Monthly "Bad" Economic News Update

Non-farm productivity grew by 3.2% during the first quarter and the U.S. GDP grew by 4.8% (annualized). With unemployment still very low (4.7%) the productivity improvement may reduce inflationary pressure associated with a tight labor market, allowing employers to pay higher wages w/o setting off significant inflation. Hourly compensation rose by 5.7%, BTW.

If you are looking for bad news, the Dow Jones Average rose to 11438.86, which is still 284 points shy of its all-time high, reached in January of 2000 as the bubble burst at the end of the Clinton Administration. The price of oiil dropped just below $70 a barrel. I don't object to high energy prices since I think they are good for the environment, but I know most people disagree with me, so we will call this good/bad news.

Posted by Jack at May 4, 2006 5:58 PM
Comments
Comment #145444

Is that the sound of crickets chirping in the backround?

Posted by: b0mbay at May 4, 2006 6:22 PM
Comment #145447

it seems that the ONLY thing that makes people think there is a bad economy (and not an inflated one like in the 90’s) is gas prices. However, how is it that a company making profits is BAD news? They’re making “record profits” off of 8.4 cents per gallon of “margin”. So where is OUR “profit” from the AVERAGE 40 cents per gallon that the Federal and state governments make? hmmmm?

Posted by: Robert at May 4, 2006 6:48 PM
Comment #145450

No. It’s the sound of an empty Treasury vault. Chirp, chirp, chirp. The Chinese are walking away. They aren’t buying anymore of our debt. Because of the horrendous trade deficit, falling dollar, and also because of continue annual budget defitics, and burgeoning national debt, US Treasuries look vulnerable to inflation. Instead, the Chinese and others are buying gold. Oil & gold are not the only commodities going through the roof. Meanwhile, the Fed no longer publishes the M3 money supply number.

We still have some time. Every economic cycle goes through predictable states. The trick is to recognize the stage. We’re in the last phase of recovery.

My guess? Another few months- maybe a DJIA over 12,000- an outbreak of optimism- and personally, that’s when I’ll walk away too.

Look for articles on the new bull market, new stock market highs, claims the Bush economic program has been gloriously vindicated, that kind of thing. It doesn’t have to happen, but it’s a typical predecessor of recession. We’ve already seen the best indicator of recession, an inverted yield curve, happen.

I’ll stick with my prediction from over a year ago. The economy will dominate the November election.

Posted by: phx8 at May 4, 2006 6:52 PM
Comment #145451

Robert,

“So where is OUR “profit” from the AVERAGE 40 cents per gallon that the Federal and state governments make? hmmmm?”

It’s paying for Iraq.


Hey Jack, does the 4.7% unemployment include the illegals in this country?

Posted by: Rocky at May 4, 2006 7:02 PM
Comment #145454

Jack, does the hourly wage increase include the new data on Oil Company CEO compensation packages in the average. That would explain a lot, don’t you think?

Posted by: David R. Remer at May 4, 2006 7:06 PM
Comment #145458

All good news.

I do have a question about the increase in wages. I can’t find anywhere that claims a 5.7% increase even over the last year. Please post your source for that number.

Posted by: Arm Hayseed at May 4, 2006 7:37 PM
Comment #145459

Private companies should be able to make a profit. The oil companies are making profits true. when you look at the percentages they are not huge and defiantely not out of line for other companies. People tend to forget that most of these oil companies lost money and almost went bankrupt not to long ago. they need some good years to stay around. Our gas prices will sky rocket if the big boys disappear because the infrastructure for transporting gas would leave with them. Then it would be more middle men and triple the cost of gas.

I do agree that we need to lower the tax the government puts on gas.

We must not forget that the trade deficit is not actually money we owe but it is that we are importing less then we are exporting. the reason is very simple we are a consumer society and most jobs any more are service. This means we do not manufacture most of our goods that we buy every day. We end up importing most things that are in our house.

You also need to remember this that many countries out there have a vested interest in having our economy shrink so theirs can grow. the more of the pie they get the less there is for us to have. You can guarantee that they think like that and make finacial decisions accordingly.

Posted by: Randall at May 4, 2006 7:40 PM
Comment #145462

David

It is hourly compensation. That is mostly the lower end of the wage earners. I don’t believe it includes salaried workers and it would not include non wage compensation.

Arm

It is from the WSJ. I don’t link because it is a premium site. This is the the link if you have access.

Rocky

I assume the numbers would be lower w/o illegal immigration, but we would have a more serious labor shortage.

Phx8

My office mate has successfully predicted 20 of the past two recessions. Wait long enough and you will be right, but probably not this year.

BTW - the economic news for the November elections is pretty much baked in already. Unemployment is a lagging indicator and the perception of economic imporvement lags even behind that. Even if the economy turned south today, it will still look better in November.

Posted by: Jack at May 4, 2006 7:50 PM
Comment #145463

Randall, the issue with the oil companies is that their profits are soaring due to a lack of refineries to keep gas supply up to demand, and they aren’t investing profits into new refineries. DUH! That would hurt their profits. See, that is called a cartel, and artificially manipulating the supply/demand intersection resulting in monopolistic price gouging.

And that is entirely aside from the taxpayers incurring higher deficits and debt due to oil company subsidies and tax cuts during record profit years. A whole other issue.

Posted by: David R. Remer at May 4, 2006 7:50 PM
Comment #145464

Randall,

“The oil companies are making profits true. when you look at the percentages they are not huge and defiantely not out of line for other companies. People tend to forget that most of these oil companies lost money and almost went bankrupt not to long ago. they need some good years to stay around.”

No body disputes that the oil companies should be able to make a profit.

The problem is they have us by the balls.
Nearly all transportation in this country from the diesel/electric locomotives pulling the frieght, to Jack’s hybrid, need oil for fuel and lubrication. If we can’t afford the price of oil this country grinds to a standstill.
And that’s a scary thought

Posted by: Rocky at May 4, 2006 7:53 PM
Comment #145467

Bombay

Those are probably the song birds. But let me take the liberal point of view.

I come home to the cacophony of bird songs and the stench of blooming flowers. Too much color. The wisteria is too extravagant. I think of all the water and nitrogen it all takes. How wasteful. Yes, life is hard.

Is that better.

Posted by: Jack at May 4, 2006 8:02 PM
Comment #145469

Rocky, The Trains will run on bio diesel and peanut oil. also they would love synthetic oil for lubrication. using that combo the trains would burn cleaner, not smoke, get better milage, and last longer, and have a little more power.

Posted by: RODNEY BROWN at May 4, 2006 8:04 PM
Comment #145470

So in order to make everything appear dismal, we can’t even say the stats Jack provided is good news. Somehow it’s really bad news disguised as good news. Is that right?

Would we ever have good news? Oh, that’s right, only if a Democratic president was in office.

Posted by: CFT at May 4, 2006 8:08 PM
Comment #145473

any peanut farmers handy? hello?

Posted by: RODNEY BROWN at May 4, 2006 8:26 PM
Comment #145482

Rodney,

“The Trains will run on bio diesel and peanut oil. also they would love synthetic oil for lubrication. using that combo the trains would burn cleaner, not smoke, get better milage, and last longer, and have a little more power.”

So when do we stert?

I saw the article, it said this was in the infant stages.

Posted by: Rocky at May 4, 2006 8:43 PM
Comment #145485

Rocky…so would you rather not have a military? nice idea, we spend billions on the military to protect us and our policy. If you’d like to speak German or Arab instead, let’s stop funding our soldiers.

Posted by: Robert at May 4, 2006 9:06 PM
Comment #145487

Robert,

“so would you rather not have a military? nice idea, we spend billions on the military to protect us and our policy. If you’d like to speak German or Arab instead, let’s stop funding our soldiers.”

Does hyperbole come naturally or……?

Could you repeat the question?

Posted by: Rocky at May 4, 2006 9:10 PM
Comment #145488

All I’m saying is…is that I would rather see some things passed along and getting rid of some of the OBVIOUS federal corruption and porkage. Give the money back to the people and let the states handle more!

Posted by: Robert at May 4, 2006 9:10 PM
Comment #145489

“the issue with the oil companies is that their profits are soaring due to a lack of refineries to keep gas supply up to demand, and they aren’t investing profits into new refineries. DUH! That would hurt their profits.”


The lack of refineries are due to the enviornmentalists and (impotent) politicians. Oil companies re-invest (much of) their profits into R&D; everytime they try to build a refinery, they are hit with lawsuit (after lawsuit) by the enviornmentalist jihad; which is backed by the politicians.

Remember, oil companies were forced into monopolies, and they only receive about 9 cents per gallon of gas; gov’t gets over 40 cents per gallon via taxes. There’s the problem right there.

Posted by: rahdigly at May 4, 2006 9:11 PM
Comment #145490

I guess you’re not married…since you didn’t follow. I was saying that if you believe that we shouldn’t have a military then you’ve lost it. We spend that money to protect our citizens and protect our policies. So if we were to stop (or did in the past) we’d be speaking German, or more recently, Arab.

Posted by: Robert at May 4, 2006 9:13 PM
Comment #145491

Well if you’re going to put it that way.

“I was saying that if you believe that we shouldn’t have a military then you’ve lost it.”

You’re just making that up, I never even implied it.

I will have been married 26 years in October.

Tax cuts during a war is just lame.

Please explain to me again how the speaking German thing works, or for that matter the speaking Arab (especially the Arab part since there is no such language).

Posted by: Rocky at May 4, 2006 9:19 PM
Comment #145492

rahdigly…I’ve made that point numerous times…they don’t listen. It’s actually between 8.4 and 8.7 cents per gallon.

If they want to reduce gas prices…reduce TAXES…reduce the environmental stranglehold on production. NOT the regulations of “clean water” and “clean air”, but the ideas of not allowing a refinery to be built, or drilling, or exploration! I think that you made a good point and I could go into MUCH more detail than you did on the process of how we get our gasoline. If people are worried about prices now…lets just tax the profits and see how high it can go!

Posted by: Robert at May 4, 2006 9:20 PM
Comment #145493

We! Rocky i don’t speak french that well. my wife does!. well if i was amtrak or santa fe, i would get off my can and start calling my suppliers, like i do every day at my tiny little optical store, their are millions of gallons of synthetic oil in stock. and quite a few independent dealers like, red line , amsoil, kendall. those giant 3,000 horsepower diesels will run on peanut oil. (my little peanut humor) hey if they want to be left behind the curve it’s their own fault. i have too make those choices everyday, or i would lose my (little ) business and ass.!

Posted by: RODNEY BROWN at May 4, 2006 9:25 PM
Comment #145494

Rocky quit playing semantics. If we didn’t fund our military back in the 30’s and 40’s and so on…we wouldn’t have beaten the nazis. And if we didn’t protect our way of life by going after these guys in Afghanistan and Iraq, we would be speaking “Arab”, Farsi, whatever it is. Tax cuts during a time of slow economics is ALWAYS a good thing, if it happens during wartime, it will only be fully felt when we get out of the full conflict.

Posted by: Robert at May 4, 2006 9:27 PM
Comment #145496

Jack-
It can’t stay good forever, especially not with the amount of debt we’re carrying. The economy may be improving, but my feeling is that it’s much more fragile economy than we formerly had.

I think your focus is too short term, and you’re too eager to prove that things are on their way up to see what signs there might be to worry about. So, tell me, through your own research, do you see any cause for concern?

Robert-
Most of the price of a gallon of gas comes (in order of magnitude) from the crude and the refining expenses. The direct profit from every gallon of gas is only cents on the gallon. The thing is, though, the people we’re paying to refine and produce the oil are the same companies.

That’s how you get record profits. The claims about the limited profits on the gas are accurate, but presented with a misleading lack of context.

Randall-
I’m sure the preceding information affects your claim, too.

The problem here is the attitude that companies are entitled to profits. They aren’t. They must earn what they get. Are they earning it, or are doing something that’s raising the prices in ways the market wouldn’t allow to occur under normal circumstances? This merits investigation.

As for keeping the big boys in business? You assume keeping these over-consolidated corporations in place is good for business. I think they’re part of the reason gas prices are so high. More competition would mean lower prices. It would probably mean more refineries up. The infrastructure, my friend would go nowhere. If anything, it would be bought up by the better competitors.

Folks like you are so used to picking up the slack for corporations while reeling off your free-market rhetoric, that you’ve forgotten what a contradiction your actions and your words have. In a free market, you don’t interfere to keep companies afloat. It’s not our job to save the airlines when years of campaigning against tightened security requirements and using High School-educated baggage screeners bites them in the ass. It’s not our job to save the oil companies from bankruptcy if they don’t know how to run their businesses right.

Because the conservatives have gotten so business-centric, their perspective on what makes a market free and what doesn’t is skewed. They’ll merrily rip out regulations that keep the market from self-destructing through conflicts of interests, monopolistic behavior, and speculative manipulations of price, confronting everybody on how this makes the market un-free. But then, they’ll turn around, give tax breaks out the wazoo, subsidies, and legislation that makes it more advantageous to take labor overseas, then claim that all the things that happen are the simple results of a free market.

Worse yet, they won’t confront countries, including China, on their trade violations, their subsidies on their business and labor supression. No, that would be bad for business.

Really, I’m for market manipulation they way the people who paint the lanes on a free way are for folks driving straight. I don’t care how fast they drive, where they’re going or hope to go, or what ever, I just want to prevent unnecessary accidents and keep people out of each other’s way.

As for a pie? I think the real character of a market is not a pastry, but something like a circulatory system. You can have a ton of blood flowing through the big vessels, but if the small vessels aren’t getting a sufficient supply, the body as a whole will be not be robust and energetic. A consumer economy functions best when consumers can spend out of their own pocket and retain stability in their economic lives.

