Neil King thinks the unemployment rate will be on of the keys to outcomes in 2010.
“Unemployment is the leading economic indicator when it comes to politics,” said Democratic pollster Peter Hart. “Anytime unemployment hits double digits, it’s hard to see the party in control having a good election year.”
Economists generally predict that the number of people out of work will continue to inch up next year, even if the economy begins to rebound. Most see the jobless rate peaking at around 10.5% in the summer. Former Fed Chairman Alan Greenspan said Sunday that his own hunch was that the economy would turn around over coming months, but that unemployment would “penetrate the 10% barrier and stay there for a while before we start down.”
As Dale has noted, if we were calculating unemployment as we did in 1974, we’d be in the 17% area. That means a lot of voters are hurting and the one place they can voice their displeasure is at the ballot box. Additionally, by 2010 the “we inherited this” gig will have been up for some time. Democrats in Congress have been in charge for almost 4 years now. Politically that means this is their economy. The last time unemployment was over 10% during a midterm, the Republicans lost 26 seats in the House.
Then there’s the stimulus which was touted to be the answer to unemployment. The current administration promised that passing it would keep unemployment down in the area of 8%. But after its passage it didn’t even slow the growth of unemployment, a fact Republicans are sure to point out in the coming year.
As it turns out, Democrats may be happy to just lose 26 seats. Republicans are targeting 54 vulnerable Democrats, 49 of which come from districts John McCain carried in 2008.
Add in Afghanistan, health care, cap-and-trade and the huge expansion of government and the fact that Congress is deeply unpopular, losses in the 40s might not be as out of the question as one might think (think of an energized Republican base and a dispirited Democratic base with independents leaning to the GOP side).
President Obama claims to be dispensing with “straw men” arguments concerning A’stan:
President Obama told Congressional leaders on Tuesday that he would not substantially reduce American forces in Afghanistan or shift the mission to just hunting terrorists there, but he indicated that he remained undecided about the major troop buildup proposed by his commanding general.
Meeting with leaders from both parties at the White House, Mr. Obama seemed to be searching for some sort of middle ground, saying he wanted to “dispense with the straw man argument that this is about either doubling down or leaving Afghanistan,” as White House officials later described his remarks.
The problem is, that leaves some version of the status quo as a viable alternative, and, as every expert to include the Commanding General there has told us, the status quo isn’t working.
This is what I was talking about when I said he’s just as likely to dither for months making a decision and then make a decision in which he appears to be doing something while not even getting anywhere near to fully resourcing McChrystal’s request. Or said another way, he’ll send more troops, but only enough troops to keep A’stan from getting worse than it is now, but not enough to do the mission McChrystal has outlined.
That’s what he appears to be setting up here. Reading between the line, the implication is that he’s not going to give McChrystal all he wants and he’s building the case by attempting to introduce something less than what most see as the only two viable courses of action – fish or cut bait. All in or fold.
This is what I’ve been afraid of since his election. There’s little will, on his part or that of his party, to do what is necessary in Afghanistan. All the rhetoric about it being the “necessary war” was just that – rhetoric to beat his opponent and their party over the head with.
If that’s the case – then get our troops the hell out of there and deal with the long-term effects of doing that. The effects will be profound. But reinforcing failure, and that’s what I’m hearing here, is just not an option.
Calling the narrowing the choices to the two most viable options “straw man arguments” doesn’t make it so. Certainly Obama has the final say – but the only viable choices remain the only viable choices whether he likes that or not. Doing anything in between is a recipe for continuing failure and will be seen as trading blood for time – political time – because he doesn’t want to make the hard decisions required due to the political implications (I’ve been saying he’ll delay any profound decision, like pulling out, until his reelection is safely in the bag).
The one thing that’s different about the job of President is that when it comes to foreign affairs and the job of Commander in Chief, the people expect the President to put aside all political considerations except what is best for the US. His job is to act in the best interest of the country. We haven’t seen that yet in President Obama’s foreign policy and, unfortunately, I hold little hope as I watch the Afghanistan discussion unfold that politics will be divorced from the upcoming decision on our strategy there.
I am not an investment advisor. I’m not a guru. I’m not qualified to give you any investment advice at all. I’m just looking around and seeing things, and telling you what I see. And, in this case, I’ll even tell you what I’m doing.
I do so, however, with the strong warning that you should not, under any circumstances, use me for an example, or follow my example. What I do may not be suitable for you at all. I just want to make that clear.
