by Jack Lee
The jobless rate came out today and a piddly 69,000 new jobs were added to our besieged economy. This immediately resulted in the stock market recoiling over 220 points.
Unemployment now stands at 8.2%, not good, but another data set, we rarely hear about, also includes under-employed and those people who have quit looking for work and that number is over 17%. That’s a job crisis! When you consider that 50% of those who have found work are under-employed it casts an even darker shadow on the dismal unemployment number.
Amid the politics, the finger pointing from the left and the right, from the fair traders and the free traders, there is one set of facts that is not subject to manipulation, it is our demographics. The age of the baby boomers has gone through their cycle of spending, which peaked at age 48 and now they’re downsizing at age 65. Equally important to consider is they’re saving what’s left their retirement money and not spending anywhere close to what was predicted. The Great Recession has caused all of us to be more frugal and to protect our dwindling assets. This drop in spending has had a dramatic impact on the entire economy.
Demographics tell us the next wave of big spenders will be the Echo Generation aka Gen X, the children of the baby boomers. We count on spenders to drive an economy, but the Echo gen is a smaller number than boomers and they are less well off. Their personal peak spending years are still 3-4 years out. Creating stimulus money, bailouts and tax adjustments won’t alter the demographics. Life in America under the old rules have changed.
In our recent history each successive bubble that went kapow. . . things got worse as we became weaker. It started with the nationwide energy scandals (Enron, et al), then it went quickly into the dot com bubble, then the housing bubble. The latter brought on the banking crisis and in each case the collapse was deeper and more profound than the previous.
Stimulus money (creating dollars from thin air) takes about 6 months to impact an economy and then it lasts about 6 months and we’re back to wherever the economy was headed anyway only saddled with the new debt. We’re not anywhere near recovery and headed our way is the convergence of economic forces that are brewing into an epic storm and we’re unprepared to cope with it.
At this point one thing should be abundantly clear: This nation was already injured when Obama took office and we desperately needed a leader with the skill and experience of a sage physician, but what we got was a first year med student. His expensive blunders have left the nation anemic and at risk to another recession or worse. Europe is floundering, our retirement savings have been ravaged, major businesses have gone under or left for Mexico or China, trust in government is at an all time low and our economy is not recovering. This takes a heavy toll on our collective psyche as an epic storm brews.
Stay tuned, more to follow.
I understand that unemployment numbers were revised down again for March and April too.
http://www.commentarymagazine.com/article/please-excuse-my-president/
Thanks Tina, these are important facts to add. You know there is so much stuff we could add it would take hundreds of pages, but suffice to say…we’re in big trouble with the amateur in the White House. You notice how they have been spending the taxpayers money? Michelle lives it up even more than Golf Course Barry. -Jack
It’s not a blunder, and he’s no amateur.
And Spain is about to implode.
http://globaleconomicanalysis.blogspot.com/2012/06/edge-of-precipice-doublethink.html
The whole EU is a house of cards. And China’s economy is slowing.
The fact that the US economy is performing so poorly in an election year is a testament to how much of a failure all the gummit stimulus and Federal Reserve hokus pokus was.
So what do these failures want to do? Even more of the same!
The “News” and Review had a nostalgic piece for Roossievelt’s Raw Deal and some ivory tower poli sci professor at Chico State opining for more stimulus.
Hello!!!! Isn’t it obvious it won’t work. And besides, where is the money going to come from? The fed gummit is nearly 16 trillion in debt with tens of trillions of unfunded liabilities. The state and local gummits are also drowning in debt.
The bottom line is that we are in the greatest debt bubble the world has ever seen and there is no painless way out. And adding more debt is insanity.
But this is what our rulers are going to do. ARE YOU PEOPLE PREPARED FOR THE GREATER DEPRESSION???
GET YOURSELF GUNS, GRUB AND GOLD.
Become self sufficient. Learn to grow your own food. Heck, eat weeds if you have to. There are several edible weeds you can grow that are good for you and taste good, too.
