NBC: Summers: High Unemployment for Years

[SnyderShrugged]

I, for one, appreciate the honesty and candor. There are a lot of factors contributing to unemployment, many of which the government can't do anything about.

Then why did they make the urgent claims of the emergency stimulus and bailout bills?

[Burgold]

You know the answers to this. We've covered it quite a few times. You can even make the argument on a corporate/bank/stock market level that the stim worked brilliantly.

[gbear]

December, the 200-300k is considered healthy. Look back when our unemployemnt rate was around 4%. The 200-300k meant storefronts with "apply within" signs. It meant government agecies not being able to hire competent staff because the government doesn't pay that well.

You almost sound like 200-300k is kind of the max tolerable. When that was going on in the middle of this decade I kept reading about how our economy was stifled by the lack of workers for many jobs. When I was in college, we were taught 5-6% was ideal frictional unemployment. Who kows? That always seemed subjective to me as I looked at assumptions in those models.

Things didn't just go overseas because it was cheaper. Often they went because people were trained over there and not here. We also brought workers here. I point you to our nursing shortage where we have for more than a decade allowed nurses to immigrate here. We don't have the trained nurses. This economy is the first time I've ever heard of nurses holding on o their jobs because of the pain in getting a new one.

Other bit of positive news I have not heard but expect to in the next year is on people retiring. I doubt my dad was the only one who put off retiring because his investments shrunk. As the stocks rally, there will be both more jobs and more retirements. The retirements also open jobs for the next generation. I've already seen signs of this happening at my work.

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edit:

SS, would you be happier with the statement "There is only so much the government can do to mitigate the disaster forseen if the entire banking sysem colapses?" Same arguement can be made about state governments unable to pay bills and provide services.

[SnyderShrugged]

You know the answers to this. We've covered it quite a few times. You can even make the argument on a corporate/bank/stock market level that the stim worked brilliantly.

No, cant make any argument at all that it worked whatsoever since the prescribed goal was specific to halt the unemployment rate increases at 8%.

Also cant make any claims at all that the bank bailouts worked either, as their prescribed goal was specific to increasing lending, which also never happened.

What they both amounted to were grand exercises in corporate welfare and increases in the size and scope of federal government.

sorry Burg! Thats the way it is in reality.

[SnyderShrugged]

December, the 200-300k is considered healthy. Look back when our unemployemnt rate was around 4%. The 200-300k meant storefronts with "apply within" signs. It meant government agecies not being able to hire competent staff because the government doesn't pay that well.

You almost sound like 200-300k is kind of the max tolerable. When that was going on in the middle of this decade I kept reading about how our economy was stifled by the lack of workers for many jobs. When I was in college, we were taught 5-6% was ideal frictional unemployment. Who kows? That always seemed subjective to me as I looked at assumptions in those models.

Things didn't just go overseas because it was cheaper. Often they went because people were trained over there and not here. We also brought workers here. I point you to our nursing shortage where we have for more than a decade allowed nurses to immigrate here. We don't have the trained nurses. This economy is the first time I've ever heard of nurses holding on o their jobs because of the pain in getting a new one.

Other bit of positive news I have not heard but expect to in the next year is on people retiring. I doubt my dad was the only one who put off retiring because his investments shrunk. As the stocks rally, there will be both more jobs and more retirements. The retirements also open jobs for the next generation. I've already seen signs of this happening at my work.

------

edit:

SS, would you be happier with the statement "There is only so much the government can do to mitigate the disaster forseen if the entire banking sysem colapses?" Same arguement can be made about state governments unable to pay bills and provide services.

The ones who claimed "disaster foreseen" have already been proven wrong in virtually every projection they have made.

At what point do these so called "expert" opinions become meaningless? (They already are to many of us)

The banking system would have been fine. Some banks who made poor decisions would have closed up, their business going to banks who made good decisions.

We never had to have the mega billions in spending since we really achieved pretty much the same result as if nothing had been spent.

