In "Fears and Failure," Paul Krugman's op-ed in Friday's New York Times--the same day that the Bureau of Labor Statistics' Employment Situation Report for April 2011 will be released--he covers much of what I've been struggling to write for the better part of the past few days. (More about that further down, below.) The fact is, his sentiments parallel much of what many of the editors over at the Times, along with economics reporter Catharine Rampell, have been writing for awhile.
On Monday, the editors at the NY Times posted an especially concise editorial about many of our latest, inconvenient economic facts in: "The Economy Slows."
Truth be told, IMHO, as even Krugman comes out and states it today, it's really all about fear, menacing, and terrorism, nationally and globally, economic and otherwise.
The Economy Slows
Editorial
New York Times
May 2, 2011
It has long been clear that economists do not see the world the way people experience it. That disconnect is especially pronounced now...
Those first two sentences, so elegantly simple in their construction, yet so clearly underscoring what I've been writing about in this community for years: the very real impact of negative economic perceptions on Main Street that devastatingly outweigh any contrary technical references to a "recovery" -- especially a recovery in a two-track economy, or, as Clinton administration Labor Secretary Robert Reich referred to it just over a week ago: our "Wageless Recovery" -- most importantly, as those palpable observations among the voting public translate into results at the polls, come any given election day...
More from the Times' editors...
...The economy lost steam in the first quarter. Growth in personal consumption — the single largest component of the economy — slowed markedly. Business-related construction cratered and residential construction fell. Exports stumbled. The only unambiguous plus was continued business investment in equipment and software, which is necessary but not sufficient for overall growth.
In all, economic growth slowed from an annual rate of 3.1 percent in the fourth quarter of 2010 to 1.8 percent in the first quarter of 2011.
The folks over at the NYT tell us that those supposedly in the know, from Ben Bernanke on down, have referred to this slowdown as "transitory." As the Times stated it on Monday, they "...believe that the poor performance can be chalked up to bad weather, political unrest and other presumably temporary setbacks."
If only. Take jobs: When lauding the economy, Mr. Bernanke and many other economists and politicians point out, correctly, that the unemployment rate has declined from a recession high of 10.1 percent in late 2009 to 8.8 percent now. That would be encouraging news if it indicated robust hiring for good jobs. It does not.
(You'll be hearing much about this in the spin in the jobs report, Friday morning, as well. And, as Wall Street continues to spin about these "anomalies," and the rather major spike in weekly unemployment claims reported on Thursday morning, the truth of the matter is that the four-week moving average of weekly jobless claims has been hovering, once again, significantly above the critical 400,000-claim weekly threshold for a few weeks now.)
Economic credibility is not supported by touting a talking point that notes that our economy created well over one million jobs in the last 12 months when, as the grey lady's editors note: "Over the last year, the number of new hires has been outstripped by the masses who have either given up looking for work or who have not undertaken consistent job search, say, after graduating from high school or college."
This reality of "the missing millions," as the Times editors refer to them, is further supported not just palpably on Main Street, but statistically by our own government--at least by anyone that takes the time to pay attention and do the math, which tells us that when we include those not counted in the official unemployment rate, joblessness (in terms of the Bureau of Labor Statistics' U.3 index) would be at 9.8%. And, taking it a step further (in comparison to the BLS' U.6 index), the number's 15.7% if one includes folks looking for full-time work who settled for part-time employment, instead.
Another intertwined and extremely inconvenient truth rears its ugly head when people falsely claim that unemployment among college-educated workers is, supposedly, low. That's true if you're over 25, but when it comes to those with college degrees ages 25 and under, as the Times' editors also remind us, unemployment has averaged 9.7%, "and shows no signs of improvement."
And, of course, the jobless statistics among most of our nation's minorities--particularly African-Americans--easily surpasses any metric that reinforces the truth that it is a downright, full-blown Depression in those demographic groups as you read this.
Ironically, the folks over at the NYT (at least in Monday's editorial) did not even reference our record breaking, double-dip (and still dipping) housing recession, which now exceeds lows previously set in the Great Depression. Nor did they discuss another metric that now also eclipses previously-set record margins seen in the late 1920's: income inequality. (Note: NYT Economics Editor Rampell has been absolutely on fire about this topic over the past week. Checkout her unrelenting, fact-based commentary here, here, and here.)
The NY Times' editors did touch upon the subject of inflation in Monday's editorial, however. And, this is where the folks doing "god's work" (as CEO Loyd Blankfein noted it less than two year ago), Goldman Sachs, come into the picture, once again.
As the Times' editorial earlier in the week points out, "... for inflation to take off, wages must also rise. There's no sign of that. Stagnant wages mean Americans will have to cut consumption in the face of higher prices, and as demand drops, prices are subdued, hardly reason to cheer." (See my link to Reich's column on our "wageless recovery," a few paragraphs up.)
So, the question remains: What is fueling these rather significant price swings in critical goods such as oil (which is, once again, under $100 per barrel as of Thursday) and food?
As some are beginning to note, it is a complicated answer, but IMHO, it may be summed-up in a few words: geopolitical instability, the emergence of an expanding middle class (and subsequent increased consumer demand) in the BRIC (Brazil, Russia, India and China) countries and other nations (i.e.: traditional supply and demand), and last but not least: unbridled Wall Street speculation.
For a moment, let's discuss this last inconvenient reality, financial speculation and the reality that: socio-economic terrorism starts at home.
