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Body-by-Guinness
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« Reply #1100 on: November 02, 2011, 09:55:00 AM »

Why We Can't Escape the Eurocrisis by Gerald P. O'Driscoll Jr.
from Cato Recent Op-eds

When is a bailout not a bailout? When the bailor is short of funds. The recently announced debt plan in the European Union comes up short in almost all respects.

The debt crisis is not just an EU problem, but a trans-Atlantic financial crisis. The overwhelming debt problems on either side of the pond are interlinked through the banking system.

First to the EU. The underlying dilemma is that governments have promised their citizens more social programs than can be financed with the tax revenue generated by the private sector. High tax rates choke off the economic growth needed to finance the promises. Economic activity gets driven into the underground economy, where it often escapes taxation.

Nowhere is this truer than in Greece, which has a long history of sovereign defaults in the 19th and 20th centuries. There is a bloated public sector, and competitive private enterprise is hobbled by regulation and government barriers to entry. Successive Greek governments ran chronic budget deficits, and the Greek banks lent to the government. Banks in other EU countries, such as France, lent to the Greek banks.

In Greece and elsewhere in the EU, the banks support the government by purchasing its bonds, and the government guarantees the banks. It is a Ponzi scheme not even Bernie Madoff could have concocted. The banks can no longer afford to fund budget deficits, yet they cannot afford to see governments default. Governments cannot make good on their guarantees of the banks.

Details differ by country. In Ireland, problems began with an overheated property sector that brought down the banks. The economy went into depression, which threw the government's budget into deficit. Further aggravating the deficit was the government's decision to guarantee bank deposits, converting private, financial-sector debt into public-sector debt. The details differ from Greece, but the linkage between the government and the banks is the common factor.

France's growth is weak to nonexistent. Germany's economy has performed well since the recession, but concerns are growing regarding its banks' exposure to greater EU risk. And U.S. banks and financial institutions are exposed to EU banks through funding operations, issuance of credit default swaps and unknown exposure in derivatives markets.

The Federal Reserve has engaged in currency swaps with the European Central Bank to support the dollar needs of EU banks. The ECB deposits euros (or euro-denominated assets) with the Fed and receives dollars in return. It promises to repay dollars plus interest.

The Fed maintains they cannot lose money because the ECB promises to repay the swaps in dollars. And yet, with the world awash in greenbacks, it is unclear why the Fed and the ECB even needed to engage in these transactions—except that it suggests funding problems at some EU banks. And if neither EU banks nor the ECB can secure enough needed dollars in global markets, there is a serious counterparty risk to the Fed. The ECB can print euros but not dollars. Sen. Richard Shelby (R., Ala.), ranking member of the Senate Banking Committee, was correct to raise concerns about the Fed's policy last week. Losses on the Fed's balance sheet hit the U.S taxpayer, not EU citizens.

The sad fact is that there is not enough money in the EU to pay off the public debts incurred by the governments. Most countries have long since squeezed as much tax revenue from their citizens as they can. That is why they have toyed with a tax on financial transactions, the one remaining untaxed activity in all of Europe.

Greece is the first of other sovereign defaults to come. With last week's bailout, the EU leaders might have bought time, perhaps a year. But at some point, the ECB will cave and monetize the debt, leading to euro-zone inflation.

The debt calculus changed dramatically this week with the announcement of a Greek referendum on the bailout agreement next January. If voters reject the agreement, the ultimate outcome is unpredictable.

Americans must not be smug about the suffering of Europeans—our financial system is thoroughly integrated with theirs. Moreover, the International Monetary Fund will most likely be involved in the event of future bailouts and will likely need large funds from its members, which ultimately means the taxpayers.

And, of course, the U.S. has its own large and growing public debt burden. We have not gone as far down the road to entitlements, but we are catching up. If you want to know how the debt crisis will play out here, watch the downward spiral in the EU.

Meanwhile, expect more volatility in financial markets. U.S. traders in particular simply have not grasped the enormity of the EU debt crisis.

Gerald P. O'Driscoll, a senior fellow at the Cato Institute, is a former vice president of the Federal Reserve Bank of Dallas and later Citibank.

http://www.cato.org/pub_display.php?pub_id=13817
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DougMacG
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« Reply #1101 on: November 02, 2011, 11:43:33 AM »

Crafty:  "Quite right." [Prof. John Taylor's piece]  "Separately I would offer that GM's post of McCardle on 10/7 is worth rereading."

Very telling in the McCardle piece is the dramatic graph.  I would ask (or just point out again): where exactly on the time line were we when the two lines, the number of unemployed and the number of job openings, both turned away from each other?  What was happening in this country in this country in January 2007?  What were the headlines?  When were employers and investors seeing when they began their retreat?

The answer is that the anti-growth politicians took over Washington.  The face of it was San Francisco liberal Nancy Pelosi becoming the first female Speaker (and Minneapolis liberal Rep. Keith Ellison putting his hand on the Qur'an to take the oath), but others elevated to majority power included Sen. Barack Obama, Sen. Joe Biden, Sen. Hillary Clinton, Rep. Barney Frank, Sen, Chris Dodd, Ways and Means Chairman Charles Rangel, etc. etc.  (Pres. George was demoted to lame duck status on all domestic issues and invested all remaining political capital into the surge in Iraq.)

http://www.washingtonpost.com/wp-dyn/content/article/2007/01/04/AR2007010400802.html
http://www.usatoday.com/news/politicselections/vote2006/CA/2006-11-08-pelosi-profile_x.htm
http://abcnews.go.com/GMA/story?id=2607555&page=1

http://pushbacknow.net/2011/08/14/january-3-2007-the-day-democrats-took-control/

January 3, 2007 was the day that Democrats took control of both houses of Congress. Let’s take a factual look at what they inherited.
The DOW Jones closed at 12,621.77
The unemployment rate was 4.6%
The GDP growth rate for the previous quarter was 3.5%
The economy had just set a record of 52 straight months of job creation
26 million Americans were on food stamps
47 banks were on the FDIC problem list
The Social Security program took in the neighborhood of 100 billion more than it paid out
The national debt was approaching 9 trillion dollars
Barney Frank took over the House Financial Services Committee and Chris Dodd took over the Senate Banking Committee
Obama became a Senator from Illinois
Bush was on record requesting restraint on Freddie Mac and Fannie Mae 17 times
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Crafty_Dog
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« Reply #1102 on: November 04, 2011, 01:16:23 PM »

Non-farm payrolls increased 80,000 in October To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 11/4/2011
Non-farm payrolls increased 80,000 in October but were up 182,000 including revisions to August/September.  The consensus expected a gain of 95,000.
Private sector payrolls increased 104,000 in October.  Revisions to August/September added 84,000, bringing the net gain to 188,000.  September gains were led by health and education (+28,000), administrative/support (+26,000), leisure/hospitality (+22,000), and retail (+18,000). The biggest decline was non-residential construction (-24,000).
 
The unemployment rate ticked down to 9.0% from 9.1% in September.
 
Average weekly earnings – cash earnings, excluding benefits – increased 0.2% in September and are up 1.8% versus a year ago.
 
Implications:  The US labor market continues to make progress and once again shows, without a shadow of a doubt, that the US economy is not in recession. Including upward revisions for August and September, nonfarm payrolls increased 182,000, almost doubling the consensus expected gain of 95,000. Civilian employment, an alternative measure of jobs that factors in small business start-ups, increased 277,000. This gain helped push down the unemployment rate to 9%. A year ago the unemployment rate was 9.7%. During this time, private payrolls have grown at an average monthly rate of 152,000 while civilian employment has grown at a rate of 140,000 per month. In other words, we don’t need 150,000 jobs per month just to keep the unemployment rate steady. Because of the aging of the labor force, 150,000 jobs per month is more than enough to push down the jobless rate. Very quietly, without fanfare, private sector payrolls have grown by 1.8 million in the past year, while the workweek has lengthened and hourly cash wages are up 1.8%. Total hours worked are up 1.7% in the past year. A 9% unemployment rate means the labor market is still far from operating at its full potential, but it is moving in the right direction as are other data. October chain store sales were up 3.7% versus a year ago, according to the International Council of Shopping Centers. This includes luxury department store sales up 4.5% and wholesale clubs (excluding fuel) up 7%. Meanwhile, compared to a year ago, core railcar loadings are up 5.8%, steel production is up 10.3%, and hotel occupancy rates are up 6.8%. Again, there are no signs of recession. Instead, plenty of signs of continued growth.
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DougMacG
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« Reply #1103 on: November 06, 2011, 05:54:34 PM »

This quote is pulled out of Bigdog's post on Constitutional Matters where military and veterans were joining with occupy protesters:

"The 99 percent have to take a stand," Bordeleau said, to rectify the biggest income gap between rich and poor since the Great Depression, fueled by what protesters say is Wall Street's overblown clout in Washington politics.
 - - - - - - -
What is the measure they are using for measuring a widening gap; looks to me like it narrowed during the worst part of the recession, and the recession is what is hurting people.  What is the evidence of government causation?  Which government programs caused it? If the rich have all the clout, how did they get a marginal tax rate higher than everyone else, why are they penalized with estate taxes that apply to no one else, why is there a limit on deductible home mortgage interest that applies only to rich people, why is the exemption for the entire profit from selling your home available to everyone except rich people, why are the rich taxed on social security income while others are not, why are rich people completely locked out of almost all social spending programs like food stamps, WIC, free school lunch, section 8 housing, cold weather assistance, free health care, free public defender, etc etc.  Where is the clout?  It makes no sense to me.  What percent of rich people work on wall street?  What if we put poor people in charge of Fannie Mae, Freddie Mac and Goldman Sachs.  What would that solve?
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Crafty_Dog
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« Reply #1104 on: November 06, 2011, 10:31:36 PM »

Let me see if I can remember these Mexican words of wisdom correctly.

"A los pobres, los hacen pendejos.  A los pendejos los hacen politicos.  A los policitos los hacen ricos.  A los ricos los hacen pobres."

or something like that.
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G M
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« Reply #1105 on: November 06, 2011, 10:38:00 PM »

My prediction:  China is a big bubble which will burst before then.  I might add that GS did not predict the bursting of our bubble (in public at any rate).

http://www.forbes.com/sites/gordonchang/2011/11/06/property-prices-collapse-in-china-is-this-a-crash/

11/06/2011 @ 9:23PM
Property Prices Collapse in China. Is This a Crash?

Residential property prices are in freefall in China as developers race to meet revenue targets for the year in a quickly deteriorating market.  The country’s largest builders began discounting homes in Shanghai, Beijing, and Shenzhen in recent weeks, and the trend has now spread to second- and third-tier cities such as Hangzhou, Hefei, and Chongqing.  In Chongqing, for instance, Hong Kong-based Hutchison Whampoa cut asking prices 32% at its Cape Coral project.  “The price war has begun,” said Alan Chiang Sheung-lai of property consultant DTZ to the South China Morning Post.

What started slowly in September turned into a rout by the middle of last month—normally a good period for sales—when Shanghai developers started to slash asking prices.  Analysts then expected falling property values to move Premier Wen Jiabao to relax tightening measures, such as increases in mortgage rates and prohibitions on second-home purchases, intended to cool the market.

They were wrong.  After a State Council meeting on October 29, Mr. Wen affirmed his policy, stating that local authorities should continue to “strictly implement the central government’s real estate policies in the coming months to let citizens see the results of the curbs.”  Then, the selling began in earnest as “desperate” developers competed among themselves to unload inventory.  One builder—Excellence Group—even said it would sell flats in Huizhou at its development cost.

Citi’s Oscar Choi believes prices will decline another 10% next year, but that’s a conservative estimate.  Even state-funded experts are more pessimistic.  For example, Cao Jianhai of the prestigious Chinese Academy of Social Sciences sees price cuts of 50% on homes if the government continues its cooling measures.

When Beijing’s pet analysts are saying prices could halve in a few months, we can be sure they are thinking the eventual sell-off will be worse.  In any event, the markets are bracing for trouble.  Investors are dumping both the bonds and the shares of Chinese developers, and legendary bear Jim Chanos, citing the property market, late last month said he is still not covering his short positions on China.

One does not have to agree that China will be “Dubai times 1,000—or worse”—Chanos’s memorable phrase—to understand that the unwinding of “the biggest housing bubble ever created” will be especially painful.  Analysts have great confidence in Beijing’s technocrats because they managed to continue to manufacture growth through the global downturn, but most of us seem to forget that the Chinese, through massive stimulus, created even bigger challenges for themselves.  At the moment, Beijing has yet to resolve two intractable problems: persistent inflation and artificially high property prices.

