NOT SO PRETTY A PICTURE (The Economy)

Lafayette · Feb 22, 2016

These three infographics (from the Economist (20Feb2016) are not so pretty a picture

Excerpt from the article:

If policymakers appear defenceless in the face of a fresh threat to the world economy, it is in part because they have so little to show for their past efforts. The balance-sheets of the rich world’s main central banks have been pumped up to between 20% and 25% of GDP by the successive bouts of QE with which they have injected money into their economies (see chart 1). The Bank of Japan’s assets are a whopping 77% of GDP. Yet inflation has been persistently below the 2% goal that central banks aim for.

In America, Britain and Japan, unemployment has fallen close to pre-crisis levels. But the productivity of those in work has grown at a dismal rate, meaning overall GDP growth has been sluggish. That limits the scope for increases in real wages and in the tax receipts needed to service government debt.

Well, we can't say they didn't try hard. Our willingness to blame the "gummint" for the lack of work is a kneejerk reaction that does not address the real problem. That is, lack of sufficient Demand that sparks employment enhancement.

The pre-crisis levels of unemployment we are talking about (in the US) were around 5% - which are about the same as recent history minimums. See the recent history of unemployment rates here. Note that we've fallen a long way since its historic high of close to 10% in 2009*.

More important perhaps is the "other face" of unemployment that is rarely considered - the Employment to Population Ratio. Which is far less sanguine.

That is, if the 63.5% high-level that the US achieved in the 2006 timeframe is a "worthy goal", then at the present level of 59.5% we are far from it. We can take solace, still, in the fact that the trend is upward.

But if we project the slope of that trend, it could take another decade to get there. That is far too long, with far to little "full-employment" - as measured in terms of "potential". Whazzat mean?

Potential derives from the fact that the BLS bases their statistical accumulation on "willingness to work". It is a phenomenon that when jobs are easier to obtain and salaries are correct, more people will want to work. Therefore in terms of percentage of the population, that willingness-to-work is taken into account.

So, what's a country to do?

Spend more, that's what - to enhance Demand from both shoppers and Federal expenditures ... but that will not happen.

And why? Because it was that year in which Obama, freshly in office, passed two spending bills (one calle ARRA) that threw close to $850B into the economy. Were we, the American unemployed, grateful. Nope. The next year, at the mid-terms, we cut of his short 'n curlies by electing the Replicants in control of the HofR. From which all spending bills issue first. They started preaching an "Austerity Spending", but the intent was clearly to keep unemployment as high as possible to rid Obama of the Oval Office. A silly game-plan that did not work.

But who paid the price? The nation's unemployed. That is no-way to run an economy, with just a cruel political objective in mind ...

RetiredUSN · Feb 22, 2016

Lafayette said:
These three infographics (from the Economist (20Feb2016) are not so pretty a picture

Excerpt from the article:

Well, we can't say they didn't try hard. Our willingness to blame the "gummint" for the lack of work is a kneejerk reaction that does not address the real problem. That is, lack of sufficient Demand that sparks employment enhancement.

The pre-crisis levels of unemployment we are talking about (in the US) were around 5% - which are about the same as recent history minimums. See the recent history of unemployment rates here. Note that we've fallen a long way since its historic high of close to 10% in 2009*.

More important perhaps is the "other face" of unemployment that is rarely considered - the Employment to Population Ratio. Which is far less sanguine.

That is, if the 63.5% high-level that the US achieved in the 2006 timeframe is a "worthy goal", then at the present level of 59.5% we are far from it. We can take solace, still, in the fact that the trend is upward.

But if we project the slope of that trend, it could take another decade to get there. That is far too long, with far to little "full-employment" - as measured in terms of "potential". Whazzat mean?

Potential derives from the fact that the BLS bases their statistical accumulation on "willingness to work". It is a phenomenon that when jobs are easier to obtain and salaries are correct, more people will want to work. Therefore in terms of percentage of the population, that willingness-to-work is taken into account.

So, what's a country to do?

