Filed under: Capitalism, Economy, Progressivism, Taxes, The United States | Tags: Missing Skill Set, QE3—More Stimulus, Recovery
More jobs were created per month last year than this year. Since January, job growth has averaged 139,000 per month. In 2011 the average was 153,000. Not good. You have to subtract the somewhere around 130,000–150.000 people who dropped out of the labor force each month. Doesn’t leave you a lot of gain. At this year’s pace, it would take 11 years to get the unemployment rate back down to 5%.
That simply won’t do, so the Federal Reserve has announced a third round of
printing out lots of money, better known as “quantitative easing” or QE3. This is an effort to boost Obama’s election chances. People who know Bernanke say he harbors no illusions that it will actually result in a stronger economy. Instead he is trying to stave off economic disaster —a severe recession — because the economic policy offered by the Obama White House is such a disaster.
The Fed does this by buying bonds from the big banks, which drives down interest rates. The lower interest rates are supposed to attract businesses to borrow more, but businesses don’t take on more risk when risk is punished with more regulation and higher costs.
— Mr. Bernanke said Americans shouldn’t complain about not getting any interest on their savings because they’ll benefit in the long term from a better economy spurred by low rates. Lord Keynes famously said “In the long term, we’re all dead.”
— Making government borrowing essentially free encourages Congress to spend, but when interest rates go back up we have to pay interest on all that debt.
— The third big risk is future inflation. Mr. Bernanke notes that it remain low, but the Fed’s core inflation rate ignores the run-up in food and energy prices. You will notice that the price of gas is back up over $4 and the media never mentions it.
The stock market likes the move. Ratings firm Egan-Jones cut its credit rating on the U.S. government to AA– from AA citing its opinion that quantitative easing will hurt the economy and the country’s credit rating. They also set a negative watch, citing a lack of progress in cutting the mounting federal debt. Moody’s, S&P and Fitch all have a negative outlook.
Recovery? No sign of one. The folks at Reason have a wonderful graphic to illustrate “The Recovery That Wasn’t” You’ll have to do a bit of enlarging, but don’t miss the two graphs in the center. The Obama administration in their own words. As Richard Epstein said, Obama doesn’t have the necessary skill set. Like understanding Say’s Law, for example.
Jean-Baptiste Say (1767-1832) lent his name to the bedrock proposition of classical economics: Supply creates its own demand. That is, manufacturers pay workers to make widgets, and workers use their pay to buy widgets. Savers lend their money to investors who build widget factories, and the factories’ profits go to repay principal and interest. A higher price will call forth more widgets, higher wages will call forth more widgetmakers, and higher returns will call forth more investment. Unless the government gets in the way, for example by fixing prices, markets will clear and everyone will live happily ever after.
Or from the University of Chicago on efficient markets: The stock market incorporates all available information. The thousands or millions of collective decisions incorporated in a market-determined price cannot be duplicated or even understood by one mind. You can’t beat the market because it’s smarter than you are. Intellectually, the only task is trying to determine what the market is telling you.
Or the basic notion of Expectations: Economics being a branch of human behavior, reality is often less important than perception. The behavior of consumers and investors will depend on the economic conditions of the moment only as the present shapes what conditions they expect to pertain in the future.
Obama does not believe in the free market. He said so. Nor does he believe in Capitalism, and the Democrats, st the DNC, were quite ready to outlaw profit.
Filed under: Capitalism, Economy, Election 2010, Freedom, News, Progressivism | Tags: Democrats, Depression, DNC, Obama, Recovery, Republicans
Yesterday, the DNC hyped that they would have a major announcement today that would excite Democrats nationwide; the implication being that the DNC had something big, something Earth-shattering that would be a game-changer. Perhaps an exciting new poll? or a dirty September surprise? After all, what could possibly excite dispirited, dejected Democrats at this point other than some good electoral news?
So what was this bombshell? Had they finally decided to listen to the American people and change direction? Did they have some new prescription to get America out of the Depression that started a year after they took control of congress and that their policies and promised policies not only caused, but are exacerbating?
No, they’re going to keep right on pushing the same disastrous policies. Their huge game-changing revelation is that they…wait for it… developed a new logo.
Indeed, Democrats are apparently SO enamored with Obama’s car analogy (the one he’s used in campaign speeches lately in which “D” stands for “drive” and “R” stands for “reverse”), that they invested their party identity in it — the new logo clearly evocative of the “drive’ symbol on a car’s gear shift. That is what the left does after all. They don’t change their policies when they have clearly failed — they simply change the name, get a new spokesman, or slap a new logo on it.
Indeed, there’s no better example of that than the Marxist miscreant now occupying the Oval Office. His ideas are as old as they come — command and control, centralized, dictatorial government. Indeed, he himself admitted that his party has been trying to pass socialized healthcare for a hundred years! (The obvious rejoinder to which is that Americans have been rejecting socialized medicine just exactly as long.)
But man, he sure had a sweet logo!
I would remind Obama, Democrats, and the American people, however, that “D” and “R” stand for a lot more than just “drive” and “reverse” — they also stand for words that are much more relevant this crucial election season. After the past four disastrous years of a Democrat-controlled congress, what should be crystal clear to everyone is that ‘D’ is for “Depression” (which is the only place Democrats have driven us), and ‘R’ is for recovery!
(PS: Has anyone else noticed how the Obama logo, all his graphics and now the new Democrat logo eschew the traditional blue of the American flag for United Nations cyan? Maybe it’s unintentional — not likely, but possibly unintentional — but either way, it certainly is appropriate.)
Filed under: Capitalism, Economy, Freedom, Taxes | Tags: Democrat Demagugues, Recovery, Unemployment Rate
When the stimulus bill was passed, the President promised the American people that he would create 4.1 million jobs by the end of 2010. According to his plan, the nation’s unemployment rate would be below 8% by this August. This is the standard that Barack Obama set for himself. According to the data from the Bureau of Labor Statistics, the Stimulus has been a complete flop. BLS reports that the number of unemployed persons increased by 466,000 in August, raising the rate to 9.7%. This is not good.
Other data indicates that job creation has fallen sharply. In February, the new hire rate had fallen to 3.2%, and by June (the most recent data) job creation had falled even further to 2.9%. So why has private sector job creation fallen so sharply? The recession, of course. But business owners hire when they have confidence in the future of the economy. Congress spent tens of billions of dollars on highway projects, but this does nothing to encourage business owners who do not build highways, that their investment will pay off. Billions of dollars spent to bail out overspending state governments does not encourage an entrepreneur to start a small business. Government spending programs do not encourage the investment and risk taking and innovation that jump-start lasting job creation.
The future seems to hold massive tax increases, vast changes in the rules, new mandates, attacks on free trade and massive hikes in the cost of energy. The federal deficit will reach $2 trillion this year and will only increase in the years ahead, doubling the national debt in just 5 years. The Health Care bill, as it is known so far, is a job killer. The Waxman-Markey climate bill is a job killer in increased energy prices, and failure to accomplish anything whatsoever. Until things change, there will not be much job creation.