And IF it were no blunder… and IF he was no amateur… that is the possibility too disturbing, too frightening for most of us to even imagine.
I’m with Soaps…this man is doing exactly what he came to the WH to do.
I also think he thinks he will pull this out. God help us if he does!
All of the faithful that are still supporting and spinning for him, certain media, Reid, Pelosi, Black Caucus members, and others will continue to look at the post crash mess they orchestrated and say someone else did it.
Jack have you seen this?
http://www.scribd.com/fullscreen/95493792?access_key=key-2bukmjiiyjtzns9qcorz
“This Jobs Chart Will Scare You and Put Things Into Perspective:”
After the Labor Department released its dismal jobs report this morning, Business Insider thought it would be useful to revisit the following chart from from Bill McBride at Calculated Risk:
What it shows is the trajectory of job losses and gains from the start of the recession and the recovery compared to all other post-WWII job losses and recoveries, Business Insiders Joe Wiesenthal explains.
As you can see, this collapse was totally unprecedented compared to past ones, and the recovery was far weaker than any others, he adds.
But dont worry, Rep. Barney Frank (D-MA) says President Obama has helped turn this economy around.
View chart here:
http://www.theblaze.com/stories/this-jobs-chart-will-scare-you-and-put-things-into-perspective/
Got my guns, grub and silver. Couldn’t afford gold.
Joseph…wow!
Got the survival kit but I think I’ll add prayer.
Yes, it would seem that the private sector simply is not going to pitch in.
So our President suggests we borrow some of all this very cheap capital (the federal rate is below 1%), and put all our public sector folk back to work, build some infrastructure … and then some.
But will the House see the wisdom in this? Not likely.
Joseph, that is in many ways the same data I have been using, but it’s too technical for most of our readers, so I didn’t bother publishing it. However, I tend to agree with it. I see at least a 30-40% possibility that the tumbling block scenario could come true and that is more than enough to start taking reasonable precautions.
I would urge anyone with an above average IQ or at least a working understanding of stock charts to go to that website and take a look.
http://www.scribd.com/fullscreen/95493792?access_key=key-2bukmjiiyjtzns9qcorz
Libby, why do you think the private sector is not going to pitch in? Now let’s think about that for a moment shall we? You see the government as trying to jump start the economy, borrowing money at a low interest, building more infrastructure as did the WPA in the 1930’s.
Libby we’ve borrowed enough money now to match our GDP and it didn’t work. The borrowing did not instill confidence. We must have demand before we can increase supply, you don’t build supply and hope for demand, unless you are Obama or some other socialist. The old USSR was famous for churning out products that were unpopular, but they forced upon their captive public. Kinda reminds me of what Obama to GM and their overpriced, underpowered Chevy Volt.
Libs, too many companies are very damaged from the Great Recession and government has very little room left to maneuver. Their answer (White House) has been to increase taxes. Companies that can have been hoarding cash because they see a giant RESET coming where the economy will re-enter recession, possibly triggered by collapsing economies in Europe and then spreading to a banking collapse, lending stops, etc. It’s a dire, but not impossible scenario and it has many intelligent and informed people seeking safety with liquidity and limited debt (spending).
There’s much more to say, but I have to load hay this morning. I’ll get back to you.
Did you see this article Fact Check article in Yahoo News?
THE FACTS: Romney is right that taxpayers are on the hook for the $528 million loan to Solyndra and other losses from the loan guarantee program. But the Obama administration said such losses were expected when Congress created the high-risk program, which is intended to boost cutting-edge projects that would have trouble obtaining private financing.
An independent review indicates that the government could lose nearly $3 billion on green energy loans just under one-third of the $10 billion Congress set aside.
http://news.yahoo.com/fact-check-romney-misses-mark-solyndra-claim-193816773–finance.html
FACT CHECK: Romney misses a mark on Solyndra claim
By MATTHEW DALY | Associated Press
WASHINGTON (AP) Republican presidential contender Mitt Romney has revived charges about the failed solar company Solyndra as he assails President Barack Obama’ green energy policy. But he didn’t get the story completely straight when he accused the administration of favoring “cronies.”