Spend more, that's what - to enhance Demand from both shoppers and Federal expenditures ... but that will not happen.

And why? Because it was that year in which Obama, freshly in office, passed two spending bills (one calle ARRA) that threw close to $850B into the economy. Were we, the American unemployed, grateful. Nope. The next year, at the mid-terms, we cut of his short 'n curlies by electing the Replicants in control of the HofR. From which all spending bills issue first. They started preaching an "Austerity Spending", but the intent was clearly to keep unemployment as high as possible to rid Obama of the Oval Office. A silly game-plan that did not work.

But who paid the price? The nation's unemployed. That is no-way to run an economy, with just a cruel political objective in mind ...

Obama: Looks like the shovel ready jobs weren't quite so shovel ready.

Propping up Wall Street doesn't necessarily prop up Main Street, does it?

WCH · Feb 22, 2016

Just remember they can't take it with them. None of us can.

Lafayette · Feb 23, 2016

SOCIETAL FAIRNESS

RetiredUSN said:
Propping up Wall Street doesn't necessarily prop up Main Street, does it?

Wall Street has grown way out of proportion to its necessity. Why?

Because since time-immemorial it has been known as the fast-track to enormous wealth. But, is that - really 'n truly - the chief objective of a nation? Methinks not, if one considers the answer to the question, "What is societal fairness?"

It's a collective of individuals within a market-economy, that must be managed for "equitability"; not equality of outcomes but the disappearance of Income Disparity.

That can only happen if we correct an error made during Reckless Ronnie's administration, which deepened even further tax-cuts originally begun by LBJ (of all people). (See that history here: History of US marginal income tax-rate levels.)

For as long as we do not bring tax-rates back up to the 90% level for all incomes above a certain sum, we cannot have the fairness so crucial to a market-economy; where most of the developed world labors to earn their daily-bread. The incessantly unfair trickle-upwards of Income into Wealth will continue unabated.

So what might a Progressive Tax System look like? Have a look here: Redistribution of Income & Wealth. Excerpt:

Redistribution of income and redistribution of wealth are respectively the transfer of income and of wealth (including physical property) from some individuals to others by means of a social mechanism such as taxation, charity, welfare, land reform, monetary policies, confiscation, divorce or tort law. The term typically refers to redistribution on an economy-wide basis rather than between selected individuals, and it always refers to redistributions from those who have more to those who have less.

Two university researchers (Piketty & Domhoff) have shown how the distribution of both Income and Wealth are indisputably unfair in America. (Even the Gini Index, generally accepted to demonstrate Cross-national Income Inequality shows America's very high rate compared to most EU-countries.)

The key-concept behind a highly redistributive tax-system is practically intuitive. If incomes are allowed trickle-up to become wealth, that wealth becomes the asset of one individual/family, with a propensity to safeguard its eventual passage to surviving family-members. The wealth clearly becomes "dynastic", that is, it benefits a highly select few. (Meaning we must also review seriously our system of Inheritance Taxation.)

MY POINT?

However, if higher upper-income taxation allows revenues to revert to the government, it is Federal expenditures that will redistribute the financial-value by means of expenditure throughout the economy. This helps to sustain employment, and therefore consumer expenditure. Meaning a far larger group of citizens benefit. (In fact, all citizens benefit - some perhaps more than others depending upon how the money is spent.)

This permits the government to offer two key benefits to the entire population, a National Health-Care System and financial assistance to obtain Tertiary Education (vocational, 2- or 4-year). The former will enhance life-spans and the latter is crucial towards allowing our youth to obtain the skills/competencies that are increasingly more necessary to obtain well-paying jobs.

Neither of the two key-benefits of national expenditure should be at the exorbitant price as seen presently in America, which means directly that some benefit unfairly far more than others.

Both are key to a better standard-of-living for all and should be cornerstones* of the Progressive Promise ...

