Sources Jan. 6: The Glass is Half Full

Hypochondriacs are not sick; they think they are. They study illnesses and convince themselves that they suffer from the most interesting ailments. Sometimes I fear Americans are hypochondriacs concerning our economy, so I am encouraged to read that most Americans feel their finances are okay. We know the glass is more than half full.

Those who are interested in health care & innovation should read Pharma in Europe: Going From Heartburn to Heart Attack. There are also two articles re Mitt Romney’s reform of health care: Is Massachusetts a Model at Last? & States Step Ahead on Health Care

Other sources are below.

Arbitrary and Capricious Product Liability Regimes
Fiscal Restraint: Entitlement Control is the Key
Complicated Politics of Free Trade
Danger and Opportunity in Eastern Europe
Is Massachusetts a Model at Last?
Is the EU America’s Friend or Foe?
Most Americans Moderately Upbeat About Finances
Nanomaterials in the Workplace
Pharma in Europe: Going From Heartburn to Heart Attack
Retirement Redefined
States Step Ahead on Health Care
Technology, Not Globalization, Driving Down Wages

Posted by Jack at January 7, 2007 1:28 AM
Comments
Comment #201840

this organization seem to be out of touch with reality. with

a. salaries declining as it reflects inflation
b. gas prices soaring
c. outsourcing

Nobody except the very rich feels secure. Just look at most company’s christmas parties, and gift lists to see how the economy is declining. I guess all the ditto heads and Faux news have done a great job convincing people about an economy in the dumps for the last 6 years.

Posted by: Sarantos at January 7, 2007 3:04 AM
Comment #201842

Well, I read them, no surprises there.

Posted by: womanmarine at January 7, 2007 3:18 AM
Comment #201847

W inherited a recession and was dealt a big blow by 9/11. Now, our economy has not only picked up, but it has remained strong for a while. That is why the Fed has been increasing rates to slow inflation. In the dumps the last 6 years? Maybe if your personal finances arent doing so well, you should find another job, in another state if need be. People have been moving from CA to NV to AZ because of better economic factors. So… “Go Midwest, young man!” Good things come, to those who are actively looking for them.

Posted by: JoeRWC at January 7, 2007 9:37 AM
Comment #201848

“People have been moving from CA to NV to AZ because of better economic factors.”

Business has moved to AZ because of cheap labor.
Arizona is a “right to work” State, and wages are relatively low compared to California. The cost of living, except housing, is pretty much the same.
I suppose moving to Arizona to buy a cheaper house would be considered an “economic factor”.

Posted by: Rocky at January 7, 2007 9:45 AM
Comment #201850

About the cost of living in CA—
Can hardly be compared to other states, maybe NY.
CA is a “right to tax” state, that is why businesses move out.
But no disagreement about the state of our economy, right?

Posted by: JoeRWC at January 7, 2007 10:00 AM
Comment #201852

Jack,

I’m glad they are optimistic. It doesn’t mean they don’t understand the danger our debt poses to the country. Do you? Because sometimes I think you see what you believe rather the other way around.

Posted by: Max at January 7, 2007 10:10 AM
Comment #201855

“But no disagreement about the state of our economy, right?”

How many of those previously on the unemployment roles are now part of the “gray employment” crowd?
Just how many have given up looking for a job, and are now playing under the radar, working for cash only, or on E-Bay, or at the endless supply of swap meets every week?
Where are those statistics, and how does the government track them?
I know a lot of people that are just barely making it, that are living month to month, and can’t afford to move to another state, ie. where the jobs are.

I received a phone call recently from someone I used to call my friend. He wanted to get me into this great new business opportunity, buying overly mortgaged homes from those that couldn’t afford the payments anymore, and couldn’t declare bankruptcy.
Basically he was doing hostile takeovers on homeowners, a pirate stealing from those that made mistakes and reaping huge profits for himself.
When I questioned the ethics of this practice, it was all bullshit and bluster.
In other words, if he wasn’t doing it someone else would.
Call me naive, I turned him down.

Posted by: Rocky at January 7, 2007 11:02 AM
Comment #201865

I do not want to get into the Clinton v Bush. If you look at the economic cycles, you see that the upturn started before Clinton (1992) and the most recent downturn started before Bush (2000) and ended in 2003. If you look in the longer perspective, the economy has been doing well since around 1982. That is why unemployment below 5% looks so bad to those with short memories or those who have never experienced a real downturn.

Max

Our big challenge is not debt; it is entitlements. Federal debt as a % of GDP is not out of line with most of our experience in the last 30 years. States are running big surpluses. Personal net worth is at an all time high.

Trade deficit is a problem, but that can be corrected. With debt in general, we have a situation we can manage, not a crisis that will wipe us out.