This is the danger in all this debt we’re carrying publically and privately- we’re trading activity now for deadweight later- the financial equivalent of getting jacked up on a stimulant and crashing when the effect wears off.

The economy is more than share percentages and growth numbers. It’s about the flow of resources.

Posted by: Stephen Daugherty at May 4, 2006 9:30 PM
Comment #145500

rhadigly,

Let’s not forget that the government gives the oil companies a lot of cash back in the form of tax breaks to invest in R&D and drilling for new oil. So, no, the oil companies don’t spend a lot on R&D. They do spend some….but we pay for some too in the form of their tax breaks.

Posted by: Tom L at May 4, 2006 9:41 PM
Comment #145501

Robert,

“If they want to reduce gas prices…reduce TAXES…reduce the environmental stranglehold on production. NOT the regulations of “clean water” and “clean air”, but the ideas of not allowing a refinery to be built, or drilling, or exploration!”

Somehow I don’t think that the price of gas would mean much next to the price we would pay without clean air or water.
Frankly I’m with Jack. I don’t care how much the price of fuel rises if it gets America off it’s lazy ass to develop alternative fuels.

On speaking German;

http://www.lewrockwell.com/murphy/murphy91.html

“With all the talk lately about World War II, I thought it would be appropriate to bring up something that has always bothered me, namely, the claim that were it not for the brave young Americans who stormed the beaches at Normandy, “we’d all be speaking German.” (I’ll ignore the cheap joke of pointing out that not even Nazis could get a majority of Americans to learn a European language.) Now I certainly don’t mean to belittle the heroism and sacrifice of young men who were willing to risk their lives in (at least what they thought was) an effort to save the world from dictators. Further, let me state upfront – and hopefully this will forestall some angry emailers – that I have never been shot at. Nonetheless, I think it is a gross distortion of history to claim that the USA was ever at risk of Nazi (or Japanese) occupation. But because Americans have had this “lesson” drilled into them from birth, they are much more likely to support our current imperialist adventures.
Consider the simple logistics: The Nazis weren’t even able to successfully cross the English Channel. Was it really ever a serious possibility that they’d gain naval superiority of the Atlantic and/or Pacific, and then send over the millions of troops and tons of equipment that would be necessary to (a) knock out the entire US armed forces, and then (b) occupy the continental United States?”

So what was that about semantics?

Posted by: Rocky at May 4, 2006 9:42 PM
Comment #145502

Jack,

I’ll give you your good news. I agree it is all good news.

Does this credit belong to our president? To congress?

Where one takes credit one should also accept blame…these cats are spending money as fast as the treasury can print it…actually, faster since we are charging everything. Before you start with your debt vs. percent of GDP speach remember this: recessions happen under good and bad administrations. When they hit the GDP falls….the debt doesn’t. We’re stuck with it.

Gee, thanks W and all you other fiscal conservatives

Posted by: Tom L at May 4, 2006 9:46 PM
Comment #145505

I guess we’ll just watch the trade deficit unravel itself, the dollar plummit in the process, and interest rates skyrocket because we can’t seem to finance our consumption-rich lifestyles with foreign goods with our own money. What about those negative savings rates? Only a matter of time when the commodities rally starts to hit core inflation…its already hitting anything construction related very hard.

Jack is right…the “official” statistics say the economy is strong. I’ll take the contrarian view and say that this country is in for one hell of a ride.

Posted by: greg at May 4, 2006 10:08 PM
Comment #145507

Stephen

Entitlements

That will be the thing that may break us in the next decade. We have to address the imbalance in SS, Medicare and Medicaid. The current systems are unsustainable.

I am extremely impressed by American innovation and the market economy. Back in the late 1970s, I was depressed like many of you. But then we faced our problems and restructured so completely that we are still in good shape. American business completely changed its paradigms in the 1980s. And when I look back in our history, I see it was not the first time we did it. It won’t be the last.

Government is less innovative and I do worry about entitlements. That is something new. The operative word is entitled. We have always sought to create opportunities; I worry about creating rights to being supported by others.

We need to cut government spending .

The economy is never perfect and it is always in a transition in some sectors. The poor are always feeling stressed and the rich are always feeling threatened. Industries are always fearing change as new one come to replace them.

This economy is not the best in the last 50 years, but it is one of the best. It is a lot like 1997/8. Those were good times and so is this. If we can cut government spending and get control of entitlements, we will be fine. But these are big challenges. The Dem’s talk too much about taxes. We need to control the size of government, whether the spending comes from taxes or from borrowing.

Posted by: Jack at May 4, 2006 10:11 PM
Comment #145509

Charge it!

Posted by: Tom L at May 4, 2006 10:15 PM
Comment #145511

ok…maybe you are married b/c you sure know how to twist words around and NOT see the meaning of the words right in front of you. read what you want to read rocky…I’ve realized that speaking to people that don’t have a clue is that they can’t find one with a map and a flashlight, so I’m not gonna keep trying.

Posted by: Robert at May 4, 2006 10:19 PM
Comment #145517

hey Rocky , mobil one has a new extended formula synthetic oil on the market, 20,000 miles before a oil change, it’s $16 for a five quart jug at wal#### or k #### . that’s $3.20 a quart. or we could run dino oil at $2.25 a quart and change our oil at every 3,000 miles, my friend that is almost 7 oil changes for dino oil. and only 1 oil changes for synthetic oil. plus your car will pick up 1-2 mpg .(much less friction inside the motor) $16 for 20,000 miles on synthetic oil, or $75 for 20,000 miles for dino oil. now it’s time for amtrak to come on aboard.

Posted by: RODNEY BROWN at May 4, 2006 10:44 PM
Comment #145519

“read what you want to read rocky…I’ve realized that speaking to people that don’t have a clue is that they can’t find one with a map and a flashlight,”

Please, Robert, edify me, I’m all ears err…eyes.

What have I twisted?

You can’t mean that clean air and water thing?

Is it becuse of the German thing?

No really I’m serious.

Cause whan you accuse someone of not having a clue,,,,well that’s pretty stern stuff.

Posted by: Rocky at May 4, 2006 10:49 PM
Comment #145520

Jack

WSJ has a free trial so I was able to see the article. I found two times “compensation” was mentioned in relation to percent of change.

“Over the same period, inflation-adjusted hourly compensation rose at an annualized rate of 3.6%.”

“Still, the year-on-year increase in unit labor costs, at 1.4%, was well below the comparable rate of productivity growth, suggesting that companies are still able to keep a significant share of productivity gains for themselves and their investors. Over the same period, inflation-adjusted hourly compensation rose only 0.1%.”

I emailed the author of the article in the WSJ, Mr. Whitehouse, asking for the link to the figure of 3.6% he quoted. If he answers I will post the link here.

Could the 5.7% you used have been a typo?

The only report I could find at the Bureau of Labor Statistics that involved both “inflation adjusted” and anything to do with “compensation” was for inflation adjusted wages.

Report CES0500000049:
The Hourly Wages adjusted for inflation went from $8.20 in April to $8.18 in March a drop of .24%. (1 month)
The Hourly Wages adjusted for inflation went from $8.20 in Dec 05 to $8.18 in March a drop of .24%. (1 qtr)
The Hourly Wages adjusted for inflation went from $8.19 in Mar 05 to $8.18 in Mar 06 a drop of .12%. (1 yr)

If anyone has the link to the data quoted in the WSJ article I would appreciate you posting it.

Posted by: Arm Hayseed at May 4, 2006 10:55 PM
Comment #145522

Tom,
“So, no, the oil companies don’t spend a lot on R&D. They do spend some…but we pay for some too in the form of their tax breaks.”


And we certainly pay for more than just “some” with taxes. Tax breaks will benefit all of us; more taxes result in higher gas prices; especially since the enviornmentalist and the politicians have a hold of the oil companies’ cotzies (and ours for that matter), by not allowing them to increase supply (drilling in the US or building refineries).


Posted by: rahdigly at May 4, 2006 10:58 PM
Comment #145523

Arm

I only know what I read in the newspapers. Maybe the guy will explain. If so please post.

Posted by: Jack at May 4, 2006 11:01 PM
Comment #145531

or not requiring auto manufacturer’s to increase fuel efficiency. But, hey, that’s what politicians do….they pander to those that fill their campaign coffers.

Not using as much of the stuff is essentially the same as increasing the supply of it. I, personally, am for doing both in parallel. We’ll start really worrying about it when it’s essentially too late. Unlike Jack and others, I don’t care to see the price sky rocket before we do something. Many Americans (some of my family included) are making it from paycheck to paycheck. What will months or years of extremely high fuel prices do to them? What will it do for our economy? I would bet that debt to GDP ration the right keeps using to justify the exreme spending and debt would certainly take a turn for the worse.

Posted by: Tom L at May 4, 2006 11:23 PM
Comment #145539

Hey Robert,

Sorry man, I gotta go with Rocky on this one. There never has been, is, or will be any danger of a foreign power occupying American soil and forcing us to speak their language. We have the two biggest oceans on our eastern and western boarders, and two of the weakest neighbors to our north and south.

As for this: “And if we didn’t protect our way of life by going after these guys in Afghanistan and Iraq, we would be speaking “Arab”, Farsi, whatever it is.”

What? If we hadn’t have gone and invaded Afghanistan and Iraq, they would all be over here right now, forcing their ways and customs upon us?

The sheer ridiculousness of that comment doesn’t even merit an explanation. Do you even wish to be taken seriously at all? If you really believe that then you are more than a little out of touch with reality here in the world.

Also, I suggest that if you want to take a stand on a topic, learn all the relevant names, languages, spellings, etc., first. Then you might be taken more seriously when making such utterly naive claims.

Posted by: 北京 Rob at May 5, 2006 12:11 AM
Comment #145543

Rob,

Are you in China?

Posted by: Rocky at May 5, 2006 12:19 AM
Comment #145546

if my chinese is correct, yes i think it means beijing, ROB.

Posted by: RODNEY BROWN at May 5, 2006 12:36 AM
Comment #145548

And now, for something Exactly The Same, an excellent example of Conservative Statistics:

My office mate has successfully predicted 20 of the past two recessions.

Really, Jack? Twenty of the past two - wow, that means his acuity is operating at an astonishing 1,000%!

With figures like those, who needs Facts?

Posted by: Betty Burke at May 5, 2006 12:42 AM
Comment #145552

Rob,

I was there in ‘95 and again in ‘97.

Interesting to be a tall American in Bejing.

BTW, thanks.

Posted by: Rocky at May 5, 2006 1:02 AM
Comment #145555

Sorry Jack, you are guilty of lying with statistics and assumptions. Note this from the BLS:

Hourly compensation (Productivity and Costs) Compensation costs are defined as the sum of wage and salary accruals and supplements to wages and salaries. Wage and salary accruals consist of the monetary remuneration of employees, including the compensation of corporate officers; commissions, tips, and bonuses; voluntary employee contributions to certain deferred compensation plans, such as 401(k) plans; employee gains from exercising nonqualified stock options; and receipts in kind that represent income. Supplements to wages and salaries consist of employer contributions for social insurance and employer payments (including payments in kind) to private pension and profit-sharing plans, group health and life insurance plans, privately administered workers’ compensation plans. For employees (wage and salary workers), hourly compensation is measured relative to hours at work and includes payments made by employers for time not at work, such as vacation, holiday, and sick pay. Because compensation costs for the business and nonfarm business sectors would otherwise be severely understated, an estimate of the hourly compensation of proprietors of unincorporated businesses is made by assuming that their hourly compensation is equal to that of employees in the same sector.

So your hourly wage increase DOES INCLUDE CEO PAY AND COMPENSATION PACKAGES, and a $400 million dollar compensation package for one OIL Exec will have an effect on hour wage statistics. Sorry to burst your bubble.

Posted by: David R. Remer at May 5, 2006 1:19 AM
Comment #145579

Yes Rocky I do live in Beijing. It’s a pretty interesting place. I have been here for a few years so I’ve gotten to see quite a few changes taking place. On this site it’s easy to tell whether someone has been to China by what they have to say about it. It’s the kind of place that you have to go to before you can possibly even try to comprehend. Those of you who know, know, and you should come visit again before this place transforms completely.

I had to use 北京(beijing) in my name because the irony was just palpable.

Posted by: Beijing Rob at May 5, 2006 5:25 AM
Comment #145580

Well out here in SoCal it may present itself as a DIVERSE salad bowl, but shows its hidden racism which causes SOCIAL & ECONOMIC power struggle between the bottom classes of the food chain. This shows weekness to the wealthy and especially those EAST ASIANS(South Koreans)who hire illegal immigrants which takes jobs away from other americans who are trying to be competative in the employment market!!!!!!! PS: and to ALL you Lazy SMUCKS IN L.A BRING IT ON, U twisted B**ch F***ers!!!

Posted by: pedro at May 5, 2006 6:46 AM
Comment #145581

Its the economy stupid! That’s all that I have read about in this website! My prediction is this that we will be in a major war and if we win or lose I cannot distinguish but please try to get ready as best you can. That means making good investments and rat holing what you cherish!

Posted by: Michael at May 5, 2006 6:55 AM
Comment #145590

Betty

Your really don’t get the joke? The idea that he predicted 20 of the last two recessions indicates that his pessimism is usually unjustified. It is funny to those who get it, but it loses something when I have to explain it. I guess such statistical humor IS a conservative thing. Or maybe most people did get the joke.

David

Okay. I didn’t know that. I have been using it incorrectly.