*In fact, subsidizing a Tertiary Education is not listed in the promise. I find that a grave oversight on the part of the CPC (Congressional Progressive Caucus).

mmi · Feb 23, 2016

Lafayette said:
More important perhaps is the "other face" of unemployment that is rarely considered - the Employment to Population Ratio. Which is far less sanguine.

if the 63.5% high-level that the US achieved in the 2006 timeframe is a "worthy goal", then at the present level of 59.5% we are far from it.

I'd describe the 63.5 figure as both a bubble high and the result of demographic factors no longer present in the population.

If you look at the 25-64 age cohort, which largely controls for the effects of the aging baby boomer population and the higher percentage of young people staying in school, the current emp-pop ratio doesn't look so bad:

I agree with a lot of yer analysis and policy prescription, but I think the labor market's in better shape than yer describing.

RetiredUSN said:
Looks like the shovel ready jobs weren't quite so shovel ready. Propping up Wall Street doesn't necessarily prop up Main Street, does it?

Fourteen million full-time, private-sector jobs added in the last six years.

Lafayette · Feb 23, 2016

mmi said:
If you look at the 25-64 age cohort, which largely controls for the effects of the aging baby boomer population and the higher percentage of young people staying in school, the current emp-pop ratio doesn't look so bad

Let's hope so.

Birth rates may have stabilized - as shown in this infographic: The U.S. Fertility Rate Has Fallen .... So two factors may be at work:
*Note that the data-line stops in 2012, four years ago. Also,
*More women may be pursuing active careers rather than birthing.

Both factors could have long-term effects on population numbers - that is, though they may not diminish any great rise may not be in the offing ...

Lafayette · Feb 24, 2016

A POSSIBLE REPEAT OF THE TOXIC WASTE MESS?

American attitude towards the future of their well-being?

Excerpt: Key Findings from the FRB report: Report on the Economic Well-Being
of U.S. Households in 2014, May 2015

Key Findings -
Overall, since the previous survey in 2013, individuals and their families experienced only mild improvements in their overall well-being, but they are increasingly optimistic about the trajectory of their well-being going forward.
• Sixty-five percent of respondents report that their families are either “doing okay” or “living comfortably” financially, compared to 62 percent in 2013.
• Forty-nine percent of part-time workers and 36 percent of all workers would prefer to work more hours at their current wage if they were able to do so.
• Twenty-nine percent of respondents expect their income to be higher in the year after the survey than in the year prior to the survey. In the 2013 survey, 21 percent of respondents expected their income to increase.

The survey also asks questions about a number of specific aspects of individuals’ financial lives:
Housing-
Most renters express a preference for homeownership. Homeowners are generally optimistic about the trajectory of their home values. However, many renters, and especially lower-income renters, indicate that financial barriers to homeownership prevent them from purchasing a home.
• The most common reasons renters cite for renting rather than owning a home are a perceived inability to afford the necessary down payment (50 percent) or a perceived inability to qualify for a mortgage (31 percent).
• Forty-three percent of homeowners who have owned their home for at least a year believe that the value of their home is higher than it was in 2013, 37 percent believe the value is about the same, and 13 percent believe that it is now lower.
• Fourteen percent of homeowners with a mortgage believe that they owe more on their mortgage than their house is worth, while 70 percent report that the value of their home exceeds the amount of their mortgage}

The bolded reference to lower-income ownership of a home probably refer to that sub-group of American worker who cannot meet the new requirements of obtaining a bona-fide mortgage. Which is good news, in a way, because this sub-group was the target of bankster unjustified loans that triggered the eventual Toxic Waste Mess.

(Are said loan-groups undergoing more scrutiny by the Fed to avoid a repeat of the Toxic Waste Mess? Nope.

Are they a significant portion of those seeking a mortgage? Not likely. Could they be again? Why not?)

Fenton · Feb 26, 2016

Lafayette said:
These three infographics (from the Economist (20Feb2016) are not so pretty a picture

Excerpt from the article:

Well, we can't say they didn't try hard. Our willingness to blame the "gummint" for the lack of work is a kneejerk reaction that does not address the real problem. That is, lack of sufficient Demand that sparks employment enhancement.

