The US Recovery

[Gun Grape]

His reply earlier in the thread, “

Snide is as snide does

I Nominate this for the most childest post by a senior member ever.

I thought Senior Members were suppose to act better than this. Guess not

[Albany Rifles]

Everybody needs to knock off the personal attacks or the thread will be locked.

[zraver]

Using DOR's data as a starting point.

3 million+ missing full time jobs after accounting for retirement, and this slightly more than 3 years after the recession officially ended.

Gold v oil is a fairly solid equivalent for one another from the 1950's through to today yet both cost far more dollars (collapse of the individual dollars buying power).

Increasingly part time jobs not full time jobs are whats being added.

Federal Reserve policy to collapse the dollar, combined with Obama's misguided attempts to increase the cost of business combined with both supporting the bubble economy (re-inflating the housing and credit default bubbles plus the student loan bubble) plus the troubles over seas, means we are in trouble. We are not "back" as has been claimed, anymore than a drowning man whose head briefly pops above water is now an endurance swimmer. A coule of examples; The housing recovery is a sham driven by investors looking to flip not people looking for homes. They are great big wooden tulips. Student loan debt is about to reach critical mass and if anything gets the bankers tar and feathered that will. Most people don't realize that the loan servicers don't actually lend the students money, the government does that. They just collect a fee from one tax payer (student) who is borrowing from other tax payers- the banks get about 50 billion a year by leeching off of students with zero risk to the banks.

We are NOT back, we are drowning.

[Doktor]

Using DOR's data as a starting point.

Can you two at least agree what time span you talk about?

3 million+ missing full time jobs after accounting for retirement, and this slightly more than 3 years after the recession officially ended.

Again, for what time span? No one ever said it's better then Clinton, but better then 2-3 years ago.

Gold v oil is a fairly solid equivalent for one another from the 1950's through to today yet both cost far more dollars (collapse of the individual dollars buying power).

That's called inflation. And US had been in luck to have one of the lowest around for those 60 years.

Increasingly part time jobs not full time jobs are whats being added.

I have been arguing then it's better then jobs. Those part time jobs, some will be lost, some will be postponed and others will be transformed into full time.

Federal Reserve policy to collapse the dollar, combined with Obama's misguided attempts to increase the cost of business combined with both supporting the bubble economy (re-inflating the housing and credit default bubbles plus the student loan bubble) plus the troubles over seas, means we are in trouble. We are not "back" as has been claimed, anymore than a drowning man whose head briefly pops above water is now an endurance swimmer. A coule of examples; The housing recovery is a sham driven by investors looking to flip not people looking for homes. They are great big wooden tulips. Student loan debt is about to reach critical mass and if anything gets the bankers tar and feathered that will. Most people don't realize that the loan servicers don't actually lend the students money, the government does that. They just collect a fee from one tax payer (student) who is borrowing from other tax payers- the banks get about 50 billion a year by leeching off of students with zero risk to the banks.

So, Obama created this student loan system?
I don't like his administration, but he has enough of his own wrong doings to add some more. Add some to Clinton if you like ;)

We are NOT back, we are drowning.

Again, compared to what? If you see Europe, it's worse. far worse.

[zraver]

Can you two at least agree what time span you talk about?

2007 v 2013

Again, for what time span? No one ever said it's better then Clinton, but better then 2-3 years ago.

2-3 years ago the problems were open and raw, not covered with rapidly failing band-aids that are going to lead to even worse hemorrhaging. Not only that, there is no longer any source of wealth big enough to paper over the problems. This means all there is is fiat currency and faith in it is failing.

That's called inflation. And US had been in luck to have one of the lowest around for those 60 years.

if oil is a constant, the modern salt so to speak, and gold is a universal constant then what we have is not inflation but dollar deflation manipulation. Neither Gold nor oil has inflated against each other.

I have been arguing then it's better then jobs. Those part time jobs, some will be lost, some will be postponed and others will be transformed into full time.

Your arguing wrong. We are now slightly more than three years since the official end of the recession. Since that end we continue to shed full time jobs and replace them with part time. The opposite of what you claim. Part of this is is because of Obamacare and the way it penalizes employers if they have full time employees, but not if they have part time.

So, Obama created this student loan system?

No he did not create it, its just another bubble getting ready to pop.

I don't like his administration, but he has enough of his own wrong doings to add some more. Add some to Clinton if you like ;)


Again, compared to what? If you see Europe, it's worse. far worse.