Posted by: Jack at May 5, 2006 9:51 AM
Comment #145592

Jack:

I liked your comment about your acquaintance predicting 20 of the last 2 recessions.

Oh, and I understood what you meant by it. Would have thought it obvious what your intention was, but….well, I never cease to be surprised by the obstinate inability of people to understand and accept sarcasm, irony and humor.

Please enjoy the sound of one hand clapping madly with wild applause. ( :) let’em chew on THAT one for a while)

Posted by: joebagodonuts at May 5, 2006 9:58 AM
Comment #145594

Since the oil companies and how they are “gouging” us has come up, did anyone see the interview this past Monday (maybe Tuesday) of the current Exxon/Mobil CEO on the Today show? He said that while we were not putting up new refineries, they were increasing the capacity of the current refineries by 2%/year per year with an increased demand of 1.5%/year so they are increasing refining capacity as much as they can. They are also still repairing the damage of last year’s hurricanes.
He also stated that of the profit they made, only 30% came from United States sources. The other point he made is that they are in the business of supplying energy products to the people. Imagine the chaos if they reduced supplies or stopped supplying all together. I still don’t like paying close to $3.00 per gallon, but I think it will come down to a more palatable price within a year or so. I live in Michigan and the economy of our state is showing some signs of recovery, but very slowly. Read about it here

Posted by: SWMichiganBill at May 5, 2006 10:09 AM
Comment #145597

On speaking German. The world had a madman on the brink of developing Nuclear Weapons. On speaking ‘Arab’. See above. The synthetic lubricants may provide ‘20,000’ mile change intervals in laboratory tests, but in the ‘real’ world, no. In severe climates (very cold winters, many miles of unpaved roads etc.) ‘normal’ change intervals are much more reliable means of getting a reliable ‘life’ from your vehichle.

Posted by: pige at May 5, 2006 10:34 AM
Comment #145599

So that Democrats don’t have to talk down our economy when a Republican is in the Whitehouse, and in order to save Republicans the embarrassment of a strong economy when Democrats manage to raise tax rates again, can we just all agree that the real elephant in the room is capitalism and not the U.S. President?

Although certainly policy has some impact on the economy, it pales in comparison to innovations like the Internet or (likely in this latest upturn) gains in productivity.

Posted by: George in SC at May 5, 2006 10:34 AM
Comment #145601

Did you catch this Jack?

http://money.cnn.com/2006/05/05/news/economy/jobs_april/index.htm?section=cnn_topstories

Posted by: Vincent Vega at May 5, 2006 10:44 AM
Comment #145605

Recessions have been occurring every 2 to 11 years for the past 46 years.
A recession is inevitable.
But, the question is, how well prepared are we?
Is what we are doing (for the past 20+ years) going to make recovery easier?

Or harder?

I’d say harder. Definitely.

If fact, I’d say the federal government is far too corrupt and irresponsible.

Inflation is rising.
Foreclosures are rising.
Debt is massive ($54 trillion nation wide).
Corporate profits are at 45 year highs, which is conforting to Americans, whose median wages have fallen 6 consecutive years.
An increase in GDP is a testament to hard working Americans, despite the anvil (government) hanging around their neck as they swim upstream.

A few cherry picked stats are not conclusive.
The big picture is not so rosy.
National Debt is $8.4 trillion.
Social Security is $12.4 trillion in the hole (Source: CATO Institute).
Medicare is a mess.
Eminent Domain abuse is rampant.
Corruption in government is rampant.
The government is FOR SALE.

But, other than that, everything is “very good”. : )

Posted by: d.a.n at May 5, 2006 10:53 AM
Comment #145611

George,

I’ll give you that up to a point. At present, I would agree with you. However, one day the present debt will have to be paid down or it will have a VERY detrimental affect on the economy….capitalism or not!

Debt affects interest rates of borrowing money. Foreign countries now hold a large percentage of our debt. Our interest rates can be manipulated by them if they desire. Naturally, the world economy would also feel the consequences. However, if it came down to a threat of war the “other country” may not really care…especially if they are on a stronger financial footing.

The cold war isn’t over. We are only entering a second phase. Only this time we are also financing our potential enemy by moving our manfucaturing companies over to their country, allowing a huge trade deficit to go unchecked, and then borrowing money from said country to finance our military and other government needs. Naturally, I’m talking about China.
They are not hostile to us now (and hopefully things will never come to that). However, this is a communist country with a large military and nuclear weapons that is shutting us down on diplomatic maneuvering with Iran.

Posted by: Tom L at May 5, 2006 11:04 AM
Comment #145613

pige,

“On speaking German. The world had a madman on the brink of developing Nuclear Weapons.”

And he had no way to deliver them. The V-2 had a range of less than 300 miles and only had an dismal accuracy. There was only a 50% chance that it would fall within 11 miles of where it was aimed.
This is far from a threat to the American mainland accross 3,000 miles of Atlantic ocean.
The best accuracy was achived with radio remote control, but as the V-2 was supersonic, the controller had to be in the area of the target for it to be effective.
Again, Hitler had nothing that could cross the Atlantic, including the V-2.
The technology just wasn’t available at the time.
England might have been compromised, but America was never in any danger of being forced to speak German.
Hell, we were still having problems getting a ICBM off the pad in the mid fifties, and the Russians didn’t have any ICBM’s until after we did.

Posted by: Rocky at May 5, 2006 11:26 AM
Comment #145621

Tom L-

Don’t get me wrong, I think deficit spending is as evil and nasty as you do. But probably not for the same reasons.

As the well documented historical lack of correlation between interest rates and deficit spending has shown, the real impact of the debt is in its political value as a limiter on the growth of the federal government. That’s why, before deficit hawking became an opposition tool, it was mostly the favored topic of federalists and limited government types.

It is ironic to see the Democrats, who mostly think that the federal government can solve all of our problems, have suddenly become deficit hawks these days. All I can say is “go get em”, but that’s really going to hurt come time for Hillary to sell Universal Healthcare (we can’t afford it).

As China owning our treasuries, do you blame them? Our Bonds are backed by the full faith and credit of the U.S. of A.; is there a safer investement in world?

Posted by: George in SC at May 5, 2006 11:41 AM
Comment #145625

Rocky,

Simply having the bomb would have been enough for the Nazi’s to have won the war in Europe. Accuracy was unimportant, one mushroom cloud outside of London would be as effective as landing one on Buckingham Palace.

We would then have had to surrender our troops already in Europe since the local nations would have to surrender and then we could not have stopped them with any certainly from delivering a weapon to US soil by ship and then plane as we did to Japan(or maybe submarine).

That would leave us a very narrow window to complete the bomb and maybe dropping it on Berlin just to get a stalemate. Otherwise, if we fought, a radioactive Boston or NYC or Philly and we’d be saying Yahvohl instead of Yeah.

Posted by: Dave at May 5, 2006 11:49 AM
Comment #145626

Speaking of good news bad news.Ever wonder why the liberal news media covers only the death and destruction in Iraq and never I mean never cover the LIFE AND RECONSTRUCTION in Iraq?This prooves the liberals of this country want us to lose.They never report the good things happening in the U.S.A. AS Jack points out.No matter how you cut it the fact remains the same liberals do not have the best interest of this country in mind!!!

Posted by: saying at May 5, 2006 11:49 AM
Comment #145627

To my above post:

Equally ironic, I might add, is that Republicans have been the Party to let the genie out of the bottle on deficit spending (by saying things like deficit spending doesn’t matter). That shows their true stripes as well…..

How can you be both a career politician and a conservative?

Posted by: George in SC at May 5, 2006 11:50 AM
Comment #145635

Keyword(s) “at the time” We and the Russians did ‘in time’ develop them with the benefits of the ‘inherited’ technologies resulting from the DEFEAT of the NAZIs.

Posted by: pige at May 5, 2006 12:26 PM
Comment #145636

Dave,

You and Robert and pige are absolutely right.

What was I thinking?

In fact, I’m going out right now to take a German class so I can make up for all of the lost time.
While I’m at it, I’ll probably take a Farsi class as well, because you just never know.

I hope this settles the issue once and for all.

Posted by: Rocky at May 5, 2006 12:31 PM
Comment #145645

ya know, rocky, I share most of your political views expressed here. I was only making a side point that real threats do exist and things might be quite different than they are today. Adolf or Tojo with a nuke and we have no EU, no NATO, no mideast oil crisis… A few years more and vonBraun would probably have had ICBM’s. Who knows what we would have today?

As far as putting words in people’s mouths, equating the threat from OBL with that of the Nazis, or implying people with doubts about Donnie’s war and Dumbya’s tax cuts are stupid, that’s a fools game. But it’s one that BushCo has played quite well with his willing sheep.

Posted by: Dave at May 5, 2006 12:59 PM
Comment #145650

Dave,

Sorry, I didn’t put in the sarcasm alert before my rant.

Most of it was aimmed at the other two anyway.

You’re right shit does occasionally happen, but that doesn’t mean that the possibilities that never happened are a open door for speculation, or to justify our unholy fear of the unknown.

The terrorists made their point, Bush used it as a tool to scare the beejeezus out of the lambs, and we as a country are the less for it.

Posted by: Rocky at May 5, 2006 1:09 PM
Comment #145651

pige, try it you will like it, my 2003 rodeo with 4 cly. dino oil 20, mpg city. 26, mpg hwy. last march 2005 i changed to mobil one, 15,000 extended oil , the 20,000 mile one was not avabile then, mileage at change 29,561. todays milaege is 43,451 so that,s 13,890 miles on the oil. ok you got me because i did change the filter at 7,500 miles. $4.50 for the filter. i know my motors ive have built a few of them like big block 440 dodges stroked to 496 cubic inches, indy heads 800 horsepower. ok this mobile one at 43,451 looks almost new, the viscosity is the same. now i get 21 mpg city and 28 mpg hwy. i can send a sample to a lab the cost is $75, i think you should pay it because you made the claim, if the oil is shot we can start a lawsuit, because mobil one makes the claim that they guarantee it in full for 15,000 miles. i think they factored in all the types of driving.

Posted by: RODNEY BROWN at May 5, 2006 1:09 PM
Comment #145661

SAYING, what an illogical argument. The Administration and its press does a good job of reporting the good news out of Iraq and NEVER, I mean NEVER, reports the stuff that isn’t going well. So, the media is actually serving the vital purpose of providing Americans with a balanced picture. We get the good news from the administration and their media supporters and we get the bad news from the other media. Both are pretty factual on what they report. And the American people having access to the full story, can make an informed decision as to whether our progress there is meeting expectations. That’s what the polls are all about.

See, how well this works. I love America.

Posted by: David R. Remer at May 5, 2006 1:51 PM
Comment #145663

d.a.n.

Social Security is $12.4 trillion in the hole

I’m confused. Weren’t Democrats saying Social Security ISNT a problem, when Bush brought up the idea of making changes to it? I know most Dems disagreed with the idea of private accounts, and recognized that they alone wouldn’t affect the SS deficit, but didn’t they also say there was no problem?

Seems to me there might be some revisionist history going on….once again.

Posted by: joebagodonuts at May 5, 2006 1:55 PM
Comment #145666

Vincent,

Did catch the title of that CNN article! “Job growth: Weakest since Katrina” now that is funny! 138,000 new jobs and they can only point out it is the lowest in 6 months. And from me eyeballing the graph it is about 10,000 less than December. I swear that they went to the Dem school of math. Where a decrease in the percentage of the increase is a cut.

Posted by: JimmyRay at May 5, 2006 1:56 PM
Comment #145667

Hmmm, no inflation and the dollar is soaring. Gold is at all time lows because of the stability of the dollar. Deficit shmeficit. I know!! Lets stop reporting M3 so no one will see how we’re printing money in the back room at record rates.

Republican strategy: buy the election with tax payer funded deficits.

Galbraith is dead. Long live Foney Free Market politics!

Where’d ya buy those rose colored glasses? At the koolaid store? Whooopeeee!!!

Posted by: Jack Mohammedoff at May 5, 2006 2:05 PM
Comment #145670

David When was the last time you watched a news story on an iraqi soldier who is risking his life to bring freedom to his country?Or when did you see a story on any leader in the new iraqi government that lives day to day never knowing when a hit sqaud will kill him or a member of his family?How about a story on neiborhoods that look a lot like american neiborhoods many peacefull and some what normal by even our standards?If you want to see these kind of stories watch LINK T.V EVERY NIGHT AT 10>30 P.M They show several news cast from the middle east every night.THESE ARE PEOPLE THAT HATE US but still they give the good and bad news to not only the people of the middle east but to americans too.Some folks do not want to see the good this country is doing in iraq but the truth will be told and some people are going to look very anti american when its all said and done.Are you one of these people?Do you ever seek the truth or do you depend on liberal news to blind you?If you are interested the news show is called mosaic i do beleive.It will blow your mind.YES even Iran news cast on mosaic are fair and give both sides of the story.Imagine that.

Posted by: saying at May 5, 2006 2:15 PM
Comment #145672

Tee hee. Porter Goss, Director of the CIA, resigned. Hookers.

Now, every Republican knows how bad the economy was under Jimmy Carter, right?

If the Bush administration continues producing 138,000 non-farm payroll jobs per month, by January 2009, whose administration will produce more jobs? Carter in four years, or Bush in eight years?

(Oh, and no need to account for US population growth. Let’s give Bush lots of statistical help).

Markets might be decent for a few months… until hurrican season. Here’s a totally predictable piece of news:

Oil prices climb to all time highs on fears supply disruptions in the Gulf.

Ya think?

Barnake will have to make some very interesting choices this summer. Either cease Fed Fund Rate hikes, & risk inflation & the shunning of US debt instruments; or continue increasing rates, which will restrict inflation & attract investors to US debt, at the risk of tanking the economy.

