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IMHO, as the travesties relating to what's occurring, less and less behind-the-scenes (primarily due to efforts in the blogosphere), within our economy mount, the asleep-at-the-wheel MSM's narratives about the "real" state of affairs of all things economic continue to go off the rails. As I've stated it in a handful of diaries over the past year, "Much of what we thought we knew about our economy, statistically speaking, is wrong." On that note, please consider this an update, with quite a bit of new information I might add, to a diary I posted on November 9th, 2009: "Breaking: BLS, Fed, BEA, et al 'Overstate Strength of Economy.'"

On the one hand, there's the QUANTITATIVE pablum fed to the masses which focuses upon grossly-flawed and/or blatantly incorrect government numbers and subsequent spin. (And, no, this has nothing to do with conspiracy theories.)  Frequently, the causes for this misinformation are due to the complexities and breadth of what's being measured moreso than anything else. In quite a few instances, however, reported numbers have been contorted for the apparent benefit of the party in power; but this is almost entirely an institutionalized problem that's been a part of the culture at the US Labor Department's Bureau of Labor Statistics for decades. (i.e.: Citing on many examples of this matter, most folks don't realize that the seasonal adjustments of our monthly employment/unemployment reports are applied at the sole discretion of the Bureau of Labor Statistics in 11 of every 12 months of the year.) As a result, what we end up with is garbage in, garbage out.

And, therein lies the rub: statistical garbage. To many, it is the increasing stench of this "garbage information" that we're hearing and reading--from just about everywhere--which conflcts with what many are observing around them.

On the other side of the "misinformation equation," there's the obfuscated QUALITATIVE story of a government so blatantly captured by the status quo that new evidence supporting this now appears on an almost daily basis. Unfortunately, what this all boils down to is that we're a nation that still buys into headlines and reality tv which accomplishes little more than to divert us from the ongoing pillaging of our middle and lower classes, while the foundations of our "Two-Track Economy"--one for the "haves" and the other for the "have-nots" in our society--are propped-up by our oligarchy as a direct result of the biggest public ripoff in the history of mankind. Hell, as much as they might try, even the Wall Street Journal can't totally ignore it: "Halting Recovery Divides America in Two."

But, I digress.

This post focuses upon my ongoing efforts to open readers' eyes to the gross distortions we mistake for fact and the societal myopia we collectively maintain as it relates to the QUANTITATIVE aspects of these economic issues. (As some reading this know, I've spent a great deal of time on our QUALITATIVE realities concerning these matters in scores of other diaries, which may be referenced HERE.)  This time, like in a handful of other diaries I've posted over an extended period, tonight, it's about the most recent truths of which I've learned concerning the quantitative history of the numbers that most of us don't know.

While the emphasis of this update focuses more upon new information related to the employment/unemployment situation, I do discuss other sectors where we're having dysfunctional information issues, too. Hopefully, you'll find these newest realities to be as much of an eye-opener as I have.

As Harry Truman put it: "The only thing new in the world is the history you don't know." Borrowing from him, I'll paraphrase that as: "The only things new in our economy are the numbers you don't know." (And, that would include significant distortions relating to many of the important government statistics we currently accept as plausibe, today, too.)

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Before I continue, I do wish to make a brief note of the sheer irony of four qualitative stories--all related in some way to Goldman Sachs--that are playing out before us, now and over the course of the next seven days and beyond.  As the New York Times noted on Sunday, a week from tomorrow, on January 18th, Goldman--still the beneficiary of trillions of government dollars in taxpayer-funded backstop and guarantee programs as I write this--will handout well in excess of $20 billion in annual bonuses.

At the same time, as Bill Moyers just noted, (h/t to Barry Ritholtz at "The Big Picture") Goldman's actual corporate tax rate is approximately 1%. (No bold type or capital letters in that last sentence, but you might want to read it again, and then click upon the links.) This is all playing out amidst a couple of other major stories about this Wall Street behemoth relating to new truths that have managed to find some light of day concerning: a.) the fact that approximately $23 billion of the initial $80-billion AIG government bailout was directly-related to Goldman's liabilities, while Goldman claimed they had no exposure at the time relating to said bailout, in mid-September 2008; and, b.) since U.S. securities law requires 100% face-value compensation of securities proven to be fraudulently conveyed as such at time of sale, we're just now learning that individuals at the most senior level of our government, and at the Federal Reserve at the time of this transaction, were fully aware of these matters and were actively involved in obfuscating these truths from both our legislative branch and the public, at-large, [despite comments to the contrary denying same], IMHO!

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Returning to the "QUANTITATIVE pablum" fed to the masses which focuses upon grossly-flawed and/or blatantly incorrect government numbers, it is due in large part to:

I.) the narrative being fed by a myopic focus upon inaccurate, "blurry" and/or prematurely announced government statistics (general employment and unemployment metrics as well as our G.D.P. stats fall into this category, IMHO, among many other numbers, with some of them being acknowledged as inaccurate by our government, while D.C. is still reporting those incorrect figures to this day), with more accurate revisions to those numbers not being made, in some instances, up to almost a year after they're first announced. Yet, in other instances, such as the government's public gauges of consumer credit (despite appearances and claims by some to the contrary), the pertinent information isn't available from the folks in D.C., at all;

II.) the financial services sector manipulating data to their own advantage, with the most glaring reason for that being...because they can, legally, due to recent changes in accounting rules enabling this hocus pocus, and general governmental policies (many just recently reported) which encourage these misrepresentations due to legal loopholes relating to same;  and,

III.) a failure on the part of many to acknowledge that this is not a garden-variety recession, with the meme being that "things are returning to normal," when nothing could be farther from the truth; and,

IV.) by focusing upon these "standard" measurements, in many ways (some more subtle than others), we're actually reinforcing this "return-to-normal" mentality (i.e.: "...if only we could see a reasonable drop in unemployment"), citing indicators which belie a much-needed urgency to address the fundamental problems which got us into this mess in the first place (i.e.: regulatory reform, etc).  Ask yourself this: Do you really think the urgency--let alone the very initiative--to clean-up our financial services sector will be sustained the moment we hear a few consecutive, positive jobs reports?

IMHO (and in the opinion of many much more qualified to comment on these matters than yours truly, such as Paul Krugman, Joe Stiglitz and Simon Johnson), we are witnessing a structural change in our economy. It's what many,  including economist Simon Johnson, referred to as "The Two-Track Economy." And, it is an over-arching reality which most in the MSM and in our government fail to acknowledge.

One exception to that last sentence would be Wall Street bailout Oversight Panel Chief Elizabeth Warren, who refers to it in great detail in: "America Without A Middle Class--It's Not As Far Away As You Might Think." And, I would go as far as to say that "the jobless recovery" we're in now, much like the jobless recoveries we experienced in our last two, so-called "recessions" (which were, in fact, bubbles much moreso than recessions),  keeps getting longer and longer each time the bubble "bursts."

What economists like Johnson, Stiglitz and Krugman all agree upon, however, is that the old rules of measuring recessions no longer apply. Johnson succinctly tells us: "Conventional statistics are likely to become misleading." (See links above.)

Paul Krugman reminded us on Friday that he's been referring to this same phenomenon in the context of labelling it a "postmodern recession." As he sees it, as far as the downturn that we're experiencing now is concerned, there's simply no comparison to be made to other recessions, in: "Payrolls and paradigms."

Payrolls and paradigms
Paul Krugman
New York Times Blogs
January 8, 2010, 11:51 am

Disappointing job number this morning. Still, a month is just a month, right? Well, not quite.


From the beginning, there have been two schools of thought about the likely path of recovery. One school -- strongly represented among Wall Street economists -- said that the 2008-2009 recession should be compared with other deep US recessions: 1957 (the "Edsel" recession), 1974-5, 1981-2. These recessions were followed by rapid, V-shaped recoveries.

The other school of thought said that this was a postmodern recession, very different in character from those prior deep recessions, and that it was likely to be followed by a prolonged "jobless recovery." Added to that were worries based on the historical aftermath of financial crises, which tends to be prolonged and ugly.

With many forecasting--and rightfully so, since the overwhelming nature of the current situation dictates this from a simple math standpoint if nothing else--a "recovery" period lasting up to 8-10 years before we reach employment (acceptable unemployment) levels attained at the peak of the last bubble (around the third quarter of 2006), the truth is we're probably just as likely to fall into another recession before we get to 2018-2020 as we are to maintaining any semblance of an upward trajectory as far as employment is concerned during the next 8-10 years, too; at least as it relates to U.S. society recapturing those numbers that we experienced less than four years ago (i.e.: 4.9% unemployment, etc.).

This 8-10 year recovery period is the reality supported by none other than our own government, as published just a month ago in the Bureau of Labor Statistics' projections for the decade ahead! (See: "Employment Projections: 2008-2018 Summary.")

(Now, there is a number from our government that I hope we may DEFINITELY prove as being inaccurate!)


I'd like to make a correction to the diary I posted early Friday night. Technically speaking, we did not see 1% of our labor force "vanish" in December. (As you'll see, below, and based upon a variety of factors, the number's actually much higher than this.) 661,000 jobs were eliminated from the marketplace--i.e. ongoing job destruction--and the labor force shrunk by 843,000 people.  In other words, 843,000 individuals--for a variety of reasons--are no longer considered to be part of the labor force. This could be attributed to a variety of factors: people returning to school, retirement (voluntary, forced, early retirement), family issues (i.e.: caring for a family member), etc., etc.  

If you add these two numbers together, the result is 1,504,000. As a numerator over the denominator equivalent to the total labor force of 153,000,000 people, the result is 0.983% (virtually 1%) of the workforce is no longer being counted in any unemployment statistic, going forward. (And, of course, this is just one month.) The truth here  is I actually took some editorial license with this issue, but I was merely quoting another's observations. (Technically, what I was saying was true, since I was merely reporting.) While there was probably a very tiny bit of overlap in these two numbers, the fact is many folks that were fired/laid-off from "destroyed jobs" would be seeking unemployment, so they would be counted as doing such (they wouldn't "vanish"). Furthermore, while one or two individuals responded in my diary in quite an obnoxious manner to this observation, the reality is they didn't take into account that young people (if we're going to talk of folks retiring, we can't conveniently ignore folks attempting to enter the workforce) were also entering the labor force, and they're in one of the most severly impacted demographic groups in our country, with people between the ages of 16-24 experiencing depression-level (25%+, BLS' U6 Index) unemployment as I write this.

Perhaps trumping all of this, however, are the truths I reference/discuss below, which document how significantly our government underestimates unemployment on an ongoing basis, especially in times of severe economic downturns. (The diary I posted on Friday was, as I noted in it, a preliminary post related to this diary that you're reading now.) In fact, after you read this next section, I think you'll be inclined to agree with me that we regularly ignore at least 2% (if not significantly more than that) of our unemployed population every month, in ALL Bureau of Labor Statistics' published tallies. So, it may be argued--and quite strongly so as you'll see below--that I was actually understating the reality, as opposed to overstating it. (Again, the entire post that brief diary was in the context of it being a prelim to this diary.)

So, after all that, let's get busy supporting the QUANTITATIVE REALITIES as to why what many think they know about our economy is, simply, wrong.


This past Friday, the US Labor Department's Bureau of Labor Statistics' December 2009 Employment Situation Report was publshed.  The lede from it was:

Nonfarm payroll employment edged down (-85,000) in December, and the unemployment rate was unchanged at 10.0 percent, the U.S. Bureau of Labor Statistics reported today...

Frankly, as you're about to see, that is all pretty meaningless, since:

a.) Obama economics advisor Austan Goolsbee reminds us that folks on disability insurance aren't all;

b.) as investment firm Stifel, Nicolaus vividly illustrates it, the government's implementation of birth/death rates and seasonal adjustments are based upon long-term averages, and those averages encounter inherent discrepancies every time they hit a major economic downturn (since our major economic downturns generate employment/unemployment statistics which behave as outliers as far as these "modifying adjustments" are concerned). In other words, long-term seasonal averages have little to do with how the economy behaves during extremely difficult periods. And, truth be told, the last thing we should be doing is applying seasonal adjustments based upon overall averages during periods such as the one we're going through now, at least if we want an accurate reflection of what's occurring, as opposed to stats that are weighted towards downplaying the severity of the situation;

c.) the Federal Reserve Bank of Boston has issued papers which tell us our country's unemployment/employment numbers are far from precise, in terms of their accuracy, especially with regard to the concepts of: i.) what constitutes the definition of the term "employed," and ii.)  as a byproduct of that, determining at what point--exactly--some change status from employed to unemployed to off the charts.

Many other folks, above and beyond people like Krugman, Stiglitz and Johnson, have published papers on these realities. John Williams, over at Shadow Stats, is one of the better-known sources of this information.

But, I've found many different factors that provide quite sound support for my commentary.  Here are three of the many reasons why we're underestimating the severity of the  our nation's current jobless nightmares.

From a six-year-old New York Times Op-Ed piece by Obama administration economics advisor Austan Goolsbee (I also cited this in a diary in early 2009, btw), entitled: "The Unemployment Myth,"

The Unemployment Myth

Published: November 30, 2003

...the unemployment rate has been low only because government programs, especially Social Security disability, have effectively been buying people off the unemployment rolls and reclassifying them as "not in the labor force."

In other words, the government has cooked the books...

Research by the economists David Autor at the Massachusetts Institute of Technology and Mark Duggan at the University of Maryland shows that once Congress began loosening the standards to qualify for disability payments in the late 1980's and early 1990's, people who would normally be counted as unemployed started moving in record numbers into the disability system -- a kind of invisible unemployment. Almost all of the increase came from hard-to-verify disabilities like back pain and mental disorders. As the rolls swelled, the meaning of the official unemployment rate changed as millions of people were left out.

By the end of the 1990's boom, this invisible unemployment seemed to have stabilized. With the arrival of this recession, it has exploded. From 1999 to 2003, applications for disability payments rose more than 50 percent and the number of people enrolled has grown by one million. Therefore, if you correctly accounted for all of these people, the peak unemployment rate in this recession would have probably pushed 8 percent.

The point is not whether every person on disability deserves payments. The point is that in previous recessions these people would have been called unemployed. They would have filed for unemployment insurance. They would have shown up in the statistics. They would have helped create a more accurate picture of national unemployment, a crucial barometer we use to measure the performance of the economy, the likelihood of inflation and the state of the job market.

...The situation has grown so dire, though, that we can't even tell whether the job market is recovering...Despite the blistering growth of the economy, the invisible unemployment problem continues...

So, let's see what's actually happening as far as the government's SSDI program is concerned...

Recession Slams SSDI Claims System
Life and Health Insurance News
Published 11/20/2009

...In fiscal year 2009, the Social Security Administration received 2.8 million initial SSDI claims, up 15% from the 2008 total, witnesses said.


But the recession probably will send 2010 SSDI claims soaring, warned Barbara Kennelly, acting chair of the Social Security Advisory Board.

SSDI already has been expecting rising claims levels because of the aging of the baby boomers.

But, today, "the most obvious factor impacting the volume of disability applications ... is the recession, with its significant increase in unemployment," Kennelly said, according to a written version of her testimony posted on the Social Security subcommittee website. "Recent history demonstrates that disability applications generally rise and fall in tandem with the unemployment rate. The DI application rate per 1,000 workers among non-elderly adults rose 37% from 1989 to 1993 (from 8.3 per 1,000 workers to 11.5), and by 49% from 1999 to 2003 (from 8.8 per 1,000 workers to 13.1)."

At 11.5 per 1,000 workers, that 1.15% of the workforce just applying for disability insurance, with that number expected to increased in 2010. What would Mr. Goolsbee have to say about that?

Stifel, Nicolaus' research team. Citigroup's Legg Mason operations and UBS' retail locations throughout the U.S. have recently become part of St. Louis-based Stifel. (More about them by clicking: HERE.)

Stifel expects that our nation's employment/unemployment reports "... for the next few weeks will paint a rosier picture of the employment market than is expected or warranted."

Unemployment Initial Weekly Claims are going up, not down, "as-reported." (They went up by 1,000, according to reports Thursday, but this was stated to be "trivial." The reality is this isn't the first time this has happened in the past month, and it's one of the most important indicators that is required to be present for the National Bureau of Economic Research to officially declare the economy to be out of recession.)

Stifel, Nicolaus via Zero Hedge, on Wednesday:

...the following chart that shows how these issues have impacted the reported data over the past six months. The bars show actual initial claims, the line shows the as-reported figures. The reported data has shown a steady decline since July while the actual initial claims have been on a steadily rising trend. In other words people have been losing jobs at a faster and faster pace since September, but the adjustment model expected job losses to rise even faster than this and thus turns the rising trend into a falling trend.

CHART: Unemployment Weekly Initial Claims
Source: Department of Labor

Diarist's emphasis in bold

Unemployment Total Ongoing Claims have been steadily rising, and are at an all-time peak. Meanwhile, we're told this number is steadily improving!

The following chart depicts the unadjusted and adjusted ongoing claims data.
The points we want to highlight are 1) the reported data (red line) has shown steady improvement since July, 2) the unadjusted sum of people collecting benefits (continuing claims plus those on extended benefits) has actually been steadily rising and is now at an all-time peak, and 3) the disparity between these trends is about to get much wider due to the adjustment methodology. We could conceivably have nearly 11M people collecting unemployment and see the data reported as a 3.something million figure.

