American Economy

[TropicCat]

America is heading into another official recession. The U6 American unemployment rate is officially 16.7%, (BLS.com), although interestingly 1 in 4 middle aged adults are currently out of work today, and youth unemployment is over 25%, according to BLS.com. God knows how U6 ends up at only 16.7%. The unofficial shadowstats.com number is 22.7% and is certainly more believable.

It's fairly obvious to anyone that in order to employ Americans we need to build something, produce something, repair something or provide services.

It's also fairly obvious that people don't want extended unemployment checks, they need jobs.

Lastly, it's obvious that good jobs allow folks to buy homes, which rescues the housing market, where as $7.00 an hour jobs do nothing. It also allows folks to pay taxes, which fixes the budget deficit. A sore subject for all of us.

So given these unarguable facts ..... where are all the job initiatives from Congress or the Administration? Why is the House playing Patti-cake politics instead of helping America?

Why hasn't Obama's team come up with a plan for fixing the economy?

Why are we paying these guys to do nothing?

[RAGNAR]

Originally Posted by TropicCat

Why are we paying these guys to do nothing?

If only they had the intelligence, honesty and self-esteem to do "nothing" . . .

[PBzeer]

The actual minimum wage is $7.25, but we get your point.

That this is the worst recovery, if you can even call it that, on record, it isn't hard to say that the politicians have already done too much, not too little. With thousands of new regulations, uncertainty about coming regulations, a dysfunctional tax code, deficit spending out of control, and no budget passed in the last two years, why would any practical businessperson take on new costs? Minus an overwhelming demand for their product/service, they sit on their cash, rather than invest it.

Basically, everything they've tried, has only ended up making things worse. Whether it's Obamacare, Dodd-Frank, the NLRB, or the EPA, the business world is full of uncertainty about the future. And when that happens, you save, not spend.

What we need from DC is not more spending, but recognition of what is going on. We need some indication that something serious is going to be done about spending. We need tax reform to raise revenue (if we're going to have taxes, then let's pay them, not deduct this, deduct that, a credit here, a credit there). As long as uncertainly remains the prevailing mood, then we're going no where but down.

[PCP]

On this side of the pond I hear economic analysts showing concerns about the American economy and the huge global problems that a significant problem will bring to the world economy.

Basically the concerns regards public depth and the nonexistence of a coherent plan to deal with it. US assumes that a future growth in the economy will be the way to pay the interests and the depth but there are concerns about the possibility of that growth.

In Europe several countries are dealing with the same situation but with a difference: The market stop believing in the possibility of that growth and that translated in a sharp raise in the interests that in Greece reached an incredible and unsustainable 30%. Portugal and Ireland have asked for help and interests are in the rise in Spain and Italy. That's what happens when the lenders start thinking that there are risks of not receiving the lent money with the agreed interests. A rise in interests can have a devastating effect on an economy that needs to borrow money for keep on going (that's the case with the US).

I have heard analysts saying that the fact that the rating agencies are Americans led them to have a protecting effect on the American economy overrating it, but that can have in the end a devastating effect. We all know that the American firms that provoked the last crisis were all very well rated by those same agencies.

We can see the vastness of European concerns by this proposal:

IMF discusses plan to replace dollar as reserve currency - Feb. 10, 2011

Regards

Paulo

[blt2ski]

Recession?!?!?! what recession? you mean DEPRESSION! we are worst off than the 1930's DEPRESSION! The thing that seems to make this depression better per say, but not really, is the jobs around today are greater in numbers, more had money saved per say, and not 3 of 5 job markets are down to zero. We have 20-30 job markets to spread the potential, and not all are down.

In the meantime, for those that think this is a recession, keep you rosy glass's on. NO< Obama or McCain if he would have been elected have the ability singlehanded to get us out of this mess that started with greenspan deregulating banks etc. We have at least 10 more years of this, not matter WHICH party is in charge. BOTH had better start to bargain in good faith together, or we are ALL screwed.

Marty

[TropicCat]

Originally Posted by PBzeer

......
What we need from DC is not more spending, but recognition of what is going on. We need some indication that something serious is going to be done about spending. We need tax reform to raise revenue (if we're going to have taxes, then let's pay them, not deduct this, deduct that, a credit here, a credit there). As long as uncertainly remains the prevailing mood, then we're going no where but down.

It's not that we don't need tax reform. We clearly do. It's just that I haven't seen any study which ties any kind of tax reform to higher growth for the American economy.