Actually the whole house of cards started to topple under Carter with early deregulation. The first crisis was the S&L scandal which privatized profit but made loss public. More deregulation of the financial sector under Clinton along with the passage of certain laws where the government acted to force bad loans into the system set the stage for a total meltdown. The next big crisis was the Asian financial crisis. US consumers carried the world through that one with massively ramped up consumption. Consumption based on borrowing against home equity. Same housing bubble that popped in 07, only it was still in its early inflationary stage. However, the inflating US home market and obscene and immoral profits being made off of shady loans and credit default swaps sucked in European banks. Its a vicious inter-connected circus. Brougyt to us by government meddling in the economy. Now those same government that destroyed all that wealth and the economist that egged them on, want us to trust them to fix it. I call BS, they don't have a clue. Keynesian's are like cultist and we are the sacrafice.

Want to fix the problem- follow old Jewish advice and declare a jubilee. Iceland did it and has managed a very solid recovery. Simply write off the immoral profits of the 80's and 90's and reset. But reset with much tighter controls for credit worthiness and require governments to run a balanced budget. Plus, re-install Glass-Steagall so that banks of deposit and investment banks are not one and the same and able to risk depositors money. Let companies and banks go bankrupt.... let the market work.

[DOR]

zraver,

Sorry if the Three Stooges joke went over poorly.
Honestly, it wasn’t meant as an insult.

. . . . .

Still thinking that was a recession, I see. You really should compare what happened in 2007+ to any post-WWII recession.

That, sir, was no recession. No economy roars back to life after a period like 2007+.

- - - - -

I’m glad to see you were able to find the data I quoted. But, I’m mystified as to what set you off. Where did I deliberately misuse hard data to make a point?

There is no evidence whatsoever that any course of action other than the one pursued by the Obama Administration would have had any better, or WORSE results. None.

In fact, there can’t be any such evidence, since economics is not a “test the theory with ABC factors in the real world, and if that doesn’t work, test it with XYZ.” You can't step into the same river twice. The closest we come is how the US and much of Europe coped, and the US experiment proved to be the better one, hands down.

EU (27): May 2012 unemp 25.1m (10.4%) _ _ May 2013: 26.6m (11.0%). -- Rising
USA: June 2012 12.7 mn (8.2%) _ _ June 2013: 11.8 mn (7.6%). -- Falling

EU (27): Retail trade +0.1%. Flat
USA : +4.2%. Rising
[Six month year-on-year average.]

EU (27) Real GDP: -0.5%. Falling
USA: +2.1%. Rising
[Year-on-year average, last four quarters.]

[zraver]

zraver,

Sorry if the Three Stooges joke went over poorly.
Honestly, it wasn’t meant as an insult.

. . . . .

Still thinking that was a recession, I see. You really should compare what happened in 2007+ to any post-WWII recession.

That, sir, was no recession. No economy roars back to life after a period like 2007+.

- - - - -

You said we are back, we are not back.

I’m glad to see you were able to find the data I quoted. But, I’m mystified as to what set you off. Where did I deliberately misuse hard data to make a point?

You do it all the time, see below

There is no evidence whatsoever that any course of action other than the one pursued by the Obama Administration would have had any better, or WORSE results. None.

Yes there is

In fact, there can’t be any such evidence, since economics is not a “test the theory with ABC factors in the real world, and if that doesn’t work, test it with XYZ.” You can't step into the same river twice. The closest we come is how the US and much of Europe coped, and the US experiment proved to be the better one, hands down.

EU (27): May 2012 unemp 25.1m (10.4%) _ _ May 2013: 26.6m (11.0%). -- Rising
USA: June 2012 12.7 mn (8.2%) _ _ June 2013: 11.8 mn (7.6%). -- Falling

EU (27): Retail trade +0.1%. Flat
USA : +4.2%. Rising
[Six month year-on-year average.]

EU (27) Real GDP: -0.5%. Falling
USA: +2.1%. Rising
[Year-on-year average, last four quarters.]

First comparing the US to the EU is rotten apples to rotten apples and that is a problem. Which states inside the EU and US did more or less well following which economic school of thought. Those states that generally weathered the storm the best had lower debt levels, lower government spending and more business friendly tax and regulatory codes. Those that did worse went in for heavy taxes, lots of borrowing and massive regulation.

Second, as multiple US bubbles are being re-inflated by the banking sector those GDP numbers are suspect.

Thirdly you keep dodging specific points I bring up in order to stick to your bullet point numbers. Why wont you have a discussion about what those numbers really say, what they really mean. Unemployment is not falling if you count full time jobs. If we look at the combined un/under employment rate it is climbing.

[DOR]

Well, this isn't going anywhere.
Call me in six months and we'll do it again.

[snapper]

There might have been some time, way in the past, when I posted something about gilts, but for the life of me I can’t recall when, in what context or how it figures in my recent posts.

The US Federal Reserve Board is not “the mainstream media.” As for The Spector, I posted it as “food for thought,” not necessarily something that anyone – including me – should take as the be all and end all of anything at all.

