No Economic Recovery Yet; Doubt We’ve Seen Bottom

There is a growing sentiment in the corporate media that the economy is finding its bottom and we’ll see recovery the rest of the year.  Their indication?  Economic leading indicators aren’t as bad as they have been.  “It’s only a matter of time”, they say.  Which is about the only thing they’re getting correct.  It is only a matter of time.  But they’re paying way too much attention to trends in the stock market and not enough attention to fundamentals.  Take the last two “recoveries” from the last two recessions.  The recovery from the 1991 recession took 16 months before the unemployment rate started going down.  16 months after the official declaration of the end of the recession, the unemployment rate finally responded.  The recovery from the last recession was even worse – exacerbated as it was by insane Con economic policies (giving away money to people who are already rich doesn’t benefit the economy or workers).  For 21 months (nearly 2 years) after the 8-month recession ended, unemployment continued to rise.  It took 47 months (4 years) for the same number of jobs to be reported as were held back in February 2001.  Which sounds good except for the U.S. population grew during those 4 years – meaning the percentage of people employed in 2005 was still less than it was in 2001.  And those two recessions weren’t nearly as bad as this recession is.

I don’t think the fundamental problems that helped cause the last two recessions were ever honestly dealt with by policy makers.  That goes for Democrats as well as Republicans.  The rich kept looking out for themselves while trying to screw the non-rich.  Few in political power have tried to stop that effort.  Instead, many of them have helped.  There are reasons fewer people are employed today than there were in 2001 – reasons that remain unaddressed.  So when the chattering heads get all excited about a small turnaround in the stock market – where the rich continue to make money while the non-rich continue to try to keep themselves afloat – I don’t get too worked up.  American corporations are firing American workers and closing American workplaces while at the same time keeping operations going in foreign countries, employing foreign workers.  Where is the outrage for that happening?  I hear nothing from the “build-the-border-fence” xenophobes, which reinforces the true intent of their complaints.  It was never about American jobs – they’re still being lost despite the efforts to crack down on immigration across our southwestern border.  It was and remains about people with different colored skin than the current majority of Americans.

So the numbers continue to get worse – and they’ll stay there for an awfully long time until more people figure out how they’re being screwed by American corporations.  Their profits will rebound while most Americans’ suffering continues.  It’s up to workers and citizens to decide when enough is enough.  Until then, news like ‘Retail sales fall‘, ‘Jobless claims remain high‘ and ‘wholesale prices fall while producer prices rise’ will continue to come out.  There is no sane reason economists should be cheering jobless claims at a rate of over 600,000 per month, just because last week’s reading is 10,000 or so less than the maximum number in late March.  600,000 per month is still over double what it was one year ago.  It’s not like 580,000 of them are finding jobs in a couple of weeks, let alone jobs that pay even as well as the job they lost.  Tens of millions of Americans are underemployed to some extent.  That is creating a huge weight on the economy, preventing it from being as strong as it should be if corporations were employing Americans instead of people in foreign countries.

Whatever bottom might be found in the next year or two won’t mean spit to those millions of Americans or the rest of us as we’re all held back by conditions that corporations and Chambers of Commerce fight for.  Unless more workers begin to stand up for themselves and their neighbors, we will all continue to be exploited.  Because you can bet any sum on corporations joining together to fight for their “right” to proiteer off of us.  As far as announcing recoveries go, economists don’t like dealing with the real world – their theoretical framework does what they want it to.  So don’t expect their prognosticating to make much sense when it comes to examining the real economy.

Weekend News Roundup: 2/20-21/09

I was disappointed to read that President Obama has taken NAFTA renegotiation of the table.  American workers are suffering because of failed “free-trade” policies.  If he wants high employment and a strong economy, protecting our workers is a primary way to get there.  This is a result of the people Obama has put into power.

Congratulations go to formor President Bush for allowing Iran to become another nuclear state.  It joins North Korea as a country that can threaten our allies for years to come, just as the War industry wanted.

Hexcel Corporation broke ground on a 100,000-sq-ft facility in north-eastern Colorado that will manufacture epoxy-resin components for wind blades.  They moved here because Vestas manufactures those wind blades at an adjacent location.  While the gas and oil industry cuts jobs in Colorado due to lack of demand for their products, the wind and solar industry enjoys new businesses and new jobs.

Another 627,000 jobs were lost in the Economy Bush Built.  Net job losses could total 700,000 for February.  Good thing corporate profits were setting records as late as last year.  I’d hate to think the economy was bad or something.