You are doing the hypochondriac thing I was talking about. The economy is healthy. It could be better, but it is like a man getting an exam, being told he is healthy and then complaining that he is not in condition to run the marathon. How many of us ever do that?

As for real wages, they are about what they were in 1998 and higher than ever year before that. They rose in 2006 year and probably will do so again in 2007. We had a brief bubble in 1999-early 2000. Returning to our athlete analogy, it is like demanding that the whole race be run at the pace of the sprint at the end.

Nobody knows what the future holds. We can assess the past. The economy has been good since 1982. We had brief downturns 1991-2 and 2000-02. Thing have been very good since 2003.

Hypochondriacs do not see it that way.

Posted by: Jack at January 7, 2007 12:37 PM
Comment #201866

A middle-class family whose combined income is not keeping up with inflation does not reflect hypochondria. And there are tens of millions of these families.

Spiraling tuition and healthcare costs. Gasoline prices. Increases in heating oil and natural gas. Outsourcing.

Sorry. But Jack’s spin does not reflect the reality of the majority in this country. It reflects a blind eye to the truth.

The rich have never had it better. Big business has never had it better. The average, hard-working middle class family has rarely had it worse.

And JoeRWC - “Good things happen to those who are actively looking for them.” What’s there to look for when your job has been sent to India? More education that can’t be afforded?

Posted by: Balboa at January 7, 2007 12:41 PM
Comment #201870

There you go again, Jack. Trying to define the economy as a snapshot at one instant of time. The economy is like a living breathing organism whose life can be cut short later on by living practices engaged in today. A smoker for example can expect to live 12 years less than a non-smoker. Our economy must be viewed in this way. And the health of our economy is in dire peril as a result of the debt and deficits today which will confront the health and well being of our fathers, mothers, grandparents in their retirement years less than 2 decades from now.

Our economy is not exercising and building its vigor to withstand that uphill run facing it. Our economy also is precariously positioned on more than 40% of our national debt owed to foreigners who one day may decide for political or financial reasons, to dump our treasury bonds. The ensuing inflation will cripple us and our poor and middle class. Won’t be too healthy for wealthy investors either if they don’t move their money in time.

Posted by: David R. Remer at January 7, 2007 1:05 PM
Comment #201881

Jack, why entitlements? why not Defense? Surely we have way more money going into offence than into defence of our country. If we would stop trying to be policeman to the world we could save billions and pay off the debt so that entitlements truely become the big issue.

Posted by: j2t2 at January 7, 2007 1:57 PM
Comment #201885

Jack,

“If you look at the economic cycles, you see that the upturn started before Clinton (1992) and the most recent downturn started before Bush (2000) and ended in 2003.”

In my global economics class we studied the trends of governance’s effect on the economy. The effects government has on the economy of the private business is a two to four year gap. The effects of government on the individual financial situation is a three to ten year gap.

So in all factuality we are only beggining to feel what is the results of Clinton’s economics right now, that is probably the ‘percieved’ slight upturn. The ‘percieved’ downfall was from Bush Sr., we won’t know how good of a job Bush Jr. did until ‘08 or ‘09 most likely as war tends to speed up the process for individual economics.

The subject of CA… the terminator is their governor, it also has more multi-millionaires than any two other states comobined. Yes, it is going to be expensive, it has always and will always be very, very expensive.

If you make middle income and don;t own property, move to Oregon. It is where I am from, and you will live best with a $20k-$45k income. Anything more and your being taxed rediculously, any less and it is the same everywhere. Welfare is still a federally administered project. It pays according to the cost of living in your area, food, utilities, taxes, and property value accounted for, per county.

Finally the economy, on the scope of our economy compared to the world economy, check this out:

target=”blank”>GDP~PPP

Now from this we see, that we are currently in the top five, which we have been since the concept of measuring the world economy first actually got put to use.

We also see that there is roughly $41k of purchasing power per person, you can argue how it the number is found, but fact is it is always accurate.

The actual average income per working American was at the time $36,400/year plus an average of $6,000 in assets. Which would mean that even if you use the pestimistic approach it would be $42,400 of purchasing power per capita (a similar measurement of wealth).

Not to mention as a full time college student in the second lowest income bracket (I just got a raise due to minimum wage going up!!!), I am financial comforatble supporting myself.

I think those American’s who feel that their financial situtation is poor are probably not very good at balancing their budget or sticking to their annual budget plan, if they have one.

Also, I have stated before that I will gladly help any one who thinks their situation financial is troubled balance their budget and start investing into their retirement for free. I stand by that.

Posted by: Bryan AJ Kennedy at January 7, 2007 2:16 PM
Comment #201888

Rocky said, “The cost of living, except housing, is pretty much the same.”

Rocky, the costs of a Harvard education and a University of Tennessee education are about the same to when you take out tuition.

