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So, I guess it has been a rather eventful week in the world economy and the lives of the Beltway Village Idiots Politicians, Pundits, and Courtiers. I’ll let Paul Krugman and Jane Hamsher do the honors of eviscerating the Standard & Poor downgrade of the US credit rating but do want to add my 2¢ in agreement that supposed neutral arbiters who sold their souls and “independent analysis” for the banksters crappy mortgage based securities should be well advised to STFU rather than interject themselves politically.
To the non-surprise of most folks living in the reality based world, the passage of the debt ceiling increase did absolutely nothing towards improving the overall economy and the budget slashing accompanying the increase is likely to push the economy back into recession (at least that’s my prediction here, here, and here). Reuters had this on the “small blessings” of the debt deal:
The plan for $2.4 trillion in spending cuts over a decade, if backed by lawmakers, would help lift some of the uncertainty that has weighed on investors, businesses and consumers unsettled by talk about a possible new and deep U.S. financial meltdown.
Of course, this was published prior to the stock market drop on Thursday. So much for the “certainty,” right? The LA Times seems to have a little better handle on things than Reuters with this:
Instead of increasing confidence in the future, the agreement seems to have underscored the near paralysis in Washington — and the fact that no substantial new efforts are likely for dealing with unemployment, lagging consumer spending or a host of other problems that have been dragging the economy down.…snip…
The stock market provided an early indicator Monday that investors and business leaders saw little to cheer about. Stocks initially rallied on the debt-ceiling pact, then tumbled after a report showed that U.S. manufacturing activity slowed sharply in July, reinforcing other weak economic data.
As we know today (Saturday, August 6), the stock markets worldwide greeted the Debt Ceiling deal by having their worst week since the middle of the Great Recession.
As always though, my foremost interest is in the Jobs Reports. Or maybe better phrased as lack of jobs reports. The ADP report on private sector jobs came out Wednesday and had it as 114K jobs (via Reuters), although this was offset by Challenger-Gray reporting that planned layoffs had jumped once again to the highest number in 16 months. CNN had a nice little article on the top ten latest “job killing” companies.
Thursday brought the weekly report of Initial Unemployment Claims for last week. Reuters reports it:
Initial claims for state jobless benefits edged down 1,000 to 400,000, the Labor Department said on Thursday. Economists had expected claims to rise to 405,000 and the dip last week indicated an easing in layoffs, which have weighed on employment in the past two months.
Of course, they failed to mention that the previous week’s report had been revised upwards once again from the original reports of 398K.
The official BLS numbers on jobs created for July came in at 117K. The most interesting part of the reporting on the BLS number is how many media sites put on the rose colored glasses to report. CNN’s headline (linked above) was “Hiring Picks Up” while the Washington Post presented it as”Cautious relief amid modest job growth.” The NY Times headline read “US Posts Stronger Job Growth in July” and Bloomberg said “Payrolls Rise, Jobless Rate Falls, Concerns Ease.” I think the LA Times may have provided one of the more realistic looks at the Friday report with this headline “Jobs report doesn’t offset U.S. recession fears.” The fact is, 117K new jobs, in an economy that needs to create 1 million jobs a year (roughly 90k per month) just to stay even with folks entering the work force, is no where near enough to attack the long term un and underemployment problems we face.
For a bit of comic relief, I’ll leave you with this article from Bloomberg this past Monday headlined “‘Embarrassed’ CEOs Silent on U.S. Debt Debate Driven by Republican Demands” combined with this one from Reuters from last week on hedge fund managers refusing to comment on the economy. So much for the best and brightest on Wall St I guess.
And because I can (H/T Old Folks Boogie on Facebook):
Cross posted from Just A Small Town Country Boy



24 Comments

Thanks, for the Bujee Wujee, dakine, and for your much appreciated efforts to move the economic flat-lander’s palaver, song and dance about the fictitous “debt ceiling” to a deeper, and genuinely human-based consideration of the actual reality of this world.
Recommended!
DW
The benefits S&P is looking for is increased borrowing costs, which will mean higher charges for their services. If, however, S&P hadn’t been taking investor money to give investors estimated ratings of AAA for worthless bundled mortgage packages so they would buy them, we wouldn’t be facing this, so actually, S&P is rating its own activities, though don’t expect them ever, ever, to admit to that. Anyone recall Anderson Little, that rated Enron stock AAA, for pay? I think their ex-employees went over to S&P.
It’s pathetic that we have a number of folks masquerading as public servants who are using me, as a Social Security recipient, to pit against veterans and students. That’s what is behind the instability, or lack of confidence, that S&P is talking about, as we all know.
AND it is always fascinating to see that the wage levels of the ‘jobs created’ is never mentioned.
Oh, and I just came across this:
“Wages and salaries accounted for just 1 percent of economic growth in the first 18 months after economists declared that the recession had ended in June 2009, according to Sum and other Northeastern researchers.In the same period after the 2001 recession, wages and salaries accounted for 15 percent. They were 50 percent after the 1991-92 recession and 25 percent after the 1981-82 recession.
