How will Obamanomics affect the employment curve?

posted at 4:07 pm on September 4, 2009 by Ed Morrissey

Earlier today, the Obama administration took a blow to its economic credibility with a jump in unemployment to 9.7%. Eventually, these numbers will begin to decline, however, and Ramesh Ponnuru warns conservatives not to fall in love with pessimism:

Like Larry Kudlow (if less influentially), I think conservatives and Republicans are overdosing on economic pessimism. If the jobs-on-Obama’s-watch number turns positive by the summer of 2010, will Steele be willing to say that the stimulus did work? Republicans are helping the Democrats take credit for a jobs rebound should one occur. And the information in today’s jobs report by no means suggests that we’re in a deepening recession. Private-sector payrolls saw their smallest drop in a year (even with a minimum wage increase and a concomitant drop in employment among teenagers). Wages seem to be going up.

Maybe I’m naive, but I think conservatives and Republicans need to have a much more solid, and less knee-jerk, economic message. My own stab at one would be: The economy’s regenerative powers are strong enough to overcome even seriously mistaken policies in Washington, but we would be recovering faster–and running less risk of ruinous debt and inflation–with better policies.

It’s good advice, and it has the benefit of being true, as Edward Lazear explained in his analysis from last month. Lazear, the former chair of the Council of Economic Advisers and currently a professor at Stanford and a fellow at the Hoover Institution, looks at the historic data on recessions and unemployment and predicts an eventual return of job growth. The problem, Lazear predicts, will be the massive crowding-out impact of Porkulus on capital in the market, which will delay and depress the normal curve:

The labor market will be slow to recover, and, unfortunately, there is little the government can do to speed it up. Stimulus spending occurs too slowly and has only small and delayed effects on the labor market. Recoveries have a consistent pattern. First, GDP recovers and productivity grows. Firms increase their output not by hiring more workers, but instead by getting more output out of the workers that they have. With significant delay, as demand continues to increase, firms then hire additional workers and the unemployment rate falls. Finally, when unemployment reaches sufficiently low levels, say in the 5% rage, we start to see upward pressure on wages. An examination of recessions dating back to the 1960s exhibits the same pattern throughout each recovery. We can expect that this one will be no different from the past, and that it will take a significant amount of time for the labor market to recover. The pain of this slow labor recovery will tempt the government to try to speed up the labor market’s resurgence. This temptation should be avoided as succumbing to it will be counterproductive.

The chief threat to future economic growth and stability is the vast expansion of government announced by the current Administration. A large part of this expansion has been camouflaged as stimulus. The additional spending of $787 billion, most of which will occur in 2010 and 2011, with the smallest amount occurring in the current year when the recession is at its height, represents permanent government expansion cloaked in the guise of temporary spending. Additionally, plans to change the health care system and other budget announcements by the Administration make clear that we are on target for a major change in the size of government relative to GDP. Using the Administration’s own projections, the 10-year deficit will be nine trillion dollars and will, in 2009 alone, be in the range of 10-11% of GDP, more than three times the highest deficit during the Bush years. A key number to consider is the ratio of public debt to GDP, which has averaged about 37% for the past forty years or so. When the Obama team came into office, it was at 40%, and by the end of this Administration’s first year in office it will reach 50%. If the Obama administration’s projections prove correct, the ratio of public debt to GDP will be 80% by 2019. Excessive government spending must be paid for. And it will be. Present borrowing will be paid for in the future either in the form of taxes, inflation, or further borrowing from abroad, which in turn means higher taxes or inflation.

On the other hand, Lazear also notes that the apparent slowing of job losses does not always indicate a recovery cycle has begun:

In particular, the Administration celebrates that job losses are only a quarter of a million jobs per month rather than more than half a million and that initial unemployment claims are in the high 500,000 range rather than the high 600,000 range. However, as the economy reaches very low levels of employment it is natural that we shed jobs more slowly. Indeed, the first jobs to go are the easiest to cut, and since we are now at a low level of employment, cutting additional jobs becomes increasingly difficult. But, that does not mean that the labor market will turn around rapidly. The 9.4% unemployment rate speaks for itself. (During the Bush term, it averaged 5.4% and during the Clinton term, it averaged a similar 5.3%.) Persistently high unemployment is an unfortunate characteristic of recessions and the one that is felt broadly, directly or indirectly, by most Americans.

With the CBO predicting an average of 200,000 net job losses per month through the end of 2010, the delay may be considerable as employers squeeze productivity hard before committing capital into labor growth. Given the rate of government spending, businesses have to consider the strong possibility of large tax hikes in the future, which will discourage risk-taking and investment. Those factors will combine with the loss of capital in the markets to slow the curve even further between recovery and employment improvement.