CHART: Unemployment Total Ongoing Claims

Diarist's emphasis in bold

Non-Farm Payroll Seasonal Adjustment Factors By Month, wherein we learn that the Bureau of Labor Statistics has been manipulating these month over month numbers at their discretion as they deemed fit! That being said, save the conspiracy theory stuff for another time because, by law,  the BLS must adjust these numbers to make them reflect actual statistical results in their annual adjustment every February. (Based upon reports earlier in the 2009, it is anticipated that the BLS' annual revision, coming up next month, will add another, up-until-now-accounted-for 800,000-plus people to the unemployment lists. Again, I've posted multiple diaries on this reality, such as this: "Breaking: BLS, Fed, BEA et al Overstate Strength of Economy.")

The November point (end of the heavy red line in the chart) was oddly at an all-time low. Effectively the BLS attributed a higher percentage of the current workforce to seasonality last month than any time in the past 14 years. Which means they erased a record high number of people out of the headline non-farm payroll number.

CHART: Non-Farm Payroll Seasonal Adjustment Factors By Month

Then there's a 2006 study by Katharine Bradbury, Senior Economist and Policy Advisor at the Federal Reserve Bank of Boston, entitled: "Measurement of Unemployment." In that, we learn the following...

From the very beginning of the report:

A continuum between unemployed and entirely inactive individuals indicates
that measures beyond unemployment may be useful in judging the state of the labor

And, from the end of the report:

IV. Measuring slack in the labor market

These measurement issues are of more than academic interest because unemployment is
the  most  widely  used  indicator  of  the  degree  of  tightness  or  slack  in  the  labor  market
and, by extension, in the overall economy; as a consequence, it is used by policymakers
as a key signal of potential inflationary pressures. The research discussed above points
to  a  continuum  of  labor  market  attachment  among  the  non-employed,  from  those
classified  as  unemployed,  through  various  marginally  attached  groups,  to  people  who
expressly  do  not  want  a  job.  Some  of  the  research  authors  argue  that  unemployment
should  be  defined  and measured more  inclusively  than  it is  currently.
 More  generally, the arbitrariness of the dividing line between the states of being unemployed and out of
the  labor  force,  together  with  the  heterogeneity  of  subgroups  within  the  "inactive"
population, implies that the relationship between the measured unemployment rate and
"true"  economic  slack  and  hence  inflation  may  vary,  depending  on  the  specific
definitions  used  in  measuring  unemployment,  potential  labor  market  entrants,  the  age
and gender composition of the population, and labor market institutions. This suggests
that  policymakers  might  gain  useful  information  by  looking  at  a  range  of  measures--
along with the official unemployment rate--in judging the state of the labor market.  

To address the challenge of measuring the degree of actual tightness in the labor market
as  accurately  as  possible,  researchers  have  developed  and  investigated  a  variety  of
alternative indicators of labor market slack. One set of alternative measures sidesteps the
difficulty  of  choosing  a  dividing  line  between  the  unemployed  and  the  inactive
population  by  concentrating  on  the  distinction  between  employment  and  non-

Bold type is diarist's emphasis.


Transitioning from the employment/unemployment topic to housing, I wanted to bring up a point which has been virtually overlooked (almost completely unmentioned, in fact) in most MSM overviews of the state of our economy, today: the concept of record-breaking, dramatically diminished worker mobility. There was an excellent story on this over at Bloomberg this past Thursday: "Job Growth Erodes as Housing Bust Pushes Mobility to Record Low."

Job Growth Erodes as Housing Bust Pushes Mobility to Record Low
By Steve Matthews, Mike Dorning and Daniel Taub

Jan. 7 (Bloomberg) --

The ability to relocate for employment, which helped the U.S. recover quickly after previous deep recessions, is the latest victim of the housing bust. About 12.5 percent of Americans moved in the year ended March 2009, the second-lowest ever, estimates Brookings Institution demographer William Frey, after a 60-year record low of 11.9 percent the previous year.


Some households are staying put because they owe more on their mortgages than their properties are worth; others have trouble selling houses in depressed areas, economists say. The S&P/Case-Shiller composite index of home prices in 20 U.S. metropolitan areas was down 29 percent in October from its July 2006 peak.

"One of the hallmarks of America's labor market is a high level of mobility," said Joseph Stiglitz, a Nobel Prize-winning economist, in a Jan. 3 interview in Atlanta, where he was speaking to an economics conference. "We are about to lose that."

Stagnant Workforce

The stagnant workforce may raise the long-term trend rate for unemployment by 1 percentage point and lower economic growth 0.3 percent a year through 2012, said Michael Feroli, an economist in New York for JPMorgan Chase & Co. It has already contributed to keeping the jobless rate as much as 1.5 percentage points higher than would have been suggested by the depth of the recession, Peter Orszag, director of the U.S. Office of Management and Budget, estimated in July.


Since the recession began in December 2007, and amidst what I can only refer to as the concept of irrational exuberance with regard to hopeful statements concerning a rebound in our nation's housing market, there has been a fairly-widely, underreported reality concerning the many millions of homes that have gone through foreclosure (or, that are being withheld from being fully foreclosed) that are yet to even hit our nation's real estate marketplace.

The investing community has been fully aware of this, all along, in fact, as is self-evident in the virtual obliteration of the asset-backed securitization marketplace for mortgages during this entire time. Between that and the reality that our federal government (that's the taxpayer, btw) is now, almost exclusively,  the only entity financing home purchases in this country, you'd think the MSM would get a clue. But, the truth is this is barely mentioned to the general public, at all.

Kossack gjohnsit posted the latest diary underscoring these truths (along with some great graphics related to our population's payroll realities) just this past Wednesday afternoon, in:  "Why Americans demand bald-faced lies about the economy."

From the housing and payroll population perspective, gjohnsit does an outstanding job explaining why the "recession" we're in is quite different from recession's past, too. He also explains it in the numbers and graphics, doing a particularly outstanding job with regard to what's happened with industry credit markets and related asset-backed securitization realities, and as it relates to overall statistics which clearly demonstrate that what we're dealing with now is unlike anything we've ever dealt with before...even though so many in the MSM and throughout the blogosphere attempt to explain all of this away as if it's just a garden-variety recession.

Again. It's not. (Read gjohnsit's diary by clicking on the link above.)


Depending upon whose stats you read and which economic pundits you favor, the reality is it is in this category where I would place my vote for the most underreported story of the entire recession: the massive evisceration of Main Street consumer credit by Wall Street.

These days, I earn my living running a small software business that provides consumer credit application processing for retailers. So, you could say I've had a front row seat to this debacle since day one.

I've written extensively on this topic, with some of my most recent diaries being available through links here, here, and here.

What boggles my mind is the truth that our federal government only really focuses on the retail consumer credit utilization rate (i.e.: currently outstanding revolving credit, non-revolving credit, auto loans, etc.--see story/graphics links two paragraphs below), and then only in dollars. What's gone almost completely unreported throughout this entire recession is the real story. As Meredith Whitney accurately projected it over a year ago, from mid-2008 through the end of 2009, roughly 25% of all consumer credit lines were stripped from the marketplace. She projects another 25% of all remaining consumer credit availability will be gone by the end of this year. That's half of all available consumer credit folks! Gone! And, nary a word from the MSM about all of this until the past few days.

Finally, apart from press coverage of our government leaders feigning encouragement of Wall Street to lend more to Main Street (which is nothing short of our government talking out of both sides of their mouth[s], since they're insisting that banks maintain significantly higher loan loss reserves, too), could it be that the MSM is beginning to get a clue about the truths as to what's actually happened as it relates to the devastation of the consumer credit market during this time? (This is all covered in the links a few paragraphs above, at the top of this section.) But, here's the link to the latest "epiphany" from the blogosphere on this outrage, courtesy of Calculated Risk (but even now, they're still missing the story; check my diary links, a few paragraphs above, for the real scoop): "Consumer Credit Declines for Record 10th Straight Month."

Consumer Credit Declines for Record 10th Straight Month
Friday, January 08, 2010
by CalculatedRisk on 1/08/2010 03:00:00 PM

The Federal Reserve reports:

Consumer credit decreased at an annual rate of 8-1/2 percent in November. Revolving credit decreased at an annual rate of 18-1/2 percent, and nonrevolving credit decreased at an annual rate of 3 percent.

Consumer Credit Click on this link for image in new window.

This graph shows the year-over-year (YoY) change in consumer credit. Consumer credit is off 3.9% over the last 12 months - and falling fast. The previous record YoY decline was 1.9% in 1991.

Consumer credit has declined for a record 10 straight months - and declined for 13 of the last 14 months and is now 4.5% below the peak in July 2008. It is difficult to get a robust recovery without an expansion of consumer credit - unless the recovery is built on business spending and exports (seems unlikely).

Zero Hedge was a little more emphatic about what they reported, but even their coverage was far from complete: "Consumer Credit Plunges $17.5 Billion On Consensus Of -$5 Billion, Largest Drop On Record."

The reason for these journalistic insufficiencies? By default (perhaps, less than intent), if nothing else, the government -- for whatever reason -- hasn't accurately reported what's actually occurred in this sector over the past 18 months!

Well, I could certainly continue on, about commercial real estate, the lack of solvency in the banking sector, inherent mistakes as to how we derive at our gross domestic product numbers, and much, much more. But, keeping it real, I'm just grateful you read this far!

Unfortunately, like so many other matters relating to our economy, we have to work and dig to get to the truth.

Hopefully, after reading this update, you are now at least a little more aware of the true extent of the travesties currently occurring throughout our government and in the MSM as it relates to the dearth of accurate information about what's really going on within our economy.

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For much more information along these lines, mostly from the last quarter, here's some additional reading:

"Breaking: Q3 2009 G.D.P. Revised Down, Again, To 2.2%" (12/22/09)

"0.2% Jobless Rate Drop Belies Q1 '10 Negative Revision" (12/4/09)

"Propaganda ≠ Jobs; Krugman: 'Provide Jobs'" (11/30/09)

"'Half A Recovery?' Or, A Half-Fast Recovery?" (11/29/09)

"New Economic Travesties: GDP Revision, Goldman/AIG, Reform."

"...Tuesday's just as bad..." (11/17/09)

"Breaking: BLS, Fed, BEA, et al 'Overstate Strength of Economy'." (11/9/09)

"NYT: Worst Unemployment Since Great Depression" (11/7/09)

"The past is never dead. It's not even past." (10/12/09)

] (10/12/09)

"[ More Gov't, Wall St. And MSM Lies: Consumer Credit, Savings" (10/8/09)

"10 Stunning New Truths On Wall St., Economy, Jobless" (10/3/09)

"Krugman: Jobs Destruction Means A 'Recovery" In Name Only'" (9/5/09)

"A Tale of Two Economies" (8/20/09)

Originally posted to on Mon Jan 11, 2010 at 03:52 AM PST.

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Comment Preferences

  •  Tip Jar (203+ / 0-)
    Recommended by:
    Renee, Lupin, JekyllnHyde, Ed in Montana, SteveLCo, ogre, Timaeus, badger, mattman, DebtorsPrison, rincewind, tmay, shycat, Jim W, Mnemosyne, TX Unmuzzled, route66, mataliandy, bronte17, TracieLynn, Dburn, JuliaAnn, greenomanic, Larry Bailey, oceanview, ctsteve, splashy, scorpiorising, Eric Blair, CitizenOfEarth, gmb, riverlover, barbwires, dkmich, side pocket, Deward Hastings, Josiah Bartlett, soros, Fabian, Massman, chumley, salmo, NoMoreLies, disrael, Halcyon, irate, PBen, Paul Goodman, Militarytracy, Flint, run around, eightlivesleft, Cmyst, stitchmd, Brooke In Seattle, trinityfly, Annalize5, where4art, tidewatcher249, lotlizard, Sandino, FightTheFuture, deepsouthdoug, MindRayge, Ekaterin, Snud, berko, Nightprowlkitty, Do Tell, Opakapaka, cookseytalbott, buckstop, VictorLaszlo, greenearth, Lefty Coaster, AnnCetera, NBBooks, triv33, MJ via Chicago, Glorfindel, imabluemerkin, Sagebrush Bob, NearlyNormal, Preston S, MarciaJ720, sceptical observer, profh, Persiflage, frostbite, goinsouth, kurt, Jbeaudill, shaharazade, jjellin, pkbarbiedoll, CharlieHipHop, Friend of the court, AllanTBG, DBunn, bigchin, One Pissed Off Liberal, dotdot, lightfoot, xaxado, dotsright, oscarsmom, Margfh, 0wn, Outrider, LillithMc, Jimdotz, terabytes, LamontCranston, DWG, bnasley, jayden, Aunt Martha, mcc777c2, mudslide, millwood, Moderation, Terra Mystica, TomP, rmonroe, glaser, ynp junkie, Involuntary Exile, Quicksilver2723, Tam in CA, wavpeac, Ruff Limblog, Dude1701, Robobagpiper, wishbone, CIndyCasella, squarewheel, forgore, Rhysling, cybrestrike, George Hier, aufklaerer, snackdoodle, lostinamerica, JG in MD, Nisi Prius, An Affirming Flame, Carol in San Antonio, dark daze, maryabein, weltshmertz, h bridges, pvmuse, mkor7, Daily Activist, John Shade, ProgressiveTokyo, synductive99, ArthurPoet, A Voice, ohmyheck, methinshaw, SolarAngel, on2them, ArtSchmart, GeeBee, Ronald Singleterry, your neighbor, polar bear, NY brit expat, Benintn, Kristina40, eyesonly, farbuska, Floande, Onomastic, anafreeka, allenjo, SkylarkingTomFoolery, thethinveil, dle2GA, Wheever, muddy boots, lizard people, SpringtimeforHitler, svboston, Wom Bat, happenstance, Anthony Page aka SecondComing, Sunspots, Ezekial 23 20, jadt65, DRo, jaebone, PrometheusUnbound, No one gets out alive, Azazello, WingNutCracker, ready for change, Tentwenty, James Robinson, HPrefugee, DM4, runningdoglackey

    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

    by bobswern on Mon Jan 11, 2010 at 03:58:24 AM PST

    •  You are still standing by that Mish crap? (25+ / 0-)

      Bob, you CANNOT add the difference between the labor force in November-December and the increase in the "not in the labor force" category.  They measure the exact same thing.  You are double counting in entirety.  Where do you think the 661,000 that dropped from the labor force go, they go into the not in the labor force category.  The numbers of those not in the labor force + the labor force must equal the civilian non-institutional population.  This isn't rocket science regardless of what that teabagger/union basher Mish likes to say.

      Regarding your general dismissal of statistics that don't enforce your worldview, I find that a disgusting breach of intellectual dishonesty.  The seasonal adjustments are applied based on historical factors that are very scientific.  They are not merely a random guesswork by the BLS.  I know you don't understand the methodology they use, but that doesn't mean it isn't accurate.  The BLS subtracts jobs every October-December to account for seasonal (there's the word) Christmas hiring and they add jobs back in January-February to account for the seasonal firings of those workers.  They also subtract jobs in May-June to account for seasonal summer hires.  The methodologies are sound and based on DECADES of data.  

      I appreciate your analysis of qualitative factors regarding our economy, as I think it brings value to the community (at least within regards to your worldview), however, unless you are willing to educate yourself more on the quantitative measures (ie economic statistics), you should probably leave those for someone else to explain.

      •  So many heads little time... (31+ / 0-) fact, no, I said the diary was technically correct, since I was reporting on someone else's commentary about that, but the truth is that far more than 1% of our population has been "vanishing" into never-never land for, primarily, other reasons, which I then go on to detail, below.

        "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

        by bobswern on Mon Jan 11, 2010 at 05:28:54 AM PST

        [ Parent ]

        •  You mean like retirement? (11+ / 0-)

          2.57 million people retired on social security last year.  It is likely that the vast majority of those are now in the "not in the labor force" category.  There is no vanishing Bob, everyone is counted.  If you look closely, the civilian labor force + the not in the labor force = total US non-institutional population.  In other words, no one vanished.

          •  I got this (16+ / 0-)

            People can vanish from the workforce by moving them around from category to category until, eventually, they fall into a category that never gets reported in the media.

            In average times an average number of jobs are added for the holidays, but how is that reflecting reality if the number of employers was nowhere near normal in a given year due to business closures? On that same note, how abour if existing business knew ahead of time that they woulf not ad in a given year because of a massive slowdown?

            I see a bias there. In very bad times the numbers added will be too large and in roaring good times they will be too small. The averages represent the recently measured trends. They happen to be very biased towards the booming times because "black swan" events are not statistically factored in as part of the averages.

            •  Its the opposite (6+ / 0-)

              the BLS actually subtracted more jobs in December 2009 than they have over the previous 5 year period (ie they accounted for more seasonal hiring).  Had they used last year's adjustment (or the 5 year average one, we would have had job growth.  Don't let your bias miss the data.

              •  I wasn't refering to any specific report (6+ / 0-)

                Just pointing out that events outside of the norm are not suitable for manipulation by the methodologies they use. Who really knows what is an appropriate adjustment? I'm no expert.