What’s the point in eliminating the one signle most expensive cost of living indicator for most. I would have to guess that it is somewhere between 20% to >50% of most people’s monthly expenses.

Posted by: Rob at January 7, 2007 2:25 PM
Comment #201893

David

I am looking at the economy for the last 30 years. That is not exactly a snapshot.

I agree with you about entitlements. We disagree about the solutions.

Balboa

The Pew research center is middle and slightly left of center. They polled Americans and found that a significant majority felt their own finances were good or acceptable. If more than 60% of Americans are “rich” that is a good thing.

J2t2

You have to go after entitlements because that is where the money is. Entitlements already make up 2/3 of the budget and grows automatically. If current trends continue, by 2025 entitlements will make up ALL of what we spend today. Even if you cut all the defense budget, it would not solve the problem.

Bryan

I often talk about lag times. I will not argue with your numbers. I usually guess around three years, which fall within your numbers. Let’s take the range 3-10.

That means that the 1990s (good times), were probably the result of Reagan and Bush I. On the other hand, the downturn of 2000-2002 falls clearly within the Clinton purview, since it is at the extreme end of your range for Bush I. In fact by your own figuring, you probably cannot blame Bush for anything yet. Is that what you are trying to say? You should not be so hard on Clinton.

Anyway, the upturn began before Clinton, so he could not have caused it. The downturn started before Bush II, so that could not be his fault either.

I do not know who should get credit for the upturn of 2003, but there WAS and upturn.

Posted by: Jack at January 7, 2007 3:06 PM
Comment #201894

Rob,

“I would have to guess that it is somewhere between 20% to >50% of most people’s monthly expenses.”

My mortgage is about 30% of my nut every month.

The cost of fuel is much higher in California, by upwards of 10-15 cents a gallon. Quite a few people commute in Southern CA. at least, and that adds up to a big chunk of change every month.

There are trade offs however. Metropolitan Phoenix, for instance has 3,865,077 people as estimated by the Census bureau, but it is soulless.
This area has grown exponentially since the early eighties, and the population has nearly doubled.
The Phoenix infrastructure has only recently started to catch up with the growth.
Living in Phoenix virtually requires having an air conditioner, which also eats into the cost of living here..
I have seen temps as high as 123f, and the monsoon months of July-Sept bring dew points over 60f, and dust storms.

Posted by: Rocky at January 7, 2007 3:24 PM
Comment #201900

My inlaws live in Tuscon. While it is not soulless, it is hot enough in the summer, that my wife and I have agreed that we only go between Thanksgiving and March.

My sister has lived in both S.C. and Tuscon. She is in Tuscon now. She prefers some of CA to Tuscon and other parts not all all. She doesn’t like Palm Springs or Palm Desert too much. Palm Desert by the way also requires an air conditioner.

All in all it is a choice thing. My point is that you cannot take out the most expensive item in a budget and then declare the cost of living “about equal”. The reality is that CA is more expensive than most places in the U.S. on average, and there are many that are making the choice to leave for greener (as in dollars) pastures from what I hear from friends in Washington State, Arizona, and Nevada (Las Vegas really).

Posted by: Rob at January 7, 2007 4:10 PM
Comment #201902

Jack,

“I do not know who should get credit for the upturn of 2003, but there WAS and upturn.”

That is the upturn I was accrediting Clinton with. I did not intend to come across anti-Clinton. He is actually one of my favorites.

Especially for his reform(s) on Welfare.

Posted by: Bryan AJ Kennedy at January 7, 2007 4:14 PM
Comment #201903

Also, I apologize to everyone for the ‘super-link’ I did. I am still a little new to the hyper-linking.

Posted by: Bryan AJ Kennedy at January 7, 2007 4:15 PM
Comment #201905

Bryan

But Bush I or Ronald Reagan gets credit for the real boom years 1997-1999?

I too believe in lag times, but ten years is bit long to exclude everything the president does. It also cannot click in and out so precisely. We agree that the downturn of 2000 was not Bush II doing, but I would find it hard to think it was all up to Bush I eight years later. Conversely, I think Clinton probably deserves some credit for the prosperity of the 1990s.

In general, however, I think I do see a good point, and I agree and talked about it above. The economy has been basically good since 1982.

Posted by: Jack at January 7, 2007 4:22 PM
Comment #201906

Jack,

We both know it’s easy to find a poll to support our individual viewpoints. If you choose the Pew poll, fine. But one poll does not a reality make. Raw data (facts, not opinions), however, does merit some consideration.

For example, data from the Federal Reserve for 2001 to 2004 show that median family income rose just 1.6 percent during that period, compared with 9.5 percent during 1998 to 2001. Income distribution from 1995 to 2004, during both an economic boom and a recession, kept tilting toward the already wealthy. The top income quartile gained 77 percent, while the bottom gained just 8 percent. Such statistics reinforce the commonly held notion that Congress and Washington are only looking out for the rich, changing the tax code in recent years to favor those who derive their income from investments rather than wages.

