Recovery 2011? Jobless Claims Jump To 410K

After last week's drop to 383k new unemployment claims, everyone was declaring the beginning of the end of the jobs crisis. As I noted in this post, this repeats the experience of last year, when everyone was ready to declare the beginiing of the end of the jobs crisis. And like the last time, the calls were delusional. Aggregate demand remains extremely weak. Unless and until aggregate demand shows consistent growth, the jobs crisis will continue. Today's weekly jobless claims report supports this view:

More people applied for unemployment benefits last week, one week after claims had fallen to the lowest level in nearly three years. The Labor Department says 410,000 people sought unemployment assistance last week, a jump of 25,000 from the previous week. The rise was much larger than economists had expected.

It's not Recovery 2011, it is the continuation of our Lost Decade. And our leaders do not seem to care, as Austerity 2011 goes into full swing.

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    Sounds right to me (5.00 / 2) (#1)
    by andgarden on Thu Feb 17, 2011 at 07:57:12 AM EST
    I don't think there's much left to say, but it's damn depressing.

    I am no economics whiz, not by any (5.00 / 2) (#3)
    by Anne on Thu Feb 17, 2011 at 08:35:42 AM EST
    stretch of anyone's imagination, but I do understand that when demand is flat in the private sector, when the private sector isn't spending, isn't hiring, is just sitting on reserves as a hedge against conditions continuing to decline, it's up to the public sector - the government - to spend.  Not just willy-nilly spending, but on projects and programs that create jobs.

    I hear Obama talking about the government making investments - and they believe that's going to create jobs and move the economy upward - but coupled with the cuts, and taken with what is happening on the state side of things, it's at best - at best - going to be a wash.  It's robbing Peter to pay Paul, and that's not going to solve this.

    I'm betting that this news on jobless claims will cause some politician or three to tell us that this actually proves the logic of cutting the budget; apparently, everything proves that logic, and they're just not going to heed the sign that says, "Last Chance to Exit Before Driving Off Cliff."

    I wouldn't mind so much if they went over that edge, if only we all weren't along for the ride.

    The problem is (1.00 / 1) (#35)
    by jimakaPPJ on Thu Feb 17, 2011 at 02:41:54 PM EST
    the government has been doing that and conditions have not improved. In fact, they have become worse.
    And now the rest of the world, China in particular, appears to resisting loaning us any more money for the Government to spend.

    We spent like a gambler who decides he will recoup all his losses by putting down all his money on a one roll bet.

    We lost.


    The government hasn't done enough (5.00 / 2) (#39)
    by Anne on Thu Feb 17, 2011 at 03:04:22 PM EST
    spending - and conditions have not gotten worse because of the spending it has done, but because it was weak to begin with and further weakened by what was - and is - happening at the state level.

    We are soveriegn in our own currency, and we don't need China to lend to us in order to be able to spend; we can create as much money as we need.

    "Full faith and credit," jim - take a look at that.  Read up on Modern Monetary Theory.  Our currency is not tied to gold anymore, which means that absent Congress-imposed constraints, we don't have a spending "problem."

    What we have is a contingent of people who would like nothing better than to make the government as small as possible - and screaming about deficits and debt, and claiming we are on the edge of the abyss unless we cut-cut-cut, is how they are going about attaining that goal.

    Some of them actually believe we are like a household budget writ large, and believe we must be solvent to be prosperous, but there's never been a dearth of ignorance in the US Congress, and that's also working quite well for those who actually do know that they're gasighting the American people to advance their own agenda.


    Well, that worked well for Germany, eh? (1.50 / 2) (#44)
    by jimakaPPJ on Thu Feb 17, 2011 at 03:53:29 PM EST

    We are soveriegn in our own currency, and we don't need China to lend to us in order to be able to spend; we can create as much money as we need.

    Got your wheelbarrow ready to carry your cash in?


    The current inflation rate (5.00 / 1) (#61)
    by cal1942 on Thu Feb 17, 2011 at 08:56:35 PM EST
    proves you're wrong.

    Our real concern is deflation.

    The idea that our total national debt is at a critical stage seems to me to be something that a politician(s) pulled out of his a$$.

    And apparently there are still people willing to buy our debt.  The sale of Treasuries hasn't gone begging.


    The sale of treasuries has (5.00 / 1) (#70)
    by Militarytracy on Thu Feb 17, 2011 at 10:27:31 PM EST
    gone flashing red.  Those who used to believe in us no longer show up to the auctions. It is getting to the point that we are seeing next day bond flipping day traders showing up at a feeding frenzy and that's about it.

    Some investors are now saying (none / 0) (#71)
    by Militarytracy on Thu Feb 17, 2011 at 10:46:25 PM EST
    that they don't understand how Bernanke can ever stop quantitative easing.  I have read several right ups on this, here is one.  There are many people who play on this field all day every day who are seeing the same thing though.

    Whatever you want to call it (none / 0) (#69)
    by jimakaPPJ on Thu Feb 17, 2011 at 10:10:43 PM EST
    $3.30 gasoline is a problem.

    And peoples wallets are being deflated by buying the inflated groceries, gasoline and utilities.


    I don't understand your argument (none / 0) (#41)
    by jbindc on Thu Feb 17, 2011 at 03:27:23 PM EST
    "Full Faith and Credit" has nothing to do with money or monetary policy, except to the extent that checks and other money instruments issued in one state have to be honored in other states.  

    The FF&C says:

    Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.

    Are you suggesting we just print more money?  Any economist worth his or her salt will say that's a bad idea, as the supply of money that's in the marketplace will just increase demand for products, thereby creating shortages, so suppliers will just raise their prices, causing inflation.