I'd put this in the same category as Obama wasting a year on a national health care plan while ignoring an economy which, at the time, was heading off a cliff. We need it, but now is not the time....

We all know that unless we get higher economic growth soon, we will find the deficit outlook even worse than we think. Low growth means low tax revenues for Washington. By Peter Orszag's calculation (Obamas ex budget director), a low growth path could add as much as $2.5 trillion to the deficits over the next 10 years. We simply can't afford this as a country and we certainly can't afford to write off the unemployed as if they don't exist.

We simply can't afford this as a country on any economic grounds.
We simply can't afford this as a country in creating a lost generation of college graduates with no employment potential.

PCP is right, this is a slow moving disaster in the making for America, as we are apparently governed by people who can't plan past lunchtime, let alone plan a high growth path for the country. To be perfectly clear ... I'm referring to both political parties...

The University of Michigan consumer survey is out this morning. It's barometer of consumer perception of current economic conditions fell to 76.3, the lowest since November 2009, from 82.0. The gauge of consumer expectations was also at its lowest since March 2009, tumbling to 55.8 from 64.8.

It's not just me....

[PBzeer]

It's just that I haven't seen any study which ties any kind of tax reform to higher growth for the American economy.

Perhaps you've seen a study where raising tax rates does? I can't say tax reform will help the economy, but I feel pretty certain it won't hurt, and a stable, revenue producing tax code, rather than a behavioral modifying one would go a long way to erasing some of the uncertainty that's hindering growth. It would also make outsourcing less attractive.

There are also three trade agreements withering on the vine that could up exports. There's oil and gas exploration and production that could be set free. We could eliminate some Federal Departments that duplicate state functions, like Education. Why should the states launder their money through DC rather than spend it directly on Education?

There are things that could be done. Only problem is, they aren't vote getters with the folks back home or cash generators with the special interests.

[PCP]

Originally Posted by TropicCat

....
PCP is right, this is a slow moving disaster in the making for America, as we are apparently governed by people who can't plan past lunchtime, let alone plan a high growth path for the country. To be perfectly clear ... I'm referring to both political parties...

Originally Posted by blt2ski

.. NO< Obama or McCain if he would have been elected have the ability singlehanded to get us out of this mess that started with greenspan deregulating banks etc. We have at least 10 more years of this, not matter WHICH party is in charge. BOTH had better start to bargain in good faith together, or we are ALL screwed.

He passed for all that here till things really hit the bottom and ONLY THEN the three major parties stopped stupid political games and lies and come with an agreement: They really had no other choice.

But look at Greece, even without a choice, in the worse economic nightmare, the different political parties are unable to reach an agreament Lies and more Lies and the problem is that people just don't know in whom to believe and off course they tend to believe in the ones that paint the reality with more bright colors....and those are almost always the ones that are more wrong but win more support

I don't believe US is ready for an understanding between the two major parties. For what I have saw here on this forum, people are really emotional (and irrational) in what politics are concerned.

The real problem with the US was the same problem with the countries that are in trouble in Europe: They waited for a economic growth that never come while the dept was increasing and when the interests started growing the situation becomes untenable. Only then they faced the problem with much worse consequences then the ones that would be experienced if the problem was addressed on the right time and not by outside pressure (raise in interests).

The problem is that for taking those measures in time to diminish the public depth there are needed very unpopular measures like cutting in social welfare, cuttings on public servant salaries and rise of taxes. The ones that take the measures will lose the next elections and the ones that are not in power will not cooperate and worst, they will lie for winning votes, saying that those measures are not necessary. A good example was that stupid discussion about allowing the raise of the depth, as if there was any way out of it.

So, I am afraid that US Politicians will remain waiting for a miracle (economic growth enough to cover interest rates and to pay the debt) while accumulating more dept till the interest rates start to rise and to make it untenable. The alternative would be very unpopular measures...and those does not exist in the Politician's vocabulary

Regards

Paulo

[RAGNAR]

The magic button

Time to make it so that DC can't do anything that can influence the economy.

End the FedRes, anchor the currency to a commodity like gold, end preemptive regulation, get out of the import-export dichotomy racket, stop subordinating business to the ethical and esthetic whims of special interests, end wealth redistribution -- Capitalism.

[WouldaShoulda]

Originally Posted by TropicCat

Why is the House playing Patti-cake politics instead of helping America?

The house didn't scare my Mom into thinking she won't get a SS check 08/04/2011 and can't pay her mortgage.

The Asshat in Cheif did that.