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When I was a kid, I used to love double-dips. I’d go to the doctor and afterwards, we’d stop by the drug store soda fountain for my free ice cream. Summers, there would be all the ice cream suppers at the churches with fresh home made ice cream and cake. Double-dips of chocolate ice cream and cake!
Unfortunately however, today’s double-dip will be a recession. Yes, there it is; I’m predicting that we will officially fall back into a recession in the very near future even though for the 25M to 30M long term un and underemployed, we’ve never, ever left the recession that began officially back in December ’07 and ended officially in June ’09. I do so very much hope that I am wrong on this but will even go so far as to act like an economist and claim to be surprised if I am wrong.
What makes me think this will happen? Well, to start with, too many folks like The Benbernank in his speech last Tuesday in Atlanta and the presidents of the Philadelphia and New York Federal Reserve Banks all saying the economy will improve in the second half of 2011. In addition, Bloomberg has a survey of economists claiming this as well:
After growing at a 2.3 percent annual pace this quarter, the world’s largest economy will expand at a 3.2 percent rate from July through December, according to the median forecast of 67 economists polled from June 1 to June 8.Rising exports, stable fuel prices, record levels of cash in company coffers and easier lending rules will be enough to overcome the damage done by one-time events like poor weather and the disaster in Japan, economists said. Nonetheless, the current slackening means Federal Reserve policy makers will wait even longer to raise interest rates next year, the survey shows.
The reality is, the corporations have been holding those record levels of cash for over a year now (via WSJ). They have used the money to buy back stocks or to invest in equipment (NY Times). Another reality is there are always “one-time events.” This year it is earthquakes/tsunamis/nuclear melt-downs in Japan and tornadoes in Alabama and Missouri combined with floods along the Mississippi and Missouri Rivers and wildfires in Texas and Arizona. This past winter, it was record blizzards. Later this summer it will be hurricanes in some areas and droughts in others. All “one-time events.”
BlackRock Investment Management CEO Laurence Fink is predicting that the US economy will lag the global economy for the next five to ten years. CNN says it will be because of household debt. My guess is that it won’t be helped by the Japanese economy contracting 3.5% in the first quarter, Australia adding fewer jobs than predicted (economists surprised!), Spain making unilateral moves (via NY Times) that go against the wishes of businesses and labor that no one thinks will work.
Nouriel Roubini is predicting that the Chinese economy will have a “hard landing” in 2013. (Side note: I had to laugh at Roubini’s wiki page):
I find it interesting that if you check the link at the footnote on the Roubini wiki page and scroll through the “8 who saw the financial crisis coming and the 8 who didn’t,” the “8 who didn’t…” are the ones still being quoted all the time. So much for Roubini becoming a “sage” instead of a Cassandra.
As always, we are not helped when we see Dana Milbank proclaiming that Austan Goolsbee leaving means President Obama is losing a “voice of reason.” That is the same Goolsbee who just last week was bragging about 1M private sector jobs having been created while ignoring the hundreds of thousands of public sector jobs lost.
Nor are we helped when the President goes on his weekly radio address and announces (via AFP):
“Now, government is not — and should not be — the main engine of job-creation in this country. That’s the role of the private sector, ” the president said in his weekly radio and Internet address.“But one thing government can do is partner with the private sector to make sure that every worker has the necessary skills for the jobs they?re applying for,” Obama added.
As I noted in this post from Thursday, Dean Baker has already written the rebuttal to the “necessary skills” argument.
Reuters noted in their article on the weekly address that:
President Barack Obama, seeking to ease voters’ concerns about his handling of the U.S. economy, said on Saturday a meeting with his jobs council next week would focus on possible further steps to boost hiring in the short term.
That would be the “Jobs Council” of Outsourcers and Masters of the Universe.
Just think, now Reuters has a headline that starting tomorrow (Monday June 13), they will offer a column from Larry Summers on the “jobs crisis.”
I keep wondering how The Onion manages to write their stuff with all the competition from reality.
