Oct 02 2009
Obamanomics An Abomination
Well, here we are a little over 7 months since the faux liberal stimulus bill went into effect (2/17/09) and there has been absolutely no job stimulus. The latest unemployment numbers are out and we still see ever increasing unemployment (U3: now at a 26 year high) and underemployment (U6: reaching a staggering 17%). The Department of Labor defines these two metrics of economic pain thusly:
- U3: Total unemployed, as a percent of the civilian labor force (official unemployment rate)
- U6: Total unemployed, plus all marginally attached, plus total employed part time for economic reasons, as a percent of the civilian force plus all marginally attached workers
The fuller measure (U6) really paints the picture of the economic catastrophe that is today’s job market. I have been tracking both indicators and the trend lines have some good and bad indicators (click to enlarge):
As the above chart shows there has been little to no effect on the job picture for the US economy since the so-called stimulus bill went into effect. In this version I overlaid 3 month rolling average trend line to each metric to show that we are starting to reach a potential plateau or bottom (that’s the only good news).
But this simply proves again that all the government spending on new jobs promised in February (over 95% of which is still stuck in the bloated government bureaucracy, as seen in the latest government data) is coming in months too late to stop the damage. Add in the 50% unemployment for young adults and we have a disaster which will be playing out for years to come.
I have said it since February, the congressional liberals’ allergic rejection of tax cuts to stimulate small and large business, as well as cuts to individuals to prime consumer spending, led them down the idiotic path of pushing through a ‘too little, too late, restricted to too few’ government jobs program.
But the unemployment and under employment numbers only tell a part of the full, bleak story. The other part of this nightmare is that there really are no new jobs being created. This can be seen in the how long people are on unemployment benefits, and how many people have had to move to Emergency Unemployment Compensation (EUC 2008).
The following data, culled from the weekly department of labor unemployment reports (they do not provide this metric on a monthly basis) shows a ballooning number of people who have burned through the normal unemployment safety net and are now sitting on their last support network.
The claim this administration has ‘saved’ 1 million jobs is ludicrous – and demonstrably false. 1.86 million people have had to move onto the EUC program since the faux stimulus bill was passed (now 3.275 million are on EUC). It is clear as day that there were no jobs ‘saved’ (let alone created) as the EUC roles explode one month after the stimulus bill went into effect, and these rolls continue to grow up to today.
As usual, it is important for people to recall the exaggerated promises the DC liberals made when they rushed through the faux stimulus bill:
I find it the epitome of arrogance that anyone in the White House or Congress would be claiming they did anything to help the nation’s job situation. As the results clearly show, the stimulus bill has been a complete failure (just like our bid for the 2016 Summer Olympics). The data cannot be denied.
Right now we have an historically painful 15 million people unemployed:
There were 15.1 million unemployed workers across the country last month, nearly double the total at the beginning of the recession, 7.6 million in December 2007.
Emphasis mine. While the number of new jobless claims are slowing a bit each month, each month is still negative by 100’s of thousands of jobs. If you look at the trend, this net ‘jobs destruction’ could go on through Christmas.
Note also that given the fact the 17% underemployed rate is 1.75 times higher than the 9.7% unemployment rate, a simple calculation reveals that over 26 million people are either unemployed or underemployed! That’s a lot of pain and suffering for the voters.
Are we to believe those mythical 1 million ‘saved’ jobs are a good sign in the face of this large of a problem? Or is it actually a measure of the depth of incompetence regarding the liberal democrats now running Congress and the White House? Some more math gives us the answer.
The  supposedly 1 million ‘saved jobs’ in the face of a 26 million job shortfall is a useless 3.8% solution. That leaves 96% of the problem unanswered – even assuming the administrations mythical ‘saved jobs’ BS. That is a failure in my opinion.
How’s that Hope & Change working for everyone out there?
The state-by-state data comes out mid-month, and it probably is not going to look too good either.
Without the creation of new jobs to replace those that have been lost, or better, until the job creation number goes overall positive, payroll collections of income, social security, and medicare taxes will continue to decline. This is at the same time more boomers are deciding to start Social Security many years earlier than they had planned due to being unable to land a job and still having bills to pay.
One side effect of people having children later in life is that more people have children in college as they approach retirement. People had been counting on pulling home equity out in order to finance those kids’ educations while they maxed out their retirement plan contributions. The idea being that once they retired, they would sell the house which pays back the college money and retire on their 401K or IRA plus social security.