A quick search did not net me more recent date, say from 2005-2006. Though I’m sure a longer search would - and I woould bet that the data (not the polls) would be very, very similar.


Posted by: Balboa at January 7, 2007 4:26 PM
Comment #201910

Rob,

I understood the point.

A degree from Harvard though, might just open a few more doors, regardless of the cost.

I might add that quality of life, while not a part of the cost of living, has to be a factor in the bottom line.

Posted by: Rocky at January 7, 2007 4:39 PM
Comment #201911

Jack said: “I am looking at the economy for the last 30 years. “

That is exactly the kind of perspective that Republicans took and the argument they made: that since the nation has not foundered in the past, it cannot in the future. This kind of ignorance of the future demands being created by past and present legislation which exceed any realistic expectations of the resources needed to meet those demands, is why our economy is on track for a major calamity.

Thank Buddha the common sense of the American voter knocked so many Republican incumbents out of office, for our children’s sake. And I assure you, the common sense of the American voter will do exactly the same to Democrats if the Democratic Caucus does not heed the Blue Dog Coalition.

Posted by: David R. Remer at January 7, 2007 4:43 PM
Comment #201916

Jack,

The only things I believe Clinton did that gave us instant gratification was the adding of small business and student tax deductables and the reforms on welfare that saved us a good chunk of money.

I do think though that the majority of Clinton’s administration are just now getting to us in the last few years and are probably the only reason W. hasn’t been able to do any permanent damage.

After all, W. is a guy who failed in the oil business… twice. I don’t credit Bush I for too much. I think the majority of what we felt in the 90s was Reagan. I think the majority of the ‘good half’ of what we are just beggining to feel was Clinton. Kind of nervous of 2010-2014 though. Who ever is next better be all about the benjamins.

=)

Balboa,

A few facts does not a reality make.

You need the whole picture.

The amount of income percentage increase for a household, in order for an accurate depiction, must be compared to the percentage of inflation (including the value of the house the household lives in), the average hours worked per person (the average is currently less than 40, was over 40 at one time), the average level of education among the working age groups, the amount of taxation upon such income, government compensations options and availability(tax return, itemizations, deductables, medicare, etc…), investment percentage return averages (they may only have made +10% income, but their IRAs could have sky rocketed/ vice versa), then with all that you have begun to get an idea of the economy of the individual.

For the overall of the nation one must look at the world economy. If the average change per nation is -12% and we change by +.0001%, I would say we did really good, because my $100 is now the same here but worth $12k over there.

One must also consider the change on all these aspect in relation to the projections. If the economy was projecting a depression in the late 90s and we only saw a small dip, we did really, really, really good.

In my global economics class we picked all this a part and concluded that our economy has been consistenly getting a tid bit better each year, with only a few exceptions where it got half a tid bit worse.

As for the debt, most of it is loans that were reloaned. A lot of it is also owed to Japan who has already canceled some debt in exchange for favors that are mutually beneficial. Such as giving them patriot missles. We will by 2008 have the ability to shoot down missles fired with in a missle web shield that covers 1/5 of the earth.

Not bad at all for a quarter trillion dollars worth of back-stock technologies sold at a full retail value for money we already recieved at a very low interest rate.

You are very right about polls though.

Any one can find any 100 people and call it evidence, kind of sad really.

There is no way to find out how accurate they are until you look it up yourself (which you have begun doing, kudos), at which point the purpose of the poll loses all accreditability and usefullness.

Posted by: Bryan AJ Kennedy at January 7, 2007 4:56 PM
Comment #201926

I take issue with the notion that the federal deficit is no big deal. Often cited is that stat that the deficit, as a % of GDP, is not out of line historically. The same people promoting this misleading statistic are also saying how disastrous it would be to tax this same GDP to produce a balanced budget.

So, which one is it?

A) A GDP (meaning an economy) that is so big and resilient that hundreds of billions of dollars in a yearly deficit is no big deal, or

B) a GDP that is so fragile that it would be derailed by a tax structure that actually produced a balanced budget?

Posted by: charles Ross at January 7, 2007 7:05 PM
Comment #201930

Bryan,

Thank you for the information. I am not currently enrolled in a global economic class, nor am I an economist, so I really do appreciate your feedback and “mini” global economics lesson.

That said, I still feel that there is still a huge disconnect between pointing out the strenghts of our economy without translating what that means to the average U.S. citizen. $100 over here may be worth $12K over there, as you state, but that economic reality means nothing for people who are trying to make ends meet in this country on a monthly basis. A family with falling wages and increased costs (there are millions of them) needs to know what theirr dollars are buying them in this country - and for too many, it ain’t much.

