For the past few years, I have been railing about data nonsense such as Core CPI, Birth/Death adjustment, Home Affordability Index, etc.  I sometimes forget that not every current TBP reader has been tracking this stuff since the mid-2000s with us.

Several comments yesterday, and a kindly email asking me if I knew about U6 (heh) or about the BDA, led me to today’s post.

A quick refresher on the Birth Death adjustment: In 2001, the Bush administration directed the BLS to compensate for the tendency of the Establishment Survey to miss new business formation and the impact on employment. Previously, BLS tended to under report new jobs in the beginning of a a cycle turn. What the new B/D Adjustment series did was take new incorporation filings per state, and deduce from them that new jobs were being created. (That took effect around 2003).

This improved somewhat the ability to capture new jobs at the start of the cycle. But the flaw in the adjustment was that the model radically overstated job creation at the end of the cycle. Say a firm goes out of business, or lays off 100s of workers. They form new shops, incorporating these start ups.  According to the BLS, that is job creation.

But in reality, a steady paycheck with benefits has now been transformed into a start up with none of the above. And as we know, 90% of all new businesses eventually fail.

How misleading is the BD adjustment at the end of the cycle? Consider that in 2007, 75% of the BLS newly created jobs were due to the B/D adjustment. That did a nice job masking the actual problems beneath the surface.

Which brings us to Friday’s NFP report. As the chart below shows, as GDP has plummeted, the BD adjustment has created ever more jobs. Is that reasonable? Does that reflect reality? Or, is it another version of 2007 data stream creating a misleading construct of reality?  I suspect its the latter . . .

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click for larger chart
birthdeathgdp1

Source, Mike Panzner (B/D Data series source here)

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The caveat is the BDA end-of-quarter data can be a little volatile on a monthly basis (see actual data below).  Note also Bloomberg’s data only goes back to 1/31/00.

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Previously:
NFP: Even Worse Than Reported (December 8th, 2008)

http://www.ritholtz.com/blog/2008/12/nfp-even-worse-than-reported/

Category: Data Analysis, Employment

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

90 Responses to “Birth Death Adjustment Goosed NFP”

  1. ella says:

    My suspicion of the BLS employment data has been growing in recent months because the monthly report flies in the face of reason when initial unemployment claims are routinely 4 times greater than the total jobs lost. The disparity between the two data points is so large that one of them must be wrong. I have suspected that it is the BLS number.

  2. Good morning, Ritholtz. There are a number of points on my mind this morning, some even possibly relevant to your post:
    1. Thanks for taking the time to actually edit some of my over-the-top comments instead of just blowing them away completely. That just shows Barry Wuzzy really does wuv The Great CNBC Sucks.
    2. To copy ahab / Ishmael (what a great call, Wes Schott!), I have updated my name to reflect my true greatness, plus integrate my “emo or indie” mtheme so that its mind-numbing repetitiveness is automatic.
    3. The CNBC Sucks blog is one year old today! Happy birthday to the world leader in the now declining global CNBC sucks blog market.
    4. Your ongoing commentary on the dubiousness of macroeconomic statistics such as NFP has illustrated to me that the market is not rational, at least in the short run, at least on a fundamental basis. GIGO means that garbage fundamental numbers make garbage fundamental investment decisions. However, I see some combination of technical analysis and smart speculation of market reactions may yield good short-term returns. When everyone in the market is a technician, the market behaves technically, not fundamentally. I think government monetary policy and indexing have made it a predominantly technical market for quite some time.
    5. As a registered Republican, I excitedly thought by Birth-Death Adjustment to goose NFP, you were promoting nuclear power, which could “kill” two birds with one stone by fighting climate change while potentially accelerating the deaths of the unemployed. You broke my heart.

  3. Steve Barry says:

    Barry,

    Do you have any idea what the B/D model should be indicating today? We know adding 220K jobs is wrong. A quick, uneducated glance at the chart above would imply it should be at -100K. That would mean the actual NFP for May was -700K. Do you agree?

  4. call me Mr. Tibbs says:

    BR Says-

    “Which brings us to Friday’s NFP report. As the chart below shows, as GDP has plummeted, the BD adjustment has created ever more jobs. Is that reasonable? Does that reflect reality?”

    in fact- you would think the opposite was true- also-

    from Zero Hedge-

    “If the job market does not turn around by late summer or early fall of 2009, the projections easily exceed the Great Depression. At that point the only way to prevent catastrophic economic conditions would be through massive inflation of the US dollar achieved by either congress allowing the Federal Reserve to issue its own debt, or by accelerating the rate at which the Federal Reserve monetizes US debt while funneling the newly printed dollars into wages so that the money can circulate within the economy.”

