Thread: The strongest economy in the world

Originally Posted by Jet Gorgon

Originally Posted by Milkman

Originally Posted by Jet Gorgon

^ Gee, I thought Obama's group said different.

Re-read my post.

Larry Summers is in "Obama's Group" as economic advisor and he said the above (what I posted) 2 days ago.

Yep, I know about that Summers guy and his role. Sorry, I missed the fact that the group changed the goal posts again.

I expect more goal posts to be moved. In which direction I cannot predict, but I am biased in favor of pushing the goal posts back, as I think it will be slow for a while, for many reasons.

Politicians move with the wind, and also attempt to placate. Economists often cannot predict the future very well at all.

Here's an Op-Ed on declining wages. I haven't followed the issue of "wages," in the last year. The point of this article: The Paradox of Thrift. And how this PoT affects the US economy.

Op-Ed Columnist
Falling Wage Syndrome

By PAUL KRUGMAN
Published: May 3, 2009
Wages are falling all across America.
Skip to next paragraph Fred R. Conrad/The New York Times
Paul Krugman

Some of the wage cuts, like the givebacks by Chrysler workers, are the price of federal aid. Others, like the tentative agreement on a salary cut here at The Times, are the result of discussions between employers and their union employees. Still others reflect the brute fact of a weak labor market: workers don’t dare protest when their wages are cut, because they don’t think they can find other jobs.

Whatever the specifics, however, falling wages are a symptom of a sick economy. And they’re a symptom that can make the economy even sicker.

First things first: anecdotes about falling wages are proliferating, but how broad is the phenomenon? The answer is, very.


It’s true that many workers are still getting pay increases. But there are enough pay cuts out there that, according to the Bureau of Labor Statistics, the average cost of employing workers in the private sector rose only two-tenths of a percent in the first quarter of this year — the lowest increase on record. Since the job market is still getting worse, it wouldn’t be at all surprising if overall wages started falling later this year.

But why is that a bad thing? After all, many workers are accepting pay cuts in order to save jobs. What’s wrong with that?

The answer lies in one of those paradoxes that plague our economy right now. We’re suffering from the paradox of thrift: saving is a virtue, but when everyone tries to sharply increase saving at the same time, the effect is a depressed economy. We’re suffering from the paradox of deleveraging: reducing debt and cleaning up balance sheets is good, but when everyone tries to sell off assets and pay down debt at the same time, the result is a financial crisis.

Here's is an interest phenomenon: employers cutting wages can cause, higher unemployment:

And soon we may be facing the paradox of wages: workers at any one company can help save their jobs by accepting lower wages, but when employers across the economy cut wages at the same time, the result is higher unemployment.

Here’s how the paradox works. Suppose that workers at the XYZ Corporation accept a pay cut. That lets XYZ management cut prices, making its products more competitive. Sales rise, and more workers can keep their jobs. So you might think that wage cuts raise employment — which they do at the level of the individual employer.

But if everyone takes a pay cut, nobody gains a competitive advantage. So there’s no benefit to the economy from lower wages. Meanwhile, the fall in wages can worsen the economy’s problems on other fronts.


In particular, falling wages, and hence falling incomes, worsen the problem of excessive debt: your monthly mortgage payments don’t go down with your paycheck. America came into this crisis with household debt as a percentage of income at its highest level since the 1930s. Families are trying to work that debt down by saving more than they have in a decade — but as wages fall, they’re chasing a moving target. And the rising burden of debt will put downward pressure on consumer spending, keeping the economy depressed.



Things get even worse if businesses and consumers expect wages to fall further in the future. John Maynard Keynes put it clearly, more than 70 years ago: “The effect of an expectation that wages are going to sag by, say, 2 percent in the coming year will be roughly equivalent to the effect of a rise of 2 percent in the amount of interest payable for the same period.” And a rise in the effective interest rate is the last thing this economy needs.

Concern about falling wages isn’t just theory. Japan — where private-sector wages fell an average of more than 1 percent a year from 1997 to 2003 — is an object lesson in how wage deflation can contribute to economic stagnation

Link & Entire: http://www.nytimes.com/2009/05/04/op...rugman.html?em

Fucking cry me a river - it's not my fault my diet is so fucked up - I have to blame someone else - fucking looser:

How the recession wrecked my cholesterol - Chew On This- msnbc.com

Like so many others, I can pin a gloomy personal number on this atrocious economy.

But my data point isn’t pulled from a stock portfolio, a credit score or a home budget, although they’re pretty much gasping, too.

Nope, this bleak figure comes straight from my medical chart. Over the past year — while I was trying to save bucks by eating on the cheap — my cholesterol count chugged 46 points higher. Put another way — for roughly every 95 points the Dow dropped since early 2008, my cholesterol gained one point.

Call it Dollar Menu Disease. Or, how the Hamburglar stole my health.
Certainly, I'm not alone in my recession junk food tangent. While Whole Foods is hurting, McDonald’s profits have boomed.

Since the start of the slump, doctors have worried that falling incomes and job cuts would damage our health as we lost medical insurance and our anxiety levels spiked.