Barnake really doesn’t have much choice.

We’ve never had a two-recession president before. It will be quite an accomplishment.

Posted by: phx8 at May 5, 2006 2:20 PM
Comment #145674

JimmyRay,

the US economy eliminates 2.5 to 3 million jobs per year. We need 200-250,000 new jobs per month to make up for the ones that are lost.

Posted by: CPAdams at May 5, 2006 2:21 PM
Comment #145676

CPA,
Good posts in previous thread on Jim Carroll.

I’ve seen the US breakeven non-farm payroll number, the number of jobs needed just to keep up with population growth, at 175,000, and once even as low as 150,000. In any case, the Bush performance on job creation sucks so bad, Bush makes Carter look great. Actually, Bush makes every president since Hoover look great.

Worst President ever? Inquiring minds want to know. I think he’s got the title. That took some doing, but he’s there. Corruption on a scale comparable with Harding & Grant, lies rivaling Nixon, second worst foreign debacle after Vietnam (and vying for worst- Kurdish communists keep attacking Iran & Turkey), dismal economic record, no significant domestic legislative achievements, 9/11, 4 airlines, 2 trade towers, a corner of the Pentagon, surplus gone gone gone, an entire city being lost to rising water and snakes….

Worst. President. Ever.

Posted by: phx8 at May 5, 2006 2:29 PM
Comment #145678

phx8,

Thanks. You’re right, 150-175k has been traditional break even on jobs. The 200-250k number is consistent with the jobs we have been hemorrhaging during Bush’s term.

Regardless, none of the economic data tells us what types of jobs are created nor how much they pay nor whether those wages are more or less than the jobs lost.

Every new WalMart creates jobs…that are inferior to the jobs they eliminate. And those jobs count for the economic report.

I wonder if there is a service in existence that tracks big box retail store openings so we could estimate how many of the “new jobs” are in retail?

Posted by: CPAdams at May 5, 2006 2:39 PM
Comment #145691

phx8 and CP,

I never said the Bush was the greatest president ever. But what country on planet earth would you rather live on?

phx8 what president ever created a job? Whether it was Carter or Bush? The best thing they can do is get out of the way.

So here we are:

Jack says:
GDP +4.8%

You say:
Deficit

Jack says:
unemployment 4.7%

You say:
yea but they are crappy jobs

I says:
Job 138k isn’t bad.

You say:
we aren’t even breaking even and they are crappy jobs.

I say:
But how can we not be breaking even and unemployment stayed the same?

And you are going to say:
Because the jobs went to illegal aliens at walmart so they won’t show up in the unemployment numbers.

So did we do better than Carter? Yes with Reagan.

Can we do better than Bush? Yes with a sock puppet as President and Newt Gingrich running the congress.

Posted by: JimmyRay at May 5, 2006 3:32 PM
Comment #145695

Right on phx8! Since 9/11 happened on Bush’s watch it should clearly support your argument that he was a terrible president. In fact, I’m pretty sure that he was the one who orchestrated the whole thing! Right? One thing you forgot to mention, that he should definitely be blamed for, is Hurricane Katrina. Oh oh, and all of the Mexicans, let’s blame him for that too!

Posted by: Craig at May 5, 2006 3:34 PM
Comment #145700

JimmyRay,

you are the one who criticized Democrats (Dem school of math) for daring to disagree with jack’s rosy economic assessment.

I never said everyone was doing poorly. If you make at least $100k per year, you are doing fine. If you make more than $250k per year, you are doing fabulously. I’m not hurting either.

But our deficit is soaring, an IOU which is going to quickly cripple the economy if Bernake keeps raising interest rates.

What percentage of Americans had no health insurance for at least part of 2005? 41%.

We keep paying for Iraq with children’s blood and our grandchildren’s inheritance.

And what is the GOP doing?

False ethics reform.

Looking for wedge social issues to motivate their base.

Trying to buy us with $100 gas rebates that they pay for with money they’ll borrow from us that we will have to pay interest on.

They’re scrambling to retain POWER without coming up with real SOLUTIONS.

Can we do better than Bush? Yes with a sock puppet as President

It wasn’t Democrats who elected a President who was worse than a sock puppet - don’t get testy because we question your sanity for supporting him for as long as you did.

Posted by: CPAdams at May 5, 2006 3:48 PM
Comment #145710

saying, I have seen a number of such in depth reports following one or more of our troops in Iraq on MSNBC, CNN, National Geographic and others.

Guess you don’t surf the news much.

Posted by: David R. Remer at May 5, 2006 4:19 PM
Comment #145712

Jimmy Ray,
Unlike Howard Dean, I’m not a deficit hawk. Earlier in this thread, Robert mentioned that cutting taxes during a recession is a good thing. I agree. (I vehemently disagree with the way the cuts were targeted- let’s come back to that). Cutting taxes a fiscal stimulus; it will stimulate the economy in the short run, but will incur deficits. The key is to raise taxes during recovery, in order to brake the economy & pay off deficits.

The Bush administration refuses to consider raising taxes. Their economic agenda began and ended with tax cuts.

In addition, the cuts were targeted, not towards stimulating spending, but towards investment, savings, & corporate growth.

We’re seeing the results: good corporate earnings, and very good GDP. This is a terrific economy for the wealthiest 1% of the population, & corporations. The fiscal stimulus is still in place, in terms of spending & low tax rates. The result of the stimulus continues to build, namely, deficits.

4.7% is a good unemployment number. Better high than low, for sure. But no one who follows this kind of thing cares about it. The unemployment rate only measures people who have lost their jobs within the past 6 months, & are actively looking. That’s it. Labor Pool Participation would be a great number is anyone could ever calculate it with any reliability. Currently, it’s in the high 60%’s, similar to what it was during the term of Bush #41. Here’s the door, here’s the steeple, but open the door and where the heck did all those workders go?

Non-farm payroll measures job creation, a much much much more important number. This is the number to watch.

Btw, non-farm payroll is a volatile number, so it’s a good idea to look at the number over months at a time, rather than any given month.

I didn’t say the jobs being created are crappy jobs, although I believe the numbers bear that out. It’s part of the reason we see relatively decent economic numbers in some areas, yet everyone feels like it’s going poorly. Wages are going nowhere, and jobs are not being created fast enough to keep up with population growth; instead, they’re being outsourced.

Craig,
You waged a devastating argument with yourself. Who won? Care to address any points I actually made?

But you’re right. Other people are terribly ignorant and gullible, and they might make the same mistake as you made; if my reference to Katrina made anyone think Bush caused Hurricane Katrina, please accept my apology. Bush did not cause a hurricane. Were you misled too, Craig? Please accept my personal apology.

Posted by: phx8 at May 5, 2006 4:19 PM
Comment #145718

Jack,

You simply cannot be that blinded to reality.

You said we are 284 points off the 2000 high in the dow?

THAT WAS 6 YEARS AGO! What about any growth since then? What about the time value of money? What about the fact that while the market has been bouncing back and forth over the same ground, the dollar has been LOSING value so the ultimate effect is a HIDDEN market correction.

Do you have any background in economics? …at all?

Further, you claimed, flippantly, that the high was the bursting bubble from the Clinton administration. Poppycock. The war is the single biggest factor in our economy right now, with a LOT of contribution from GOP pork barrel spending.

And there is another item to consider: The current administration and its congressional supporters have gambled our future on these VERY precarious economics by literally BETTING on the world continuing to invest in and prop up the dollar. It isn’t happening. We have known for 15-20 years now that the E.U. was going to come on strong as an economic power-house once they began to join forces and solidify as a major world economy. The world knows it too. The same world that has grown more and more frustrated and angry with our Empire-like actions. Awhile back the E.U. had to adjust its growth projections downward…but then world investment starting shifting again. It isn’t official yet, but the E.U. may be readjusting UPWARD soon. That represents money being shifted OUT of our economy due to how the world sees our actions and our stability. Watching our markets bounce back and forth over the same ground for over 5 years is not helping us to be perceived by the world as economically stable. There is now a better option on the horizon: Europe.

The superficial stuff you have pointd out doesn’t even represent REAL economic good news. It’s a holding pattern at best. The foundation is slipping out from under us along with International good will. The debt is climbing faster, the dollar is dropping like a free-falling safe and the first and second worlds are pulling money out of the U.S. and putting it into Europe.

Don’t you think it’s time for a change? I’ll bet your great grandkids would agree with a need for a change. It might be too late for them even if they haven’t been born yet.

Now, pointing these things out absolutely does NOT make me a pessimist. It means I have a desire to see the real issues and do something about them before it’s too late. Pridefully looking for some favorable statistics to crow about is nothing short of woeful irresponsibility, Jack. Especially in light of what is happening.

RGF

Posted by: RGF at May 5, 2006 4:32 PM
Comment #145719

CPAdams:

There certainly are issues that need to be addressed. Social Security, Medicare/Medicaid/ health insurance, debt, excess spending among them. Yet to hear some talk about it, the sky is already falling.

I spoke with an AP reporter a few months ago and he lamented how bad the economy was. When I ticked off a few good economic indicators, he was a bit surprised.

I can accept someone suggesting that we have financed an improving economy by increasing the debt. It may or may not be true, and is much dependent on what happens in the future. But I cannot accept those who say the economy has not improved. They are wrong, and most of the indicators prove them wrong.

There are many factors that affect the economy, some within US control and others outside of US control. But I happen to think that it’s not just coincidence that the economy began improving directly after the tax cuts were implemented. It would be wrong, I think, to suggest that the tax cuts were the sole reason, but I think they certainly were part of it.

I do also think that Democrats often see “wedge” issues simply as issues they disagree with. If someone puts forth legislation, for instance to legalize same sex marriage as Massachusetts has done, and the GOP disagrees with this and proposes its own legislation, I don’t consider that a “wedge” issue. Nor would i consider that action started by the GOP. What it truly is is a difference of opinion on an issue. Both parties try to energize their respective bases with issues in order to drum up votes and support. Its not the action of one party or the other but both, and its a normal part of politics. Dems seem to want to point the finger at the GOP for “wedge” issues, when some of the time the Dems are the ones bringing the issue to the forefront, and the GOP is reacting.

Posted by: joebagodonuts at May 5, 2006 4:34 PM
Comment #145720

RgF:

Further, you claimed, flippantly, that the high was the bursting bubble from the Clinton administration. Poppycock. The war is the single biggest factor in our economy right now, with a LOT of contribution from GOP pork barrel spending.

You seem to be suggesting that the economy was good until the war began, and then the economy went down. Reality is that the economy had peaked near the end of Clinton’s presidency and was dropping by the time Bush was inaugurated. The war had nothing to do with the tech bubble bursting, which is what Jack referred to.

The war is a big factor and so is pork barrel spending. You blame the GOP for the porkbarrel spending, but I’m sure you know its a bipartisan thing. If you don’t know that, then you are beyond hope. Its fair to hold the GOP more responsible for the budget and for the excessive spending, because the GOP currently holds more power. But in order to point the finger only at the GOP for pork barrel spending, one would need to be ignorant of people like Robert Byrd etc on the Democratic side of the aisle.

Posted by: joebagodonuts at May 5, 2006 4:40 PM
Comment #145723

Sheesh, JBOD,

You are as blinded as Jack. WHAT indicators? Read above post from me, Joe. I find it astonishing that these things aren’t even getting considered because of those who wish find *statistics* to crow about. The economic statistics Jack is offering are VERY misleading. You got to consider the effect, both domestically and in the rest of the world, of the falling dollar and the investment that is steadily being shifted out of our economy and into Europe.

RGF

Posted by: RGF at May 5, 2006 4:46 PM
Comment #145726

Uh…No, JBOD.

That simply isn’t so. The reality is that the .com bubble burst in the latter part of ‘98 and early ‘99. The high Jack quoted was from 2000, the year BEFORE Bush. We were growing still through 2000. The issue is that we have shown this holding pattern (…and thus a loss in the markets when you consider the falling dollar) as a result of the war and wanton wasteful deficeit spending by those currently in power in congress.

RGF

Posted by: RGF at May 5, 2006 4:51 PM
Comment #145727

JBOD,

The GOP has the purse strings at the moment. The GOP also sold the country on the idea of greater budget responsibility over 25 years ago. That is why I now point the finger at the current GOP. This is the absolute height of hypocrisy. Nobody like a hypocrit.

RGF

Posted by: RGF at May 5, 2006 4:56 PM
Comment #145729

hey. Jack add another 138+ points. big gain today. and quasimoto has rang the bell.

Posted by: RODNEY BROWN at May 5, 2006 5:01 PM
Comment #145730

What phx8? Bush wasn’t responsible for a city being lost to rising water and snakes? Just when I thought you were making some sense you go and pull the rug out from underneath your own post. Oh well, I guess we can only call him “Bush the liar” now and not “Bush Summoner of Hurricanes”. Maybe we can still say that he blew up those buildings, you know, those explosions did look suspiciously controlled.

I’m starting to lose faith in you phx8 - if that is even your real name.

Posted by: Craig at May 5, 2006 5:04 PM
Comment #145734

phx8

We’ve never had a two-recession president before. It will be quite an accomplishment.

Actually Eisenhower had 3 recessions during his 2 terms and Nixon/Ford had 2 recessions. Interesting that Nixon had his V-P resign, the Watergate investigation, the anti-war demonstrations and finally had to resign hinself and still ended up with the economy performing better that the current one.

Posted by: Arm Hayseed at May 5, 2006 5:22 PM
Comment #145737

RGF:

I won’t bother to try to convince you. If you havent’ seen the economy improve over the past few years, then nothing I can tell you will help you understand it. There is a lot of “there’s always a cloud behind every silver lining” thinking out there.