    “Some realistic downside projections: U3: 17-21%; U6: 30-37%.”

    pretty grim indeed

  5. Super-Anon says:

    My suspicion of the BLS employment data has been growing in recent months because the monthly report flies in the face of reason when initial unemployment claims are routinely 4 times greater than the total jobs lost. The disparity between the two data points is so large that one of them must be wrong. I have suspected that it is the BLS number.

    Not to mention the household survey and the ADP numbers. Its like you have one “good” reading and three negative readings. The household reading was horrible.

  6. franklin411 says:

    @Barry
    That’s great, but what’s your point? The GDP contraction in Q1 2009 was -5.7%. The forecast for Q2 2009 is a contraction of -1.8%.

    Your thesis is that the faster GDP contracts, the more the B/D model inflates the NFP job creation number. But the problem is…GDP is contracting at a slower rate, not a faster rate. Even accepting your argument, doesn’t this mean that the NFP numbers are being *deflated,* not inflated? Doesn’t this mean that the NFP number is actually quite a bit better than it seemed at first glance?

    ~~~

    BR: That’s not my thesis — its what Mike’s chart shows.

    I find it somewhat incongruous that as the economy contracts, more jobs are created by the B/D adjustment. Does that make any sense to you?

  7. CNBC Sucks says:

    ahab – I don’t think U-3 will ever get as high as 17 – 21%, because it will be “micromanaged to the hilt” by government one way or the other. In fact, the Obama administration is right on top of U-3. However, U-6 of 30-37% is actually what I am thinking, maybe even in the 40-or-so % range, although I also don’t think it will EVER be reported as such. Probably, there is some “true” number like a “U-7″ of Americans that are “just plain screwed one way or the other” that might well exceed half of the population.

    In the U.S. of the 1930s, or in any other country on Earth, such numbers would have the potential to cause a massive leftist revolt. However, we have enough residual and trickle-down wealth or perception of wealth or just plain false pride that Americans will be preoccupied by the “emo or indie” question or when they might get their next tattoo. Plus, 30% of Americans are under the mind control of Fox News and the South is still fighting the Civil War.

    In other words, US market valuations are completely divorced from the plight and misery of Americans now and for the foreseeable future, so trade accordingly.

  8. call me Mr. Tibbs says:

    emo or indie Says-

    “I don’t think U-3 will ever get as high as 17 – 21%, because it will be “micromanaged to the hilt” by government one way or the other. In fact, the Obama administration is right on top of U-3.”

    are you saying the numbers will be manipulated?- or are you saying that the USG will do what it has to do to keep people who are looking for a job even if they are “make work” jobs

    emo and indie also Says-

    “US market valuations are completely divorced from the plight and misery of Americans now and for the foreseeable future, so trade accordingly.’

    good point

  9. Bruce in Tn says:

    @Franklin:

    I am going to make a point I made a couple days ago for you, and let you put you academic mind to it. Simple folks like me just wonder about these things.

    First, GDP in an of itself, means nothing…these bright guys are in reality talking about the income the government derives through taxes from the size of the economy. We have been paying for our government through deficit spending for generations.

    Ok…the GDP is about 13 trillion dollars and the debt we’ve accumulated is about 10 trillion…so that gives us an idea, in times of normal tax revenues about the debt to gdp ratio, and whether we can afford that level of debt.

    BUT, the revenues from taxes this year are only .66% of last year’s revenues…so our “tax based gdp” is 13 trillion x .66 or 8.58 trillion (!?!!)

    Normal debt/gdp= 10/13=77%

    Tax revenue debt/gdp= 10/8.58=116%…!!!

    …are tax revenues going to return to normal for our next fiscal year…or are we going to see this kind of poor revenue to fund our rapidly increasing debt load?

    What say ye, Frank?

  10. call me Mr. Tibbs says:

    sentence above corrected as follows-

    are you saying the numbers will be manipulated?- or are you saying that the USG will do what it has to do to keep people who are looking for a job *employed* even if they are “make work” jobs

  11. Winston Munn says:

    CNBC Sucks,

    I am shocked that you suggest the U.S. federal government would massage the truth to fit an agenda. The Private Jessica Lynch story flies in the face of your cowardly accusations.