A new study released Friday from the Harvard School of Public Health found that losing a job can increase the risk of hypertension, heart disease or stroke. For someone who was previously healthy, being laid off increased the odds of developing a stress-related health condition by 83 percent.

“In today's economy, job loss can happen to anybody,” lead researcher Kate Strully said in the report. “We need to be aware of the health consequences of losing our jobs and do what we can to alleviate the negative effects.”

Health experts also fear hard times could further inflate U.S. waistlines as we seek cheaper foods loaded with fats, calories and sugar. Many studies have directly linked drops in income to increases in obesity.

“It’s kind of a nasty [sign] of trouble to come,” said Susan Moores, a registered dietician in St. Paul, Minn., and msnbc.com contributor. “But I also wonder if all this somehow might get us back to thinking about how we eat, give us a reason to reload and retool what we eat.”

Boo, fucking hoo, hoo - when in the hell are people in the US going to actually stand up and become acountable for their own choices in life?

Oh, poor me - I don't have a job - never mind I don't get my fat ass off the couch and look for one.

On, poor me - I'm a fat bastered - never mind that I stuff anything and everything into my fat goob that I can get my two fat hands around.

Oh, poor me _ I don't have health insurance - never mind that I haven't held down a steady job in the past ten years.

Get off you lazy asses and go and an make it happen. Cry me a fuckn'' river for all these dead beats.

If the folks in the US would put half the effort into working as they do into complaining the GDP would fuckn' double.

Remember this?



Check out what BO is doing to the future. As someone else points out,we're going to need a bigger graph. To quote Robert J. Samuelson:

From 2010 to 2019, Obama projects annual deficits totaling $7.1 trillion; that's atop the $1.8 trillion deficit for 2009. By 2019, the ratio of publicly held federal debt to gross domestic product (GDP, or the economy) would reach 70 percent, up from 41 percent in 2008. That would be the highest since 1950 (80 percent). The Congressional Budget Office, using less optimistic economic forecasts, raises these estimates. The 2010-19 deficits would total $9.3 trillion; the debt-to-GDP ratio in 2019 would be 82 percent.

But wait: Even these totals may be understated. By various estimates, Obama's health plan might cost $1.2 trillion over a decade; Obama has budgeted only $635 billion. Next, the huge deficits occur despite a pronounced squeeze of defense spending. From 2008 to 2019, total federal spending would rise 75 percent, but defense spending would increase only 17 percent. Unless foreign threats recede, military spending and deficits might both grow.

The actual numbers will be far worse than the graph above. In an apparent attempt to prepare folks for the skyrocketing taxes that await us, BO recently admitted that the debt will break the spine of our economy:

But the long-term deficit and debt that we have accumulated is unsustainable. We can't keep on just borrowing from China, or borrowing from other countries — (applause) — because part of it is, we have to pay for— we have to pay interest on that debt. And that means that we're mortgaging our children's future with more and more debt, but what's also true is that at some point they're just going to get tired of buying our debt. And when that happens, we will really have to raise interest rates to be able to borrow, and that will raise interest rates for everybody — on your auto loan, on your mortgage, on — so it will have a dampening effect on the economy.

Interesting blog entry I read today, from Felix Salmon:
http://blogs.reuters.com/felix-salmo...ating-the-usa/

If you want proof that US sovereign ratings say everything about the rating agency and much less about the US, here it is coming straight from the horse’s mouth:

SR Rating, a Brazilian firm, will soon issue a judgment on American government bonds. Its verdict is not pretty: the company says it will issue a AA rating.

Paulo Rabello de Castro, who chairs the ratings committee at SR, describes the decision to rate Uncle Sam as “an outright provocation”.

Not that de Castro doesn’t make sense:

Mr de Castro argues that perfect scores should henceforth be saved for places like Norway that sit on lots of oil, put revenues from its sale into a piggy bank and are unlikely to be invaded by their neighbours. As for the structured products that were mistakenly given AAA ratings over the past few years, he argues that no asset that has been around for less than ten years should be considered worthy of the accolade.

If you have some money in a small bank in the states you might want to read the article (and links) below.

From americablog.com

Friday, May 15, 2009

Small banks also facing cash issues

Sounds like Geithner was spot on again when he talked about the health of the banks. It's all so dreamy, isn't it? The small bank executives don't play tennis at the same club that Timmy and the big players use so it's easy to forget they even exist. Let them eat cake.

While investors have focused mostly on the nation's largest 19 banks that were the subject of the government stress tests, shares of some smaller banks have been getting pummeled since last week's rollout of the test results.

One of the reasons: the stricter capital requirements for all banks—not just the 19 biggest—may prove too onerous for some of the regional and community institutions, causing some of them to fail.

"Most of these little banks won't be able to do it," said Richard Bove, banking analyst at Rochdale Securities. "We're headed to a situation where the focus is going to be on small banks. The small banks are going to fail in, I think, pretty large numbers. I'm guessing 150."


Link: http://www.americablog.com/2009/05/small-banks-also-facing-cash-issues.html


Link: http://www.nbcwashington.com/news/business/Small_Banks_Need_Capital__Too__But_Could_Face_Hard er_Time.html