Solyndra, the first renewable energy company to receive a federal loan under the 2009 stimulus law, went bankrupt last year and laid off its 1,100 workers, leaving taxpayers on the hook for more than $500 million.
The company’s implosion and revelations that Obama administration officials rushed to complete the loan in time for a September 2009 groundbreaking have become an embarrassment for Obama and a rallying cry for GOP critics of his green energy program.
On Thursday, Romney stood outside the company’s former headquarters in California to decry Solyndra as Exhibit A of presidential missteps on the economy.
A look at some of Romney’s assertions and how they compare with the facts:
___
ROMNEY: “An independent inspector general looked at this investment (Solyndra) and concluded that the administration had steered money to friends and family to campaign contributors.”
THE FACTS: There is no proof and it appears unlikely that Energy Department Inspector General Gregory Friedman was talking about Solyndra when he testified in March 2011 about stimulus contracts. Friedman said his office was investigating whether such contracts were steered to friends and family, presumably of government officials in charge of spending stimulus money. Romney cited a Newsweek article that referred to Friedman’s testimony.
But Friedman did not say that such claims had been proved, and there is no evidence he was including Solyndra in his comments. The testimony came nearly six months before the company declared bankruptcy. And there is no evidence that family members of top federal officials received any favors. Friedman’s office is among several federal agencies that are investigating Solyndra.
___
ROMNEY: “President Obama was here to tout this building and this business (Solyndra) as a symbol of the success of his stimulus. It’s a symbol not of success but of failure. It’s also a symbol of a serious conflict of interest (and) how the president thinks about free enterprise. Free enterprise to the president means taking money from the taxpayers and giving it freely to his friends.”
THE FACTS: So far, there is no indication of White House interference with the energy loan process. There is no question, though, that campaign contributors have ties to Solyndra and other energy companies that have received federal money. Romney appeared to be referring to possible political influence wielded by two major Obama campaign donors with ties to Solyndra.
The Energy Department hired Steve Spinner, a former sports fitness executive, to help monitor the loan guarantee program that benefitted Solyndra. Emails released to Congress show Spinner was actively involved in the Solyndra loan, despite pledging to step aside because his wife’s law firm represented the company. Spinner, who left the Energy Department in 2010, was a major contributor to Obama’s 2008 campaign and is again raising money for the president’s re-election.
George Kaiser, an Oklahoma billionaire, invested $400 million in Solyndra through an investment vehicle connected to his family foundation. Kaiser was a “bundler” for Obama’s 2008 campaign, raising between $50,000 and $100,000 for the president, records show. He also was a frequent White House visitor in 2009 and 2010.
Kaiser has said he played no part in helping Solyndra win the 2009 loan, but emails to Congress show he discussed Solyndra with the White House on at least one occasion. Kaiser also directed business associates on how to approach the White House and Energy Department to help Solyndra deal with its financial problems.
Internal emails show administration officials were keenly aware of political considerations in the Solyndra loan, especially during later efforts to keep the company afloat. But none of the records released to date shows the White House or top administration officials pushed the loan specifically because of Kaiser or other campaign contributors.
___
ROMNEY: “If the business failed, as it did, it’s the taxpayers that get stuck with losing a half a billion dollars. So it’s heads and his cronies win, and tails and the taxpayers lose.”
THE FACTS: Romney is right that taxpayers are on the hook for the $528 million loan to Solyndra and other losses from the loan guarantee program. But the Obama administration said such losses were expected when Congress created the high-risk program, which is intended to boost cutting-edge projects that would have trouble obtaining private financing.
An independent review indicates that the government could lose nearly $3 billion on green energy loans just under one-third of the $10 billion Congress set aside.
The report by former Treasury Department official Herb Allison said the loan program needs more rigorous financial oversight and stricter performance standards to reduce the risk of future defaults.