    And yes, there were weapons of mass destruction – they all were sublet to Syria before the invasion, though.

    If our government says the B/D model created 200+K jobs, then By Golly you can carve it in stone.

    Have a nice day.

  12. Pat G. says:

    “Or, is it another version of 2007 data stream creating a misleading construct of reality? I suspect its the latter . . .”

    Absolutely. Give the PPT a bad number and they will create a way of spinning it. Like many posters here have said; the markets trade on perceptions not fundamentals. Un-spun numbers and fundamentals are reality which is what I trade on. If you want make believe, take in a good movie.

  13. franklin411 says:

    @Bruce
    I say this:

    I haven’t seen a single poster yet who has said that they believe that an economy that relies on buying manufactured goods from China (using money borrowed from China) to sell at Wal-Marts to American consumers using credit cards (financed with money borrowed from China) for 70% of its commerce is sustainable.

    Nobody likes borrowing money, but I ask you…how are we supposed to change this?

    The President’s proposal seems to be to make a massive investment in future GDP growth–education, science, energy, infrastructure–using borrowed money to rejigger America’s economy away from consumption and towards production. It’s a gamble, no doubt about that.

    What is the alternative? I haven’t seen a single reasonable proposal from anyone else on how we’re going to break our dependence on foreign money and foreign energy and foreign goods and foreign engineers. Are we to believe that we can change course by…cutting taxes and not investing a single penny in the future? Are we to believe that doing exactly what we’ve been doing for the last 30 years is magically going to produce a different result?

    We could impose draconian spending cuts and increase taxes substantially to pay off our debt, with the idea that we can start investing in the future once again in 10 or 20 years without using borrowed money. Two problems with that–First, what happens to the “lost generation” that isn’t able to go to school? Second, the rest of the world is going to be investing in their own futures, and when we emerge from our self-imposed monasticism we will be far behind every other nation.

    We have a choice: We can either aim for excellence with the risk of failure, or we can accept the guaranteed outcome of continued mediocrity. Personally, I don’t think Americans have ever been a people content with mediocrity.

  14. Mannwich says:

    I’m guessing many have “started businesses” but aren’t really making any (or much) money at doing it. Should that even count? That chart says it all, I’m afraid.

  15. Mannwich says:

    @franklin411: Au contraire. Just because not many have mentioned this, does not mean we believe it’s sustainable. Another point on which I actually agree with you.

  16. Mannwich says:

    @franklin411: Here’s the thing – you say we need to invest in our future (e.g. education, health care, etc.) again, but think about the gross misallocation of TRILLIONS that we’ve thrown at failing banks and companies that could have been FAR better invested on the things that you illustrate. To me, that’s where you and other Obama apologists are missing the mark completely. These bank bailouts are indeed STEALING vast resources that could have been used to help re-invest in the country in the ways that you describe. Watch what happens if O can’t get through his health care plan or rams through a plan that is wasteful and doesn’t work (that’s what I’m guessing will happen). It’s funny they have some serious will power to bail out their friends in high places but when it comes to the average American, they somehow lose that same will.

  17. Chief Tomahawk says:

    GREAT set of eagle eyes, BR!

    As far as global warming goes, just how much heat do the cooling towers of nuclear plants put into the atmosphere?

  18. Mike in Nola says:

    @F411:
    I don’t think Barry put forth a thesis that there was a causal connection between plunging GDP and B/D numbers, only that it is masking the effect on employment we should be seeing.

    A question for everyone which may have a simple answer: We get a regular stat of new unemployment claims and continuing claims. From what I see in the reports, it comes out of the Dept. of Labor, but I don’t see a link to it on the BLS website. I was wondering if there is a simple way to see how many people dropped off the continuing claims rolls because their benefits ended? Anyone got any links?

  19. CNBC Sucks says:

    @franklin: I am – no offense – surprisingly impressed by your last post. That is PRECISELY Obama’s situation, although of course I have a different take.

    Obama has two choices:

    (a) Tell Americans that they are too preoccupied with “emo or indie” and tattoos; concede that we would have a tough time just staying competitive with the Germans, Koreans, Japanese, etc., much less get on top of the world value chain to compensate for our cost disadvantages and restore global economic equilibrium; admit that we will never repay our debt and default now; reprice the US dollar dramatically lower; stop printing money; and start the hell over

    (b) Maintain some semblance of the status quo by borrowing and printing money until doomsday, making doomsday only slightly more unpleasant

    Obama is a smart cat, and has chosen (b).

