Posts Tagged ‘economics’
Guest post from Vulcan’s Hammer
Hold the celebrating. Here’s the sobering news:
Stock markets dropped sharply Friday and the euro slid to a new four-year low against the dollar after U.S. government figures showed lower-than-anticipated jobs creation in May…
The DOW closed at -323.31. Fun times.
But here is the real kicker:
The U.S. economy added jobs in May at the fastest pace in a decade, but the gains were inflated by temporary government hiring for the 2010 census and weren’t enough to bring unemployment down much.
The May figure was boosted by the hiring of 411,000 temporary workers for the census. Only 41,000 private-sector jobs were added.
The headline unemployment rate dropped to 9.7% from 9.9%.
So according to the BLS 431K jobs were created in May…41K were in the private sector and 390K were temporary government census workers. This is hardly good news particularly since this temporary bump will be short lived.
Based on employment patterns for the 2000 census, nearly all such census employment gains should reverse out of the data by the end of September, with June payrolls reflecting the first outright contraction in the reversal of current hiring.
Let’s face facts, the “stimulus” was a very expensive joke that taxpayers are going to have to pay back with interest to countries that buy our debt like China—fifteen months have gone but since it’s passage and we have little to show for it. Furthermore, it should be obvious to anyone that doesn’t accept this administrations usual pabulum, that the stimulus was chock full of wealth transfers and paybacks to state public sector unions. Mortimer Zuckerman pointed out the following in the WSJ recently:
It is not an accident that in framing the national stimulus program in 2009 Congress directed a stunning $275 billion of the $787 billion as grants to the states to support public-service employees in health care, education, etc.
That won’t create jobs in the private sector, that’s a wealth transfer.
The cold hard fact is that Obama’s economic plan is not working and is not going to work: it’s all a wealth transfer scheme while printing dollars in order to evoke the Philips Curve. But this time, unlike other times, the coming (and current) tax burden to businesses and citizens due to massive debt is dampening economic growth.
Expect leaner times, friends.
A Guest Post By Vulcan’s Hammer
The American economy is on the rebound. There are a slew of positive indicators every where we look: durable goods orders have increased for a third month, the Dow is closing in on 11,000, and best of all, the conference boards leading economic index is on the rise. All of this is as welcome as breaking sunshine after a brutal hurricane.
And as the economy edges into positive territory, we will start to hear from Democrats and liberals that the uptick in the economy has a lot to do with the economic policies of Barack Obama and his administration. We will hear more about the alleged effectiveness of the $800+ “stimulus” package, even though from what I can tell, and leaving the absurdity of “saved” jobs aside, it seems that the “stimulus” has done more to increase employment in the public sector than the currently desperate private sector. We will hear more about how all of the bank bailouts aided banks out of certain doom even though it seems that banks used most of the funds provided by taxpayers to pad their capital requirements, acquire other banks, and pay bonuses to their executives.
Meanwhile, we have the federal reserve keeping short term interest rates at historic lows as it attempts to re-inflate the economy out of the doldrums—more easy money shenanigans. Add to all of this, chairman Bernanke has been blessed with a stroke of luck as the Dollar strengthens due to the plummeting value of the Euro as it grapples with the Greek crisis. A bit of luck coupled with the seemingly right dose of economic policy certainly seems just what the economic gods ordered. Right?
I’m sorry to say that this is all a sham, my dear friends. The recent high economic-growth numberssee here.) Sadly, this is the kind of economic expansion that does not constitute genuine economic growth. What happens when all of the stimulus funds run out? Or better yet, what happens to all those employed in state jobs when their respective states (most of which are running deficits) can no longer keep their jobs going and the federal pork that has shored them up has run dry? Then what? The economic growth we are currently experiencing is not real growth. It is growth spurned on by aggregate demand thanks to Uncle Sam, his credit card, and an easy money policy from the Fed. How much faith do you have in all of that? After all, an easy money policy brought us the housing bubble and the subsequent collapse. And now the Fed is using an easy money policy to prop us up again; it’s their favorite tool to wield in a very lean tool box. for the United States, is just one more deception in a long series of deceptions that have inflicted policy makers, investors and the average American. The present economic expansion is brought about by massive government stimulus policies and their subsequent mal-investments. (If you don’t know what I mean about mal-investments,
It’s not as if we have not witnessed this sort of fiscal strategy before with its subsequent grave results: Japan practiced fiscal and monetary expansion on a massive scale since its economy entered a recession in the early 1990s, and the result? Stagflation. Before Japan, the 1970’s taught us a lesson that seems to have been forgotten as stimulus policies in Europe and the United States resulted in crippling stagflation.