[Burgold]

sorry Burg! Thats the way it is in reality.

I thought the goal was to save or create x million jobs? Were they really so concrete and absolute as saying,

"You will know this program is successful because unemployment will stay under 8%"

Doesn't sound like a politician at all. The saved or create is much more political. Adding in "saved" jobs is an exercise in BS as you can never be assured that the jobs would have been lost or you can't prove that they weren't saved.

Still, I have to believe that a huge jump in the DOW and Ford and all these banks becoming profitable again (in the short term) was an effect that they were hoping for. The unemployment aspect they have to list as a failure.

[SnyderShrugged]

I thought the goal was to save or create x million jobs? Were they really so concrete and absolute as saying,

"You will know this program is successful because unemployment will stay under 8%"

Doesn't sound like a politician at all. The saved or create is much more political. Adding in "saved" jobs is an exercise in BS as you can never be assured that the jobs would have been lost or you can't prove that they weren't saved.

Still, I have to believe that a huge jump in the DOW and Ford and all these banks becoming profitable again (in the short term) was an effect that they were hoping for. The unemployment aspect they have to list as a failure.

They didnt add the caveat "save" until after it became apparent that jobs werent being created. Politispin at it's finest.

President Obama was fairly specific in stating the 8% (it might have been 8 point something, not certain) goal.

Fords jump, while encouraging (I'm a former Ford employee), is much from cash for clunkers. Though, they are probably picking up market share from GM and Chrysler.

[gbear]

Don't know about that SS. "Save" was used from the beginning in everything I read. The make jobs was only the parts on "infrastructure" speding which is only just now starting.

Have you read the news today about what at least 10 states are going ot have to do in terms of cutting jobs?

How much of the stimulus went to states to maintain Medicaid and unemployment and... To the extent that I haven't heard any state say "we don't have medicaid anymore," I think that part worked.

What was the last major bank to go under? I know people only count the costs and not the returns, but have we and are we making money on most of those bailouts? Does that count as success at all in your book? How much lending would be going on if the banks colapsed? You point to still depressed lending, but I don't see any recognition of how close we were to a major colapse. Like employment, I htink the government did what it could to "mitigate" not erase the damage to our economy. To some extent those before should take great pride that many never realized how bad things could and have been and were in the past before people made efforts to save banks and critical institutions (though I am more hesitant than our law makes evidently on the term "critical institutions").

For the magnitude of the this economic fall, we've been fairly lucky to be this graceful.

[SnyderShrugged]

Don't know about that SS. "Save" was used from the beginning in everything I read. The make jobs was only the parts on "infrastructure" speding which is only just now starting.

Have you read the news today about what at least 10 states are going ot have to do in terms of cutting jobs?

How much of the stimulus went to states to maintain Medicaid and unemployment and... To the extent that I haven't heard any state say "we don't have medicaid anymore," I think that part worked.

What was the last major bank to go under? I know people only count the costs and not the returns, but have we and are we making money on most of those bailouts? Does that count as success at all in your book? How much lending would be going on if the banks colapsed? You point to still depressed lending, but I don't see any recognition of how close we were to a major colapse. Like employment, I htink the government did what it could to "mitigate" not erase the damage to our economy. To some extent those before should take great pride that many never realized how bad things could and have been in the past.

For the magnitude of the this economic fall, we've been fairly lucky to be this graceful.

Obviously, I have a very different view. But I respect yours greatly.

I think that we mainly heard crys of disaster in order to build support for the spending, those crys came from the ones proposing it. Then the same cast of idiots come out and say things like "We miscalculated" and "misread" to justify their errors.

I have zero trust in what they have said or will say since they and their crony's are the ones who ultimately benefited on the backs of the taxpayer, while the taxpayer suffers through continually rising unemployment.

edit: I think you may be right and I stand corrected. President Obama did use the "saved" language in his early january stimulus pitch.

here are some quotes:

"That's why we need to act boldly and act now to reverse these cycles. That's why we need to put money in the pockets of the American people, create new jobs, and invest in our future. That's why we need to restart the flow of credit and restore the rules of the road that will ensure a crisis like this never happens again."