    Currently China owns about $900 billion in Treasuries - are yousure we can cut them off anytime?

    If that's not what you are saying, could you please further enlighten me?


    I may have misspoken about FF & C (5.00 / 3) (#43)
    by Anne on Thu Feb 17, 2011 at 03:51:50 PM EST
    I should have referenced Section 4 of the 14th Amendment...

    But that doesn't change the fact that we want to increase demand - with 9% nominal umemployment, the functional number being close to double that, we are in no danger of shortages, or inflation.

    Once demand has increased, jobs are being created in the private sector, and private-sector spending has also taken off, the government can and should dial back its spending, thus avoiding inflation.

    I've posted links from time to time about Modern Monetary theory, and there are plenty of economists who understand the need for the government to spend precisely to increase demand.

    As long as the debt instruments being issued by the government are being honored - and they are actually required to be - this is a manufactured crisis.

    From Corrente:

    What's really behind this angst is, ostensibly, the mistaken idea that the Government can run out of money and so go broke, and that it is doing so. But this fear, if it is real, is due to a misunderstanding, a throwback to the days before 1971, when the currency had to be backed by some finite amount of a commodity such as gold.

    We live in a different time. All the money issued by the Government today is backed by nothing except the full faith and credit of the United States of America, and that means that our Government can always use its constitutional authority to create money to pay its previous debts at any point in time, as long as it chooses to spend to meet its obligations. There's no solvency issue and no solvency risk. America can't go broke. The Government doesn't finance its expenditures, either through taxing or borrowing. So even if it has a temporary inability to tax or to borrow it can't go broke, unless its political authorities (including Congress) fail to honor its obligations in violation of the provisions of Section 4 of the 14th Amendment to the US Constitution.

    take a look at this passage from the transcript of the presentation of Professor Stephanie Kelton given at the Fiscal Sustainability teach-In Counter-Conference (held at George Washington University on April 28th 2010).

    Here's an interesting passage from that link:

    " . . . the government is the issuer of its currency. It is not like a household. It doesn't have to raise money by borrowing or collecting taxes in order to spend. Those of us in the private sector have to earn or borrow dollars before we can spend. The government must spend first. And we say this, and sometimes people have a hard time understanding that. How can the government spend first? How can it not spend first? How could the government collect taxes, in dollars, first? It first had to have spent those dollars into existence. The spending has to come before the payment or the collection of taxes. The government must spend first. Government spending is not (we use this term a lot) operationally constrained by revenues. It doesn't need tax payments and bond sales in order to fund itself. It is not operationally constrained. The only relevant constraints are self-imposed constraints. We talked a little bit about this earlier, things like debt ceilings. That's a self-imposed constraint. Rules that prevent the Treasury from running an overdraft in its account at the Fed. That's a self-imposed constraint. It is a constraint that is imposed by Congress. Rules that prevent the Fed from buying Treasury bonds directly from the Treasury, so-called monetizing the debt, is a self-imposed constraint. [00:14.36]

    And from the Corrente post:

    There are a number important self-constraints, imposed by Congress, that are hamstringing this scorekeeper beyond the constitutionally envisioned constraint of the Executive Branch spending only what Congress authorizes and appropriates. 1) The Congress prevents the Treasury from running a negative balance in its Federal Reserve accounts as a result of its spending. 2) The Congress also mandates that the Treasury issue debt to prevent such negative balances. 3) It also imposes a debt limit on the amount of debt that can be issued at any time.

    None of these self-constraints are necessary. Potentially, they can interfere with the ability of the Government to pay its legitimate obligations including repaying its debts, and since section 4 of the 14th Amendment clearly says that the validity of the debts of the United States cannot be questioned, this raises of the question of the constitutionality of these constraints. A very important question currently, since many Republicans in the House are looking forward to refusing to raise the debt limit when the issue comes up in March -- a voluntary act on the part of the US Government that calls our debt repayments into question.

    Why doesn't President Obama appear to know these facts about the impossibility of the US running out of US Dollars to pay its debts and buy things with? Well, perhaps he does know about it. Certainly, Alan Greenspan knows that "A government cannot become insolvent with respect to obligations in its own currency." And Ben Bernanke knows that the US hasn't used tax money to bail out the banks. So, it's reasonable to assume that the President must know that we can never run out of money. So, why, pray tell, does he tell us that we've already run out of it?

    And then I think you have to ask, why, if we have the ability to spend, and our debt obligations are not in danger of being defaulted on, are Democrats and Republicans manufacturing this crisis?

    That's the question too many people aren't asking, because they are believing the nonsense being spouted by both parties.


    The only glitch in the solution (none / 0) (#57)
    by Militarytracy on Thu Feb 17, 2011 at 07:47:12 PM EST
    that would seem to be easily at hand, is that every cent of our currency we get our hands on, the Federal Reserve Bank "lends to us".  We don't create our own dollars, all of them are loaned to us.  Every single new dollar is born in debt.  We aren't on the gold standard anymore.  We have a fiat currency now.

    And when you do what you are suggesting with a fiat currency, you then must contend with it losing its backing and what its worth is....you experience inflation.  A fiat-money currency loses value once the issuing government refuses to further guarantee its value through taxation.  And that is exactly what we have done and now it is giving us problems, but instead of taxing the wealthy and shoring up what our currency will buy any of us on the streets we have decided to cut spending and make the poor poorer to try to shore up the worth of our currency.