                It's interesting that you point out how easily they can make that report go positive or negative based on some arbitrary decision though. I guess my point is that it is not that statistically valid to be laying claims of job growth measured in tenths of a percentage point (+0.1%, i.e.)when things may clearly not be that precise.

                If I have a bias it is that I think the reporting will always reflect what the administration wants to see. The narrative is being supported as much as it can.

                •  Nice conspiracy (5+ / 0-)

                  so the BLS economists (life long government bureaucrats) are now fudging all the seasonal adjustments to whatever the administration wants?  So, why did they subtract an extra 171,000 jobs in December when the normal seasonal adjustment would have shown job creation of 85,000?  Did the "administration" want December's jobs report to be negative?

                  •  Oh no you don't (8+ / 0-)

                    The statisticians don't create the narrative. I'm saying this: The statisticians themselves are being hired to measure thhings that can be cherry picked to sound as good as one wants. This is done by constantly redefining things in ways that are counter-intuitive and totally not well siuted to be thrown out by the media without some sort of added explanation.

                    Your point is that if I am well educated and stick to my protocols there is no way that what I do is not being used for political gain---a really simplistic argument.

                    •  The statisticians (6+ / 0-)

                      have been at the BLS forever.  There are bureaucrats not appointees.  And the measurements are not "cherry-picked" they are all described at length in the methodologies of each report.  You obviously have never taken the time to read (or understand) these reports or you wouldn't be professing this kind of crap.

                      •  And that is where it stops (4+ / 0-)
                        Recommended by:
                        mataliandy, TMP, bnasley, pvmuse

                        They are not the ones construction the economic narrative. They are good public servants that do as they are told. They have been there many years and they have been measuring things exactly as they are told to. No conspiracy there at all.

                        What is being produced on the media is not given any more relevence because they (statisticians) are doing a good job. The narrative is what comes outside of the science. You know, the arguments that are based on whatever "meaning" people think they can extract from things and not be called out for making untrue statements.

                        •  The administration is actively working to (0+ / 0-)

                          undermine the security of working families. Not quite as openly as the previous administration, they are a lot smarter and sneaky about it. But, they are. The only conclusions that can be drawn from this are very scary ones.

                          I think that basically this nation is being looted, in a sense, the power elite keep pushing the envelope, getting away with more and more.

                          How stupid we are to let them do this. Soon, if they continue to get away with it, we're going to become a de-facto banana republic. A Third World nation.

                          We need to completely restructure our government's priorities to reflect the nation's real priorities. For example, is this the breakdown you think is appropriate for Federal spending?

                          Taiwan moved to Single Payer and 95% coverage at high quality in One Year
                          101,000 Americans don't NEED to die in 2011

                          by Andiamo on Mon Jan 11, 2010 at 10:22:50 AM PST

                          [ Parent ]

                          •  might I humbly submit, politically, we have (0+ / 0-)

                            achieved banana republic status.  Jimmy Carter has said for pretty much the past decade his organization would not be able to certify national elections in the US.  Look who got the bailout money.  Look who benefits the most from healthcare 'reform'.  "Torture? oh, we have to move past that." and so on.  

                            Because our nation is sooooo wealthy, the minimum services provided to the poorest and their material possessions are much better than what one usually associates w/stereotypical banana republics.  However, look who/what controls the machinery and who/what reaps the majority of the benefits from society's efforts.

                    •  It is like the argument over the CBO (5+ / 0-)

                      for a long time I simply assumed they were not influenced by political considerations, and then they put out a statement saying that 90 percent MLR for health care is government take over of health care. It requires no conspiracy to think that people will give into political pressures.

            •  And you are wrong in general (6+ / 0-)

              there are only "2" categories, those in the labor force and those not in it.  So, you can't really be "moved around until you vanish".  Nobody "vanishes" they retire, go back to school, become homemakers, etc.

              •  Yes you can vanish (2+ / 0-)
                Recommended by:
                Bobjack23, allenjo

                ...from one category. Stop parsing my statements to make it look like I am being the fool you'd wish I was.

                One week someone may sit in a column and vanish from it the next as a result of time having elapsed. His working status may not have changed whatsoever.

                The fact that things must balanca out and always dies is irrelevant for one musy be forced into thinking people are retiring when in fact they have only retiring from looking for work.

                I do not dispute that all the pieces of the pie add up to the whole pie. I'm saying that a lot of people are being considered crumbs just to make it look right on paper.

                •  This statement is wrong (5+ / 0-)

                  One week someone may sit in a column and vanish from it the next as a result of time having elapsed. His working status may not have changed whatsoever.

                  This is not true.  Simply on its face false.  The numbers are derived from a survey and the only way someone switches columns on the survey is to change their status in the survey (ie how they view their situation).  Just having a month go by changes nothing.

                  •  Whoa (0+ / 0-)

                    The numbers are adjusted as we have been saying all along. You can be adjusted right out of a column from one month to the next for no reason except that time has elapsed, no?

                    •  The adjustments are based on changes to (3+ / 0-)
                      Recommended by:
                      askew, Elise, jiffypop

                      the unadjusted numbers (they do report those every month too, if you care to be informed) in an effort to eliminate seasonality, but they are all based on the unadjusted numbers from the survey.  In other words the survey determines where you are placed.  

                      Your "statisticians painting a rosy scenario theory" falls apart when we look at the unadjusted data, which show an unemployment rate of 9.7% (instead of the 10% reported).  

                      •  Nice try (1+ / 0-)
                        Recommended by:

                        And where do you think one would land in a survey if he hasn't gone anywhere. He'd be found in the same column of unadjusted numbers right before he was adjusted away to some other column. You' re trying to say that seasonality is a constant from year to year and that adjusting unadjusted numbers cannot lead to false assumptions.

                        I would just compare that to a bird counter trying to report a bird count in 1816 (the year without a summer) by sampling every day and then applying a statistical correction to account for seasonal variations. It's perfectly ok to do most years, but not that one. It may lead to strange conclusions like assuming the birds have retired all at once (if that was the only column one could place them). The weirder thing might be that the appearence of one bird the next summer would be a sign that things were really improving and that nature was creating new birds.

                        •  Stop embarrassing yourself (0+ / 0-)

                          you obviously have no idea how these statistics are calculated or the methodologies behind them.  The seasonal adjustments include current factors in them.  They are revised all the time to be as accurate as possible.  And since one can always ignore the seasonal factors and just use the unadjusted data if they like your argument is rather meaningless.

                          As for your birds, wouldn't you think it would be odd if the seasonal adjustment told you there should be even less birds in 1816 than 1815?  Because that is essentially what the BLS did in December, they subtracted even more jobs than in previous years to account for GREATER Christmas hiring (which I don't think anyone believes happened).  So, it is not the BLS attempting to make the numbers more rosy (if they wanted to do that they could have used last years adjustment (remember the adjustment for December is NEGATIVE).  Instead, they believed that other seasonal factors were at play in December (more so than in most Decembers) and thus they subtracted even more jobs.  

                          •  I don't feel embarassed (1+ / 0-)
                            Recommended by:
                            enough already

                            Not one bit. And I am not lacking any understanding by anyone's standards. I happen to have a graduate degree in science, not that it matters. I know a thing or two about statistics, although not exactly about the machinations in this specific case. I don't attribute much more certainty to numbers that they deserve, but that is just me. The reason? I understand how things can be hidden by accounting for things in different ways all the time.

                            It is rather you who keep embarassing youserlf by implying that I am siding with the overestimate camp rather than underestimate camp...I side with no camp. I think the whole process of trying to assume what the behavior will be and account for it either by refering to the past (or the opposite of the past in some degree)is totally biased. But then you will just say that it is the best we can do and will reply that I understand that.

                        •  And in this case (0+ / 0-)

                          the BLS actually thought that people filling out the survey were "lying" about being out of the workforce (and not wanting a job) and thus they adjusted the number of those not in the labor force, but still wanted work (ie the discouraged) up by 366,000 in December.

          •  SSDI Claims (12+ / 0-)

            many people who have been laid off were disabled to begin with but worked with employers who were willing to work with them.

            When they are laid off, they don't have a very good chance at getting a new job.  First off, they have a pre-existing condition and self-employed companies don't want those types of people (yet).

            Granted, a small portion of people are just trying to get some money, but to actually get approved for SSDI is NOT as easy as Republicans would like people to think it is.

            -6.13 -4.4 Where are you? Take the Test!!!

            by MarciaJ720 on Mon Jan 11, 2010 at 06:51:08 AM PST

            [ Parent ]

            •  I mean self-insured not self employed (2+ / 0-)
              Recommended by:
              Brooke In Seattle, Annalize5

              -6.13 -4.4 Where are you? Take the Test!!!

              by MarciaJ720 on Mon Jan 11, 2010 at 06:52:09 AM PST

              [ Parent ]

            •  My point exactly... (2+ / 0-)
              Recommended by:
              mataliandy, MarciaJ720

              it is not a conspiracy theory to cook the books just economic good times the marginally employable can be accomodated for but not when things are tough...

              Obama - Change I still believe in

              by dvogel001 on Mon Jan 11, 2010 at 06:57:17 AM PST

              [ Parent ]

              •  The federal books have been cooked for years... (5+ / 0-)

                ...mostly so people having a really hard time will think they must be in an isolated pocket. Meanwhile the already rich have been getting obscenely rich. It's time to take from this class in a big way and use the money to build new efficient domestic industry starting with Steel, and other heavy industry.

                The stealing from the working classes has been done by using  China to finance that robbery. If we don't get a domestic heavy industry back we will be at the mercy of China. Do you thionk the super rich care?

                Those fools think they are going to control China...they could not be more wrong. They have had their way for so long that they have a greatly exaggerated sense of their power...mostly because of the couch potatoes in this country when there was slack enough in the economy that no one gave a damned what they were up to. Well those couch potatoes are becoming lean and hungry and most of the rest of the world already is...they are going to have no where to run but states that have not got the military power to protect them or their property.

                The young man who has not wept is a savage, and the old man who will not laugh is a fool. George Santayana

                by Bobjack23 on Mon Jan 11, 2010 at 08:32:55 AM PST

                [ Parent ]

            •  Except for my mom's kidney failure (1+ / 0-)
              Recommended by:

              I've never met anyone who could get SSDI without years of providing increasing mounds of evidence, most of which is "lost" or "unintentionally" excluded from the review process. People essentially have to prostrate themselves to get SSDI.

          •  I doubt that (0+ / 0-)

            There is no vanishing Bob, everyone is counted.

             I'm sorry, but I have a hard time believing that.

            "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

            by gjohnsit on Mon Jan 11, 2010 at 11:01:03 AM PST

            [ Parent ]

        •  Could you be so kind as to summarize this diary (1+ / 0-)
          Recommended by:

          at the end: a kind of Econ for Dummies version for laypeople like me?

          I'm very busy today, and I can't read this diary and digest it thoroughly.  It's very complicated for me, as I have never taken an Econ course in my life, and I would very  much appreciate a concise list of the main points to quickly comprehend what it is that we should know about our economy.  I will try to read the complete diary tonight in greater depth when I have more time to study it.

          Thank you.

      •  "A mental recession" (3+ / 0-)
        Recommended by:
        bruh1, Do Tell, dark daze

        America: our highest paid profession is thief.

        by Paul Goodman on Mon Jan 11, 2010 at 06:38:51 AM PST

        [ Parent ]

      •  SilverOz (4+ / 0-)
        Recommended by:
        Mnemosyne, Do Tell, shaharazade, bobswern

        when you are unemployed, you are still part of the labor force, otherwise the unemployment rate as defined would beequalt to zero at all times...

    •  One very important story last week (44+ / 0-)

      that fly diaried on Saturday but it received much too little attention: How the Teamsters Beat Goldman Sachs> I found it at techno's excellent new blog, Real Economics (which today has the latest update on the very scary chart showing unemployment in this "recession" compared to previous recessions). Basically, Goldman Sachs was trying to convince bond-holders in the country's largest trucking outfit to oppose a bankruptcy restructuring so that GS could win big on some credit default swaps. The Teamsters used the advice of former CFTC head of enforcement under Clinton, Michael Greeneberger, to discover and expose Goldman's maneuvers, and the threat of Teamster picket lines forced Goldman to back down. The full story was in a Counterpunch article by Andrew Cockburn.

      I have argued before that financial derivatives have actually destroyed the property basis of capitalism. A credit default swaps is basically insurance on a bond. Bond holders can only succeed if the company they lent money to (the company that issued the bond) creates new economic wealth at a profit. However, a credit default swaps pays off only if that company fails. So, the incentive structure of capitalism is perverted by credit default swaps! Is there anyone doing studies of how many companies have been wrecked and how many jobs destroyed because of derivatives like credit default swaps? You would think this would be a top priority for economic policy makers and regulators to figure out. That's why I am so strident that this a war to the death between Wall Street and America. Sadly, many highly educated people, who have made their livings my dipping a cup in the flood flow of finance, refuse to see what's actually happening, and how their "success" is causing the failure of our entire national economy. They refuse to see how they are parasites killing off the host.

      A conservative is a scab for the oligarchy.

      by NBBooks on Mon Jan 11, 2010 at 06:29:15 AM PST

      [ Parent ]

      •  Yes, it's like the Mafia buying life insurance (14+ / 0-)

        on one of their business associates or like the show horse insurance market where there was incentive to kill horses.

        Derivatives give incentives to kill American businesses. Lehman Brothers was a competitor of Goldman Sachs. Paulson, who let Lehman fail was the former boss of Goldman Sachs. GS cashed in on derivatives when Lehman failed then cashed in again when the recovery began because the competition was eliminated.

        look for my DK Greenroots diary series Wednesday evening. "It's the planet, stupid."

        by FishOutofWater on Mon Jan 11, 2010 at 07:34:40 AM PST

        [ Parent ]

      •  Fly's diary gave me a ray of hope (7+ / 0-)

        The Counterpunch article that Fly referenced was quite enlightening.  

        Lost in all of the commentary on this situation is that an organized, effective, union-led offensive worked, against a Wall Street monolith.




        Did I say, "organized"?

        The teamsters / GS / Yellow dustup was proof positive that there is power in numbers and an organized response to corporate raiding.  And there is real power in numbers + bad publicity + sunlight on the market machinations that caused this to happen in the first place, and potentially displace 30,000 workers.

        There is a fine line between bold and Dennis Kucinich.

        by Richard Cranium on Mon Jan 11, 2010 at 07:40:42 AM PST

        [ Parent ]

      •  exactly... (2+ / 0-)
        Recommended by:
        greenearth, Terra Mystica

        Sadly, many highly educated people, who have made their livings my dipping a cup in the flood flow of finance, refuse to see what's actually happening, and how their "success" is causing the failure of our entire national economy. They refuse to see how they are parasites killing off the host.

        ...said! More sadly they are not going to wake up until they are grabbed by the back of their necks...then they are not going to be able to help themselves and anybody else. Looks like the desensitization schemes of the Seventies and Eighties worked too well...a cup of EST anyone?

        The young man who has not wept is a savage, and the old man who will not laugh is a fool. George Santayana

        by Bobjack23 on Mon Jan 11, 2010 at 08:39:48 AM PST

        [ Parent ]

      •  Not inherently problematic, however... (0+ / 0-)

        A CDS makes perfect sense in all respects if the person purchasing the swap has a stake in the bond that is being issued.  In this case it acts as insurance and helps mitigate the risk posed to them if the underlying bond tanks.  It's a positive because it opens up credit to somewhat riskier endeavors that may be worth funding.

        However, the problem is the naked CDS where somebody is doing nothing more than gambling.  They have no stake in the original instrument that the CDS is based on, they are just making a bet.  It may sound more legitimate than Goldman Sachs betting on the Super Bowl, but in practice it's little different.  

        Had Goldman been holding onto the bonds and then getting swaps against those bonds, they would have still been better off having the bonds mature properly.  The CDS would be a backstop to reduce losses, but it wouldn't create the perverse incentive to want them to fail.  With a naked CDS they were better off having them fail.

        Worse because none of these derivatives are traded on an exchange, nobody knew who had what bets on what.  In the stock market we have shorts but you can look and see what positions are short against a stock at any time.  This can give you a sense of the health of a company.  But with the CDS market, it's not on an exchange.  So there could be trillions bet against a particular bond's survival and nobody would know until it collapsed.  

        There is value in swaps, but they need to be run through a regulated exchange so that we can all see what's going on.  Furthermore, swaps should require a certain stake in the underlying asset.  Then they are useful.

      •  Well stated (0+ / 0-)

        They refuse to see how they are parasites killing off the host.

        Obviously the other option is that they really don't give a damn. They have "theirs" already.