You say the economy was still growing in 2000—and I’d agree. It fits in with what I wrote—-that the economy had begun its downturn before Bush was inaugurated—-in 2001. It hit its peak during Clinton’s tenure and turned down. Remember all the idiots claiming Bush was “talking down” the economy during the election cycle? If the economy was still improving, then all the Dems who were claiming Bush was talking it down must have been flat out lying? You just can’t have it both ways, even though that seems to be what some want.

You’ll note that I hold Republicans responsible in part for the excessive spending. Only partisans hold one party totally responsible. That you cannot concieve that Dems are part of the problem says something about your viewpoint. If you can’t see it, perhaps its because you are unwilling to. Its either that or you are not intelligent enough to see that both parties feed at the pork trough. Because of the Republican majority, I hold them MORE responsible. Only fools would hold them totally responsible, since its easy to show Dems who engage in pork spending. Just go to CAGW and you’ll see what I mean.

Posted by: jo0ebagodonuts at May 5, 2006 5:28 PM
Comment #145739

Arm,
Extremely interesting. I stand corrected. Good call. Bush would not be the first two-recession president.

Posted by: phx8 at May 5, 2006 5:42 PM
Comment #145742

Phx8

Do you remember the late 1970s? I do. It is much better now.

Re jobs and presidents, I have said before and will say again

-Presidents are not particularly responsible for creating jobs. Their policies can work to enhance of hinder what the private sector does.
-A president’s policy takes at least a couple of years to have any effect at all. I don’t know the numbers, but you have to take the Carter years from about 1978-1982. Those are the jobs he is “responsible for”. You can give Clinton credit for 1994-2002. Bush gets 2002-2010.

A president’s policy is not like an on/off switch. The Federal fiscal year doesn’t even start until October.

The economy is basically good. If there were a Dem in the Whitehouse, you all would be praising it as one of the best ever.

I am an American first and a Republican second. I was happy when the economy was good under Clinton and I am happy when the economy is good under Bush. I take no pleasure in bad news no matter who is in office.

RGF

I know this about economics. Stock portfolios began to decline in January 2000 - whole year before Bush took office. I also know (as above) that any president policies take time to have an effect. By 2003, things were good again.

Most stocks also pay dividends. Even if they do not increase in value, you are making 3-5% off your investments. You should also be diversified. If you own real estate (and more Americans own this than stocks) you made money.

The EU as a whole is not doing well. It is growing at about half the rate of the U.S. and unemployment in major EU economies such as France and Germany is nearly double ours. If we had those statistics you could really be worried.

We need to address government spending and we need to address entitlements. You guys like to complain, but you don’t oppose any of the steps needed to solve the problem. Our government deficit will not be closed by taxing the rich and it will have no effect on our trade deficit if we raise Bill Gates’ taxes.

So the economy is good now. That is just true. We need to worry about the future. We need to:

Cut spending
Cut or at least address SS and Medicare
Buy less from overseas which means consume less. The lower priced dollar will help do this BTW.

I hear a lot of talk, but when the price of something goes up, everyone screams. Nobody wants to cut any government programs and the Dems applauded themselves for killing SS reform. So what do we do?

Posted by: Jack at May 5, 2006 5:48 PM
Comment #145749

Arm Hayseed:

I’m trying to re-find the source, but this would bear on your disbelief on rising wages; an average may rise, but that doesn’t mean everyone is sharing in the largess:

“According to the report, the mean family before-tax income in 2004 fell to $70,700, from $72,364 in 2001, after taking into account inflation. The median family income, on the other hand, rose only 1.6 percent over the three-year period, to $43,200. By contrast, federal figures from 1995 through 1998 indicate that mean family incomes rose by 12.3 percent. In the pre-recession period from 1998 to 2001, mean incomes rose another 17.3 percent.

The difference between the median and the mean figures for income ($43,200 as compared to $70,700) reflects the concentration of income in the hands of the top income-earners. If the distribution of income above the median were similar to the distribution below the median (as in a normal or bell curve), then one would expect the mean and median calculations to be roughly equal. However, while the median figure indicates that half of US families have a before-tax income of less than $43,200, the large earnings by a relatively small section at the very top are enough to pull up the mean substantially.”

Posted by: Lynne at May 5, 2006 6:22 PM
Comment #145750

Probably even “better” bad news…the OMB reports using cash-basis accounting…but the generally accepted accounting practice for companies (and governments??) over $5 million is to use accrual basis accounting. In fact, companies over $5 are mandated BY U.S. LAW to use accrual based accounting!!

OMB reports the deficit from 2001 to 2005 as $1.1 trillion; using accrual based accounting, that same figure becomes $2.9 trillion…a whole 264% larger!!

What great economy?????

Posted by: Lynne at May 5, 2006 6:25 PM
Comment #145751

Federal Reserve on decline of mean [average] family incomes

Posted by: Lynne at May 5, 2006 6:29 PM
Comment #145752

joebagodonuts:

I’m confused. Weren’t Democrats saying Social Security ISNT a problem, when Bush brought up the idea of making changes to it?

The latest dates I found for financial “problems” with Medicare and Social Security were: 2018 for Medicare and 2042 for Social Security…

Now which do you think needs “fixing” first???

Posted by: Lynne at May 5, 2006 6:34 PM
Comment #145753

Jack,
My assessments are realistic. I’m still in the stock market, and I have been since a 7,000 DJIA. I’m adding to my 401k every month, and I’ll hang in there until the DJIA tops 12,000.

If Bush would shutup about Iran, it would help tremendously. Everytime the Iranians shake their fists and mouth off, oil goes up, and it earns their country additional billions. What a racket.

It’s inevitable hurricanes will shock the economy this summer. Can’t be helped.

In the meantime, this economy remains a very good one for the wealthiest 1% and corporations. That’s not a partisan statement, that’s just the way it is today.

You write: “The economy is basically good. If there were a Dem in the Whitehouse, you all would be praising it as one of the best ever.”

It is great if you belong to the right part of the economy. Not many people do, but the ones who do, the very richest people in the country, are really making out.

This economy reflects Republican philosophy to a tee. Embrace it, Jack, this is what you always wanted. This economy reflects the best efforts of a Republican House, Republican Senate, a Republican President, and a conservative Supreme Court to boot. A few people are doing very nicely indeed. What’s wrong with that, Jack?

Posted by: phx8 at May 5, 2006 6:41 PM
Comment #145755

Lynne,
Great posts! Thanks!

Jack,
Don’t want to be too partisan. You posts are great too!

Posted by: phx8 at May 5, 2006 6:48 PM
Comment #145759

Whoops!!

Probably even “better” bad news…the OMB reports using cash-basis accounting…but the generally accepted accounting practice for companies (and governments??) over $5 million is to use accrual basis accounting. In fact, companies over $5 are mandated BY U.S. LAW to use accrual based accounting!!

That should’ve read “…companies over $5 MILLION are mandated….”

Posted by: Lynne at May 5, 2006 7:00 PM
Comment #145763

Jack,

I get it. Our economy is doing well in some areas, but do you understand we have unsustainable debt and trade deficits?

You keep posting these green light indicators and frankly I think it’s irresponsible, like a kid who’s just bought on credit a new jaguar he can’t pay for saying “but I just bought a new jaguar - I must be rich”.

I just want you to know I get it. I understand the economy is doing good things, and that you think Democrats are ignoring that. It’s not that. It’s that you are on the road, running out of gas, and you point this out to your passenger and they start talking about what a great car you have instead of helping you find a gas station.

That’s why these posts are like flame-bait. It’s not that what you say isn’t true - it’s that it’s not what we should be talking about given the dire economic situation we’re in. If my car mechanic told me my car could die in a month or two, but is running great now, I’d want to talk about how to prevent that. If he tried to deter me by talking about how great it was running now, I would have to insist we talk about what I could do to prevent its dying, if anything.

So, to return you to the real subject of conversation: I understand parts of the economy are running well, I always have, but is our debt something we should be worried about? Because a lot of economists are comparing it to a car that could die at any time, and I would want some reassurance driving a car like that.

Posted by: Max at May 5, 2006 7:18 PM
Comment #145765

I found one place where wage growth is claimed to be 5.7%

http://www.whitehouse.gov/infocus/economy/

I still would like to find the source data and do my own calculations and long term comparisons.

Posted by: Arm Hayseed at May 5, 2006 7:22 PM
Comment #145772

Jack,
Why do I feel so bad about the economy?
I order to become more competitive, my health care costs are going to increase by a factor of five.
All I hear from my government is doom and gloom about how the terrorist are going to kill me unless I submit to more surveillance and government monitoring.

Why do I feel so bad about the direction MY COUNTRY IS GOING?

Supposedly the only “real problems” facing America are “Christianity under attack” and “activist judges”.
The government proclaims gloom and doom if I do not agree with their policies and are surprised when I perceive my life as being dominated by gloom and doom.
Voices of dissent are silenced by fear, intimidation and slander. Freedom of speech has to pass the PC (Patriotically Correct) test.

Kennedy gave us a vision, Regan gave us hope, and Clinton let us believe the government was concerned with our day to day problems; Bush gave me 58 Dollars in tax cuts and told me it was going to “reshape our economic model”

Posted by: NotaChickenHawk at May 5, 2006 7:55 PM
Comment #145775

Jack,

The REAL strength of the EU is not present but future. They are the alternative to foreign investments that are losing faith in the falling dollar.

I don’t give a flip about anybody’s specific porfolio in this context, Jack. When the market ping-pongs back and forth over the same ground for over five years while the value of the dollar declines…THAT REPRESENTS AN OVERALL MARKET LOSS. We are talking about the strength of the economy, not any specific person’s portfolio, are we not?

We are betting all. Future stability, economic growth and the value of our currency on the fact that dollar will remain attractive to foreign investors who prop up our currency with their investments. If the dollar continues to decline while and foreign investment continues to move to Europe, then Europe will look better and better while we look more and more precarious. Do you want the current economic trends to continue? Are you so sure of what you believe that you will continue to play ostrich with your head in the sand and ignore all this? I, for one, believe..no… KNOW we need a change. Enough of this short term profiteering by the top 1% at the expense of the stability of our entire nation.

RGF

Posted by: RGF at May 5, 2006 8:35 PM
Comment #145788

Sorry I didn’t get your little joke, Jack.

:o/

I guess I was too busy worrying about the SKYROCKETING NATIONAL DEBT, the INSANE FEDERAL DEFICITS, and the WAR ON THE MIDDLE/WORKING CLASSES.

Next time, I’ll try to Lighten Up a bit, that is if it’s not too dark in the Fallout Shelter - oh, I’m sorry: I meant *Freedom Shelter* - to read your funny, funny, posts…

Posted by: Betty Burke at May 5, 2006 9:26 PM
Comment #145796

Jack

Try to follow this carefully. Except for the upper quintile of incomes, real incomes have been falling for five years. My definition of a good economy doesn’t include one in which all the growth goes to the upper end of the economic spectrum. In my world, that is a bad economy. I guess if you identify with the upper quintile, you could call it a good economy. Is that where your heart is?

Posted by: Mental Wimp at May 5, 2006 10:12 PM
Comment #145798

Arm Hayseed:

That 5.7% would seem to be the “average” growth in wages…do you know anyone who has gotten that percentage raise (without changing jobs!) in the past 12 months???

In addition, your source was the White House…I don’t think I would consider that a “good” source of informati anymore…hard to understand all those statistics when they’re busy spinning around so fast.

Posted by: Lynne at May 5, 2006 10:26 PM
Comment #145810
joebagodonuts, d.a.n. Social Security is $12.8 trillion in the hole (Source: CATO Institute) . I’m confused. Weren’t Democrats saying Social Security ISN’T a problem, when Bush brought up the idea of making changes to it? I know most Dems disagreed with the idea of private accounts, and recognized that they alone wouldn’t affect the SS deficit, but didn’t they also say there was no problem? Seems to me there might be some revisionist history going on….once again.

joebagodonuts,
It’s crazy. Yep, there’s a lot of deception about Social Security.

Yes, it is $12.8 trillion in the hole, unless you subtract the current “so-called” $1.5 trillion surplus.

That would put it at $11.3 trillion in the hole.

So, why they call it a surplus is beyond me.
How can you have a surplus when you have a debt?

There’s just one other little problem.
Guess what form that $1.5 trillion is in?
ANSWER: government bonds!

Isn’t that a big laugh.
So, when will they be worth anything?

The whole thing is a huge ponzi scheme.

The nation is swimming in debt.

The next recession may not be so easy to recover from.

Posted by: d.a.n at May 5, 2006 11:29 PM
Comment #145811

Max

The economy is good now. It is not the best economy in our lifetimes, but it is one of the best.

The future is uncertain. Some things probably need to happen.

1.We need to cut Federal spending
2.We need to address Social Security & Medicare
3.We need to buy less from overseas, which will mean a decline in American living standards or a slowing of growth.

The dollar decline will help accomplish #3.

What are the chances any politician will do any of these things until there is a clear and present danger? Which Federal programs can we cut? Who will dare address SS? May we ask for volunteers to take a lower living standard?

The thing I would fault to President and Congress for doing is increasing the size of government. We are taking in enough taxes to balance the budget IF the government had not grown. But I don’t hear Dems really advocating cutting real programs.

Nota

We Americans spend more on health care than anybody else. We don’t get a good deal. Most other countries ration health care and do not give patients the same gold plated services. I experienced health care in Scandinavia. I liked how it worked, but I am not a cry baby like most people when they don’t feel well. Most Americans demand a different standard.