The dominant narrative at the moment is that China’s economic managers will skillfully deflate the property bubble and land the economy softly.  As Time observes, “Many observers say a sharp economic decline won’t be permitted to happen before the change of leadership in 2012.”

Won’t be permitted?  It is true that Beijing’s technocrats have had the advantage of working in a semi-closed system that has allowed them to use the considerable resources of the state to achieve outcomes not possible in freer economies.  Nonetheless, they can continue to do so—in other words, defy economic principles—only as long as market participants—in this case builders, local officials, and homeowners—cooperate.

The last four weeks, however, must have been a sobering period for Premier Wen, and not only because developers began to lose their nerve.  For one thing, recent purchasers have taken to the streets because they had suffered losses even before taking possession of their homes.  A crowd of about 300 people in Shanghai smashed windows at the sales office of Longfor Properties on October 22, two days after the builder had ended a sales promotion on a project.  The protestors had bought properties in earlier phases of the same project at prices as much as 30% higher than the discounted ones.

And then, on the 23rd, a smaller crowd—on the same street—demonstrated against another developer, Greenland Group.  Protesters were injured in Shanghai at another demonstration, this time against a unit of China Overseas Holdings.  There were also protests against builders in Beijing and in other cities, Hangzhou and Nanjing.
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G M
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« Reply #1106 on: November 10, 2011, 10:08:31 AM »

http://www.theatlantic.com/business/archive/2011/11/the-financial-folly-of-fairness/248216/#

The Financial Folly of Fairness
By Megan McArdle





Nov 9 2011, 4:38 PM ET324

 When I was a young and naive economics writer, I used to write about developing countries a fair amount.  Time and again they would make these bizarre and pointless moves, like suddenly and for no apparent reason defaulting on a bunch of debt.  They would engage in obviously, stupidly unsustainable fiscal practices that caused recurring crises.  They would divert critical investment funds into social spending which was going to become unsustainable when underinvestment reduced government revenue.  And the other journalists and I would cluck our tongues and say "Why can't they do the right thing when it's so . . . bleeding . . . obvious?"



Then we had our own financial crisis and it became suddenly, vividly clear: democratic governments cannot do even obvious right things if the public will not tolerate it.  Even dictators have interest groups whose support they must buy.




This has come home to me forcefully several times over the last few years, but never more than now.  The leaders of the eurozone have a dual mandate to keep the euro intact, and to not do the things which could keep the euro intact.  They cannot fiscally integrate to the extent necessary because, as I wrote for the Daily the other day, the Greeks do not want to act like Germans, and the Germans do not want to share their credit rating with anyone who won't.




It is obvious that either Germany is going to have to guarantee massive ongoing fiscal transfers to the PIIGS, or Greece and probably Italy are going to have to undergo a massively contractionary austerity program, or they will have to leave the euro.  Yet in the face of these three choice--which exclude both each other, and any other mathematically possible outcome--their governments have chosen d: half measures.  No, half-measures is too generous.  Quarter measures.  Window dressing that only covers a single pane.




With Berlusconi's obviously counterproductive antics tanking markets worldwide, the sort of hopeful pessimism that has pervaded the economic commentariat has now turned to open despair.  Their cri de coeur is ably summed up by Brad DeLong:





I have been complaining for some time now that Reinhart and Rogoff think that the time is always 1931 and that we are always Austria--that the great fiscal crisis is about to erupt and send us lurching down toward Great Depression II. Well, right now guess what? The time is 1931, and we are Austria. The Federal Reserve needs to buy up every single European bond owned by every single American financial institution for cash before the increase in eurorisk leads American finance to tighten credit again and send us down into the double dip. The Federal Reserve Needs to do so now. Paul Krugman: >This Is The Way The Euro Ends: Not with a Bang, But with a Bunga-Bunga: [W]ith Italian 10-years now well above 7 percent, we're now in territory where all the vicious circles get into gear -- and European leaders seem like deer caught in the headlights. And as Martin Wolf says today, the unthinkable -- a euro breakup -- has become all too thinkable: >>A eurozone built on one-sided deflationary adjustment will fail. That seems certain. If the leaders of the eurozone insist on that policy, they will have to accept the result. >Every even halfway plausible route to euro salvation now depends on a radical change in policy by the European Central Bank. Yet as John Quiggin says in today's Times, the ECB has instead been part of the problem. >I believe that the ECB rate hike earlier this year will go down in history as a classic example of policy idiocy... the sheer stupidity of obsessing over inflation when the euro was obviously at risk boggles the mind. I still find it hard to believe that the euro will fail; but it seems equally hard to believe that Europe will do what's needed to avoid that failure.




For all my cynicism, I too want to cray out, "For the love of Mike, why?" 




Why can't they do the any of the obvious things--not even necessarily the right ones?  Why are they picking the only path that is obviously not going to work?




But I come back to the answer above: they can't.  Government, like soylent green, is people. And people are not always rational.




The things that fix economic crises are not always intuitive.  As Brad De Long himself once remarked to me, it is nearly impossible to bail out the financial system without also bailing out people who are long assets--aka financiers and rich people.  But oh, how that flies in the face of our intuitions!  It should be true that the most prosperous system is the one which severely punishes everyone who didn't monitor the soundness of their investments.  We feel, very deeply, that financial and economic efficiency should mirror our intuitive sense of justice.  And probably it does, mostly, when you're living in a hunter gatherer tribe.




But in a complex world where mistakes are easy and detecting them is not, I just don't think this holds truet.  The "just world" described above is not some bourgeois paradise; it is the western world during the Great Depression.  It was not a better world for everybody; it wasn't even a better world for anybody that I can think of. After it had finished punishing people who made stupid decisions, it went on to wreak brutal vengeance on a lot of people who had been quietly minding their own business.  Bank runs can afflict the soundest banks, if depositors panic.




Life savings were wiped out overnight not because depositors hadn't done a good job of choosing a sound bank, but because they'd happened to choose a bank which had credit exposure to other banks that had credit exposure to other banks that were unsound.  Many of the most immiserated people were farmers who had quite innocently taken out the then-standard five year mortgages to invest in new farm equipment.  Only back then, mortgages didn't usually amortize--they were what we'd call "balloon mortgages" today--and the standard practice was to roll them over when the notes came due.  And when farm prices fell and credit dried up, they couldn't roll over those mortgages as they'd always done before, and they lost their farms. Then there were the people who had never had anything to begin with, and now had even less because unemployment shot up to 25% and they couldn't get the daily casual labor they needed to feed themselves.




The solution to the problem turned out to be throwing money at it: going off the gold standard, devaluing, and guaranteeing everyone's bank accounts.  Oh, yes, there was moral hazard.  There still is.  What there aren't, is bank runs that wipe out peoples' life savings overnight, or an unemployment rate of 25%.




One can name dozens of examples of things that violate our sense of fairness and obligation, and thereby make us all richer, from limited liability to bankruptcy.  But people most won't believe it.  Oh, they may believe the part of it that supports some larger "fairness" agenda they're committed to.  But their support is almost always piecemeal: try getting a liberal who loves easy bankruptcy to give a second chance to bankers who made a few stupid money decisions, or convincing conservatives who are avid for tort reform that debtors who ran up credit cards with unwise investments in expensive but rapidly depreciating motor vehicles and consumer electronics might also need legal protection from the fullest extent of their past mistakes. 




In the years that I have been doing just that, it has been a losing battle on most fronts.  Especially as regards the financial crisis, where the reaction is usually that I am either a worthless dupe, or a paid shill, for the banking industry.  The people on the right who can explain it all in terms of moral hazard, and the people on the left who can explain it all in terms of insufficient regulation/punishment of bankers, can wrap economic and moral theory up in a neat package that claims to deliver justice and prosperity.  All I've got to offer is messy tradeoffs.




So it is in Europe.  The German people feel that it is not fair that they should be asked to pay for the bloated public sectors of nations where tax avoidance is an Olympic event.  The Greeks feel that they should not be asked to take a 40% paycut so that a bunch of rich Germans don't have to bail out their banks.  Berlusconi no doubt feels that he is entitled to keep a job to which he was duly elected.




You can try to explain to all of them why their sense of outrage is rather beside the point in the face of a looming financial explosion which is going to make everyone much worse off if it reaches critical mass.  You can also go home and try to explain this to your microwave, for all the good it will do.  As anyone who has ever spoken to a five year old knows, the sense of fairness is one of the most primal and intractable cognitive instincts we have.  In the best of times, it takes years to change public opinion about what is fair.  These are not the best of times, and we do not have years.




I am very much afraid that the euro zone is about to plunge us into phase two of the global financial crisis--and that as with the Great Depression, phase two may be even worse than the dismal years we've just endured.    In search of fairness, we may all get a lot more justice than any of us really wants.
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Crafty_Dog
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« Reply #1107 on: November 16, 2011, 03:01:15 PM »

Industrial production rose 0.7% in October To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 11/16/2011
Industrial production rose 0.7% in October; easily beating the consensus expected gain of 0.4%. Including revisions to prior months, production increased 0.5%. Output is up 4.0% in the past year.
Manufacturing, which excludes mining/utilities, was up 0.4% in October. Auto production spiked up 3.1%. Non-auto manufacturing increased 0.3%. Auto production is up 8.9% versus a year ago and non-auto manufacturing has risen 3.9%.
The production of high-tech equipment rose 0.1% in October and is up 7.0% versus a year ago.
 
Overall capacity utilization rose to 77.8% in October from 77.3% in September. Manufacturing capacity use increased to 75.4% in October from 75.1% in September.
 
Implications:  Industrial production soared in October, easily beating consensus expectations and showing no sign of recession. Mining activity increased 2.3%, the most in three years. However, manufacturing was strong too, up 0.4% in October and 0.3% if a booming auto sector is excluded. From a year ago, manufacturing is up 4.5%, 3.9% excluding autos. Auto production is up at a 17.3% annual rate over the past six months, a rebound from the supply-chain disruptions that came from Japan earlier this year. It’s still an open question what temporary impact recent massive flooding in Thailand will have on auto production in November. The production of business equipment has been particularly strong in recent months, up 10.2% from a year ago and up at a 12.7% annual rate in the past six months. The outlook for continued growth in business investment looks good. Corporate profits are at a record high and so is cash on the balance sheets of non-financial companies. Meanwhile, capacity utilization looks set to be at the long-term average of 80% by the end of 2012, which will give firms more of an incentive to build out capacity. 
===========
The Consumer Price Index (CPI) declined 0.1% in October To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 11/16/2011
 
The Consumer Price Index (CPI) declined 0.1% in October. The consensus expected no change. The CPI is up 3.5% versus a year ago.
 
“Cash” inflation (which excludes the government’s estimate of what homeowners would charge themselves for rent) slipped 0.2% in October, but is up 4.1% in the past year.
 
The decline in the CPI was due to a 2.0% drop in energy prices. Food prices were up 0.1% and the “core” CPI, which excludes food and energy, was up 0.1%, matching consensus expectations. Core prices are up 2.1% versus last year.
 
Real average hourly earnings – the cash earnings of all employees, adjusted for inflation – increased 0.3% in October but are down 1.6% in the past year. Real weekly earnings are down 1.7% in the past year.
 
Implications: Like producer prices, consumer prices also took a breather in October, with the CPI down 0.1%. However, the slight dip in consumer prices is going to be temporary and the Federal Reserve should not assume it has more room to execute another round of quantitative easing. The reason the overall CPI fell in October was that energy prices dropped 2%. But now, with oil pushing $100 per barrel again, we already know energy prices will likely be up in November. Meanwhile, despite the decline in overall prices in October, the CPI is still up 3.5% from a year ago. “Cash” inflation, which excludes the government’s estimate of what homeowners would pay themselves in rent, is up 4.1% in the past year.  In our opinion, this is a more accurate measure of the inflation actually being felt by consumers.  “Core” prices, which exclude food and energy (what the Fed seems to focus on) are up 2.1% in the past year, held down by owners’ equivalent rent (up just 1.6% in the past 12 months), which makes up one-third of the core. But, because of the shift from home ownership to rental occupancy, rents are now accelerating (see chart to right). As a result, core inflation is likely to accelerate in the year ahead. The best news in today’s report was that “real” (inflation-adjusted) earnings per hour were up 0.3% in October. Although these earnings are down 1.6% from a year ago, consumers have been able to increase their spending by slowing the pace at which they’re paying down debt. This makes sense with consumers’ financial obligations now at the smallest share of income since the early 1990s.   
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G M
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« Reply #1108 on: November 22, 2011, 09:26:18 AM »


http://hotair.com/archives/2011/11/22/q3-gdp-revised-from-2-5-to-2-0/

Q3 GDP revised from 2.5% to 2.0%
 

posted at 9:25 am on November 22, 2011 by Ed Morrissey
 





Thanks to the upcoming holiday, the Bureau of Economic Analysis released its first revision of the advance quarterly GDP report today — and the new number drops significantly from the figure released less than four weeks ago.  Instead of a mediocre 2.5% annualized growth rate in Q3, the US now reports a 2.0% annualized growth rate, which means that we are still not coming up to last year’s stagnant growth levels:
 

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.0 percent in the third quarter of 2011 (that is, from the second quarter to the third quarter) according to the “second” estimate released by the Bureau of Economic Analysis.  In the second quarter, real GDP increased 1.3 percent.
 
