Must Read Posts - Sometimes you just can't say it better for 12.02.09

On The Economic Populist you might have noticed the middle column. We try to list other sites and blogs who have exceptional insight and writing on what is happening in the U.S. economy.

Sometimes though, one cannot say it better but miss those who did.

Must Read #1

James Hamilton, over at Econbrowser has a easy to read, lots of graphs analysis post on some recent reports on auto sales, home sales, ADP jobs report in Anemic Recovery. If I wrote up my own thoughts on many of these reports, it would be almost identical so check out his site. Here's one:

11/09 auto sales

I'm seeing the same story in new home sales. These are up on a seasonally adjusted basis mostly because they had previously been so very low, not because the market is remotely back to normal.

Hamilton is also referring to that infamous rate of change view versus the absolute totals in the above commentary on the state of the economy.

Must Read Post #2

EconomPic has more analysis on auto sales for emerging economies. We also have Goldman Sachs claiming strong global growth, i.e. not the U.S. that's getting out of this economic hole, but emerging economies. EconomPic is showing some evidence, instead of the hype, that the U.S. has probably transferred enough of it's own economy to these emerging economies for a consumer market to actually take off.

Must Read Post #3

The ADP employment report.

Nonfarm private employment decreased 169,000 from October to November 2009 on a seasonally adjusted basis. The estimated change of employment from September to October was revised by 8,000, from a decline of 203,000 to a decline of 195,000.

ADP will then chatter about unemployment being a lagging indicator but guess what, it's also a coincident indicator by the total number of jobs. Why? Because employment interacts with all sorts of other indicators, such as consumer spending.

Must Read Post #4

The latest justification to not confirm Ben Bernanke and how Senators are reading the political winds (if you want my 2¢, read Burning Ben).

The big issue here is not the financial markets but the real economy. Bernanke was unwilling to intervene in markets, namely the subprime/housing bubble when it would have hurt Wall Street and saved us this mess. He (and Paulson and Geithner) falsely sold the bailouts on the idea that they would get lending going and trickle down the little guy. But that was false, unemployment is rising, the banks are not lending. Bernanke not only has no plan B, and more important, he has NO INTEREST in a plan B, such as really cleaning up the banks, which would be painful short term but would set the foundation for a recovery. We are now on our way to Japan style malaise.

If Volcker were to return, I would probably be on board with this effort.

Must Read Post #5

Like most things, the lowest wage workers get the most screwed. It's common sense to give people paid days off for illness as well as personal. Even worse, these wages are so low even a day unpaid means they will not make rent (if they can make rent in the first place). Obviously dumping the costs onto small business is yet another issue.

EPI, paid sick leave

Earlier today I called EPI's jobs plan the worst jobs plan ever. See An Infrastructure Jobs Program to Create Millions of Jobs, in particular the AAM report, for a superior plan that kills many birds with one stone.

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Comments

A comment that says a lot!

Good selection of articles Robert, highlighting further examples of the decline of America and the lack of cogent public policies to reverse the trends.

Recently, a commenter on a blog I frequent made a statement that really resonated with me, so I copied it. I want to share it with you and other readers here at EP because it says what I feel, but more eloquently than I could express.

Capitalism they say is the best of the worst systems. I have to agree and disagree with this statement. On the one hand capitalism as we have witnessed has brought humanity tremendous progress in terms of standards of living, healthcare, entertainment etc. Yes I know Austrians will be aghast saying that today's Capitalism is not pure,it is in fact a mixed breed of Central planning via the FED and lots of Govt bureaucracy.

I would argue that the FED doesn't set interest rates, it simply follows what the market tells it to do. It may for a while not follow the market but in the end, the credit dog wags the FED tail. So while some would argue we don't have free markets, I say prior to the bailouts we mostly did to a certain extent, combined with Fabian fascism or fascism lite which is the preferred system of choice that society seems to revert to, with the peasant underclass, the don't know, don't care middle class and the elite aristocratic overlords commanding vast empires and fortunes.

The present monetary system was designed to favour economic efficiency (well it was, prior to the bailouts) via capital allocation but capitalism in all it's forms - pure to impure - dismally fails in two aspects, social efficiency and resource efficiency.

A socially optimum society would not see such large divergences in pay between people. Nothing justifies Lord Blankfein earning a 1000 times more then the average worker. Nothing justifies how society has come to exist in a box, we drive little boxes on wheels, go to big box shopping malls to buy food in boxes. We come home and watch images on a box and we work in box like cubicles and in the same looking box sized homes (No, having a yellow room and green cushions and a table tennis table doesn't differentiate you from your neighbour).

This is not socially optimum, humans need public spaces and places to interact and feel human. How did it come to be that the only way humans could come together is via consumption? Be it eating, drinking, watching movies etc. Life revolves around the consumer, NOT the citizen. Capitalism is not socially optimum as the resource misallocation and social inequity it produces will be tremendously damaging in the long run.