    All of this goes back to not nationalizing the banks and taking the defaults two years ago now.  They are all still insolvent with huge defaults hiding on their books via voodoo bookkeeping now, and they must "earn their way out of it". The Fed is flooding them with liquidity (creating deficit though) trying to make it possible for them to earn their way out of this and earn their way to health again.  And it is hard to find the tracks, but I'm betting that most of the huge insolvent institutions are trying to earn their way back to health right now not by loaning that liquidity to mainstreet which is experiencing all this unemployment and joblessness, but by buying the only thing that looks good in these horrible times.....commodities.


    It's not guaranteed through taxation. (5.00 / 1) (#58)
    by Anne on Thu Feb 17, 2011 at 07:58:43 PM EST
    It was never guaranteed through taxation - that's the flaw in your argument, I think.

    Fairy Tales:

    If you think about it further, the Government's creation of US Dollars is logically prior to either taxing or borrowing, since to either borrow US Dollars or get dollars through taxation, those dollars have to have been created by the Government at some time in the past. So, the notion that the Government can get money by either taxing or borrowing, and only in these ways, is a pretty obvious untruth, told by people who either don't understand where money comes from, or who want other people to believe that money for spending can only come from these two sources.

    The truth is that the Federal Government doesn't need to, and also doesn't, raise its spending money from taxing and borrowing. The Federal Government doesn't even "fund" its expenditures as the users of its currency have to "fund" theirs. Most often these days, the Government spends money by marking up accounts in the private sector . The Government also spends by marking up State Government accounts, and by issuing checks to some people, and even by printing a relatively small amount of currency, and coining an even smaller amount of money. But, again, the Government, mostly uses its spending authority to mark up accounts, and it doesn't use the money it collects in taxes, or the money it has raised from borrowing, in its spending process.

    There's only one main reason why the Government borrows money when it wants to deficit spend, and that's because Congress requires that it do that, not because the Government either needs or uses the money borrowed in order to spend. The rule that it must issue debt in these circumstances is a hangover from gold standard days.

    Congresspeople probably believe that issuing debt when the Government deficit spends prevents or moderates inflation because borrowing removes cash from the economy that Government spending injects into it. It's true that it removes cash from the economy, but whether or not debt is issued to match Government spending, that spending still adds net financial assets to the private sector economy , and the fact that the net addition is a bond and not cash is no less, and may be more inflationary because bonds can be leveraged to a greater degree than cash deposits, and also command interest income . Government deficit spending still adds net financial assets (savings) to the private economy dollar for dollar, and that spending has nothing operationally to do with whether or not money is borrowed to correspond with the spending.

    The requirement mandating such a correspondence has nothing to with the function of spending. Though it has everything to do with causing interest to be paid to foreign Governments and wealthy individuals -- "welfare" that the US need not pay them if it doesn't continue to practice debt issuance.

    Government doesn't use money raised through taxation to spend, either. In fact, taxing actually destroys both private sector money and Government money . This becomes quite clear when you know what the Government does when it receives payment of taxes in cash. After the tax payer leaves the tax office, the cash paid is shredded by the government official.

    So, if the Government doesn't spend the taxes it collects, but destroys the money, then why must it tax. In my view taxes have three functions. First, if the Government did not tax and also require citizens to pay their taxes with Government currency, then that currency would have no value. So Government taxes to establish and validate the value of its fiat money.

    Second, Government also may tax to drain aggregate demand from the economy. When the economy is overheated, the best way to avoid inflation is to increase taxes.

    And third, Government also needs to tax to re-distribute wealth in a democratic society. Mal-distribution of wealth is a great danger to democracy, as we are seeing in the United States today. One of the chief means of restoring a greater measure of economic inequality to the United States would be a reformed and much more progressive taxation system.

    Lastly, not only is it true that the Federal Government raises money through means other than taxing or borrowing all the time, because it creates that money in the act of spending. It's also true that the money it spends is not the money it collects through taxing or borrowing. So, the idea that we must raise money by taxing or borrowing in order to fund our spending is a fairy tale.

    On the other hand there is a kernel of truth to the tale, in the sense that Congress mandates that deficit spending cannot occur unless the Government issues debt. But this doesn't mean that the Government has the capability to spend only by raising money through taxing or borrowing. Instead, it means that Congress, itself has mandated a need for borrowing to accompany deficit spending. Therefore in place of the fairy tale, the Administration will tell, we see the real truth - namely that it is the fault of Congress that the Executive must borrow and incur new debt in order to deficit spend, and, consequently, also that it is the fault of Congress that we have a national debt today at all.



    There is always the risk (none / 0) (#60)
    by Militarytracy on Thu Feb 17, 2011 at 08:38:20 PM EST
    that the debt will not be paid back.  That risk always exists where debt is concerned, and it is the ability and history of paying the bills that holds the intrinsic worth.  That is what we are dealing with now.  It is looking like the United States is going to have to default on her debt.  It is too enormous and the taxes coming in are grossly inadequate to the point that it is impossible to pay back on the Ponzi gone wrong scheme that usually becomes a fiat currency.  I think that the longest any fiat currency we have ever known the world over managed to not destroy itself is like 40 years.

    It is very depressing to embrace such facts.  But as Dadler often points out, money is an illusion.  And that illusion has thusfar blown up at least every 40 years with a fiat currency :)  And crap, we left the Gold Standard about uhhhhh 40 years ago :)  I don't know if we will make it through it.  And if our fiat currency blows it always brings with it giant social destabilization.  I think we could have set a new fiat currency world record though if Wall Street wouldn't have gone nuts this last go around.  We had enough innovation and research and development, we could have shattered records if Wall Street had not become so greedy....but maybe that is part of the nature of this beast too and unescapable too.