Having this type of manufactured growth is very popular with politicians who portray themselves as having “done something” while targeting select groups with all sorts of high profile pork projects. And in this downturn, it’s no secret that being a union memberhas had its benefits. The Obama administration knows that the business cycle and very low interest rates, will move the economy forward into growth. (How much is anybody’s guess.) When it does, the administration will then claim that all of the programs that it initiated have been a great success. But in truth, the administration is simply kicking the can down the road past the 2012 elections. Don’t be fooled.
Fiscal conservatives should not be easily convinced by the coming arguments, no matter how much liberals drum it up; they should be ready to disabuse those that hail the heavy handed government practice of “priming the pump.” America’s economic recovery rests on glass pillars formed on unsustainable levels of public debt (bailouts, stimulus packages) and excess reserves in the banking sector, which could explode at any moment into a surge of inflation when the Fed is finally forced to raise interest rates.
So if the economy “recovers,” it would be wise to take it with a very large grain of salt and prepare for the next rounds of deluge.
Good lord, people! The Federal Deficit is now at $1,420,000,000,000.00!!! Last year at this time it was at $459,000,000,000. Do you libbers realize that Obama has TRIPLED the deficit in just 9 MONTHS!
I wasn’t exactly pleased with some of Bush’s policies – however – the man did not crash this economy. Bush did not spend this country beyond oblivion to the point where our dollar is now at a 14 year low. Unemployment is now at its highest rate in 25 years. Gold is now at its highest level EVER. The Yen and the Euro are currently being positioned to be the reserve currency of the world. Do you not realize that the American dollar has been the global reserve currency since the end of WW ONE! Obama has single-handedly devalued our currency to the point that what we built up in almost 100 years – he destroyed in 9 months.
Come on, folks – wake the hell up! Does anyone here realize that China has been buying up commodities (precious metals, natural gas, oil, etc.) to levels above our own? Does anyone understand why? Here’s the deal – once China feels comfortable they have enough in their own reserves – they will be calling in our debt. China can bankrupt this country with the stroke of a pen. They currently have almost as much gold in their reserves ($100 Billion) than we have in Fort Knox and they are holding $2 Trillion (not including the gold) in their reserves.
According to the latest estimates – assuming it is still actually there – all the gold in Fort Knox is only worth $137 Billion. Our national deficit right now is 10 times that amount. According to the latest reports, as of 2009 there is approximately $2.585 Trillion in circulation (take a look at that number and do the math (see above China reserves) – a little over 20 times the amount of gold in Fort Knox. Since we moved from the gold standard in the Nixon era – what this means is that there is absolutely NOTHING backing our dollars right now. Our national deficit is now 1/2 of the total currency circulating. This means that as our deficit goes up and for every dollar in circulation that is above our deficit – it devalues that currency even further. I wonder just what that means if China is holding $2 Trillion of all the total dollars in circulation? Ponder that for a while.
In addition to the $2.585 Trillion in circulation, the Federal Reserve is still holding on to $2 Trillion. That is potentially $4.585 Trillion American dollars that could end up on the market. If the Fed lets that money go – our economy will absolutely crash. Part of the reason that our dollar continues to go down, other than our huge deficit and abundant amount in circulation, is the fact that we have that other $2 Trillion ALREADY PRINTED and ready to go. This scares all those other countries who currently hold American treasuries and trade in the dollar. Essentially, we monetized our debt by holding so much printed currency.
There is only one way to reverse the decline of our dollar and boost our economy again – QUIT SPENDING and lower the freakin’ deficit. Our government has become too bloated and those asshole politicians don’t give a shit. They have lifelong retirement at 100% of their current pay and benefits at our expense. Now is the time to get real conservatives back in government. We need some true Americans who understand economics, business, and budgeting and will adhere to fiscal conservative principles. The Republicans have become Tax and Spend Democrats – and – well – the Democrats haven’t changed. They are ALL to blame for this mess.
There are a helluva lot of government organizations that are doing absolutely nothing. Government is a consumer, not a producer. Now is the time to start shutting things down and get rid of those outrageous entitlement programs. What the hell, they’re going bankrupt anyway and we taxpayers can’t afford to continue paying in to them.
Anyway – just my weekend wakeup call to my fellow Americans. Read this again and let it sink in. Whether you are liberal or conservative – these figures should disturb you.