  20. Pat G. says:

    @franklin411
    “I haven’t seen a single reasonable proposal from anyone else on how we’re going to break our dependence on foreign money and foreign energy and foreign goods and foreign engineers.”

    1.) Foreign money: Reinstate balanced (pay/go) federal and state budgets. The bulk of borrowed money comes from our government.
    2.) Foreign energy: Develop clean burning coal technologies or build nuclear plants. America has the largest deposits of coal in the world.
    3.) Foreign goods: Trade is part of the free market system which is a good thing. We will never be the cheapest producer of everything.
    4.) Foreign engineers: Other countries promote a greater emphasis on providing their citizenry with an education than the USA. Because of that, it’s cheaper therefore less financially cumbersome to get that education.

    And like you and Manny, most of us on here know that our current lifestyle is not sustainable. Short of armed insurrection, I don’t believe it will change. Right now, ordinary Americans are saving. Frugality is in. While our government digs us a deeper financial hole. That’s what they want. Promote spending, punish saving.

  21. call me Mr. Tibbs says:

    mannwich Says-

    “but think about the gross misallocation of TRILLIONS that we’ve thrown at failing banks and companies that could have been FAR better invested on the things that you illustrate . . .These bank bailouts are indeed STEALING vast resources that could have been used to help re-invest in the country in the ways that you describe. ”

    well said- good points

  22. Cursive says:

    I think our economy is bad and steadily getting worse. In my consulting business, I have various one-time clients and one major client, a medical equipment start-up. Believing that the start-up client will fail, I have now opened a second business that relies entirely on state Medicaid funding for mental health rehabilitation. I have actually begun hiring people, so I am one small support to the B/D adjustment. However, my new business is funded by the taxpayer and anyone that I hire is only likely to offset the loss of jobs at the aforementioned start-up company. We have a Dresser valve plant in the area and a contractor at that facility told me that they will be laying off another 50 people next month. He says that is only the beginning of job losses at the plant. Please note, even in this anectodal story, the loss of manufacturing jobs and the rise of services jobs. Sadly, I’m thinking that mental health rehabilitation is going to be a growth business for the forseeable future….

  23. kstills says:

    Franklin,

    Your ignorance of business is no excuse for posting the piffle you rely on to make points here.

    ****What is the alternative? I haven’t seen a single reasonable proposal from anyone else on how we’re going to break our dependence on foreign money and foreign energy and foreign goods and foreign engineers.****

    Foreign money is a result of massive deficit spending. Oppose bigger government and all the spending that entails.

    Foreign energy is only oil. Drill in the continental shelf and develop oil shale.

    Foreign engineers? That will teke care of itself now that the financial services industry has cratered.

    ***The President’s proposal seems to be to make a massive investment in future GDP growth–education, science, energy, infrastructure–using borrowed money to rejigger America’s economy away from consumption and towards production. It’s a gamble, no doubt about that.***

    Heres where the problems with your thought processes and the POTUS”s plans come into conflict.

    We do not need a ‘massive’ investment into education. In order to manufacture goods for sale, you do not need a plant full of PhD’s, you need low overhead. Example: Look around you at all of the formed plastic ‘things’ in your life. Every country has access to the same equipment used to make those things. Every country has the same access to the raw material’s used to make those things. Every country has the access to the technology, within reason, to make those things. (There will be some proprietary manufacturing technologies along with raw material compositions, but absent a strong system to protect patents most of that becomes useless). However, not every country is ‘regulated’ the same. Not every country has the same work rules, pay scales, pension guarantees, infrastructure demands, taxation etc. etc. etc. The intelligence of the guy standing at the machine forming your Target trash can is irrelevant when it comes to figuring out where you will manufacture said can.

    We have a strong k-12 school system in the US. In order to be a ‘manufacturing’ center, that is really all a country needs. The problem is not with our level of education, the problem is with the costs associated with making high volume, low margin products that compete globally.

    As for ‘rejiggering’ the economy away from consumption, no sooner said then done. Another thread talks about EMH, consider this downturn a spending excess version of that hypothesis.

    What you are advocating, however, and what Obama is trying to accomplish, is maintaining the status quo (which is why we bail out banks instead of doing mortgage cramdowns, as a for instance). The administration is desperate to inflate consumption, and at the current price level of all assets. How that will help an overleveraged group of used-to-be consumers is a mystery.