    As far as that debt going out there though and creating net financial assets in the private sector too.  Ahhhh....there's the rub with what happened when we refused to take the bank defaults.  That debt hits their door at the incredible discount rate that it is right now and it is theirs Anne, they must earn they way clear of debts sitting on their books that you and I can barely fathom.  So the shadow banking system loans it back and forth to each other right now and they look for things to buy......for themselves in order to save themselves and they are buying into the stock market and commodities.  All that "wealth" is staying in the shadow banking system and very little of it is experienced as private sector assets.  It is staying right up there within that 1% of the population, who sit within their financial corporate structure and loan it back and forth to each other to "invest"....and then they write themselves huge paychecks and bonuses to boot doing it.  It is mind phucking at this point :)

    And the taxation draining aggregate demand in this write up is over simplified too.  Because we do have historical instances, historical proof when certain specific taxations worked to increase aggregate demand.  Those times were when the rich paid more taxes and we put more money into the hands of the poor.  That has historically as far as I know always increased aggregate demand when it was being strangled.  But Bernanke is using the over simplified theory to argue for keeping the rich rich because he needs them rich in order to create this bubble he is creating to try to reinflate the economy.  He needs to keep the rich rich to create new bubbles, while trying to save the currency that he is destroying through QE....and that will require the blood of the poor.


    Section 4 of the 14th Amendment (none / 0) (#65)
    by Anne on Thu Feb 17, 2011 at 09:22:03 PM EST
    to the US Constitution:

    4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

    The only way we can be insolvent is if the Congress forces us to be, and in that case, I think it fails a constitutional challenge.

    And why would the Congress force insolvency on us?  What possible advantage would there be in that?


    What our currency is worth (none / 0) (#66)
    by Militarytracy on Thu Feb 17, 2011 at 09:57:35 PM EST
    though Anne is what investors are willing to pay for our bonds.  Section 4 of the 14th ammendment  is only worth what it is printed on if it looks to investors like it is impossible for us to pay our debts.  And at this point, it looks like it is impossible for us to pay our debts.  That has all really happened too because of "remedies" that the Bush White House and this White House decided were going to be applied.  I still think we could have made it through it all if we would have immediately restructured the banks too and the defaults taken.  But because we refused to do that our personal balance sheet has now become impossible to believe in, and impossible to believe that we can ever earn our way clear of it.

    I didn't really want to go into it either, but the other day when discussing us losing our default currency status.  Understand that if and when that happens, we lose a great deal of "private sector" wealth with it.  The fact that we are the global default currency has a lot of intrinsic wealth to it too.  If we lose that there will be private sector wealth lost too in that collapse.

    None of what I'm pointing out though is me arguing that the middle class or the poor can be or should be bled anymore.  We are simply in a really horrible place, and what the administration decided to do in the early days of all this made certain consequences unavoidable.  Money IS an illusion, people are not.


    Here's (none / 0) (#42)
    by Warren Terrer on Thu Feb 17, 2011 at 03:44:58 PM EST
    a good article on the subject by someone in the finance business who objects to all the deficit hysteria. Ignore the comments, however, as they are written by the usual suspects "winging it on a single undergraduate course in economics, if that, but they know they're right because everybody agrees."

    A more important statistic (5.00 / 1) (#4)
    by Yes2Truth on Thu Feb 17, 2011 at 08:47:13 AM EST

    % of new jobs that pay a livable wage

    Well, most people earn a wage which (none / 0) (#5)
    by observed on Thu Feb 17, 2011 at 08:51:41 AM EST
    provides the living standard of Enid, Oklahoma.
    If they dont' like their situation in NYC, they can just move to Enid.

    Of course, (5.00 / 1) (#23)
    by Zorba on Thu Feb 17, 2011 at 12:21:25 PM EST
    if everyone from New York City moves to Enid, Oklahoma, then Enid will essentially become New York City.   ;-)

    It is a long commute, but (none / 0) (#7)
    by inclusiveheart on Thu Feb 17, 2011 at 09:43:06 AM EST

    Trash and Burn Mentality (5.00 / 2) (#8)
    by mmc9431 on Thu Feb 17, 2011 at 10:38:39 AM EST
    It's sad, but there are a lot of Republicans out there that would be perfectly willing to drive the country into a major depression in order to achieve their agenda. Gut the pension funds, kill off the unions and elimnate any form of regulation. Then we'd be in such bad shape that we'd have to eliminate all of those "frivilous entitlement" programs. We really wouldn't have the money to continue them.

    And they wear their American flag pins and spout about their duty to save the country. Save it for who and how? By lowering the standard of living and  turning us into a third world country.


    Teachers on the street in WI... (5.00 / 2) (#10)
    by kdog on Thu Feb 17, 2011 at 10:58:23 AM EST
    They might live to regret the suicidal greed, if we follow the lead of the educators of WI, and the people of Egypt.

    We know for sure the ruling class doesn't wanna educate their own kids, scrub their own toilets, etc...we have more power than we realize, the riches of numbers, and labor they require.  



    Representative Paul Ryan (R. WI) (none / 0) (#13)
    by KeysDan on Thu Feb 17, 2011 at 11:12:18 AM EST
    and "economic star" of the House said that Egypt has come to Madison--not meant in a good way.  I don't know how camels would fare in Madison in February, but it would not surprise me if Paul has checked out camel-crowd control options.

    If he don't want it... (none / 0) (#15)
    by kdog on Thu Feb 17, 2011 at 11:17:42 AM EST
    send some Egypt to NY...the secret police they are not, but the NYPD is a closer resemblance than I'd like.  And Tunisia it is not, but hot dog cart vendors gotta pay some vig to the state to ply their trade.