Instead they find themselves unemployed, the home equity is gone or worse, if they pulled it out right before the bubble burst, they are tens or hundreds of thousands of dollars in debt and can’t sell the house for enough to clear the debt. They lost 40% or more of their retirement account, and they can’t find a new job. Even social security may not offer them enough to cover the mortgage plus taxes and utilities on that house that has suddenly become an albatross.
People are hurting and I don’t see the Obama administration doing a damned thing other than talking up the fact that the water isn’t leaking into the boat as fast as it was before.
The Democrats are likely to be out of power for a good long time after this fiasco.
CP, ya think the unemployment rate will improve next year?
Bret’s all Star Panel thought it was stupid of Obama to send Biden out in the streets selling Obama’s stimulus plan, especially when those numbers continue to look bad.
They’re saying, “You don’t tell the American Public that your stimulus plan is working and that you saved jobs, blah blah blah,…” Then the Americans see the truth. They no longer believe Obama and Biden except those that have blinders on.
They’re saying stop selling the bill and wait until next year to see if those numbers improve.
Steve Hayes said that if those numbers improve, Obama won’t be hurt.
What do you think?
lurker9876:
Part of what created the surge in employment over the past several years was an increase in spending from home equity. People would pull out equity to build a vacation home, an RV, a boat or maybe remodel or rebuild their existing home. Or maybe they refurnished, repainted, put on a new roof, and replaced the major appliances. Or maybe they bought a new car.
All that is gone now. Every time the median home price declines, that is billions and possibly trillions of wealth that is destroyed. When these people stopped spending it put a lot of people on the bench looking for work. This is particularly true for small businesses such as contractors, decorators, independent car dealerships, etc. If you are a roofer or a drywall or painter and have gone from five crews to barely being able to keep one crew working, then your entire town is hurting.
For several years wealth was being created out of nothing but simply inflating the demand for housing by giving mortgages to anyone who asked for one. You could sit on your butt in front of the TV and your house would stuff cash in your wallet. Those days are gone.
So, how do we create jobs and reduce unemployment? Considering the 85% of the people in this country work for small businesses, the answer is pretty clear:
1. Eliminate federal taxes on any business with less than 50 people. If that allows them to hire 2 or 3 more workers, then tax receipts go up and the entire town benefits from people having money to spend.
2. Eliminate federal taxes for the first million dollars of adjusted gross income of sole proprietors and S corporations. This way small business owners can hire a helper or two. A business might go from two employees to four.
Until wealth is created the old fashioned way … by starting a growing businesses, we are going to just sit here and unemployment will continue to rise.
In other words, you increase employment by increasing the incentive to be self-employed or if you are self-employed, you increase the cash they have available to expand and hire employees.
If income from self employment was tax free up to the first million dollars of AGI, many unemployed people would turn into self-employed people.
Every unemployed person is a potential freelancer. It generally only costs a few dollars (generally less than $20) to register at the county courthouse with the clerk in order to do business under your own name.
Some occupations may require additional licenses but many do not. There is nothing stopping a person from hiring themselves out on a per-project basis or making money doing something they have a talent for. And with the Internet, it becomes easy to have a 24×7 international storefront where people can find you and buy your product or service. And the possibilities are limitless. Like to build models and are good at it? Build them and sell them on the web! That is just one example. The possibilities are endless.
And while our President was over in Denmark failing to secure an Olympics for Chicago, the Saturn auto brand was going out of business:
—
http://www.freep.com/article/20091001/BUSINESS01/910010457/1318/Collapse-Saturn-deal-stuns-GM
On Tuesday, General Motors Co. thought it had a deal to sell its storied brand Saturn. But Wednesday afternoon, a day before the deal was to be announced, the Detroit automaker was blindsided by the news that businessman Roger Penske’s deal to acquire Saturn had collapsed.
The news sent shockwaves through the GM organization.
“This is very disappointing news and comes after months of hard work by hundreds of dedicated employees and Saturn retailers who tried to make the new Saturn a reality,” Fritz Henderson, GM chief executive officer, said in a statement.
While dealers still hope Saturn might be saved, GM expects all the dealerships to be closed by the end of next year, if not sooner.
