Archives for employment

There Is No Recovery

For anyone foolish enough to believe there is a recovery underway, Business Insider provides a slide presentation by David Rosenberg that should disabuse you of any such notion. Mr. Rosenberg is one of the more astute analysts around. His take is that the Federal Reserve is doing all it can to save the economy but there is nothing it can do.

Make sure you view the slides in his presentation. Here is Business Insider’s intro:

David Rosenberg, the veteran Wall Street economist and bearish strategist at Gluskin Sheff, gave an intense presentation on Friday at John Mauldin’s Strategic Investment Conference.

Titled “Bernanke: The Wizard Of Potemkin,” this presentation offers a sobering look at the anemic U.S. economy, the labor market mess, and the Federal Reserve’s controversial efforts to get everything back on track.

Before you can even think about getting bullish, you must consider the eye-opening charts from Rosenberg’s presentation.

Thanks to Gluskin Sheff for giving us permission to feature this presentation.

Click on the Business Insider link above to see the slide presentation. It is well worth the viewing. It provides a pretty comprehensive picture of the sad state of our economy.

How Rich We Are(n’t)

The chart below shows how wealthy and well-off this country has become with Obama. When fewer and fewer people have to work, that is surely a sign of well-being. Or, it’s a sign of a dead economy and lower standards of living.

The media has been telling you that everything is going along just nicely. Look in your wallet and tell me how you feel. Look at your neighbors. Perhaps they are the fortunate ones who don’t have to work. Or are they the unfortunate ones who cannot get a job? Or perhaps they are the just the plain stupid ones who believe there is no need to work because government will take care of them

The unsustainable is, er unsustainable. Those banking on a future based on government better re-evaluate their plans. I know of no government promise, explicit or implicit, that has ever been kept.

David Stockman Alienates Both Ends of The Political Spectrum

David Stockman wrote an intriguing article which appeared in the NY Times. That it appeared in the Times is noteworthy itself, for it contradicts so many liberal shibboleths the paper has supported (promoted) for many years. Its appearance is less likely to reflect the first steps to Damascus and may be a sign of financial desperation where the need for readership trumps political ideology. Or perhaps it is a return to “all the news that’s fit to print.”

Mr. Stockman has the background and experience to know of what he writes. He was the Budget Director under the Reagan Administration and is familiar with government spending and political excess.

His diagnosis of the problem is reasonable and welcomingly blunt:

… we are now state-wrecked. With only brief interruptions, we’ve had eight decades of increasingly frenetic fiscal and monetary policy activism intended to counter the cyclical bumps and grinds of the free market and its purported tendency to underproduce jobs and economic output. The toll has been heavy.

[snip]

The United States is broke — fiscally, morally, intellectually — and the Fed has incited a global currency war (Japan just signed up, the Brazilians and Chinese are angry, and the German-dominated euro zone is crumbling) that will soon overwhelm it. When the latest bubble pops, there will be nothing to stop the collapse.

[snip]

As the federal government and its central-bank sidekick, the Fed, have groped for one goal after another — smoothing out the business cycle, minimizing inflation and unemployment at the same time, rolling out a giant social insurance blanket, promoting homeownership, subsidizing medical care, propping up old industries (agriculture, automobiles) and fostering new ones (“clean” energy, biotechnology) and, above all, bailing out Wall Street — they have now succumbed to overload, overreach and outside capture by powerful interests. The modern Keynesian state is broke, paralyzed and mired in empty ritual incantations about stimulating “demand,” even as it fosters a mutant crony capitalism that periodically lavishes the top 1 percent with speculative windfalls.

I do disagree with this assessment:

There was never a remote threat of a Great Depression 2.0 or of a financial nuclear winter, contrary to the dire warnings of Ben S. Bernanke, the Fed chairman since 2006.

I believe there would have been a banking system collapse and another Great Depression. Regardless, there should have been no intervention, and that is the point Stockman was making. Instead, the politicians kicked the can further down a road that has an end. The banking system collapse may or may not have been avoided. A currency collapse now appears possible and an even Greater Depression has been baked into the future.

Stockman’s article is worth the read. It is pointed and highly opinionated. It raises anger from both sides of the political spectrum. From the left come criticisms from the likes of Paul Krugman, Jared Bernstein, Kevin Grier, Joe Weisenthal, John Feehery and Matt O-Brien.

