Many of the jobless were discontinued, not downsized.
Box Score: As of June 30th, over 15 million would-be homeowners have negative equity in their dream houses. One out of three mortgaged pieces of the American Dream has turned sour. Another 2.5 million folks are at the break-even brink, so round it off and say 40% of homeowners have been sucker-punched. Tell me about the bonus room again...
The Power of the Press : The government's outpouring of funds – the bailouts, the stimuli, the cash for this and that – have had an effect – it's driven up the stock market. But it has not cured the banks' problems, nor found a way for the US to prosper without continuous debt, nor any of the other problems. But printing money does have its uses.
Better Luck Next Time: The Senate will put off legislation to curb CO2 emissions for at least another year and concentrate on soliciting money from polluters.
Lost in Translation: The Chinese government announced it would support equity market stability, so the Chinese market index has promptly fallen 6%. Chinese investors don't seem quite as gullible as Americans.
Times, Sign Of: T-Mobile will charge you $1.50 extra if you want a paper phone bill.
Buddy, can you spare a dime?: The previous depression gave rise to long lines at soup kitchens, men selling apples on street corners, mass migrations in search of better lives. Today's desperate are not as visible; people keep living in houses they are no longer paying on and no longer own., 11% are drawing food stamps, unemployment payments last for 18 months.
Hidden In Plain Sight: The worst economic downturn in 75 years results in the price of crude oil settling in the $60 -$70 range due to a collapse in demand. Where do you think the price will be if there's a recovery?
Half Right: To the extent that this collapse was caused by a credit bubble (and only secondarily by the real estate bubble and sub-prime mortgages) nothing has yet been done to solve the problem. To the extent the credit bubble was inflated on the back of magic formulas concocted by 'quants', the problem has gone unspoken.
Envy: I wish I'd thought to compare mobile phone service and health care...
My Point, Exactly: The American economy has been based on advances in technology that have led to advances in production, and thus profits. This seems destined to continue. The genius of America was in an acceptable, if not equitable, apportioning of the profits of this expanded production between the workers and the owners. This has ceased. The problem now is the growing percentage of the working-age population that have no skills needed in the economy. There will be a growing gulf between the winners and the disenfranchised, and to date the rich seem disinclined to share with what is becoming a permanent under-class. Using taxes to support the socially unneeded brings resentments - witness California – that make this an unlikely solution. Other, more violent solutions will eventually arise if a way to peaceably bridge the growing gap is not found.
The Big Tent: The nine largest banks drew in $173 billion in TARP funds, had $17 billion in earnings, lost $98 billion, and gave out $33 billion in bonuses. Guess where the bonus money came from?
Relax: Ponzi scheme! Ponzi scheme! God, if there's a meme that won't die, it is that Social Security is a Ponzi scheme. The CBO reports that Social Seurity will be fully funded through 2043 with absolutely no changes, while the Social Security Trustees conservatively state the program is sound until 2037. A lot better than Madoff was doing.
Help Wanted, Not: Perhaps the saddest “truth” on the job front is that companies will not be rushing to rehire the vanquished, because most firms have just taken the “fat off the top.”
Porn O'Graph: Rich man, poor man... and soon, beggar man, thief?
11 comments:
Your headline was most accurate. Many of these jobs are never coming back. Manufacturing and Info Services have moved overseas (remember when the plan was to teach fat fingered guys to program computers?) and construction jobs are gone for years as demand has been pulled forward over the past 5 years.
RBM
Relax: What a misleading article. If you go to http://www.treasurydirect.gov/NP/BPDLogin?application=np, you will see that our current national debt is $11.66T, which consists of $7.33T in debt held by the public and $4.33T of Intragovernmental Holdings.
Intragovernmental Holdings are the name given to a method that is used to keep track of money that the government has “borrowed” from government agencies that are running surpluses — and the primary one is the Social Security Administration.
Social Security is not part of the Federal Budget general fund; it is a separate account and has its own source of income. Social Security payments do not go into the general fund – they go in the Social Security trust fund, and should NOT be counted as general revenue. The trust fund is supposed to be used to pay future benefits.
However, the only assets held by these “trust funds” consist of the IOUs given by the U.S. government as it “borrows” money from them. For practical purposes, the federal government treats Social Security and Medicare receipts as another source of taxes — second only in size to individual income taxes — that get spent each year.
For a good analogy I came across, think of it in terms of a married couple where the wife (the Social Security Administration in this case) has a job that provides a steady source of income (Social Security and Medicare payments from individuals and employers). The deadbeat husband (the remaining parts of the federal government) borrows every cent that the wife makes, and gives her an IOU each time. He also promises to pay interest on the money that he has borrowed. And he agrees to pay for all of the things that she “buys” (payments to Social Security beneficiaries, in this example), which gets counted as an offset to the amount that he owes her.
The husband and wife spend more than both of them together make, so the husband borrows money from friends. So far, his friends continue to loan him enough money to keep him and his wife afloat. Both the debt to his wife (call it Intraspousal Holdings) and the debt he owes his friends (the Public) are growing. However, to include Intraspousal Holdings in a list of the husband’s liabilities is artificial in one sense, because when the husband and wife are considered as one entity, they only owe the amount that is payable to the outside friends. Nevertheless, in the interest of full disclosure, the husband makes it known that he owes both his friends and his wife a lot of money ($7.33 trillion to his friends and $4.33 trillion to his wife).
