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Author Topic: Looks like we'll get a twofer
G2
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Despite all the assurance in the media and from government officials, it looks like a double dip recession is in the works. Unemployment jumped to 9.7% this month but check out the data for 16-24 year old (and this does not include students):
quote:
The unemployment rate for young Americans has exploded to 52.2 percent -- a post-World War II high, according to the Labor Dept. -- meaning millions of Americans are staring at the likelihood that their lifetime earning potential will be diminished and, combined with the predicted slow economic recovery, their transition into productive members of society could be put on hold for an extended period of time.
52.2% [Eek!]

It gets worse:
quote:
The Bureau of Labor Statistics found that mass layoff events, where a single employer lays off 50 or more employees, increased 24.7% from July...
Even the leading indicators are dropping:
quote:
Resales of U.S. homes dropped 2.7% in August to a seasonally adjusted annual rate of 5.1 million,
and
quote:
New orders for long-lasting U.S. manufactured goods fell unexpectedly in August, dropping by their biggest margin in seven months...
Housing starts and durable goods, maybe just a downward blip or are we back on the recession track after the government subsidies dry up? With growing mass unemployment, the turnaround gets that much harder.

As soon as inflation kicks in, we're really gonna be hurting.

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JoshCrow
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Nothing the good old free market won't fix. I'm not worried, we've got the invisible hand to guide us. All hard work will be rewarded - probably in heaven, but still...
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Sauurman
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The free market doesn't eliminate economic downturns. However government intervention does artificially create bubbles that cause a great deal of pain when the pop...
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0Megabyte
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Yes, it was due to all that massive government intervention that the terrible depressions of the 19th century took place. Sure.
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JoshCrow
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quote:
Originally posted by Sauurman:
The free market doesn't eliminate economic downturns. However government intervention does artificially create bubbles that cause a great deal of pain when the pop...

Was the 2001 tech bubble the result of the government, or the market?
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kenmeer livermaile
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Ladies and gents, give it up for Adam Smith & the Irrational Exuberance, featuring Alan Greenspan on the royal libertarian synthesizer!

Playing "Synthetically Determined Interest Rate Sizes"!

[ September 28, 2009, 08:10 PM: Message edited by: kenmeer livermaile ]

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Sauurman
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"Yes, it was due to all that massive government intervention that the terrible depressions of the 19th century took place. Sure."

Because that was EXACTLY what I said.

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DonaldD
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Or equivalently: "Government intervention doesn't eliminate economic downturns. However 'free' markets do generate bubbles that cause a great deal of pain when the pop... and even when they don't"
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Colin JM0397
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It's neither and it's both.
You're all looking in the wrong place for the blame.

Fiat money is where you get the bubbles, regardless of 'ism that appears to be in the driver's seat. Unnatural manipulation, be it by private companies, strong central governments, or the invisible hand create bubbles and then lets them burst.

If you control the flow of fiat money (credit), you know where the bubbles are and can fleece the rest of us when it pops. Or am I the only one who noticed certain companies and individuals with record earnings over the past year?

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G2
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It seems The One and I are seeing the same thing:
quote:
President Barack Obama says he's worried that spending too much money to help revive the economy could undermine a fragile U.S. recovery and throw the economy into a double-dip recession.
I'm not sure what he means by too much money. He's pushing for trillions in new spending. But it does seem that we're not turning any corners.

It was widely reported that the US returned to positive GDP last quarter but, suddenly, you don't hear that anymore. Gee, why could that be? Maybe that the C4C program accounted for about half of that and the program ended? Yeah, that'll dent the next quarter numbers. Then there's the housing subsidies that look like they'll end this month - that was the other half of the boosted GDP. So in the end, we had nothing and we'll go back to less than nothing.

There there's unemployment. Remember when around 6% unemployment with the economy adding 200,000 jobs per month was a disaster? It was economic Armageddon! Now we're cruising into double digits and still shedding 200,000 jobs a month ... and it's going to get worse:
quote:
Think the worst is over? Wrong. Conditions in the U.S. labor markets are awful and worsening. While the official unemployment rate is already 10.2% and another 200,000 jobs were lost in October, when you include discouraged workers and partially employed workers the figure is a whopping 17.5%.