    ****We could impose draconian spending cuts and increase taxes substantially to pay off our debt, with the idea that we can start investing in the future once again in 10 or 20 years without using borrowed money. Two problems with that–First, what happens to the “lost generation” that isn’t able to go to school? Second, the rest of the world is going to be investing in their own futures, and when we emerge from our self-imposed monasticism we will be far behind every other nation.****

    Well, I can agree somewhat with that first part. My generation is mostly responsible for this mess, so it should fall on us to set it right. As for the lost generation who isn’t able to go to school? Do you really believe what you write? In an economy with deflationary outcomes for all manner of asset classes, what makes you think that education costs should remain the same, let alone go up? Everyone has the same ‘opportunity’, just no one will be buying BMW’s who teaches elementary education anymore.

    De-leveraging means we reset the asset prices to reflect the real values (or try to get the Chinese to buy, say, Orange County). That means we all take the hit. Through reduced wages, reduced asset values, reduced access to capital, reduced services from Government (however will the bee keepers make do without their subsidies) and a lower standard of living.

    Or, we can continue to spend money we don’t have in hopes that some day we’ll have an industrial base that the Chinese and Indians can’t copy which will make us a net exporter of goods. If that is truly your and Obama’s vision, then we are indeed truly screwed.

  24. Mannwich says:

    To assert we anywhere near turning the corner and that “the worst is behind us” (as franklin411 suggests), would be laughable if not so sad……

    http://www.calculatedriskblog.com/2009/06/consumer-bankruptcy-filings-up-sharply.html

  25. Mannwich says:

    @kstills: Very well put. Agree with just about everything.

  26. call me Mr. Tibbs says:

    CNBC Says-

    “[we will have a] tough time just staying competitive with the Germans, Koreans, Japanese, etc., much less get on top of the world value chain to compensate for our cost disadvantages and restore global economic equilibrium; admit that we will never repay our debt and default now; reprice the US dollar dramatically lower; stop printing money; and start the hell over”

    well said- no honest discussion with the American people has taken place to let them know where we stand- and Obama himself may be hesitant to admit the truth- as was Churchill before him-

    “I have not become the Kings First Minister in order to preside over the liquidation of the British Empire.”

    and of course we know how that turned out- Obama is in the same unfortunate position

  27. franklin411 says:

    @Mannwich:
    The bank bailout money was in the form of loans, not grants. We may have an excellent return on our investment, we may have no return, or we may lose money, but it’s wrong to say (for example) that the $700 billion TARP funds were “spent.” They were lent (not spent) to prevent the complete collapse of the world economy. Some might say that we needed a collapse to save the system. I say–how do you know the system that came out on the other side would be one we’d want to live in?

    @CNBC
    If that’s the choice you believe we have–failure now or failure a little later–then isn’t the answer to emigrate?

    @Pat
    What you’re describing is putting the US economy in stasis. Freeze everything, stop spending, and put the money towards paying off the bills. Wonder if China and India will do us the favor of stopping their investment in growth during the 20 years we’re locked in the meat freezer?

  28. Onlooker from Troy says:

    Tibbs

    Dude, you’ve got to be ahab! You can’t change your name now, that would be like renaming your 5 year old kid half way through kindergarten. All the other kids are gonna be very confused. :)

  29. Mannwich says:

    @franklin411: Your assertion that we “might have an excellent return on our investment” with the bailouts of rotten, corrupt firms that deserve to die, not be rewarded for this rotten, fraudulent, even criminal behavior, isn’t even worthy of an intelligent response, so I won’t even go there. And it’s not billions that we’re talking about. It’s TRILLIONS.

  30. franklin411 says:

    @Mannwich
    I said we could have an excellent return, no return, or a loss. The fact remains that the money has been “lent,” not “spent,” as I think you can admit.

    I laughed out loud when you said you agreed with kstills. Can’t you see what he’s arguing? He’s arguing for a Soviet-style economy where the masses toil in factories with no hope or chance of progress. His plan is to have the US compete with China on wages. He claims that if we could only get Americans to work 18 hour days for a dollar a day, we could restore prosperity.

    Mao or Stalin would be thrilled, but a more un-American vision of the future I cannot imagine.

