Posted on 01/10/2014 5:42:52 AM PST by John W
Job creation stumbled in December, with the U.S. economy adding just 74,000 positions even as the Federal Reserve voted to take the first steps in eliminating its stimulus program.
The unemployment rate dropped to 6.7 percent, below economist estimates and due primarily to continued shrinkage in the labor force. The labor force participation rate tumbled to 62.8 percent, its worst level since January 1978.
(Excerpt) Read more at cnbc.com ...
yes and I was speaking of any and all reports from all levels of every dept of federal govt.
The stock markets go up and down at the release of any of this data
“So things just got a bit trickier for Janet Yellen, who now doesn’t have a smooth path out of the current plan.”
i’m sure ms yellin’s first priority has always been the welfare of americans.
You don’t really think MBS purchases by the FED are a good idea? I get the velocity issue, but we’d be better off had the bad banks gone under, bad loans been resolved via the marketplace, and both bankers and borrowers borne the cost.
Instead the thrifty and prudent are punished and the guilty rewarded. We need a good and strong and transparent lending regime. We don’t have that and we’re not going to get there via QE. It’s methamphetamines for a lethargic economy made exhausted by the previous doses of speed. Debt has to clear and trust has to be restored. QE isn’t restoring trust and neither is Obama & Co.
Have you listened to Richard Fisher’s interview on Econtalk?
http://www.econtalk.org/archives/2013/12/richard_fisher.html
Very unpopular opinion here on FR but I absolutely believe TARP (as originally written by Paulson/Bernanke not the bastardized version from Congress) was the right thing to do. The financial system was melting down (it was a very scary time - I work in corporate finance and investor relation and do financial and economic forecasting. It was an incredibly volatile period in late 2008. Our forecasts were literally changing daily). Letting the banks go under would have been a disaster 1000x what we saw. Commerce would have stopped. Thousands of businesses would have gone under and 10’s of millions would have lost jobs. The Fed backstopping the banks restored faith in the credit system which is the lifeblood of economic activity.
Now, should the idiots who levered up with exotic financial products they didn’t understand go to jail? Absolutely. But to let the banks go under would have been economic suicide.
QE isn’t related to TARP. When the market demands liquidity how is it provided? When everyone is hoarding cash (i.e. Collapsing velocity) and the system can’t provide it what are the consequences? DEflation is exponentially worse than inflation.
The purpose of QE isn’t to restore trust. It’s to provide the liquidity demanded by the market.
I have not listened to it but I will. I don’t like institutionalized “too big to fail”. Doesn’t mean I think the financial system shouldn’t be back stopped though. If a bank is that big it should probably be broken up as it’s too big of a systemic risk.
Thanks for the link.
I get what you’re saying and it’s easy in hindsight to call it differently. Perspective is hard to come by, especially in the midst of a crisis. My concern is that the meltdown didn’t occur in a vacuum. The economy didn’t just start in 2007/08, but was/is the result of bad fiscal and monetary decisions made by the selfsame leaders who are there today. They keep getting a second bite at the apple and getting it wrong. There’s an unresolved structural problem in the marketplace.
The FED chairs sound like financial advisors booking both sides of the trade: “it will blow up or it will just be going higher”. I’m not as impressed with our leaders as you seem to be. Neither Paulson nor Bernanke nor Yellin were taking steps to curtail the building risk to the financial markets. The status quo rules and the regulators are there to see that nobody important gets hurt.
Let’s accept that TARP had to happen, the markets had to be reassured. Few people realize just how big and critical the credit markets really are or how much nonbank credit gets created every day. That said we’ve seen over and over again, not just in this crisis, but every single one, that the wealthy insiders get covered while main street is left to swing in the wind.
As for QE one of the major reasons people are hoarding cash is the truth/rumor of QE. I don’t think it’s expanding liquidity, it’s simply holding the line as the bonds/MBS are traded for cash. Psychologically we expect a bloodbath and then a recovery as prudent, thrifty money reenters the market and captures value. That hasn’t happened. From bankers to average Joes Americans are still waiting for the other shoe to drop. That, coupled with Obama’s war on wealth, is what’s holding back the economy. 5-6% real growth sustained over time wouldn’t surprise me (turned loose the US economy would blow the doors off the rest of the world), but the unnaturalness of the government intervention is keeping people out of commerce.