Your chart: Thirteen years of data is a nice long run. But, the world changed half way through that span. As the man said, past performance may not be be indicative of future results.

The equities markets have a long and storied history of getting it wrong, or getting right much it too early.

US Federal Government spending has been dropping as a share of GDP, and in real terms. GDP grew an average of 1.9% over the past four years, while real federal spending fell 0.3%. Of course, if Mr Obama had been foolish enough to do a Europe on the American economy right from the first day in office, GDP would have been falling, too. Simply put, he and his economic advisers weren’t that dumb.

“There has been no recovery.” Excuse me?
Mr Obama is in his 19th quarter in office, and we have almost complete data for 17 quarters.

The First 10 Quarters _ _ The Latest 7 Quarters
Real GDP _ _ +0.1% p.a._ _ _ +2.0% p.a.
Real PCE _ _ _+0.5% p.a. _ _ +2.0% p.a.
Real CAP _ _ _-3.4% p.a. _ _ +8.0% p.a.
Real Income _ _ -0.5% p.a. _ _ +1.7% p.a.

Now, I will grant you that there are differently, perfectly valid definitions of “recovery.” But, given the numbers above, and the experience in Europe during that time, I’ll go with the US model.

In the first half of this year, the average private sector hourly wage was $23.87. In the first half of 2009 it was $22.11. See also “real incomes” above.

As for higher bank interest rates as the way to recovery, please consider the case of Japan. You’re starting to sound like Paul Krugman, ca. 2006!

While I applaud your honesty in proposing the utter destruction of the US economy and dismantling of the nation, I disagree. Honestly, snapper, you have got to stop watching Fox News!

I've actually never seen Fox News - only been to the US once and was too busy to watch TV. What you're really trying to say here is that the Treasury bond yields don't matter; your employment figures show a 'truer' picture - I think. Please say if I am wrong. I would argue that you are wrong. Of course astralis (who seems to have gone missing, hope he's ok) argued before that there was no 'bond bubble' and that US the property market would do well this year (which is what I think zraver means when he talks about reflating bubbles) and pave the way for a 'recovery'. With the Fed buying $40bn of mortgage backed securities every month it would surprising if the property market wasn't reflated to some extent. The point is with the threat of 'tapering' yields are rising and as these yields dictate whether mortgage rates rise or fall it seems that you can expect mortgages to rise and buying to slow.

You suggest that half way through all the 'rules of the market' changed presumably meaning the crash of 2008. Again I think you are wrong on this; the 'rules' changed when the Fed and other Central Banks started QE - it is not crashes that distort the market but Central Bank activity. Once the QE programmes started 'bad' news became 'good' and vice versa. If the equities markets dropped, which is normally 'bad' news this meant QE would continue so actually it was 'good' news. So if Bernanke does indeed 'taper' and looks to end QE next year this recent confusion between good and bad news ends; bad news becomes what it says on the tin. You therefore can't regard rising gilt yields with their knock on effects on the property market as 'good' news unless Bernanke does an about turn. This is why I argue it all still depends on what the Fed does. If QE continues you get more asset inflation, equities go up and bond yields will be checked. I do not believe it's 'real' growth - just number inflation. We can all add a few 0s and the numbers go up. This should not be mistaken for saying anything about underlying reality where 'structural changes' (lower taxes and changes to employment regulation for example) may be required. If Bernanke does 'taper' he's also left with a lot of losses on the Fed's portfolio which will have to be monetised and that kind of makes a mockery of the theoretical basis for QE.

One other on the employment data. Unemployment remained at 7.6% - the percentage didn't fall. Didn't the Fed say it wanted unemployment at 6.5%? What is looking so rosy that this no longer matters?

[DOR]

I love this graph: 89 years of normal, and then something broke

T-bills yields are a useful indicator in normal times, and inverted yield curves often (not always) signal a recession. The operative term is “in normal times,” which these ain’t (see the graph).

I did not say the ‘rules of the market’ changed. What I said (and you quoted) was ‘But, the world changed half way through that span.’

I don’t dismiss out of hand T-bills or financial markets in general, but neither do I bow down to their might and tremblingly obey.

The financial markets are divorced from the real world, for the most part. Jobs matter to people, and the money workers earn drives the largest share of advanced economies, consumer demand. Year-on-year growth in civilian employment has been positive for 34 months in a row, and growing faster than growth in the labor force for the past 19 months. The only age group not turning in consistent positive numbers for jobs is the 16-19 year old demographic.

. . . . .

I am currently enjoying the spectacle of folks who regularly ranted about Bernanke’s ‘irresponsibly loose monetary policy’ now moaning about his preliminary comment that, if things continue to improve at the recent pace, there will be need to reconsider, just possibly, in the fullness of time and at the proper juncture, the end to extraordinary monetary policy.