"And this plan begins with -- this plan must begin today, a plan I am confident will save or create at least 3 million jobs over the next few years. It is not just another public-works program; it's a plan that recognizes both the paradox and the promise of this moment -- the fact that there are millions of Americans trying to find work even as, all around the country, there's so much work to be done. And that's why we'll invest in priorities like energy and education; health care and a new infrastructure that are necessary to keep us strong and competitive in the 21st century. That's why the overwhelming majority of the jobs created will be in the private sector, while our plan will save the public sector jobs of teachers, police officers, firefighters and others who provide vital services."

These next ones are unbelieveable in hindsight...

"Instead of politicians doling out money behind a veil of secrecy, decisions about where we invest will be made transparently, and informed by independent experts wherever possible. Every American will be able to hold Washington accountable for these decisions by going online to see how and where their taxpayer dollars are being spent. And as I announced yesterday, we will launch an unprecedented effort to eliminate unwise and unnecessary spending that has never been more unaffordable for our nation and our children's future than it is right now."

"That also means an economic recovery plan that is free from earmarks and pet projects. I understand that every member of Congress has ideas about how to spend money, and many of these projects are worthy. They benefit local communities. But this emergency legislation must not be the vehicle for those aspirations. This must be a time when leaders in both parties put the urgent needs of our nation above our own narrow interests."

[Burgold]

Obviously, I have a very different view. But I respect yours greatly.

here are some quotes. These next ones are unbelieveable in hindsight...

"That also means an economic recovery plan that is free from earmarks and pet projects. I understand that every member of Congress has ideas about how to spend money, and many of these projects are worthy. They benefit local communities. But this emergency legislation must not be the vehicle for those aspirations. This must be a time when leaders in both parties put the urgent needs of our nation above our own narrow interests."

I think one of the great features of our government is that we have three branches that are designed to check one another. What the quote above is an example of is one of the weaknesses in my opinion. I believe Obama meant what he said. I believe that there were some Congressmen and women who took the Montgomery Burns pose and began rubbing their hands together.

You can argue that Obama should have acted as his own check here and sent this back to the drawing board. I think he felt a pressure (real or imagined) based on events and his promises that made that seem impossible to him.

[SnyderShrugged]

I think one of the great features of our government is that we have three branches that are designed to check one another. What the quote above is an example of is one of the weaknesses in my opinion. I believe Obama meant what he said. I believe that there were some Congressmen and women who took the Montgomery Burns pose and began rubbing their hands together.

You can argue that Obama should have acted as his own check here and sent this back to the drawing board. I think he felt a pressure (real or imagined) based on events and his promises that made that seem impossible to him.

Yeah, I actually blame congress first and the President second for that one. (He could have veto'd).

[gbear]

"over the next few years"

- how many have you given him? Things are trending ok on his prediction. Turning an economy around isn't an overnight thing. It's liek a tug boat pulling a chain of cruise ships. Turning around requires time and space.

"invest in priorities like energy and education; health care and a new infrastructure "

- Most of these contracts are just now starting. I'd hardly view this as broken promises yet. With government contracts, these never happen next day and we should be thankful for that. The hope is these are long term boons to the economy not merely short term fixes.

"while our plan will save the public sector jobs of teachers, police officers, firefighters and others who provide vital services."

- That's the bail the states out part which was done and many want again. It's also what at least 10 states are saying they may have to begin cutting without help.

The with out earmarks bit was a sad understimation of the greed of our politicians in congress. They put him behind the eight ball on those. The web page for transparency is unfortunately not one with which I've had time to keep up.

[SnyderShrugged]

"over the next few years"

- how many have you given him? Things are trending ok on his prediction. Turning an economy around isn't an overnight thing. It's liek a tug boat pulling a chain of cruise ships. Turning around requires time and space.