The middle class is booming in India because many of the jobs that Americans used to do are going there. Conversely, our middle class is being squeezed like a collective grapefruit due to outsourcing and wages not keeping up with inflation and hard costs.

You’ve read the newspapers and magazines. Probably much more than I have. So it should come as no surprise to you that income for middle class families has remained stagnant or flat since 2001; prices for big-ticket items (housing, health care, college education and transportation) have skyrocketed, leaving families unable to save; and that many middle-class families are borrowing record amounts of money to pay their monthly bills.

Looking at the world economy in order to gauge the health of our own may be fine and dandy for many economists. But it does little, if anything, to help John Smith put food on the table and keep a roof over his family’s head.

Posted by: Balboa at January 7, 2007 7:32 PM
Comment #201931

Rocky,
You are exactly right about arizona. Business is here to take advantage of cheap labor and right to work state. One of our daughters and her husband are school teachers. They lived here in Havasu bought a house here. They moved back to California kept there house here and because of the higher pay there are able to keep the house here and look for a house to buy in Calif.The cost of living and pay are relative.

Posted by: dolan at January 7, 2007 7:34 PM
Comment #201937

Balboa

1998 - 2001 was a boom time at the end of a boom time. 2001-2004 includes a recession. In the recession, as in all recessions, we gave back some of the gains. It is not a valid point of comparison. I think you would find a really different number when you compare 2003-2006. It depends on your reference point.

Inequality has been increasing worldwide since the 1970s. It is not only an American phenomenon. Much of it has to do with simple economic growth. Rapid economic growth, which we have enjoyed, produces inequality.

The Pew survey asks only what people think about their own finances. It found that most people are doing okay. I do not ever expect an honest survey to show that ALL people are doing okay.

In my own experience, most people are doing okay. Many people have too much money, but nobody seems to have enough. I have noticed that if you want to book flights & hotels to vacation destinations, you have to do it well in advance. I did see that Best Buy was selling lots of electronic equipment and those plasma TVs were heading out the doors. When I watch network TV, I see lots of ads for expensive goods. I suppose these advertisers must expect to sell to somebody.

Our economy has been robust since 2003.

I do not know what they are teaching these days in world economics classes. Investors are investing in America and the U.S. is consistently rated as among the most competitive economies in the world. Economists struggle to understand the international economy. They get it right sometimes, but do not believe they get it right most of the time. If we could resolve the whole thing to a couple of equations, there would be no need for managing risk.


David

The past is never a perfect predictor of the future, but what else do you have? All of our information comes from past experience. That is how we assess risk in the future. If change is truly discontinuous, and experience is valueless, we have only uncertainty and no ability to assess risk. In that case, flip a coin.

Our experience indicates that the economy is currently healthy. We can project that entitlements will cause a really big problem in the near future. I have advocated addressing them.

Posted by: Jack at January 7, 2007 8:11 PM
Comment #201950

I myself am not rich by any means in fact Im considered poor.Mostly myself to blame for my past lifestyle. I believe are economy is doing very well. We are all though most people seem not to believe it, at war. We have not been asked to ration gasoline, food,or any luxury items to support the war as we did in world war two.Had I personaly quit smoking and drinking earlier in life than I did, I could have paid for a good education, a nice home,ecetra a couple times over. I guess what Im trying to say is your lifestyle has most to do with wether you are doing well finacially or not. If you deem yourself poor add up your luxury items you use or consume and you would be suprised. Cell phones,cable or dish TV,cigarettes,alcohol,gameboys,laptops,SUVs,all add up to a good chunk of change per month. If anything we have the most well to do poor on earth.

Posted by: dolan at January 7, 2007 10:21 PM
Comment #201953

We will be welcomed as liberators.

We have turned the corner in fighting the Iraqi insurgency.

We will have a new Marshall plan that will rebuild New Orleans.

See, any wiretapping by the government requires a search warrant.

Anyone in the administration that have been found to have leaked the identity of a CIA agent will no longer work for this administration.

As the Iraqis stand up we will stand down.

Iraqi oil production will pay for the war. And tax cuts will pay for themselves.

Iraq is the central front on the War on Terror.

“Brownie, you’re doing a heckuva job!”

Federal deficits don’t matter.

The Reich will last a thousand years!

The economy is healthy.

Posted by: Tim Crow at January 7, 2007 11:16 PM
Comment #201955

Tim

The economy IS healthy by any measurement we can use. That is just true.

I do not believe I have said any of the other things in this post, or any ohters I have written for that matter.

Posted by: Jack at January 7, 2007 11:36 PM
Comment #201958

Jack said: “We can project that entitlements will cause a really big problem in the near future.”

Is it the planned and agreed to entitlements that are the problem, Jack, or the mismangement of revenues and spending priorities that failed to save and provide for them. Republicans want to declare that safety nets themselves are the culprit. Democrats declare that inappropriate priorities and handling of federal revenues are the culprit.