    Yes, and this year (none / 0) (#11)
    by KeysDan on Thu Feb 17, 2011 at 11:03:40 AM EST
    the House Republicans may not be able to slash and cut social security benefits, so they will try  to slash and cut social security administration's budget by $1.9 billion.  This will delay checks to old-age and disability beneficiaries, for months,  impede first time enrollments to social security and medicare and otherwise show that government cannot do anything right. All while wearing their American flag pins.

    The Good Old Days (5.00 / 4) (#14)
    by mmc9431 on Thu Feb 17, 2011 at 11:15:35 AM EST
    I have a suggestion for the Republican theme music at the 2012 convention:

    "If I could Turn Back Time" by Cher

    They all seem to dream of the good old days of the robber barons. Life was so much easier when the peasants knew their place and stayed there.


    Well (5.00 / 2) (#62)
    by cal1942 on Thu Feb 17, 2011 at 09:07:47 PM EST
    they've always dreamed the peasants would stay quiet.

    There was a lot of labor unrest in the last quarter of  the 19th century and early 20th.  Republicans always dream of a past that never existed.  They dream of it and try to sell the narrative. Unfortunately many people buy into their false story.


    Unlike us, our "leaders" will profit (5.00 / 2) (#9)
    by Dadler on Thu Feb 17, 2011 at 10:47:21 AM EST
    They get campaign cash, lobbying jobs, lucrative connections, etc, from the monied class -- an entirely wretched assemblage of alleged sentient human beings, who deserve at the least to be pummeled with socks full of horse manure.  

    Our fearless business leaders at work (5.00 / 4) (#12)
    by Harry Saxon on Thu Feb 17, 2011 at 11:03:54 AM EST
    from the LA Times:

    The biggest mistake people make when talking about the outsourcing of U.S. jobs by U.S. companies is to treat it as a moral issue.

    Sure, it's immoral to abandon your loyal American workers in search of cheap labor overseas. But the real problem with outsourcing, if you don't think it through, is that it can wreck your business and cost you a bundle.

    Case in point: Boeing Co. and its 787 Dreamliner.

    The next-generation airliner is billions of dollars over budget and about three years late; the first paying passengers won't be boarding until this fall, if then. Some of the delay stems from the plane's advances in design, engineering and material, which made it harder to build. A two-month machinists strike in 2008 didn't help.

    But much of the blame belongs to the company's quantum leap in farming out the design and manufacture of crucial components to suppliers around the nation and in foreign countries such as Italy, Sweden, China, and South Korea. Boeing's dream was to save money. The reality is that it would have been cheaper to keep a lot of this work in-house.

    Click or LAT Me

    Not only that (5.00 / 3) (#16)
    by shoephone on Thu Feb 17, 2011 at 11:19:55 AM EST
    but we Washingtonians gave Boeing billions of dollars in tax breaks and other goodies (such as redesigning highways just for them) so that they could outsource all those jobs, demonize and screw over the unions here, and delay the completion of the plane's rollout by more than three years.

    The Dreamliner project has been a disaster. We have former governor and current Obama commerce secretary Gary Locke to thank for a lot of it.

    We did find out one important thing, however: The Italians don't know cr*p about how to properly manufacture anything for an airplane.


    The Italians don't know (none / 0) (#21)
    by Zorba on Thu Feb 17, 2011 at 12:19:27 PM EST
    cr*p about manufacturing a reliable car, either.  Pretty, yes.  Reliable, not so much.  

    Sounds like you (5.00 / 1) (#45)
    by jimakaPPJ on Thu Feb 17, 2011 at 03:55:49 PM EST
    owned a Fiat.

    Not me, but (none / 0) (#47)
    by Zorba on Thu Feb 17, 2011 at 04:37:34 PM EST
    a friend of ours years ago.  The car was in the shop more than on the road.   ;-)

    I'm all for (none / 0) (#48)
    by jbindc on Thu Feb 17, 2011 at 04:46:55 PM EST
    buying American cars, but then again, there is the Ferrari.  :)

    OTOH, (5.00 / 1) (#49)
    by Zorba on Thu Feb 17, 2011 at 05:07:15 PM EST
    you could be buying a French car {{shudder}}.  You do know the old joke, don't you?
    Heaven is a place where:
    The lovers are Italian
    The cooks are French
    The mechanics are German
    The police are English
    The government is run by the Swiss

    Hell is a place where:
    The lovers are Swiss
    The cooks are English
    The mechanics are French
    The police are German
    The government is run by the Italians


    I heard it as (none / 0) (#64)
    by cal1942 on Thu Feb 17, 2011 at 09:16:47 PM EST
    The police are Irish
    The government is English

    All I know about (none / 0) (#68)
    by jimakaPPJ on Thu Feb 17, 2011 at 10:06:29 PM EST
    "mechanicing" I learned underneath the hood of a Fiat.

    But it was sexy.


    Lousy motorcycles too. (none / 0) (#55)
    by MileHi Hawkeye on Thu Feb 17, 2011 at 07:21:13 PM EST
    Dad had a Moto Guzzi when I was a kid and that thing was broke down more than it ran.  

    They do make one heck of a scooter though...  


    Yup (none / 0) (#63)
    by cal1942 on Thu Feb 17, 2011 at 09:11:23 PM EST
    But I wonder if they're smart enough to learn the lesson.

    Thanks for the link Harry.

    Of course it's also morally reprehensible.


    It's only going to get worse. (5.00 / 1) (#17)
    by Chuck0 on Thu Feb 17, 2011 at 11:22:29 AM EST
    What the upcoming layoffs of government workers at all levels. And this seems to be just fine with the right. "Who cares if the unemployment roles get bigger, they don't contribute to our campaigns anyway."