<snip>

The last recession ended in November 2001, but job losses continued for more than a year and half until June of 2003; ditto for the 1990-91 recession.

So we can expect that job losses will continue until the end of 2010 at the earliest. In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back.

So don't expect unemployment to peak until next Christmas. I wonder if we can break 15%? We can always hope as there is a dark lining to this little cloud:
quote:
The long-term picture for workers and families is even worse than current job loss numbers alone would suggest. Now as a way of sharing the pain, many firms are telling their workers to cut hours, take furloughs and accept lower wages. Specifically, that fall in hours worked is equivalent to another 3 million full time jobs lost on top of the 7.5 million jobs formally lost.

This is very bad news but we must face facts. Many of the lost jobs are gone forever, including construction jobs, finance jobs and manufacturing jobs. Recent studies suggest that a quarter of U.S. jobs are fully out-sourceable over time to other countries.

Other measures tell the same ugly story: The average length of unemployment is at an all time high; the ratio of job applicants to vacancies is 6 to 1; initial claims are down but continued claims are very high and now millions of unemployed are resorting to the exceptional extended unemployment benefits programs and are staying in them longer.

Greeeaaat, just great.
quote:
The weakness in labor markets and the sharp fall in labor income ensure a weak recovery of private consumption and an anemic recovery of the economy, and increases the risk of a double dip recession.
So in addition to Obama seeing it my way, we now have economists seeing it too. With mass unemployment, the Christmas shopping season this year will be weak, enforcing the downward spiral. And it ain't looking too good for Xmas 2010 neither! How many retailers can weather 2 Christmas seasons in a row of declining sales?

You know what would fix all this? Another 800 billion dollars in spending - doesn't matter what it's spent on just as long as it's gone. It worked so well the first time but this time it's gonna do something. Something really good. For reals. Maybe Biden can be in charge this time, he's freaking brilliant.

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TomDavidson
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quote:
You know what would fix all this?
What, in your opinion, would fix all this?
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Daruma28
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quote:
Originally posted by Colin JM0397:
It's neither and it's both.
You're all looking in the wrong place for the blame.

Fiat money is where you get the bubbles, regardless of 'ism that appears to be in the driver's seat. Unnatural manipulation, be it by private companies, strong central governments, or the invisible hand create bubbles and then lets them burst.

If you control the flow of fiat money (credit), you know where the bubbles are and can fleece the rest of us when it pops. Or am I the only one who noticed certain companies and individuals with record earnings over the past year?

Here, here Colin. Don't forget the role of fractional reserve banking too!

But nevermind everyone else on this thread. They are simply arguing their side of the dialectic. Most will read what you just wrote (or all the stuff I've been writing on this topic), perhaps give a momentary pause, before they resume drinking their red or blue kool aid.

DemoLibs - It's the free market!

Oh? Pray tell, when was the last time the US had a "free" market?

RepubliCons - It's the Government!

Really? Where is it written in the constitution that we are supposed to have a Government entitty like the Federal Reserve's central banking system owned by private corporations in charge of a fiat currency?


[Exploding]

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Daruma28
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quote:
Originally posted by TomDavidson:
quote:
You know what would fix all this?
What, in your opinion, would fix all this?
We could start with HR 1207 & S 604
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G2
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quote:
Originally posted by TomDavidson:
quote:
You know what would fix all this?
What, in your opinion, would fix all this?
What do you mean? I laid it all out. The first $800 billion created or saved 20 ... no, 80 ... wait - 100 million jobs. Yeah, that's the ticket, 100 million jobs (go ahead, just try to prove that wrong - you can't!). I figure if we just do the same thing again but to the tune of $1.6 trillion then everyone in America will be employed. Obama/Pelosi/Reid and the gang got it all figured out. If only those wascally Wepublicans would quit using their dominant position in Congress, why we'd all have jobs! Oh wait ...

[ November 18, 2009, 05:57 PM: Message edited by: G2 ]

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kmbboots
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I seem to recall that a year ago we were talking about bread lines.

G2, being sarcastic about what other people think will help is not the same as suggesting your own solutions. What do you think will fix it?