The pre-crisis levels of unemployment we are talking about (in the US) were around 5% - which are about the same as recent history minimums. See the recent history of unemployment rates here. Note that we've fallen a long way since its historic high of close to 10% in 2009*.

More important perhaps is the "other face" of unemployment that is rarely considered - the Employment to Population Ratio. Which is far less sanguine.

That is, if the 63.5% high-level that the US achieved in the 2006 timeframe is a "worthy goal", then at the present level of 59.5% we are far from it. We can take solace, still, in the fact that the trend is upward.

But if we project the slope of that trend, it could take another decade to get there. That is far too long, with far to little "full-employment" - as measured in terms of "potential". Whazzat mean?

Potential derives from the fact that the BLS bases their statistical accumulation on "willingness to work". It is a phenomenon that when jobs are easier to obtain and salaries are correct, more people will want to work. Therefore in terms of percentage of the population, that willingness-to-work is taken into account.

So, what's a country to do?

Spend more, that's what - to enhance Demand from both shoppers and Federal expenditures ... but that will not happen.

And why? Because it was that year in which Obama, freshly in office, passed two spending bills (one calle ARRA) that threw close to $850B into the economy. Were we, the American unemployed, grateful. Nope. The next year, at the mid-terms, we cut of his short 'n curlies by electing the Replicants in control of the HofR. From which all spending bills issue first. They started preaching an "Austerity Spending", but the intent was clearly to keep unemployment as high as possible to rid Obama of the Oval Office. A silly game-plan that did not work.

But who paid the price? The nation's unemployed. That is no-way to run an economy, with just a cruel political objective in mind ...

Absolute utter nonsense. Are you sure you should be posting in the " Economics " section ?

" Stimulus to increase aggregate demand " is a ideological solution put forth by ignorant left wingers who have no idea how to grow Market based economies

People that put demand before production and who think you grow economies by influencing demand directly.

What's so astonishing is there are blatant examples of its failure and its STILL being pushed as a solution.

How ignorant do you have to be to call 8 Trillion in New dent over the last 7 years " austerity " ? Pretty damn ignorant.

Fenton · Feb 26, 2016

Lafayette said:
A POSSIBLE REPEAT OF THE TOXIC WASTE MESS?

American attitude towards the future of their well-being?

Excerpt: Key Findings from the FRB report: Report on the Economic Well-Being
of U.S. Households in 2014, May 2015

The bolded reference to lower-income ownership of a home probably refer to that sub-group of American worker who cannot meet the new requirements of obtaining a bona-fide mortgage. Which is good news, in a way, because this sub-group was the target of bankster unjustified loans that triggered the eventual Toxic Waste Mess.

(Are said loan-groups undergoing more scrutiny by the Fed to avoid a repeat of the Toxic Waste Mess? Nope.

Are they a significant portion of those seeking a mortgage? Not likely. Could they be again? Why not?)

The " Fed " Federal Govt lowered those standards as part of its " Fair lending " initaive.

Banks who refused to abandon their decades old standards used to vet a borrowers ability to repay their loans were targeted by the DOJ, HUD, FDIC and Community Activitst groups like ACORN

Janet Reno's 1999 speech in front of the Community Reinvestment coalition shed some light on the effectivness of those Regulatory changes that forced lenders to develop loans ( Subprime ) loans for low income lenders with no credit history, bad credit with little or no documentation

She counted 13 successful " Fair lending " lawsuits and vowed to target more lenders

Banks that tried to make sure Lenders " met certain requirments " were sued.

As for your anti-austerity rhetoric its nonsense.

Lafayette · Feb 27, 2016

Fenton said:
" Stimulus to increase aggregate demand " is a ideological solution put forth by ignorant left wingers who have no idea how to grow Market based economies.

First, a definition: Stimulus Spending - key words "spending projects aimed at vigorous job creation".