    More than two years in, and (5.00 / 2) (#18)
    by shoephone on Thu Feb 17, 2011 at 11:24:21 AM EST
    I'm still waiting for the Obama jobs bill.

    Maybe, sometime, someday (5.00 / 0) (#19)
    by KeysDan on Thu Feb 17, 2011 at 12:01:16 PM EST
    somehow, one of these deficit hawks will become exasperated with cutting and slashing jobs and social programs gaining only a billion here and a billion there finding that it is so hard to add up to real money. And, suddenly, those hawkish blood-shot eyes will turn to our military misadventures in Iraq and Afghanistan and see through their tears and fears that we are spending at least $12 billion a month in about equal measure between those two wars.  Perhaps just a six-month furlough.

    I want (none / 0) (#24)
    by Zorba on Thu Feb 17, 2011 at 12:25:14 PM EST
    some of what you're smoking, Dan.     ;-)

    Good stuff, plentiful and (5.00 / 0) (#34)
    by KeysDan on Thu Feb 17, 2011 at 02:39:48 PM EST
     inexpensive in Enid.

    We need to cut all these damned (none / 0) (#2)
    by Militarytracy on Thu Feb 17, 2011 at 08:03:15 AM EST
    entitlements.  So that the rich people will feel more secure about finally putting some of that giant nest egg they have into creating jobs in the United States.  Because if I were dripping filthy rich, every morning that I arose from the rose petals on my sheets, the unemployed working stiffs out there would be my first concern too.

    And the answer to our (5.00 / 1) (#6)
    by KeysDan on Thu Feb 17, 2011 at 09:20:15 AM EST
    economic woes for some is anchored in the experience of governors who have been in office for three or four weeks.  All are now presidential material, and touted as such in the media.

    The Dems have their work cut out for them (none / 0) (#20)
    by jbindc on Thu Feb 17, 2011 at 12:05:03 PM EST
    And they need to hammer their message home 'cuz right now, the public isn't on their side.

    Democratic senators gathered at a Virginia resort last week to plot political strategy got alarming news from a trusted pollster: Republicans are winning the debate over dealing with the budget deficit.

    The Democrats learned that while the public's top concern is improving the economy, more voters view cutting spending rather than investing as the best way to do so. And right now, they trust Republicans more to do the trimming.

    These views were pronounced among independents, whose support Democrats will need in 2012 to hold the Senate, recapture the House and keep President Barack Obama in office.

    The data, presented to Democratic senators at their retreat by Geoff Garin, president of Peter D. Hart Research Associates, and obtained by Bloomberg News, highlight a dilemma for Obama and Democrats in the showdown with Republicans over federal spending. They must find a way to show the public they're willing to cut, and they're divided over how far to go.

    Well, the public agrees with the (5.00 / 1) (#22)
    by observed on Thu Feb 17, 2011 at 12:19:29 PM EST
    Democrats I hear, like Obama and Durbin----the deficit is the number 1 problem.

    And the reason they agree is because (5.00 / 1) (#28)
    by Anne on Thu Feb 17, 2011 at 12:59:19 PM EST
    the whole issue is one they have been told there is no choice about: we HAVE to cut, or else - cue scary music - we are all DOOMED.  There has been virtually no discussion about whether we should be cutting, whether we need to cut, or what the consequences are of going down that path now.  It's all now about what to cut.  End of discussion.

    And the real danger here is that, by continuing to push this load of crap - and it is a load of crap - they are also leading people to believe that reducing the deficit and the debt is going to solve "the problems" as those problems have also been defined by the powers-that-be.

    I posted in an earlier thread a link to an article I found via Corrente today, and am re-posting the excerpts I thought particularly important:

    There is no visible harm from current deficits. Yields on U.S. Treasurys are up a tick but still near historic lows. Core inflation in the U.S. is still so far below the 2% annual rate deemed desirable by the Federal Reserve that deflation continues to be more worrying. There is no crowding out of private borrowers in the debt markets.


    There is cause for alarm. There is the possibility that the government, held under the sway of misguided and obsolete economic theories and driven by a not-so-hidden corporate agenda, will make genuinely harmful cuts in both discretionary spending and entitlement programs - cuts that will cause real and needless misery to millions.


    When the U.S. was bound by the gold standard, it also faced constraints. Most of the thinking and language about budgets and deficits actually goes back to this time, when the U.S. genuinely had to "finance" its deficit.

    Since abandonment of the gold standard and the de facto adoption of a fiat currency, however, these constraints no longer apply. The U.S. is free to print as much money as it likes; the U.S. government is free to spend money without financing it.

    How crazy, you say. What about inflation? Inflation occurs when there is more demand than supply and this simply isn't going to happen when there is 8-10% unemployment. Treasury and the Fed have ample tools - selling debt securities and raising interest rates - to deal with inflation when it does threaten.

    Modern monetary theory - which is espoused by a growing number of economists and investment managers because it explains the observable facts better than the obsolete theories driving most of the public discussion - deals with the world as it is without a gold standard.


    The federal government is also not comparable to a household. It does not have a checkbook to balance or a credit card to max out, even though our folksy politicians like to use these metaphors. It does not have to "live within its means" like a family or individual. Our grandchildren will never have to repay all that debt. No one will, ever. It will continue to grow as our economy grows.

    All this flies in the face of all the groupthink going on in Congress, in the press and on cable TV. So if you want to reject modern monetary theory as hogwash and cling to theories that worked a century ago, you're in good company. But think about it, look around you, and decide for yourself what best describes the world you live in.