In short, we’re in for a long ride, and that isn’t just undue pessimism. When jobs do begin to recover, as they will, conservatives will need to point out that we endured unnecessary pain thanks to the fiscal policies of a reckless administration. And all of this assumes that we don’t apply the cap-and-trade policy that passed the House last July, which would further depress business growth and employment through large-scale increases in energy costs that would filter through the entire distribution chain.


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Private-sector payrolls saw their smallest drop in a year (even with a minimum wage increase and a concomitant drop in employment among teenagers). Wages seem to be going up.

Ramesh is right on his main point.

However, Americans care very little that you’ve had a smaller drop than usual in payrolls.

Here’s what they see from the Associated Press story:

WASHINGTON (AP) – The unemployment rate jumped almost half a point to 9.7 percent in August, the highest since 1983, reflecting a poor job market that will make it hard for the economy to begin a sustained recovery.

While the jobless rate rose more than expected, the economy shed a net total of 216,000 jobs, less than July’s revised 276,000 and the fewest monthly losses in a year, according to Labor Department data released Friday. Economists expected the unemployment rate to rise to 9.5 percent from July’s 9.4 percent and job reductions to total 225,000.

They see the unemployment rate rising, talk of the economy being harder to revive, economists predicting better results than what came to fruition, and the bit about 26 years.

There are fewer jobs than usual lost? Fantastic. They care very little if one of those lost was a family member, friend, or neighbor.

“A recession is when your neighbor loses his job. A depression is when you lose yours.”

amerpundit on September 4, 2009 at 4:13 PM

And this is when the depression starts.

upinak on September 4, 2009 at 4:13 PM

Lazear…..Lazear…..Lazear…….

Wouldn’t he be the guy that worked on UFOs at Area 51. Great credentials……

JoeinTX on September 4, 2009 at 4:13 PM

What a joke…we are too pessimistic??? Are you kidding? We aren’t pessimistic enough. Exactly what is it in the economy that we should be celebrating? That we are imitating Zimbabwe? If spending money equals recovery then Zimbabwe should be the city on the hill.

Conservatives thinking that the economy is coming back need to start wondering if Pete Stark was right and Debt equals wealth.

Neo Conservatives believe that sort of nonsense…the rest of us don’t. Isn’t it time we did away with the neo conservatives?

PierreLegrand on September 4, 2009 at 4:14 PM

Real unemployment is now 16.8%.

BTW we are in a deflationary spiral.

http://www.zerohedge.com/article/real-unemployment-rate-hits-168

jdun on September 4, 2009 at 4:15 PM

No, what Conservatives need to point out is that the Government has no real control over these numbers… and the job market, EXCEPT in a NEGATIVE manner.

But that the Government DOES control its own debt…

So they are spending money, to no effect…. the economy will recover, as its always done.

They also need to point out that Barry ran on having superior judgement to Bush… and yet his numbers have consistantly been wrong…

Romeo13 on September 4, 2009 at 4:15 PM

Isn’t it time we did away with the neo conservatives Socialistic Liberals who want Dictoralship in the land of the free?

PierreLegrand on September 4, 2009 at 4:14 PM

FTFY

upinak on September 4, 2009 at 4:16 PM

If the jobs-on-Obama’s-watch number turns positive by the summer of 2010, will Steele be willing to say that the stimulus did work? Republicans are helping the Democrats take credit for a jobs rebound should one occur.

Dems take credit for a jobs rebound when one DOESN’T occur. I think the GOP needs to continue to put heat on Obama and the Dems for their utter failure. Then in 2010, they need to start offering up an alternative economic plan as the midterms approach.

Doughboy on September 4, 2009 at 4:16 PM

We’re in the short recovery phase before the true market bottom, similar to the Great Depression. Deal with it.

The Calibur on September 4, 2009 at 4:16 PM

“With the CBO predicting an average of 200,000 net job losses per month through the end of 2010″

Lets see that only 3.2 Million more unemployed. 11% unemployment. No problem there. Good thing stimulus gave us a jolt otherwise we might have an issue.

Sanmon on September 4, 2009 at 4:17 PM

Hey, look, over here! Government jobs! It’s the new growth industry!

Fletch54 on September 4, 2009 at 4:18 PM

Eventually, these numbers will begin to decline, however

In 2012? The problem is all the folks out of work so long they’re on the street. As they walk away from their homes and everything else, the net result will be catastrophic.

It not helpful that we avoid the real unemployment number, because it includes all the people who actually are out of work, including those who (what a shock) can’t find a job and gave up.

dogsoldier on September 4, 2009 at 4:18 PM

Like Larry Kudlow (if less influentially), I think conservatives and Republicans are overdosing on economic pessimism. If the jobs-on-Obama’s-watch number turns positive by the summer of 2010, will Steele be willing to say that the stimulus did work?

And yet… that’s EXACTLY what Obama, Biden and the Democrat Media said in July.

I think liberals and Democrats are overdosing on economic optimism.