  31. Greg0658 says:

    Winston writes “there were weapons of mass destruction – they all were sublet to Syria” … if true makes you wonder just who you can trust with weapons of mass / major / psychological destruction doesn’t it

    and maybe AirFrance 447 isn’t in deep ocean – its being repainted / repinged and fitted for another fly-in somewhere

  32. call me Mr. Tibbs says:

    onlooker-

    unfortunately I know not of this ahab you speak- I am but a humble first time poster and only want to converse with like minded individuals as myself-

    however- if I come upon this ahab of whom you speak- I will let him know you have inquired of his whereabouts

  33. cvienne says:

    @kstills

    Very well articulated (vs. Franklin)

    I especially like the way you alluded to the fact that we don’t need a plant full of Phd’s…

    If Franklin understood anything about the way real business worked, he’d understand that those HIGH PAYING JOBS are the first to get trimmed when times get tough…

    If you’re manufacturing products, the ‘last’ thing you cut are the salaried workers who run the assembly lines, and/or handle orders & shipments…

    Obama’s idea seems to be to create a CZAR for everything…The latest is a wage & salary CZAR…Great, another government position (that Obama needs to borrow money from the Chinese to pay, then tax US citizens)…What does that position do? Run around and see how much everyone makes so they gan go sit in front of Barney Frank as to whether or not it’s too much?…I mean, can’t Congress already do that if they want? Furthermore, why not just post the salaries on the internet…How tough is that?

    You have it right…It’s OBAMA that’s borrowing money now (not the American people)…

    And I’ll add one thing…

    At least HALF of what is behind what Obama has chosen as his policy is dedicated to one thing only…And that’s GETTING RE-ELECTED…

    If he wanted to HELP this country, he’d stop spending…But to stop spending would cause temporary hardship (which might make him unpopular)…So he doesn’t care so much about what’s best for America as he does keeping his job for 2 terms…

  34. cvienne says:

    @Franklin

    Just because someone works a plant job doesn’t mean that he toils (vis-a-vis) under mao or Stalin…

    You’re about to see firsthand how that goes…

    Obama gave 70% of Chrysler to the UAW (and poleaxed the senior bondholders)…

    So now essentially the “WORKERS” are running “THE WORKERS”…

    Let’s see how they treat themselves (or how long that experiment lasts before the company is bankrupt again)…

  35. Bruce in Tn says:

    Franklin:

    Consider this. I know Obama wants to be FDR-lite, but what if…what if….when social welfare programs like social security are put in place they are always self-sustaining? By that I mean, that if Franklin pays in one dollar, that that dollar is invested for Franklin’s future. So when Franklin retires, the money is guaranteed.

    My pension is controlled by me. The money is there, and when I die, my heirs will get the proceeds, minus taxes. Government, and many business pensions in the past, like social security, have been underfunded and the law has allowed this. So now, when a social security pensioner retirees, the money is NOT in a big pot with other of his dollars.

    The government always seems to do this half-ass job. States call them unfunded mandates. Younger workers, looking at the SS bill for the baby boomer generation, call this stealing from them. Franklin, the person or entity that makes the best decisions for you, is you. You think the omnibus health care bill will turn out great? Don’t bet a burger with Leftback on it….

  36. Mannwich says:

    @franklin411: What you’re suggesting is we kick the can down the road. It’s a Hail Mary Pass, period. Maybe I’m not being realistic but I think we’re going to get a major recalibration of life whether we want it or not. I prefer to stop delaying the inevitable in the name of political cycles so that our elite can continue to socialize their losses and privatize their gains at the expense of all of us. Maybe it’s just time for all of us to simply stop paying any taxes? And, mind you, I’m not one of these tea party people but I think that may be the most drastic nonviolent action we could take collectively.

    My brother in Northern Cal says he’s heard of people in the Sac area who have simply stopped paying their mortgages (and are hanging out there for as long as possible) because their neighbors have done the same and they figure they might as well do it too. Rewarding failure has all sorts of unintended perverse consequences. The fact that you don’t see that is amazing.

  37. Mannwich says:

    My point on the above is that I think more and more people are getting truly angry about banks being bailed out, yet they turn around and still stick to all of us in some way. I think that more people are simply going to rebel and not pay their mortgages and hang out there for as long as they can until someone comes by and can prove they own the house. This is going to get much messier before it’s over.

    The irony is those folks have/will have more $$$ to spend on discretionary items again, so it will help the economy, and maybe even help my wife’s company stay afloat so she can keep her job! ;-)

  38. call me Mr. Tibbs says:

    “So now essentially the “WORKERS” are running “THE WORKERS”…

    Let’s see how they treat themselves (or how long that experiment lasts before the company is bankrupt again)…”

    we may finds that some workers are more equal than other workers-

    and in the future of America- we will all have Phd’s and will push paper, not toil, and will have witty conversations with our erudite friends and neighbors on the finer points of existentialism, gourmet coffee and the poetry of e. e. cummings.