About one in four people with a mortgage owe more than their homes are worth.  One of Obama’s solutions is to force lenders to re-negotiate mortgage terms.  The lending industry, who got us into this mess in the first place, is objecting to the plan.  As usual, they’re also not proposing any kind of solution.  Doing nothing will all but destroy our economy.

David Harsanyi continues his crusade against America with his op-ed this week.  He claims taxes, extreme government spending and wealth redistribution are patriotic in an attempt to slam President Obama’s recovery plans.  In Con Fantasy Land, it seems tax reductions are now called tax increases.  Similarly, the past 8 years of keeping occupations off the budget and creating the largest government program in 30 years (that doesn’t work with its peers) went by uncommented since it was a Con “president” who proposed the “extreme government spending”.  Last but not least, Harsanyi’s characterization of wealth redistribution comes across as pathetic after we’ve seen the effects of Bush’s “tax cuts”.  Americans were sure glad to get one two grand back (the first year only) they were passed weren’t they?  Oh, except for the richest 1%.  They’re keeping hundreds of thousands to millions of dollars per year thanks to Bush’s tax cuts.  Wealth redistribution indeed.  And what’s up with this:

Yes, the same Freddie and Fannie — once implicitly guaranteed by government and now explicitly run by government — that helped, through social engineering, to push us into recession.

I wish the rest of us had figured out what the great sage Harsanyi did – Fannie and Freddie (with Cons leading them right up through the beginning of this horrible recession) were so unbelievably powerful.  Cons love their conspiracy theories.  I learned an important lesson during the Bush years.  When a Con says something, the reality is exactly opposite.

Breckenridge ski resort may not be allowed to expand onto Peak 6.  At issue is a lynx recovery plan.  It’s nice to see more honest consideration of all factors with something like this.

A Colorado constitutional rewrite is being seriously considered by more and more people.  State spending is affected by numerous, conflicting amendments.  Colorado can either lose out on education, health care and prisons or a group of adults (hopefully) can come together and implement realistic solutions.  If a Constitutional Convention is called, one potential flaw is they can rewrite any part of the Constitution they want.  It would be nice if people who were convinced government can’t operate weren’t put in charge of that government.  It simply makes no sense.

The Colorado House Agriculture Committee killed a proposal to limit the involvement of the Division of Wildlife in issuing oil and gas drilling permits.  The CDoW became involved in the Colorado Oil and Gas Conservation Commission only after a Democratic Governor was elected.  Not surprisingly, this pro-business article ony quoted a proponent of the bill.  Unlike climate change articles, where the denyers’ point-of-view in nearly sacrosant, opponents of HB-1255 didn’t get their comments published.

On a positive note for science, the Orbiting Carbon Observatory is scheduled to launch Tuesday.  The polar-orbiting satellite will measure oxygen-to-carbon ratios to indicate where carbon sources and sinks are at.  My fear is that carbon sources will be found to be larger and more prevalent than carbon sinks.  There are already indications that the warming oceans are soaking up less carbon every year, allowing the atmosphere and oceans to warm up even further.

More Dismal Economic Numbers In January

The effects of failed Republican economic theories continue to make themselves known.  The latest numbers to come out:

Only 550,000 new housing starts (annualized) were started in December.

589,000 new jobless claims were filed last week.

The corporate welfare giveaway didn’t save the banks and now they want more.

The housing number ties together a number of issues.  The Fed’s record low rate cut hasn’t changed much with regard to new housing.  People are refinancing their mortgages like mad, but not many people are buying new houses.  So that policy failed.  (It also failed to get credit flowing through the system.)  Also hurting housing is unemployment.  13.5% unemployment translates to a populace that isn’t able to buy a house.  That effect is maintained by 589,000 new jobless claims.  Over 1 million people are losing their jobs every month.  How are they supposed to buy groceries, let alone new houses?

The solution does not lie with dispensing billions of dollars to mega-corporations.  It’s millions of people and small businesses that need the government’s help, not the tiny numbers of ultra-rich people and corporations.  Rich people are sitting on our billions, letting the economy slide further into recession toward depression; watching as workers lose their jobs and their houses; hoping the spread between them and the rest of the citizenry grows each day.  Which leads to the third article: banks are still “teetering on the brink”, as MSNBC put it, because they used the money to pay for bonuses and buyouts of smaller banks, not to improve their business standing.  Banks who received billions of taxpayer dollars with no oversight or transparency did things with that money that nobody can trace.  But they want more.  Excuse me?  That malfeasance was exactly why I opposed the TARP program from the beginning: the Bush “administration” pushed it through as fast as they pushed the mis-named patriot act through.  But they said the financial system would collapse without immediate assistance.  Well, the assistance went out and the system is still looking at a collapse.  Hopefully the new President and the 111th Congress tries to solve the real problems and not the made-up ones Bush peddled.

