
the paper implies that skepticism about science is an aberrant condition, equivalent to delusions of conspiracy. the undercurrent of rah-rah science in the paper collides with the reaiity that scientific results (for example, in medicine) can be bought.
see the recent article http://tinyurl.com/8qmer8g
"Doc Who Faked Pfizer Studies Gets 6 Months in Prison, Showing Why Gift Bans Are a Good Idea "
and this paper http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2685008/
"How Many Scientists Fabricate and Falsify Research? A Systematic Review and Meta-Analysis of Survey Data"
concludes that "it is likely that, if on average 2% of scientists admit to have falsified research at least once and up to 34% admit other questionable research practices, the actual frequencies of misconduct could be higher than this."
conflict-of-interest disclosures are increasingly required in medical journals precisely because readers suspect authors could conspire with their benefactors to demonstrate a desired outcome.
(apologies for neglecting /sarc in the previous post)
404 - File or directory not found. The resource you are looking for might have been removed, had its name changed, or is temporarily unavailable.
and although the paper didn't say so, acceptance-of-science is also associated with the perception that research funded by bigPharma produces the same solid results as research not funded by bigPharma. science is science, and it can't be influenced by the source of funding.
/sarc
there.
'science is science, and it can't be influenced by the source of funding.'
'Science is science, but it can easily be influenced by the source of funding.'
There, fixed it for you. BTW, your link, much like your posts, leads nowhere.
Wait until all the baby boomers try to sell their $300k+ nest egg homes for retirement. Then we'll see how many $300k+ home buyers are out there in the next 10 years. Ya need a decent job to move up and buy a $300k+ house from a retiring boomer.
I sold my $280K(what I paid for it) home for $134K already. I expect that drill to be repeated many many times over the next 15 years
What about the next generation after baby boomers ? First they have to pay off college student loans that are not subject to normal bankruptcy proceedings before being eligible for mortgages. Then the sub prime car loans, then the credit card loans and all this time worry that their job may be outsourced overseas or replaced in US by recent proffessional emmigres with socialized education. Cards are stacked against Americans and citizens of all developed nations---but the multinationals will thrive until the collapse
The baby boomers and seniors who voted for the islamic really f**ked-ed-ed themselves "real good."
Yeah yeah red team blue team but Mullah Hussein's voters want mo money from those baby boombers & seniors with $300 K homes.
The EBT/WIC card natives are restless in Greenwich Village. These libs are going to be easy meat when the SHTF.
http://newyork.cbslocal.com/2012/09/08/vicious-mob-trashes-motorists-car-in-greenwich-village/
"Mullah Hussein's" So when does this Muslim start bombing Israel? Whats holding him back? This radical Muslim bank employee? Oh right the criminal bankers are all joooz so we can't have a Muslim president bombing the banksters homeland,that would be terrorism. or would it?
Wow ... and we want the 22-55 cohort to take over?
Freddie, I am curious - have you ever met a Muslim?
Yeah, I've met plenty of them in graduate school and they were all ignorant in the use of soap and showers. They also liked to wash their feet in sinks and didn't know how to use toliet paper.
Amazing they'll wash their feet but forget about the rest.
And, you try sitting in a classroom during a summer semester while more than 3/4 of the students and the instructor haven't bathed in who knows how many months/years?
While I appreciate your anecdotal perspective on the apparent superiority of western personal grooming customs/habits, I am really interested in Freddie's response to my query.
I will chime in here. I met two Muslims whle working in a medium sized city govt. job. One followed his faith fairly strictly and one was more like a Western Christian where the faith was there in the background. I liked them both as people. One was from Pakistan and one was from Jordan. They were both student refugees from the Gulf War (I think) and I know at least one was (the one I will discuss). He was heartbroken that his dying Dad (cancer) could not immigrate and come to the USA because he was a member of the Bathist party..even though he had to be a member of the party to get a Job in Iraq under Saddam. He did not care for Saddam at all. He had the means to bring his Dad here and support him but could not.
I was always impressed that the one who was more strict actually followed his faith (no lying, no gambling, no pork, no debt..etc). I would always give him shit about never tasting bacon. About the only vain thing he did was smoke cigarettes (which I also partook in at the time). He met an American wife in a library and asked her to marry him the very same day. She did. They had a cute little kid together.
I had a lot of good conversations and ended up making very good friends with the Pakistani. He was a very gracious person. He used to bring me food to share at lunch as friends. He was a great cook. I could not identify anything he would bring but it all tasted good.
I think he was equally amazed that as a Westerner and supposed Christian that I knew very little about the Bible. He asked a lot of questions about the Bible that I could not answer. He said that in Pakistan, Muslims called people who followed the New Testament, "People of the Book". He said that he was taught that Jesus was a Prophet. He had a lot of questions about Jesus that I could not answer (I did not go to church or Suday school growing up).
He had a great sense of humor about the differences between Western Culture and his home. He was always making jokes about how bad it was for him growing up in Pakistan and living under Saddam. He would mention things like bribes, hanging three deep on the public transportation on the way to school. How his Dad had to have political connections to get a job, etc. Even though he grew up with a Dad that earned a decent amount of money in a technical Job, (I think) he was very impressed with how wealthy the people in the USA were. He very clearly liked living here. He did not want to go back to Pakistan. He wanted to immigrate the rest of his family here. The only policial opinion I remember him having was that he did not like how the USA used it's weight to push other smaller countries around but that was his main and only beef with the USA.
I finally lost contact with him, but he was a good friend for the time that I knew him.. My overall impression of him was very good and he had a very good work ethic (way better than me). He actually made me question my value system deeply because in contrast to him, I was really sort of a materialistic asshole - whereas he believed in faith, family, hard work (just being honest here - People change).
He would always stress how Islam meant 'Peace' and he would always use their greeting 'asalam walkeum..or whatever'. I liked that greeting. I think it means peace be upon you..etc. He always laughed and got a big kick out of it when I would say the customary response back to him...I don't remember it now. One of his big dreams was to take his Son back for the pilgramage that Muslims all try to do. I actually wish that I would have kept contact with him and remained his friend. (You have to be a friend to have a friend). I thought about him a lot after 9/11 and was concerned about him after 9/11.
He was not politically active or any kind of threat to the USA but I could see how he could end up being thought as one. I bet he has a really high level Govt. job now. He was no slacker.
Why bother?
yeh, and where are those jobs coming from?
Obummer has not created one job (he sez he has!) since he became prez!
Right ... Jobs come from small business (100% of all net jobs in the last ten years are from small business) while BHO's push has always been focused on Big Pharma, Big Auto, Big Green, Big Health, Big Finance, Big Education, and Big Wall Street (caus dats where is the $). Small Business has been really hurt by BHO
They are too late. They were supposed to sell in 2007 at the latest, which I did, mwa ha ha ha ha! One must stay ahead of the curve.