That’s a $15 billion difference.  What changed?  The BEA says that the initial estimates of some key indicators were, well, pretty darned rosy:
 

The “second” estimate of the third-quarter increase in real GDP is 0.5 percentage point, or $15.0 billion, lower than the advance estimate issued last month, primarily reflecting downward revisions to private inventory investment, to nonresidential fixed investment, and to personal consumption expenditures that were partly offset by a downward revision to imports.
 
It’s not unusual for the BEA and its parent Commerce Department to make tweaks to these numbers.  That’s why we have a second and third quarterly GDP statement, so that additional data can offer a clearer view of economic activity.  However, the initial figure missed the mark by more than just a tweak, and it’s not the first time that we’ve seen a significant downward revision in the GDP release in subsequent restatements.
 
Reuters prefers the rosy view:
 

 The U.S. economy grew at a slightly slower pace than previously estimated in the third quarter, but weak inventory accumulation amid sturdy consumer spending strengthened views output would pick up in the current quarter.
 
“Slightly”?  That’s not a slight adjustment; it’s a significant downgrade in output.  Furthermore, it seems that Reuters didn’t bother to read the “revisions” section of the new statement, where the BEA noted that they had to revise “personal consumption expenditures” — in other words, “consumer spending” — downward.  The new numbers look anything but “sturdy”:
 

Real personal consumption expenditures increased 2.3 percent in the third quarter, compared with an increase of 0.7 percent in the second.  Durable goods increased 5.5 percent, in contrast to a decrease of 5.3 percent.  Nondurable goods decreased 0.6 percent, in contrast to an increase of 0.2 percent.  Services increased 2.9 percent, compared with an increase of 1.9 percent. …
 
Real gross domestic purchases — purchases by U.S. residents of goods and services wherever produced — increased 1.5 percent in the third quarter, compared with an increase of 1.0 percent in the second.
 
Was Q3 better than Q2?  Sure, but that’s a low bar, since Q2′s GDP growth rate was 1.3%, barely above recessionary level.  It’s not that much better, as these numbers show, and the new Q3 number is still below the stagnation levels of the “Recovery Summer” and fall of 2010.
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JDN
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« Reply #1109 on: November 23, 2011, 11:22:51 AM »

"Over the last two decades, the average income of the top 1% of Californians increased by 50%, after adjusting for inflation, while the average income of the middle fifth fell by 15%."

http://www.latimes.com/news/opinion/commentary/la-oe-andersonross-99percent-20111123,0,1203795.story
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G M
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« Reply #1110 on: November 23, 2011, 11:27:34 AM »

"Over the last two decades, the average income of the top 1% of Californians increased by 50%, after adjusting for inflation, while the average income of the middle fifth fell by 15%."

http://www.latimes.com/news/opinion/commentary/la-oe-andersonross-99percent-20111123,0,1203795.story

Gee, I guess the PRK's redistrubitionist policies are destroying the middle class, at least a few wealthy amidst the teeming poor will be quite familiar to the masses of illegals that now make up a good portion of the state.
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Crafty_Dog
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« Reply #1111 on: November 23, 2011, 05:15:34 PM »

Lacking GM's extraordinary google fu skills I am unable to lay my hands on the data (NO sarcasm here whatsoever!) but I do have a clear sense of having seen data in a variety of sources that seemed reliable to me concerning the remarkable % of net GDP profits that came from the financial sector in the 1990s and 2000s.
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DougMacG
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« Reply #1112 on: November 23, 2011, 05:30:07 PM »

LA Times: "Over the last two decades, the average income of the top 1% of Californians increased by 50%, after adjusting for inflation, while the average income of the middle fifth fell by 15%."

It's kind of sad that in Journalism and in economics that kind of deception can be passed along without consequence.  The implication is clearly made that two groups of people were studied over a two decade period when in fact no actual person group of people was studied over an extended period. Income Mobility: The majority of Californians moved freely between quintiles, there is no indication whatsoever how many of the top 1% at the start remain in the top 1%, perhaps close to none, the group that makes up the middle quintile is completely different for a host of reasons.  New Californians: For every immigrants that come in at the bottom of incomes, the middle shifts downward even if everyone in the state including that immigrant is making more than they made previously.

For all the fears about the success of 'the wealthy' starting with the title, 'California's Wealth Pyramid', isn't it strange that at no point to they measure or compare wealth.  Income studies and wealth studies are not the same.  Look at the unprecedented collapse of wealth in the last 3 years.  Wouldn't that be problem solved? None of it is shown in the data.

"Policymakers should be mindful of the growing income divide and the millions of workers and families who have fallen behind."  - Once again, for each poor person moving in to better him/herself, the income divide overall grows, and nowhere in the study does it document that anyone has fallen behind.

Before Pelosi-Obama took over congress, incomes were growing, covering most of those two decades.  People may have been falling behind though in the sense of the increasing costs of all government interfered expenses and markets, including taxes, housing, tuition, energy costs and health care.

I like the ending in particular, they are with the nonpartisan California Budget Project, lol.  Nonpartisan.  Why on earth would you openly and intentionally deceive people if you had no agenda??
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G M
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« Reply #1113 on: November 23, 2011, 06:14:07 PM »

http://www.europac.net/commentaries/whose_fuse_shorter


Whose Fuse is Shorter?

By: Peter Schiff


Wednesday, November 23, 2011
 
With fiscal time bombs ticking in both Europe and the United States, the pertinent question for now seems to be which will explode first. For much of the past few months it looked as if Europe was set to blow. But Angela Merkel’s refusal to support a Federal Reserve style bailout of European sovereigns and her recent statement the she had no Hank Paulson style fiscal bazooka in her handbag, has lowered the heat. In contrast, the utter failure of the Congressional Super Committee in the United States to come up with any shred of success in addressing America’s fiscal problems has sparked a renewed realization that America’s fuse is dangerously short.
 
Chancellor Merkel has been emphatic that European politicians not be given a monetary crutch similar to the one relied on by their American counterparts. Her laudable goal, much derided on the editorial pages of the New York Times, is to defuse Europe’s debt bomb with substantive budget reforms, and as a result to make the euro “the strongest currency in the world.” Much has been made of the poorly received auction today of German Government bonds, with some saying the lack of demand (which pushed yields on 10-year German Bonds past 2% --hardly indicative of panic selling) is evidence of investor unease with Merkel’s economic policies. I would argue the opposite: that many investors still think that Merkel is bluffing and that eventually Germany will print and stimulate like everyone else. It is likely for this reason that yields on German debt have increased modestly.
 
In contrast, the U.S. is crystal clear in its intention to ignore its debt problems. With the failure of the Super Committee this week it actually became official. American politicians will not, under any circumstances willingly confront our underlying debt crisis. While the outcome of the Super Committee shouldn’t have come as a great surprise, the sheer dysfunction displayed should serve as a wakeup call for those who still harbor any desperate illusions. Some members of Congress, such as John McCain, have even come out against the $1.2 trillion in automatic spending cuts that would go into effect in January 2013. Expect more politicians of both parties to cravenly follow suit.
 
Over the next decade, the U.S. government expects to spend more than $40 trillion. Even if the $1.2 trillion in automatic cuts are allowed to go through, the amount totals just 3% of the expected outlays. In a masterstroke of hypocritical accounting, $216 billion of these proposed “cuts” merely represent the expected reductions in interest payments that would result from $984 billion of actual cuts. These cuts won’t make a noticeable dent in our projected deficits, which if history can be any guide, will likely rise by much more as economic reality proves far gloomier than government statisticians predict. Finally, the cuts are not cuts in the ordinary sense of the word, where spending is actually reduced. They are cuts in the baseline, which means spending merely increases less than what was previously budgeted.
 
In the mean time, the prospect of sovereign default in Europe is driving “safe” haven demand for the dollar. So contrary to the political blame game, Europe’s problems are actually providing a temporary boost to America’s bubble economy. However, a resolution to the crisis in Europe could reverse those flows. And given the discipline emanating from Berlin, a real solution is not out of the question. If confidence can be restored there, each episodic flight to safety may be less focused on the U.S. dollar. Instead, risk-averse investors may prefer a basket of other, higher-yielding, more fiscally sustainable currencies.
 
The irony is that Europe is actually being criticized for its failure to follow America’s lead. This misplaced criticism is based on the mistaken belief that our approach worked. It did not. Sure, it may have delayed the explosion, but only by assuring a much larger one in the future. In the mean time, many have mistaken the delay for success.
 
However, if Merkel’s hard line works, and real cuts follow, Europe will be praised for blazing a different trail. As a result the euro could rally and the dollar sink. Commodity prices will rise, putting even more upward pressure on consumer prices and interest rates in the United States.
 
Any significant reversal of the current upward dollar trend could provide a long awaited catalyst for nations holding large dollar reserves to diversify into other currencies. My guess is that Merkel understands the great advantage the U.S. has enjoyed as the issuer of the world’s reserve currency. I believe she covets that prize for Europe, and based on her strategy, it is clearly within her reach.
 
There is an old saving that one often does not appreciate what one has until it’s lost. The nearly criminal foolishness now on display in Washington may finally force the rest of the world to cancel our reserve currency privileges. The loss may give Americans a profound appreciation of this concept.
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DougMacG
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« Reply #1114 on: November 26, 2011, 11:27:30 AM »

Not finding a category for 'Cognitive Dissonance of the Centrists, I will stick this here.  So-called centrists like past candidate Perot IMO tend to be better at pointing to problems than structuring real solutions. Summers, like Volcker, was supposed to be one of the sane advisers to the President.  Both are now long gone from the administration.

I will go along with his point one, but it is mostly nonsense.  People without means can't participate evenly with the wealthy if the government decides to auction off public assets or licenses like an additional airwave for broadcast or land for energy exploration.

Point 2 is verbose but basically means make progressivity in taxation even worse while half already pay nothing.  I would say worst case should be hold the line with progressivity where it is, cut the worthless loopholes and lower the rates proportionally for everyone who produces.

Point 3 is more BS.  College tuition, along with a host of other things, is outrageous and unaffordable because of government interference and he proposes no solution.

Apologies to Thatcher, but we need to pursue a 'society' of haves, not choose between protecting or destroying a class of them.  We need to unleash economic freedom and growth.  In that context, government should do nothing that unnecessarily favors the rich and nothing that makes the natural inequalities of a free and prosperous society worse than what is natural and necessary.
-------------------
http://www.washingtonpost.com/opinions/three-ways-to-combat-rising-inequality/2011/11/20/gIQAvGb5fN_story.html

Three ways to combat rising inequality

By Lawrence Summers, Published: November 20

There has been a strong and troubling shift in market rewards for a small minority relative to the rewards available to most citizens. A recent Congressional Budget Office study found that incomes of the top 1 percent of the U.S. population (adjusted for inflation) rose 275 percent from 1979 to 2007, while income for the middle class grew only 40 percent. Even this dismal figure overstates the fortunes of typical Americans. In 1965, only one in 20 men ages 25 to 54 was not working; by the end of this decade, it is likely to be one in six, even if a full cyclical recovery is achieved.

Another calculation suggests that if the income distribution had remained constant from 1979 to 2007, incomes of the top 1 percent would be 59 percent, or $780,000, lower and that incomes among the bottom 80 percent would be 21 percent, or more than $10,000, higher.

Those looking to remain serene in the face of these trends or who favor policies that would disproportionately cut taxes at the high end — and exacerbate inequality — assert that snapshot inequality is all right as long as there is mobility within people’s lifetimes and across generations. In fact, there is too little of both. Inequality in lifetime incomes is only marginally smaller than inequality in a single year. And intergenerational mobility in the United States is now poor by international standards.