"invest in priorities like energy and education; health care and a new infrastructure "

- Most of these contracts are just now starting. I'd hardly view this as broken promises yet. With government contracts, these never happen next day and we should be thankful for that. The hope is these are long term boons to the economy not merely short term fixes.

"while our plan will save the public sector jobs of teachers, police officers, firefighters and others who provide vital services."

- That's the bail the states out part which was done and many want again. It's also what at least 10 states are saying they may have to begin cutting without help.

The with out earmarks bit was a sad understimation of the greed of our politicians in congress. They put him behind the eight ball on those. The web page for transparency is unfortunately not one with which I've had time to keep up.

They are already talking about a new stimulus and have already extended unemployment benefits and other programs from the initial stimulus package.

He obviously gave himself about the same amount of time as I am giving him.

I'll wrap my thoughts up in a short statement.

When you or I are in deep, deep debt and in short a personal recession, is it proper for you or I to double or triple down on the debt problem in the spirit of "fixing" our woes?

[Burgold]

When you or I are in deep, deep debt and in short a personal recession, is it proper for you or I to double or triple down on the debt problem in the spirit of "fixing" our woes?

Sometimes. When I'm in debt, it is smart for me to buy a new suit and get a haircut before getting interviewed. It may even be smart for me to hire an accountant to figure out my situation or hire a head hunter to get me a better set of prospects. It's not good for me to take all my buddies out to the local bar and buy them a night's worth of drinks.

You do have to spend money to make money. You do have to dig down before you can build up.

[SnyderShrugged]

Sometimes. When I'm in debt, it is smart for me to buy a new suit and get a haircut before getting interviewed. It may even be smart for me to hire an accountant to figure out my situation or hire a head hunter to get me a better set of prospects. It's not good for me to take all my buddies out to the local bar and buy them a night's worth of drinks.

You do have to spend money to make money. You do have to dig down before you can build up.

do you "dig down" to the tune of doubling or even tripling your already outstanding debt? Dont you make necessary cuts in other areas before you spend your way to success?

[Burgold]

do you "dig down" to the tune of doubling or even tripling your already outstanding debt? Dont you make necessary cuts in other areas before you spend your way to success?

Sure, but it also depends how far the hole you already are in. Remember, we were thrown into this hole we didn't climb in. If you woke up and you suddenly found yourself undone, let's say that your manager embezzled your bank accounts, emptied your stock accounts, and all other tangible assets before jetting down with your wife to Rio. And to make matters worse, your wife burned all your clothes, took the jewlery, tvs, car and almost everything else. If you suddenly had nothing, really nothing, then you just might mortgage the only thing you had left so you could try to get your balance. You have to have clothes to get to work or to find work. You have to put food in the fridge. Have to take care of the kids. If you were at zero, you may just double down and go into the negative numbers, because it gives you the best chance to climb up. You will need some capital.

[gbear]

Our own personal recession...this is a bit different. This is my car jsut broke down and I can't get to my job. I'm already in debt. Do I fix my car so I can go to my job even though it means I'm in more debt?

It's bigger though. There are companies that produce big ticket items. Think planes (our economy). Before one sells they have months of bills. Half way through the project, a natural disaster hits greatly increasing costs and debt. There is an underlying belief that the plane design (our economy) is solid, and for the company there really isn't an alternative to believing. The company (the U.S.) is pot commited. You fix up the shop as best you can and while you're at it you make the best cost to benefit decisions you can in picking new equipment even if it means more debt. In the end, you have a plane you hope sells. Whether CompanyB or somebody else comes along with another "better" plane matters little save for figuring how to price your plane and assure its place in the market. The debt is problematic, but the choice is fold up business or pony up. Thus far we have ponied up.

[wilsonian]

They are already talking about a new stimulus and have already extended unemployment benefits and other programs from the initial stimulus package.