[ November 18, 2009, 06:08 PM: Message edited by: kmbboots ]

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G2
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Sarcastic? I'm practically quoting current headlines. Look at the news, the stimulus plan created jobs in places that don't even exist. Think about that. This program worked so well that it bridged the gap between reality and fantasy by creating real jobs in imaginary places. If that's not a successful program, I don't know what is. I'm not being sarcastic, I'm telling you what's really going on and being reported in the media.
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KE
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The Invisible Hand is quicker than the all seeing eye.


Still making more money at the best job I ever have had while sending my son through UT and then Harvard Law. I almost feel guilty. [Smile] I would feel guilty if I didn't know it was because I had all those nasty Thetans expunged a while back.

Okay, gotta leave work. Hour and a half after hours and I'm on salary! (No overtime. [Frown] )

KE

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JWatts
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quote:
Originally posted by G2:
...but check out the data for 16-24 year old (and this does not include students): [QUOTE]The unemployment rate for young Americans has exploded to 52.2 percent --

Sorry, I'm calling BS on that number. That number seems ridiculously high. Do you have a link?

The Bureau of Labor Statistics says:
October 2009
==============================
Adult men 10.7
Adult women 8.1
Teenagers 27.6
US BLS

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edgmatt
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I don't know that a "fix" exists for an economic downturn. I certainly know that it is not the governments role to "create" jobs in the manner most often spoken of. The government can do things that will help jobs be created.

The government should spend it's efforts either creating incentives for:

People to work
People to look for work
Employers to hire workers
Business to open

Or getting rid of disincentives for the same list.

For people to want to work they generally have to have a need to work. Growing unemployment benefits, although certainly very helpful to those who do not have a job, create an incentive not to work. So lessening the benefits, even a little, will help. A little.

For employers to hire more workers, the employer has to need ( not want ) something for that worker to do, and the money to pay that worker. A tax break of $3,000 for the year to hire an extra workers doesn't seem like enough of an incentive to hire that worker and pay him $25,000/year, unless that worker can make 22,001 or more for that company.

So a tax credit might be helpful to create incentives for employers to hire. A lower tax rate in general would be somewhat effective also.

For a business to open, the same incentive of profit has to be significant enough to weigh against the risk of losing invested time and money. Part of their risk is the contract they have to sign to land lords for rent for a shop they want to open. Land lords base what they charge in rent somewhat on the land taxes they have to pay. If rent was lower, that would potentially lower rent charges, creating a little more incentive for a business to open.

So lowering property tax ( which would be a state function ) would help a little bit.

So some possible things that would help not fix:

*Lessen unemployment benefits. ( or at least don't increase them )
*Lower tax rates for businesses of every kind.
*Lower property taxes.

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edgmatt
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quote:
By Daruma28:
We could start with HR 1207 & S 604

I'm a big fan of that as well.
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Greg Davidson
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This conversation is ignoring the key issue in the Keynes vs. Austrian economics debate. In a recession or depression, rational businesses will see that the business forecast is bleak, and thus will lay off workers, which further reduces future expectations (because the laid-off workers will spend less. The free market does not easily or efficiently solve this problem. Government can address this problem better than the free market because government is not tied to the perspective that indicates it is too risky for any individual business to increase capacity while other businesses contract.

For all of those indicating shock and horror at our current economic situation, remember that the ones who drove us off of this cliff believed in a theory of economics that is incompatible with the actuality of the financial market crash of 2008. Alan Greenspan testified accordingly on October 23, 2008. Reiterating the assertions of conservative economics doesn't make that system any less flawed.

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Pyrtolin
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quote:
Originally posted by edgmatt:
The government should spend it's efforts either creating incentives for:

People to work
People to look for work



There is absolutely no lack of incentive for either of those. There are far, far more people seeking employment right now than there are open positions.


quote:
Employers to hire workers
Business to open

There is exactly one meaningful thing that provides this incentive- customers looking to but the products/services that said businesses offer.

quote:
For people to want to work they generally have to have a need to work. Growing unemployment benefits, although certainly very helpful to those who do not have a job, create an incentive not to work. So lessening the benefits, even a little, will help. A little.
Unemployment benefits help one barely survive (assuming you weren't already barely surviving before, then they just slightly slow the fall into bankruptcy) To say that they provide a disincentive when they generally don't give enough to make bill payments, never mind such luxuries as food, is completely absurd. They can provide a bridge till you find employment again, so that you don't have to completely undersell your value or otherwise get trapped in a dead end that pays less than you need to stay afloat, but even if they were increased to something closer to what you actually previously made, there would only be a very slim minority who would find a lack of incentive, and those would be people with enough accessible wealth to weather such a storm anyway.