Then a fact about spending: ARRA (American Recovery and Reinvestment Act) was one of two stimulus-spending bills in 2009 passed by Obama and a Dem-congress (at the time). Totally, it was close to a billion dollars that was added to the economy to stimulate employment.

And another fact about historical unemployment in the US: BLS History of Unemployment Rate - note how unemploymnt is spiked at just less than 10% in 2009 and begins its long, long downturn. Furthermore, note in this historical infographic (BLS Employment to population Ratio) how the ratio stops sinking in 2009 and begins its long and laborious inflexion upwards.

One would have to be blind not to see the consequence of Obama's Stimulus Spending in 2009.

MY POINT? Successive Replicant control (after the 2010 mid-terms) of the HofR, from which all spending-bills issue, stopped dead in 2010 - with the idiocy of "Austerity Budgeting" by Replicant "Deficit Hawks". Which was simply a ploy by the Replicants to keep unemployment high throughout the remaining two years such that in 2012 it would help elect a Replicant PotUS. How undemocratic can a political-party get?

I repeat - the Replicants willfully extended from 2010 to 2012 higher-than-necessary unemployment simply as an electoral manoeuvre for the 2012 presidential election ... which, of course, failed. Nonetheless, their control of the HofR has helped them to maintain budgetary control over spending. The US has done no such spending since 2010.

So the US took an extra four years to crawl slowly, slowly out of the Great Recession in terms of National Unemployment.

Fenton · Feb 29, 2016

Lafayette said:
First, a definition: Stimulus Spending - key words "spending projects aimed at vigorous job creation".

Then a fact about spending: ARRA (American Recovery and Reinvestment Act) was one of two stimulus-spending bills in 2009 passed by Obama and a Dem-congress (at the time). Totally, it was close to a billion dollars that was added to the economy to stimulate employment.

And another fact about historical unemployment in the US: BLS History of Unemployment Rate - note how unemploymnt is spiked at just less than 10% in 2009 and begins its long, long downturn. Furthermore, note in this historical infographic (BLS Employment to population Ratio) how the ratio stops sinking in 2009 and begins its long and laborious inflexion upwards.

One would have to be blind not to see the consequence of Obama's Stimulus Spending in 2009.

MY POINT? Successive Replicant control (after the 2010 mid-terms) of the HofR, from which all spending-bills issue, stopped dead in 2010 - with the idiocy of "Austerity Budgeting" by Replicant "Deficit Hawks". Which was simply a ploy by the Replicants to keep unemployment high throughout the remaining two years such that in 2012 it would help elect a Replicant PotUS. How undemocratic can a political-party get?

I repeat - the Replicants willfully extended from 2010 to 2012 higher-than-necessary unemployment simply as an electoral manoeuvre for the 2012 presidential election ... which, of course, failed. Nonetheless, their control of the HofR has helped them to maintain budgetary control over spending. The US has done no such spending since 2010.

So the US took an extra four years to crawl slowly, slowly out of the Great Recession in terms of National Unemployment.

Fiscal stimulus doesn't work, claims Harvard economics professor Robert Barro - Telegraph

Stimulus doesn't work. It's put forth by left wing ideologues who have no concept of how a Free market economy works and no idea how to grow a free market economy successfully.

It's why Sanders is proposing it. All these people understand is more debt,.more spending and bigger Govt.

It didnt work when Japan tried it 10 seperate times in the 90s and it didn't work when Obama wasted hundreds of Billions of dollars on " shovel ready " jobs.

Lafayette · Feb 29, 2016

HISTORY LESSON

QUOTE=Fenton;1065610961]It's put forth by left wing ideologues who have no concept of how a Free market economy works and no idea how to grow a free market economy successfully..[/QUOTE]

You're blathering in a blog, and need a history lesson.

Latest example of how Stimulus Spending worked - and this is the umpteenth time I have explained it on this forum: In 2009, Obama's first year in office, he inherited from Lead-head's presidency an unemployment rate that was about to reach 10% due to what was called then the Great Recession.