    Food for thought - not that it's going to stop the runaway train.


    It's class warfare and a trillion dollar (5.00 / 2) (#29)
    by observed on Thu Feb 17, 2011 at 01:06:38 PM EST
    heist---by the rich of the poor.
    Of course no one is going to tell the truth, because the truth is not "civil".

    Inflation no problem? (none / 0) (#37)
    by jimakaPPJ on Thu Feb 17, 2011 at 02:47:45 PM EST
    Gasoline is up about 35% since last summer with no top in sight.

    Clothing is estimated to go up 10% this year. Cotton is at a 150 year high.

    We have had food riots in Tunisia and were one of the big problems in Egypt.....

    Our food bill is up around 15% over last year, and we shop at bulk stores, Walmart and freeze/can/store food for use.

    I sure hate to think what will happen things actually get bad.


    And for 2 straight years (5.00 / 2) (#38)
    by mm on Thu Feb 17, 2011 at 02:56:44 PM EST
    No Social Security benefit COLAs.

    Explain that.


    QE2 (none / 0) (#46)
    by jimakaPPJ on Thu Feb 17, 2011 at 03:57:48 PM EST
    for start...

    The speculators expect inflation and they are bidding up commodities.


    Where is the inflation going to come from (5.00 / 2) (#50)
    by Anne on Thu Feb 17, 2011 at 05:27:36 PM EST
    when there is no demand, unemployment is nominally at 9%, and the Congress is embarking on an austerity program that isn't going to stimulate the economy?

    How do you have inflation when no one is buying, people are continuing to lose jobs and no one is spending out of necessity and fear?


    Historical economic evidence (5.00 / 1) (#52)
    by Militarytracy on Thu Feb 17, 2011 at 07:07:16 PM EST
    When you increase the supply of currency you get inflation.  We Are getting inflation now because we are creating loads and loads of currency right now.  The solution you are argue for is underway right now and it isn't fixing anything, and it is in fact beginning to starve the poor of the world.

    I'm sorry, but we have not committed (5.00 / 0) (#56)
    by Anne on Thu Feb 17, 2011 at 07:38:07 PM EST
    to any one policy with enough oomph to make a difference, so now we are pivoting to austerity, which is completely counterintuitive; the private sector isn't spending now, and it isn't going to start when the government turns the spigot down even more.  What will we do when that doesn't work?  Or will the line be that if the markets are doing well, then all's right with the world?

    Convince me, please that going down the road to austerity is going to juice the economy, spur demand and send the economy upward.

    Or tell me what the solution is, please; I'm all ears.  Or eyes, as the case may be.

    The fact remains that neither the deficit nor the debt is endangering us; that's the excuse that's being used to cut government to the bone and trim back entitlements for people for whom that may be the only thing that stands between them and the abyss.

    This entire exercise, scaring people about debt and deficits that simply do not matter, is kabuki of the worst kind; once again they are scaring people in order to get them to facilitate their own suffering.


    It isn't counterintuitive though (none / 0) (#59)
    by Militarytracy on Thu Feb 17, 2011 at 08:02:58 PM EST
    when you have a fiat currency and you have been doing GIANT quantitative easing.  It is what you now must do to attempt to avoid hyperinflation and destruction of the fiat currency.  So remarkably, and factually historically speaking...Jim's argument is reality based and has a history of being correct too.

    We are now only attempting to save our currency from experiencing destruction, we are living in self designed daily desperation and we can only attempt to survive for the day....we can't think about the future when we aren't sure we will make it through tomorrow.  This is what Obama's economic team has chosen to do though.  The rest of us are only along for the ride.


    Inflation? (none / 0) (#51)
    by Ga6thDem on Thu Feb 17, 2011 at 06:30:00 PM EST
    H*ll, we have been experiencing deflation in the economy for about three to four years now. Deflationary wages and deflationary housing. Even if food prices stayed the same then they would seem inflationary because of the deflation in everything else.

    The "speculators" are the ones that bid up the gas prices too. Maybe they are just people wanting to destroy everything while they make a buck.


    Well, food prices are not staying the same (2.00 / 1) (#67)
    by jimakaPPJ on Thu Feb 17, 2011 at 10:03:58 PM EST
    and while I'll hold the speculators while you whip'em the end result is inflationary and a real hit on the economy.

    Yet high energy prices seem to be what Obama wants.

    And the economy isn't coming back as long as gasoline and diesel are a $1 too high.  


    Bubbles have been deflating (none / 0) (#53)
    by Militarytracy on Thu Feb 17, 2011 at 07:12:58 PM EST
    (like housing), needs have been inflating because as everything tightens up the rich put their money into things that will retain their wealth under heavy social stresses.  That would be things that you and I must have to survive every day.

    Then the government takes the deflation and weighs it against the inflation and it comes out  with a figure that nears zero and right now it throws a party because it needs that figure to reassure markets.  And that statistical figure has nothing in common with the reality on the ground for the little people.


    The Deficit!! (none / 0) (#40)
    by Warren Terrer on Thu Feb 17, 2011 at 03:14:09 PM EST
    As Seen On TV

    That's exactly what I thought... (5.00 / 1) (#32)
    by inclusiveheart on Thu Feb 17, 2011 at 01:26:48 PM EST
    The President has been at the bully pulpit selling cuts and deficit fear.  One wonders why it would be perceived as "losing the debate" if the de facto head of the Democratic Party is talking about austerity and belt tightening.  Seems like they are winning the debate in that case.