Skywise on September 4, 2009 at 4:19 PM

What? Unemployment went up again? Say it isn’t so! Obama’s chickens…have come home to roost!

Battlecruiser-operational on September 4, 2009 at 4:21 PM

were at the point where if and when jobs come back the sense will be it occurred despite Obama.

rob verdi on September 4, 2009 at 4:21 PM

We’ll recover in spite of Porkulus, not because of it. The best way to reinforce this is to not place all the blame on Obama for the present situation, which would allow him to claim full credit for recovery. Market forces will drive the engine if health care reform and cap and trade go bye bye. Then, an honest attempt to fix Medicare and SS.

a capella on September 4, 2009 at 4:21 PM

As part of that 9.7%, I don’t care if the stimulus creates jobs a year from now, we were promissed immediate relief hence the need to pass this bill before anyone could read it. Any job growth will now occur in spite of this Administration.

cadams on September 4, 2009 at 4:23 PM

We’re in the short recovery phase before the true market bottom, similar to the Great Depression. Deal with it.

The Calibur on September 4, 2009 at 4:16 PM

As long as Obama continues on Carter-o-nomics , great depression is what it will become.

the_nile on September 4, 2009 at 4:24 PM

The job numbers will eventually turn north of course, even with this cretin in the white house things will eventually get better.

The first unemployment drop will not be more people working however, it’ll be people no longer qualifying or giving up on the whole ordeal. You can also expect the WH to fudge the numbers at the earliest opportunity, much like Clinton killed the effectiveness of the inflation index when he wanted to shoe decreasing inflation.

Then finally jobs will come back, but not the same jobs that were lost. Lesser valued jobs will pop up, but they’ll disappear again too as his stupid economic nightmarish ideas start to effect the economy.

One thing that’s stopping recovery now is the raise in minimum wage. Dumbest idea ever. Next will come the health care, cap & tax, and when he can’t steal enough of your money doing that he’ll raise taxes and give the IRS more power.

Down goes the economy again. Doesn’t take a genius to see what’s coming.

Spiritk9 on September 4, 2009 at 4:24 PM

That NetFlix picture of Brad Pitt on the homepage is driving me nuts. Could we please have a picture of Bo Derek?

fogw on September 4, 2009 at 4:24 PM

Tax and trade and teddy care are lined up to destroy about 2 million jobs each.There is no incentive to expand or hire.

seven on September 4, 2009 at 4:25 PM

How’s that turnaround in the economy going?

Making the recession great …

tarpon on September 4, 2009 at 4:25 PM

Ramesh Ponnuru warns conservatives not to fall in love with pessimism:

later in the article

In short, we’re in for a long ride, and that isn’t just undue pessimism.

Don’t fall in love with pessimism, but it is justified.

It is hard to be optomistic when some hits are coming:
- State budget shortfalls
- Commerical real estate loans
- More bank failures
- Bush tax cut expiration
- Medicare is bankrupt
- SocSec outflows exceed inflows
- Public employee pensions
- etc.

This is all happening in the next decade. Where do I get by optomism about the future prosperity of this country?

WashJeff on September 4, 2009 at 4:25 PM

Market forces will drive the engine if health care reform and cap and trade go bye bye. Then, an honest attempt to fix Medicare and SS.

a capella on September 4, 2009 at 4:21 PM

We should not be emphasising that Obama caused the recession, but instead we should emphasis that the waste and mismanagement caused by his team, delayed the inevitable recovery.

We should also be pointing out the trillions spent with nothing to show for it.

MarkTheGreat on September 4, 2009 at 4:26 PM

We are headed right where they want us to be economically, which is a full-blown depression.

If you haven’t figured that out yet, then you haven’t been paying attention to what has really been going on since 12:01pm, January 20, 2009.

Dave R. on September 4, 2009 at 4:27 PM

I think Obama is counting on the swine flu to take unemployment numbers down. I have heard no Plans from this administration besides stimulus and that was an interesting jolt thud.

Sanmon on September 4, 2009 at 4:28 PM

a capella on September 4, 2009 at 4:21 PM

Agreed. I have not seen one program in the stimulus package that has any impact on long term employment. I do see a mounting deficit that could cripple this economy for decades.

HoustonRight on September 4, 2009 at 4:29 PM

The majority of political bloggers has no idea how bad the US economy is. The government are low balling the numbers.

The commercial restate market is in the process of crashing.

ARMS, Prime, Alt-A, etc mortgage going to go KB! between 2010-2012. It will be twice as worst then sub-prime.

This is a credit lead recession that has turn into a depression. We are currently in a deflationary death spiral. The will be no inflation for awhile.

Millions of Americans will run out of unemployment check by the end of the year. Expect a lot of retailers to go out of business next year.

China economy has imploded. They aren’t buying US notes. They are trying to save their own skins.