Indeed, as I've noted in many diaries, and as President Obama called it out, as recently as two weeks ago -- and as even Kossack Jerome a Paris implied somewhat the same in a diary here just two days ago -- what's currently driving these violent price swings in crude has little to do with the world hitting peak oil production (although, as many note, that will happen soon enough). (And, if you follow my diary link, and the links in that post, you'll learn how even our nation's own Commodities Futures and Trading Commission [CFTC] has specifically acknolwedged that speculation--most notably by Goldman Sachs--in crude oil futures drove up the consumer price of oil in the lead-up to our nation's economic crash in 2008, too.)
What's fairly new, in terms of the current anti-Wall Street zeitgeist, however, is the reality that Wall Street's been at least somewhat responsible for increasing global inflation as it relates to food.
Here's author Frederick Kaufman on "How Goldman Sachs Created The Food Crisis," via Foreign Policy Magazine, no less. (And, I urge you to read the Economist's very weak rebuttal to this story, linked next to Kaufman's article, not to mention Goldman-Sachs' lead spokesperson Lucas van Praag's extremely lame retort to Kaufman--van Praag would have us believe it's the middle class' fault--to realize that this call-out of G-S by Kaufman is, in fact, quite substantive.)
Here's a bit of Kaufman's piece (see the link in the above paragraph to read the whole thing):
...Demand and supply certainly matter. But there's another reason why food across the world has become so expensive: Wall Street greed.
It took the brilliant minds of Goldman Sachs to realize the simple truth that nothing is more valuable than our daily bread. And where there's value, there's money to be made. In 1991, Goldman bankers, led by their prescient president Gary Cohn, came up with a new kind of investment product, a derivative that tracked 24 raw materials, from precious metals and energy to coffee, cocoa, cattle, corn, hogs, soy, and wheat.
They weighted the investment value of each element, blended and commingled the parts into sums, then reduced what had been a complicated collection of real things into a mathematical formula that could be expressed as a single manifestation, to be known henceforth as the Goldman Sachs Commodity Index (GSCI).
For just under a decade, the GSCI remained a relatively static investment vehicle, as bankers remained more interested in risk and collateralized debt than in anything that could be literally sowed or reaped. Then, in 1999, the Commodities Futures Trading Commission deregulated futures markets. All of a sudden, bankers could take as large a position in grains as they liked, an opportunity that had, since the Great Depression, only been available to those who actually had something to do with the production of our food...
And, here's how the Times' editors closed out their editorial on Monday...
The economy still needs help and, specifically, a sustained focus on jobs and income. Instead, policy makers are gearing up for deep spending cuts, ignoring the damage they are likely to cause. Last quarter, cutbacks by governments at all levels took a chunk out of overall growth. If cuts of similar or greater magnitude become the norm, the slow economic pace of the first quarter also could very well become the norm. It's nice to believe slowing growth is transitory. But as long as spending, jobs and incomes are at risk and policy priorities are skewed, it's hard to believe in a turnaround.
So, whether it's failed, rightwing economic theories or status-quo/greed-centric macroeconomic thinking which continually misdirects many of our world's leaders and our nation's deeply "captured" elected officials to enable the ongoing suffering of hundreds of millions, as we concurrently deny greater truths with regard to society's well-being; or, the godforsaken acts of a madman who will fly planes into buildings and kill thousands, the reality is--whether these people bogusly claim they're doing Allah's work, God's work or they're leading our prayers in the church of capitalism--they're all committing blasphemy as they justify their transgressions against our societies in their own "special" way.
Terrorism by any other name is still terrorism. People die.
It's all about fear and menacing; whether it's overt or plain, old-fashioned, obfuscated greed which morphs into the outright pillaging of the world's underclasses.
And, this brings us back to the folks over at the New York Times and Professor Krugman's post in this morning's edition of it...
Fears and Failure
By PAUL KRUGMAN
New York Times
May 6, 2011
From G.D.P. to private-sector payrolls, from business surveys to new claims for unemployment insurance, key economic indicators suggest that the recovery may be sputtering.
And it wasn’t much of a recovery to start with. Employment has risen from its low point, but it has grown no faster than the adult population. And the plight of the unemployed continues to worsen: more than six million Americans have been out of work for six months or longer, and more than four million have been jobless for more than a year.
It would be nice if someone in Washington actually cared.
It’s not as if our political class is feeling complacent. On the contrary, D.C. economic discourse is saturated with fear: fear of a debt crisis, of runaway inflation, of a disastrous plunge in the dollar. Scare stories are very much on politicians’ minds.
Yet none of these scare stories reflect anything that is actually happening, or is likely to happen. And while the threats are imaginary, fear of these imaginary threats has real consequences: an absence of any action to deal with the real crisis, the suffering now being experienced by millions of jobless Americans and their families...
Krugman asks: "What does Washington currently fear?"
The answer "topping the list" is budget deficits. But, as Krugman follows up on this in his column, there are many other "phantom menaces" on this list, including inflation and the decline of the dollar in world markets.
In his conclusion he states: "...the clear and present danger to the American economy isn’t what some people imagine might happen one of these days, it’s what is actually happening now."
It's all about unemployment. As Krugman states it: "Yet any action to help the unemployed is vetoed by the fear-mongers."
His closing sentence...
By looking for trouble in all the wrong places, our political class is preventing us from dealing with the real crisis: the millions of American men and women who can’t find work.
Fear and menacing takes on many forms. At the end of the day, IMHO, what we're really talking about are the different flavors, shapes and sizes of...terrorism.