  39. Onlooker from Troy says:

    cvienne

    Pretty good editorial here:

    http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_baum&sid=amkTORldgMYA

    The egregious piling up of debt is just more pulling future demand into the present. It’s what we’ve been doing on a government and individual basis for decades now and there’s limit to how far this can go.

    The lie we tell ourselves is that some day a wonderful productivity machine will be developed to dig us out of the suffocating pile of debt and nobody will have to truly suffer for all our profligate, immature, selfish, short-sighted spending behavior. (i.e. the “we’ll grow our way out of the deficit meme that was all the rage from so many).

    So why should be sacrifice now? LA LA LA LA LA.

    But it won’t happen and it’s immoral to burden future generations with our mess. That’s the bottom line for me. We’ve made our bed, now we have to lay in it. Period. It’s really not that complicated. Those who try to make it so and continue to pretend that govt debt is so much different than private debt are just continuing to lie to the American people to further their own political and personal economic goals.

  40. DL says:

    Mannwich @ 11:31

    “watch what happens if [Obama] … rams through a plan that is wasteful and doesn’t work”

    Yes, a multi-trillion dollar boondoggle that doesn’t work very well.

  41. Greg0658 says:

    1st> these attacks at F411 – its like some of you guys know him outside of here and he works for the other team and must be squelched – he seems to have a brain as well as you and I

    > kstills writes “you do not need a plant full of PhD’s, you need low overhead” …. “trying to accomplish, is maintaining the status quo” … “so it should fall on us to set it right” … “some day we’ll have an industrial base that the Chinese and Indians can’t copy”

    me now – that post was informed and subjective – POTUS is hired to be the head cop/peacemaker for all – not to be capitalisms head cop and enforcer – IMO – abit further – Americas Head Cop/Peacemaker not the worlds

    Balance That

  42. CNBC Sucks says:

    @franklin – I have thought about emigration, and I have options, but if and when all our sins finally catch up with us, somehow I get the feeling that there will be no place to run, no place to hide.

    @cvienne – Obama needs to keep his job for 2 terms, and the Democrats (“the stupid”) probably need to control the White House and Congress for no fewer than another 56 years. Otherwise, if the GOP (“the stupid AND evil”) ever gets back in charge, it’s GAME OVER. Your trading losses and my bellyaching against monetary policy will be the last of our worries.

    Read Cormac McCarthy’s The Road for a prospectus on our future with the GOP back in charge.

  43. Onlooker from Troy says:

    Bruce

    http://www.ritholtz.com/blog/2009/06/birth-death-adjustment-goosed-nfp/comment-page-1/#comment-180104

    Well put. In other words they’re all just big ponzi schemes that we justify by telling ourselves that future productivity will surely be greater than ever in some magic way so as to be able to have our cake and eat it too.

    We continue on that path and may be setting ourselves up to be judged amongst the most immoral eras in history.

  44. franklin411 says:

    @Bruce
    What happens if Franklin lives longer than expected, and runs out of Franklin’s dollars? What happens if Franklin lives as long as expected and saves much more than he anticipates needing, but the cost of living soars unexpectedly and Franklin runs out of Franklin’s dollars?

    This is why the insurance model is the only practical means of achieving social security.

    @Mannwich
    No, what I’m suggesting is that we have to take a chance now to have even a possibility of prosperity in the future. The alternative is guaranteed mediocrity.

    Taking a chance on success is the American way. There’s nothing more “European” than standing pat and refusing to take risks.

  45. willid3 says:

    KSTILL wrote
    Foreign money is a result of massive deficit spending. Oppose bigger government and all the spending that entails.
    well at this time with the consumer and business in full reverse and this isn’t going to change any time soon, what do you propose to do with all of the unemployed you will create?

    Foreign energy is only oil. Drill in the continental shelf and develop oil shale.
    so far all of the claims of oil existing on the shelf is based on the theory that because there is oil in Africa and that at some time in the past, when we the Earth had one continent, that there is theory is oil there. but we have yet to ever explore for it. and if its there, it will enormously expensive to get. and to top it off, there is the methane hydroxide issue to deal with. its exists in the same locations you want to drill.
    one error with this stuff can be fatal to the entire human race. but its a great energy source if you could fix the ‘minor’ issue with getting it.