You and I both know both are parties are partly right. But, 1929 is instructive in many ways, as the past is always a guide. But, it no longer takes a crystal ball to see the calamity coming if appropriate cost effective and efficient steps are not taken PDQ. Republicans by and large don’t believe in entitlements that help those who can’t help themselves. But, concomitant with that belief is the corollary that breaching contract with the American people regarding entitlements is just fine as long as too great a political price does not have to be paid. Which is why Republicans exerted every effort to bankrupt the future through national debt that could not sustain the safety nets.

Bankrupting the future to end a contract entered into in the past. Now that is a strategy I hope the American people never, ever forget as a hallmark of the Republican legacy of rule. Republicans have and should continue to pay this ever so deserved price for their strategy.

Posted by: David R. Remer at January 7, 2007 11:46 PM
Comment #201961

“The economy IS healthy by any measurement we can use. That is just true. “

The voters this past November cited the economy second in their list of concerns in polls. That concern (along with Iraq) gave the Republicans their drubbing.

I think you are absolutely correct—the economy, as interpreted by white men in suits who write for think tanks, newspapers, government surveys, and, indeed, run this government, and the top 10% of America are in fat city. The economy has never been better for them. And that is the most sinister and duplicitous ‘good news’ ever perpetuated on the American people.

This regurgitation ad naseum of facts, figures and data to ‘sell’ the health of the economy confirms for most Americans that economists, universities, politicians and pundits are out of touch and very much removed from the realities of Main Street. And such entrenched denial, shining in its certitude and complacent in its ideology, can ‘prove’ down is up, and cruelty, oppression and economic injustice are natural and unavoidable.

Politics, and by extention economics, is no longer a battle between Left and Right, Conservative and Liberal—it is a battle between the top and the bottom.

“Those who make peaceful revolution impossible will make violent revolution inevitable.”

Your insistence that this is a healthy economy accentuates the class divide in this country, and points to the ever-widening gap between the haves and the have-nots. Poverty has increased over the last six years, 47 million Americans have no insurance, one in five children in this country go hungry at sometime during the year. Over half the Americans who filed for bankruptcy last year did so from a health crisis and were insured when that crisis occurred.

This government is nurtured, supported and sustained on lies. The government is no longer to be believed about anything, least of all it’s perception of the economy, or anything else.

It you want to believe the government, the right-wing think tanks, the bloviators and the con-men, that is certainly your perrogative. But let me warn you—the American people are beginning to wake up. They are living in the economic trenches, they see their paychecks and they see the costs of living for energy, education, health care, food. And they see the gap widening, relentlessly, every day, despite the rosy music playing on Republican muzak.

How do I know they’re waking up? Look at November seventh.


Posted by: Tim Crow at January 8, 2007 12:21 AM
Comment #201964

Tim

I am not currently wearing my suit, but I do not hold to the racist assertion in any case. I believe that most people can intepret data. It is not only white men in suits. That is why the Pew Research is interesting. Pew is generally left of center, BTW. Those who consider it right wing, perhaps are extremely left of center. Most Americans, according to the poll, find their own situation okay.

You should never read too much into elections. Do not learn more from a lesson than it has to teach. The Dems won. Now they are in about the same position Republicans were after the elections of 2002. Did you believe at that time that people were waking up? What were they saying back then? I also wonder what they will be saying 2008.

BTW - the Dem Senate control is very thin, one vote. I do not see that as a clear mandate.

Posted by: Jack at January 8, 2007 12:38 AM
Comment #201965

Jack:

Not one single incumbent Democrat in Congress lost this past November. It wasn’t because America is in love with Democrats.

Posted by: Tim Crow at January 8, 2007 12:43 AM
Comment #201970


Jack:

The last article was very informative. Globalization is not the culprit, technology is. Technology is a never ending tsunami that overwhelming low and non-skilled labor’s wage potential. Actually, I think both are responsible.

In the not to distant future, technology will be able to eliminate the need for most of the human workforce both skilled and non-skilled. Will that signal an end to the worker/consumer capitalism model? If so, what will replace it?

Posted by: jlw at January 8, 2007 1:09 AM
Comment #201977

jlw

I do not know.

I would not count on work ending any time soon, however. In the 1920s&30s, they predicted a world where nobody would work and all labor would be mechanized. That didn’t happen.

In fact, we have already eliminated much of what we used to call work, but the service industries have sprung up doing all sorts of things nobody thought of. Service industries, BTW, includes lots of consultants, medical professionals etc, who make very good livings.

But low and unskilled labor cannot jump on that wagon.

Posted by: Jack at January 8, 2007 3:11 AM
Comment #201981

30 years ago (1975) the National Debt was 35.2% of GDP.
Currently the National Debt is approximately 65.1% of GDP

Over that time the National Debt has grown nearly twice as fast as the GDP.