FDIC is bankrupted. There is no 500 billion credit line from congress because it didn’t pass committee. Wells Fargo is expect to go under. More and more banks will fail which will lead to a bank holiday sooner or later in the USA.

Their is more but you get the idea.

jdun on September 4, 2009 at 4:29 PM

But the important part is that socialists from all over Chicago have nice government jobs whilst Bush’s recession takes it’s toll on those racists from Red America. /sarc

Browncoatone on September 4, 2009 at 4:29 PM

One thing that’s stopping recovery now is the raise in minimum wage. Dumbest idea ever. Next will come the health care, cap & tax, and when he can’t steal enough of your money doing that he’ll raise taxes and give the IRS more power.

Down goes the economy again. Doesn’t take a genius to see what’s coming.

Huh. It’s almost like he’s trying to destroy the economy…naaaah!

Battlecruiser-operational on September 4, 2009 at 4:29 PM

…delayed the inevitable recovery.

MarkTheGreat on September 4, 2009 at 4:26 PM

Er, exactly what “recovery” are you referring to? I don’t see one anywhere on the horizon.

Dave R. on September 4, 2009 at 4:30 PM

We should not be emphasising that Obama caused the recession, but instead we should emphasis that the waste and mismanagement caused by his team, delayed the inevitable recovery.

We should also be pointing out the trillions spent with nothing to show for it.

MarkTheGreat on September 4, 2009 at 4:26 PM

No disagreement, just hard to convince Americans of what would have happened if we did nothing or did (a), (b) and (c). Will be viewed as politicial conjecture.

WashJeff on September 4, 2009 at 4:31 PM

We know that summer begins around June 21, on the longest day of the year, and that the hottest days of the year are not far behind. But length of daylight is a leading indicator of warmth; notably, December 21 is the day that daylight hours hit bottom and begin to lengthen. September 22 is the day that daylight hours shorten the fastest, and begin to shorten less quickly; but, we would not state in late September that because days are beginning to shorten less quickly, hot weather is just around the corner. Yet we hear that because jobs are beginning to be lost less quickly, economic recovery is just around the corner. We still have to get through winter.

topdog on September 4, 2009 at 4:33 PM

If the jobs-on-Obama’s-watch number turns positive by the summer of 2010, will Steele be willing to say that the stimulus did work?
Lets worry about getting the unemployment number below 6% before we worry about who compliments who.

fourdeucer on September 4, 2009 at 4:33 PM

Of course the average wage is going up. The people losing jobs tend to be at lower levels and younger who earn less. This drives the average wage up.

hip shot on September 4, 2009 at 4:34 PM

It does not matter, because the media will say the stimulus has worked no matter what.

rlwo2008 on September 4, 2009 at 4:34 PM

topdog on September 4, 2009 at 4:33 PM

ah ok.

But that doesn’t help the situation by saying we have to get through the winter. Common Sense… goes a long way, and most everyone knows that in here already.

upinak on September 4, 2009 at 4:34 PM

I don’t think that the reported unemployment percentages are as important to the individual as is the lack of a job, working shorter hours, or having a family member or friend in that situation.

farright on September 4, 2009 at 4:37 PM

jdun on September 4, 2009 at 4:29 PM
Wells Fargo is expect to go under.

JPMorgan Chase hold more commercial 2nd’s than any other bank. We will have to sees who wins this race to failure.

Sanmon on September 4, 2009 at 4:38 PM

Didn’t the OMB just predict high 9%/low 10% unemployment for the next 24 months?

Chuck Schick on September 4, 2009 at 4:40 PM

The Porkulus was a joke that did nothing for the economy. It’s funny how people can point to less than $100 billion in wasted spending and totally ignore trillions – TRILLIONS – that have been dumped into the system by the Fed. I have never seen such stupidity in my life, though I find myself saying taht every day, as no matter how stupid things seem today, there is no question that more stupidity will be found tomorrow. We are stuck on a vicious cycle of public stupidity.

progressoverpeace on September 4, 2009 at 4:40 PM

It does not matter, because the media will say the stimulus has worked no matter what.

rlwo2008 on September 4, 2009 at 4:34 PM

When the AP does a fact check on Joe Biden with regard to how well the stimulus worked, chances are pretty good that not all of the state run media will fall in line behind that concept.

VibrioCocci on September 4, 2009 at 4:42 PM

Private-sector payrolls saw their smallest drop in a year (even with a minimum wage increase and a concomitant drop in employment among teenagers). Wages seem to be going up.

I didn’t read the comments all that closely, so I don’t know if anyone touched on this, but the Federal Minimum Wage went from $6.55 to $7.25 on July 24th…. it doesn’t say what period they examined wages, but if it was last month….. wouldn’t the increase give a bit of a boost to overall wages for the month of August? Technically making it a “false” increase? Just wonderin.

