I’m Not An Economist
I don’t pretend to offer you advice on how to make money, I’m just an old Boomer who has seen too much for too long not to recognize the reality around me: we are in a recession – been there, done that, still have the check stubs.
The “real economists” will tell you about it in a few months, because their guild rules require that several months of economic pain must past before an official recession may be declared.
The standard prescription for recession is targeted tax cuts, government deficit spending, and Federal Reserve rate cuts. These are supposed to spur the economy and soften the blow…except, the Hedgemony has already done these things, so there’s no relief available.
Of course, the tax cuts that the Shrubbery pushed were targeted to the “investor class” who promptly invested in Asia, where all the growth in manufacturing and jobs was taking place, so Americans could buy lead-painted toys and poisonous pet food.
Fallenmonk notes that the UK now has a higher standard of living than the US for the first time since 1900. The article FM links to notes that the UK’s climb intensified in 2001.
Kevin linked to Paul Krugman’s latest column, and, as much as he wants to, guild rules won’t let him say “recession”, but he certainly lets you know that’s what he’s thinking.
At his blog Krugman has a post containing the Charts for 1/7 column, which shows the employment picture under the Hedgemony, and a separate post comparing the US and EU jobs growth.
As Badtux, the snarky penguin, points out, the EU has a different method of calculating the unemployment rate. Using the EU method, the US unemployment rate would be 8.8%, not 5%. Keep in mind that undocumented worker show up as employed, but disappear from the statistics if they are laid off or picked up.
Some have compared this election to 1968. I voted by absentee ballot in 1968 as I was occupied annoying the Soviet Union and it’s minions, so I remember that election. Before this is over, people are going to be doing comparisons to 1932 and Franklin Delano Roosevelt’s first campaign for the Presidency. What makes this truly scary is that Herbert Hoover was an intelligent, honest man, whereas the Shrubbery is a bit short in those departments.
20 comments
veiled references to 1932 abound.
I actually wrote this post for the Street, but they are having problems [I swear it wasn’t anything I did]. A number of people have been talking about 1968 over there.
I’ve been through a number of recessions and recoveries, and the recovery under the Shrubbery sucked, and is really an underlying cause of the current mess. You target tax cuts to the Middle Class and below because they spend the money, getting it into circulation. Instead of being spent, it has been pulled out of the economy and shipped to Asia, or into Treasury notes. There has been no expansion into new businesses with an increase in jobs, and the existing jobs are seeing lower wages in real terms.
All we have to show for the Hedgemony are a lot of over-sized, over-priced, empty houses.
well, y’know, the investor class needed us to move out of those houses so they can buy them real cheap and get rich[er] off of them in a few years.
[ok, so it was curmudgeon cat’s fault but he was only trying to help by hacking into the site and correcting that category deficiency]
the recovery under the Shrubbery sucked
Did I miss something? What recovery? I don’t remember a recovery.
I want my recovery!
Do I have to wait for it as long as I’ve waited for my Reagan tax cut?
We’ll actually be lucky if we avoid a full fledged depression. All the tools used to tweak the economy are out of bullets and it will only take a couple of more shocks, like an even higher run up in oil or more fall out from the mortgage mess to push us over the edge.
My advice is to start putting back some flour, corn meal, salt, peanut butter, beans, dried milk and maybe some Spam.
That, Hipparchia, is exactly what is going to happen to a lot of the condos down here, only they will not sell for years, if ever. Save your pennies and you can get a real deal on beach property over here.
[I was suspicious of that bowl of kibble by keyboard.]
Apparently, Andante, “recovery” is a technical term for a Repub “election” victory, rather than an description of the economy. As for that “tax cut”, I watched my take-home amount reduced every year Reagan was in office – the tiny dip in Federal income tax was more than matched by the increase in FICA and state income taxes.
I think it’s time to look at seeds, FM, because this is going be a long slog out – staples for the short run, but be prepared for a very slow climb out of this mess.
Well, there is alwais *raising* taxes on the way top brackets, where the money is not spent, and then using that income to increase government spending for local police, firefighters, teachers, and other who would certainly go out and put that money into local economies.
We can’t possibly do that Scorpio, because it would work and has always worked, just as you always target tax cuts for the middle class and below because they will spend it and spur the economy.
You spend money on public works, like rebuilding the Gulf Coast or repairing the bridges and roads, because that produces local jobs and spurs the economy.
We know exactly what works, all that is required is to do it, and that will require new political leaders willing to admit that we have a problem.