    In fact, if the Democrats really do believe that cuts and the deficit are priority number one, then having the GOP enact the plan for the cuts allows the Democrats to avoid having to take responsibility for the pain and suffering that the cuts will cause.

    Of course, they could be trying to play 11th Dimensional Chess again which is really scary since they always lose that game badly when they attempt to play it...


    The should stick to checkers (none / 0) (#33)
    by jbindc on Thu Feb 17, 2011 at 01:32:26 PM EST
    I'm thinkin' that's too hard a (none / 0) (#36)
    by inclusiveheart on Thu Feb 17, 2011 at 02:42:06 PM EST
    game for them.  Maybe they should try Go Fish or something along those lines - but that might be too challenging for them as well.

    Got it - coin toss - they have a 50/50 shot at that one and it requires no real skill other than making sure that the coin has two different sides...


    If Tim Geithner and Ben Bernanke (none / 0) (#54)
    by Militarytracy on Thu Feb 17, 2011 at 07:17:47 PM EST
    say that we must cut now to save the big finance infrstructure as is, it becomes a priority with our current Democratic party.  And that is what they have said must happen now, and the big campaign donors agree.

    Ah yes...what to cut (none / 0) (#25)
    by christinep on Thu Feb 17, 2011 at 12:30:53 PM EST
    Now that the polls have moved on to a new theme: Everyone wants to bring down the deficit...but everyone doesn't want to cut almost anything specifically identified. In fact, a recent reliable poll in South Dakota (yes, SD) questioned self-identified tea party types. Even those types did not want to cut stated programs, etc....with one exception, and that is that these teapartiers in South Dakota supported the statement that upping taxes on individuals making $1M plus would be a good idea. (Funny how the worm may turn!)

    It's the old (none / 0) (#26)
    by Zorba on Thu Feb 17, 2011 at 12:40:03 PM EST
    "don't tax me, don't tax thee, tax that fellow behind the tree."  Goes right along with "Don't cut my programs or your programs- cut somebody else's programs."  Maybe they're beginning to get a glimmer that they're not the ones making $1M plus, nor will most of them ever be, so why not tax those rich people?  Maybe, just maybe, the worm will indeed turn when they finally figure out just whose side most of the wealthy are actually on, and just who will be seriously hurt by many of the proposed cuts.

    Playing on the Repubs home field was never a good (none / 0) (#27)
    by ruffian on Thu Feb 17, 2011 at 12:54:04 PM EST
    political strategy. They would have been better off in the long run to try to lead the public elsewhere rather than follow the Repubs to Deficitville.

    Win WIn (none / 0) (#30)
    by star on Thu Feb 17, 2011 at 01:07:48 PM EST
    It is sort of win win situation for repubs right now. Winning only the house and not senate,they have the luxury to come up with all sorts of CUTS to achieve deficit reduction, knowing full well that it will die in the senate and or get vetoed by Obama. This is a sure recipe to draw the I's to R camp - they can appear hawkish with out actually not taking any responsibly. this is how the situation in 2011 is different from 95. Maybe "I am not a witch" O'Donnell was there for a reason after all.

    I agree (none / 0) (#31)
    by jbindc on Thu Feb 17, 2011 at 01:14:08 PM EST
    And as I've said before, high unemployment only benefits the Repubs in 2012.  Great argument for them - a revamp of the "change" meme.

    For the sake of argument (none / 0) (#72)
    by Slado on Fri Feb 18, 2011 at 09:59:40 AM EST
    I will say it one more time.

    We do not have a demand problem.  The lack of demand is a symptom of the real problem which is debt.

    See link and article about our massive collection of debt.

    Our federal, state and local governments (along with most Americans) are in massive debt.   This debt was accumulated by over spending during the bubbles of the 90's and 2000's.

    We are seeing the long slow work off of this debt.  Until we all collectively work off this debt we will not see a collective rebound in jobs, wages etc...

    Those who are not in debt up to their eyeballs, namely wall street and some private companies, will see faster turnarounds in profits but that is not enough to spur the demand BTD keeps talking about.  The small rebound in the economy can't possibly create enough capital to payoff the debt that we've accumulated so here we are.  

    Just like your own personal finances it's not recommended to put money on your credit card to invest in the market to pay off your mortgage.   That is what Obama, Krugman and Bernake are trying to do.  It could work if we come up with another game changer like the internet or some sort of magic technology that would spur massive growth but barring those unforeseen improbable circumstances we're just digging a bigger whole and running up a larger debt burden.

    Economic forces are real.  Debt is real.  They do not respond to theory.   Until our collective economy works off this massive debt burden we will continue to see this type of slow sputtering growth.  

    Get used to it.   It's going to be years until it's over.

    Start from your proposition (none / 0) (#74)
    by robotalk on Fri Feb 18, 2011 at 11:24:02 AM EST
    that Wall Street is not in debt and then start thinking.  Why not?  Because the rich have not paid for their gains.

    The debt is directly connected to the very rich not paying their fair share and putting the debt on the backs of everyone else.  


    I agree in theory (none / 0) (#75)
    by Slado on Fri Feb 18, 2011 at 07:18:06 PM EST
     but ask yourself why they are still rich and not broke?   Because our "government" bailed them out and let them keep their wealth in order to protect the "system".

    It's called crony capitalism and it was a bipartisan effort.

    I all along felt the government should have let it crash but it didn't and now the same people who helped get us into this mess are making profits while the rest of the country is stuck in reverse.


    Do we assume (none / 0) (#73)
    by robotalk on Fri Feb 18, 2011 at 11:20:39 AM EST
    policy is intentional or results from negligence?  I choose the former.  Deliberate choices about whose economy shall benefit have been made and implemented.