. . . . .


Perspective: If you can see a tiny thickening of the line in the 1980s, that’s the S&L crisis.

[Crocodylus]

The financial markets are divorced from the real world, for the most part. Jobs matter to people, and the money workers earn drives the largest share of advanced economies, consumer demand. Year-on-year growth in civilian employment has been positive for 34 months in a row, and growing faster than growth in the labor force for the past 19 months. The only age group not turning in consistent positive numbers for jobs is the 16-19 year old demographic.

When you're making s**tloads of ca$h day in and day out and living a life of unparallelled freedom, of course you would not give away your secret ;) Those operating "on the inside" pretty much "have it all" and want to keep it that way, hence all the chicanery that occurs in the world of finance. This is one instance of emotion, not strategy or logic, driving the financial markets. The latter merely serve as instruments to express the former.

As for the demographic of 16-19 year olds not producing positive numbers, most of these either go to high school or college, so most of the time it's part-time jobs they take.

[snapper]

Naturally your graph says nothing about the potentially toxic debt the Fed is sitting on. All it shows is that primary banks are cashing in their Government bonds at the Fed which we always knew. Not sure it solves a bursting of the bond bubble in any way. The Return of the Bond Vigilantes is coming to a mortgage like yours! - if he 'tapers'.

I did not say the ‘rules of the market’ changed. What I said (and you quoted) was ‘But, the world changed half way through that span.’

But I think - and please correct me if I am mistaken - you would argue that it changed when the banks crashed and that somehow necessitated 'special' powers fiscal or monetary. With that I fundamentally disagree. If a business or whole 'sector' goes bust I object to having to pay for it! Go to Hell where your stupidity and greed will be appreciated! It ain't the taxpayers problem - we're innocent. The change occurred with the supposed 'remedies' that have simply re-inflated more bubbles.

The financial markets are divorced from the real world, for the most part. Jobs matter to people, and the money workers earn drives the largest share of advanced economies, consumer demand. Year-on-year growth in civilian employment has been positive for 34 months in a row, and growing faster than growth in the labor force for the past 19 months.

I would agree with you on the first bit here that "The financial markets are divorced from the real world, for the most part." but ask what makes this so at present? Could magic money to the tune of $85bn per month have nothing to do with the recent equity highs? Is there no relation whatsoever or is it half/half? To my mind it is 9/10th the increase in existing $s (x4.5 ish since 2008). The companies are not suddenly making a greater profit - their value is inflated if they are making any profit.

As for the well meaning words about jobs etc... almost Obama-esque. A part time job doesn't pay a mortgage or pay for a new car or a family holiday and the numbers show (in the UK too) that more people are classified as 'employed' because they work part time in a bar or a coffee shop or MacDonald's or some other cheap job. The numbers also show that wages lag behind inflation - even on your own skewed inflation calculation. How you can calculate inflation without fuel or food included and hope to know how it feels for the man on the street is still beyond me alas. Yet you say you're worried about the ordinary person? Perhaps it's not meant for people who have to buy their own food etc... It's a blatant distortion of fact to mislead the mostly ignorant masses who don't believe you but don't understand the con that being played on them by the bankers and Government. Comparing British and US inflation is not really possible... it's apples to oranges. Some last shred of honesty remains terra firma. You aren't worried about jobs for the people Comrade. You're worried about some weird Keynesian theory of liquidity to keep the system afloat - a system that creates debt slaves out of the people.

I am currently enjoying the spectacle of folks who regularly ranted about Bernanke’s ‘irresponsibly loose monetary policy’ now moaning about his preliminary comment that, if things continue to improve at the recent pace, there will be need to reconsider, just possibly, in the fullness of time and at the proper juncture, the end to extraordinary monetary policy.

It doesn't matter if he 'tapers' or twists. Which way you prefer your poison? Long or short? If he keeps going (and my bet is he will) then eventually meltdown is guaranteed and the $ probably stops becoming the world reserve currency which may entail war. If he 'tapers' you get a dose of hard reality that Obama will not approve of. Fiscal tightening will have to increase to pay higher borrowing costs and the property market subsides. Unemployment rises about 9 months later. The wrong thing to do was start QE - recessions are good if they allow the market to work. This one has been 'managed' and it has only added to misallocation of resources. The next recession will be worse.

[astralis]

snapper,

well, i return to see that you're now making predictions.

so, what type of timeframe are you talking about until we see either your meltdown/$ stops being reserve currency/war scenario, or your unemployment rises/property market subsides scenario?

[Doktor]

No butter cookies this time?

[astralis]

i think i offered to make that bet two or three times now. i'm willing to offer it up again, but i don't think snapper will accept.