        Bad things can happen if you walk a mile in another man's shoes if you took his only pair of shoes.

        by Anthony Page aka SecondComing on Mon Jan 11, 2010 at 01:08:58 PM PST

        [ Parent ]

    •  THE PERFECT STORM (6+ / 0-)

        There is a lot here to digest and may  i say it's a pleasure to see folks doing so much data refs to help idiots like me come to my own conclusions.
        A couple of rhetorical(?) questions here:
        The housing slump has indeed brought a sudden degradation to mobility. The collapse which caused it has also caused a perilous unemployment prospect. Data may not be able to capture the watershed social ramifications of these concomitant events. Realignment of employment currently seems to be to utilize existing workforce to raise the bottomline because the top line is still generally anemic, not to mention that 40% of the companies on the NYSE, for instance, accrue revenue from overseas which is a major reason the tickers are still at 15 month highs. Socially how does one predict which local economies will strangle with citizens frozen in place and to what extent will this apply nationally?
       Second, add to this discussion the steadily revised methodology for compilation of inflation statistics - the CPI, for instance heavily influenced by unremitting pressure by Alann Greenspan to parse data out of the final publicized results which as a result also do not seem to provide reality for the consumer for whom the index was originally composed. Anybody have info on this?

      "America is ruled by the moral philosophy of the dollar."

      by runningdoglackey on Mon Jan 11, 2010 at 06:44:50 AM PST

      [ Parent ]

    •  George Carlin characterizes it perfectly (9+ / 0-)

      The game is rigged and nobody seems to notice. Nobody seems to care. Good honest hard-working people . . . white collar, blue collar it doesn’t matter what color shirt you have on. Good honest hard-working people continue, these are people of modest means . . . continue to elect these rich ***** who don’t give a ***** about you. They don’t give a ***** about you . . . they don’t give a ***** about you. They don’t care about you at all . . . at all . . . at all, and nobody seems to notice. Nobody seems to care. That’s what the owners count on. The fact that Americans will probably remain willfully ignorant of the big red, white and blue dick that’s being jammed up their ass everyday, because the owners of this country know the truth. It’s called the American Dream, 'cause you have to be asleep to believe it . . ."

      George Carlin ~ The American Dream

    •  Question for Bob (0+ / 0-)

      Why is it that so many of the comments in so many of your diaries deteriorate into ad hominem attacks, shrill denouncements of 'trolling' and the like. It seems you have a flock of unruly fans.

      Just asking for some responsible leadership here. Thanks.

  •  wow (33+ / 0-)

    Nice work sir.  Did you sleep at all last night?

    I am quite sure now that often, very often, in matters concerning religion and politics a man's reasoning powers are not above the monkey's. - Mark Twain

    by route66 on Mon Jan 11, 2010 at 04:14:52 AM PST

  •  It's more of a dump than a diary. (26+ / 0-)

    Let me sum it up: Government statistics are all wrong and on that basis, I'm going to tell you that it's much worse than the strawman I set up of people saying this is an "ordinary recession".  

    Subsidies without cost controls, regulatory reform means that citizens get a little more awful insurance at a huge cost to taxpayers. Like Part D but worse.

    by Inland on Mon Jan 11, 2010 at 04:21:22 AM PST

    •  glad (21+ / 0-)

      you took the time to read it.... you might have noticed this in it....

      Shrinking U.S. Labor Force Keeps Unemployment Rate From Rising

      Jan. 9 (Bloomberg) -- An exodus of discouraged workers from the job market kept the U.S. unemployment rate from climbing above 10 percent in December, economists said.

      Had the labor force not decreased by 661,000 last month, the jobless rate would have been 10.4 percent, according to economists including David Rosenberg at Gluskin Sheff & Associates in Toronto and Harm Bandholz at UniCredit Research in New York.

      “The actual unemployment rate is higher than shown by the official numbers,” Bandholz said yesterday after a Labor Department report released in Washington showed the economy unexpectedly lost 85,000 jobs in December while the jobless rate was unchanged.

      About 1.7 million Americans opted out of the workforce from July through December, representing a 1.1 percent drop that marks the biggest six-month decrease since 1961, the Labor Department report showed. The share of the population in the labor force last month fell to the lowest level in 24 years.

      December’s 10 percent unemployment rate matched the median forecast of economists surveyed by Bloomberg News. It was shy of the 26-year high of 10.1 percent reached two months earlier.

      I am quite sure now that often, very often, in matters concerning religion and politics a man's reasoning powers are not above the monkey's. - Mark Twain

      by route66 on Mon Jan 11, 2010 at 04:29:11 AM PST

      [ Parent ]

    •  Yes - this is now on the verge of trolling (23+ / 1-)

      For god's sake - after 8 years of the Bush regime, does anybody seriously take government reported numbers as gospel? The strawman underpinning this diary is an insult, the writing set at a 6th grade level, the tone histrionic, the supporting data cherrypicked and weak.

      We are in very precarious circumstances and I don't think people running around screaming and ripping their hair out is very helpful.

      I really miss Bonddad's expert, dispassionate analysis.

      Every day's another chance to stick it to The Man. - dls.

      by The Raven on Mon Jan 11, 2010 at 07:22:54 AM PST

      [ Parent ]

      •  Donut for calling (5+ / 0-)
        Recommended by:
        rick, Timaeus, Do Tell, greenearth, Badabing

        bobswern's diaries trolling.

        WAY out of line....................

        The person who says it cannot be done should not interrupt the person who is doing it.

        by ohmyheck on Mon Jan 11, 2010 at 07:33:44 AM PST

        [ Parent ]

      •  having dealt with the bullshit HR - (8+ / 0-)

        I've read your comment, and agree fully.  Bonddad did the right thing by leaving, but we really needed a voice of economic sanity here at DKos and the place is poorer for his absence.

        A lot poorer, as this diary shows.  I'm ashamed to be a part of a community that would endorse this...ahhhh, words fail me.  I wish the diarist would have the decency to delete this, as it is embarassing.  Histrionic is perhaps the best word to describe it, and that is neither warranted by the circumstances or helpful.

      •  Bonddad's "expert analysis" (14+ / 0-)

        Is highly questionable. Bondad freely stated his complete belief in BLS and other government statistics. Bondad also, IMO, showed a repeated inability to read charts, or at least to presume psychic powers in their interpretation. IMO, you can't call a top or bottom with any reliability until it is altogether in your rear-view mirror. Until then, you might well just be looking at a minor up/down tick. Bondad often predicted future movement based on very small trends.

        And many of us suspect that the government statistics have become increasingly detached from reality. So, yes, Bonddad had a calm and reasoned tone, and represented the mainstream PoV well. But "expert, dispassionate analysis" -- mostly not. On either count.

        •  This rececession bottomed in 2009Q3 (0+ / 0-)

          Do you deny that?

          •  How do you know this recession is over? (1+ / 0-)
            Recommended by:

            We can still drop yet again. And there are plenty of factors that can bring us down further than where we were.

            For one, end consumer demand has not come back no matter how hard people wish it had. Consumer credit - particularly credit cards are down and the pace downward is accelerating. If the recovery will be based on the consumer coming back on purchasing based on wages and disposable income only we are in for years more of a recession. And it is likely to get worse than it has been in terms of the number of unemployed.

            The December Retail Sales report is coming out and if ex Autos and ex Gasoline those numbers are still in the crapper we are in trouble for the long haul because all we have seen so far this year for consumers is that every month about one half of one percent of all households is buying a big ticket item (auto) and the rest of us are getting our disposable income clobbered further by higher gasoline costs (which affect the prices of most other retail sales items higher).

            There are a lot of people calling bottoms and ends of this recession but that may not turn out to be true.

            •  North American Auto Production (1+ / 0-)
              Recommended by:
              The Raven

              will be way up this year over last year.  That will mean increased hiring and purchasing.

              If housing prices start rising again, the foreclosure crisis will abate.

              But the main driver will be what Keynes called "animal spirits": the panic of the herd will reverse and consumer confidence will be restored along with business confidence.  We will then be on a sustained recovery.

              Of course, Washington could abort the recovery like it did in 1937 by trying to reduce the deficit, but hopefully that history won't repeat itself.

              •  Um (1+ / 0-)
                Recommended by:

                The automakers are currently planing for production at an annual rate of 10.5 million vehicles this year. They want much leaner inventories so that they can maintain or even raise prices. Plus they are dumping a boatload of dealers so they will have a lower amount of space for product.

                That is not going to be that way up. The second least amount of cars produced than at any time in the last 3 decades. So hiring won't even come back to previous levels in the auto industry any time soon.

                Why would the foreclosure problem go away if housing prices go up? The problem in a foreclosure is that people can't afford to pay for the mortgage. No amount of rising house prices will help the person in foreclosure nor will it prevent someone from going into a foreclosure in the first place. Plus if housing prices go up, more houses will go on the market, which due to supply and demand will cause housing prices to drop.

                Further houses are already way over-priced as it is today. Nobody should be purchasing a house that costs more than 3 times the gross household income. And with the tougher underwriting standards in place now there are fewer truly qualified potential borrowers that will be able to purchase the available for sale housing stock. That is the true problem with housing - the number of people that can actually afford to buy any given home. That is why it doesn't help with preventing foreclosures because who is the person trying to avoid foreclosure going to sell that house to? And, if they are underwater to boot then the bank won't let them sell (in most cases) to begin with.

                By the way the underwriting standards for auto loans also affects just how many qualified borrowers are out there to be able to purchase them.

                If you want to repeat the TARP fiasco just have the regulators and banks relax all the underwriting standards for loans again.

                The "panic of the herd"? Animal spirits? Oh, you mean that if the wishful thinking momentum can just take off consumers will rapidly spend their way into financial oblivion on the off chance there may be jobs out there?  Hardly. Otherwise we would have already seen that by now. And the banks aren't going to put themselves into the position of lending to such people. People can't just start spending money they don't have.

                The consumer confidence number will be the bellwether for the upcoming elections. If that number remains in the tank then Democrats in particular are going to pay a hefty price in the mid-terms.

                •  OK, I get it (1+ / 0-)
                  Recommended by:
                  The Raven

                  You are a gloom and doom guy.  No good news out there at all. Got it.

                  Meanwhile, everyone else is making money in the markets and GM is profitable for the first time in years.  At some point you will wake up, but it won't be any time soon.

                  •  Not necessarily ,,, more of a realist (1+ / 0-)
                    Recommended by:
                    Do Tell

                    Check out this today about Automakers

                    Finally, US automakers start to see improvement

                    General Motors may reopen some shuttered factories because it can't produce four of its vehicles fast enough to meet demand, and Chrysler is set to hire more engineers and product development workers.

                    GM factories making the Chevrolet Equinox, GMC Terrain and Cadillac SRX, all SUV-like crossovers, and the Buick LaCrosse sedan are at or near capacity, GM's North American president, Mark Reuss, told reporters at the Detroit auto show

                    Sounds good for your theory. But just where have they been making the cars to try to keep up with this demand?

                    The Terrain and Equinox are made at a factory in Ingersoll, Ontario, while the LaCrosse is built in Kansas City, Kan. The Ontario factory is working around the clock, and GM has plans to add a third shift to the Kansas City operation.

                    The SRX is made in Ramos Arizpe, Mexico. GM dealers have reported shortages of all four, and Reuss said he has fielded e-mails from frustrated customers who couldn't get vehicles they ordered.

                    Seriously. Foreign workers getting the big hours, and no doubt overtime to produce cars that are selling "big" in the U.S. And, only if the sales grow, will the taxpayer owned GM actually start re-hiring American workers.

                    Fucking fantastic. See, I am not necessarily a doom and gloomer, only a realist. If the reality happens to be doom or gloom then you have described me aptly.

                    •  Apparently, you've never heard of NAFTA (1+ / 0-)
                      Recommended by:
                      The Raven

                      The U.S. and Canada are basically a free trade zone where jobs and production are very interconnected.  Auto workers are going back on the job in both countries as both economies gain strength.

                      Manufacturing in the U.S. has been expanding for several months and job growth has just begun.  That's the reality.

                      •  Yeah, heard of NAFTA (1+ / 0-)
                        Recommended by:
                        Do Tell

                        But you just got done telling me how the auto industry was going to be producing jobs hand over fist for American workers. That isn't the reality of the situation now is it? Did you see the article when GM emerged from bankruptcy and they added 550 workers and made a $100 million investment in the Ingersoll plant in Canada? See, they didn't even bother to open up one of their shuttered plants in the US to begin with, they started outside the country.

                        I am sure you didn't even see that article quoting the GM North America President at the Detroit Auto Show. You just had an "animal spirit" concept that translates GM profitability into more jobs for Americans. And that isn't what is going on, or even has been going on at all. So, then you want to play around in NAFTA and try to condescend to me. Fine.

                        But when you say that auto sales would lead to more jobs or that a rise in house prices will somehow stem the tide of foreclosures you are playing in the world of wishful thinking without offering any evidence to support such conclusions other than the "animal spirits" that drive you.

                        Now you want to switch to manufacturing in general. That's okay because manufacturing is up - though choppy - since August. Manufacturing employment is up. The only question is whether it can be sustained and grown. Without the consumer it can't.

                        •  This person is a clueless, mindless (0+ / 0-)

                          robot for green shoots.  Also quite willing to call people names and use ridicule in answer to direct questioning of their unbelievable bullshit.  

                          I think that there are a number of folks here who may be paid shills as their comments make no sense, they lie about and/or distort the facts and are generally disagreeable.  That is the only explanation because no one could be that stupid to believe the lies that they are parroting about the economy.  

                        •  Consumers will be back in the market (0+ / 0-)

                          when they realize that the panic is over and they no longer need to hoard their money.  Once we see job growth again, consumer confidence will return and accelerate.

                          I think the next 2 years will be very good because Obama will get religion on jobs for his re-election bid.

          •  I think it is premature bottom calling (0+ / 0-)

            So far, it looks that way. If we have a 'W' shaped recession, and some economists (and some of the grimmer stats suggest), that 'bottom' will turn out to be one of at least two.

            I am not saying "I know the recession didn;t end", only that we don't really know yet, especially given the uniqueness of the situation and the number of persisting negatives.

        •  Won't argue with that (0+ / 0-)

          Each reader is free to form his or her opinion. My sense is that he isn't a cheerleader nor the herald of unwarranted optimism, as he was consistent in qualifying his opinions. His identification of small trends is one of the things I find compelling in his analysis - he has a knack for finding data that others overlook, and explains why it is important.

          From an investing standpoint, the critical issue is being able to call the various turns. At least once a week KB Home (KBH) gets a small bump which then dissolves as you see investors anxious to call the turn in real estate.

          Various sectors will experience the turn at different times, and bonddad understands the importance of making a good call on these events because the flatlined Bush years cost many of us a decade of investment growth.

          Every day's another chance to stick it to The Man. - dls.

          by The Raven on Mon Jan 11, 2010 at 08:49:28 AM PST

          [ Parent ]

          •  Successful investors (0+ / 0-)

            Call the turns when they are confirmed, not right after an uptick or downtick, or especially the leveling of a downtrend. A new trend has to be established, or there's a good chance ogf 'biting' on a minor counter-move. In looking at a large collection of data, I am not convinced we are out of the woods yet.

            At this stage -- until more indicators start establishing a stable trend, and not just stabilizing a tad above near-death -- we cannot rule out that we are seeing only a dead-cat bounce.

            •  Interesting idea (1+ / 0-)
              Recommended by:

              we cannot rule out that we are seeing only a dead-cat bounce.

              I'm pretty sure we can. The stock market has recovered from Dow 6600 to 10600 in less than a year. That's not what a dead-cat bounce is.

              You are correct in that investors who try to time the market usually get bitten. That's why I gave KBH as an example of that very phenomenon.

              However, to get solid returns at some point you have to use the information you have at hand to make a decision. Following the herd and waiting for confirmation can leave you on the dock watching the ship sail away. The savvy investor will work with information and crowd psychology and personal experience to make the best choice possible given possible outcomes.

              The danger for investors now is a W-shaped recovery, aka: a double-dip recession. Provided that the government doesn't make any known mistakes, we can avoid that. What are the classic errors? There are two: First, too much stimulus on public works projects (those are fine, but Main Street needs a boost too) and, second, deficit hawkishness. Per Krugman, spending must be sustained until the economy is fully out of the woods.

              Every day's another chance to stick it to The Man. - dls.

              by The Raven on Mon Jan 11, 2010 at 03:55:24 PM PST

              [ Parent ]

      •  You must like bonddad's "expert, dispassionate (7+ / 0-)

        analysis" because it echoes Wall Street so well.

        Your comment here is definitely on the verge of trolling, but not the diary.

        None of your criticisms here are fair, and it's obvious you didn't actually read the diary if you claim its writing it at a 6th grade level.

        I'm a small business owner under tremendous stress from this depression, and I find bobswern and gjohnsit and others to be useful in helping me to take an informed, long-term realistic view of things.

        I don't see you doing any of that.

        •  In all my years here I never ever thought (5+ / 0-)

          I'd see someone suggest that bonddad echoed Wall Street.

          LOL. That's just funny.

          And I finished this letter with unshakable faith that the dream will be fulfilled for this generation, and preserved and enlarged for generations to come.

          by Elise on Mon Jan 11, 2010 at 08:56:37 AM PST

          [ Parent ]

        •  Point of order (2+ / 0-)
          Recommended by:
          Elise, Inland

          Your comment here is definitely on the verge of trolling, but not the diary.

          The statement in the diary that the government is "cooking the books" by putting people on SSDI to lower unemployment is beyond outrageous.

          Most of us are struggling very hard in this recession and you certainly are in good company. But a realistic view of things is not, I contend, what we see in this diary.