During the 1930s, under the very same circumstance (called a Great Depression), the unemployment rate had reached its high-point at nearly 25%. Heeding history, Obama did what economists were clamoring for him to do.

He spent by means of two bills, one called ARRA (that released $787B to stimulate the economy) nearly a trillion dollars. The consequence of which was to stop-dead the unemployment rate at just below 10%. (See here: US Unemployment Rate)

Were the American people grateful for this achievement? Nope, they voted the Replicants in control of the HofR - from which all spending-bills first issue. What did the Replicants do?

They embarked upon "Austerity Budgeting" idiocy for the purpose of maintaining high-unemployment in time for the 2010 PotUS elections to favor Romney's election. That ploy obviously failed.

What did happen instead is that America took another two and half years longer than necessary to finally crawl out of the Great Recession.

Mr Barro seems to have forgot that history lesson ...

James972 · Mar 5, 2016

Lafayette said:
Latest example of how Stimulus Spending worked -. - and this is the umpteenth time I have explained it on this forum: .

Of course stimulus spending cant work. If it did economic fluctuations would be a thing of the past. When libsocialist govt spends it stimulates and when it taxes to get the money to spend it de stimulates so no net stimulation is possible. Very very simple indeed. In fact there is a net loss because when the lib socialist stimulative spending is withdrawn the bubble bursts causing a recession or depression while private spending is constant and sustainable. Econ 101 for you.

Lafayette · Mar 6, 2016

THE DEMOCRAT CONGRESS OF 2009

James972 said:
Of course stimulus spending cant work. If it did economic fluctuations would be a thing of the past.

Why "of course". You're making a claim without substantiating it, because it HAS worked in the past - and if you had the slightest bit of economics training you would understand the multiple periods in which it has worked.

And the last time it worked was when it smothered an exploding unemployment rate in 2010 - a year after Obama had taken office - and with a Dem-Congress that allowed passage of the ARRA spending-bill.

Having won the 2010-midterms that obtained control of the HofR, it was the Replicants who then stymied all further stimulus spending that would have cut an additional two-years off the time necessary to bring unemployment down to the 5% range.

You're economic history of the US is highly-selective ...

Still, for purposes of debate, I submit this article from WashPo that treats the matter of scientific examination of data towards understanding Stimulus Spending.

The fact of the matter is that no scientific proof is possible.

That does not bother me in the least. All the proof I need is that in the worst recession since 1930, the American Recovery and Reinvestment Act of 2009 (passed by a Dem-Congress) that spent $831B shows convincingly that stimulus-spending stopped the unemployment explosion.

And had America not given the HofR to the Replicants, further spending would have shortened the decent to the 5% level, which is - more or less - the long-term unemployment rate in the US.

'Nuff said ... ?

James972 · Mar 6, 2016

Lafayette said:
Why "of course". You're making a claim without substantiating it, because it HAS worked in the past - ?

its impossible for it to work. Do you think taking water from one side of the lake and pouring it the other will raise the water level in the lake?? Do you think taxing and spending is any different?? Say why or admit your illiteracy with your silence or attempts to change the subject.

Lafayette · Mar 6, 2016

James972 said:
its impossible for it to work. Do you think taking water from one side of the lake and pouring it the other will raise the water level in the lake?? Do you think taxing and spending is any different?? Say why or admit your illiteracy with your silence or attempts to change the subject.

But it does not happen that way!!!

The insufficiently taxed income at the 10Percenter level "trickles-up" into Wealth and is not spent upon Consumption, but Investment (that is, value invested in family Net Worth). Were it spent upon Consumption, it would benefit all.

But as Investment, it simply benefits a very tiny class of Americans that Domhoff has shown retain 89% of the the Nation's Net Worth. (Net Worth is Wealth - Debt.)

And what becomes of that Net Worth? It serves to perpetuate upper-income family dynasties by means of inheritance ...

James972 · Mar 6, 2016

Lafayette said:
But it does not happen that way!!!

so then please explain how it happens!!!!!!!!!!!!

NOT SO PRETTY A PICTURE (The Economy)

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