First let me recap some data points I’ve made in several previous posts:
The Fed has more than doubled the monetary base over the past year. The amount of money that is just sitting there in the economy is incomprehensible. But, it’s not making any trouble for us in inflationary terms, because it is just sitting there. It’s what will happen when it does stop just sitting there that is worrisome.
The Federal Budget has spiraled out of control, with the TARP, stimulus, and recession bringing additional massive amounts of debt to bear, and future deficits signifigantly larger than any in recent memory–on top of which, there is now talk of “Stimulus II”.
Despite the happy talk about the economy’s recovery, the fact is that it is still in decline–just a slower rate of decline. If a recovery doesn’t occur soon, we will run into another leg down in the economy, as households and businesses draw down their cash reserves, hit their credit limits, and slash their spending. The longer the recession continues, the more people and business that will be forced into bankruptcies, the more foreclosures will rise, etc. We call things like this “black swan” events.
On the other hand, even if there is a recovery, the Fed will be faced with the task of trying to wring the extra money back out of the economy. If they are unsuccessful, inflation will rise. If they are successful, they may spark another recession through tightening, much as they did to cause the second leg of the back-to-back recessions in 1981-1982. A second leg of a recession will undoubtedly result in greater debt and more money funneled into the economy as the government re-imposes monetary and fiscal stimulus again to re-inflate economic activity. This will both deepen the debt and increase the money supply, making the next round of interest rate tightenings more difficult, unless the economy comes back strongly.
Social Security is now estimated to begin having a negative cash flow in 2019. In other words, Social Security expenditures will exceed the payroll tax receipts. We have, until now, been running surpluses in Social Security receipts, but, of course, the government spent that money in the general fund. There is, therefore, no pot of money saved to make up for the deficit in receipts in 2016. Benefits will be cut. Taxes will be increased. Economic growth will be affected.
1. Some of these nations have no reason to risk destabilizing the USA. Esp the Saudi Princes.
2. Some of these nations have no reason to risk destabilizing the global financial system. Esp. Japan.
3. Many of these nation have leaders who are some combination of cautious, slow, reactive, and incrementalists.
4. Something of this scale would be almost impossible to keep secret 2 days after the first discussions.
5. If multiple Hong Kong banking sources knew it, their fingerprints would be all over the US dollar – as they shorted it to the max.
Having said that, while I believe this particular story is implausible, it is obvious that a number of countries, China and Russia chief among them, are urging that the dollar be replaced as the world’s reserve currency, or, at the very least, allow some other currency or basket of currencies to be used in addition to the dollar. If this happens, billions of dollars will be repatriated to the US, drastically lowering the dollar’s foriegn exchange value. China is already denominating regional trade deals in yuan, and the use of gold has been on the rise as an instrument for international settlements in Asia and Europe.
There are many more data points, but it would be both tedious and depressing to continue.
The bottom line is that the trends outlined above will, in all probability, necessitate dealing with our foreign creditors. Such dealings may require us to reschedule our debt payments, which will devastate the bond market, make future borrowing far more difficult, and end the notion that treasury notes are “risk-free” investments. If so, we will have become a financial banana republic in which future investment will be given the gimlet eye. We may also be required to those foreign debts off in some currency or basket of currencies other than dollars, in order to prevent the government from inflating the debt away.
These trends will also probably require devaluing the US dollar by a substantial amount, so that our imports become expensive, while our exports become cheap. This will allow us to earn the money to pay off our foreign debts, although it will, of course, result in a lower standard of living in the USA.
This the inevitable result of allowing the government–and the voters–to loot the system for 70 years.
So here is what I have done–and this is purely for informational purposes. I do not recommend it for you, and I urge you to consider that I may be entirely wrong.
Several months ago, I completely pulled all of my investments out of equities, and into some select bond funds with a mix of government and private bonds. As of today, I have ceased placing any more money in to either equities or bonds.
For the forseeable future, I will be buying gold bullion. Not gold stocks. Not Krugerrands. Not gold depository accounts. I mean direct bullion purchases of gold bars or rounds. My personal preference is for APMEX or Pamp Suisse 10g bars, or Scotia Bank 1/4 oz. rounds, since they have the lowest premiums over the spot price, and are small enough to conveniently convert at local jewelry stores, pawn shops, or gold dealers at need.
Trying to convert a 1kg bar on short notice would be…inconvenient. Even 1oz. Krugerrands might be hard to convert as the value of each single coin is now over $1000.