HouseHold6 on September 4, 2009 at 4:42 PM

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pain train on September 4, 2009 at 4:45 PM

The stimulus bill was a “Diner’s Club” solution from the beginning. To the extent it “created or saved” jobs, they were temporary at best, possibly delaying some layoffs. But this was at the expense of burdening the economy for years or decades with more debt and higher taxes, deepening and lengthening the downturn, slowing the economy, and threatening an inflationary backlash at the end. “Buy now, pay later” may make for good politics, but lousy economics — which is a good reason why politicians shouldn’t be allowed the power to do such things.

Socratease on September 4, 2009 at 4:46 PM

the_nile on September 4, 2009 at 4:24 PM

No kind of “nomics” will get us out of this mess. The horse is out of the barn. The dollar is the main currency of trade and when it becomes worthless (which is soon) world wide trade will stop. No one knows what their products are worth and a entire new market will have to be constructed to assess value and that takes a long time. In that long time, we’ll be feeling the pain.

The Calibur on September 4, 2009 at 4:49 PM

If the jobs-on-Obama’s-watch number turns positive by the summer of 2010, will Steele be willing to say that the stimulus did work?

Uhm.. No.. because the stimulus should have per Biden and Obamas words, already kicked in by now… not one conservative to my knowledge has blamed the Porkulus for the job situation being as bad as it is… It’s as bad as it is, despite the porkulus being passed.

Remember the original numbers? And how the Stimulus was supposed to help stem those original numbers… it hasn’t stemmed/lessened those numbers, so it’s done absolutely nothing now for unemployment and it will have absolutely nothing to do with it _IF_ the numbers improve.

DaSaintFan on September 4, 2009 at 4:49 PM

The Calibur on September 4, 2009 at 4:16 PM

I would agree. Even a drowning man comes up for air several times before he sinks like a stone. I don’t think what we’re seeing now are green shoots; just misplaced optimism. I predict another market crash within six months.

We also haven’t seen the end of the housing crisis. I still can’t sell my condo in Florida. There has been virtually no recovery in the hardest hit markets, and with some ARMs set to reset in 2011, and the coming crash in commercial real estate, it would seem we are setting up for a perfect storm that will make this most recent malaise look like a trip to Disneyland by comparison.

I also wonder how much longer the Fed can keep interest rates so low. I am no expert on monetary policy, but it would seem to me, with the out of control spending taking place in Washington, that eventually rates will have to go up. In which case I would expect massive stagflation to set in. Combine all of that with cap and trade, should it pass, and the shortages it will cause, and 2011 will look like 1979 on steroids. The GOP could run Mickey Mouse and win.

I think if anyone doubts where this is headed, they only need to look at countries like Argentina to be disabused of the notion. I only hope that we survive this and are able to recover for it. It will take real leadership for that to happen, tho, and there’s no hope of that with this current administration.

NoLeftTurn on September 4, 2009 at 4:50 PM

First off National Review’s economic analysis ranks right up there with New York Times. Both of them are shills for big government…didn’t used to be that way but since NR started letting in all those Neo Conservatives/Socialists mugged by reality it has been. They are hawks on Defense and doves on everything else…David Frum…etc.

We’ll recover in spite of Porkulus, not because of it. The best way to reinforce this is to not place all the blame on Obama for the present situation, which would allow him to claim full credit for recovery. Market forces will drive the engine if health care reform and cap and trade go bye bye. Then, an honest attempt to fix Medicare and SS.

a capella on September 4, 2009 at 4:21 PM

No we won’t recover we will go through hell because neither side seems to want to give this country the medicine it needs. We need to cut spending, we need to actually produce goods and no we won’t be led out of this black hole by consumer spending.

Republicans and Democrats only want one thing…us sucking the tit of the Government. One tit is on the left the other is on the right…both connected to the rotting corpse of a big ass government.

PierreLegrand on September 4, 2009 at 4:52 PM

National Review represents the French in the conservative movement. They always carry around white flags in case there’s an opportunity to surrender. The magazine reflects its leader – Rich Lowry, a girlie-man if there ever was one.

bw222 on September 4, 2009 at 4:52 PM

I think if anyone doubts where this is headed, they only need to look at countries like Argentina to be disabused of the notion.

NoLeftTurn on September 4, 2009 at 4:50 PM

The big difference between the US and other nations that have destroyed their currencies is that those nations were able to be bailed out (usually by us) but no one can bail the dollar out. When the dollar goes, nothing can stop it and nothing can replace it. The destruction of the dollar presents a situation that this world has never seen.

progressoverpeace on September 4, 2009 at 4:54 PM

NoLeftTurn on September 4, 2009 at 4:50 PM

The problem with interest rates is that there’s no way to pay the debt as is. Raising rates makes it even more impossible. You’d have to be nuts to buy American dollars. The Chinese will be trying to fire sale those as soon as possible but as soon as they do, they lose value and the whole charade is kaput. With credit already at a stand still, raising rates kills the economy instantly.