          I read the financial press throughout the day - not just "Wall Street" but various analysts of varying stripes, and nobody - no one - has claimed that we're out of the woods, that there is not a severe risk of a double dip recession, and the mainstream, standard opinion right now is that we're balanced on a house of cards.

          If the diarist simply recognized that, it would tone down the hyperbolic framing. Instead, he's writing an argument against a position that doesn't exist.  

          Every day's another chance to stick it to The Man. - dls.

          by The Raven on Mon Jan 11, 2010 at 08:56:43 AM PST

          [ Parent ]

          •  That statement is made by an Obama advisor! (2+ / 0-)
            Recommended by:
            run around, Ezekial 23 20

            I'm not saying that, Austan Goolsbie is. And, it's from 2003, in reference to the Bush administration.

            Is that the writing level of a 6th grader or the reading level of a 6th grader that's in question, a couple of comments upthread?

            "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

            by bobswern on Mon Jan 11, 2010 at 10:22:34 AM PST

            [ Parent ]

            •  Well you know those Obama advisors. (1+ / 0-)
              Recommended by:

              They're 'beyond outrageous' when they say things that disagree with the general cheerleading, but worth listening too as long as they agree.

              Those who labour in the earth are the chosen people of God. - Thomas Jefferson

              by Ezekial 23 20 on Mon Jan 11, 2010 at 11:35:17 AM PST

              [ Parent ]

      •  Seems to me, the right thing to do is highlight (1+ / 0-)
        Recommended by:

        how and why the diarist has it wrong.


        by potatohead on Mon Jan 11, 2010 at 09:03:25 AM PST

        [ Parent ]

      •  Um. Diarist doesn't just assert numbers wrong, (1+ / 0-)
        Recommended by:
        The Raven

        but asserts that they must be overly optimistic, and by design, and the fact that the gov stats are impercise means he must be right.

        I don't think that anyone believes the gov numbers are "correct".  But that's a long way from saying that nobody knows nuttin' and that one person's bull is as good as anyone else's.  

        Subsidies without cost controls, regulatory reform means that citizens get a little more awful insurance at a huge cost to taxpayers. Like Part D but worse.

        by Inland on Mon Jan 11, 2010 at 10:11:24 AM PST

        [ Parent ]

        •  Yes that's my take on it, too (2+ / 0-)
          Recommended by:
          Inland, cognitivecontinuity

          I assume that most government-reported economic data is reasonably valid unless proven otherwise. That is, I don't put a lot of stock in the exact U3 and U6 numbers, but if they are reporting 10 and 17 percent unemployment, I assume that's about the general level, and if those numbers get worse, I assume the problems are getting worse, and the same with improvement.

          The Bureau of Labor Stats also are the ones used by academics and economists and we can't make any assumptions or analyze policy and strategy if we think the numbers are illusory. The better way to interpret them, I think, is to consider reported numbers as "advisory."

          Every day's another chance to stick it to The Man. - dls.

          by The Raven on Mon Jan 11, 2010 at 11:29:11 AM PST

          [ Parent ]

        •  Other than ad hom's, you appear to have nada n/t (0+ / 0-)

          "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

          by bobswern on Mon Jan 11, 2010 at 12:32:27 PM PST

          [ Parent ]

  •  As someone who has seen first hand... (10+ / 0-)

    how SSDI helps people who are on the edge of employable...I think loosening the standards for SSDI is a good pays people who otherwise would stress their lives trying to eek out a living and frees up that potential job for a more able bodied young worker.

    Many of these people just keep on working for healthcare benefits at the cost of further degregation of their bodies and quality of life...and many of them if they keep on working will shorten their lives.

    So you say this is some sort of conspiracy I say it is good for society and one of the purposes of our federal government to help the weakest amongst us.../peace

    Obama - Change I still believe in

    by dvogel001 on Mon Jan 11, 2010 at 04:23:12 AM PST

  •  "wow" is right (rt66). My god, what a diary... (20+ / 0-)

    ...the scope, the detail! And as convincing as you've been in pieces (diaries) over the past year, this one has me thinking you've been close to 100% right all along. Those of us living on hope just didn't want to see it. Truly a tour de force Bob. T&R'd.

    Learn more about second-class U.S. citizenship at

    by Larry Bailey on Mon Jan 11, 2010 at 04:23:25 AM PST

  •  OMFG...5 comments and on the Rec list... (5+ / 0-)

    the Secret Santa must have rec'd the diary...

    Obama - Change I still believe in

    by dvogel001 on Mon Jan 11, 2010 at 04:24:57 AM PST

  •  Is this why the export numbers are called "good"? (5+ / 0-)

    They don't mention that, along with the raw materials, go the jobs.

  •  Let me give you an example of... (8+ / 0-)

    the positive effect of SSDI...a friend of mine who is 50 years old a Dentist by trade had severe back problems.  Now hovering over patients was making the back problems worse, so he sold his business and applied for SSDI and got it.

    Could he have technically worked, sure but he would be in agony for the rest of his life and when he in fact did retire would probably be in a wheelchair for the balance of retirement...

    Instead he retired early gets his SSDI benefits and more importantly what does he do now, he volunteers at low cost to help elderly at stage I, II & III assisted living facilities with dental care, advising young dentists how to deal with the tough cases in a cost effective manner...essentially volunteering his skills and living a better life...

    Should we have forced this person over the 65 year old finish line while crippling himself or simply recognize that for his profession that is all he could do...???

    I say the system worked...

    Obama - Change I still believe in

    by dvogel001 on Mon Jan 11, 2010 at 04:33:04 AM PST

  •  Don't know about the rest of the Nation, but (12+ / 0-)

    I question everything, especially anything I hear on the Chatter Box, or read on a blog or in a book.

    This particular subject is especially difficult, because unlike the hard sciences, Economists have a hard time agreeing on a lot of things.

    Conservatives want live babies so they can raise them to be dead soldiers.- George C.

    by gereiztkind on Mon Jan 11, 2010 at 04:33:36 AM PST

  •  Ok, Mr. Bad News. ... what's your solution? (7+ / 0-)

    I can definitely agree that the economy is in the crapper and that we're all feeling the effects.

    But what's the solution?

    In the past (really, in my entire lifetime), the solution has been to cut taxes in order to flood the system with more money which is spent.

    We did that in 2009.  Largest middle class tax cut ever.

    Now what?

    Also ... given the fact that the wealthy few are going to see their taxes go up in 2010 (i.e., the Bush Tax Cuts set to expire), we ought to see a dramatic improvement in the US government's balance sheet.  Isn't this a good thing?  Isn't getting closer to fiscal sanity a good thing?

    My solution would include much more bold government intervention in the direct creation of jobs - not funneling money out to state governments or contractors like they did with ARRA, but actually creating a program that creates jobs.  Also, I'd like to see even higher taxes for the wealthiest 1%.

    We need to eliminate tax shelters (continuing financial system regulatory reform).

    Other thoughts?

    What's the solution?

    "It is a serious thing to live in a society of possible gods and goddesses." - CS Lewis, Weight of Glory

    by Benintn on Mon Jan 11, 2010 at 04:34:56 AM PST

  •  my (14+ / 0-)

    there are some cranky people waking up this morning.

    I am quite sure now that often, very often, in matters concerning religion and politics a man's reasoning powers are not above the monkey's. - Mark Twain

    by route66 on Mon Jan 11, 2010 at 04:36:09 AM PST

  •  Morning Bob, (18+ / 0-)

    I always have a tip and rec. for truth tellers.  

    The numbers are all useless, but then so is Washington.  How long before they nail Social Security and other entitlements?  I don't think they are done stripping us of everything we have.  

    So instead of retiring and handing off my decent paying job to someone else, I hang on because I don't trust the future these crooks have in store for me or my grandkids. For a generation that grew up with the world at its feet, it is a cruel and ironic fate that awaits the boomers.  Instead of saving my money for them to steal,  I wish I had blown every dime.  

    They're asking for another four years -- in a just world, they'd get 10 to 20. ~~ Dennis Kucinich

    by dkmich on Mon Jan 11, 2010 at 04:51:02 AM PST

  •  US earnings set to triple in 4th qtr (y/y) (4+ / 0-)
    Recommended by:
    askew, Pozzo, Fury, i8pikachu

    At long last, the fourth quarter is likely to mark the end of the earnings recession. Operating earnings for companies in the Standard & Poor's Composite Index of 500 stocks are expected to nearly triple on a year-to-year basis

    (WSJ - today)

    First the earnings.
    Then stable asset prices.
    THEN - jobs slowly return.

    That said we need a huge jobs program anyway based on energy reform.

    "The way to see by faith is to shut the eye of reason." - Thomas Paine

    by shrike on Mon Jan 11, 2010 at 04:51:48 AM PST

    •  Earning from where? (11+ / 0-)

      Americans are still spending less and less, where are all these magical earnings coming from?

      •  When you factor in the upper earnings... (5+ / 0-)

        it drags the no earnings below upwards. Or something like that.

        "Revolutionary Road" was a brilliant film.

        by scorpiorising on Mon Jan 11, 2010 at 05:33:49 AM PST

        [ Parent ]

      •  Abroad plus smoke and mirrors (4+ / 0-)
        Recommended by:
        Jbeaudill, i8pikachu, ohmyheck, Kristina40

        Since the dollar is relatively weak offshore earnings appear strong when expressed in dollars.  The Obama admin has pumped a lot of money into the economy so some earnings growth is probably real.  The big financial companies are doing well because they are being loaned money by the Fed at such low rates.  Imagine--if I could get the fed to loan me $500 billion at 0.25%, I could buy T bills with it and make a terrific profit.  I wouldn't make any product, I wouldn't hire a lot of people, but my earnings would be impressive.

        •  Yes, it will be very interesting to see (2+ / 0-)

          the breakdown of which sectors accounted for how much of the earnings rebound. The financial / real estate sector was taking over one third of all corporate profits before Bare Sterns and BLEHman Bros. This graph doesn't exactly show  the percent the financial sector gets, but it helps you get the idea of what's wrong.
          US Corporate Profit Margins

          Here's another one that is not exactly the percent the financial sector gets, but it helps you get the idea of what's wrong.
          Finance pcnt GDP SM

          A conservative is a scab for the oligarchy.

          by NBBooks on Mon Jan 11, 2010 at 09:30:01 AM PST

          [ Parent ]

          •  What is wrong? (0+ / 0-)

            You say it's wrong, but please explain how financial industry profits are wrong.

            •  It's wrong in the sense it is total fiction (2+ / 0-)
              Recommended by:
              MindRayge, NBBooks

              Shuffling paper. Not making jack shit in lasting value.

              A good writer is another government.

              by newlymintedjerseygirl on Mon Jan 11, 2010 at 11:02:15 AM PST

              [ Parent ]

            •  Well, since you asked (0+ / 0-)

              How the Servant Became a Predator: Finance's Five Fatal Flaws, by William K. Black

              What exactly is the function of the financial sector in our society? Simply this: Its sole function is supplying capital efficiently to aid the real economy. The financial sector is a tool to help those that make real tools, not an end in itself. But five fatal flaws in the financial sector's current structure have created a monster that drains the real economy, promotes fraud and corruption, threatens democracy, and causes recurrent, intensifying crises.

              1. The financial sector harms the real economy.

              Even when not in crisis, the financial sector harms the real economy. First, it is vastly too large. The finance sector is an intermediary -- essentially a "middleman". Like all middlemen, it should be as small as possible, while still being capable of accomplishing its mission. Otherwise it is inherently parasitical. Unfortunately, it is now vastly larger than necessary, dwarfing the real economy it is supposed to serve. Forty years ago, our real economy grew better with a financial sector that received one-twentieth as large a percentage of total profits (2%) than does the current financial sector (40%). The minimum measure of how much damage the bloated, grossly over-compensated finance sector causes to the real economy is this massive increase in the share of total national income wasted through the finance sector's parasitism.

              Second, the finance sector is worse than parasitic. In the title of his recent book, The Predator State, James Galbraith aptly names the problem. The financial sector functions as the sharp canines that the predator state uses to rend the nation. In addition to siphoning off capital for its own benefit, the finance sector misallocates the remaining capital in ways that harm the real economy in order to reward already-rich financial elites harming the nation. The facts are alarming:

              • Corporate stock repurchases and grants of stock to officers have exceeded new capital raised by the U.S. capital markets this decade. That means that the capital markets decapitalize the real economy. Too often, they do so in order to enrich corrupt corporate insiders through accounting fraud or backdated stock options.

              • The U.S. real economy suffers from critical shortages of employees with strong mathematical, engineering, and scientific backgrounds. Graduates in these three fields all too frequently choose careers in finance rather than the real economy because the financial sector provides far greater executive compensation. Individuals with these quantitative backgrounds work overwhelmingly in devising the kinds of financial models that were important contributors to the financial crisis. We take people that could be conducting the research & development work essential to the success of our real economy (including its success in becoming sustainable) and put them instead in financial sector activities where, because of that sector's perverse incentives, they further damage both the financial sector and the real economy. Michael Moore makes this point in his latest film, Capitalism: A Love Story.

              • The financial sector's fixation on accounting earnings leads it to pressure U.S manufacturing and service firms to export jobs abroad, to deny capital to firms that are unionized, and to encourage firms to use foreign tax havens to evade paying U.S. taxes.

              • It misallocates capital by creating recurrent financial bubbles. Instead of flowing to the places where it will be most useful to the real economy, capital gets directed to the investments that create the greatest fraudulent accounting gains. The financial sector is particularly prone to providing exceptional amounts of funds to what I call accounting "control frauds". Control frauds are seemingly-legitimate entities used by the people that control them as a fraud "weapons." In the financial sector, accounting frauds are the weapons of choice. Accounting control frauds are so attractive to lenders and investors because they produce record, guaranteed short-term accounting "profits." They optimize by growing rapidly like other Ponzi schemes, making loans to borrowers unlikely to be able to repay them (once the bubble bursts), and engaging in extreme leverage. Unless there is effective regulation and prosecution, this misallocation creates an epidemic of accounting control fraud that hyper-inflates financial bubbles. The FBI began warning of an "epidemic" of mortgage fraud in its congressional testimony in September 2004. It also reports that 80% of mortgage fraud losses come when lender personnel are involved in the fraud. (The other 20% of the fraud would have been impossible had these fraudulent lenders not suborned their underwriting systems and their internal and external controls in order to maximize their growth of bad loans.)

              • Because the financial sector cares almost exclusively about high accounting yields and "profits", it misallocates capital away from firms and entrepreneurs that could best improve the real economy (e.g., by reducing short-term profits through funding the expensive research & development that can produce innovative goods and superior sustainability) and could best reduce poverty and inequality (e.g., through microcredit finance that would put the "Payday lenders" and predatory mortgage lenders out of business).

              • It misallocates capital by securing enormous governmental subsidies for financial firms, particularly those that have the greatest political power and would otherwise fail due to incompetence and fraud.

              1. The financial sector produces recurrent, intensifying economic crises here and abroad.

              YOu really should go read the entire article.

              A conservative is a scab for the oligarchy.

              by NBBooks on Mon Jan 11, 2010 at 02:37:20 PM PST

              [ Parent ]

      •  Derivative funny money. (1+ / 0-)
        Recommended by:
        Terra Mystica

        Real earnings would be a product of labor, and we know that's not on the serious growth right now.


        by potatohead on Mon Jan 11, 2010 at 09:18:16 AM PST

        [ Parent ]

    •  I always like a good bedtime fable... (14+ / 0-)
      Between the changes in FASB rules--which allow for mark to model operating earnings statements, such as the ones you reference here--and the realities as they relate to REAL corporate cashflow, we end up with the following REALITY (also, not widely stated in the MSM)...

      "Dividends Are Still Trending Worse Than The Great Depression." (It's certainly worthwhile to checkout the graphics that accompany this post by clicking on the link.)

      Dividends Are Still Trending Worse Than The Great Depression
      December 5, 2009

      ....Earnings have dropped more rapidly than during the Great Depression (dramatically so if you count reported rather than operating earnings), but they appear to have begun a recovery much sooner than occurred back then. Trailing 12-month dividends are still falling slightly faster than during the Great Depression, which is particularly remarkable given how much more severe deflation was then compared to now. These trends underscore that contrary to some claims, this is no crisis of confidence!

      Since dividend changes tend to lag earnings changes, rising earnings could mean dividends will level out and start increasing soon (and in fact the quarterly fall in dividends from Q2 to Q3 was small). However, if earnings are being over-reported thanks to factors such as relaxed accounting rules or optimistic loan loss assumptions, dividends should ultimately reveal the truth about underlying cash flows.

      And while we should all hope that this recovery can be sustained, there is a significant probability (details of which I hope to discuss in a separate post) that this is a temporary upturn in a longer term depression. A renewed fall in GDP, persistent unemployment, and intensifying deflationary pressures would not be good news for any fledgling recovery in earnings and dividends.

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Mon Jan 11, 2010 at 05:35:45 AM PST

      [ Parent ]

      •  Just more of the CT meme (4+ / 0-)

        Between the changes in FASB rules--which allow for mark to model operating earnings statements, such as the ones you reference here--and the realities as they relate to REAL corporate cashflow, we end up with the following REALITY (also, not widely stated in the MSM)...