I have no interest in paying a premium for “collectible” coins. I have no interest in purchasing a depository account, where my gold holdings have to be reported to the government. In fact, prior to this month, I had no real interest in gold either. Indeed, if you bought gold at any time from 1979 to 2001, by march of 2001, you would have lost money–perhaps quite a lot of money, depending on when you bought it. However, in the current circumstances, let’s just say that my interest is now…heightened substantially.
Whether your interest should be heightened…well, I couldn’t say.
Do you suppose that’s true? That that’s why we have such absurdities as people climbing in zoo cages to cuddle the animals? It would explain a lot of things.
It would explain, for instance, why the writer of that article is able to regurgitate a century and a half of Socialist propaganda and get commenters calling it “insightful”. Two centuries of modern capitalism have resulted in such ease, such comfort, such near-total safety and security, that Americans (at least, some Americans) don’t just take it for granted but consider it the normal state of affairs, so much so that they are ready and willing to smash the structures that created it, in the confident “knowledge” that the safety and prosperity will remain because they are “normal”.
Ric’s observation stemmed from a Firedoglake post (linked above) in which capitalism is noted as the source of violence. I think Ric pretty much nailed why such thinking is so absurd. Also see Synova’s thoughts on the matter, which are also quite good.[ad#Banner]
In elementary school.
Longfellow Elementary School in Howard Country, Maryland to be specific.
President Obama–He says Yes we can!
President Obama–We say Yes we can!
President Obama–I say Yes I can!
President Obama–He says Yes we can!
Barack Obama–Oh yes he rates,
The first Black President in the United States!
He’s smart and he’s–so so good!
He’ll lead this country as he should!
He wants us all to work together,
To make this country even better!
Prez’ Obama says–“Yes We Can!”
Make the US better–hand in hand!
Since this was featured on a blog in an email, my first stop was snopes.com. They’ve never heard of it. Doesn’t mean its true, but it certainly wouldn’t come as a huge surprise if it was. The Assistant Principle to whom the email allegedly is from does exist at that school. And the email is dated Sep. 29th of this year. So with enough due diligence to say “it’s plausible”, I’ll also say it is totally inappropriate – especially for first graders. And you’d think, after the blowup recently concerning the video of small school children singing a similar song, they’d know that by now. And you have to assume the three ‘R’s have been mastered if they have time for nonsense like this.
The irony is Longfellow is probably rolling over in his grave as he surveys the “poetry” of the lyrics.
Ann Althouse is watching the propaganda so you don’t have to. Something in her review of the new Michael Moore agitprop, “Capitalism: A Love Story”, struck me as interesting:
The most striking thing in the movie was the religion. I think Moore is seriously motivated by Christianity. He says he is (and has been since he was a boy). And he presented various priests, Biblical quotations, and movie footage from “Jesus of Nazareth” to make the argument that Christianity requires socialism. With this theme, I found it unsettling that in attacking the banking system, Moore presented quite a parade of Jewish names and faces. He never says the word “Jewish,” but I think the anti-Semitic theme is there. We receive long lectures about how capitalism is inconsistent with Christianity, followed a heavy-handed array of — it’s up to you to see that they are — Jewish villains.
Am I wrong to see Moore as an anti-Semite? I don’t know, but the movie worked as anti-Semitic propaganda. I had to struggle to fight off the idea the movie seemed to want to plant in my head.
I may be alone in this observation, but for quite some time I’ve viewed anti-semitism and anti-capitalism as basically one and the same. Said another way, hatred for Jews appears to me to be closely tied to their historical affiliation with capitalist enterprises.
Certainly the anti-semitism found in the Middle East is somewhat different, in that there are religious and historical factors mixed in to that particular bigotry. And Christian Europe was never terribly friendly to the Jews either, with religious rivalry and illogical scape-goating (i.e. holding Jews responsible for killing Jesus, even though it was the Romans who actually did it, and Jesus was supposed to die according to the scriptures) being played out in large part there as well. Even so, I think there is definitely an anti-capitalist element to anti-semitism.
During the Middle Ages in Europe, Jews were often forbidden from owning land, or entering certain professions, which relegated them to doing the work that the Christians wouldn’t do. Lending money for interest had long been considered to be an awful enterprise, so much so that it was forbidden for Christians to engage in it (much as it is still so for Muslims). Therefore the Jews, who had no strictures* against charging interest, settled into those roles (as well as tax collectors, accountants, rent collectors, and other money-centered jobs), and for quite some time were the only lenders around. During the Roman Empire they were both reviled and tolerated for the practice. Of course, being the only lenders in town meant that when defaults happened, it would be a Jew who would looking for his “pound of flesh” and that did not make them any more desirable. Maybe it was during this time that the capitalist enterprises of making a profit from the use of money became closely associated with Jews, or perhaps it occurred much earlier, but before the term “capitalism” even existed there were Jews performing those functions.