And because I can:
Cross posted from Just A Small Town Country Boy



31 Comments

Hi Dakine! Thanks for staying on top of our loafers, oops I mean our leaders for their lack of direct action to create employment. Did you see in today’s NYT editorial where in the last sentence they asked for federal direct job creation. I was shocked that those neoliberals at the Times would write such a thing. Do you think it was just an editorial slip up??? It was the first time I had ever seen anything mentioned about direct federal job creation in the A Section. Just Wow!
Maybe some unemployed don’t have the required skills, but many do. Why can I get a temporary job with a division of a multi-national corporation (obviously skills not lacking) but not a permanent one? Also, PTB continue to fail to address the fact that such areas as “health care employment”, which they’re forever touting, on the whole don’t pay worth a damn.
must be a difference between ‘officially out of recession’ and ‘out of recession’ because if the first one ended, you couldn’t tell it by me.
I had not seen that editorial but then I rarely read the NY Times editorials.
But it might have to do with a new editor there (Jill Abramson instead of Bill Keller)
Dean Baker (whom I linked to in Thursday’s diary) slapped down the “lack of skills” nonsense quite nicely back in February
According to the official economic statistics, the recession did end two years ago. But I agree that it hasn’t really ended for most of us.
Not a double dip but totally off the cliff.
If I were your editor, I would have started your article with “I’m predicting that….”
As soon as they announce their “Grand Bargain.”
Wall Street saw what happened in England, I am sure they are all shorting our economy.
They split the two economies.
Wall street vs. Main street.
How?
Well I’m glad you asked.
First, keep cap gains tax at 15%. So Wall street gambling and speculation gets taxed less. Not only that, with all the loopholes they bought, that’s much much less.
Tax breaks also helped.
That’s why short term profit is so darn appealing. They can make a boat load in shorting and other quick tricks. Make the money quick, get out, and leave the suckers, ie. the taxpayers, to clean it up.
The inheritance tax, federal, is lower now than it was under B. Oh you crazy “socialist” O, spreading the wealth to those who didn’t earn it. Their parents did.
And of course state by state inheritance taxes? shhhhhhhhhhhhh.
I’ll give you a clue: Wisconsin abolished their state inheritance tax in 2009. That’s right, it’s ZERO!!!
So when they talk, it’s about the economy that matter to them – Wall street.
Main street can rot and die. And we are.
It certainly didn’t end in my neighborhood. The house next to ours was foreclosed on and is currently listed at less than half the price the average home in our neighborhood sold for a few years ago.
I’m reading a book about Germany in the build up to the war and there was a description of a soldier with a helmut with a bird on the top. And, it took me a few seconds, but I thought of your photo.
Just did. I don’t think you would have fit in with the Nazi regime.
Back in 2008, I predicted the Dow Jones will hit 5,000 by November 2012. That’s a 50 percent drop from today. I still maintain my prediction! Also, I wonder if big companies are intentionally refusing to spend their taxpayer-provided cash in order to keep the economy in the doldrums until November 2012.
Yeah, it is quite doubtful that I would have survived life in Germany in the ’3os and ’40s
o/t to you: “there but for fortune” diary = good stuff
that was meant for demi. butr this post is good stuff, too. as always
somebody had to say it dakine!
I hope you’re wrong of course, but I don’t see how.
I think May ’11 may be the point in the future they point back to as the economy overall going into recession again.
we’ll see.
Thanks for such an info rich diary.
Now for me to (hopefully) get back on the ball…
President Barack Obama said the private sector must take the lead in creating jobs as the as the economy recovers, with the government assisting by making sure workers have the necessary skills.
“Government is not, and should not be, the main engine of job-creation in this country,” Obama said in his weekly address on the radio and Internet. “That’s the role of the private sector.”
Obama said the government can work as a partner with businesses to enhance training and education for the jobs that are available. With the nation’s unemployment rate at 9.1 percent in May, up 0.1 percent from the previous month, the administration is focusing on measures that can encourage hiring.