        Mark to market accounting only has a material effect on financial services companies (and then only to the extent that their Level III assets are material to earnings).  The majority of companies in the S&P 500 are not in financial services.  The idea that mark to market accounting rules are distorting S&P 500 earnings in a material way is far fetched.

        What is your point about cash flow?  Cash flow and earnings are separate and distinct from one another.  It is not uncommon to see a company with negative earnings and positive cash flow and vice versa.  I don't think you understand accounting principles very well.

        When presented with a post that says S&P earnings will triple this year, your reaction is to say that the numbers are cooked.  Geee ... how consistent of you.  First you say government statistics are cooked and now you expand that to the private sector numbers are cooked as well.  

    •  how (6+ / 0-)

      how?arent you paying attention.  70% of our economy is basically due to consumer spending of some sort.  Credit lines and access to them have been cut roughly 50%  50!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!%.

      THAT IS WHAT you need to take away from this diary.

      Dont you get what that means.  In a country that lives on credit, this is ominous.

      (regarding the bank mess) They want to cure the patient but not deal with the disease.

      by dark daze on Mon Jan 11, 2010 at 07:10:48 AM PST

      [ Parent ]

      •  We gotta start making stuff, or... (2+ / 0-)
        Recommended by:
        hester, Terra Mystica

        we suffer a reduction in standard of living


        we sell more of ourselves


        we start a war.


        by potatohead on Mon Jan 11, 2010 at 09:19:22 AM PST

        [ Parent ]

        •  That's not the problem (1+ / 0-)
          Recommended by:

          Worker productivity is at its greatest in history.  But, that's because of robotics and innovation.  This can't be reversed.  We can have low unemployment (remember when it was 4 percent a few years ago?) but that will require a robust financial and service industry.  Trying to build a manufacturing society would be like telling farms to eliminate their technology so we can go back to an agrarian society so people can have the jobs that were lost in that industry.

          If we kill our comparative advantage in the financial industry, the US will be finished.

          •  Not true at all. (1+ / 0-)
            Recommended by:
            Terra Mystica

            We do have very productive workers.  

            We just are not using them.  Seriously, we consume way more than we produce and that's a wealth transfer out of the nation.

            The robotics and other innovations mean we can reach parity with our exports by employing workers and can do it quickly.

            How efficient a worker is, has nothing to do with our economic problems.

            The fact that we are simply not carrying our global weight is.

            Despite those innovations, our companies are choosing to have the work done overseas anyway!  They can do this because the cost of production, in terms of being environmentally sound, and labor are a fraction of ours.

            That has implications for us, and this is one of them!

            Until we produce more of what we need, here, or until we produce more of the things that others need, wealth will continue to leave the nation, not replaced by new wealth.

            Wealth is INNOVATION applied to labor over time.

            We've got the INNOVATION part right, and just need to apply it to more labor.

            The fact that we innovated isn't the problem.  It's our trade policy allowing companies to over exploit us that is.


            by potatohead on Mon Jan 11, 2010 at 09:51:15 AM PST

            [ Parent ]

            •  They don't need the workers (0+ / 0-)

              And it's still cheaper to hire foreign work where the lack of benefits and low wages is still cheaper than building a factory and using robots with fewer workers in the US.

              •  Yes!! That's the problem. (1+ / 0-)
                Recommended by:
                Terra Mystica

                It's only artificially cheaper.

                You see, when they choose to do that work overseas, in those conditions, they profit from it, but we do not.

                The nation pays the difference in terms of wealth transfer out of the country.  So their balance sheets look good, but our national debt grows, and all of us individually suffer either a lower quality of living, or take on more debt, or sell stuff to make up for it.

                That's why we have to do more here.  Yes it will cost a bit more, but it's important to do, because we then will be meeting our needs.

                The wages paid here, stay here, and make for an economy that's not always being sucked dry, with all the net dollars leaving.

                Take Germany for example.  They have a lot of their needs met right there in Germany.  When the down economy hits, most of their national economy is isolated from that because they have their own suppliers meeting their demand.

                We, on the other hand, have all demand, and not enough supply.  So then, the rest of the world is meeting that demand, and when they do meet it, the profits go there, not here, and that's the wealth transfer problem.

                The big companies love it, because they keep the difference!  

                WE didn't have this problem, until we opened the door for it.  

                It is now time to close that door, using protection of various kinds to encourage building out of production here, so that we don't have so much wealth leaving the nation.


                by potatohead on Mon Jan 11, 2010 at 10:00:27 AM PST

                [ Parent ]

                •  We never opened the door (0+ / 0-)

                  Because the door has always been open.  America lost its competitive edge when technology and a demand for higher wages and benefits wiped out many of the jobs that are now overseas where wages are cheap, benefits are non-existent, and the workforce has become educated in countries that seek to attract businesses with low taxes.  This doesn't happen everywhere, though. You don't see factories going to Mexico.

                  •  Not really. (0+ / 0-)

                    We have given trans-national corporations, and many American Corporations significant tax advantages for taking work overseas.

                    And we failed to charge them the tariff needed to balance the cost, putting money in their pocket, that comes right out of ours.

                    Trust me, go back pre-Reagan, and you will see how and why that door was opened.

                    Lowering of top income tax rates, lowering and elimination of tariffs, trade agreements that are "free" trade agreements, etc....

                    No other nation lets companies just come here and sell, without making a contribution to their local economies.

                    We do that.  We used to not do that, and this isn't some invisible force we can't stop.  It's greed, and it's unchecked, and it's wrong.

                    It's dumb ass trade policy that lets them profit in ways that drain the net value of the nation away, leaving us little to rebuild with.

                    I challenge you.  Go look at other modern nations.  They don't do the stupid free trade shit we do, and their national economies are well balanced, and they are not suffering anywhere near the degree we are.

                    Exception = UK, as they are just as thick about it as we are.

                    So then, tell me this too:

                    If we don't export what we consume, what do those people holding dollars buy with them?


                    by potatohead on Mon Jan 11, 2010 at 04:39:10 PM PST

                    [ Parent ]

                    •  Europe too (0+ / 0-)

                      Yes, we give businesses a tax advantage to go abroad, but that is not the reason they go abroad.  If you eliminate that tax break, they'll still go abroad.  Europe, including the UK, is also losing massive businesses to foreign countries where labor costs are cheaper and they don't have the same tax break you're blaming the loss on the US government.

                      •  However you position that, the reality is (0+ / 0-)

                        we are not producing an amount for export that balances what we import.

                        That is a wealth drain out of the nation, and unless checked, will continue to cause us significant grief.

                        Business exists to serve us, not the other way around.

                        If we have too much business moving too many dollars and jobs off shore, we regulate that until that is not the case.

                        Failure to do this means we advocate that Americans shall have a lower standard of living over time.

                        I, for one, am not interested in that, when it is completely practical and possible to sustain our needs here, and balance our trade with others, so that they don't end up owning us.

                        As for the blame?

                        Hell yes it's the US Goverment.  It has failed to regulate business to prevent harm to us.  Significant harm is occuring, and that needs to be addressed.

                        This is one of the primary reasons I am motivated by Progressive politics; namely, returning to a state of checking corporate greed.

                        Left unchecked, it will undo us.

                        There are no free markets, they do not exist.  Governments structure market rules so that those markets actually serve the nation, in that the product of them is added net positive value, in return for profit.

                        Sorry man, the "trickle down", "free trade" deal is the most harmful thing we've entertained here, and it must be addressed, if our kids are to have even the quality of living we had.


                        by potatohead on Mon Jan 11, 2010 at 08:47:59 PM PST

                        [ Parent ]

                      •  So tell me then. How would you fix it? (0+ / 0-)

                        If we don't remove that cost advantage to insure that there is production here, what then?

                        Do we continue to sell ourselves?  Do we suffer a lower standard of living?

                        Start a war?


                        by potatohead on Mon Jan 11, 2010 at 08:50:06 PM PST

                        [ Parent ]

                        •  You can't remove the cost advantage (0+ / 0-)

                          That's the problem with your argument: you can't remove the cost advantage other countries have over the US in manufacturing and soon in the financial industry.  There is absolutely no way it can be done unless you become isolationist.  If that's your goal, then say it.

                          So, to keep America competitive, dinosaur industries must be allowed to die.  Instead of giving GM billions of dollars just so it can still exist without meaning, let the company die and whatever rises from the ashes, if anything, will be more competitive than ever.  So, instead of making standard sedans and trucks, the new company can produce highly-technological vehicles and capitalize on the nations' strengths, much like what happens with German manufacturers.  Germany focuses on precision mechanics because basic manufacturing is too expensive to produce in the country.

                          If you don't believe trickle-down economics exists, then explain what is happening to tax-revenues at all levels of government.  They're disappearing.  Our tax-collection system relies on trickle-down economics and it works most of the time.

                          China, on the other hand, practicing shrewd capitalism, is increasing tax revenues and spending more on social programs -- the same system you claim doesn't work.

                          Businesses don't exist because of greed.  I see your argument slipping when you start to lump all businesses into the category of greed because they make a profit.  Some businesses, though, are greedy, careless, and dangerous.  But, that doesn't mean business is dangerous.

                          So, how does America remain competitive?  First, if other things are equal, the size of the population will determine a country's wealth.  That's why China and India will eventually become more wealthy than the US.  The US cannot fight this anymore than France or the UK couldn't fight losing their economic prestige to the US.

                          Therefore, we need to decide what the goals of government should be.

                          I believe the US should maintain a laissez-faire attitude to the economy while watching for abuse.  The people of America are a much better judge of their future than any government in the world has ever tried to engineer.  American ingenuity will keep America strong -- maybe not the strongest -- and will help people make more money and have more leisure time.

                          BTW, America still has a long way to go before it loses its economic standing in the world.  Some argue that the 21st century will be the true American century with the 20th only as the build-up.

                          •  isolationist? (0+ / 0-)

                            That sure puts a big ass hole in "can't" now doesn't it?  Sure it does, and you had to label me something to get there too.  Nice one that.

                            Why not say "won't", because of your belief statement later in the post?  That would be honest at least.  Coming off like you understand some elementary truth, that is some rule that "cannot" be broken, is just foolish.

                            How about you show me a functioning "free market", or retract the word "can't", because it's done every single day, all over the world, and done a lot to balance labor so people aren't forced to compete with dirt factories, child labor and toxic / unsafe conditions.

                            Well, if I'm an "isolationist", you sir, or madam, are an ideologue.

                            At least I'm honest about it.  I want the companies to make a lot of money --as much as they can.  The difference between you and I is you would sell people out for an idea that does not even exist in practice!  Go ahead.  Show me that free market and how good it is for the people.

                            It doesn't exist man!  It never, ever will, and it won't for the imbalance reasons I gave up-thread.

                            What I find most disappointing is that you put corporations above your peers.  Know I won't ever do that.



                            by potatohead on Tue Jan 12, 2010 at 12:09:46 AM PST

                            [ Parent ]

                          •  I didn't fail to notice that you didn't (0+ / 0-)

                            actually answer my question, "how to fix it?"

                            Just so you know.

                            I think, I'll add one here too.  If United States is being beat at manufacturing, for "cost differences", and soon "financials"

                            (and could that be a very weak ass dollar because we don't produce anything?  One does wonder!)

                            what exactly will our standard of living come from?

                            Doing each others nails, hair and laundry?


                            by potatohead on Tue Jan 12, 2010 at 12:12:27 AM PST

                            [ Parent ]

  •  Residential real estate cover-up (17+ / 0-)

    People can bring this story right down to the local level if they take a few minutes.  Somewhere you can find a listing of foreclosure sales in your locale.  Check it out.  What I'm finding is that there are almost no buyers at these sales except for Fannie Mae and HUD.  The banks offer these houses with a minimum bid requirement.  Then they "buy" them back at the sale for that minimum bid amount.  The only time that money is moving is when some agency of the federal government moves in and pays off the bank because the loan was guaranteed.

    Fannie, Freddie and HUD will be a gaping wound for years, and a way that taxpayers are bailing out bankers.

    Are you the change or not?

    by goinsouth on Mon Jan 11, 2010 at 04:53:39 AM PST

  •  Great diary.. LOTS to consider here. (14+ / 0-)

    Thanks for writing & sharing your research and knowledge.

    Sunshine on my shoulder...

    by pkbarbiedoll on Mon Jan 11, 2010 at 04:54:21 AM PST

  •  Thanks for the eye-openers (4+ / 0-)
    Recommended by:
    Larry Bailey, kurt, Onomastic, DRo

    One question brought to mind. How much of the decline in Consumer Credit is attributable to those who are paying off their credit cards and or getting rid of them? I know several people who are doing just so. Does this affect these numbers at all?

    Heads in the clouds are just as detrimental as heads in the sand.

    by A Voice on Mon Jan 11, 2010 at 04:58:12 AM PST

  •  The sky falling is? (3+ / 0-)
    Recommended by:
    dvogel001, Seeds, Onomastic
  •  Am I the only one who smells a Gold Bubble (8+ / 0-)


    I have noticed every third commercial on CNN seems to be a "Buy Gold" ad. And the price of gold has shot up steeply in the past year. Look at a 20 year chart for perspective. It's looking bubbly to me. I'm just waiting to hear a taxi driver recommend it.

    You are witnessing late stage Capitalist Carcinoma. Diagnosis, terminal. Hospice recommended.

    by CitizenOfEarth on Mon Jan 11, 2010 at 05:12:29 AM PST

  •  On that "overstating economic strength" argument (4+ / 0-)

    you do realize that the overall highest impact to GDP of that potential overstatement was estimated to be

    The statistical distortions can be significant. At worst, the gross domestic product would have risen at only a 3.3 percent annual rate in the third quarter instead of the 3.5 percent actually reported, according to some experts at the conference.

    That is from the article you cited in your diary.  In other words it is significant to economists, but relatively meaningless to the rest of us.  

  •  Why would you add these together? (14+ / 0-)

    As you'll see, below, and based upon a variety of factors, the number's actually much higher than this.) 661,000 jobs were eliminated from the marketplace--i.e. ongoing job destruction--and the labor force shrunk by 843,000 people.  In other words, 843,000 individuals--for a variety of reasons--are no longer considered to be part of the labor force. This could be attributed to a variety of factors: people returning to school, retirement (voluntary, forced, early retirement), family issues (i.e.: caring for a family member), etc., etc.  

    If you add these two numbers together, the result is 1,504,000.

    The number of jobs shrank by 661,000.  That is on top of the several million jobs lost to the economy over the past decade.

    The size of the labor force shrunk by 843,000.  These are the folks who are no longer looking for work or working or discouraged job seekers.  That is on top of the several million out of the labor force.

    The jobs figure deals with demand for workers.  The labor force figure deals with supply of workers.

    The figures should be subtracted, not added.  So there is a net difference between supply and demand of -222,000 placements.  For this month.  So the market tightened by 222,000 because that many more folks not only stopped looking for work (discouraged) but said that they were no longer "able and available to work".

    You say, "Aha. The labor market tightened. Good news."  Nope.  It tightened even though there was a loss of 661,000 jobs.  That is not good news at all.  That is very bad news.  That means that the consumer demand disappears from those 843,000 who have left the labor force entirely -- unless they enlisted in the military.  The statistics, after all, are for the "civilian labor force".  Less consumer demand means less incentive for expansion, which means the recessionary spiral continues.

    The statistics are not intended to count everyone.  They are intended to be read together to determine the supply-demand relationship in the civilian labor market.

    Military employment is excluded.  Those who are not able to work, for a variety of reasons, not just disabilities, are excluded.  Seasonal workers (farm workers during growing and harvesting season, and retail workers during Christmas season) are excluded because the ups and downs of seasonal work overestimate or underestimate the supply-demand relationship for year-round employment.

    The BLS is not the problem; they are very good within the data limitations that they have (for example, their data must come from state unemployment claims or from employers, neither unbiased providers of data).  The problem is the public relations staff who cherry pick the statistics to report to the media.  And the media for not bothering to explain the limitations of the statistics (just like their failure to explain the limitations of the Dow Jones Industrial Average).

    The problem that policy-makers have not come to grips with is that this is a demand-side recession.  Tinkering with the supply side will do nothing if the decision-makers on the supply side don't see enough consumer demand to warrant not shrinking their operations further.

    The error is in believing that what is good for the individual players is good for the system.  Individual players pursuing their own interests are continuing to destroy the economy.  All the while crowing that their bonuses are deserved because they "take risks".

    50 states, 210 media market, 435 Congressional Districts, 3080 counties, 192,480 precincts

    by TarheelDem on Mon Jan 11, 2010 at 05:39:33 AM PST

  •  actually (19+ / 0-)

    i call this

    'the great restructure'

    nothing is going to look the same on the other end.

    whether we get something positive out of this has to do with what people like us are willingly to think and do.

    we could get a better world, but i'd estimate those chances as slim.

    what we are going to get is a very different usa.

    no. doubt.

    great. job. bob.

    hotlisted to go over later.

    i hope to see this on the wreck list as long as possible.

    We must practice `pessimism of the intellect, optimism of the will.' Antonio Gramsci

    by fernan47 on Mon Jan 11, 2010 at 06:01:27 AM PST

  •  I try to look at it this way. (15+ / 0-)

    Sooner or later everything really will go to hell, there won't be anything else the federal government can do to delay it, and then finally, finally, we will look around us and really see the ashes of our nation without the benefit of any rosy Obama spectacles. We will see what we have become, and it will not be pretty. Then and only then will we muster the collective will to "change."