Why has the top 1 percent done so well relative to the rest? The answer lies substantially in changes in technology and in globalization. When George Eastman revolutionized photography, he did very well, and because he needed a large number of Americans to carry out his vision, the city of Rochester, N.Y., had a thriving middle class for two generations. When Steve Jobs revolutionized personal computing, he and Apple shareholders did very well, but those shareholders are all over the world, and a much smaller benefit flowed to middle-class American workers, both because production was outsourced and because the production of computers and software was not terribly labor-intensive.

The market system distributes rewards increasingly inequitably. On one side, the debate is framed in zero-sum terms, and the disappointing lack of income growth for middle-class workers is blamed on the success of the wealthy. Those with this view should consider whether it would be better if the United States had more, or fewer, entrepreneurs like those who founded Apple, Google, Microsoft and Facebook. Each did contribute significantly to rising inequality. It is easy to resent the level and extent of the increase in CEO salaries, but firms that have a single owner, such as private equity firms, pay successful chief executives more than public companies do. And for all their problems, American global companies have done very well compared with those headquartered in more egalitarian societies over the past two decades. Where great fortunes are earned by providing great products or services that benefit large numbers of people, they should not be denigrated.

Meanwhile, those who call concerns about rising inequality misplaced or a product of class warfare are even further off base. The extent of the change in the income distribution is such that it is no longer true that the overall growth rate of the economy is the principal determinant of middle-class income growth — how the growth pie is distributed is at least equally important. The observation that most of the increase in inequality reflects gains for those at the very top at the expense of everyone else further belies the idea that simply strengthening the economy will reduce inequality. Focusing on American competitiveness, as many urge, could easily exacerbate inequality while doing little for most Americans if the focus is placed on measures such as corporate tax cuts or the protection of intellectual property for the benefit of companies that are not primarily producing in the United States.

We need more and better responses to rising inequality. Here are three places to start.

First, government must not facilitate increases in inequality by rewarding the wealthy with special concessions. Where governments dispose of assets or allocate licenses, preference should be on the use of auctions to which all have access. Where government provides implicit or explicit insurance, premiums should be based on the market rather than in consultation with the affected industry. Government’s general posture should be standing up for capitalism rather than for well-connected capitalists.

Second, there is scope for pro-fairness, pro-growth tax reform. The moment when more great fortunes are being created and the federal deficit is growing is hardly the time for the estate tax to be eviscerated. And there is no reason tax changes in a period of sharply rising inequality should reinforce the trends in pretax incomes produced by the marketplace.

Third, the public sector must ensure greater equity in areas of the most fundamental importance. It will always be the case in a market economy that some will have mansions, art, etc. More troubling is that middle-class students’ ability to attend college has been seriously compromised by increasing tuitions and sharp cutbacks at public universities, and that, over the past generation, a gap has opened between the life expectancy of the affluent and the ordinary.

Neither the politics of polarization nor those of noblesse oblige on behalf of the fortunate will serve to protect the interests of the middle class in the post-industrial economy.

The writer, a professor and past president at Harvard University, was Treasury secretary in the Clinton administration and economic adviser to President Obama from 2009 through 2010.
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DougMacG
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« Reply #1115 on: November 28, 2011, 09:49:14 AM »

http://www.youtube.com/watch?feature=player_embedded&v=26QxO49Ycx0

Discussion between Thomas Sowell and Frances Fox Piven with Milton Friedman
http://miltonfriedman.blogspot.com/
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Crafty_Dog
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« Reply #1116 on: November 28, 2011, 09:30:06 PM »

Doug:

The content of your post would seem to be of more lasting importance than the often transitory nature of this thread.  May I request you post it on the Economics thread of the SCH forum as well?

TIA,
Marc
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G M
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« Reply #1117 on: November 29, 2011, 11:34:45 AM »

http://www.theblaze.com/stories/kramer-were-two-stages-from-a-financial-collapse-so-huge-its-hard-to-get-your-mind-around/

Cramer: We‘re ’Two Stages From a Financial Collapse So Huge It‘s Hard to Get Your Mind Around’
Posted on November 29, 2011 at 7:39am by Jonathon M. Seidl


Nevermind the stock rally from Monday or the massive sales figures from Black Friday, CNBC’s Jim Cramer had a very grim outlook for the global financial markets going forward. In sum, the European crisis is so bad that the U.S. is grave danger. Business Insider explains:
 

In his opening segment on Mad Money tonight (via The Fly) Jim Cramer warns that Europe could easily spoil any party we’re having in the US due to the collapse in credit.
 
He walks through a fairly long (but very basic) explanation of what credit is, and how central it is to the economy, before (around the 6:30 mark) declaring that we’re in “DEFCON 3, two stages from a financial collapse so huge it’s hard to get your mind around.”
 
He tells everyone to “curb your enthusiasm.” If you want to stay happy, don’t watch the clips below. But if you want the hard truth, click play:

**Click the link.
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DougMacG
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« Reply #1118 on: November 29, 2011, 01:53:15 PM »

Obama administration wants high fossil fuel costs and lower consumption.  Mission accomplished.  That is the opposite of prosperity and it isn't a failure of capitalism.

American Airlines files for Ch. 11 protection

FORT WORTH, Texas (AP) — American Airlines' parent company is seeking Chapter 11 bankruptcy protection as it seeks to unload massive debt built up by years of accelerating jet fuel prices and labor struggles.
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Body-by-Guinness
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« Reply #1119 on: December 01, 2011, 02:44:06 PM »

Which November Jobs Report Estimate Is Wrong?

By Robert HolmesSenior Writer | TheStreet.com – 2 hours 23 minutes ago


BOSTON (TheStreet) -- After the best three-day winning streak for stocks since March 2009, there's a lot riding on Friday's employment report. Unfortunately, investors are faced with two separate estimates that paint two very different pictures about the U.S. labor market.

After yesterday's announcement of coordinated action by central banks around the globe to add liquidity to the banking system, the S&P 500 surged 4.3%, capping a 7.6% gain over three days. Amid the euphoria, investors cheered the ADP Employment Report, which estimated that the private sector added 206,000 jobs in November, double that of previous months. For investors, it was a loud signal to buy stocks.

"November's increase in employment normally would be associated with a decline in the unemployment rate," Joel Prakken, chairman of Macroeconomic Advisers, said in a statement Wednesday. "An acceleration of employment is consistent with data showing that GDP growth, which slowed sharply around the turn of the year, is gradually recovering."
ADP's estimate compares with economists' consensus of 126,000, according to a survey by Bloomberg. TrimTabs Investment Research is even more cautious. The company said Wednesday that the U.S. economy likely added only 64,000 jobs in November, an estimate that went unnoticed by investors caught up in the exuberance of a nearly 500-point gain on the Dow Jones Industrial Average.

"The sharp deceleration in job growth in November has us concerned," says Madeline Schnapp, director of macroeconomic research at TrimTabs. "It appears that hiring managers have rolled up the welcome mat due to the raging debt crisis in Europe."

How could two firms measuring employment come to such disparate figures? The difference between ADP's call of 206,000 and TrimTabs' 64,000 is a staggering 142,000. For some context, the Bureau of Labor statistics said the U.S. economy added only 80,000 jobs in October.

ADP says its estimate for private payrolls growth is derived from actual payroll data. Chances are that your paystub has the ADP logo in the top right corner, which means the firm is measuring jobs in the most direct way it can.

TrimTabs' employment estimates are based on an analysis of daily income-tax deposits to the U.S. Treasury from all salaried U.S. employees. Schnapp says that while the measure isn't perfect, it's a better view than a survey subject to revision.

"Everybody looks to the BLS Bureau of Labor Statistics as the be-all, end-all when those numbers are substantially revised," Schnapp says. "We have no idea what the BLS is going to publish. We just look at how much money is in people's pockets. That's a measure of wages and salaries. Ultimately, that will determine how good the economy is."

TrimTabs says estimates using tax deposits are historically more accurate than initial estimates from the Bureau of Labor Statistics. Schnapps says that once the government is through with revisions, TrimTabs' estimates are usually within 10% of the final figure.

So how did Schnapp react when she saw the ADP Employment Report show a substantially greater increase to private payrolls than her firm's estimates?

"It is frustrating because it moves the markets," she says of the ADP report. "One of us is going to be closer to the truth. Everyone looks at how close you are to the BLS. I can only call what the numbers are telling me."

The numbers are telling Schnapp that there was a "pretty substantial decay in November." To explain the difference between her estimate and ADP's, Schnapp says that companies may have postponed their tax deposits until December because of the Thanksgiving holiday, although that should be followed by a bounce in tax-withholding data that we haven't seen yet.
"It could also be that people changed their withholdings, but that doesn't happen until January," she says. "We're all over tax increases, so I doubt that's a factor. So you get back to that the tax withholdings are weaker. Considerably weaker. Unless there's something we don't know could be impacting the data. We'll find out tomorrow."

ADP didn't immediately respond to a request for comment. But as the chart below shows, the total employment data from the Bureau of Labor Statistics doesn't always match up perfectly to the private sector employment data ADP collects.

Even though the government's nonfarm payrolls data will be released at 8:30 a.m. New York time Friday, investors may not ultimately find out who was closest until all revisions to the data come in. As we've seen, it took the Bureau of Labor Statistics more than a year to revise employment data for the months during the financial crisis, which isn't a big help to investors.

-- Written by Robert Holmes in Boston.

http://finance.yahoo.com/news/Which-November-Jobs-Report-tsmf-3215130537.html?x=0
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G M
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« Reply #1120 on: December 01, 2011, 02:58:16 PM »

Well, there is no way "the most transparent presidency evah" would cook the books to show a politically motivated drop in unemployment.
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Crafty_Dog
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« Reply #1121 on: December 01, 2011, 07:35:06 PM »

BBG:

That is a very interesting post.  If the bigger number is accurate, it lends strong support to the case that Wesbury has been making to general raspberries around here.  If not , , ,

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ccp
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« Reply #1122 on: December 02, 2011, 12:05:33 PM »

http://www.cnbc.com/id/45521793

Great news but who in their right mind believes the numbers?  Essentailly embezzling the numbers all it is.

We ain't seen nothing yet.   Wait till election 12 nears.  No one will know who to believe.
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Crafty_Dog
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« Reply #1123 on: December 02, 2011, 06:09:35 PM »



Date: 12/2/2011






Non-farm payrolls increased 120,000 in November and were up 192,000 including
revisions to September/October.  The consensus expected a gain of 125,000.
Private sector payrolls increased 140,000 in November.  Revisions to
September/October added 42,000, bringing the net gain to 182,000.  November gains
were led by retail (+50,000), restaurants and bars (+33,000), health and education
(+27,000), and temps (+22,000). The biggest decline was non-residential construction
(-12,000).
 
The unemployment rate plummeted to 8.6% from 9.0% in October.
 
Average weekly earnings – cash earnings, excluding benefits – declined
0.1% in November but are up 1.8% versus a year ago.
 
Implications:  The labor market continues to improve. Private payrolls increased
140,000 in November and a stronger 182,000 including upward revisions for September
and October. Upward revisions have been a recurring pattern for the past year. For
example, private payrolls for September were originally reported up 137,000 but have
since been revised to 220,000, and who can forget August when nonfarm payrolls were
originally reported at 0 but were revised up in September to 57,000 and again
revised in October to 104,000 jobs. The average upward revision in the past year has
been about 35,000. Over that period, private payrolls (including revisions) have an
average gain of 157,000. Civilian employment, an alternative measure of jobs that
factors in small business start-ups, increased 278,000 in November and is up an
average of 178,000 in the past year. Some pessimists say a “birth/death”
model is artificially inflating payroll gains, but the employment survey does not
use a birth/death model and that survey is even stronger. The gain in civilian
employment helped push the unemployment rate down to 8.6%. However, the drop in
unemployment was also due to a 315,000 decline in the labor force (people working or
looking for jobs). As a result, we think a portion of the drop in the jobless rate
may reverse next month, but not all of it. Another cautious note in today’s
report was that average hourly earnings dipped 0.1% in November, although they are
still up 1.8% from a year ago. That gain from a year ago, combined with a 2.1%
increase in the number of hours worked (meaning total worker earnings are up 3.9%
from a year ago) and a slowdown in the pace of debt reduction, is making it easier
for consumers to spend. In other recent news, automakers sold cars and light trucks
at a 13.6 million annual rate in November, up 2.8% from October and 11% from a year
ago. The economy is still far from operating at its full potential, but it is
clearly moving in the right direction.

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DougMacG
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« Reply #1124 on: December 02, 2011, 06:39:11 PM »

"Average weekly earnings ... declined 0.1% in November but are up 1.8% versus a year ago."