The review did not involve Solyndra or Beacon Power Corp., a Massachusetts energy storage company that also went bankrupt after receiving a federal loan. The government has lost $567 million from those two loans so far, although officials say they could recover as much as $28 million from the sale of Beacon to a private equity firm.
Energy Secretary Steven Chu said administration officials “have always known there were inherent risks in backing innovative technologies at full commercial scale.” But he said the “vast majority” of companies that received loans are still expected to pay them back in full, with interest.
Okay Libby I’m back. It got too darn hot out there to be pitching hay bales, especially at my age (66).
Obama is to a great extent mimicking what we did under Roosevelt during the 1930’s. The US wound up spending an extended time in recession and it was longer than most other nations because of the New Deal. It was an unprecedented move towards socialism that never went away. Now Obama is adopting many of the same old socialist plans FDR brought us.
Stew Pedasso summed it up nicely when he wrote, “Mounting evidence, however, makes clear that poor people were principal victims of the New Deal. The evidence has been developed by dozens of economists — including two Nobel Prize winners — at Brown, Columbia, Princeton, Johns Hopkins, the University of California (Berkeley) and University of Chicago, among other universities.
New Deal programs were financed by tripling federal taxes from $1.6 billion in 1933 to $5.3 billion in 1940. Excise taxes, personal income taxes, inheritance taxes, corporate income taxes, holding company taxes and so-called “excess profits” taxes all went up.
The most important source of New Deal revenue were excise taxes levied on alcoholic beverages, cigarettes, matches, candy, chewing gum, margarine, fruit juice, soft drinks, cars, tires (including tires on wheelchairs), telephone calls, movie tickets, playing cards, electricity, radios — these and many other everyday things were subject to New Deal excise taxes, which meant that the New Deal was substantially financed by the middle class and poor people. Yes, to hear FDR’s “Fireside Chats,” one had to pay FDR excise taxes for a radio and electricity! A Treasury Department report acknowledged that excise taxes “often fell disproportionately on the less affluent.”
Until 1937, New Deal revenue from excise taxes exceeded the combined revenue from both personal income taxes and corporate income taxes. It wasn’t until 1942, in the midst of World War II, that income taxes exceeded excise taxes for the first time under FDR. Consumers had less money to spend, and employers had less money for growth and jobs.
New Deal taxes were major job destroyers during the 1930s, prolonging unemployment that averaged 17%. Higher business taxes meant that employers had less money for growth and jobs. Social Security excise taxes on payrolls made it more expensive for employers to hire people, which discouraged hiring.
Other New Deal programs destroyed jobs, too. For example, the National Industrial Recovery Act (1933) cut back production and forced wages above market levels, making it more expensive for employers to hire people – blacks alone were estimated to have lost some 500,000 jobs because of the National Industrial Recovery Act. The Agricultural Adjustment Act (1933) cut back farm production and devastated black tenant farmers who needed work. The National Labor Relations Act (1935) gave unions monopoly bargaining power in workplaces and led to violent strikes and compulsory unionization of mass production industries. Unions secured above-market wages, triggering big layoffs and helping to usher in the depression of 1938.
What about the good supposedly done by New Deal spending programs? These didn’t increase the number of jobs in the economy, because the money spent on New Deal projects came from taxpayers who consequently had less money to spend on food, coats, cars, books and other things that would have stimulated the economy. This is a classic case of the seen versus the unseen — we can see the jobs created by New Deal spending, but we cannot see jobs destroyed by New Deal taxing.
For defenders of the New Deal, perhaps the most embarrassing revelation about New Deal spending programs is they channeled money AWAY from the South, the poorest region in the United States. The largest share of New Deal spending and loan programs went to political “swing” states in the West and East – where incomes were at least 60% higher than in the South. As an incumbent, FDR didn’t see any point giving much money to the South where voters were already overwhelmingly on his side.
Americans needed bargains, but FDR hammered consumers — and millions had little money. His National Industrial Recovery Act forced consumers to pay above-market prices for goods and services, and the Agricultural Adjustment Act forced Americans to pay more for food. Moreover, FDR banned discounting by signing the Anti-Chain Store Act (1936) and the Retail Price Maintenance Act (1937).