—
You think unemployment is bad now…
And do you think all these unemployed workers are going to be spending lots of money for holiday purchases?
The ripple effects will be widespread…
AJ, this is off subject but I am distraught. Would you comment on this:
http://www.guardian.co.uk/technology/2009/sep/30/icann-agreement-us
“US relinquishes control of the internet
• Icann ends agreement with the US government
• Move will give other countries a prominent internet role
After complaints about American dominance of the internet and growing disquiet in some parts of the world, Washington has said it will relinquish some control over the way the network is run and allow foreign governments more of a say in the future of the system.”
This is horrific is it not? This will be the UN telling us what can be on the net, no? China has been pushing for this?!!
Please tell me this is not happening…or I am wrong.
Net neutrality?
1. There is no such thing as “the internet”. There are only private networks that agree to exchange traffic.
2. ICANN is in charge of such things as defining top level domains and delegating who is in charge of what domains and who can issue IP addresses. It isn’t actually in charge of a network.
These changes are not likely to have much (any?) impact on how things actually work with possibly one exception. They could speed up the process of migration from IPv4 to IPv6. But that is more of a technical issue that will be transparent to most users. The only difference users will notice is that IP addresses will change in format. The old “dotted quad” of x.x.x.x where x is a number between 0 and 255 will go away.
As far as actual communications from one network to another, nothing is going to change. If your traffic starts on Comcast, goes across Sprintlink and terminates on AT&T, it will still start on Comcast, transit Sprintlink and terminate on AT&T.
Again, repeat after me, “There is no such thing as the Internet”. There is not a piece of wire anyone can touch and say “this is The Internet” . That wire that comes out of your computer is your wire. That wire that comes out of your cable modem is Comcast’s or Cox’s or AT&T’s cable. That router that it goes to belongs to your provider. The cable it goes over from there belongs to the carrier that installed and maintains it.
All ICANN does is provide a common set of standards so all the networks can communicate and locate addresses.
Thanks for clearing the internet stuff up Cross. Very interesting.
Wireless complicates the picture a bit. Where I work, we’re running out of IPv4’s and need to step up to IPv6. Unfortunately, it’s an expensive process to transition to IPv6. The shuttle flights and the pending retirement complicates the transition plan as each launch locks down any software changes for 30 days prior to launch and 15 days fr hardware changes. When the shuttle launch slips, those windows are “extended”. They may end up waiting until after shuttle retirement before stepping up to IPv6.
CP, the democrats will never go with the tax cuts. People have lost the creativity and the desire to start new things. That’s because we live in a nanny state.
BTW, the tax cuts that came out of Obama’s stimulus bill is nothing but someone actually thought that those tax cuts is 1/3 of this stimulus bill. Is that what HuffPo, dKOS, DU been telling their readers????
CP, I meant incentives.
Do you think that the Americans will find new incentives to start things back up next year? Nah, I don’t think so. They are forward thinkers and the Democrats are preventing them from thinking ahead.
I have to wonder why the stock market is doing alright considering the other bad economic numbers. Is it because the investors are short term forward thinkers. Because they know or think that Obama will raise the capital gains tax rates next year?
Lurker, the stock market is bewildering since there are so many moving parts and so many varying predictions.
I believe (and it’s not just me, serious analysts are making this case) that one of the prime movers behind the stock market’s rise is the fear of massive dollar devaluation soon.
Now, this sounds counterintuitive, so let me make the case: The dollar, due to our incredible deficits, is soon going to tumble dramatically on the international markets. (already happening to an extent) If you are a major investor, where do you put your money? You don’t want it in cash or cash deposits, since that’s what’s going to be devalued. You don’t want it in any type of bonds, either government or corporate, since devaluation sparks inflation which always destroys the long term value of everyone’s bonds. Do you put it in Gold? Some, yes, but Gold is also very volatile and it’s very hard to put large amounts of money (billions of dollars if you’re a large institution) into gold and still be liquid.
Foreign currency looks a little better, but still, there’s no single place in the world today that anyone can point to and say “there, that’s a safe place to put our money!” Too many problems everywhere, too many countries in trouble. Even China, supposedly the strongest right now, has a host of internal problems they are papering over.
So what’s a large institutional investor to do, even if they believe that bad times are ahead? The theory is that large publicly traded companies, although they will face hard times like eveyone, will be the *best* at spreading their risk through several different nations and the best at managing their survival through the times to come. If this is the case, then it makes sense to start putting money into ownership of the larger, more defensive companies now, in preparation for the deluge to come.