BTW - I went to the dentist in Norway for a root canal. The dentist asked me if I really wanted novacaine. After all, it would not take that long, he said. These guys are just tougher than we are.

RGF

Most people who know about the EU have less confidence than you do. Currency appreciation is not necessarily the vote of confidence. Our own dollar was higher in the early 1980s when the economy was in the dumps than it was in the later 1980s when things were much better. The EU economy has been growing only about half as fast as ours. Nobody expects much of a change unless the big economies such as Germany and France restructure. The U.S. is still the most competitive large country in the world. Sometimes a place like Finland beats us, but nobody gets such high marks over all.

Mental

Income inequality was higher at the end of the Clinton Administration than it is today. It has been a worldwide trend in general.

We had some serious problems when the dot com bubble burst. Then we had 9/11 which made us pay back the famous peace dividend. We got back on track in 2003. This year median incomes will probably grow again. I expect you will have to add that to the list of things that no longer mean what they used to.

Posted by: Jack at May 5, 2006 11:38 PM
Comment #145812

Jack,

Let me see if I am guessing this right:

You are a republican. Republicans, once upon a time, pushed for balanced budgets, fiscal responsibility, smaller government, etc. etc.

Now the republicans are in power. They are expanding the debt, making our country look unstable and unnattractive to foreign investors, growing the size of the government to epic proportions…but they still call themselves republican.

So is it the label or the philosophy you care about? What is it that is important to you, Jack? you too, JBOD?

Remember those teenage girls in the late 70’s and early ’80s who just HAD to have that Gucci purse? well, by the time that fad was taking over that generations’ young girls all over the country, Gucci had already switched to making the purses out of cheap plastic and vinyl. However, girls kept on buying them for no other reason except that they said, “Gucci.”

Get what I’m saying here, Jack? JBOD? The GOP has lost it. UTTERLY.

RGF

Posted by: RGF at May 5, 2006 11:43 PM
Comment #145814

Which is why I prefer to have the raw data and to do my own calculations.

Posted by: Arm Hayseed at May 6, 2006 12:03 AM
Comment #145818

Two things you can count on:

A newly inaugurated President has many meetings with the Appropriation Committee before he can remember which drawer the maid hid his underwear in. The Presidents fiscal policies are reflected in the actions of the Appropriation Committees actions long before the beginning of the first fiscal year. Especially with the same party dominant in both houses of Congress.

The Presidents fiscal policy has a direct effect on job creation. Too many highly qualified people attest to that fact for it to be any thing but true.


President George W. Bush
January 6, 2006
http://www.whitehouse.gov/news/releases/2006/01/20060106-7.html
By cutting taxes on income, we helped create jobs.


John Snow
Secretary of the Treasury
October 7, 2004
http://www.whitehouse.gov/ask/20041007.html
The President’s economic leadership has contributed to one of the strongest years of GDP growth in 20 years, and this growing economy has created 1.7 million new jobs over the past year.


Dr. Gregory Mankiw
Chairman of the Council of Economic Advisors
October 10, 2003
http://www.whitehouse.gov/ask/20031010-2.html
One of the big reasons is the President’s Jobs and Growth tax relief package, which went into effect this summer. This put money in people’s pockets, stimulating consumer spending. In addition, a variety of tax reforms lowered the cost of capital, stimulating investment spending. Both of these lead to more rapid growth in real GDP and to stronger job creation.


Elaine Chao
Secretary of Labor
November 7, 2003
http://www.whitehouse.gov/ask/20031107.html
Today’s news of continued job growth and a drop in the unemployment rate is good news for workers and is another sign that the President’s economic policies are turning the economy around.

…the President pushed two jobs and growth plans through the Congress—the results of which we are seeing now in accelerating economic growth and job creation.


White House Press Release
June 7, 2002
http://www.whitehouse.gov/news/releases/2002/06/20020607-5.html
The tax cut provided a much needed boost to our economy at just the right time by giving Americans more of their own money to spend, boosting investment and creating jobs.


Joel Kaplan
Deputy Director of the Office of Management and Budget
July 13, 2005
http://www.whitehouse.gov/ask/20050713.html
What we see in the numbers released today is that the President’ program of pursuing pro-growth economic policies, especially tax relief, and spending restraint is working.

This was exactly the right prescription for our economy, and the result has been restored growth, job creation, and strong investment.

^^^^^^^^^^^^
The President and the people in the top positions of his administration all claim that the Presidents fiscal policy is the catalyst for the economic growth and job creation. Why do the rank and file Republicans try to belittle the President’s role in the present economic condition?

Posted by: Arm Hayseed at May 6, 2006 12:24 AM
Comment #145822

RGF

I am not happy with everything Republicans have done and are doing, but when I consider the alternatives I see that there are not any good ones.

Posted by: Jack at May 6, 2006 12:36 AM
Comment #145823

Jack,

As long as we going to discuss countries within the EU, consider Ireland. In the 90’s it earned the moniker, “Celtic Tiger” because of the strength and growth of its economy. It is still the fastest growing economy in the EU. Just 15 short years ago, Ireland was still more than 95% agricultural. They have been investing in education for decades and now Intel, Compaq, Dell all have bases in the Republic of Ireland. Phizer is there too and Viagra is made in the city of Cork, Ireland. They are a nation of under four million. The top 3 cities in our country are at least that big and Chicago is almost that big. Ireland invested in its people. They prioritized education, built working mass transit all over the country, encouraged clean businesses, etc. Sounds good, doesn’t it?

RGF

Posted by: RGF at May 6, 2006 12:39 AM
Comment #145824

Republicans, once upon a time, pushed for balanced budgets, fiscal responsibility, smaller government, etc. etc.

Under that definition we haven’t had a Republican President since Eisenhower and the Democrats have fit that description far better.

Posted by: Arm Hayseed at May 6, 2006 12:41 AM
Comment #145841

RGF, I was going to drop a few gems in here, but, as I read further down, I see you have the situation well in hand. Good job. Republicans need all the economics education they can get, the state of our economy over the next decades proves it. Can’t believe so many are still believing we will grow ourselves out of this mess the GOP has put my daughter’s future in. My daughter is looking to Canada as an option for a future. She is 15.

Posted by: David R. Remer at May 6, 2006 3:23 AM
Comment #145843

After adjusting for inflation the National Debt has increased by about $5,421,961,000,000 ($5 trillion, 421 billion, 961 million) since Truman took office in 1949 in year 2000 dollars.

During that time Democrats were in the White House for 24 years and they increased the National Debt by $602 billion, 770 million.

During that time the Republicans were in the White House 33 years and they increased the National Debt by $4 trillion, 819 billion, 191 million.

To give proper credit to Eisenhower, the last fiscally conservative Republican President, the debt was reduced by $54,532,000,000 during his administration.

In the 6 years since Jan 2001 the National Debt has increased by 1,510,569,000,000 (in year 2000 dollars), over twice the amount of the increase during the whole 24 years Democrats were in the White House.

Republicans usurping the label “fiscal conservative” has to rank as one of the greatest propaganda coups.

Posted by: Arm Hayseed at May 6, 2006 3:44 AM
Comment #145850

RGF:

I’m not into labels. People try to box others in with labels, by calling them liberal or conservative, Democrat or Republican.

I don’t like the excessive spending that is going on—I’ve said that to you in this thread repeatedly, even though you ignore it. I recognize that SOME of the spending in the past few years has been a result of 9-11 and some has been a result of the military actions we’ve undertaken. I can accept that part of the spending—its the over the top “bridge to nowhere” type of spending that I abhor.

You want to blame Republicans solely for the spending—but Dems are to blame as well. I’ve stated that I hold Reps MORE accountable because of their majority position, which is logical. You seem to want to give Dems a pass, perhaps for partisan reasons, or perhaps for other reasons.

I agree with Jack that I prefer the overall ideas and principles of the GOP than I do the Democrats. That you feel differently is perfectly fine with me. I don’t find the need to malign the Democrats simply because I prefer the Republicans. I don’t malign other sports teams if I prefer one team—I simply root for that team. I think its a weakness to have to denigrate one group in order to show affection for another.

RGF, each time you toss out a generality about my position, I’ve responded with an explanation of my position. You’ve then resorted to pigeonholing me anyway. Jack has responded as well, saying that he doesn’t like everything the GOP is doing. What part of that mystifies you? Is it such an all or nothing proposition to you that you must LOVE everything in order to love at all? Is there anything about the Dems policies that you dislike, and if so, how can you possibly still support them in any manner? If you can, then you should be able to understand my position regarding the GOP.

The question is: are you even trying to understand, or are you in some kind of competition to ‘win’ an argument?

Posted by: joebagodonuts at May 6, 2006 6:36 AM
Comment #145862

JBOD,

When I get responses from you or Jack they INVARIABLY are responses to some rather small aspect of my post with no recognition or adress to the arument itself.

For instance, I pointed out that the market has ping-ponging, and not climbing, over the same ground while the dollar loses value. Jack responded with an assertion that the EU is not doing as well as it could or would like. IT’S NOT EVEN THE POINT. The point about the EU is that they are a FUTURE strength. They are an alternative to investing with us, and the more we look unstable, the better they will look.

Both you and Jack do the same thing, JBOD. You either cannot or will not adress the argument itself so you pick some minor element and go off on a tangent so you can still oppose some aspect of my posts. Where is the lack of understanding?

Economics and law are my areas of expertise, JBOD. I was once on the right right there with you. Now the right is filled with unthinking label identifiers. Don’t be one of them. If you are smart enough to put together salient arguments here, why can you not see the hypocrisy and falsity within the new GOP?

RGF

Posted by: RGF at May 6, 2006 9:56 AM
Comment #145863

David R. Remer,

I encourage you to drop your gems. I don’t think we are going to convince anybody, but drop them anyway.

RGF

Posted by: RGF at May 6, 2006 10:07 AM
Comment #145864

JBOD,

” …some spending….?”
Have you read Arm Hayseed’s post above?

RGF

Posted by: RGF at May 6, 2006 10:10 AM
Comment #145872
Jack wrote: The economy is good now.

Well, I’m not sure I’d characterize it that way.
The issue is very complex.
The statement is really very inadequate.
Instead, the big picture is needed.
Dozens of issues should be considered.

Actually, we need something more accurate than the “Miser Index” or “CPI”. Those are both woefully inadequate.

I think if all the issues were weighted and and added up, it would not paint such a rosy picture.

Not if all of the following are weighted and added up to arrive at a final score.

If you look at all the issues, debts, trade deficits, falling media wages, corporatism & corpocrisy, corrupt and FOR SALE governemnt, pork-barrel, rising foreclosures, plundered entitlements, selective enforcement of the law, conflicting laws, rampant abuse of eminent domain laws, etc., etc., etc., it is not so rosy. You have to look at much more than just the current (but rising) interest rates, and the current (but rising) inflation.

So, yes … Jack wrote:
1.We need to cut Federal spending
2.We need to address Social Security & Medicare
3.We need to buy less from overseas, which will mean a decline in American living standards or a slowing of growth.
The dollar decline will help accomplish #3.

The sad part is a decline in the dollar is probably inevitable, as inflation grows, and the fed prints too much money to keep up with interest (alone) on the astronomical debt.

The problems with Social Security and Medicare can not be isolated from the rest of the government or nation.

Large cuts in Social Security and Medicare benefits are inevitable too. There is no other way. No politician will tackle it. They prefer to let it resolve itself (the hard way).

Posted by: d.a.n at May 6, 2006 10:57 AM
Comment #145874

Gentlemen and Ladies,

This is a very good debate and I commend both sides (although I agree with those on the left). Thanks for no name-calling and for the insight from both the right and the left. Wonderful points from both sides!

Posted by: Tom L at May 6, 2006 10:59 AM
Comment #145876

d.a.n.,

Thanks for trying to focus us back to a bigger picture. I applaud your efforts. It also seems to me that perhaps the only issue where we don’t see eye-to-eye is on immigration. So be it. I find you to be, ohterwise, a careful and clear headed thinker. Thanks.

RGF

Posted by: RGF at May 6, 2006 11:04 AM
Comment #145878

RGF

You cannot take one country out of the mix and compare it to the whole U.S. It is like choosing our best performing states and comparing them to Europe.

If you read my earlier posts, you find that I have praised Ireland. Why? Because of its free market habits and LOW corporate taxes. Read my recent article ”Cut Some Taxes. I mention Ireland as the place with the LOWEST taxes. So yes, be more like Ireland in taxes. More like France in nuclear power (they get 78% from nukes), more like the Finns in honesty etc. But still like America over all because when we sum up all the indicators and look at the big picture, the U.S. is the most competitive economy in the world and it has been for a long time.

Posted by: Jack at May 6, 2006 11:25 AM
Comment #145880

Jack,

Again you are taking a rather small point to run with. I was obviously raising Ireland as an example of how Europe itself is growing and improving. The larger nations still have plenty of room to grow and improve their standings but the real issue is that this process is underway. That what matters as far as our argument is concerned, Jack. This process is underway.

THAT MEANS WE CANNOT BET ON DOLLAR PROMINANCE AND GROWTH FOREVER.

…but that is what all this run-away-deficeit is doing to us. We (and the world) are watching the alternative looming on the horizon and while we continue to operate in complete denial, the frustrated and angry world is beginning to shift investments into Europe.

ADDRESS THE ENTIRE ARGUMENT, Jack.

RGF

Posted by: RGF at May 6, 2006 11:34 AM
Comment #145886

Jack,

You suggest we get rid of the debt by spending less. Again, would you say this to a kid that had to pay off a car? Let’s face it, that kid would need to do the responsible thing and get a job or two or three and pay it off. It’s amazing to me that Republicans think they can just spend, spend, spend, borrow, borrow, borrow. I don’t like having debts, we’ve got to tax and get rid of it now.