A little oversight and some bank-busting would be a darn good start to any implemented solution.  Smaller banks aren’t having the problems that the mega-banks are.  That’s for good reason: they didn’t bundle people’s risky mortgages and bet on them irresponsibly.  Those who did so should be held to account: executives should lose their jobs and be prosecuted (where applicable) and their corporations should be broken up.  Enforce the Sherman Anti-Trust Act.  Work out plans for troubled homeowners and help maintain foreclosures.  Get some of the TARP money back.  It wasn’t dispensed as dictated by law – it should be repaid in full with interest.  Or how about creating a national bank?  One that is transparent and has oversight.  Let it compete with the rest of the banks and let’s let the “free-market” decide which one does the best job.

And the Bad Economic News Just Keeps Piling Up

I’m so glad the Cons got to show us how magical their economic theories could be in real-life!  Americans are making so much more money than they were 8 years ago, they’re so much happier, everyone is employed, and ….  Okay, the snark is going to be put away.  I do need a dose of it every now and then, especially with economic numbers that get worse by the week.  And did the morons running things ever blow their perpetually rosy forecasts, or what?  Let’s make the rounds and see what records are being broken, shall we?

Jobless claims totaled the high last seen 16 years ago.  Let’s see – that would be … 1992.  Oh, the end of the Bush I presidency, when we were leaving yet another Con-serative recession.  Could it be coincidence that the number was matched by his son?  I don’t think so.  The historical basis has been laid.  What was the magical number?  542,000.  So between last week and this week … that’s over 1,000,000 jobless claims.  Unemployment insurance claims jumped to 4,000,000 last week.  That’s the highest since 1982, when St. Ronnie was happily enacting Con economic policies.  October’s unemployment rate (under-calculated) was 6.5%  Does anybody want to guess what November’s will be?  7%?  7.5%?  8%?

The Big 3 American auto manufacturer CEO’s went to Washington D.C. this week to “beg” Congress for a loan.  How did they get to D.C.?  Aboard multi-million dollar private jets.  I have an idea where they can get some money….  The Democratic-led Congress wisely didn’t buy into their cock-and-bull story.  It seems they want more assurance that the auto corporations will viably restructure for 21st century business.  I have another idea – how about requiring the dismissal of said executives with no compensation.  They ran their businesses into the ground – they shouldn’t get to walk away with a golden parachute at taxpayer expense.  GM shares sank to their lowest value since the Great Depression.

Wall St. almost found a consolidation point in the past few weeks.  The Dow broke through the 8,000 level yesterday and continued it’s rapid descent again today by closing at 7,552.  The S&P 500 closed at an 11.5 year low of 752.  The S&P has lost 52% from its all-time high last Oct 9th.  The Dow has lost 47% since then.  The NASDAQ has lost 54% from its all-time high since last Oct 31st.

Inflation fell by a record 1% in October from September.  The Consumer Price Index fell to 3.8% year over year, down from 4.8% the previous month.  The drop is the largest since seasonal records were started in 1947.  While inflation easing would normally be considered a good thing, it could portend very, very bad things moving forward.  The problem?  Deflation.  Consumers will likely continue holding off making purchases, as they expect future prices to be lower than today’s prices.  That reduces overall economic activity.  Capacity idles, investment falls, and aggregate demand falls in a cyclical fashion.  Deflation is incredibly difficult to battle, as 1990s Japan can attest.  The current state of government actions make it even more difficult: the Fed can’t cut rates more than they are since their effective interest rate is nearly 0%.  A negative interest rate doesn’t make sense.  So far, we’re only seeing disinflation.  We’d better hope that’s all we see.

Those aren’t the only numbers out there, but the bottom line is this: the Bush recession is well underway.  When will it end?  Your guess would probably be as good as mine.  I’m thinking sometime in the first half of next year.  A lot of interconnected gears have to change directions for it to happen.  Meanwhile, the Cons are running around the country (and world) telling anyone who will listen that unregulated capitalism is still the preferred path to be on.  Just like their refusal to look in the mirror when considering why they lost so many 2008 elections, their refusal to look at their failed economic policies threatens to doom the country to a longer, deeper recession.