If that is not a “challenge” it has many of the same characteristics.

Posted by: Arm Hayseed at January 8, 2007 4:55 AM
Comment #201982

If you care to see the actual dates the economy changes from expansion to contraction and back again go to the National Bureau of Economic Research. They are the official organization that sets the dates for those events.

According to them March of 2001 was the beginning of the most recent contraction and Nov was the beginning of the current expansion.

This quote from their web site:

The NBER does not define a recession in terms of two consecutive quarters of decline in real GDP. Rather, a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. For more information, see the latest announcement on how the NBER’s Business Cycle Dating Committee chooses turning points in the Economy and its latest memo, dated 07/17/03.

You can get a good idea of the data they use here:
http://www.nber.org/cycles/hall.xlw

Martin Feldstein heads the NBER. I found this on the Harvard faculty web site:

Martin Feldstein is the George F. Baker Professor of Economics at Harvard and President and CEO of the National Bureau of Economic Research. He was President of the American Economic Association for the year 2004. From 1982 through 1984, he was Chairman of the Council of Economic Advisers and President Reagan’s chief economic adviser.

Robert Hall chairs the Business Cycle Dating Committee.

Hall has co-authored with Gregory Mankiw who was a researcher at NBER and according to the National Assoc. for Business Economics:

Hall has advised a number of government agencies on national economic policy, including the Justice Department, the Treasury Department, and the Federal Reserve Board. He served on President-elect Ronald Reagan’s Task Force on Inflation Policy and was a member of the National Presidential Advisory Committee on Productivity. He has testified on numerous occasions before congressional committees concerning national economic policy.

If there was any validity to the premise that the last recession started prior to March of 2001 these experts would have gladly published that information.

Posted by: Arm Hayseed at January 8, 2007 5:53 AM
Comment #201987

Jack,

Thank you for your thoughtful reply. Not to sound like a one-trick pony, but if rapid economic growth does indeed lead to inequality, it’s a bit ironic that a strong economy (by empirical standards) can produce results that are less than stellar for so many in the general population.

Posted by: Balboa at January 8, 2007 7:52 AM
Comment #201992

“hard-working middle class family has rarely had it worse.”

You cannot be serious. You simply cannot be serious. Please go back and look at the history of our country in the last 50 years. Perhaps even 100 years, and tell me this is even remotely close to the worst they have had it. I live in Michigan right now, and I now make more than I ever did. My job is directly related to the Big 3 as well. GM and Ford Specifically.

I’m not rich by ANY stretch, but I’m living better than I ever have in my entire life. If I can do that in Michigan, I have confidence that this isn’t the “worst time” in our economic history.

Such absurdity from “counter pointers” on this site make this place almost unbearable at times. It’s like people get memos handed out to them from Al Franken.

Posted by: Matt at January 8, 2007 9:15 AM
Comment #201993

From Pharma In Europe:

While European consumers (and European governments) benefit from price controls in the short term because they pay less for drugs, in the long term, they suffer. New medicines sometimes no longer reach European consumers, hurting public health;

And, still, average lifetime is higher in most European nations than in US. I wonder why.
Maybe money is not that ultimate drug that could fix all health problem, afterall.

Anyway, I agree with the overall european pharma R&D delocalized in US since decades already.

The issue here is does giant pharma groups like Novartis still *from* a nation or became inter and a-national group? Today, money feeding them comes more from US. Tomorrow it could be coming from Russia, Japan, China or India. That’s globalization. Things change (ever did), just quicker and quicker.

What’s more worrying is the lack of european funding for R&Ds, whatever the domain, private or public. Overrall, EU is NOT investing in the future enough. And that’s a shame, indeed.

Posted by: Philippe Houdoin at January 8, 2007 9:19 AM
Comment #201998

Hay

You chose very selectively. Let’s go back in ten year increments.

The first number is the % gdp and the second is % gdp held by outside the USG.

1945 - 117.5/96.4
1955 - 69.5/51.4
1965 - 46.9/32.3
1975 - 34.7/19.8
1985 - 43.9/32.3
1995 - 67.2/44.1
2005 - 64.3/31.4

This is the source.

I am not saying debt is not a problem, but what kind of problem is not immediately clear. The 1970s, when debt was low, was one of the worst decades in terms of economy. The debt is also about the same as it was ten years ago. The 1990s were good economic times.

Re recession - The economy turns down before the recession. If you own stocks, you know that the Dow declined in January 2000 and the S&P in March of 2000.

If my exact timing of the beginning is not correct, the purport is. The downturn is part of a long term fluctutation in a generally good economy. George Bush could not have been responsible for a downturn that started either before he came into office or when he was in office for not much more than 45 days.

