Posted on 07/11/2009 7:29:42 AM PDT by SeekAndFind
Vice President Joe Biden recently acknowledged the administration's misreading of the weak economy.
In view of his comments, I would like to update readers on my three-baseball-game analogy (introduced Nov. 3, 2008, in "Economy sinks as we save bankers") and note where we are now:
Although we've managed to put the financial crisis behind us, the reality of the economic crisis is slowly becoming clearer to more and more people.
As an example of the fact that more people are starting to understand the root problem: The Financial Times recently carried an article by Pimco CEO Mohamed El-Erian titled "American jobs data are worse than we think" (subscription required).
He notes that "there are rare occasions, such as today (July 2, when the June employment report was released), when we should think of the unemployment rate as much more than a lagging indicator; it has the potential to influence future economic behaviors and outlooks."
Of course, the reason we have such a problem creating jobs is because the country spent 10 to 12 years engulfed in financial bubbles. They created a vast misallocation of capital and gave the economy the appearance of health -- when all we were doing was creating more risk.
Now we've got a broken economy and will experience serious difficulty creating real jobs. One of the shocking developments, El-Erian points out, is the speed with which jobs have been lost and how fast unemployment has screamed higher. He notes (in terms not far from what I've written): "The unemployment rate will increasingly disrupt an economy that, hitherto, has been influenced mainly by large-scale dislocations in the financial system."
That's El-Erian's way of saying: The big issue now is not the financial mess but the economic crisis.
(Excerpt) Read more at articles.moneycentral.msn.com ...
The crisis is just beginning.Where do these people dream this stuff up?
Because the ONLY way to “create jobs” is to create a motivating economic environment. Increasing taxes and imposing penalties and disincentives DESTROYS JOBS!
I guess CNBC.com got rid of the “contrarian”. Fleckenstein is in the same boat with Denninger, El Erian, and Gross. Perennial bears who peddle economic chaos fears.
When will these "economic mega minds" realize that outsourcing our economy is the single biggest reason we're in this fix?
Yep,and it runs the wealthy out of the country along with the corporations.These people are total bafoons and shouldn’t even be in chargs of a hotdog stand.Geez!
Washington’s bi-partisan consumer economy has run out of gas. We have exported our production seed corn.
Goosing up the consumer economy with stimulus money is misdirected. What needs to be stimulated is the producing economy. A producing economy [a la days of yore] will produce non-governmental jobs. Jobs will provide the consumer stimulus needed without government.
PS That doesn’t mean just reduce corporate tax rates. Bush reduced all sorts of taxes and we have what we have today. Rather it means find ways to rebuild our exported job economy.
” Although we’ve managed to put the financial crisis behind us, “
Nope — we’ve just put a multi-billion dollar (borrowed) bandaid over a multi-trillion dollar cancer...
What’s this guy jawing about now?
Prolly exactly why Pimco withdrew its PIPP application last month.
Completely agree. It's all about incentives. Our current business environment and policies are all about disincentives--high taxes, excessive regulation, fear of lititgation, insane environmental controls, unionization, etc. Why would anyone want to start a business or invest here?
How about a personal example?
I have enough set aside to finish my basement.
Instead, I’m retaining the savings against near term economic uncertainty.
Also, I’ve pulled half of my retirement savings out of the stock market and into fixed income investments.
Is there something Obama is doing that should change my perspective?
This has NOTHING to do with conditions he inherited from Bush!
This is ALL about how he chose to deal with the circumstances!
The obvious problem that has been growing in the US economy for thirty years - the structural problem that we rely too much on the production of goods and valuable services overseas while our domestic economy is dominated by leeches who get their money from tapping in to the cash stream generated by credit excesses be they public or private. It is the growth of financial services, legal services, regulatory services, administrative services, health care administration, legal services, etc. none of which add one drop to the goods and services that folks want.
Pouring trillions into the economy has merely provided life support for these kinds of activities and continues to misdirect the US away from productive enterprise.
I would like to update readers on my "Three Card Monty" analogy of how 0bama became President.
To have jobs you have to make something.
[I guess CNBC.com got rid of the “contrarian”. Fleckenstein is in the same boat with Denninger, El Erian, and Gross. Perennial bears who peddle economic chaos fears.]
Seems like they are the ones who have been correct. Green Shoots anyone? Anyone?
“when all we were doing was creating more risk.”
Which regs and laws that would prevent another CRA financial meltdown for mortgages & investments have been altered?
Anyone?
“we’ve just put a multi-billion dollar (borrowed) bandaid over a multi-trillion dollar cancer”
Someone needs to grab that as a tagline
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.