"the drop in unemployment was also due to a 315,000 decline in the labor force" (People quit looking for work, why?)

The current economic growth rate is around 2%, it was 2.5% last quarter.  Breakeven growth is roughly 3.1%.  Typical or healthy growth rate coming out of a downturn this large is much higher.  Average annual real GDP growth rate from 1983 to 1990 was 4.1% according to the Joint Economic Committee of congress:  http://www.heritage.org/research/reports/2001/03/the-real-reagan-economic-record
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bigdog
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« Reply #1125 on: December 02, 2011, 07:52:17 PM »

http://money.msn.com/top-stocks/post.aspx?post=e870b663-1471-467f-adc5-318f6cd40ea7
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G M
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« Reply #1126 on: December 02, 2011, 08:18:00 PM »


They day the music stops gets closer.
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Crafty_Dog
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« Reply #1127 on: December 02, 2011, 08:41:41 PM »



The U.S. added 120,000 jobs in November, but the unemployment rate posted a huge drop to 8.6% from 9% and a broader unemployment rate fell even more to 15.6% from 16.2%. Why?

The number of jobs added comes from a survey of establishment payrolls. The unemployment rate comes from a separate survey of U.S. households. The household survey is much smaller than the establishment survey, and as a result it can swing around a lot — and move the unemployment rate up and down when it does. That volatility is a big reason why economists usually, but not always, pay much more attention to the establishment report.

The unemployment rate is calculated based on people who are without jobs, who are available to work and who have actively sought work in the prior four weeks. The “actively looking for work” definition is fairly broad, including people who contacted an employer, employment agency, job center or friends; sent out resumes or filled out applications; or answered or placed ads, among other things. The rate is calculated by dividing that number by the total number of people in the labor force.

In October, the household survey showed the number of people unemployed fell by 594,000, but the labor force — the number of people working or looking for work — fell by a little more than half that amount. That means that though the number of employed people rose, a large group just stopped looking for work. That could be due to discouragement of the long-term unemployed or by choice over retirement or child care. So the decline in the unemployment rate to 8.6% was about half due to people finding jobs and half people dropping out.

Meanwhile, the broader unemployment rate, known as the “U-6″ for its data classification by the Labor Department, dropped by a 0.6 percentage point last month. The U-6 figure includes everyone in the official rate plus “marginally attached workers” — those who are neither working nor looking for work, but say they want a job and have looked for work recently; and people who are employed part-time for economic reasons, meaning they want full-time work but took a part-time schedule instead because that’s all they could find.

The key to the drop in the broader unemployment rate was due to a 378,000 drop in the number of people employed part time but who would prefer full-time work, that comes on top of a big drop in that category last month. That number could reflect people having their hours increased or part-time workers moving on to full time work.

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Crafty_Dog
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« Reply #1128 on: December 02, 2011, 08:46:25 PM »

second post of evening:

Just read BD's post.  Makes sense to me.
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ccp
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« Reply #1129 on: December 03, 2011, 11:39:15 AM »

Disability rolls are also on the rise.   People are leaving the work force and desparatly getting onto disability and taking the easy way out. 

I cannot seem to find number on this but I am suspect the Feds are allowing this to lower the unemployment numbers.

There is no way people are suddenly getting jobs in droves.

But Brockster takes the phoney numbers to Hawaii for some leisure time.

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DougMacG
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« Reply #1130 on: December 03, 2011, 01:20:12 PM »

"Just read BD's post.  Makes sense to me."

"All of this distracts from an emerging truth: The global economy is rapidly falling into a new recession."

True, and excellent data is presented.

We are a cause, not a victim, of the global downward trend, IMHO.  The only country capable of real leadership chose economic decline as a national economic policy and direction, and it is all interconnected.  Instead of fixing underlying problems, now we will monetize Europe? With what?
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G M
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« Reply #1131 on: December 03, 2011, 01:26:03 PM »

http://reason.com/blog/2011/12/01/federal-housing-authority-poised-to-re-s

Federal Housing Authority Poised to Re-Sink the Economy

Tim Cavanaugh | December 1, 2011


Back in the innocent days of 2007 or so, it was customary for experts to say that housing had led the recession and housing would lead us out. Whatever measure of truth there may have been in that cliché, the reality is that by refusing to accept the real estate correction as the healthful and decades-overdue solution it is, America’s leaders have created a new dynamic: Housing led us into the recession, and it continues to lead us into newer, deeper and more destructive recessions.
 
Last month Wharton School real estate finance professor Joseph Gyourko warned that the Federal Housing Authority is shaping up as the next likely target for a bailout. Although the full report [pdf] is worth reading, Gyourko’s central argument is pretty simple:
 

(1) FHA has become a much larger and riskier government entity since the housing crisis began because it has increased its risk exposure without anything close to a commensurate scaling up of its capital base; (2) it is underestimating future default risk and losses on its single-family mortgage guarantee portfolio by at least $50 billion;  and, (3) this should be corrected with an immediate recapitalization of FHA sufficient to compensate for the high risks it faces.
 
The FHA issued a rebuttal, noting that it had upped its assets by $400 million over the last year – a pittance, as Gyourko notes, compared to the $213 billion in new guarantees it issued over the same period.
 
We’ll just have to wait and see whether HUD Secretary Shaun Donovan ends up lassoing taxpayers to shore up the insolvent FHA, but one thing is for sure: Everything has gotten worse, and FHA’s policies have become even more reckless, since Gyourko’s report.
 
In the middle of the month, the Obama Administration even managed to walk back one of the few things it has done right: allowing the expanded conforming loan limit for “high-cost areas” to lapse. At the start of the real estate correction FHA upped its conforming loan limit (the mortgage amount the federal government guarantees) to $729,750. That emergency increase expired October 1, and the high-cost conforming loan limit dropped back to $625,500.
 
But in a tribute to the lobbying power of Realtors®, the conforming loan limit got jacked back up a few weeks ago. The move makes negative sense. (Why do you need to increase the subsidy when house prices continue to fall?) It’s also offensive to the broadly held belief that public assistance should be reserved for actual poor people: Presuming a 20 percent down payment, you’re talking about a house in the high $900k range being subsidized by taxpayers. Who mourns for the million-dollar starter home? Apparently we all do. 
 
It gets worse, however. In an email this morning, AEI Senior Fellow Edward Pinto, who has done crucial work on figuring out how the GSEs Fannie Mae and Freddie Mac defrauded taxpayers during the boom, reported on FHA’s recent financial deterioration:
 

•       In October 2011 17.02% of FHA loans were at some stage of delinquency.
 
–      Comparing October to September, FHA’s total delinquency (17.02% vs. 16.78%), 60-89 day (2.42% vs. 2.3%), and serious delinquency rates (9.05% vs. 8.77%) were all higher.
 
•       The increase in the 60-89 day rate is a leading indicator of future claims problems.
 
–      At 9.05%, the serious delinquency rate is now 0.8% higher than the 8.2% rate in June 2011 (Source:  HUD Neighborhood Watch and FHA Outlook Reports).
 
•       The June rate was used to prepare the recently released actuarial report.
 
–      As a result, there were about 75,000 more seriously delinquent FHA loans in October compared to June.   
 
•       The Actuarial Study notes that FHA’s forward single-family program has total capital resources of $28.2 billion offset by $27 billion in negative cash flows on its outstanding business (Study, p. 25).
 
–      This sounds reassuring; however a private company would be required to set aside this amount plus $13 billion more to cover expected losses from known 60+ day delinquent loans:
 
•       FHA is responsible for 100% of the losses on the loans it insures.  As a result its loss severities are extremely high.
 
•       In 2009 FHA experienced a 64% loss ratio (Study, p. E-2).
 
•       In October FHA had over 836,000 loans 60+ days delinquent with an estimated total outstanding balance of $117 billion (October 2011 HUD Neighborhood Watch).   
 
•       FHA would incur losses of $41 billion if 55% of these loans eventually go to claim and losses average 64% (calculation based on private mortgage insurance company reserving practices). 
 
•       This is $1.5 billion more than a similar calculation made for September. 2011.
 
–      FHA would need another $21 billion to meet its congressionally mandated 2% capital cushion.
 
Well maybe it’s darkest before the dawn. Or darkest before things go completely black. Or something. In any event, Lender Processing Services reports that the percentage of mortgages in foreclosure is at its highest level ever. “Foreclosure inventories are on the rise,” LPS writes, “reaching an all-time high at the end of October of 4.29 percent of all active mortgages.” LPS notes that lenders are still doing their best to drag out the foreclosure process:
 

The average days delinquent for loans in foreclosure extended as well, setting a new record of 631 days since last payment, while the average days delinquent for loans 90 or more days past due but not yet in foreclosure decreased for the second consecutive month.
 
That second part may actually be a small piece of good news if it indicates lenders are at least getting serious about getting foreclosures started. Housing won’t lead us out of the recession until the market hits rock bottom. Even Bob Shiller admits that we’re a long way from there. But we will get there eventually. It’s just a question of how long the feds want the torture to last.
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« Reply #1132 on: December 03, 2011, 05:24:55 PM »

Please post this in the Housing thread too.  Thank you.
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« Reply #1133 on: December 04, 2011, 12:42:47 PM »

http://www.tri-cityherald.com/2011/12/03/1739803/kennewick-construction-company.html


Kennewick construction company auctions itself off
 
By John Trumbo, Tri-City Herald
 



KENNEWICK -- It took Bob Bertsch 25 years to build his construction business and just a day for it all to go away.
 
Bertsch's Kennewick-based Ashley-Bertsch Group went on the auction block Friday at 9 a.m. By 4 p.m., Booker Auctions had sold off almost two dozen vehicles and trailers, tons of power tools and supplies, even the gas-fired fireplace in the office.
 
Bertsch, 65, said he is down-sizing because the tax burden got too expensive to stay in business.

After a quarter of a century of building a successful enterprise at 5903 W. Metaline Ave., Bertsch sat back and watched as about 200 people bid on what was left of his company -- boxes of electrical parts, a drafting desk, high-end office furniture, TVs, computers and even the phone system.
 
Anything that could be carried away, was.
 
"I am tired of carrying all the tax load," Bertsch said. "I renew 13 licenses here every year just so I can spend money in this city."
 
Bertsch makes no attempt to conceal his frustration with the costs government imposes on small businesses like his.
 
"Government is killing small business. We used to have 24 employees at our peak. Now, all of those people who used to work here are in unemployment lines," he said.

 
Seeing all his life work and hard-earned gain sold off wasn't easy, Bertsch said, but the sale was successful enough to ease the hurt.
 
"I wasn't as emotionally attached as I thought I'd be," Bertsch said at the end of the day while sitting in what used to be the company's conference room in the 5,000-square-foot office building.
 
Most of the auction action took place inside and outside a 4,000-square-foot warehouse.
 
The buildings and 3.2 acres of property already had been sold. The Kennewick School District paid $960,000 and plans to expand the Tri-Tech campus on Kellogg Street to the site, Bertsch said.
 
Bertsch, who is a commissioner for the Benton Public Utility District, said selling off the company's assets doesn't mean he is retiring.
 
"I like what I do. All of my work has been relationship-based, with mostly referrals and negotiated jobs," said Bertsch, who expects he will be doing much of the same in his home-based, husband-and-wife operation.
 
Bertsch told a friend at the auction he is selling out because government was taking more out of his business than he was.
 
But auctioneer Merle Booker said Bertsch's wife put it differently.
 
"She said Bob told her he was shedding his skin," Booker said. "I'm not retiring. Just slowing down."


Read more: http://www.tri-cityherald.com/2011/12/03/1739803/kennewick-construction-company.html
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« Reply #1134 on: December 07, 2011, 06:40:59 PM »

http://www.cnbc.com/id/45569450/

Six More Reasons Why Jobs Market Is Still Bad

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« Reply #1135 on: December 09, 2011, 10:07:46 AM »

The trade deficit in goods and services shrank to $43.5 billion in October To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 12/9/2011
The trade deficit in goods and services shrank to $43.5 billion in October, close to the consensus expected deficit of $43.9 billion.
Exports declined $1.5 billion in October, led by gold. Imports dropped $2.2 billion, led by petroleum and autos/parts. The decline in petroleum imports was mostly due to volume, but also due to a slight decline in price.
 
In the last year, exports are up 12.3% while imports are up 11.9%.
 
The monthly trade deficit is $4.0 billion larger than a year ago. However, adjusted for inflation, the trade deficit in goods is $1.8 billion smaller than last year.  This is the trade measure that is most important for measuring real GDP.
 