Balboa

The general population is doing okay. Some of the lower wage workers have suffered relatively. They have not fallen behind in real terms, but most of the benefits of growth have gone to those with more skills. It is almost impossible not to have something like that happen in the context of growth.

Think about two unemployed guys. One gets a job. Inequality goes way up, but is the jobless guy really worse off?

Posted by: Jack at January 8, 2007 10:15 AM
Comment #202012

Balboa,

“In the not to distant future, technology will be able to eliminate the need for most of the human workforce both skilled and non-skilled.”

You are right about the fact that we are not getting significantly better, but you can’t expect us to get rich when the rest of the world is going to the pits.

The only countries stay alright or doing good in the last ten years are: U.S., U.K., Ireland, Canada, India, Brazil, Norway, Russia (surprisingly), China, Japan (also surprisingly), Sout Korea, Taiwan, Mexico (has not changed), Iceland, Denmark, Israel, and Switzerland (always doing fine).

While the list does seem fairly long, keep in mind that there are a couple hundred countries out there and most of Europe is not on the list.

So the idea that we are not getting worse, tells me we are doing significantly better than most.

Could we be doing a little better, of coarse, but how do you expect to do that?

How many politicians have you elected that have degrees in economics or accounting?

Seriously, how good do you expect a nursing major to be for the national economy?

Would you let a psychology major invest your money for you over a Business Foreign Exchange major?

If you want more goodies, vote for a Social Service major.

If you want a better system, vote for a Political Science major.


If you want more money, vote for an economist.

Posted by: Bryan AJ Kennedy at January 8, 2007 11:52 AM
Comment #202095

Bryan, I agree. I’d much rather have an economist running things than somone whose holy trinity is based on war, wealth, and oil.

Posted by: Balboa at January 8, 2007 6:41 PM
Comment #202116

Bryan & Balboa

You probably just want a leader. Leadership is a separate skill set. People who study poli-sci or economics may have it, but the more you study anything in particular,the less likely you are to be a leader in general.

Posted by: Jack at January 8, 2007 9:25 PM
Comment #202132

Jack wrote:

You chose very selectively.

Actually I used the 30 year time frame originally used by you in comment 201865:

Federal debt as a % of GDP is not out of line with most of our experience in the last 30 years.

Again in 201893:

I am looking at the economy for the last 30 years.

But the last 60 years shows even more clearly that fiscal conservatism can no longer be found in D.C.

Using the percentages you have provided and the GDP figures from the bea.gov web site it appears as though the National Debt was reduced by about 29% (in year 2000 dollars) from 1945 to 1975 while the GDP increased by 141%. Since then the debt has increased by about 375% while the GDP increased by 156%.

There is one strange thing that I noticed while working with these numbers. In the 60 years since 1945 there has been 10 recessions and 8 of those occurred while a Republican was in the White House.

So far I can not find a solid connection between recessions or expansions and fiscal policy so I can not blame a president for recessions. The Federal Reserve has far greater opportunity to start, or end, a recession than a president does.

The Fed Chairmen that I can find information on are the most recent ones and they seem to be mostly Republican. I did not find party affiliation for Martin, McCabe or Eccles. (Anyone have information on these?)

Could be a streak of incredibly bad luck.

Posted by: Arm Hayseed at January 9, 2007 3:12 AM
Comment #202144

Matt, we don’t listen to air america. we just look at reality. actualy, listening to folks like Hannity make you see what little respect the conservative media has in respecting anybody opposing them.

you are talking about michigan, and how your job gets affected from GM and Ford. i guess you are not working for their supplier. how do you feel after you heard their december report? still, if you are in the finance/stock brockerage industry, you can make plenty of money by betting against the company.

how secure do you feel about the future of your company? how much did your real income (raises vs inflation) went up? how did state and property taxes affected you after the taxes for the rich went down? My property taxes doubled while my federal taxes went down by less than 5%

Posted by: Sarantos at January 9, 2007 10:58 AM
Comment #202478

Tim,
I also find it odd our leaders our so eager to lie to maintain the appearance of a false reality.

Here’s a humorous take on Bush’s economic policy (from a fake white house web site):
http://www.whitehouse.org/policy/bushonomics.asp

And of course Bush-style diplomacy:
http://www.whitehouse.org/initiatives/foreign-policy/index.asp

Posted by: Thomas at January 11, 2007 1:44 AM
Comment #202882

Jack,
When are you gong to come out of your comfortable cocoon? You and I have have this debate in the past.

If you would please explain to the new-comers how you beleive everyone can come up with $5000 to invest? Don’t forget to tell all the readers here, how everyone can afford to take a chance of losing teir investments, or of course gaining - assuming they can make their incomes last long enough to reap the benefits.

Sorry Jack, just have to ask again!!!

Posted by: Linda H. at January 12, 2007 4:39 PM
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