Corporate profits, by contrast, accounted for an unprecedented 88 percent of economic growth during those first 18 months. That’s compared with 53 percent after the 2001 recession, nothing after the 1991-92 recession and 28 percent after the 1981-82 recession.”
From here:
http://digbysblog.blogspot.com/2011/08/booming-profits-and-falling-wages.html
Krugman nailed it.
The models S&P use are simple – so getting addition and subtraction wrong is expected, as is get the inputs incorrect.
As in going with, as the promise to the GOP, downgrade despite the model not justifying it – all very expected.
The dance continues.
They all really do think we’re idiots
Thank you for the Bugee Wugee also. I almost forgot about ol’ John it’s been so long.
Nice to know that FDL has such experts posting on the economy.
Not really. They just don’t care what you think/
Was that snark? :) hi, eCAHN. I’m glad to see you. Everyone has been asking for you to come back. I think we need you, especially right now.
Heya eCAHN, saw you over at the book salon, hoped you might stick around a bit over there.
Haven’t seen your moniker for a while. How has life been treating you of late?
DW
nailed it.
Recommended!
But of course!!!
This whole BS mess is totally a Republican fabrication! Let the all rot in hell on earth and lose all their worldly possessions with nothing left for their progeny!
Once more there is a profound misunderstanding by FDL.
You see they don’t want promises that we will bring back senior poverty, they actually want it to happen.
They don’t want us to promise we will kick grandma out into the streets where here choice will be the workhouses, ie. slow death, or the street, ie. slow death.
They actually want it to happen now. They want to see it.
You see, just like with corporate prisons, they want granny working at the poor house for no pay. And if they keel over, well there are always more baby boomers.
This could be snark, except it’s exactly what they want.
eCHAN!! where the hell ya been lady.. We sure do need your sage wisdom!! Great to see your fonts…. Hope all is well you and your Bees..
Mahalo, dakine, for your tireless efforts…! ;-)
Dayam, M’dear…! You sure do play a mean game of ‘hard-to-get’…! *g*
Sure seems like it.. They are heartless bastards every one of them,, Just look around the country and see what republicans are doing!! Don’t be shy they want to reduce the population so they get everything.. everything ..
I just finished reading a post at Kos titled: Debt ceiling trigger could cut nutritional assistance WIC program http://www.dailykos.com/story/2011/08/05/1003583/-Debt-ceiling-trigger-could-cut-nutritional-assistance-WIC-program?via=blog_1
The article ends: “Just cutting the people who need these programs off to twist in the wind isn’t a policy solution. It’s also criminally short-sighted.”
Do these people still not get it??? The OmniParty doesn’t see this as a policy solution. They see it as a final solution.
You don’t have to be a weatherman … the new Standard of Poor.
I’m neither an economist nor a meteorologist, but clearly, all of the talk of a double dip recession is among people who have profited generously to obscenely over the past ten years, and today are doing better than ever.
For everyone else, whom this predatory finance economy has failed and will continues to fail, it’s an unrelenting Depression — one born of the belated death notices for two of the 20th century greatest societal forces — capital formation & the Common Good.
Capital formation in America today is a cruel joke. No one invests in productive capacity here, physical or human. The return in a real economy that grows at most, two percent per year is dwarfed exponentially by “investment returns” on unregulated, leveraged casino betting in the financial markets — with TBTF guarantees against loss. It’s a risk/return ratio that cannot be matched outside of legalized, financial fraud.
No matter that we have the world’s largest economy when it’s cannibalizing itself to maintain the illusion that we missed the iceberg, or hit the iceberg & are safely returning to dry dock for repairs, or repairs are completed & we’re testing the vessel’s restored seaworthiness.
For an economy where 70% of GDP is derived from consumer spending and U6 unemployment is over 20%, the ship is in pieces at 14,000 feet.
When Wall Street goes up against Main Street with both ends of Pennsylvania Avenue’s thumbs on the scales of their paymasters, it’s the ultimate in asymmetric warfare — neutron bombs against anti-nuclear protest signs.
The shorter version of Obama’s unshakable resolve: Step away from that detonation button & come out from behind your lead lined safe room, or we’ll wave our protest signs at you more menacingly.
So as actuarially under funded as Social Security & Medicare may be over the long term, the real threat to our future is awakening from the dream that Common Goods are both common & good for society, and that they are a price we all must pay for the infrastructure that makes civilization possible to a desolate landscape of privatized profit & socialized losses that extends to the horizon.
We wake from a dream, to find ourselves in a nightmare.
Sure, progressives feel burned by the fact that the people they trusted have betrayed them completely.
But do they recognize it mentally, and are they motivated to do anything real about it?
No
let me elaborate. Most of us are tired, numb and burned out @ this juncture. This is the result of 10.5 yrs. of very bad political and economic news and events.
Well, you know I’m not an economist and truth be told, the last thing I’d like to write about is the economy. But given the propensity for the economists who have forums within the TradMed to get things abysmally wrong, I find myself trying to make sense of the various reports.
Making sense of nonsense is what it seems to amount to though