A funny parallel between Argentina and your current real estate problem: their currency failed so it was actually better to own assets than cold cash. You may be best off to hold onto it.

The Calibur on September 4, 2009 at 4:55 PM

The big difference between the US and other nations that have destroyed their currencies is that those nations were able to be bailed out (usually by us) but no one can bail the dollar out. When the dollar goes, nothing can stop it and nothing can replace it. The destruction of the dollar presents a situation that this world has never seen.

progressoverpeace on September 4, 2009 at 4:54 PM

Sadly what will replace it is very well known…caliber .30

PierreLegrand on September 4, 2009 at 4:56 PM

Sadly what will replace it is very well known…caliber .30

PierreLegrand on September 4, 2009 at 4:56 PM

*rolls eyes*

I assume you will be the first to go?

upinak on September 4, 2009 at 4:59 PM

I’m not as pessimistic about job recovery, since I do believe the economy is fundamentally sound and can withstand what Obama has done to date.

Thus, I’m in agreement with Ramesh’s advice not to harp too much about the unemployment numbers as that could come back to bite in 2010 or 2012.

What scares the living hell out of me is the inevitable inflation that’s just around the corner.

With debt growing to 50% of GDP quite soon, it’s going to have to be paid one way or the other:

The hard way is massive tax hikes, and this would have to be across the board. Not likely.

The easy way, and the most likely, is massive inflation. Which means the huge debt will be paid back with far less valuable dollars.

The Chinese know this and thus have substantially cut back on buying our bonds and instead are buying all the oil and commodities and precious metals they can get their hands on.

Inflation, of course, is nothing but an indirect, hidden tax on us all.

But, it comes with a hidden risk, a good chance it could spiral out of control, given the historically high debt load.

Finally, you add ObamaCare and/or Cap and Trade, you guarantee the nightmare of unmatched unemployment AND spiraling inflation.

And, folks, we’re toast.

TXUS on September 4, 2009 at 5:01 PM

*rolls eyes*
I assume you will be the first to go?
upinak on September 4, 2009 at 4:59 PM

Too obscure for me…

And I see you fixed my Neo Conservatives by relabling them Socialist Liberals…exactly. They are one and the same.

PierreLegrand on September 4, 2009 at 5:02 PM

And I see you fixed my Neo Conservatives by relabling them Socialist Liberals…exactly. They are one and the same.

PierreLegrand on September 4, 2009 at 5:02 PM

wow. I guess that flew over your head. I “fixed it” calling you a Socialistic Liberal.

Dense.

upinak on September 4, 2009 at 5:03 PM

I am going to remain pessimistic until I can find a job.

bridgetown on September 4, 2009 at 5:04 PM

Our local economist has been predicting the dreaded W recovery and we’re on the precipice of the second dip.

Rogue on September 4, 2009 at 5:08 PM

*rolls eyes*

I assume you will be the first to go?

upinak on September 4, 2009 at 4:59 PM

Pierre is just expressing the fact that when the currency goes, there is no glue left to society. That just happens to be the truth. You can roll your eyes over the fate of the currency, but if it does go, everything falls apart. And, as I said earlier, we cannot be bailed out by anyone, as Argentian, Mexico, Iceland, Albania, … were. We will not be in the position of Zimbabwe, to just adopt another currency. The dollar has no replacement.

progressoverpeace on September 4, 2009 at 5:13 PM

Biden, Obama’s chief stimulus cheerleader, proudly pointed to more than 2,200 highway projects Thursday funded by the program, but didn’t mention the growing frustration among contractors that infrastructure money is only trickling out

Following along topdog’s logic (?), it seems to me that when any significant stimulus money finally is released, it will happen just in time for winter.

Probably not the best, or most efficient, time to be building roads and bridges in the north.

pain train on September 4, 2009 at 5:15 PM

Our local economist has been predicting the dreaded W recovery and we’re on the precipice of the second dip.

Rogue on September 4, 2009 at 5:08 PM

Forget the “W”. The way policy is oriented, coming out of the Washington junta, I am expecting more of an “M” descent.

progressoverpeace on September 4, 2009 at 5:15 PM

Wouldn’t he be the guy that worked on UFOs at Area 51. Great credentials……

JoeinTX

You’re thinking of Bob Lazar.

StevefromMKE on September 4, 2009 at 5:17 PM

wow. I guess that flew over your head. I “fixed it” calling you a Socialistic Liberal.
Dense.
upinak on September 4, 2009 at 5:03 PM

Me? A Socialist Liberal? Are you smoking crack or just stupid? Here is a socialist liberal practicing what you should be practicing because soon you will need it.

Because I see the evil that was done to this country by both sides of government does not make me a socialist liberal…it makes me a realist.

PierreLegrand on September 4, 2009 at 5:18 PM

I thought the article made some good points but one of my problems with it is that the turn around of the economy he talks about does not take in consideration the extreme socialist policies of the Obama administration.