Poor people suffered from other high-minded New Deal policies like the Tennessee Valley Authority monopoly. Its dams flooded an estimated 750,000 acres, an area about the size of Rhode Island, and TVA agents dispossessed thousands of people. Poor black sharecroppers, who didn’t own property, got no compensation.
FDR might not have intended to harm millions of poor people, but that’s what happened. We should evaluate government policies according to their actual consequences, not their good intentions.”
It sounds too simple, but it’s all true: We can’t borrow our way to prosperity and government can’t employ everyone. Government does not create wealth, it lives by taking the wealth from others. The only people who create sustainable wealth and sustainable jobs is the private sector operating under the basic rules of capitalism. That’s it Libby, you’ve been properly schooled, but did any of it sink in?
Libby is always yapping about the private sector not “pitching in”. What a crock!!!!! Where in holy helicopters does she imagine the money for government comes?
The private sector creates wealth ONLY when there is an opportunity to benefit from the risk, investment, and work. They hold back when that path is uncertain or fraught with danger signs. When the path is clear those risk takers become energized and put people to work. That enlarges the tax base (no need to stifle business OR raise taxes). When most Americans can find work both the private companies and the employees pay taxes and because of that it is possible to also run government. Government workers also pay taxes too but they should be mindful that they pay them with money generated in the private sector.
Given the LOUSY job that government has done why would ANYONE imagine that throwing good money after bad would be smart or help?
Given the pending tax increases that are already a concern (Obamacare & Bush Tax cuts expiring) and given the constant threats to raise taxes even more, and given the administrations policy of demonizing and punishing energy producers (a must have for all business) why would anyone hire or try to expand their business? Why would anyone invest in new equipment?
Businesses and the wealthy are holding on to cash because they have no idea just how FAT their tax bills next year will be. They have no idea how FAT energy and freight bills will be, they have no idea how FAT their healthcare bill will be. When gas prices surge even the garbage bill goes up…everything goes up.
This is so easy to grasp…my teenaged grandchildren can grasp it.
The Don Smith Show: “Why Wisconsin Matters”
http://www.youtube.com/watch?feature=player_detailpage&v=m5kwKTxxEy4
George Soros: Europe Has Three Months to Stem Euro Crisis
George Soros, a billionaire investor who in part made his fortune by predicting economic trends, delivered a speech today in Trento, Italy where he said that Europe has three months to rectify the Eurozone crisis, after which time it will be too late.
http://www.theblaze.com/stories/george-soros-europe-has-three-months-to-stem-euro-crisis/
“It started with the nationwide energy scandals (Enron, et al), …”
Always the revisionist. No, a little further back … to the S&L Scandal. That was the last big taxpayer bailout.
(The dot.com thingy didn’t actually cost us anything, and Enron’s investors/employees bore the brunt of that little bit of cleverness.)
You know, I could not find out, and I looked. The total tab to us taxpayers for the S&L thing was reputedly 130B, 30 of which seems to be still outstanding. A drop in the bucket containing the current 3 Tril. Is that progress? I suppose so. It was thirty years ago.
I expect thirty years from now we will have paid off the 3 Tril. But those years won’t be no fun, and I like to think I’ll be long gone, and no burden on me nephews.
“Libby, why do you think the private sector is not going to pitch in?”
Because they haven’t. As current jobs numbers amply demonstrate.
“We must have demand before we can increase supply, ….”
You put the recently turfed public sector back to work and you’ll have demand … right?
“… too many companies are very damaged from the Great Recession ….”
Bunch o’ chicken shit, unpatriotic, greedy, frightened, selfish pigs is what they is … which is why my government has to step in … just like in ’33.
“Companies that can have been hoarding cash ….”
See above.
Gottcha. Big time.
Seriously, Jack. That’s what our government is for … to override primal fears … and make civilization, dragging the uncivilized along as best we can.