With the rise of socialism in the industrial age, especially during the Progressive Era, all those capitalistic endeavors in which Jewish families had staked their claims started to fall into disfavor (even as they were employed with great abandon). Charging interest for money, always historically suspect, and all other occupations concerned with amassing capital were looked upon with increasing scorn. These were anti-social behaviors engaged in by the “greedy” who placed money above all else, and especially human well-being. It wasn’t uncommon for Jews to be treated as the face of these unsympathetic capitalist sorts.
In the age of industrialization vast sums were risked in building factories and the like, and huge fortunes were made, while regular working stiffs found themselves displaced from their idyllic farms and shacked up in dirty tenements, teeming with poverty (or so the story goes). As in medieval times when the Lord came up short on his payments, and couldn’t provide for those who depended on him, the Jewish lenders made for an easy target when industrialists failed. Wealthy bankers such as the Rothschilds and the Warburgs often came under scrutiny (and still do today) because of their Jewish heritage and massive family fortunes, and many conspiracy theories concerning Jewish attempts to control the world through their financial houses flourished. Indeed, during this ironically anti-capitalist period (ironic because of capitalism’s rapid spread during this time, raising the living standards of millions upon millions of people), political parties and community groups were sometimes formed based quite openly on their antisemitism. As an acceptable social prejudice, anti-semitism was often found to be quite politically useful in Europe and here in the United States. At the same time, prevailing political winds were blowing strongly in the direction of scientific socialism, and decidedly against capitalism and individualism.
Again, I don’t know how or when anti-semitism and anti-capitalism became so intertwined, but for at least the last 150 years I think it’s safe to say they share common space. If you were to replace the words “multinational corporations” with “the Jews” in the popular anti-capitalist screeds of today, I don’t think one would see much of difference in coherence (be that as it may) or objection from purveyors of these conspiracy theories.
Bringing it full circle, I think that close connection between anti-semitism and anti-capitalism is why Althouse gets this feeling from Michael Moore’s film:
He never says the word “Jewish,” but I think the anti-Semitic theme is there. We receive long lectures about how capitalism is inconsistent with Christianity, followed a heavy-handed array of — it’s up to you to see that they are — Jewish villains.
In some ways, the bigotries may be inseparable.
* To be sure, the Bible does prescribe certain regulations for lending, one of which has been interpreted as meaning that Jews were forbidden from charging interest to other Jews, while doing so for loans to gentiles was perfectly acceptable. As I understand it, however, these Biblical restrictions treat “lending” as a sort of charity (that may or may not be paid back), in which Jews were encouraged to be free with their money in the service of their tribe, while having no compunction to be so charitable with “outsiders” (although, there too, be charitable when possible is encouraged). In short, it is a “take care of you family” sort of restriction on lending and not a “screw anyone who’s not Jewish” policy that it is sometimes made out to be.
John Crudele alerts us to a GIGO (garbage-in-garbage-out) statistic the Labor Department uses and has used for a long time that provides erroneous data. Bad as it is in normal times, it is even worse in bad economic times:
In 11 of the 12 months, the government adds massive numbers of jobs — sometimes more than 100,000 — that it thinks, but can’t prove, exist.
This is because the Labor Department uses something called the birth/death model, which assumes that no matter how bad the economy is, there are itty-bitty, newly-formed companies — which can’t be reached by government surveyors — that are creating jobs.
So it pumps up its statistics with unconfirmed jobs created which hides the real extent of the jobs lost. And, of course, as Crudele points out, the stats are iffy in a good economy, but reliance on them in this sort of an economy is simply a travesty.
Even the Labor Department has now admitted that:
Right after Friday’s report came out, Bloomberg News called Chris Manning, the national benchmark branch chief at the Labor Department’s Bureau of Labor Statistics, and asked about the 34,000 probably non-existent jobs.
“In this period of steep job losses, the birth/death model didn’t work as well as it usually does,” Manning told Bloomberg. “To the extent that there was an overstatement in the birth/death model, that is likely to still be there.” No freakin’ kidding! This year alone, this model has added over 700,000 jobs that don’t exist to the government’s count.
The Labor Department is not only still using this model, but it nearly doubled the number of phantom jobs for this September compared with the same month last year.
