Posted on 11/16/2009 1:10:39 PM PST by blam
Roubini: The Worst Is Yet To Come!
Joe Weisenthal
Nov. 15, 2009, 6:47 PM
Roubini is back!
After a summer of mixed messages, he's now firmly back to stark warnings, most recently sounding the alarm about a massive bubble due to the dollar carry trade.
And today in the Daily News he has some bad news for the unemployed: the worst is yet to come.
Also, remember: The last recession ended in November 2001, but job losses continued for more than a year and half until June of 2003; ditto for the 1990-91 recession.
So we can expect that job losses will continue until the end of 2010 at the earliest. In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back.
There's really just one hope for our leaders to turn things around: a bold prescription that increases the fiscal stimulus with another round of labor-intensive, shovel-ready infrastructure projects, helps fiscally strapped state and local governments and provides a temporary tax credit to the private sector to hire more workers.
Helping the unemployed just by extending unemployment benefits is necessary not sufficient; it leads to persistent unemployment rather than job creation.
The current recession notwithstanding, Roubini is of the view that unemployment is now a permanent condition, in part due to the outsourceability of so many jobs (that's interesting, because it seems like an attack on free trade, which is somewhat new for Dr. Doom; that being said the increase in unemployment is part of a long, long trend from before the recession so there's something to this).
[snip]
(Excerpt) Read more at businessinsider.com ...
What we need are massive across the board tax cuts, including sharply reducing corporate taxes, ending inheritance taxes, and removing all capital gains taxes.
This guy must be a riot at Thanksgiving dinner.
What you are suggesting is right but it will never happen with Obama and the Dems in charge.
Thank people like Newt and Dede for this prolonged misery. Plus all the anti-birthers and idiots who voted for the islamo marxist. We may see some improvement by 2013 if we still have a country.
Roubini is right on the doom, but his palliative is more poison. tax cuts and deficit reduction on large scales are the only way out, along with a tighter fed. The pain will be great no matter what is done.
People still on unemployment are less likely to riot, rob, or anything else a desperate person does than a person who’s unemployment ran out last month.
Just sayin’.
It is scary that some of these idiots are allowed to vote ... or procreate, for that matter.
I doubt this. The Bush tax cuts will expire the next year and combined with the increase in taxes due to the health care and cap and trade bills will keep the pressure on small businesses. They will continue to be afraid to move. But one thing for sure no matter when jobs come back, it will be slow growth to rebuild the damage to the Country. It will be many years before we see us even back to 5 or 6 million job loss figure. So, hold on your hat. There is no magic wand.
1990-91 recession "officially" ended in 3/1991. Payroll jobs hit a trough in 5/1991 at 108,203,000. 12/91 employment was at 108,261,000, 3/92 (one year) at 108,301,000, 9/92 (18 months) at 108,888,000. Slow growth =/= losses.
The unemployment rate stayed high in 1991-1992 because of an influx of new participants into the labor market. Over 2.1 million more people joined the labor force between 6/91 and 6/92.
OTOH, Payrolls declined 20 months and by 700,000 following the end of the 2001 recession, even as the Current Population Survey showed employment growth of over 2 million during the same period. This statistical dichotomy was widely discussed in the financial/economic/political press at the time.
And the dichotomy continues. Payrolls show a decline of 350,000 from 10/01 to 10/09, while the CPS shows a growth of 1.9 million in employment from 10/01 to 10/09. They can't both be right.
So we can expect that job losses will continue until the end of 2010 at the earliest.
That is a "post hoc ergo propter hoc" fallacy. There is no future necessity created by the recent past in economics, and rising unemployment following the last two recessions wasn't caused by continued bad economic conditions.
In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back.
The net number of jobs are not coming back immediately. But millions of people are being hired every month in the US (they have to be, because new unemployment claims total over 2 million per month, but we don't have 30 million people out of work). If you are unemployed and have skills with value or a good work ethic and a willingness to learn, there are jobs for you now. If you were just a cog in the machine, you are screwed.
More than that is a simplifcation of taxes so that the structure of the code is straightforward and understandable, to end the diversion of resources towards tax avoidance/wealth preservation strategies and channel them into wealth producing activities operating under consistent and easily understood rules.
Massive tax cuts right now would be fiscally disastrous without taking a meat cleaver to the Federal Budget, including the Department of Defense and the Social Security and Medicare/Medicaid sacred cows. And its funny, but I never hear people really wanting to do that, even here on FR.
Obummer hasn't changed the tax structure (yet) from what we have had over the past 6 years since the 2003 cuts. The economy is ailing not from a superfluity of tax collections, but a lack of investment activity in fixed private investments (houses, cars, appliances, buildings, etc.) and public investments (roads, airports, etc.). This activity is being stymied by disincentives in the code.
Massive stimulous...more...how much money can Obama’s CEO’s, Banksters, Acorn and the Unions possibly spend?
I disagree that at this point ANYTHING can be “fiscally disastrous.” It is never, ever the wrong time to cut taxes. Funny, but incentives immediately work, and other things start to come into line when taxes are low. Yes, the bureaucracy should be slashed, and I mean home mortgage interest exemptions, public schools, SS, medicare, and so on. But you cannot wait for the “right” time to cut taxes. That has to be done FIRST, then everything else follows.
What ratings does CNBC have during market hours?
Yet there they were claiming their interview with this chick was the reason the interday DJIA tanked from its high of about +175 to +106..
Bernanke's lunch is supposedly responsible for the late day rally.
yitbos
I doubt this."
Bernanke said today that 100,000 new jobs are needed each month just to absorb new entries due to population increase.
Big Ben also said he was surprised at the productivity increases realized during this shakeout (getting rid of dead weight, etc.). He doesn't see much need to hire many back for a long time.
yitbos
Other than the corporate income tax rate, current tax rates (prior to the expiration of the Bush cuts) are quite low by historic standards.
The main tax problem right now is the complexity of the code and the perversion of incentives and missallocation of resources created by the various exemptions, deductions, and penalties.
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.