Son I remember the year and time that our President told us a stimulus package had to be passed. That without the stimulus package everything would collapse, unemployment would go above 8 percent and our economy would collapse. The package was going to create many, many new jobs. Yes son, I remember those days.
But dad, unemployment is almost 10 percent and the stimulus package was passed. Dad, didn't Goldman get a big, bailout and now they are giving almost one thousand new million dollar bonuses. Dad they are saying that another stimulus package is needed and are going to pass it. Dad is borrowing from China good for me. Dad I remember our President said the economy had turned a corner. Dad are Green Shoots sprouting in our back yard?
Last September, during the debate over the federal bailout of Wall Street, politicians that supported the bailout used a certain phrase.
"Our time has run out," said Rep. Spencer Bachus, R-Ala., the ranking Republican on the House Financial Services Committee. "We're going make a decision. There are no other choices, no other alternatives."
Recently I saw the same argument made on DKos concerning the deficit spending and bailouts. It seems like common knowledge at this point. If we hadn't bailed out Wall Street then we would headed into a Depression.
The fact of the matter is that this idea, that we had no choice, is wrong on three different levels.
A few months ago, I noticed something that seemed strangely discordant about our "Great Depression 2": consumers were refusing to stay dead, but instead showed signs of - at least partially - rising from the grave.
But a look at truck traffic (which is only posted monthly) and rail traffic (which is updated weekly) showed a continued year-over-year slide.
I took a further look because one very prominent blogger has recently alluded to rail traffic several times, most recently saying it was "horrible" and "13-week moving averages are still moving lower, with no apparent end in sight" So, what's going on? Does rail traffic in particular mean the recession is continuing to plunge deeper into the abyss, or are there signs of some stabilization?
There are those that honestly think you can make a sustainable economy based on people buying things they don't need with money they don't have. Then there are those who just want to sucker in the sheeple so they can fleece them one more time.
Finally, there are the sheeple themselves - so scared that they will buy into any feel-good message about Green Shoots that the politicians and media sells them, and even defend it.
What none of these three groups want is for the general public to know what the actual numbers really are.
They don't want me to show you what I am about to show you.
It's Friday Night! Party Time! Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!
Before we get to the documentary, if you missed this one, it's a must watch! Before Congress, health insurance executives refuse to stop rescinding health insurance coverage, retroactively, when a person actually gets sick! Reminds me of the big Tobacco CEOs Seven Dwarfs famous clip, all under oath swearing they did not believe nicotine is additive.
A picture is worth a thousands words, and this map shows the loss of a couple of hundreds of thousands of jobs. This map shows the current unemployment in each of the 50 states, and in 13 of them, that rate is above 10%.
At least in part, this map shows the immediate impact of the shutdown of much of the US auto industry. With most GM and Chrysler plants idled beginning in early may, a large number of parts suppliers have followed suit. As a consequence, the industrial region around the Great Lakes has seen unemployment jump to heights not seen since the late 1970s.
This morning the BLS reported that consumer inflation increased +0.1% (seasonally adjusted) in May, (rising 0.3% non-seasonally adjusted). Year-over-year prices have fallen -1.3% into deflation. YoY consumer deflation is only surpassed by 1949 in the post-Depression era.
The first 5 months of inflation data are still in accord with the optimistic scenario I laid out in January:
In the Optimistic scenario, the fiscal and monetary stimuli, together with intelligent new political leadership in Washington, halt the meltdown perhaps by mid-year, and wage reductions remain the exception. In the Pessimistic scenario, the stimuli fail, and wage reductions spread, leading to a wage-price deflationary spiral.
If you are out of work like me, and hoping that the Depression will end soon so you can get a job, you better develop a Plan B.
A recent analysis by a trio of economists with the Federal Reserve Bank of San Francisco predicted a jobless recovery on a nationwide basis, following a pattern that appeared after the recessions of the early 1990s and 2001.
Most economic predictions can be taken with a grain of salt. If you were as wrong on your job as often as economists are on their jobs, you would get fired very quickly.
On the other hand, it's common sense to look at recent historical trends and project patterns from them. Given that premise, let's look at what we can expect in terms of employment.
At this point, many people here are aware that a number of states have deep budget deficits that threaten to bring shutdowns as early as August. I think that throwing some numbers in really shows the depth of the problem as well.
This map shows the gap between expected 2009 state revenues and the budget for the year in percentage terms. California has a real problem, as do several other states.
It's Friday Night! Party Time! Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!
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