People want luxury- to have more than the bare essentials. That's sufficient motivation for all but a trivial minority of the population.

And, more to the point, eligibility for unemployment is based directly on whether you are actively looking for work, and you lose it if you turn down a job that pays withing a near range of what you made before.

The other critical thing that unemployment does is to ensure that the loss of the job does not completely prevent the person from continuing to generate demand in the market, because a near complete loss of demand from that person will trigger many more job losses. Unemployment benefits help subdue that chain reaction.

quote:
For employers to hire more workers, the employer has to need ( not want ) something for that worker to do, and the money to pay that worker. A tax break of $3,000 for the year to hire an extra workers doesn't seem like enough of an incentive to hire that worker and pay him $25,000/year, unless that worker can make 22,001 or more for that company.


And the only thing that's going to make the company want to hire more people is an inability to meet current demand such that they need to hire more people to keep up with the work load. And don't forget that that entire salary is a tax deductible expense, so the $3K is already a smaller deduction than the tax benefit from the expense of the salary.

quote:
So a tax credit might be helpful to create incentives for employers to hire. A lower tax rate in general would be somewhat effective also.
Neither of those will replace customers lost because they no longer have sufficient incomes to patronize the company. If you don't replace the demand, the business owners will just pocket the profit or pay it out in dividends. Either way, it will go to people who will not significantly chance their consumption for having it, generating little demand for additional service; there's no reason for them to hire people just because they have extra cash floating around.

quote:
For a business to open, the same incentive of profit has to be significant enough to weigh against the risk of losing invested time and money. Part of their risk is the contract they have to sign to land lords for rent for a shop they want to open. Land lords base what they charge in rent somewhat on the land taxes they have to pay. If rent was lower, that would potentially lower rent charges, creating a little more incentive for a business to open.
There's a little more ground here, but rent is tax deductible, so it only really matters if the business is not getting enough customers to even make rent. Property taxes are mostly set by the local municipalities and the county- maybe a small number of states, so the only way to have any real effect on them to to provide additional funds to those lower government levels to lessen their need to tax to support their own services.

quote:
*Lessen unemployment benefits. ( or at least don't increase them )
This would hurt immensely as it would make demand bottom out and put most of the affected people below the income level where they could afford to seek work, or pay for food and shelter.

quote:
*Lower tax rates for businesses of every kind.
Without additional demand, this will do absolutely nothing other than drain money further away from the segment of the population that can't afford to generate sufficient demand.

quote:
*Lower property taxes.
Could be mildly beneficial in lowering rent, but the only way to do it is by transferring replacement funding from higher in the system; and money to help support state budgets so they could try to do such things was solidly cut by stimulus opponents.
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Pyrtolin
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quote:
Originally posted by edgmatt:
quote:
By Daruma28:
We could start with HR 1207 & S 604

I'm a big fan of that as well.
It would be good, but the insight into those couple of line items in the Fed's budget that aren't currently subject to audit are completely irrelevant to ending the current problems. On such matters, though, the proposal in Dodd's finance reform to strip some of the Fed's powers and assign them to a more neutral agency go a lot further to establishing a better power balance.
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The Drake
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Clearly it is time to follow the teachings of Bob Dobbs and the Church of the SubGenius.

So the Pinks are out of work? This is due to a shortage of Slack.

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edgmatt
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quote:
there is absolutely no lack of incentive for either of those. There are far, far more people seeking employment right now than there are open positions.
Please explain the "now hiring" signs that have been up for weeks at costco, home depot, and many other stores in my town. Please explain how a friend of mine who got her hours reduced to 12/week, is not looking for a new job because her husband works, and with un-employment shes doing just fine. I don't know if she lied or what to get the unemployment, but she certainly got it. This lady owns two houses, each worth over 350,000, and has one kid in college. She is not starving. Anecdotal? Sure. Are their other stories just like this? Certainly. Would reducing unemployment benefits create an incentive for people in this sort of situation to look harder for a job? Yes. ( Don't confuse "create incentive" with "force". )
Don't say "absolutely" when it just isn't true. One of the problems is that unemployment pays better than some of the jobs that are available. If I have to work 20 hours a week to get 7.50 an hour, or do nothing for 5.00/hour...it can be argued that the 5.00/ hour pays better.

quote:
There is exactly one meaningful thing that provides this incentive- customers looking to buy the products/services that said businesses offer.