This is not a clear thinking group of people that want to institute policies that are sound and productive for the American people.

There policies are based on leftist ideology and are centered on government expansion and takeover of the private sector.

They have basically declared a war on business during a recession just like they have declared a war on our intelligence agencies during a time of war.

These are not the actions of leaders who are trying to help all Americans achieve their dreams and goals but of a government doing what it takes to have total control over the entire economic and social system.
There is much history that shows no rebound in economic status with these kind of policies.Look at Cuba,Russia,N.Korea and yes China to. Only the elite are making all the money in China.There are still millions and millions living like peasants and working for pennies.

I would be more optimistic if the policies being instituted did not increase government control,loss of jobs in the private sector, debt,increase the need for taxes,and gut sectors like energy,banking,mortgage,and retail.

Pessimistic or not, this guy has a proven track record and I can see a lot of his predictions coming true:

http://www.youtube.com/watch?v=EOnrdyY_nXY&feature=player_embedded

This has been long in the making, but now it’s being accelerated, by these programs of stimulus packages, bailouts, buyouts, government takeovers. By the way, people are calling it — is it nationalism, is it socialism? The merger of state and corporate powers, according to Mussolini who knew a thing or two about it, is called fascism. So what we’re doing is we’re looking at the disintegration of the empire in terms of, “This used to be the entrepreneurial empire of the world.” And now, it’s become a place of the “too big to fails.”

for this country to come out of this recession robust and strong,we need pro-business,pro-investment,low tax pro-growth policies.
The socialist policies of the Obama administration are just the opposite of this.
I think our economy is going to get worse and take longer to recover the longer the Fidel wannabe and his Karl Marx loving democratic majorities are in power.

Baxter Greene on September 4, 2009 at 5:29 PM

Job Growth? Not anytime soon.

The Obama goal is to remake the US using the “enlightened” European model. After the Democrat’s get a few more of their favorite bills passed governments yearly spending per GDP will be close to the levels of France (47%).

So we can look forward to a European style economy: 1%, maybe 2%growth instead of the 3% to 4% that we are accustom to, and an 8% to 10% unemployment as the norm. And we will have the “European Malaise” that is so prevalent in all of the countries over there.

TangoZulu on September 4, 2009 at 5:31 PM

What a joke – Kudlow predicted that the Dow would skyrocket before it crashed and always says that prosperity is around the corner.

Face it – we’re not getting out of this depression by wishing it away.

corona on September 4, 2009 at 5:35 PM

What scares the living hell out of me is the inevitable inflation that’s just around the corner.

With debt growing to 50% of GDP quite soon, it’s going to have to be paid one way or the other:

TXUS on September 4, 2009 at 5:01 PM

You are certainly not alone in seeing the coming inflation
concerning the massive debt/spending:

Get Ready for Inflation and Higher Interest Rates
The unprecedented expansion of the money supply could make the ’70s look benign.

http://online.wsj.com/article/SB124458888993599879.html

With the crisis, the ill-conceived government reactions, and the ensuing economic downturn, the unfunded liabilities of federal programs — such as Social Security, civil-service and military pensions, the Pension Benefit Guarantee Corporation, Medicare and Medicaid — are over the $100 trillion mark. With U.S. GDP and federal tax receipts at about $14 trillion and $2.4 trillion respectively, such a debt all but guarantees higher interest rates, massive tax increases, and partial default on government promises.

I see Obama telling us it’s our patriotic duty to pay up with higher taxes and meaningless small cuts that the MSM will trump up as showing fiscal restraint.

We have already had many trial balloons released through CNN/MSNBC and other Obama outlets concerning higher taxes coming across the board.

“It’s a crisis,we have to raise taxes”…..you know the drill.

Baxter Greene on September 4, 2009 at 5:42 PM

By the time there is a recovery most of the public might forget how the shit storm started. Interesting articles are coming out about the demise of Lehman Bros. and how much it would have cost to support them through their own mini crisis but they are mostly in the UK press.

lexhamfox on September 4, 2009 at 5:47 PM

Pierre is just expressing the fact that when the currency goes, there is no glue left to society. That just happens to be the truth. You can roll your eyes over the fate of the currency, but if it does go, everything falls apart. And, as I said earlier, we cannot be bailed out by anyone, as Argentian, Mexico, Iceland, Albania, … were. We will not be in the position of Zimbabwe, to just adopt another currency. The dollar has no replacement.

progressoverpeace on September 4, 2009 at 5:13 PM

Here is an interesting take on what could happen with the dollar:

This $17 Trillion Divorce Won’t Be a Pretty One: William Pesek

http://www.bloomberg.com/apps/news?pid=20601039&sid=aKLGZEc7qoqA#

Everyone knows China wants to reduce its dollar holdings. Little is known about how that process may unfold and how much work and preparation needs to go into it. Lots, in fact.