He obviously gave himself about the same amount of time as I am giving him.

I'll wrap my thoughts up in a short statement.

When you or I are in deep, deep debt and in short a personal recession, is it proper for you or I to double or triple down on the debt problem in the spirit of "fixing" our woes?

I like an analogy that Peter Schiff has used before.

It's the equivalent of an individual who just been laid off from his job and is thousands of dollars in debt. Instead of living beneath his means and paying down his debt for a while, the individual decides to take out more credit cards and redo his kitchen, install a pool, and repave his driveway.

Certainly, he may feel "wealthier" in the short term. But would anyone really consider him to be better off by having gone deeper into debt? What happens when the bill finally comes due?

[DjTj]

Sure, but it also depends how far the hole you already are in. Remember, we were thrown into this hole we didn't climb in. If you woke up and you suddenly found yourself undone, let's say that your manager embezzled your bank accounts, emptied your stock accounts, and all other tangible assets before jetting down with your wife to Rio. And to make matters worse, your wife burned all your clothes, took the jewlery, tvs, car and almost everything else. If you suddenly had nothing, really nothing, then you just might mortgage the only thing you had left so you could try to get your balance. You have to have clothes to get to work or to find work. You have to put food in the fridge. Have to take care of the kids. If you were at zero, you may just double down and go into the negative numbers, because it gives you the best chance to climb up. You will need some capital.

All of this has nothing to do with the federal deficit right now.

The US Government is not unemployed right now and looking for a job. The government is still making trillions in tax revenue.

The comparison is to a person in his twenties. The average American my age probably has student loan debt, car debt, credit card debt, and is thinking about taking on a mortgage.

My debts far exceed my assets, but does that mean I am in dire financial straits? No, because I believe I have future income that will allow me to make payments on my debt. Now, eventually, I'll have to accumulate enough assets to cover my debts if I ever want to retire and be able to live without having to go to work every day and earn an income, but that's still a long ways off.

The government, in contrast, doesn't need to think about retiring. The tax revenue will come in forever. They can always just keep making their debt payments and living it up ... they are twenty-somethings forever.

Certainly, he may feel "wealthier" in the short term. But would anyone really consider him to be better off by having gone deeper into debt? What happens when the bill finally comes due?

The bill never comes due.

[wilsonian]

The bill never comes due.

Why doesn't it?

[gbear]

To some extent the bill doesn't come due because it is never in everybody's interest to collect at once.

Our debt to some extent actually adds to our dollar's value in some ways, a wierd paradox I know. This can only be pushed so far, but debt to GDP ratio is key.

[luckydevil]

how does 13% unemployment sound?

http://blogs.reuters.com/james-pethokoukis/2009/11/11/12-reasons-unemployment-is-going-to-at-least-12-percent/

[Burgold]

Yeah, I think DJ and Gbear came up with better examples.

[DjTj]

Why doesn't it?

Well, it's just like your credit card bill. You have to pay interest every month, but you don't have to pay the principal. In real life, you better pay the principal at some point if you ever want to retire, but the United States isn't planning on retirement.

The only thing we really need to worry about is the credit card company reducing our credit limit or running into problems getting new credit cards. We aren't realistically worried about being unable to make payments, and it's not even possible for us to pay off the balance of our debt.

There is a national debt. There has been a debt for a long time, and there will always be a debt. Learn to live with it.

[SkinsHokieFan]

There is a national debt. There has been a debt for a long time, and there will always be a debt. Learn to live with it.

Wish you made these posts in 2005

The key thing will be the impact these deficits have on interest rates, seeing that the debt to GDP ratio is changing quite a bit, and not in our favor

We aren't talking about 400 billion dollar deficit in a 10 trillion dollar economy. We could be talking about a 1.8 trillion dollar deficit in a 9 trillion dollar economy. That with a 12 trillion dollar debt, as opposed to a 400 billion dollar deficit with a 7 trillion dollar debt in 2005