So, pay no attention to all the talk you may have heard about how Social Security is okay until 2040 or thereabouts. That is simply nonsense. The real problem starts in 2017 or sooner, when Social Security begins to take in less cash than it spends.
Here are a few undeniable facts about Social Security (Medicare is its own separate nightmare). For years, Social Security has been taking in more in taxes than it has paid out in benefits — in recent years, lots more. The year-end 2007 effect on the budget deficit was an eye-popping $186.5 billion.
However, that subsidy to the rest of the government is getting smaller each year. Every year in which the subsidy decreases will be a year in which we cut spending, raise taxes, or issue more PUBLIC debt.
Beginning in 2017 (or sooner), Social Security will collect less in taxes than it will pay out in benefits. The rest of the government will then either have to raise taxes, reduce spending, run increasing annual deficits by issuing A LOT MORE PUBLIC DEBT or reduce benefits immediately in some way. That’s code-red time.
Bill - It's always interesting to tweak the hot buttons: climate change, social security, peak oil. These issues seem destined to generate sincere but somewhat emphatic responses.
I understand there are two (at least) schools of thought - that we are doomed to penury, or that everything is (or will be) okay.
I cannot imagine any politicians permitting SS to fail. Thus I fully expect that - if the US is still a going concern come 2020 or so- to see a reasonable increase in the income subject to FICA taxation. I do not expect the government to actually pay back the borrowed funds, that was never their intent.
But in the country's still here, so will Social Security.
ckm
I completely agree with you. I just loathe the "no worries" crowd when it comes to our deficits and entitlement programs. Hitting the wall at full throttle will be painful.
I'm a pension actuary, which explains my my passion and frustration with regard to this topic. I like the current arrangement over individual accounts.
If I were king, I would start with means testing. But nothing constructive will be accomplished until we replace about 90% of congress.
RE: Re Relax...
What Bill said...times 2.
Private business is legally precluded from i) investing pension fund/401k assets, which belong to plan participants, in its own securities (IOUs), and ii) borrowing funds from its retirement plans.
(Yes these essentially are the same thing, point being: it's illegal.)
That's why Social Security IS a Ponzi scheme which will require substantial changes in not more than than the 8 years or so until the current pay-as-we-go system reverts back to deficits (more outgo than inflow) and then very difficult choices will have to made.
We have so many issues which face difficult choices; how we as a nation will able to peacefully solve them, or accept the solutions which will be imposed upon us by our creditors (worse, by far), is truly reason for deep concern.
(I originally posted this in the wrong place)
The Chinese propping up equity markets...
When the Fed buys all those treasuries in open market operations, the dealers get a huge chunk of cash. We know excess reserves have gone hyperbolic, but are they going up as fast as the Fed is buying paper? Not any more.
So where is all the money going? It's not being lent out. It's not collecting interest as excess reserves, could it be going into the equity market?
It would be just that easy to float the market. Why else has it gone up so much? The P/E ratio on the S&P500, based on 'as reported' earnings, is 143.
If you like apples, how do you like them apples?
(B.T.W. I was just poking around here and got lost for about 2 hours. Great stuff.)
Ken - Glad you fell into the trap. As for posting "in the wrong place" - a lot of themes get repeated so often that there's not really a'wrong' place unless you are responding to a prior comment.
I repeat myself, for the world doesn't seem to be paying much attention...
ckm
You might be surprised.
I found this site from a comment at Naked Capitalism congratulating Yves on finding this site. You were called the link master.
She referenced this site, and she has had 11 million visitors.
Things can change in a hurry. You just never know.
KA - Tad of unclarity on my part in the previous comment. I wasn't complaining about the readership figures (although I'd love to have Yves' numbers over at NC), but rather that no matter how obvious it is that my opinion is the only possible correct view, the world pretty much ignores my advice.
The NC cite did well in increasing hits at SAR - we'll see how many found my snarkieness acceptable...
I'm not really looking for disciples - SAR has a few commenters who disagree with parts of my creed, and some who disagree with most of it. Good. So far the discussions have been generally rational & I'd like to see more - I've even been known to (rarely) acknowledge errors!
Anyway, glad to have you aboard as a reader & commenter.
ckm
Snark is an extremely effective way of getting a point across. Jon Stuart uses it with devistating effect.
I was blogging at a libertarian site for a while. Then I realized the only reason I was there was for sporting fun. It was a hard right libertarian blog run by a couple of professors, and the ideology was so rigid that it was comical. It was all about Liberty, as long as it happened a very certain way, with very strict rules.
I couldn't resist tweaking them sometimes. It was like poking at a sore tooth: you know it is going to hurt, and flare things up for a while, but sometimes you have to do it. :-)
I'll be nice.
I cannot imagine any politicians permitting SS to fail.
Until it actually happened, nobody of the "serious" analysts imagined the fall of the USSR either.
Perhaps they never actually bothered to travel in the Eastern block or perhaps they could not imagine what the world would be like after.
*I* did travel there and to me the USA (been there too) looks ever more like the USSR and the DDR did in the 1980's: A fine, shiny place to be *if* one belongs to the Oligarchs while looking ever more grubby, dilapidated and infested with perps and security goons on the streets where the peons must travel!
The street does not lie!!
Of course social security will fail - no one is willing to pay for it!
"They" will probably not go for the straight bust, though, but instead they will let time and circumstance rot the services into useless inadequacy.
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