The amount of scrutiny the dollar’s successor would face makes you wonder who would want to print the reserve currency. That explains why the most credible argument making the rounds involves the IMF’s so-called Special Drawing Rights, or SDRs.

They are really an account of exchange, rather than legal tender, and are calculated according to a basket of currencies consisting of the dollar, euro, yen and pound. Chinese central bank Governor Zhou Xiaochuan wants the IMF to move toward creating a “super-sovereign reserve currency.”

There are many ideas being tossed around concerning how to deal with the sinking dollar.
Which one will work I don’t think anybody can say for sure.

What is certain though is that other countries don’t trust America’s economic strategies or future policies and are looking for a way out that does not cause a major blow to the markets.

liberals spent years telling us how important international opinion was concerning our policy making.

Now that they are in power,they are ignoring their own advice.

How Progressive!!!!!!!!

Baxter Greene on September 4, 2009 at 5:53 PM

http://online.wsj.com/article/SB10001424052970204313604574328792152010638.html

Read the above. My conclusion is employment will keep falling through 2010 and into 11. CBO is predicting wages will follow that curve also. They predict wages will rise in 12, but without a change in GDP from their last estimate, which is pretty hard to do. I think we are stuck with much higher levels of unemployment directly due to Bama’s failed policies through 2012, maybe see a comeback in 13…or a fall if Bama pulls a Zelaya out of his hat and succeeds, due to bloodshed and chaos.

Harry Schell on September 4, 2009 at 5:55 PM

Baxter Greene on September 4, 2009 at 5:53 PM

Yeah, I don’t know about the SDR idea. They are not much more stable than their component parts, so I’m not sure about their value. For a very short-term patch they might work, but I don’t see much more to them, other than a slap at the US. There are ideas of trans-national/global currencies, like the Euro, but they suffer from even worse problems.

With China, I figure that the first payout to them on our debt will be when we turn Taiwan over to them (or just let them do whatever they want with Taiwan). More than anything here, they want that island and they have the leverage to go for it, now, especially as this administration is looking for any reason to reduce our military. I’m keeping a close eye out for Taiwan, because if it goes, then we are getting really close to the end game.

progressoverpeace on September 4, 2009 at 6:06 PM

The Obama goal is to remake the US using the “enlightened” European model…

TangoZulu on September 4, 2009 at 5:31 PM

Actually, I think Obama is aiming for the Cuban model.

Dave R. on September 4, 2009 at 6:33 PM

Actually, I think Obama is aiming for the Cuban model.
Dave R. on September 4, 2009 at 6:33 PM

If it is only that bad it will be awful but not as bad as I expect. Remember who this clown has been hanging around with…remember who he has been putting into his administration. Ayers was quoted by an FBI informant musing about murdering millions. Holdren thinks the world is vastly overpopulated…his hero Harrison Brown was a Eugenic maniac. Wright hates white people…Obama sat in his church nodding his goddarn head for 20 years…

We should be so lucky as to get a Cuban model.

PierreLegrand on September 4, 2009 at 7:47 PM

This will end badly…mark my words.

PierreLegrand on September 4, 2009 at 7:48 PM

I don’t blame the administration for the economy. I blame them for making it worse, making it last longer, and taking advantage of the situation to try and suck more power away from the American people.

Vashta.Nerada on September 4, 2009 at 9:29 PM

I’m keeping a close eye out for Taiwan, because if it goes, then we are getting really close to the end game.

progressoverpeace on September 4, 2009 at 6:06 PM

Great point.
I knew that Taiwan was on the chopping block with a liberal administration, but I never considered looking at it as economic leverage. I felt that China knew Obama was a dove so that they could do what they wanted.

I will look out for this, thanks.

Baxter Greene on September 4, 2009 at 10:59 PM

With China, I figure that the first payout to them on our debt will be when we turn Taiwan over to them (or just let them do whatever they want with Taiwan). More than anything here, they want that island and they have the leverage to go for it, now, especially as this administration is looking for any reason to reduce our military. I’m keeping a close eye out for Taiwan, because if it goes, then we are getting really close to the end game.

progressoverpeace on September 4, 2009 at 6:06 PM

What is really surprising is that Obama did not sacrifice the Gitmo Uighurs to China. I don’t remember if there are any more of them left but if there are China is in a better position with each passing day to demand that they be turned over for “re-education.”

trapeze on September 4, 2009 at 11:48 PM

If the Republican base wants to get more tangible credibility, they need to start drafting more legislation that will stimulate the economy. They should some out and announce that the days of pointing the finger are over and that these initiatives will be introduced to get us back on track. They can talk about nuclear power and oil exploration. Bills that will prevent frivilous special interest lawsuits. This will enable alternative energy initiatives in California, Nevada and Massachusetts to move forward. The time to ACT is now.

djaymick on September 5, 2009 at 5:17 PM