Implications: We have known for some time that consumer spending and business investment have been growing. But it’s always an open question whether the production related to that spending is coming from the US or abroad. Today’s trade data for October show that an increasing share of what consumers and businesses are buying is being made here. Unless these figures are reversed sharply for November or December, net exports will add significantly to real GDP growth in the fourth quarter. Both exports and imports slipped in October, but imports slipped more, largely due to lower oil volume. The “real” (inflation-adjusted) trade deficit in goods has been shrinking in the past year. That shows greater US competitiveness. Usually, this measure of the trade deficit expands when our economy is growing. The improvement may reflect the large depreciation in the US dollar versus a decade ago. The problem is that this large dollar depreciation is also consistent with higher inflation, for which we will ultimately pay a price. Although the total volume of exports and imports declined slightly in October, the decline was from a record high set in September and was not a large change given normal month-to-month fluctuations. In other words, there is no sign that financial problems in Europe are hurting the ability of companies to do cross-border trade. In other recent news, new claims for jobless benefits declined 23,000 last week to 381,000. With the exception of one week back in February, it’s the lowest since July 2008, even before Lehman Brothers collapsed. Continuing claims for regular state benefits dropped 174,000 to 3.58 million. Meanwhile, same-store chain store sales keep rising: up 3.8% versus a year ago according to the International Council of Shopping Centers and up 3.2% according to Redbook Research.
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« Reply #1136 on: December 12, 2011, 01:55:54 PM »


This strikes me as pretty plausible, and the political consequences quite spinnable by His Glibness , , ,

=======================
Monday Morning Outlook
________________________________________
Obama's 8%: Sounds Right To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 12/12/2011
Given his advisers’ track record, you would think President Obama would be very cautious when making predictions about the unemployment rate. Back in January 2009, fresh off his inauguration, his economic team forecast that the $800 billion “stimulus” bill would keep the jobless rate below 8%.
As we all now know, even though the “stimulus” bill was fully implemented, the jobless rate kept heading north, peaking at 10.1% in October 2009 and never once falling even remotely close to 8%. Nevertheless, President Obama is doing it again and predicting unemployment will be 8% around Election Day.
 
This time, we think he’s right.
 
It’s important to recognize that 8% unemployment is not good. The unemployment rate was lower than 8% for 25 straight years, from early 1984 through early 2009. During that time no one would have been proud of an 8% jobless rate.
 
The difference between then and now is the size of government. Spending, regulation and expanded jobless benefits have made the US look more like Europe, where even in the best of times unemployment rates rarely fall below 7%. Nonetheless, the US economy is growing today, it is creating new jobs, and unemployment will continue to fall in the months ahead just as the President has predicted.
 
Here’s why we think 8% makes sense. Just two years ago, in the last quarter of 2009, the jobless rate averaged 10%. In the current quarter, unemployment will probably end up averaging 8.8%. (We look for an 8.7% rate in December).
 
That’s a drop of 1.2 percentage points over two years, when real GDP was growing around 2.5% per year. And notice that the drop in the jobless rate was not due to people leaving the labor force. The labor force is up slightly versus two years ago.     
 
We think the economy will grow in the 3 to 3.5% range in 2012, which makes a drop to an 8% unemployment rate a sensible forecast. Faster economic growth should generate a faster decline in the jobless rate. And remember, this faster growth is occurring without a new stimulus bill and without QE3. The fact that the government has done nothing new in the past few quarters is helping the economy accelerate again.
 
Some analysts keep waiting for a large surge in the labor force (more people looking for work), which would drive the unemployment rate up again, or at least makes it tough to get the jobless rate down further. But that’s unlikely.
 
The aging of the Baby Boom generation started putting downward pressure on the labor force participation rate about a decade ago and that process will continue. Any increase in the labor force in the year ahead should be modest compared to prior economic expansions.
 
Bottom-line: We think President Obama is right about the 8% unemployment rate. What’s interesting is that so many people have been so negative about the economy for so long that 8% is going to feel like a huge victory, even when it isn’t. This is the problem with creating negative expectations…even slight improvement could be considered a victory.


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« Reply #1137 on: December 12, 2011, 03:36:02 PM »


This strikes me as pretty plausible, and the political consequences quite spinnable by His Glibness , , ,


**I wonder if Wesbury is actually Krugman in a "Mission Impossible" type mask......

http://www.washingtonpost.com/blogs/ezra-klein/post/wonkbook-the-real-unemployment-rate-is-11-percent/2011/12/12/gIQAuctPpO_blog.html

Wonkbook: The real unemployment rate is 11 percent

Posted by Ezra Kleinat 07:51 AM ET, 12/12/2011


Typically, I try to tie the beginning of Wonkbook to the news. But today, the most important sentence isn't a report on something that just happened, but a fresh look at something that's been happening for the last three years. In particular, it's this sentence by the Financial Times' Ed Luce, who writes, "According to government statistics, if the same number of people were seeking work today as in 2007, the jobless rate would be 11 percent."

Remember that the unemployment rate is not "how many people don't have jobs?", but "how many people don't have jobs and are actively looking for them?" Let's say you've been looking fruitlessly for five months and realize you've exhausted every job listing in your area. Discouraged, you stop looking, at least for the moment. According to the government, you're no longer unemployed. Congratulations?

Since 2007, the percent of the population that either has a job or is actively looking for one has fallen from 62.7 percent to 58.5 percent. That's millions of workers leaving the workforce, and it's not because they've become sick or old or infirm. It's because they can't find a job, and so they've stopped trying. That's where Luce's calculation comes from. If 62.7 percent of the country was still counted as in the workforce, unemployment would be 11 percent. In that sense, the real unemployment rate -- the apples-to-apples unemployment rate -- is probably 11 percent. And the real un- and underemployed rate -- the so-called "U6" -- is near 20 percent.

There were some celebrations when the unemployment rate dropped last month. But much of that drop was people leaving the labor force. The surprising truth is that when the labor market really recovers, the unemployment rate will actually rise, albeit only temporarily, as discouraged workers start searching for jobs again.
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« Reply #1138 on: December 12, 2011, 04:49:03 PM »

GM:

Your point/the point of the piece you post, is quite correct.

I am looking to make an additional point-- which is that the number which is currently 8.6% is the number which people track; just as people (including me I might add) tend to follow "the DOW average" instead of the "S&P 500"-- which is a decidedly better overall metric.  If people see if falling from 10+% to 8.0% (or even 7.9%) His Glibness will be all over it like white on rice and like stink on excrement selling it as "See, I inherited a terrible mess but I have managed to turn things around and now we are in the right direction.  Give me another 4 years to fininsh the job.  Don't put back in the people who got us into this mess in the first place!"
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« Reply #1139 on: December 12, 2011, 08:33:56 PM »

GM:

Your point/the point of the piece you post, is quite correct.

I am looking to make an additional point-- which is that the number which is currently 8.6% is the number which people track; just as people (including me I might add) tend to follow "the DOW average" instead of the "S&P 500"-- which is a decidedly better overall metric.  If people see if falling from 10+% to 8.0% (or even 7.9%) His Glibness will be all over it like white on rice and like stink on excrement selling it as "See, I inherited a terrible mess but I have managed to turn things around and now we are in the right direction.  Give me another 4 years to fininsh the job.  Don't put back in the people who got us into this mess in the first place!"

**Short of the koolaid drinking O-zombies, most people will notice their plummeting economic conditions, no matter what the MSM-DNC spins.

http://finance.yahoo.com/news/plummeting-income-shaves-household-cash-050010589.html

Plummeting income shaves household cash
By Frank Bass and Timothy R. Homan | Bloomberg – Thu, Dec 8, 2011 1:19 PM EST.. .
.
The housing market collapse, historically low interest rates and corporations stingy with dividends helped cut the median household income in two of every three U.S. counties, the U.S. Census Bureau reported today.

The number of American households that made money from rent, interest or dividends fell by one-third to 24.2 percent in 2010, including residents of counties that encompass New York City and San Francisco.

The census figures capture the lost financial opportunity experienced by Americans during a decade that saw the dot-com bust and then the worst recession since the Great Depression.

"We were expecting back in 2000 that our 401(k) would grow 4 to 6 percent a year," said Gayle Thompkins, 68, a resident of Green Valley, Arizona, whose husband used to work for Dow Chemical Co. (DOW) when the couple lived in Michigan. "Right now, if we break even, we'll feel lucky."

The plunge in the number of households with dividend, interest or rental income spanned the country, falling to 29.8 percent from 39 percent in 2000 in Manhattan; dropping to 13.1 percent from 23.5 percent in Miami; and declining to 50.3 percent from 69.6 percent in Anchorage.

"Over the last decade, income provided by financial market returns has declined, and pretty meaningfully," Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, said in a telephone interview. "Consumer incomes are beginning the decade off at a lower starting point."

Alaska Cushion

The census figures were released as part of the five-year version of the American Community Survey, an annual poll of 3.5 million U.S. households that replaced the decennial census long- form survey.

In 2000, 16 counties with more than 100,000 households had a majority report they received income from interest, dividends or rentals. Anchorage, where full-time residents last year received an average $1,281 dividend from a state fund created by oil revenue, was the only one in 2010.

Nationwide, median household income fell to $51,914, a $2,678 drop over the decade when adjusted for inflation. Black households lost the most, with median household income falling 8 percent to $35,194. Hispanics reported $41,354, a 5.5 percent drop. The figure for white, non-Hispanic households fell to $56,466, a 4.3 percent decrease over the decade. Asian households reported $68,950, a 2.2 percent gain.

Impact on Affluent

Households in traditionally affluent areas, such as the New Jersey suburbs of Hunterdon, Somerset and Morris counties -- the sixth, ninth and 10th-wealthiest in the nation -- showed median income losses over the decade. Incomes fell in Westchester County, New York, to $79,619, a $3,037 drop; Putnam County, to $89,218, a $4,744 decline; and $82,534 in Rockland County, a $5,828 fall.

The greatest declines occurred in Great Lakes states and southern Appalachia. People in 82 of Michigan's 83 counties reported their household incomes dropped between 2000 and 2010. Households in Livingston County, a Detroit suburb, registered the largest drop in the nation, with incomes falling to $72,129, a $15,491 decrease from the 2000 real median of $87,620.

"This is the absolute nadir for us," said Lou Glazer, president of Michigan Future Inc., an Ann Arbor-based non-profit research group. During the last decade, 94 percent of the state's income growth came from government payments rather than private-industry sources, Glazer said.

Declining Dividend Payouts

Dividend payouts declined for the broader U.S. market between 2003 and 2010. The amount of dividends paid out as a percent of net income declined to 55.5 percent from 80.5 percent in that period, according to Russell 3000 Index data compiled by Bloomberg.

Prices for existing U.S. homes fell over the decade in one of five U.S. counties, according to data compiled by Bloomberg. Pitkin County, Colorado, homeowners were hardest hit. The median value of a home in the central Colorado county, home to the Aspen/Snowmass ski complex, fell $304,800, almost 10 times the decline in Oakland County, Michigan, the second-biggest loser.

The median sales price was $1.2 million for the 63 homes sold during the third quarter of 2010 in the Aspen area, said Ryan McMaken, chief economist for the Colorado Division of Housing. During the third quarter of 2011, 68 homes were sold with a median sales price of $637,000, he said.

"There aren't a lot of fire sales, but there hasn't been the sort of demand that existed prior to the financial crisis," McMaken said. "It's pretty clear there have been some declines."

Real-Estate Hangover

Even counties that gained the most during the real estate boom didn't end the decade much better. The median value of a home in Maricopa County, Arizona, climbed to $238,600 from an inflation-adjusted $167,960 in 2000, a 4.2 percent annual return over the decade.

The next decade isn't starting well for the next generation of workers, the census data showed. Civilian unemployment among 16 to 24 year olds rose to 16.7 percent in 2010, almost double the November U.S. jobless rate of 8.6 percent and a 23.7 percent increase from a decade ago.

In 2000, two counties had a young adult unemployment rate that topped 50 percent. Ten years later, 18 counties reported a majority of unemployed among 16 to 24 year olds. Carroll County in Mississippi's Delta region reported the nation's highest youth unemployment rate in 2010, rising to 81.7 percent from 22.4 percent in 2000.

The Bureau of Labor Statistics reported in June 2010 that younger workers made up 13.9 percent of the total labor force and 19.5 percent of all workers unemployed for 27 months or more.

"The fact that a huge portion of the unemployed have been out of work for more than a year really suggests that the income stagnation is a long-term phenomenon," said LeBas of Janney Montgomery Scott.