As resource depletion takes full hold on the world, we also learn that capitalism/ fascism lite is resource inefficient. It takes 240,000 calories of fossil fuel energy which is non renewable to feed one US citizen (should I say consumer?) per day on 3,000 calories. Oil is so precious it should not be burnt for use on wasteful gas guzzlers or any cars for that matter.

Capitalism is not the answer to all our problems, it would work well on an infinite planet, not a finite one. Capitalism's proponents make good arguments, such as Mr Bill Bonner does on a daily basis but what is the basis of success of a civilization? Is it the peak it reaches or the longevity? The present prosperity we have achieved is entirely short term, maybe 150 years from start to finish. If we had used the resources we had wisely, predicated on long term thinking, we would have resources to last us millennia.

Capitalism is an epic fail. We must come up with a new monetary system, one that is consistent with resource scarcity and reduced economic activity.

Yeah, sometimes you just can't say it any better than that!

how about writing something?

With today's Bernanke blast yet assumption he will be confirmed and the absurd "jobs summit" where Obama likes the idea of "Stimulus" being people add insulation and double pane their windows....

I'm out of inspiration at the moment. This is just friggin' pathetic frankly and I'm sorry but more and more Obama is looking like Bush to me on economic policy...or Bush with a charge card limit raised.

I personally believe we will have economic malaise, that this "new normal" is by design....people desperate for work are more apt to accept even worse working conditions and wages.

That's the plan and regardless of how stupid it is....they ain't gonna let anything change this anemic economic U.S. status. (I'm not one who believes calamity is around the corner, more a slow acid dissolve of the entire U.S. middle class). I'm depressed, I hope others write up their thoughts because that "jobs summit" done me in in terms of mood.

Disagree on too many levels

I would take much exception to many of the comments by that blogger, expecially that the present monetary system was designed to favor economic efficiency.

Instead, it was designed to favor an economic elite, and has been moved towards that direction each and every time there has been any pushback of any sort (Teddy Roosevelt in his trustbusting days, Louis Brandeis and his exposing of interlocking directorates (Other People's Money), FDR's New Deal, John F. Kennedy's moves against the insurance industry (the last president to force them to sign a Consent Decree - where they stated they would stop their price-fixing ways, back in October of 1963) and his movement, prior to his untimely death, to address inequities in the tax structure affecting employment, as well as the oil depletion allowance, etc.

Today's tax structure favors debt leveraging, leveraged buyouts and an insanely low federal income tax revenue recovery from corporations in America (read the GAO-08-957 report) -- between 1998 and 2005 two out of every three American corporations paid no fed income tax!

Further tax arbitrage with regard to securitized financial instruments based upon debt further erode the American tax base.

I would recommend the following two web sites for further education: one regarding economic democracy and the other a further background on this matter.

Far too often people confuse the spreading of wealth among people, which virtually always leads to greater progress among us humans, as an offshoot of predatory capitalism.

Not so! Those are the short blips in the long march of history. Ayn Rand confused political and economic systems, and such is still being done today.

The concentration of unearned wealth is still the primary cause of poverty.

Holding companies to hide ownership (and other nefarious purposes) and SIVs, SPEs, SPVs, SPREs to hide debt (and other money laundering and tax-avoidance purposes) --- only constant pushback by honest people will deter such behavior.

Soviet- and Chinese-style communism favors monopoly of land, capital and knowledge by the state, whereas our present predatory capitalism favors monopoly by the corporation.

Truly, it will require a serious revolution to ever bring to reality any actual form of economic democracy.

I'm with you Robert.

You know from the few private communications we've had that I don't want to change the forum you have created here at EP. I'm afraid I would be the resident doomer. I have said repeatedly during the past 6 months or so that I think we are in a full scale political crisis, which is resulting from a major financial crisis.

Earlier today, I read Elizabeth Warren's article decrying the demise of the American middle class. Well, I absolutely agree with her but we all have been saying the same thing here for months! As much as I like Elizabeth Warren, Robert Reich, Paul Krugman, et al, I just keep thinking to myself...why are they being so discrete in their criticism? I mean, I voted for the O-man too, but I think he is a total fucking sellout and a worse president than GWB!! You call them like you see them, right? So why are so many others reluctant?

Anyhow, I will take your encouragement under advisement. Again, there is much I would like to say, but often I wonder if it is proper to express them in someone else's forum.

you could write

and instapopulist overviewing Warren's excellent article. On specific policy that's related to econ, it's perfectly ok to talk politics. I just want to stay away from generalities, such as "all Dems suck" or "tax cuts work" and some of that insanity. I'm with you on this absurdity going on though.