From the right, Forbes has an article entitled David Stockman Brings New Meaning To ‘Flawed Economic Analysis’ which concludes with this advice:

It’s time to divorce ourselves from the myriad fallacies of the moment that are suffocating our present and future. But in doing so, we would be wise to not follow Stockman down a similar, fallacy-littered path.

I don’t know what it means when you anger both ends of the political spectrum. I suspect the left is upset with his interpretation of the effects of liberal policies, most notably The New Deal. The right appears to be displeased with his proposed remedies.

Stocks Up, Economy Not

This from Forbes:

The Bureau of Labor Statistics guessed that 236,000 jobs were added in February and everybody applauded. Yay, or should we say, “boo.” What most everyone missed is that even the BLS admits in a footnote to its February jobs press release that historically its initial number can be revised

as much as 90 percent. A 90 percent revision to me means that the February 230,000 job number is meaningless.

On the other hand, TrimTabs has been estimating about 100,000 new February jobs. Our estimate historically has varied less than 10 percent from the final, revised BLS jobs number. The real numbers for this February will not be reported until March 2014. In other words, like most of what the U.S. government does, the monthly jobs number is a joke.

[...]

Click here to view original web page at www.forbes.com

How Stupid Is The American Public?

The cruelest law of all is the minimum wage. It is the most basic law of economics: if the price rises on a good (ceteris paribus, of course), then less of it will be purchased. Labor is no exception. When you raise the price (i.e., the minimum wage in this case), less labor at the low end of the skill scale will be employed. For a thorough discussion, see here.

In a time when our economy is struggling and teenage unemployment is through the roof (especially minorities), raising the minimum wage is the worst thing that can be done. This price control hurts the most vulnerable in society and those most in need of jobs. Yet the political class knows they can depend upon the ignorance and stupidity of the voting public. By appearing to be compassionate, they gain favor and votes. This move is not compassionate, it is harmful and destructive. There is nothing more harmful to low-skilled workers than raising the minimum wage. If it benefits politicians they don’t care what havoc and destruction they impose so long as enough of the people can be fooled.

The reality is that Government schooling produced this situation of zero to low skills. Now government rides to the rescue by making laws that make it illegal for their damaged output to be hired. No employer will hire an employee that costs him money. Unless the employee has a reasonable chance of contributing more than he costs, he has no hope of escaping unemployment. Unskilled workers are capable of doing productive work, but not at a beginning wage set too high by politicians looking out only for themselves. If the minimum wage is so good, why not raise it to $20.00 per hour or $50.00? Wouldn’t that erase poverty?

The answer is an emphatic no! The higher the minimum wage the more poverty and unemployment results. This “feel-good” legislation will raise unemployment. Sadly, it will also destroy lives. It effectively makes it a crime to higher willing workers with low skills. These are people who deserve better than what they received from government schools. Entering the workforce at any wage would provide the work habits and skills that would enable them to quickly go beyond their entry levels. These low-skilled workers are no different than MBAs who enter at lower wages than they will earn after training and gaining experience.

The tragedy of the minimum wage is that it ruins lives. It condemns many to a lifetime of unemployment, welfare and living a life equivalent to a ward of the state. These “compassionate” politicians don’t care how much damage they do so long as you are too ignorant to see through their scheme. They want your vote. So long as you are ignorant enough to believe they are doing compassionate and generous things, they will continue to destroy lives.

This survey from Rasmussen is confirmation of the appalling economic ignorance of the American public.

54% Favor Raising Minimum Wage to $9 An Hour

Most voters don’t think the minimum wage is enough to live on and support President Obama’s proposal to raise it from $7.25 an hour to $9 an hour. They’re more narrowly divided, however, when asked if hiking the minimum wage will be good for the economy. Read More

With every passing day, the American public makes H. L. Mencken appear to have been more of a genius than he possibly was. His evaluations of the public were merciless. Here are but a couple of his pronouncements:

Democracy is a pathetic belief in the collective wisdom of individual ignorance.

Democracy is the theory that the common people know what they want, and deserve to get it good and hard.

Mencken must be chuckling from his grave at the situation we allowed our criminal class politicians to impose on us. Even he probably could not have imagined how dumbed-down the government has made recent generations. Make no mistake, it is government and its policies responsible. Despite all the blather about education, our criminal class is quite content with having stupid constituents. An educated public would have ridden these crooks out of town on a rail.