Well, the problem I see with taxing the wealthy is… who would tell them they have to pay tax? I mean… even Arnie Terminator hasn’t got a pair big enough for that! He’d end up with his brakes failed and over a cliff, or his plane suffering a sudden catastrophic failure… or in Arnie’s case, another heart attack he won’t recover from this time. 🙂
Anyway… Most of the wealthy have stashed much of their money overseas. They could always do a Skase and live in Majorca or somewhere until it all blows over, or the USA is bankrupted, or they get a new puppet in power to say “All is forgiven! Come home!” LOL
And don’t even mention what would happen to the poor sod trying to collect the tax!
My friend in Chicago works in Tax, and she’s been saying since before October this (recession) was coming and will be bad.
You’re right about the rich not paying taxes, which is the main problem with calls to dump the income tax and institution a VAT – the rich will avoid it, exactly the same way they avoid paying state sales taxes.
Our tax laws are a mess because of all of the loopholes and exemptions added later to “help” the “oppressed” to 1% of taxpayers. Any benefit to the lower classes is a bribe to get the real “relief” for those who can make campaign contributions.
Don’t feel alone in that! Our Taxation system is a disaster too. And the Wealthy have many ways to *minimize* their tax. The poorer people can’t afford the kind of creative accountants required for such minimization. When the GST came in here, it was supposed to be a *good thing*. And it would have been,if you could trust the Howard Gov, which anyone with a working brain just laughed hysterically at. Then it was implemented, and we were screwed again.
Same old, same old…
Only a government can make money stealing from the poor.
[you didn’t see the case of green cow that mysteriously showed up on the front porch]
i did actually have enough pennies to buy my house on the beach the last time they did this, but i was busy spending them on riotous living at the time. just as well, i suppose, since ivan destroyed the entire neighborhood.
Bernanke will save us! Just today he said the Fed would cut interest rates as needed to prevent housing and credit problems from plunging the country into a recession.
I also believe in Santa Claus and the Easter Bunny.
All the indicators have been screaming recession for the past few months. They’re afraid if they confirm it people will stop buying crap they can’t afford with money they don’t have. Hmmm. What a concept.
Welcome, Lady Min. Many people believe that Mr. Bernanke is poised to inflate the credit markets out of their problems, except that the corporations have no intention of raising wages, so the inflation will be rather one-sided.
I knew we were in a recession when I noticed that retailers started price reductions earlier than ever, and did not go to excess in supplying merchandise. When you walk into a store that is reducing prices before Christmas, and the selection looks sparse, you know there is a problem.
The jobs numbers [which should have been inflated by Christmas hiring and reduced days for filing] were the final confirmation.
Thanks for the welcome. 🙂
I am one of those who believes the Fed will try to inflate their way out of this mess.
And true, the corporations aren’t going help. They don’t want to spend money or raise wages. I see it with the clients I work with… they question charges and want lower fees, whereas in the past, they just paid their bill.
Last month I read the personal savings rate for 2007 went back into the negative. Yeah… looks like the party is over.
Hmmm… LadyMin… LadyMin… that nic rings a bell for some reason!
Don’t I know you from someplace? Or places? 😉 😀 Heh…
Can’t quite put my finger on it… I knew a Lady Minerva… but she went and became a Goddess or something!
Yeah… Athena/Minerva! The Chaste goddess of victory and wisdom. Patroness of arts, science, and crafts. But she is armed with a wicked pig sticker and has a helmet and her symbol is an owl not a babe! 😉 And she don’t do tax!
You’ll like it here Min. Nothing like a robust and (usually) intelligent discussion for a change! Teehee…
Good to see ya here! Cheers. 😀
If the latest report I saw is true, and it is admittedly iffy, a reconstructed M3 [the Fed doesn’t release the official version any more] says we are experiencing a little deflation, which will scare the hell out of the Federal Reserve and may be a reason they are being somewhat aggressive.
People don’t have the money to save, LadyMin, as most are living paycheck to paycheck through and including the upper middle class. They bought into the dream of real estate, and have discovered that buying a house is not the “sure thing” they had been told it would be.
This is as bad as I have ever seen it, and Harry Truman was President when I was born.
Yes, it will be bad. And I wish I knew what affect it will have on the rest of the World. It’s all a bit too complicated these days.
Truman huh? Hmmm… That makes you slightly older than me then. I always wished I’d been born a few years earlier so that I could have appreciated the 60’s more. Then again, I just missed out on Vietnam… so I guess that’s a plus. Though I did end up in Cambodia. Oh well…
Cheers 🙂
This may be when we really discover how interconnected economies really are. I don’t think anyone is sure.