    --Free thinkers shouldn't go around thinking just anything. (Terry Pratchett)

    by HPrefugee on Mon Jan 11, 2010 at 06:13:13 AM PST

  •  Well, thank goodness the auto sector ... (0+ / 0-)

    ... is all shiny happy:

    Ray LaHood, transportation secretary said, "It makes us all believe it’s a new and brighter day. The auto industry is back."

    Bring it on!

  •  I'm not an economist (16+ / 0-)

    I'm only an over achiever business major that really enjoyed my econ classes.  Nothing has added up for a very long time.  And all the creative bookkeeping and all the bubbles.....I just can't see anything good up ahead for anyone other than Wall Street and even theirs is a short lived happiness.  You can't gut the people, then slit their throats, and have an economy.

    I'm the Left that Rahm's mother warned him about

    by Militarytracy on Mon Jan 11, 2010 at 06:42:11 AM PST

    •  The Wall Street calculus (6+ / 0-)

      I there are two possibilities with respect to Wall Street.  1) They believe this neoliberal tripe they spew out.  2)  They believe they will do OK even if the US is reduced to a second class power.  (Maybe there is a third possibility--they don't think about it if it doesn't affect this quarter's results.)

      •  the third is my guess (1+ / 0-)
        Recommended by:
        Eric Blair

        they are like gamblers who only live for the next hand. The corps are built to function on short term profits for shareholders, that is the nature of the beast. What seem to be killing us is that the whole freakin government has become just another arm of the corporations.

        The governments role should at the least be regulatory. Both parties seem hell bent on privatizing everything that they can get their dirty hands on. But hey it's a free market economy and we don't disparage wealth creation. We need a different definition for both wealth and creation not to mention a different definition of growth. The numbers are meaningless as anyway you read them they don't address the real economy we must survive in.    

  •  I wonder (3+ / 0-)
    Recommended by:
    TracieLynn, JuliaAnn, ohmyheck

    whether it would be possible to get decent unemployment statistics by polling rather than by collecting statistics from various government offices. Surely people would be willing to tell a pollster what their employment status is.

    Perhaps R2K could add a set of standard employment based questions to the political questions they ask, and we'd get a continuous metric on the economy as well as on candidates political fortunes.

    "The problems of incompetent, corrupt, corporatist government is incompetence, corruption and corporatism, not government." Jerome a Paris

    by Orinoco on Mon Jan 11, 2010 at 06:46:02 AM PST

  •  just a public relations campaign (6+ / 0-)

    Since our government effectively has been captured by private interests, and since most professional economists simply want to shepherd us into agreeing with the preordained neoliberal conclusions that they learned in school, I have begun giving government statistics the same weight as statistics provided by oil industry trade groups, or by the various realtors' associations, or by the Saudi monarchy, or by any other organization or entity whose purpose is to sell us a product or service or prop itself up politically.

    What I've observed by myself, on the ground, has been much more accurate.

    A terrible beauty is born. --W.B. Yeats

    by eightlivesleft on Mon Jan 11, 2010 at 06:57:09 AM PST

  •  my job is to produce quarterly financial reports (8+ / 0-)

    earnings release statements.  i hear from all sectors of industry and they all say the same thing; we've hit bottom and things are turning.  now maybe all those CEOs are wrong, but they certainly know the folly of pollyannaism here.

    The problem with people who need to follow leaders is that they need to follow leaders.

    by Cedwyn on Mon Jan 11, 2010 at 07:01:49 AM PST

  •  We should always assume the worst (3+ / 0-)
    Recommended by:
    TracieLynn, NearlyNormal, DRo

    Say these cooked books are the truth and the economy actually is looking rosy. What is the harm in remaining diligent anyway and pressuring politicians to remain progressive. I say we should operate under the assumption that this is a depression because it makes sense to assume the worst case scenario now rather than trying to play catch up and dealing with it later, and if a full depression never comes, good but better to be safe than sorry.

  •  I agree but I don't (3+ / 0-)
    Recommended by:
    Sparhawk, Terra Mystica, dark daze

    There is only one thing worth knowing about our economy, in my opinion: we're moving from an industrial economy to a nothing economy, and that's obviously untenable.  If we don't start making things--which don't have to all be physical things, but they have to genuinely add value and that's largely going to be physical processes and products--we're simply not going to have an economy to speak of.

    The hell with 1% this and 10% that.  We could have zero unemployment and we'd still have a sick economy and society if they're all flipping burgers, washing the cars of the plutocracy, or doing WPA-style make-work (as was suggested here the other day).  We need less focus on the numbers and more focus on what the country ought to look like.  The jobs will come from that vision.

    Enrich your life with adverbs!

    by Rich in PA on Mon Jan 11, 2010 at 07:22:09 AM PST

    •  we agree (4+ / 0-)

      how about that  :)

      the problem I see is this free trade crap.  That is just more bumper sticker propaganda that is used so we dont look out for ourselves.  It so the rich can exploit labor the world over, and in doing so destroys our middle class.

      Bumper sticker propaganda has destroyed this nation. in Just the last decade or so. Add to this free trade crap, the slogan, " they hate us for our freedom" and " too big to fail" and you have the rich mindfucking the average american into oblivion

      (regarding the bank mess) They want to cure the patient but not deal with the disease.

      by dark daze on Mon Jan 11, 2010 at 07:30:02 AM PST

      [ Parent ]

      •  Re (0+ / 0-)

        It so the rich can exploit labor the world over, and in doing so destroys our middle class.

        Not sure what you mean by "exploit". Chinese laborers who work in factories are much better off than their previous standard of living. Sure, they don't make $20/hour, but just because they make (to us) a low wage doesn't mean they are being "exploited".

    •  Slightly disagree (1+ / 0-)
      Recommended by:
      Terra Mystica

      The time for vision was the 90's.  Time for doing.  You got the remedy right in your comment.

  •  I read this in the media. (1+ / 0-)
    Recommended by:

    It's interesting that all the "secrets" noted above are from reading articles in the main stream media including NPR, NY Times, et al as main stream media.

    It's always interesting that people read this in the media and them blame the media for not reporting it or distorting it.

    It's really the audience that's the problem. The information is out there and in plain site, most people just don't pay that much attention to it.

    Also, there's nothing wrong with the BLS and other stats in US Statistical Abstract.. It's what people choose to read of the available stats. Unemployment rate is a good example, the diarist knows about the "hidden" unemployment rate because it is discussed frequently in the media the numbers to calculate come from...the BLS.

  •  Dude - assume most of us have read your work B4 (2+ / 0-)
    Recommended by:
    FishOutofWater, Fall line

    These are mostly good points, but you've made most of them before.  

    I'd love to give my views on some of these stats (pro and con), but there's so much going on here it would easier to just write a diary myself.

    It would be much more interesting to cover GS/bailout stuff one day, jobs/econ data another, prospects for recovery and what government should be doing another.

    Otherwise, most of this excellent work just melds into a vague, if well-researched, plea to look at the glass as half-empty.

    Sanctimony thy name is Joe Lieberman.

    by roguetrader2000 on Mon Jan 11, 2010 at 07:32:10 AM PST

    •  I think you're missing Bob's point in writing (2+ / 0-)
      Recommended by:
      MindRayge, bobswern

      The half-empty/half-full thing is a diversion of Spy vs. Spy farce on dkos.

      He's trying to unwind the purposes that these stats have been employed to convey apart from how economists (real economists concerned about the big picture) use them.

      They have become highly charged little green footballs here on this site.
      Last month I believe SilverOz did a diary trumpeting an end to the employment spiral with November's figure of - 11,000.  I, along with others attempted to bring this into the context that you have to have much more than a one month anomaly to prematurely announce an end to spiral.  And look at December's numbers.  Kiss that trend so long even with the ongoing efforts to throw more and more unemployed off the charts.  But that won't stop those attempting to make political hay out of every statistical blip and isolated data point as "proof" of something or another.

      Those trying to get a handle on the real information are considered a small notch about the Conspiracy theorists banned from this site because it's still vogue to be very smug on this site about being an "optimist" (short term and in an politically expedient way) and confuse those who are reality based as doom and gloomers.  We have a much better chance in the long term to become optimists and engaged by anticipating the brutal reckonings ahead based on the picture being painted by whatever real data we can glean.  In a way we're watching the back of progressives and even the Obama administration with shots across the bow to wake people up to what's actually occurring on the ground.

  •  Only statistic that counts (3+ / 0-)
    Recommended by:
    Terra Mystica, Tam in CA, ohmyheck

    is that our economy is 70% consumer spending.  And that cannot recover with high unemployment, declining wages, and no consumer credit available.  By using trillions of dollars on the banks, Geithner and Bernanke have engineered a stock bubble and some GDP increase.  But this will probably prove as phony as the GDP increases pre-2005.  

    But it will keep the ultra-rich happy for a few more years.

  •  Thank you for this great work (3+ / 0-)
    Recommended by:
    Badabing, Terra Mystica, ohmyheck

    Your effort is much appreciated.  Much of what you write is over my head, but I truly value reading and, hopefully, learning from you.

  •  Paul Krugman finally write an upbeat op-ed on (3+ / 0-)
    Recommended by:
    Elise, Fury, Terra Mystica

    the state of the economy!!

    America's? NO. Europe's!!!!

  •  I wish I were a political cartoonist. (3+ / 0-)
    Recommended by:
    greenearth, ohmyheck, Kristina40

    The picture would show impoverished people camped out all over lawns, up staircases in apartment buildings, homeless shelters bursting, tent cities everywhere (see Soylent Green), and Bernanke shouting,

    "But look, people!  This sixteen linear feet of graphs, charts and statistics prove we're actually in a recovery!  So feel good!"

    Somewhere a mountain is moving; afraid it's moving without me. (from Pretty Ballerina by The Left Banke)

    by dov12348 on Mon Jan 11, 2010 at 08:20:22 AM PST

  •  Meanwhile even small towns like mine (3+ / 0-)
    Recommended by:
    Do Tell, greenearth, Badabing

    are trying to figure out what to do with the skyrocketing numbers of homeless people.  Of course, rather than have to look at them around town they are now planning on creating a "campground" for them on the outskirts of town.

    ~War is Peace~Freedom is Slavery~Ignorance is Strength~ George Orwell "1984"

    by Kristina40 on Mon Jan 11, 2010 at 08:20:53 AM PST

  •  Bottom line, there is a hell of a lot of (3+ / 0-)
    Recommended by:
    ohmyheck, Kristina40, DRo

    unemployment.  The actual number is impossible to calculate, but the percentage of the potential workforce that's unemployed is probably between 10-20%.  That's a lot of people that aren't going to be working any time soon.  No new jobs on the horizon.  I suggest conscripting these folks into the Armed Forces and starting several more low grade long term conflicts, thereby creating jobs and keeping our military industrial complex busy.  War worked last time, and will work again.  After all, the protection racket is what we do best.

  •  Excellent diary. Lots to think about. (1+ / 0-)
    Recommended by:

    I seriously appreciate you highlighting the dual economy.  That is a fact, and one ignored pretty much everywhere, and something I find very frustrating.

    Without realistic dialog, we will not arrive at solutions.


    by potatohead on Mon Jan 11, 2010 at 08:56:56 AM PST

  •  Are stock market numbers phony too? (2+ / 0-)
    Recommended by:
    i8pikachu, cognitivecontinuity

    The S&P 500 is up nearly 70% in the past 10 months which supports the recovery theory that unemployment is at, or near, its peak for the cycle.

    Of course the government could be manipulating the stock price data too, huh?

    •  The government has no comment on that subject (0+ / 0-)

      [ Time for Fed to disprove PPT conspiracy theory
      Commentary: Analyst charges that government is manipulating markets]

      Yet Biderman's accusation of PPT market manipulation is another argument in favor of a complete public audit of the Fed's books. As any casual reader of this site's community boards knows, there is a widespread belief that the PPT does manipulate stock prices on a daily basis to enrich its pals and screw individual investors.

      It would be useful to prove them wrong. And if they are right, the PPT should be put out of business.

      •  Yeah, I'm sure Ben is helping his Wall St buds (0+ / 0-)

        Except that he never worked on Wall Street and never has anything good to say about them.

        All of Bob's CTs about unemployment data make no sense unless he proves that the Feds are manipulating stock prices directly.

    •  Could be a bit of a bubble (1+ / 0-)
      Recommended by:
      Terra Mystica

      I don't think the govt is manipulating the stock market directly (although spending and monetary policy have huge effects).  Corporate profits do not necessarily mean jobs or economic benefit for this country. If GM builds a Buick in China that is sold in China, they profit.  American workers do not profit.

    •  nope- the investors are (0+ / 0-)

      just sucking more money in before a sell-off

      seriously P/E ratios are FUCKED

      •  So did you also predict the rally last year? (0+ / 0-)

        If you are sure there will be a sell-off now, then how did you miss the biggest rally in a generation last year?  Just wondering.

        •  ? (0+ / 0-)

          my comment has nothing to do with predictions. (my snide rhetorical remark aside)

          but here's one, IF you are going to use P/E ratios as an investment guide.
          At current valuations, in order for stocks to maintain their current pricepoint, earnings are going to have to   increase %500.
          My guess is that our recovery is going to bring us %180 earnings, you will then see a series of reports that say "stocks fell on weaker than expected earnings reports."  And by may the indices will be at %60 of where they are now at which point (joy) all of us who have money can jump on the rollercoaster again.

          there's a prediction, see you in june.

          of course it doesn't factor in the potential of externalities that could be caused by foreign crises.

    •  It is a bear market rally. Sheesh. If you (0+ / 0-)

      don't what you are talking about, please don't comment.  

      We are no where near a recovery in the economy or employment or the stock market.  

      The SP-500 fell 56% from October 2007 to March 2009.  It will take a 112% rally just to break even.  

      Let's talk about a little stock market history.

      DJIA 9/29  386.10  MARKET TOP
      DJIA 11/29 195.40  -40%
      DJIA 4/15/30 2973.0 BEAR MARKET RALLY 52%
      DJIA 7/8/32 40.60  BOTTOM DOWN 296%

      The DJIA fell 40% before it rallied to add 52% in a bear market rally.  It then proceeded to fall another 296% over the next two years.

      The NASDAQ has had 6 bear market rallies since 2000 and it still remains about 50% below it's market peak.

      Japan's Nikkei has fallen 72% since their debt bubble of 1989 with 6 bear market rallies in between.  

      Too many people have drunk the kool-aid of green shoots and pretty BLS charts and ignore what is really going on out there.  

      •  So explain this (0+ / 0-)

        Why has the S&P 500 been far above its 200 day moving average for months?  

        There is no indication or reason why this rally would collapse and as retail investors move back into markets, the rally could accelerate.

        •  What does that have to do with the (0+ / 0-)

          price of beans?

          The DJIA did not surpass the former 1929 highs until 1954 despite being over and under it's 200 day moving average many times during those 25 years.  The same type of thing is true in all of the cases I cited.  Using a 200 day MA as "proof" of an economic recovery is just nuts.  

          Do you remember people ringing a bell at the top in 2007 and giving  you an indication or reason to be cautious?  Retail investors do not dominate the markets and haven't for a generation.  Institutions dominate the markets as well as global wealth sovereign funds.  

          Hopefully, the foolish public won't rush in at the top because they were afraid of missing the boat.  Just who do you think is selling to the public at the top?  

          Did you know that Goldman Sachs has been responsible at times for 70% of all NYSE volume on a daily basis?

          But of course, I do remember Bernanke and Paulson saying in 2007 that the sub-prime mess was going to be "contained".  

          Thus far, the weakness in housing and in some parts of manufacturing does not appear to have spilled over to any significant extent to other sectors of the economy. Employment has continued to expand as job losses in manufacturing and residential construction have been more than offset by gains in other sectors, notably health care, leisure and hospitality, and professional and technical services, and unemployment remains low by historical standards. The continuing increases in employment, together with some pickup in real wages, have helped sustain consumer spending, which increased at a brisk pace during the second half of last year and has continued to be well maintained so far this year. Growth in consumer spending should continue to support the economic expansion in coming quarters. In addition, fiscal policy at both the federal and the state and local levels should impart a small stimulus to economic activity this year.

          Overall, the economy appears likely to continue to expand at a moderate pace over coming quarters. As the inventory of unsold new homes is worked off, the drag from residential investment should wane. Consumer spending appears solid, and business investment seems likely to post moderate gains.

          He was privy to all of the information that people are using now to point to a new economic expansion and yet he and others failed to foresee the perfect storm that was coming.  

          Yea, go ahead, make believe that these economic numbers are viable inputs and that those who are proclaiming "green shoots" are right about the economy, just like they were in 2007.  Use that 200 day moving average to your heart's content.

          Don't say that you were not warned.  

          •  So apparently (0+ / 0-)

            you completely missed the S&P's 70% rally off the 3/9/09 low.  Good call.

            •  No, actually I did not. I was in the market (0+ / 0-)

              on March 6 with both feet.  And I used stock index futures to do so.  

              Sheesh again.  I am a trader by profession.  Professionals do not need  the lovey blanket of the 200 day ma in order to discern whether the market is a buy or a sell.    