Posted by: Max at May 6, 2006 12:28 PM
Comment #145891

RGF:

If you are smart enough to put together salient arguments here, why can you not see the hypocrisy and falsity within the new GOP?

I’m sorry to see you resort to a somewhat standard educated liberal mentality. The mantra is often “if you were smart enough, you’d understand and agree with me.” Its a rather arrogant mindset, which predisposes that you are correct and anyone who disagrees is either not smart enough or has ulterior motives. When someone takes that attitude, they’ve lost the ability to discuss, for everything is already discussed—-there is no possibility of change.

I havent said the economy is the best ever, havent said there are not problems, havent said that we face no hurdles. I’ve addressed some of the problems and I recognize that there will always be the ability to look negatively. If interest rates are low, you don’t make much on your CD’s. If interest rates are high, your mortgage costs more.

While Jack and i have each respectfully disagreed with part of what the Republican party has been doing, that differs from your approach. YOu seem to be taking a stance that unless someone agrees in totality with your point of view, they must be wrong. That is an arrogant and closeminded position—and I am glad to have none of it.

Posted by: joebagodonuts at May 6, 2006 1:04 PM
Comment #145905

RGF, your arguments are logical and appropriate. JBOD however, is quite correct. Jack and JBOD have both made salient points pertaining to the assumptions and conclusions of some of your positions. The inadvertent implication (I assume it was inadvertent) that they are not smart enough to convince you, is itself a dodge from the matters being discussed.

You have made many of the arguments I would have had I joined this thread earlier. I have learned from experience however, that neither JBOD nor Jack are deficient in anyway in making valid arguments based on their assumptions and values. If their facts are wrong, present the correct facts. If their assumptions are wrong, present real world evidence to counter. If their conclusions are wrong, point to the faulty premise.

If however, they hold a differing value set or priority set, they are not necessarily wrong. In that case, I found the best that can be accomplished is to agree to disagree without casting aspersions on their intelligence or competence at debate.

Posted by: David R. Remer at May 6, 2006 2:44 PM
Comment #145922

Jack

Again, read carefully. I wasn’t talking about income inequality, but rather a growing economy where for the lower 4/5 of the population their income is shrinking, but for the upper 1/5 it grew enormously. This is a dysfunctional economy, not just some income inequality. I hope your sleight of words wasn’t a sneaky attempt to deflect that point, but rather a momentary thickness on your part.

I am puzzled by your statement “I expect you will have to add that to the list of things that no longer mean what they used to.” Was that a snark? If so, I don’t get what you are referring to.

Posted by: Mental Wimp at May 6, 2006 5:25 PM
Comment #145929

David R. Remer, JBOD, Jack,

Nothing I said was meant to imply in any way that any of you are not inteligent in anyway. I am trying for greater candor here. Honesty with ourselves primarily, but then with everyone. NOBODY has said anythng about the observations of how disceptive these economic numbers are in light of what is going on. I offered not conflicting evidence so much as conflicting analysis. What I am getting back is not even on target and it is frustrating beyond beleif. Because of that, I naturally assume that it doesn’t really matter to Jack or JBOD. They are merely trying to score points of some sort with the info offered (which only works if you don’t dig deeper). That is why I made the label-Gucci analogy. It still seems to fit. JBOD even mentioned using these figures to convince an AP reporter. Since I do not believe he even considered some of the points in this blog following this article, both mine and others, I figure he cannot be blamed for being disingenuous. AFTER reading these posts, if he continues with that, he would be.

So one more time…

WHAT ABOUT THE FACT THAT WE ARE BETTING OUR ABILITY TO PAY OFF THIS DEBT ON THE CONTINUED STRENTH OF AN ALREADY DECLINING DOLLAR? A DOLLAR WHOSE ‘PROPS’ ARE MORE AND MORE LIKELY TO BE KICKED OUT FROM UNDER IT WITH EVERY PASSING DAY???!!!???
ESPECIALLY CONSIDERING THE EURO IS GETTING STRONGER AND STRONGER?

Is that succinct enough for you, Jack? JBOD?

RGF

Posted by: RGF at May 6, 2006 6:04 PM
Comment #145930

The comment you point out, JBOD, is meant NOT to insult yours or anyone’s inteligence…but hopefully to spur you to think about something I don’t think you are considering. OR…in your defense, if you are considering, then you have not yet chosen to discuss it here. When the main points of my comments get completely ignored but little tangential arguments get picked at…naturally I assume you have nothing to say to the main point being offered.

So I ask you, ARE YOU DIGGING DEEPEER INTO THE ECONOMIC NUMBERS YOU GUYS ARE OFFERING? …OR ARE MERELY TRYING USE SUPERFICIAL MEANS TO SWAY THOSE THAT MIGHT BE EASILY SWAYED?

It’s a fair question in light of the non-responses I’ve seen thusfar.

RGF

Posted by: RGF at May 6, 2006 6:14 PM
Comment #145944

I used to think we were merely close to the edge, but we may have just gone over the edge. The question, is how long before we strike the bottom of the abyss?

Spending and debt are out of control.
Pork-barrel is out of control.
Several problems don’t look like they are going away for decades.

That is dangerous, because these are problems that require action decades in advance, and we failed to do so.

These are problems that will take decades to resolve, but only if we start immediately.
But that’s not likely. Do-nothing congress keeps right on being irresponsible as ever (more so lately). They don’t care. They already got theirs. They already got golden parachutes.

It is you, and the average American that will suffer most. And, perhaps that is as it should be, since voters have the power right there under their very noses, to vote out irresponsible incumbent politicians, but failed to do so, decade after decade. How many times do voters need to re-elect the same do-nothing, irresponsible incumbent politicians before they realize that ain’t workin’ ?

No one knows for certain, but things are likely to deteriorate more in the next 10 years.

Recessions come and go every 2 to 11 years for the last 46 years. That is a recession, on average, about every 6.5 years. The last recesson was about 5 years ago. So, a recession may occur in 2007 or 2008.

We are in much deeper debt now than in 2000.
Many things are worse since 2000.
How easy will it be to recover from the next recession ? Could the next recession turn into the next Great Depression ?
We are in (4) and (5), and starting (1)
Can we stop the cycle?
We are being crushed by our own selfishness.

,-(1) Corruption, oppression,
| (2) courage, Responsibility, rebellion, reform,
| (3) liberty, growth, abundance,
| (4) selfishness, complacency, fiscal irresponsibility
| (5) apathy, dependency, fiscal & moral bankruptcy,
` - - return to step (1)


Posted by: d.a.n at May 6, 2006 9:00 PM
Comment #145953

RGF

I expect the dollar to decline against the euro this year. I think you should diversify into foreign stocks. My favorites are RIO, TM, IBN, POSCO and TEVE.

The dollar decline is not necessarily a sign of strong economic trends in Europe. The dollar went up last year because of increasing U.S. interest rates. It is declining this year because those have probably stopped.

I just don’t think you should overestimate Europe. (or underestimate U.S. reslience) There are many bright spots in Europe, but overall the it is still the “old” continent. European labor markets are horribly inefficient. Their immigration policies are a shambles. We can learn from some things the European do and from some individual European countries, just as they can learn from us. Overall, the U.S. is in better shape than Europe. If you want to copy Irish corp taxes, Finnish education policies or French nuke, I am with you. Euro labor policies, governance, immigration etc suck. The U.S. does better. You don’t have to credit Bush for this, although I think that Reagan turned the U.S. around in the 1980s. Until that time, Europe was closing the gap with the U.S.. Not anymore.

Max

The kid should pay off the car, but maybe he should sell it and buy a cheaper one or drive less and save on gas. We may have to raise some taxes, but cutting spending and addressing entitlements is more important. Tax revenues have been up this year and last. About 2/3 of the revenue lost in 2001-3 came from the declining economy NOT the cuts. As the economy picked up, so did revenues. Unfortunately, the government was bigger by then. We have to cut more than we tax.

Mental

It was not particularly aimed at you but rather at the general argument. For the last century or so, we have measured the health of our economy but unemployment rates & GDP growth. We measure our rising potential to create value by productivity. Since the 1970s we have measured our environmental success by reductions in major pollutants such as SO, NO2, NO. ALL these indicators are good and have been since 2003. When I bring them up, people tell me that they don’t mean that things are good. The only one we have not yet won on is median income. This is a lagging measure. I expect it will improve soon and when it does, I expect the Presidents opponents will start saying that also doesn’t mean anything.

Posted by: Jack at May 6, 2006 10:08 PM
Comment #145957

Jack,

First, thanks. No we have discussion.

I love the policies that most of Europe has with respect to education. If you qualify for it- you get it! Tuition free. This is called investing in one’s future. Ireland is succeeding because of this very policy. They have computer and engineering schools that are besting MIT. I have friends who have such degrees.

True, their immigration is a shambles and that is a contributing factor to their wieghty labor problems as well. But they are still immproving! …and, for the first time since WWII, they represent another option for foreign investors and countries tired of the dollar standard. That isn’t an issue now, but it will be. How soon it becomes a problem for us depends on how we handle ourselves as well as how Europe handles itself. That’s all I’m saying. With this context in mind, is it not the height of irresponsibility to so heavily gamble our future the way we have? Would we not be more stable if we had paid down our debt and made it less of a burden on the overall economy? Why did we NOT do that? These are the things I think should be considered before we start imagining that the picture is rosey.

RGF

Posted by: RGF at May 6, 2006 10:30 PM
Comment #145961

I must apologize for the typos.

The “No” should be “Now” as in: Now we have discussion. I have a faulty keyboard, but I still should have caught it before hitting the post button.

Posted by: RGF at May 6, 2006 10:59 PM
Comment #145963

Some Euro countries have always been good investments.

Not all Euro countries do so well in education. The Finns are very good and so are the Dutch. European university education is not as good as American. The tuition free idea is one of the things that is not working.

We have to compare like with like. We cannot compare parts of Europe with the whole U.S.

I am very surprised how long the U.S. has remained predominant. We still produce about a third of all the goods and services produced in the entire world. Our share of the world GDP has remained steady while those of China and India have grown and Europe’s has declined. I don’t really think we are gambling our future any more than a natural swing. Eventually the rest of the world SHOULD catch up with us. If not for the destructive policies of much of the world, they would have done. Boliva just managed to ensure its poverty for another generation, for example.

In many ways, the Europeans are letting us down. We need stronger partners. They don’t support their own military establishments and they don’t reproduce themselves. I fear they will lose the race with immigrants. I don’t want a Eurabia. The good performing Europeans are mostly small and on the edges. The core of France and Germany is not doing well. The U.S. had its Reagan. The UK had its Thatcher. France and Germany need some kind of reformer

The EU has generally been a positive force in that it has been good for business. But the Brussels bureaucracy can be stifling and its regulations often make no sense. The Finns cannot grow strawberries, for example. They grow something that looks like strawberries and tastes like strawberries, but they cannot call them strawberries because they don’t fit the size and shape criteria set by Brussels.

They also have to cross translate all the regulations into the various languages. Do they really need all the Danish stuff in Greek?

I don’t want to crap on the Euros. It is a great place to live and to work IF you are established and you like the status quo. Some countries are good for particular things. But as a whole the old continent has to address its socialist based policies that worked in the machine ages of the last century, but are ill suited to the information age we live in today.

Posted by: Jack at May 6, 2006 11:11 PM
Comment #145977

Jack,

I agree with the obstacles you are seeing in Europe. France and Germany have significant labor problems to work out. While it is true that Europe’s population growth has slowed, I believe the immigration issues they are facing could, over time become strengths. Just as our own situation with Mexico will. Provided the new immigrants, just like what we face, will become permanent productive members of the EU and its economy. Time will tell the tale, but in the meantime we at least see that the EU is moving in the right direction. I agree with you about the significance of their obstacles, but I believe they still represent an alternative to foreign investors that is likely to grow stronger, not weaker, over time. It was just earlier this year I saw a story on how the nation of Liberia is interested in moving assets out of dollars and into Euros. I grant you, Liberia is not much of a loss, but they are moving in a direction that others may well follow if we remain on the same path, do they not? I do, however, believe the tuition free idea is a good one and this is why:

We are back to the example we discussed earlier of Ireland (I recognize we are in the microcosm again and this may not be a succesful idea for the rest of Europe). Ireland offers this scheme and it has resulted in the well educated returning to Ireland from abroad to raise their families in Ireland and to seek their own further education. You see, Ireland, like much of Europe, was actually losing population. In Ireland’s case it was due to training their next generation too well. I must disagree with the assertion that European Universities are not as good as American ones. In Ireland and the UK, they outperform our schools. UC Limerick, for example, patterned itself on MIT, but then in about its 4th or 5th year, it began outperforming MIT in every catagory they both were in. We do a better job of allowing open and free admissions into various programs while Europe requires a much more stringent merit based qualification process. I look at it this way - we give people who want it bad enough a shot. Europe requires them to jump through more stringent academic requirements. Both strategies have their place, but it means that strictly speaking, European schools are going to be academically stronger.