It’s very hard for me to see which is causing the most damage, the giant financial bolder the FED is balancing or the destructive policies of the Obama Administration. Imagine if that TARP and other fiscal stimulus really went to rebuild infrastructure and not to line the pockets of Green tinged thieves and connected investors.
The arguments in favor of eventual interest rate increases coupled with the very real argument that inflation or taxes or both are going up is logical and scary. Wage stagnation is mainly driven by massive increases in health care charges offsetting wage gains. I’d like to see a deflationary cycle driven by increasing productivity gains. Debt and the assets securing it must come down. Housing remains a real anchor to job mobility. Might we not have been better off if the government had simply admitted that in certain markets the pricing isn’t ever coming back?
It’s a mixed up picture, but I agree with your assessment. We are in a typical recovery out of a credit collapse. It takes a long time to work that through the system. In the meantime our dynamic productive economy is producing jobs for which government school educated people aren’t properly trained. It’s at the margins with the marginal that we’re seeing the growth in stagnation. Welfare pays and that’s the wrong incentive.
Overall, I’m very optimistic and will not bet against the US economy. Not just because I am an American, but looking out across the world I don’t see a more dynamic economy or a people more ready to make the switch over to a fully 21st century economy. I believe like Julian Simon, that human beings are the ultimate resource. We’re already seeing the solutions to our major problems being brought to market.
In health, education and welfare the solutions exist. Get the right Congress and hold it for a generation and all this will seem like just a bad dream. I enjoy your thoughtfulness and erudite comments. Take care.
I am not hopeful. Why?
Answer: Because nearly all the teachers in this nation were trained by godless Marxists in Marxist run colleges and universities. This is true, not only for the government K-12 indoctrination camps, but for private schools, too.
Answer: Because nearly all of the nation’s children attend godless schools. While in these schools they **will** learn to think and reason godlessly. They must just to cooperate in the godless classroom.
The Marxists are laughing at us. They have the nation’s kids and young adults. These are the future citizens who will vote.
Perhaps( for those of us skeptics who wonder if the fire wasn't deliberately set)...the questions have never been answered, among those questions...
1) why did it happen?
2) was it deliberate?
3) who was responsible?
4) why aren't/weren't those "individuals" responsible punished(and not just the institutions through pocket-change-gov.-slaps-on-the-wrist)?
5) were the Fed oversight agencies ignorant...or compliant?
For those of us outside of the financial/institutional window looking in, it simply looked like a bunch of greedy bastards who used modern day techniques/technology along with creative(deviant)ideas, to pull off the greatest crime spree(s) of all time.
...then things got out of hand as more and more tried to get in on the caper.
All that manipulation and greed without care-one of how it would negatively affect so many others...those who were simply trying to go about their normal lives.
...many who will never recover, because there simply isn't enough time to start over.
But hey...at least somebody's being punished.
Q.E.++?
What is wrong with Q.E.
It worked just fine for Wiemar Germany, pre-Hitler.
It worked just fine for Zimbabwe.
It is working fine in Venezuela.
It should do just as well in the USSA.
What could possibly go wrong?
Need money?
Print it out of thin air and give it to the big, super-rich bankers to buy the DOW and thus prove the Economy is great because the DOW is 16,000+.
Duh?
Yes, the Bank runs/Market meltdown was triggered by a HUGE sell off by unknown persons/agencies.
It was obviously engineered.
But did anyone investigate?
(crickets)
Looming Obamacare in 2014 caused these poor jobs numbers and January numbers (next month)will confirm the downward trend. Meanwhile, Washington wants to make matters worse by passing immigration “reform.”
immigration “reform.”
Gotta replace those 1.4MM American workers no longer in the work force somehow.
The presumption is the numbers are real. I believe they are all garbage and can not be relied on to form cause for action.
Nothing coming forth from the Obama administration is valid. It is all, that is 100% propaganda.
Many stories reported this morning on NBC’s Saturday Today. Not this one. In the past the drop in unemployment % would have made it without the truth being told as to why. Apparently they’ve even given up on that.
They just touched on this on CBS This Morning Saturday but certainly danced around it very carefully, walking on eggshells as it where.
The denominator in this ratio is the only number that’s real.
Only if the God-fearing remain passive. I think we have a golden opportunity to undo the past century of progressive error. Reality is a great teacher and the Millenials are getting a full dose.
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