Although that is one of, it is not the only meaningful thing. The chance of profit is one of the other ones.

quote:
To say that they provide a disincentive when they generally don't give enough to make bill payments, never mind such luxuries as food, is completely absurd.
Let's tone down the rhetoric just a bit, Pyrt. Not everyone who claims unemployment is about to keel over from starvation. As illustrated by me already, some people use it as supplemental income because they'd rather get the money for free instead of work for 7.50 an hour.

quote:
... and you lose it if you turn down a job that pays withing a near range of what you made before.
Again, some people might earn $15 an hour, get fired, not want to work in Burger King for min wage, and be eligible for unemployment. Some people lie. They do this because there is an incentive to do so. I am not against un-employment benefits, I am just aware of what kind of incentives they create.

As for the rest of your post, your ignoring that with lower prices, demand will go up. There are businesses on the brink of bankruptcy that would love to lower their prices so they could stay in business. Lower rent and lower taxes would help some businesses be able to lower their prices.

You also ignored the fact that I said these things would help, not solve. I also never claimed that these things would be universally helpful. There will be a business somewhere that is doing just fine, and lower taxes for them will just mean a new BMW for the owner. ( And that might be O.K. too )But you seem to be saying that since these things I suggest won't completely fix every aspect of every problem, or they have a marginal side affect, they are useless.

An interesting side note: I wonder how many more people now have more than one job because of the down turn? I got a second job to make up for my 10% pay cut, and to ensure my own financial stability. I don't know what the numbers are nationally as far as people who got a second job, or what kind of effect that has on unemployment numbers. Has anybody ever looked into that sort of thing?

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JWatts
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quote:
Originally posted by The Drake:
Clearly it is time to follow the teachings of Bob Dobbs and the Church of the SubGenius.

So the Pinks are out of work? This is due to a shortage of Slack.

Awesome, I never new the game Illuminati expansion
(INWO: SubGenius (1997, Steve Jackson Games) (Illuminati New World Order game supplement) was actually based on something real.

It's always a good day when I learn something new. Thanks Drake. [Smile]

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G2
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quote:
Originally posted by G2:
Sarcastic? I'm practically quoting current headlines. Look at the news, the stimulus plan created jobs in places that don't even exist. Think about that. This program worked so well that it bridged the gap between reality and fantasy by creating real jobs in imaginary places. If that's not a successful program, I don't know what is. I'm not being sarcastic, I'm telling you what's really going on and being reported in the media.

Well, it looks like the jig is up, even Barry can't quite say this with a straight face any more. So what's the solution? Why, change the definitions of course!
quote:
The Obama administration has taken some heat and mockery for using the nebulous and non-economic term of jobs being “saved or created” by the $787 billion stimulus program.

So it’s gotten rid of it.

In a little-noticed December 18, 2009 memo from Office of Management and Budget director Peter Orszag the Obama administration is changing the way stimulus jobs are counted.

The memo, first noted by ProPublica, says that those receiving stimulus funds no longer have to say whether a job has been saved or created.

“Instead, recipients will more easily and objectively report on jobs funded with Recovery Act dollars,” Orszag wrote.

In other words, if the project is being funded with stimulus dollars – even if the person worked at that company or organization before and will work the same place afterwards – that’s a stimulus job.

The saddest part of all, so many of you will swallow it and think you're being told the truth when Barry tells you how he single handedly saved or created over 1 million ... no, wait, 10 million jobs. No, no, 100 millions jobs saved, yeah, that's the ticket!
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bringer
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G2,

I wondered if you had followed the money and could confirm that it is being parcelled out with preference.
My sources indicate two to one in favor of the Dems, even when certain Democratic held districts are holding up well without stimulus money.
This added to money pouring into heavy civil construction (unions) seems to indicate that the campaign is still in full swing, only now using money from the unborn.
Hopefully the unborn will survive the health care legislation enacted by legislators whose elections were funded (indirectly by stimulus pork in the favored districts) that these future unborn will be made to pay for.