To contact the reporters on this story: Frank Bass in Washington at fbass1@bloomberg.net; Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Flynn McRoberts in Chicago at fmcroberts1@bloomberg.net
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« Reply #1140 on: December 12, 2011, 08:46:14 PM »

#Invalid YouTube Link#

http://www.youtube.com/watch?feature=player_embedded&v=P36x8rTb3jI

Koolaid bitter yet?
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« Reply #1141 on: December 12, 2011, 08:57:03 PM »



http://www.youtube.com/watch?v=6jJvkkNmR_8&feature=player_embedded#!

Ah, the glory days of 2009.
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« Reply #1142 on: December 12, 2011, 10:24:47 PM »

Careful GM.  Bret Baier report today reported that the deficit is on track to come in under $1T this year.  This is about 33% down from the peak.  Another $250B and the statement will be true.
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« Reply #1143 on: December 12, 2011, 11:39:13 PM »

"Careful GM.  Bret Baier report today reported that the deficit is on track to come in under $1T this year.  This is about 33% down from the peak.  Another $250B and the statement will be true."

Baier is likely referring to the fiscal year with 10 months remaining and Obama is saying rather specifically: half of 1.3T ($650 billion) within his first term, which really is this fiscal year.  Not spoken in the numbers is the total amount added to the debt, which is his central point - the burden of paying the interest.

Another lead indicator of misery subsiding will be the food stamp count, up more than 50% under Pres. Obama.  Economic growth at the main street / kitchen table level is measured in number or percentage of families not needing assistance on something as basic as food - or health care.

Food stamp recipients at record
Recession, disasters, Obamanomics drive spike in assistance

THE WASHINGTON POST Thursday December 8, 2011

WASHINGTON — The nation’s struggling economy and an uptick in natural disasters have prompted more Americans than ever to apply for federal food aid.

More than 46.3 million people received a total of $75.3 billion from the Supplemental Nutrition Assistance Program, formerly known as food stamps, in fiscal 2011, according to U.S. Agriculture Department statistics released on Monday.
-------------------------
Flashback 3 years:

Food stamps recipients nearing record 30 million
November 26, 2008|WASHINGTON POST

WASHINGTON — Fueled by rising unemployment and food prices, the number of Americans on food stamps is poised to exceed 30 million for the first time this month, surpassing the historic high set in 2005 after Hurricane Katrina.

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« Reply #1144 on: December 13, 2011, 07:59:30 AM »


http://news.investors.com/Article.aspx?id=594554&p=1

Obama Also Lists Clinton for Lousy Recovery

  Posted 12/12/2011 06:43 PM ET




Economy: No longer content to blame President Bush for the country's economic ills, President Obama now accuses his Democratic predecessor of being a co-conspirator. Will he stop at nothing to escape responsibility?
 
In his "60 Minutes" interview this weekend, Obama claimed the economy is suffering "structural problems that have been building up for two decades."
 
Let's see, in the past 20 years we've had three previous presidents, one of whom was two-term Democrat Bill Clinton.
 
Of course, Obama doesn't really mean to say Clinton is at fault. After all, he's tapped several Clinton alumni to advise him, including Gene Sperling, who has served as head of the National Economic Council in both administrations.
 
All Obama's trying to do here is give himself a bigger excuse for the fact that his own policies have completely failed. After all, how can anyone expect him to produce strong growth after decades of economic mismanagement?
 
"I've always believed that this was a long-term project," Obama told CBS's Steve Kroft, and that it "was gonna take more than a year. It was gonna take more than two years."
 
The problem is that, once upon a time, Obama was saying pretty much the exact opposite. Examples:
 
• On Feb. 2, 2009, Obama told the "Today Show" that "a year from now I think people are gonna see that we're starting to make some progress," and that "if I don't have this done in three years, then there's going to be a one-term proposition."
 
On Feb. 12, 2009, he predicted that his $830 billion stimulus would "ignite spending by businesses and consumers" and unleash "a new wave of innovation, activity and construction ... all across America."
 
• On Feb. 26, 2009, Obama's first budget projected that by 2011 the economy would be cooking ahead at 4% real GDP growth, with unemployment at 7.1% and falling fast.
 
• On Feb. 7, 2010, he said "we are seeing the corner turn and the economy growing again."
 
• On June 4, 2010, Obama claimed the "economy is getting stronger by the day" and later that month said the recovery was "well under way."
 
It was only when the agonizingly slow pace of the recovery became obvious to everyone that Obama started pleading for patience and looking for someone or something else to blame.
 
And the longer the slog dragged on, the further back in time Obama has had to go with his finger pointing to affix blame.
 
The truth is, no one is to blame for the country's prolonged economic misery other than the current occupant of the White House.
 
Obama's prescription — massive spending, vast new regulations, a health care takeover and class warfare — has produced a recovery so weak that unemployment's never fallen below 8.6% since the recession ended 29 months ago, and GDP is a mere 0.1% above its pre-recession peak.
 
Now Obama is warning that dark clouds will last for years.
 
In contrast, when President Reagan confronted a comparably painful recession — the 1981-82 downturn lasted 16 months with unemployment peaking at 10.8% — he took the exact opposite approach.
 
Reagan cut taxes, deregulated the economy, championed the free market and worked to rein in spending during his two terms.
 
The result was that by this stage of the recovery, unemployment was just 7.3%, real GDP was 12% above its pre-recession peak, and Reagan was boasting that it was morning in America again.
 
In his "60 Minutes" interview, Obama said it could take "more than one president" to fix the economy.
 
He certainly has that part of the story right. And with any luck, that next president will be sworn in 13 months from now.
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WSJ
« Reply #1145 on: December 13, 2011, 10:59:17 AM »

By CONOR DOUGHERTY
The U.S. economy is on track to grow faster in the current quarter than any time since the second quarter of last year, though several risks—including a possible meltdown in Europe—are clouding the outlook.

In recent days, a number of economists have increased estimates for fourth-quarter growth, pointing to stronger-than-expected readings on trade, consumer spending and other gauges. Forecasting firm Macroeconomic Advisers on Friday raised its estimate to 3.7%, from 3.5%, while Goldman Sachs has raised its target to 3.4% from the 2.5% it was predicting two weeks ago.

Nomura Global Economics lifted its target from 3.7% to 3.9%, which, if achieved, would match the fastest quarterly growth of the recovery.

This pace of growth is much stronger than economists were expecting a few months ago, when Europe's sovereign-debt problems started getting worse. A Wall Street Journal survey of economists in October showed they expected growth of just 2% in the fourth quarter. There was good reason for the subdued projection, including a third quarter that sparked little hope of an accelerating economy. Stock-market gyrations earlier this year erased huge amounts of wealth, while weak housing and job markets constrained consumer confidence.

But the economy looks much better now. The stock market has made up much of its losses, although new worries about Europe sent indexes lower Monday, and consumer sentiment has improved, prompting consumers to dip into savings and continue spending. Companies are not only selling more, they're restocking shelves when they become too lean. Retail sales rose 0.5% in October and were up 7.2% from the same month last year, according to the Commerce Department. Economists surveyed by Dow Jones Newswires estimate another 0.5% gain when November's retail-sales figures are released Tuesday.

A few months ago, Alan Levenson, chief economist at T. Rowe Price, predicted fourth-quarter growth would come in below 2%—a contrast with his current forecast of 3.5% to 4%.

That updated outlook comes with significant caveats. "My caution is that 3.5% is not the new trend and we're expecting substantial slowing to below 2% in the beginning of next year," he said.

Most economists see more reasons for caution than optimism. In the most recent Wall Street Journal survey, conducted in late November and released last week, 92% of economists said the euro zone now is in recession or faces an imminent recession. A number of manufacturing reports suggest growth has slowed in overseas economies including China and Brazil. In addition to a slowing manufacturing sector, China's cooling real-estate market could damp domestic demand.

Many forecasters also doubt that U.S. consumers can keep spending at their current pace. Home values continue to fall. The personal savings rate, after moving up sharply in the wake of the financial crisis, is heading back down. Americans saved 3.5% of their after-tax income in October, down from 5.2% at the start of the year.

Despite what is shaping up to be a strong fourth quarter, economists surveyed by the Journal said they expect a slowdown in the beginning of next year. They predict growth of 2.1% in the first quarter.

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Body-by-Guinness
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« Reply #1146 on: December 14, 2011, 11:19:19 AM »

Interesting rumination over what the unemployment rate would be if those who had stopped looking were counted:

http://www.shotsacrossthebow.com/index.php/site/comments/whats_the_real_unemployment_rate/
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ccp
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« Reply #1147 on: December 21, 2011, 12:54:50 PM »

A little bit long winded but worth the read for a history lesson on a government/private business that affected world history.
There are many present day comparisons in China, Russia, Venezuela, Brazil, oand others and some more occult situations in the US such as GE and Obama administration:


*****The East India Company
The Company that ruled the waves
As state-backed firms once again become forces in global business, we ask what they can learn from the greatest of them all
Dec 17th 2011 | from the print edition

A POPULAR parlour game among historians is debating when the modern world began. Was it when Johannes Gutenberg invented the printing press, in 1440? Or when Christopher Columbus discovered America, in 1492? Or when Martin Luther published his 95 theses, in 1517? All popular choices. But there is a strong case to be made for a less conventional answer: the modern world began on a freezing New Year’s Eve, in 1600, when Elizabeth I granted a company of 218 merchants a monopoly of trade to the east of the Cape of Good Hope.

The East India Company foreshadowed the modern world in all sorts of striking ways. It was one of the first companies to offer limited liability to its shareholders. It laid the foundations of the British empire. It spawned Company Man. And—particularly relevant at the moment—it was the first state-backed company to make its mark on the world.

Twenty years ago, as the state abandoned the commanding heights of the economy in the name of privatisation and deregulation, it looked as if these public-private hybrids were doomed. Today they are flourishing in the emerging world’s dynamic economies and striding out onto the global stage.

State-controlled companies account for 80% of the market capitalisation of the Chinese stockmarket, more than 60% of Russia’s, and 35% of Brazil’s. They make up 19 of the world’s 100 biggest multinational companies and 28 of the top 100 among emerging markets. World-class state companies can be found in almost every industry. China Mobile serves 600m customers. Saudi Arabia’s SABIC is one of the world’s most profitable chemical companies. Emirates airlines is growing at 20% a year. Thirteen of the world’s biggest oil companies are state-controlled. So is the world’s biggest natural-gas company, Gazprom.

State-owned companies will continue to thrive. The emerging markets that they prosper in are expected to grow at 5.5% a year compared with the rich world’s 1.6%, and the model is increasingly popular. The Chinese and Russian governments are leading a fashion for using the state’s power to produce national champions in a growing range of “strategic” industries.

The parallels between the East India Company and today’s state-owned firms are not exact, to be sure. The East India Company controlled a standing army of some 200,000 men, more than most European states. None of today’s state-owned companies has yet gone this far, though the China National Offshore Oil Corporation (CNOOC) has employed former People’s Liberation Army troops to protect oil wells in Sudan. The British government did not own shares in the Company (though prominent courtiers and politicians certainly did). Today’s state-capitalist governments hold huge blocks of shares in their favourite companies.

Otherwise the similarities are striking. Both the Company and its modern descendants serve two masters, keeping one eye on their share price and the other on their political patrons. Many of today’s state-owned companies are monopolies or quasi-monopolies: Brazil’s Petrobras, China Mobile, China State Construction Engineering Corporation and Mexico’s Federal Electricity Commission, to name but a few of the mongrel giants that bestride the business world these days. Many are enthusiastic globalisers, venturing abroad partly as moneymaking organisations and partly as quasi-official agents of their home governments. Many are keen not only on getting their government to provide them with soft loans and diplomatic muscle but also on building infrastructure—roads, hospitals and schools—in return for guaranteed access to raw materials. Although the East India Company flourished a very long time ago, in a very different world, its growth, longevity and demise have lessons for those who run today’s state companies and debate their future, lessons about the benefits of linking a company’s interests to a nation’s and the dangers of doing so.

The gifts of government

One of the benefits the Company derived from its relations with the state was limited liability. Before the rise of state-backed companies, businesses had imposed unlimited liability on their investors. If things went wrong, creditors could come after them for everything they possessed, down to their cufflinks, and have them imprisoned if they failed to pay. Some firms had already been granted limited liability, and the Company’s officers persuaded Queen Elizabeth that it should be given this handy status too.
A second benefit of state backing was monopoly. In the 17th century, round-the-world voyages were rather like space missions today. They involved huge upfront costs and huge risks. Monopoly provided at least a modicum of security. The third benefit was military might. The Company’s Dutch and Portuguese competitors could all call on the power of their respective navies. The English needed to do likewise in order to unlock investors’ purses.