—-
Isn’t it nice that Obama can tell people what the private sector SHOULD be doing, in a perfect world? Doesn’t help people living in THIS world, but at least he, like, cares, man.
One would hope he would have developed a Plan B, since the private sector ISN’T doing that and won’t do that, and instead are sitting on trillions in cash and hiring in China and India. And he’s generous enough to say government can help train people and stuff – it’s not like there are millions of overqualified workers out there scrapping for whatever jobs are available.
The 2012 slogan almost writes itself. “Obama/Biden 2012: Ideally, the Private Sector Would be Hiring. It’s Not Our Fault Things Suck.”
According to the Fortune 500 – 2011 annual ranking of America’s largest corporations:
Wal-Mart Stores is still #1 as “America’s” largest company. Exxon Mobil, Chevron, and ConocoPhillips are #’s 2, 3, and 4 respectively. Exxon Mobil is #1 in the highest profits (but, Congress and Exxon Mobil declare the need for taxpayer subsidies or they will take us hostage).
The #1 largest company in our country is Wal-Mart Stores with low paying “service” jobs and products primarily from China, and #2, 3, and 4 are oil/gas companies who have effectively “bought” our government “representatives”. How can this possibly be good for citizens?
Maybe we need a new definition of recession. I think it should be defined by jobs in some way.
By the way, I find it disturbing when people accuse others like Roubini, Krugman etc. of being a “Cassandra” for being pessimistic, fear-mongering, and being doubtful of the “experts” or whatever.
The thing about the story of Cassandra is that Cassandra was proven right in her predictions – the curse was that no one believed her until the bad things she prophesied actually happened.
She even tried to warn people about the Trojan Horse, and then the city just wheeled the horse in…
make mine a triple…gonna be here a while.
Doesn’t the crap economy yield significant benefit to the Ruling Class? And if it does, why would the Ruling Class be in any great hurry to improve it? Low revenues, and failure to raise them, have made the delivery of government services difficult or impossible. Public employees’ unions are being trashed and trounced. State governments are being strangled and drowned in the bath tub. High deficits provide an excuse for gutting social security and medicare.
From the MOTU’s point of view, it is an ill wind that blows no good. And the good for them is further concentration of their wealth and consolidation of their power. I think the crap economy serves them well in this regard, as well as producing a scared, cowed, obedient, malleable lower 98%.
If you are confident in your prediction, go short the stocks.
Yep. That’s why I found that particular part of Roubini’s wiki so funny as Cassandra was almost the definition of a “sage”
The “ruling class” has no incentive to improve the economy. In fact their incentive is to keep it the way it is. Why take the chance that someone else could overtake them. The sad thing is they have all the money to buy others, democrats or thugs. IMO though thugs are far worse.
Bugs the hell out of me.
Other Cassandras include the people warning about the damage that would be caused by NAFTA, trade with China, financial deregulation, Iraq, the disaster of passing RomneyCare (while the “experts” were lecturing the Cassandras about how it would help out Democrats in 2010…)
I predict that some day, far in the future, most economists will refer to this period as the depression it actually is. No recession we’ve had in my lifetime (50+ years) has lasted this long, or gone this deep into unemployment and lost productivity.
Larry Summers just came out calling for more $tim. At some point during the 2012 election cycle Obama is going float a sort of apology to the American people for him and his ‘team’ not getting the recovery right. He will send up a trial balloon along the lines of ‘we didn’t do enough when we should have done more’. I wonder how that will play out?
What exactly did they do with the first stimulus ?….
I think when they say stimulus they mean tax-breaks for the wealthy….it’s still a failed policy but they(Obummer) will push for more.
But really folks,what is it that the WH has done that is drastically different from GWBush apart from putting the war cost on the books.And yet they are looking for different outcomes.
I saw Jared Berstein on Thom Harthman TV saying they(WH) did a good job.well yeah! if you are catering to the wealthy,they(WH) did a very good job.They still don’t get it.
I am doing just that!