The ultimate taxation (and potential extermination) without representation. God help us each and everyone.

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bringer
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This from the WSJ article about the economy in Venezuela and why it is tanking.

I believe the author is fairly clear on what needs to change in the U.S. as well whether intentionally or not.


Foremost, devaluation by itself is not enough to revive a domestic manufacturing base that's atrophied amid a hostile operating environment. Few investors are willing to brave Venezuela's maze of price caps, currency controls and the ever-present fear of nationalization.

Higher inflation from the move will also keep chipping away at the value of the bolivar, even at its new peg.

What's more, by keeping a subsidized dollar rate for importing food, medicine and essential items, Mr. Chavez removes any incentive for Venezuelans to produce what they need most. It will almost certainly remain cheaper to import beef from Brazil, for example, than to produce it.

The fact that Venezuela has ceased to produce meaningful amounts of food, medicine and other basic goods under Mr. Chavez puts his government in a Catch-22 bind.

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G2
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We;ve been bumbling along since G2 started this thread:
quote:
Durable goods orders jumped 2.9pc in April but house prices have been falling for several months and mortgage applications have dropped to a 13-year low. The ECRI leading index of US economic activity has been sliding continuously since its peak in October, suffering the steepest one-week drop ever recorded in mid-May.
So a lot of mixed signals but today we got a big one:
quote:
The M3 figures - which include broad range of bank accounts and are tracked by British and European monetarists for warning signals about the direction of the US economy a year or so in advance - began shrinking last summer. The pace has since quickened.

The stock of money fell from $14.2 trillion to $13.9 trillion in the three months to April, amounting to an annual rate of contraction of 9.6pc. The assets of insitutional money market funds fell at a 37pc rate, the sharpest drop ever.

"It’s frightening," said Professor Tim Congdon from International Monetary Research. "The plunge in M3 has no precedent since the Great Depression.

Yes indeedy, we may just be getting a twofer. Certainly it's in the works. But let's not take G2's word alone:
quote:
arry Summers, President Barack Obama’s top economic adviser, has asked Congress to "grit its teeth" and approve a fresh fiscal boost of $200bn to keep growth on track. "We are nearly 8m jobs short of normal employment. For millions of Americans the economic emergency grinds on," he said.

David Rosenberg from Gluskin Sheff said the White House appears to have reversed course just weeks after Mr Obama vowed to rein in a budget deficit of $1.5 trillion (9.4pc of GDP) this year and set up a commission to target cuts. "You truly cannot make this stuff up. The US governnment is freaked out about the prospect of a double-dip," he said.

The White House request is a tacit admission that the economy is already losing thrust and may stall later this year ...

The M3 is about a 12-18 month leading indicator, the canary in the coal mine. That canary died about 10 months ago. If it really is the leading indicator it's puported to be, we're going to start taking a pounding by the end of the year.
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noel
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quote:

DemoLibs - It's the free market!

Oh? Pray tell, when was the last time the US had a "free" market?

RepubliCons - It's the Government!

You are working with a false dichotomy Daruma. Of the two other combinations;

- Government intrusion into the free market, and loose Federal Reserve credit policy.

or :

- A healthy free-market, and a Federal Reserve constrained in the creation of credit by GDP.

More accurately reflect the liberal/conservative polarity, and between those two alternatives, the conservative combination is a clear winner.

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TCB
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G2, how do you reconcile your fear of inflation (from your first post) with your fear of a contraction of the money supply (from your most recent post)? Aren't these contradictory concerns?
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Colin JM0397
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Keep your eye on the price of Gold & Silver - they are about the only things "holding value" relative to everything else.

Notice what people are buying like crazy these days?

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Michelle
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I remember this from the mid-seventies. Gold and silver went through the roof and when gold started to deflate, inflation moved in, staying with us for many years.
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Daruma28
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quote:
Originally posted by noel:
quote:

DemoLibs - It's the free market!

Oh? Pray tell, when was the last time the US had a "free" market?

RepubliCons - It's the Government!

You are working with a false dichotomy Daruma.
No...I'm POINTING OUT the false dichotomy! [DOH]

To which you merely expanded upon with this:

quote:
Of the two other combinations;

- Government intrusion into the free market, and loose Federal Reserve credit policy.

or :

- A healthy free-market, and a Federal Reserve constrained in the creation of credit by GDP.