Regardless, the point is that I believe it is a matter of investing in the next generation. In the first world in the k-12 grades we consistently finish last or near the bottom. It was a few years back I remember we came out 18th in the world for educational standards in the first world. I have many family members in the world of education at one level or another and everyone was talking about it and passing the article around. That won’t do. We can and should do better. It is, afterall, an investment in our future. Whether or not tuition free schemes are a good idea is one that is likely to be a difference we will not settle anytime soon. I can live with that. To some, it sounds like socialism. I get that too, I just don’t see it that way anymore. I once did. By saddling our students with evergrowing tuition costs and student debt, we continually put them in a bind that makes it harder and harder for them to do the things they would. I went to law school with a great many who had fantastic idea about the contributions they wanted to make, but ultimately, had to take the best money options because of the burdens of their loans. Tuition increases are growing faster than incomes or inflation. The concern I have is that we are in danger of losing the open opportunity atmosphere that I mentioned earlier. WE used to educate more and more at the college level every generation. We are in danger of allowing that to decline, if it hasn’t already. I believe that would be a bad thing for our nation in both the short and long term.

RGF


Posted by: RGF at May 7, 2006 12:36 AM
Comment #145982

I have to run off, but re tuition.

I think we need to charge so that students are not tempted to think it is not valuable and/or they hang around too long. I speak as one who liked university life too much. Sometime you have to push people out into life.

A thing Euros do better than we do is admissions. They generally depend on objective tests. We used to do that until the tests failed to produce the color and gender mix our politics required. Now it is all screwed up.

When I think of who should study and do what, I always think of Henry Ford, who when asked who should do a job said it was like asking who should sing tenor in the choir - the one who could do it best.

Posted by: Jack at May 7, 2006 1:18 AM
Comment #145992

Jack,

I believe we just found something on which we are on the same page.

RGF

Posted by: RGF at May 7, 2006 2:54 AM
Comment #146005

RGF:

I’m not really trying to sway anyone. Honestly, I’m not an economics expert in any way shape or form. But I find that many other non-experts, and even some experts, play games with the information. I’m trying NOT to do that. I recognize your points about the dollar—I simply don’t reach the conclusion that doom and gloom are near.

Here is an example: To my knowledge, unemployment rates are determined by the same calculations now as they have been in the past. Yet when naysayers see unemployment rates today consistent with the “low” unemployment rates from Clinton’s tenure, they poo-poo the results.

The point is that naysayers can find a negative anytime they want to, because the world is not fair, the world is not equal and the world is quite changeable.

This is the problem I have. I’m not saying that the economy is not without concern, and I’ve addressed things like the debt etc. What I AM saying is that in comparison with other eras of US economy, and in comparison with economies of today around the globe, the US economy is doing pretty good. Is it perfect? No. But it has improved and the indicators that have been used in the past to mark a good economy are now marking a good economy.

As Jack says, we need to cut spending. That’s my first rule. Its easier to cut spending than it is to create growth—and it happens much more quickly. We need to be judicious in what we cut, so as not to pull the rug out from under people. But we do need to cut the expenditure somehow.

Posted by: joebagodonuts at May 7, 2006 9:26 AM
Comment #146014

Wow, JBOD,

Now, much to my shock, I find myself also agreeing with you.

I do not mean to sound like doom and gloom unnecessarily, JBOD. I do believe things are starting to look better. However, I feel that this beginning may well be stillborn unless we recognize how the situation is different this time around. Our spending is not just bad, it’s exponentially worse than it has EVER been. We are still in control and we can do something about it. The current status quo is not a path to economic strength and stability. That’s all I’m saying.

RGF

Posted by: RGF at May 7, 2006 11:19 AM
Comment #146044

RGF

WHAT ABOUT THE FACT THAT WE ARE BETTING OUR ABILITY TO PAY OFF THIS DEBT ON THE CONTINUED STRENTH OF AN ALREADY DECLINING DOLLAR? A DOLLAR WHOSE ‘PROPS’ ARE MORE AND MORE LIKELY TO BE KICKED OUT FROM UNDER IT WITH EVERY PASSING DAY???!!!??? ESPECIALLY CONSIDERING THE EURO IS GETTING STRONGER AND STRONGER?

Why in the world would you assume a decline in the dollar would be a bad thing? The dollar basically goes in the same direction as the fed. (If the fed is raising interest rates relative to the world the dollar goes up, if the fed is lowering interest rates RELATIVE to the world the dollar goes down). Right now the fed is looking at stopping raising rates, and europe and japan are looking at raising rates. That means the dollar should fall.

The dollar falling is a good thing, not a bad thing. (It means more US exports). Watch and see who complains if the dollar falls. It wont be the americans.

Craig

Posted by: Craig Holmes at May 7, 2006 5:29 PM
Comment #146045

JBOD

Here is an example: To my knowledge, unemployment rates are determined by the same calculations now as they have been in the past. Yet when naysayers see unemployment rates today consistent with the “low” unemployment rates from Clinton’s tenure, they poo-poo the results.


The unemployment numbers published on the government web sites (as far back as 1948) have been calculated the same way. Some folks claim that the way they got the numbers used in those calculations have been changed over time but I can’t find evidence of that.

In comparing the current unemployment numbers with those of Clinton, perception is the thing. The last number published before Clinton took office was 7.4%. There was a fairly steady decline for 8 years and the last number published before he left office was 3.9%. It left a good impression and is a tough act to follow.

The last published number before Bush took office was the previously mentioned 3.9%. Unemployment immediately began to rise and reached a high point of 6.3% in June of 2003. Like it or not this created a bad impression and those are the ones that are going to stick, especially if you or your family was one of the millions directly effected.

The current 4.3% is a big improvement over 6.3% but other numbers indicate that the pay for those jobs is lower and that fact will effect the way those people perceive the unemployment numbers.

Unemployment Is Lower Than The Average Over The Last X# Of Decades is not impressive to those who are working more hours for less pay.

Posted by: Arm Hayseed at May 7, 2006 5:29 PM
Comment #146049

Craig,

The falling dollar means that when the market is moving back and forth over the same ground while the dollar declines, then the overall value in the market may LOOK like is on a modest rise (when it is on the upswing of this ping-pong over the same ground) but the market is actually LOSING value. The significance of this is that other investments look brighter than we do. For instance, Japan is coming back after a long, long recession. Our lost market value is balancing out elsewhere while we put ourselves in a position to be dependant on a strong dollar to help pay off our run-away spending spree. When the dollar gets too strong, other nations’ goods goods are more attractive on the world market. When the dollar is too weak, there is a potential snow-ball effect as we find it harder and harder to spend enough of them for debt maintenance. The right balance is what we need. My concern is that we are blindly BETTING our futures on ONE NECESSARY DOLLAR position relative to our growing debt and to other currencies. It’s precarious and scary.

A microcosm example (not the whole story, but intended to offer a point of observation):
Of all the American airlines out there, which one would you most like to work for? to invest in? The answer should be obvious - SOUTHWEST AIRLINES. Perhaps the greatest contributing factor to their success is that they run with little or no debt while using their operating capital to negotiate airplane fuel option contracts far in advance of their need. The result is that they have been showing growth and profit while the other airlines are floundering in the expenses of rising fuel costs and debt maintenance. Now I know we cannot look at a companies micro-economics in the same way we as national economics, but this does illustrate the value low operating costs and low debt, does it not? When our dollar declines while we simultaneously spend arrogantly, we drastically increase the cost of merely holding steady on top of debts. That means we better not EVER lose economic strength relative to the rest of the world or we are sunk.

…and yet the trends have been predicting for many years now that we would lose economic superpower status to first Europe, and then if China can do a better job of efficiently governing by rule of law, China.

It’s as though you got a got a super hot tip on a horse from the most reliable source you could possibly imagine and then went out and bet against that very horse. Foolish beyond beleif.

RGF

Posted by: RGF at May 7, 2006 6:05 PM
Comment #146058

Arm

4.7% unemployement is a good number no matter who you are. The last year of Clinton was the end of the dot.com bubble. Unsustainable. It is not like unemployement will trend to zero. Anything less than 5% is excellent.

Think of an athlete who works out to get in peak condition. He manages to reach a peak performance once in a while, but there is a range of excellent performances.

Or a student who gets steadily improving grade and manages to get a 96.5% on a test. But 95.3% is still an A.

Posted by: Jack at May 7, 2006 7:34 PM
Comment #146060

Jack and Arm:

And if the student continues to improve and reaches 100%, the student cannot improve any further. But a plateau at 100% aint a bad thing.

RGF:

Then we have agreement. We need to cut spending. Both parties need to work at this, because both are the source of it. Republicans being in power have more ability to make changes.

To some degree, things like SS or Medicare/Medicaid etc, have a growing impact on spending. Since they are already in process, at some point someone will need to make changes to how these work. Who will have the courage to do it? Bush tried bringing it up and got whacked for it. Will the next President have the courage to try—lets hope so.

Posted by: joebagodonuts at May 7, 2006 7:57 PM
Comment #146094

RGF:

I think you like many are extrapolating recent economic events too far into doom, and yet I find that very unlikely.

This current set of facts is simply the flatening of the earth economically. We get access to cheap labor markets, and they get access to liquid and transparent security markets. Since these economies have few spending consumers (in the american sense), they have a huge savings glut. (I have heard as high as 40%). This demand for a place to save, have met our supply of good investments which lowered interest rates, which increased home prices. Of couse being good capitallists, when a commodity (credit) is cheap we are going to use it.

Where I part company with many friends here, is that I believe this dramatic upswing is over. The arbitrage between our economies is narrowing. Home prices are unlikely to expand again in the near future as in the past. However I do believe interest rates are going to stay in a lower band probably for the rest of our lives.

What this means is that the economy should start to “normalize” with home prices increasing at about the same pace as income. I think commodities have probably seen their day, (or at least peaks are near). I think credit will stay at this level, but will start to expand back at normal levels.

With this much new money flowing within these two systems, it would seem logical that the dollar would fluctuate as new systems and balances are explored.

I could not disagree with you more about the importance of US supremacy. What is important is the supremacy of liquid markets and democracy. The is no firm and fast rules about one country verses another. Capital simply flows to where it is treated the best. For that reason alone I think China is limited on the upside. (not limited for a while however). For China to truly compete as a super power and have their own version of “the american century” they would have to treat capital as well as the US market, which mean they would have to have very strong democratic institutions in place. If they were to choose these types of reforms, in terms of super power status I would say “welcome aboard!”

In terms of our current discussion about the value of the dollar, it will predictably fall. It always does when our interest rates become less attractive on the world scene compared with our piers. I do not share your optmism about Europe gaining anything an America. In fact, I believe Europe will continue to loose world market share. The taxes are just too high, and regulations to steap, along with a very old population.

Craig

Posted by: Craig Holmes at May 8, 2006 12:15 AM
Comment #146102

Those of us who detail oriented and enjoy digging through historical databases and doing our own calculations have an entirely different perception on economic indicators than the other +/-95% of the population and especially of those who never open the financial section.

There are hundreds of thousands of people in the general population who have had to take jobs for less pay than the one they just lost and adding their family and friends who have witnessed the effects first hand it would total in the millions.

Those people have lived a different experience and have formed an entirely different perception of the current job market. They represent a large enough part of the population to effect the polls and that seems evident. It’s the perception of these people that I was referring to.

If you are trying to change their opinion of the job market with statistics and parables you’ll have a rough row to hoe.

Posted by: Arm Hayseed at May 8, 2006 1:48 AM
Comment #146186

Jack

Yes, I agree that some indicators will lag, and that median incomes may not respond as soon as measures of overall productivity and growth. What I’m trying to emphasize, though, is that the shrinking of median incomes for 5/6 of the population is anomalous. It hasn’t happened for over half a decade. I’m afraid that it may signal some shift in the structure of our economy.

It is perfectly possible for an economy to grow and produce wealth, but for all that wealth to go to a few. In this case, most incomes would stagnate. What we are seeing over the past 5 years is worse than this. In a sense, the middle and lower classes are losing quality of life, “wealth”, if you will. Wealth flowing up hill to the wealthy is not new, but this occurring at the expense of the growth or maintenance of the middle class harkens back to the age of the robber barons.

My question to you and anyone else engaging in this debate is “Why is this happening?” It isn’t clear what changes in either the economy or the laws have driven this. The tax burden has been pretty radically shifted federally and locally, but this shouldn’t have a direct effect on the growth of pre-tax income. Maybe after some time it could. Lower investment per capita in education shouldn’t have a near-term effect, although longer-term it might. Shifts in entitlements should have some effect, but none has been large enough to explain the decrease in incomes. The power of organized labor has been slowly eroding for a long time, so that couldn’t explain the difference. The only things I can see are structural unemployment making it a buyer’s market for labor and the impact of outsourcing putting downward pressure on salaries (in real dollars, of course; no one is taking a pay cut on paper).

Assuming I’m right (a big assumption, I admit), this would imply that the growing economy has continued to treat the wealthy well, but has not been a boon to the vast majority in the middle. Unfortunately, there is no theoretical reason why this trend can’t continue indefinitely, and there is no indication that it won’t. My issue is whether we, as a country, should be concerned about this phenomenon. Are we to be satisfied if the economy slowly erodes the middle class and creates a small class of privileged wealthy? How long is too long for such a trend? Given we should be concerned, what can we do about it? It seems to me this should be a non-partisan topic. However, if one party feels the need to crow about the economy and treats any criticism with contempt, it may be difficult to address the problem straight on.

Posted by: Mental Wimp at May 8, 2006 11:48 AM
Comment #146284

Mental Wimp


Yes, I agree that some indicators will lag, and that median incomes may not respond as soon as measures of overall productivity and growth. What I’m trying to emphasize, though, is that the shrinking of median incomes for 5/6 of the population is anomalous. It hasn’t happened for over half a decadeI’m afraid that it may signal some shift in the structure of our economy.

It’s called globalization. The world is awash in cheap labor.

Craig

Posted by: Craig Holmes at May 8, 2006 4:17 PM
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