Posted on 09/08/2001 9:51:30 AM PDT by Moby Grape
Today's Greenville News (South Carolina) headline screams "BRUTAL Unemployment News". EXCUSE ME!!!! I do not recall this liberal rag using the term "brutal" to describe the 10% unemployment rate under Jimmy Carter (the TRUE worst ecomony in 50 years). I do not suggest that I am not bothered by the unemployment trend, but I am reminding all that there was a time in this country, not too long ago, when economists said it was not possible to get below 6%. There were MANY years under the democrat controlled Congresses that 7-8% was the norm.
Oh, and I remember the Carter years, with endless talk of reduced circumstances, oil running out, and the sharpest minds all agreeing there was no way out of the malaise.There was, it was called The Reagan.
That doesn't equate for the full 10% by any means, but the same level of unemplyment wouldn't be 10% today. I would figure it's at least worth 1%.
Unemployemnt + Inflation......
Global Smackdown Continues Asia was pasted again last night with Hong Kong falling 3 percent to another new low, while Japan managed to only drop a percent and end just shy of a new low. Europe was down about 3 percent this morning with all major indexes hitting new lows for the move once again. The US futures were higher ahead of the unemployment number but then tanked on the news that the August unemployment rate had risen to 4.9 percent, a 4-year high and the biggest monthly increase in 6 years. As usual, the number doesn't really matter (it's a lagging indicator.) It's the reaction that counts, and that reaction was negative. That set up a gap down at the open that was followed by a sharp rally, as shorts got a little edgy and decided to cover a bit. From there we had a steady grind lower into the afternoon that took us to new lows for the day in the S&Ps, while the NASDAQ actually held up around unchanged. At that point rumors started going around that Bush was going to announce a "capital gains cut" (just plug in your favorite economy "savior" here.) That began a sharp rally that retraced about half the day's losses. Bush then began speaking in the last hour. Unfortunately, he had no "magic bullet" to save the day (and he won't have one.) Bush simply said, "I want the American people to know we're deeply concerned about the unemployment rates, and we intend to do something about it.'' More tax cuts aren't going to do anything other than increase the deficit and push up interest rates, which will just add another problem to the growing long list. It's the ultimate no-win scenario. It's not Bush's fault. This cake was baked long before he came into office by the Clinton Treasury and the Greenspan Fed that aided and abetted this mania instead of stopping it back in 1996 when it began getting out of hand. I actually feel sorry for the Bush because he's probably going to get some of the blame for this mess and doesn't deserve it.
From the PrudentBear.com 09/07/01.
The irony here is, when you get unemployment rates below ten percent, the spin counts more than the reality.
Consider: at 4% unemployment, 96 out of 100 people have a job and are doing well. At 5% unemployment, 95 out of 100 people have a job and are doing well.
Thus, when the unemployment rate goes from 4 to 5% as it has recently, 95 out of 100 people don't notice the difference and are doing quite well, thank-you. Indeed 99 out of 100 people notice no change in their status. They have to rely on the media to be informed about the 'crisis' befalling the US economy.
And the media is there to scare them with hysteria about how everyone will lose their jobs -- and then, presumably, we'll all just sit around twiddling our thumbs, starving to death . . . because of overproduction.
And then we'll need a mental giant like Bill Clinton (IQ 182, according to the 'Lovenstein Institute' [barf!]) to rescue us from our helpless stupidity.
What we need to do is stop worrying that every one percent fluctuation in the unemployment level is a return to the Great Depression. The reason we had the Great Depression in the first place, economists now recognize, is because the Federal Reserve overreacted to nonexistent inflationary pressures during the 1920s. And overreaction is still a trait that we have yet to unlearn.
George Gilder correctly points out that tax cuts always increase revenues, not just government revenues but revenues across the whole economy, thus increasing the value of almost all economic assets. While the government debt increased Reagan, total national assets increased by $7 trillion more. All the real estate, stocks, bonds, and all other financial assets increased in value massively, during the Reagan years, and largely because of the tax cuts, according to Gilder. The proper measure for the relative size of the national debt is not GDP, but the value of the total assets that are the collateral for the debt, the sum total of the national wealth of the US.
Don't believe the liberal lies. Don't be conned by the deficit, national debt canard.
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