More accurately reflect the liberal/conservative polarity, and between those two alternatives, the conservative combination is a clear winner.

Why yes. What a clear winner.

The Federal Reserve policy, loose or tight, is an intrusion on the "free" market.

And a healthy free market wouldn't have a Federal Reserve centrally planning economic policy by using debt-based, fiat currency in the first place.

[Exploding]

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noel
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Daruma,

quote:
The Federal Reserve policy, loose or tight, is an intrusion on the "free" market.
Not really. Credit is a vital part of any modern economy, and the central bank is the spigot. If you don't want to call it the Federal Reserve, you will just have to find another name for the entity that serves the same function.

Milton Friedman suggested many years ago that credit availability be tied mathematically to the economy... the idea is quite old, and it is conservative. It would solve the too tight, too loose, yo-yo effect that politicians love to play with.

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Daruma28
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You're missing the entire point, noel.

There's a difference between credit in a true free market economy based on real assets vs. the credit we have with a central bank and it's twin evils of fiat currency and fractional reserve lending which gives the bankers the tools to catch the average person in debt enslavement and 21st century serfdom.

Until you understand the history of the Federal Reserve (Read: The Creature From Jekyll Island) and the reality of exactly what fiat currency and fractional reserve lending means (and how they are the primary drivers of the Public National debt), you will never understand what I'm talking about.

The fact that you, as a self-described "conservative" is defending the Federal Reserve and it's role in our economy tells me all I need to know about exactly how meaningless the distinction is between "right" and "left" when it comes to modern politics.

If you apply the old maxim "FOLLOW THE MONEY" you will learn just how much of our partisan political system is a mass charade to keep us distracted while the owners of the Federal Reserve continue to rob us all blind and trap us into debt slavery.

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Daruma28
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Just to be clear:

If I, as a guy with some saved up wealth, would extend some credit to you, noel, a guy with a business plan and no capital...that's perfectly aboveboard and a good example of how credit can help development of a solid, productive business.

I loaned you capital that I myself labored to earn and save. It's real capital with real value...and the interest you pay me is perfectly justified compensation for me having the opportunity costs of not having my own money at my disposal cause I lent it to you.

Under the Fed system we have today, the bankers loan you fiat currency - which is literally created "out of thin air."

Or..in most cases, is simply "willed" into existence by entering a number into a computer ledger program.

This is the ultimate reality of fiat currency and fractional reserve banking.

When you go to the bank and take out a loan, the bank is NOT loaning out the money they have on deposit from other bank account members...because they only have to maintain a "fraction" of there reserves...essentially, if you take out a $1000 loan, the bank will only have actually $100 (10%) on hand as a reserve to back that loan. The other $900 was simply "created" out of nothing when they entered the $1000 figure into their computer system, under your name...an obligation you now owe them interest for.

So, in essence, you are paying interest to the bank for them having done nothing other than "create" money out of thin air. That's basically legalized counterfeiting...and charging you interest on their counterfeiting "service" is essentially USURY.

This is how our entire economy exists under the Federal Reserve system...writ large.

In essence, this entire country is owned, lock stock and barrel to the Bankers who own the Federal Reserve.

Whether you are conservative or liberal, if you defend this status quo, you defend the continued serfdom and enslavement of this entire country.

[ May 27, 2010, 08:29 PM: Message edited by: Daruma28 ]

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Daruma28
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BTW - if you doubt what I've written here, Colin offered up a great link to confirm that in fact this is precisely how fiat currency and fractional reserve lending works in ALL of the world's central banking systems...

From Germany: http://www.washingtonsblog.com/2010/03/german-central-bank-admits-that-credit.html

Oh...and before someone tries to log in and say the Federal Reserve is just a part of the government...

Check this post out.

Note how Pyrtolin completely dropped out of the debate at this point...and the rest of the folks that tried to tell me the Fed is NOT a privately owned entity avoided responding to my links.

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noel
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Daruma,

I think you may be missing my point. Linkage of GDP, to credit availability, avoids precisely the problem you are (accurately) describing. We are not at odds here.

Where we might diverge, is in the nature of credit itself. Are you working with a static model?

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