So if you’re wondering how distinguished economists can get things so wrong, this provides a peek. After all, these are the statistics they’re stuck using. Phantom job creation stats based on an absurd assumption that says something’s happening that can’t be confirmed and, by the way, it continues to happen at the same rate even in the worst of financial times. Does that conform with your experience in the real world?
Mine either. Keep that all in mind when you hear the “experts” tell you that according to the latest unemployment stats, it just isn’t as bad as you might think.
[HT: Mark W.]
Well, unsurprisingly, it isn’t private insurance companies, in some cases by quite a large margin. A chart from some recent research by Beverly Gossage of the Show-Me Institute makes the case:
You remember the outcry about CIGNA’s denial of Natalee Sarkisian’s liver transplant a couple of years ago? Well, as you can see by the numbers the chance of denial from Medicare is much higher than one from CIGNA.
It is these sorts of facts which are not apparent in the constant demonization of private insurance.
Interestingly, the AMA has come out in favor of government “health care reform” – whatever that may mean. The irony is the information that Ms. Gossage found came from the AMA’s own 2008 National Health Insurer Report. Is this the type of “competition and choice” the government insurance introduced in a public option would bring? Higher denial rates than private insurance?
I guess that’s insurance “reform”.
While the Fed tries to assure us that when the time comes it can wring the excess money it has pumped into the economy without driving it into the ditch, Paul Krugman and others want more spending, and we’re staring at 9 trillion in additional debt, the rest of the worldhas seems to be quietly deciding that the dollar has become an unstable currency in which they’d rather not trade:
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
They’re talking about a whole range of different currencies to replace the dollar but the fact remains that the old buck ain’t what it used to be and those trading in oil are looking for a more stable means of trade.
The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.
Which explains some of the growth in the price of gold. Of course this transition will take time as the various countries carefully get rid of their dollar reserves over the coming years. However, if they are as committed to this transition away from dollar as the base trading currency for oil as this article indicates, then obviously the strength of the dollar will be adversely effected over that transition period and beyond as dollars are dumped. Couple that with the excess dollars we’ve pumped into the system these past few months and you can begin to understand the possible economic disaster this may end portend.
Ever since the Bretton Woods agreements – the accords after the Second World War which bequeathed the architecture for the modern international financial system – America’s trading partners have been left to cope with the impact of Washington’s control and, in more recent years, the hegemony of the dollar as the dominant global reserve currency.
The Chinese believe, for example, that the Americans persuaded Britain to stay out of the euro in order to prevent an earlier move away from the dollar. But Chinese banking sources say their discussions have gone too far to be blocked now. “The Russians will eventually bring in the rouble to the basket of currencies,” a prominent Hong Kong broker told The Independent. “The Brits are stuck in the middle and will come into the euro. They have no choice because they won’t be able to use the US dollar.”
Chinese financial sources believe President Barack Obama is too busy fixing the US economy to concentrate on the extraordinary implications of the transition from the dollar in nine years’ time. The current deadline for the currency transition is 2018.
We’ve been talking and hinting about this since it first began surfacing and warning of the dire economic consequences such a move would have. Of course it is the result of our own profligate spending and financial mismanagement, but I don’t think, for the most part people understand the implications of this move to replace the dollar. And it also doesn’t appear we have ability (much less a plan) to reverse this trend toward this change of the economic guard.
The Federal Trade Commission has just released a ruling (PDF) that requires bloggers to disclose anything–and I mean anything–they receive as a result of their blogging. Free review copies of books. Trips to oil rigs. Payments. T-shirts. Whatever it is, you better disclose it, or you get slapped with a fine of $11,000 per infraction.
In other words, the government is now putting all web sites, professional or personal, under its thumb for failing to disclose everything they receive from any source. And what are the guidelines for disclosure? Why, none at all. So, assuming you receive a free copy of a book–even if you don’t review it–you must disclose that you received it. How do you disclose it? I dunno. How do you you know if your disclosure is sufficient? I dunno. The FTC, you see, will make those decisions on a “case-by-case” basis.
<sarcasm>I’m sure they’ll be quite fair about it, too. And I’m quite certain that the FTC will never, ever selectively enforce these new rules so that more scrutiny is given to opponents of the current regime than to its supporters.</sarcasm>
The main thing to remember here is that free speech is not nearly as important as protecting the public from some blogger who doesn’t disclose that he got a free review copy of the book to read, in order to write the review. And, of course, you’re all too stupid and venal to protect yourselves from the danger to the republic that freebies to bloggers represent.
But, we already knew that.
More info and quotes here.