It’s not that these companies prospects are so good, but rather that everyone else’s are so bad. And the old safety standby, the US T-Bill, can no longer be trusted. Will that have consequences down the road? Oh, you better believe that it will.
“Unfortunately, it’s an expensive process to transition to IPv6”
Only if your equipment is ancient and needs to be replaced. All equipment sold in the past several years supports IPv6. Older gear might support it with a software update. You simply change the IP address from an IPv4 address to an IPv6 address. Where are you incurring any expense in the change?
I might suggest “Deploying IPv6 Networks” by Cisco Press available on Amazon.
“Do you think that the Americans will find new incentives to start things back up next year? ”
It isn’t about incentives. It is about opportunity. Everything coming out of Washington is a disincentive to hire people. It is hard to find an incentive to hire employees when there is nothing for those employees to do. Nobody is buying anything. Remove the taxes on the self-employed, sole proprietors and S corporations and you will see people buying tools and equipment. That leads to hiring people to build and ship those things. That begins to put money back into circulation.
We cant rely on banks lending at this time. Government has to leave the cash in the hands of the people so they don’t need to borrow.
Thanks, Cross. One other question: are we being setup for a worldwide body that will try to regulate the internet, content-wise?
[…] do not like this chart. And I like these economics charts even […]
“are we being setup for a worldwide body that will try to regulate the internet, content-wise?”
ICANN already is a world-wide body. They do not regulate content. They regulate the technical details that make it possible for networks to exchange traffic in a standard manner.
Lets say there is some top level domain called .silly
.silly exists because ICANN says it could … sort of. There is nothing stopping you from creating your own .silly but nobody would know how to find the ip addresses in that domain.
So lets say you want to go to http://www.really.silly
Your computer first visits a thing called the “root” name server to find out who has information for .silly. The root name server then passes you the ip address of that dns server. You then go there and ask for really.silly and the dns server gives you the ip address of the server that handles the really.silly domain. You finally go there and ask for http://www.really.silly and you get the ip address of the server.
ICANN regulates what the top level domains are and decides who is the “official” dns for the top level domain and makes sure that information gets into the root name servers. That is about all ICANN manages … the root name servers and domain disputes at high levels. That and deciding what overall blocks of ip addresses get distributed out to the various regulators. For example ARIN issues IP addresses in the Americas. RIPE issues them for Europe and (I think) Africa. APNIC issues the ip addresses for the Asia/Pacific region. ICANN is the one that assigns the larger blocks of IP addresses to those various entities.
Now there is nothing in the world that prevents you from making any top level domain you want. It’s just that nobody will be able to find it unless they use you for their “root” nameserver. You can even make your own “internet” with a complete duplication of the existing address space if you want. You just wont be able to inter-operate with the existing “internet”.
ICANN doesn’t have squat to do with content. Content issues are handled by the various legal jurisdictions involved.
AJ,
What Sean Trende said:
http://www.realclearpolitics.com/articles/2009/10/01/2010_could_easily_be_disastrous_for_democrats_98501.html
October 1, 2009
2010 Could Easily Be Disastrous For Democrats
By Sean Trende
“So let’s say this: If it is apparent to the average American by the summer of 2010 that we are in the midst of a robust recovery, then I think that the Democrats’ losses will be very limited. We could even see minor gains. But if we’re seeing double digit unemployment numbers that are only beginning to crest or come down (or worse still, are still going up), the Democrats are going to have an absolute debacle on their hands. Every Democrat in a red district that voted for the stimulus package, which is almost all of them, will have to face charges that they voted for a trillion dollars in spending with nothing to show for it.
Many will also have to defend votes on cap-and-trade, a health care proposal that isn’t particularly popular in red states, and other votes yet to be determined (immigration reform?).
If that’s the playing field on which the 2010 elections are fought, then 2010 won’t look like 1994. It will look worse.”
Thanks again, Cross. 🙂 OK, I promise this is my last question that seems to be on many people’s minds:
Can the US government “take over” our internet viewing? There was a bill proposed, I believe, that would give the President such so-called powers in an emergency. Not sure how that would work in light of how you have explained things.
[…] I agree. Just look at how bad the numbers are once you dive into the details: […]