              The point is using the stock market as a gauge as to the health of the economy is perilous at best and as some have found, disastrous at worst.  

              We know many people who had their children's college funds or their IRA's almost wiped out because they would not heed our warnings.  They think that we were "lucky".  Luck had nothing to do with it.  

              Also, we sold all of our stock holdings during 2007 as the year progressed so we were effectively in cash for the entire dump.  How about you?  

              •  I'm fine, thank you (0+ / 0-)

                Good to know your crystal ball is working so well.  No doubt you have your own private island and your own G-V to fly you there.  

                What's not clear is why you are dissing the market now.  Do you seriously think that profits are not going to increase?

                •  Hey, you were the one who thought (0+ / 0-)

                  that you needed to ridicule my market performance, not me.  

                  I think that you cannot see the forest for the trees.

                  Oh sure, quarterly profits in some industries are improving, when comparing quarter to quarter, but YOY, they are still cratering.

                  What you do not understand is that the market is a discounting mechanism.  That is why when it tops out everyone is so surprised because they do not see the weakness coming.  

                  But I can see that name calling and ridicule are your stock in trade, so adios.  

                  But don't say you weren't warned.  

  •  There will be NO job growth... (6+ / 0-)

    ...and I mean NO job growth until the fundamental economic problem that no one is discussing is addressed. It is the inequality of the distribution of wealth and its impact on our consumption driven economy. There will be NO recovery so long as the wealth of our nation is concentrated in the hands of the super rich who won‘t (or can‘t) spend enough to keep the economy going. It is not even their fault. A decreasing marginal propensity to consume as people grow richer is a basic tenet of economic theory. Only ten percent of our population now possess over 80% of our wealth which means that 90% of us do not have the economic resources to maintain our consumer based economy. This lack of consumer demand guarantees that GM and Chrysler will eventually slide into full Chapter 7 liquidation, and the housing market will never recover. Unemployment will rise well into the teens and stay there. Following California’s lead, state after state government will go bankrupt as well. The answer is to recycle some of the stagnant pool of wealth (it currently is not going into productive investment) back into the economy through a highly progressive tax on those with annual incomes over $250,000 to be spent on free universal health care, and education for qualified students through college. This action would stimulate consumer spending, jump start the economy and surprisingly not even hurt the super rich who would benefit from the reulting economic growth. The Obama administration will not confront the super rich to make it happen, and if the Republicans are returned to power the problem will only get worse. The result will be (and is) a return to a near permanent 1930’s type of depression and one in which government at all levels will not have the resources to help its citizens.


    If you read anything today read Juan Cole‘s  recent  analysis of the super rich.

    To see the data go to UCSC.

    Where we are headed if we don‘t change course and begin to fairly tax the super rich.


    Photographer: Tuca Vieira, Paraisópolis Favela in Sāo Paulo, Brazil 2005


  •  One starting point: Dr. Richard Koo. (3+ / 0-)
    Recommended by:
    Badabing, synductive99, ohmyheck

    Complicate DKOS Diary -- one-hour read time:

    When Capitalism Fails

    Bush's tax cuts caused a $1.5-trillion shortfall to private savings. Big Bust 2008 then popped the residential housing and stock bubbles. Now, commercial office vacancies have skyrocketed and another $1.5-trillion in loan rollovers are in trouble.

    Without competent intervention, these factors could still push America into a years-long "Weekend at Bernie's."

    Welcome to capitalism's greatest debacle: the Balance Sheet Earthquake.


    Dr. Richard Koo has made a singular contribution to Political Economy. With John Maynard Keynes, Naomi Klein, and Nassim Taleb -- a foursome.

    Dr. Koo shows why and how a "bubble" market collapse forces laissez faire capitalism over into a terrible, fear-driven "Yin" dysfunction.

    Diary whisks in the Stimulus; how the Richistan tax cuts killed private savings; Corp.Class dishonesty; the Great Depression; GOPer Monetarism; and career planning.

    Obama Administration uses Dr. Koo's recommendations, today, to reach out for normalcy. For the GOPers... this is like another Global Warming or evolution.

    Welcome to the new Econ_101 :::

    Angry White Males + Personality Disorder delusionals + Pro-Life Christians


    The GOPer Base

    by vets74 on Mon Jan 11, 2010 at 09:12:09 AM PST

    •  Thanks for this! (2+ / 0-)
      Recommended by:
      vets74, Badabing

      Especially the "for Nonspecialists" like me who get lost sometimes when the jargon gets rolling.

      It is nice to have folks point out places to get oneself educated.

      The person who says it cannot be done should not interrupt the person who is doing it.

      by ohmyheck on Mon Jan 11, 2010 at 10:22:03 AM PST

      [ Parent ]

  •  Enough with the "CT" comment (5+ / 0-)

    If someone has a world view that doesn't agree with yours, that does not make it a conspiracy.

    I don't see this diary as spouting a CT to any degree whatsoever. Governments lie, obfuscate, and downright ignore their own analysis repeatedly. They all do.

    Throwing out "Conspiracy Theory! CONSPIRACY THEORY!!!"every damn time someone wants to make sense of the collective mess that is the United State just doesn't cut it anymore.

    Find something better to argue with. Everything is not a conspiracy and everyone that has a different opinion than yours isn't a paranoid radical with a chip on his shoulder.

    To whom it may concern: I am an American citizen. Not an American consumer. I am a human being, not a variable in the capitalist system.

    by FinchJ on Mon Jan 11, 2010 at 09:34:08 AM PST

  •  While Congress was trying to write (2+ / 0-)
    Recommended by:
    NBBooks, ohmyheck

    DAVID CORN: Well, the House Banking Committee is called a money committee. And Congress on the House and Senate side, there are couple committees that they refer to as money committees. Not because they necessarily deal with money. It's because if you serve on that committee, you have access to a lot of money. Campaign cash. Because you deal with industries that are wealthy. As Kevin said, the banks have all the money, literally. And they will give money to people on the committee, if not to vote their way, at least to hear them out. So, their witnesses get perhaps more attention at some of these hearings. And also what the Democrats do, and it's common practice, is you take vulnerable freshman and you put them on the House Banking Committee so they can raise a ton of cash and maybe scare away Republican opponents.

    KEVIN DRUM: This is why Barney Frank can tell you he's not affected by campaign contributions. Well, maybe he's not. His seat is safe. But, you know, there's a lot of people on his committee, the freshmen, the second term congressman, who are affected by money, because they do need to get reelected.

    BILL MOYERS: Did you see the posting on this week? While Congress was trying to write these new rules to clamp down on the risky derivative trading that we were talking about, several of these New Democrats were in New York meeting privately with executives from Goldman Sachs and J.P. Morgan. And they also managed, while they were here, to sandwich in a fundraiser. I mean, does this raise your eyebrow just a tiny bit?

    "We are tired of war," he said. "We don't want it anymore."

    by allenjo on Mon Jan 11, 2010 at 09:34:12 AM PST

  •  Much better report on this topic (0+ / 0-)

    A much better report on this topic is Act 5 of the 1/1/10 episode of "This American Life". Real economics journalists talk with the guru of computational modeling and forecasting about what we know and what we don't know and why.

    Highly recommended:

    This American Life - Episode 397

  •  It's really distressing the so many people (8+ / 0-)

    insist on debating on whether or not bobswern is correct or not to highlight possible problems with government statistics. It's as if they are terrified that any admission that things are worse than official pronouncements will reflect badly on the Administration and its salesmanship thus far. In fact, you don't even have to question official statistics to see how deep in dung we are.
    This compared to previous recessions Jan 2010
    This is originally from Calculated Risk, but I found it on techno's new blog, Real Economics today. As techno points out

    We're now 24 months into this decline, and we're still at the bottom. By this point in most previous recessions, we had already recovered all of the lost jobs.  

    This is very strong evidence that this is not really a recession, but a depression; not really a temporary correction of over-production cured by a draw-down of inventories, but the death phase of an economic system that allowed the financial sector to mutate into a bunch of giant vampire squids, rather than serving to properly estimate risk and allocate society's savings.

    A conservative is a scab for the oligarchy.

    by NBBooks on Mon Jan 11, 2010 at 09:42:01 AM PST

    •  Yes, all you have to do is look at... (4+ / 0-)
      ...the realities of the situation, graphically or otherwise, to see that the entire concept of "recovery" (when we're talking about anywhere from 6-10+ years to enable that) is taking on new meaning.

      Regrettably, there are a lot of folks, both inside and outside of this community that are having a problem with...reality!

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Mon Jan 11, 2010 at 10:13:38 AM PST

      [ Parent ]

    •  Wow! (1+ / 0-)
      Recommended by:
      An Affirming Flame

      A simple graph that I finallyactually understand.

      Good Graph for Dummies!  Like me.

      (....cuz like most other graphs....eek....gak....head explodes.....)

      The person who says it cannot be done should not interrupt the person who is doing it.

      by ohmyheck on Mon Jan 11, 2010 at 10:28:50 AM PST

      [ Parent ]

    •  Notice the symmetry of the curves? (0+ / 0-)

      In prior recessions, the recovery of jobs was symmetrical with the loss.  So maybe we are now 2 years away from recovering all the jobs lost since 12/07.

      •  Yes, I did. (0+ / 0-)

        Maybe I should stop the Reactionary Brainfart I get when someone posts a graph, because this one is very informative!

        Although "2 years"?  Yes, I can see that graphically (lol) but I still think we are more in a systemic, evolutionary decline than in any other downturn.  Which is, of course, just and only, a belief.

        The person who says it cannot be done should not interrupt the person who is doing it.

        by ohmyheck on Mon Jan 11, 2010 at 10:42:30 AM PST

        [ Parent ]

      •  Oh, and (0+ / 0-)

        2 years, IF we have seen the bottom of this.  Notice some other years have had leveling-offs, then dips, before going up.

        The person who says it cannot be done should not interrupt the person who is doing it.

        by ohmyheck on Mon Jan 11, 2010 at 10:50:11 AM PST

        [ Parent ]

      •  To quote the stock guys (0+ / 0-)

        Past performance is not indicative of future outcomes.

        Glass-Steagal was in place for pretty much all of those, barring perhaps whatever the brown one is that looks like it was 2000something.  Now maybe it's not a direct tie-in to employment, but for its effects on the economy overall, its absence severely distorts the overall economic picture.

        I'd imagine there were other corrective bits of legislation in place as well that have since been dismantled for the sake of appeasing large corporations as well.

        Now I don't know if there's a correlation, but the two most wide and slow to recover losses on that graph also correspond to the timeframe in which the rich were taxed at far lower rates.  Might not be a direct cause/effect sort of thing, but regulation/lack thereof probably mimics taxation under various administrations, or vice versa.

        So if we're likely to be like any of the curves on that graph, it's the brown one, and based on the severity of the current problem, our 'recovery' is likely to be many years out after a long period of slowed loss and essentially sideways movement.

        Those who labour in the earth are the chosen people of God. - Thomas Jefferson

        by Ezekial 23 20 on Mon Jan 11, 2010 at 11:51:05 AM PST

        [ Parent ]

        •  Hopefully, you are wrong (0+ / 0-)

          But we will all know soon enough.

          At the end of the 83 recession, there was a lot of doom and gloom too, so it's not surprising that there is little optimism now about the future.

          •  Well, that's something we agree on. (0+ / 0-)

            I hope I'm wrong too.

            Those who labour in the earth are the chosen people of God. - Thomas Jefferson

            by Ezekial 23 20 on Mon Jan 11, 2010 at 12:51:08 PM PST

            [ Parent ]

          •  I lived through the early '80's recession as a (0+ / 0-)

            young semi-employed adult.
            It was nothing like this.  There was no gloom and doom, because if you recall, Ronald Reagan was looking for re-election.  For most of conservative America - which had swung wildly right - it was "Morning in America" for all intents and political purposes.

            This was inner-city Detroit I lived in at the time which never recovered from the '67 riots and NO, there was no gloom and doom.  Anger, yes.  Devastation of good paying jobs, yes.  But no one could've conceived of a scale of economic collapse we're talking in 2008-2009 back then.

            So let's be careful about revising history with false equivalences.  This is a 100 year event we're living through.

            •  Revising history? (0+ / 0-)

              I don't think so.

              Michigan's record for unemployment was 16.9% in November, 1982, which is significantly higher than the 14.7% now.

              There were also thousands more autoworker jobs back then because the "Big 3" still had 75% of the American market.

              •  You were talking gloom and doom (0+ / 0-)

                not unemployment figures which were counted much differently back then.
                If we counted the same way we would be at around 20% right now.  You need a BLS refresher course and a pair of BLS rose color corrective lenses.

                The rate inside Detroit is approaching  50% if you talk to civic leaders, workers and residents on Main Street and not the BLS.  

                Believe me, I've lived there for over 25 years and nothing touches what's happened these past two years.


                •  Sorry to confuse you with the facts (0+ / 0-)

                  about the relative unemployment rates in Michigan. Apparently, your recollection of the situation nearly 3 decades ago is more relevant to you.

                  •  You are confusing yourself (0+ / 0-)

                    with the "facts".
                    You go right on believing those numbers, when they lop off another 600,000 - 800,000 off the roles each month as in the "labor force".
                    You go right on believing Michigan's unemployment rate is a laughable 14 point seven percent (let's not forget that point seven now to make it sound "official").
                    We are all counting on your confusion for a return to confidence.

    •  Do you know if there is a version of this chart (1+ / 0-)
      Recommended by:

      with a GDP and/or DJIA overlay?   I think that would reinforce this chart by showing that GDP is being increasingly decoupled from employment.  I think that decoupling is intuitively obvious but it would be interesting to see it graphically.

      Just curious.  Great comments.  This graph needs to be shown as often as possible.

      "I'm mean in the East, mean in the West. Mean to the people that I like best. ... I push folks down, and I cause train wrecks." Woody Guthrie

      by Terra Mystica on Mon Jan 11, 2010 at 12:33:20 PM PST

      [ Parent ]

  •  Do you think, bob (1+ / 0-)
    Recommended by:
    vintage clothes

    that some peoples' reactions have to do with just plain Fear?  

    I think that it is just difficult for some folks to keep a grasp of their objectitvity, and to just look, sans emotion, at the information being offered.

    Just the facts--acknowledged.

    But then, immediately comes the fear, and then that's all there is-fear.

    For me, I just want to KNOW.  I don't need to judge the "Good" or the "Bad"---it just IS.

    GeeIdunnowhosaidit---"The Only thing to Fear is Fear Itself."

    It would be nice if some folks would apply that saying to themselves, and their reactions.

    I mean, I don't much care for SilverOz's point of view, but at least S.O. has data to back up the their claims, which I can discern for myself.

    Also, I understand the level of anger you have at what has been done to this country, but I do make an effort to read past your anger, and just discern the data you offer.

    Nothing anybody writes here is going to make me afraid.

    The person who says it cannot be done should not interrupt the person who is doing it.

    by ohmyheck on Mon Jan 11, 2010 at 10:38:25 AM PST

  •  Economist joke (3+ / 0-)

    A mathematician, an accountant and an economist apply for the same job.

    The interviewer calls in the mathematician and asks "What do two plus two equal?" The mathematician replies "Four." The interviewer asks "Four, exactly?" The mathematician looks at the interviewer incredulously and says "Yes, four, exactly."

    Then the interviewer calls in the accountant and asks the same question "What do two plus two equal?" The accountant says "On average, four - give or take ten percent, but on average, four."

    Then the interviewer calls in the economist and poses the same question "What do two plus two equal?" The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says "What do you want it to equal?"  

    "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

    by gjohnsit on Mon Jan 11, 2010 at 10:58:42 AM PST

  •  I want to add P/E ratios to the list bob (0+ / 0-)

    Hey bob- you might want to add p/e ratios to the list of values that the MSM "mis-reports"

    more info can be found here:

    in a nutshell, if you were to calculate the S&P 500's 10 year moving average, the P/E ratio is only 18.

    If you were to use real time values, the ratio is 129.(!!)

    I consider it bad enough that we don't even hear much talk of p/e ratios as is.

  •  As a DB/Marketing IT professional, I have long... (0+ / 0-)

    ... said to people that statistics is not a science, it is an art, and the ability to skew a metric is always present. The real art of statistics is knowing which qualitative metrics are important, because a skilled statistician can make almost anything "appear" true. I recall, 20 years ago, when I used to work at Business Week Magazine, they had an entire statistics department whose sole job was to run different statistical metrics to make BW's readership appear better than their competition's in order to help the sales dept. sell their mag to the advertiser.

    ~we study the old to understand the new~from one thing know ten thousand~to see things truly one must see what is in the light and what lies hidden in shadow~

    by ArthurPoet on Mon Jan 11, 2010 at 11:52:28 AM PST

  •  I wonder what the embrace of the (0+ / 0-)

    "extend and pretend" change in the accounting rules, that previously demanded a mark to market, is doing to the economy.  In particular, who if anyone is paying the local property taxes on property that the banks are holding on their books, and what property values the taxes are figured on.  I seems to me that this would be an ongoing drain on the banks.

    Justice, if not pursued, does not exist.

    by phonegery on Mon Jan 11, 2010 at 01:29:14 PM PST

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