Still, getting into bed with the government was risky for the Company. It meant getting close to courtiers who wanted to extract revenue from it and exposing itself to politicians who wanted to rewrite its charter. The Whig revolutionaries who deposed James II in 1688 briefly promoted a competing outfit that the Company first fought and eventually absorbed. Rival merchants lobbied courtiers to undermine its monopoly. But for the most part it dealt with these political problems brilliantly. Indeed its most valuable skill—its “core competence” in the phrase beloved of management theorists—was less its ability to arrange long-distance voyages to India and beyond than its ability to manage the politicians back home.

The Company created a powerful East India lobby in Parliament, a caucus of MPs who had either directly or indirectly profited from its business and who constituted, in Edmund Burke’s opinion, one of the most united and formidable forces in British politics. It also made regular gifts to the Court: “All who could help or hurt at Court,” wrote Lord Macaulay, “ministers, mistresses, priests, were kept in good humour by presents of shawls and silks, birds’ nests and attar of roses, bulses of diamonds and bags of guineas.” It also made timely gifts to the Treasury whenever the state faced bankruptcy. In short, it acted as what George Dempster, a stockholder, called a “great money engine of state”.

The Company was just as adept at playing politics abroad. It distributed bribes liberally: the merchants offered to provide an English virgin for the Sultan of Achin’s harem, for example, before James I intervened. And where it could not bribe it bullied, using soldiers paid for by Indian taxes to duff up recalcitrant rulers. Yet it recognised that its most powerful bargaining chip, both home and abroad, was its ability to provide temporarily embarrassed rulers with the money they needed to pay their bills. In an era when governments lacked the resources of the modern tax-and-spend state, the state-backed company was a backstop against bankruptcy.

State-backed monopolies are apt to run to fat and lose their animal spirits. The Company was a model of economy and austerity that modern managers would do well to emulate. For the first 20 years of its life it operated out of the home of its governor, Sir Thomas Smythe. Even when it had become the world’s greatest commercial operation it remained remarkably lean. It ruled millions of people from a tiny headquarters, staffed by 159 in 1785 and 241 in 1813. Its managers reiterated the importance of frugality, economy and simplicity with a metronomic frequency, and imposed periodic bouts of austerity: in 1816, for example, they turned Saturday from a half to a full working day and abolished the staff’s annual turtle feast.

The Company’s success in preserving its animal spirits owed more to necessity than to cunning. In a world in which letters could take two years to travel to and fro and in which the minions knew infinitely more about what was going on than did their masters, efforts at micromanagement were largely futile.

Adam Smith denounced the Company as a bloodstained monopoly: “burdensome”, “useless” and responsible for grotesque massacres in BengalThe Company improvised a version of what Tom Peters, a management guru, has dubbed “tight-loose management”. It forced its employees to post a large bond in case they went off the rails, and bombarded them with detailed instructions about things like the precise stiffness of packaging. But it also leavened control with freedom. Employees were allowed not only to choose how to fulfil their orders, but also to trade on their own account. This ensured that the Company was not one but two organisations: a hierarchy with its centre of gravity in London and a franchise of independent entrepreneurs with innumerable centres of gravity scattered across the east. Many Company men did extremely well out of this “tight-loose” arrangement, turning themselves into nabobs, as the new rich of the era were called, and scattering McMansions across rural England.

Money and meritocracy

The Company repaid the state not just in taxes and tariffs, but also in ideas. It was one of the 18th and 19th centuries’ great innovators in the art of governing—more innovative by some way than the British government, not to mention its continental rivals, and outgunned only by the former colonies of America. The Company pioneered the art of government by writing and government by record, to paraphrase Burke. Its dispatches to and from India for the 15 years after 1814 fill 12,414 leather-bound volumes. It created Britain’s largest cadre of civil servants, a term it invented.

State-backed enterprises risk getting stuffed with powerful politicians’ half-witted nephews. The Company not only avoided this but also, in an age when power and money were both largely inherited, it pioneered appointment by merit. It offered positions to all-comers on the basis of exam performance. It recruited some of the country’s leading intellectuals, such as Edward Strachey, Thomas Love Peacock and both James and John Stuart Mill—the latter starting, at the age of 17, in the department that corresponded with the central administration in India, and rising, as his father had, to head it, on the eve of the Company’s extinction.

The Company also established a feeder college—Haileybury—so that it could recruit bright schoolboys and train them to flourish in, and run, India. These high-minded civil servants both prolonged the Company’s life when Victorian opinion was turning ever more strongly against it and also provided a model for the Indian and domestic civil service.

The Company liked to think of itself as having the best of both private and public worlds—the excitement and rewards of commercial life, on the one hand, and the dignity and security of an arm of the state on the other. But the best of both worlds can easily turn into the worst.

The perils of imperialisation

In the end, it was not rapacious politicians who killed the Company, but the greed and power of its managers and shareholders. In 1757 Sir Robert Clive won the battle of Plassey and delivered the government of Bengal to the Company. This produced a guaranteed income from Bengal’s taxpayers, but it also dragged the Company ever deeper into the business of government. The Company continued to flourish as a commercial enterprise in China and the Far East. But its overall character was increasingly determined by its administrative obligations in India. Revenue replaced commerce as the Company’s first concern. Tax rolls replaced business ledgers. Arsenals replaced warehouses. C.N. Parkinson summarised how far it had strayed, by 1800, from its commercial purpose: “How was the East India Company controlled? By the government. What was its object? To collect taxes. How was its object attained? By means of a standing army. What were its employees? Soldiers, mostly; the rest, Civil Servants.”


 Sir Robert Clive with wife, daughter and local help
The Company’s growing involvement in politics infuriated its mighty army of critics still further. How could it justify having a monopoly of trade as well as the right to tax the citizens of India? And how could a commercial organisation justify ruling 90m Indians, controlling 70m acres (243,000 square kilometres) of land, issuing its own coins, complete with the Company crest, and supporting an army of 200,000 men, all of which the East India Company did by 1800? Adam Smith denounced the Company as a bloodstained monopoly: “burdensome”, “useless” and responsible for grotesque massacres in Bengal. Anti-Company opinion hardened further in 1770 when a famine wiped out a third of the population of Bengal, reducing local productivity, depressing the Company’s business and eventually forcing it to go cap in hand to the British government to avoid bankruptcy.

The government subjected the Company to ever-tighter supervision, partly because it resented bailing it out, partly because it was troubled by the argument that a company had no business in running a continent. Supervision inexorably led to regulation and regulation to nationalisation (or imperialisation). In 1784 the government established a board to direct the Company’s directors. In 1813 it removed its monopoly of trade with India. In 1833 it removed its monopoly of trade with China and banned it from trading in India entirely. In 1858, the year after the Indian mutiny vindicated the Company’s critics, the government took over all administrative duties in India. The Company’s headquarters in London, East India House, was demolished in 1862. It paid its last dividend in 1873 and was finally put out of its misery in 1874. Thus an organisation that had been given life by the state was eventually extinguished by it.

A dangerous connection

Ever since its ignominious collapse the Company has been treated as an historical curiosity—an “anomaly without a parallel in the history of the world”, as one commentator put it in 1858, a push-me pull-you the like of which the world would never see again. But these days similarly strange creatures are popping up everywhere. The East India Company is being transformed from an historical curiosity into a highly relevant case study.

The Company’s history shows that liberals may be far too pessimistic (if that is the right word) about the ability of state monopolies to remain healthy. The Company lasted for far longer than most private companies precisely because it had two patrons to choose from—prospering from trade in good times and turning to the government for help in bad ones. It also showed that it is quite possible to rely on the government for support while at the same time remaining relatively lean and inventive.

But the Company’s history also shows that mercantilists may be far too optimistic about state companies’ ability to avoid being corrupted by politics. The merchants who ran the East India Company repeatedly emphasised that they had no intention of ruling India. They were men of business who only dabbled in politics out of necessity. Nevertheless, as rival state companies tried to muscle in on their business and local princelings turned out to be either incompetent or recalcitrant, they ended up taking huge swathes of the emerging world under their direct control, all in the name of commerce.

The Chinese state-owned companies that are causing such a stir everywhere from the Hong Kong Stock Exchange (where they account for some of the biggest recent flotations) to the dodgiest parts of Sudan (where they are some of the few business organisations brave enough to tread) are no different from their East Indian forebears. They say that they are only in business for the sake of business. They dismiss their political connections as a mere bagatelle. The history of the East India Company suggests that it won’t work out that way.*****
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Crafty_Dog
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« Reply #1148 on: December 21, 2011, 02:48:51 PM »

That is a very interesting article and a worthy point of reference concerning what seems to me a very important question-- which is what becomes of free market companies in a world economy increasingly played by GSEs?

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DougMacG
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« Reply #1149 on: December 29, 2011, 10:49:04 AM »

"They miss growth when it is absent. They don't appreciate it so much when it is happening."

Voters want growth, not income redistribution
by Michael Barone


"A 2008 election widely regarded as heralding a shift toward the more government-friendly public sentiment of the New Deal and Great Society eras seems to have yielded just the reverse."

So writes William Galston, Brookings Institution scholar and deputy domestic adviser in the Clinton White House, in the New Republic. Galston, one of the smartest political and policy analysts around, has strong evidence for this conclusion.

He cites a recent Gallup poll showing that while 82 percent of Americans think it's extremely or very important to "grow and expand the economy" and 70 percent say it's similarly important to "increase equality of opportunity for people to get ahead," only 46 percent say it's important to "reduce the income and wealth gap between the rich and the poor" and 54 percent say this is only somewhat or not important.

In addition, by a 52 to 45 percent margin, Americans see the gap between the rich and the poor as an acceptable part of the economic system rather than a problem that needs to be fixed. In 1998, during the high-tech economic boom, Americans took the opposite view by the same margin.

As Galston notes, these findings suggest that Obama's much praised speech at Osawatomie, Kansas, decrying inequality, "may well reduce his chances of prevailing in a close race." Class warfare politics, as I have noted, hasn't produced a Democratic presidential victory in a long, long time.

Where Galston misses a step, I think, is that he seems to regard the move away from redistributionist politics in this time of economic stagnation as an anomaly in need of explanation. He seems to share the Obama Democrats' assumption that economic distress would make Americans more supportive of, or amenable to, big government policies.

That, after all, is what we have all been taught by the great and widely read New Deal historians, and that lesson has been absorbed by generations of politicians and political pundits.

I believe that historians have taught the wrong lessons about the 1930s. And I believe there is a plausible and probably correct reason why economic distress has apparently moved Americans to be less rather than more supportive of big government.

To understand the lessons of the 1930s, you need to read the election returns. Franklin Roosevelt's big victory in 1932 was a massive rejection of Republicans across the board. Republicans lost huge ground in urban and rural areas, in the West and Midwest and most of the East, even in their few redoubts in the South.

In 1936 FDR won re-election by a slightly larger margin, but with a different coalition. The rural and small town North returned to its long Republican allegiance, while Democrats made further big gains among immigrants and blue collar workers in big cities and factory towns.

The New Deal historians attributed these gains to Roosevelt's economic redistribution measures -- high tax rates on high earners, the pro-union Wagner Act, Social Security. These laws, the so-called Second New Deal, were passed in 1935. They replaced the different, non-redistributionist policies of the First New Deal that stopped the deflationary downward spiral underway when Roosevelt took office.

The problem with the historians' claims is that the shifts in the electorate apparent in 1936 also are apparent in the 1934 off-year elections. Democrats won big that year, but compared to 1932 they lost ground in rural areas and small towns and gained much ground in big cities and factory towns.

The 1936 realignment happened in 1934. It could not have been caused by redistributionist Second New Deal legislation, because it hadn't been passed before November 1934.

So why should voters be leery of economic redistribution in times of economic distress?

Perhaps because they realize that they stand to gain much more from a vibrantly growing economy than from redistribution of a stagnant economic pie. A growing economy produces many unanticipated opportunities. Redistribution edges toward a zero-sum game.

They miss growth when it is absent. They don't appreciate it so much when it is happening.

Roosevelt's 1934 and 1936 victories were won in periods of growth. After the economy shifted into recession in 1937, New Deal Democrats fared much worse, and Roosevelt won his third and fourth terms as a seasoned wartime leader, not an economic redistributor.

Lesson: If you want redistribution, you better first produce growth. Which the Obama Democrats' policies have failed to do.

http://campaign2012.washingtonexaminer.com/article/voters-want-growth-not-income-redistribution/277856
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