    Foreign engineers? That will take care of itself now that the financial services industry has cratered.
    while the crate that is the financial system may solve the engineer (and math and science ‘issue’). the problem is that will take a few years, and considering how the ‘shortage’ has been addressed (off shoring), its unlikely we will get new jobs from this any time soon.

    the other problem of the employment survey (other than all of the ‘corrupting’ of the numbers) is that
    we really have no idea of the quality of the ‘new’ jobs. since we don’t collect that, it is impossible to decide if things are really better. or we are just seeing a lot of low wage jobs.

    you would think that if we really wanted to know, we might could use tax records to determine just how many ‘jobs’ we have and how well they are paid. i know they have studied at least incomes any way, and we know that we make less than we did in 2000 on average.

    i would certainly like to know what our economy should be based on. we had an industrial economy for so long. and that worked well for a time.
    we then tried to convert to a services economy. but so far thats not working so well, especially since we have ‘reduced’ value of the services (its a sad state when education and health care are the ‘big’ parts of services. given time, we will reduce the cost of education by using off shore teachers. and so far they are working on doing the same with doctors. and of course we now have that medical vacation)

  46. Mannwich says:

    @Greg0658: I don’t think anyone here wants to “squelch” franklin411′s, or anyone else’s opinions, and I don’t see anyone attacking him personally. What we’re doing is debating the merits of our arguments. What’s wrong with that?

  47. Greg0658 says:

    F411 “Can’t you see what he’s arguing? He’s arguing for a Soviet-style economy where the masses toil in factories”

    now I gotta correct you – I think its more like 1930ish Germany and some Europian countries .. and he’s management in the MIC (maybe theKstreet)

  48. Bruce in Tn says:

    Franklin:

    The short answer is that Franklin works UNTIL he knows he has enough money….

    Period.

  49. DL says:

    franklin411 @ 12:21

    “The fact remains that the money has been lent, not spent”.

    That remains to be determined. There’s also the mortgage assets of the banks that Bernanke has “lent” against. In determining what has been paid back, one must also take into account interest payments by the federal government, and the inexorable decline in the value of the dollar.

    When one takes into account the financing costs incurred by the Federal government, the decline in the value of the dollar, and the fact that a substantial portion of the nominal value of the loans will never be repaid, I think the losses could be substantial.

    There’s also the fact corporate CEO’s of large corporations will now incorporate the prospect of a bailout into their business plans… creating new problems down the road.

    There’s also the matter of “opportunity cost”, i.e., how else that bailout money could have been spent.

  50. Onlooker from Troy says:

    Mannwich

    Indeed, the default wave will grow as the moral hazard spreads. It will become the only rational thing to do for many, which will overcome any moral qualms due to the immorality that’s rampant these days, making the relativity equation much more palatable.

    As I’m sure you’ve seen, Mish (and others I’m sure) has been talking about this coming for quite some time.

    http://globaleconomicanalysis.blogspot.com/2009/06/walking-away-revisited-reader-mailbag.html
    http://globaleconomicanalysis.blogspot.com/2008/04/walking-away-next-mortgage-crisis.html

    Debt restructuring has to happen on a large scale basis. One way or another. That the bank bond holders are bailed out at the expense of future generations is unconscionable.

  51. Mannwich says:

    This chart blows a hole in the “education as panacea” argument. Unemployment for those with a bachelor’s degree or above is now much higher (and starting to go parabolic) than at any time than the last 17+ years. I’d love to see a chart that goes much further back to illustrate this point even more effectively.

    http://4.bp.blogspot.com/_pMscxxELHEg/SipjvYfyUiI/AAAAAAAAFdg/1ZF_C02KGsw/s1600-h/UnemploymentEducation.jpg

  52. Bruce in Tn says:

    Franklin:

    The point is still, if you are going to pass the national grasshopper plans on the backs of the ants, at least be sure they are self funded. Medicare, social security….are not. Government pensions, and many others…are not. In this way lies madness….it is a ponzi scheme of a national order…

  53. cvienne says:

    @Manny (12:57)

    I’ll second what you said there…

    Nobody here thinks Franklin is “stupid”…In fact, just the opposite (as he makes an honest attempt to provide a background thesis for what he argues)…

    My incredulity with Franklin is as follows…I scratch my head and wonder how an obviously bright and thoughtful kid could get bent into reasoning arguments the way he does…

    Franklin…I think you need to start your “memoirs” right away…You need to CUT and PASTE all the text of the arguments you put forth and then read them back to yourself in 30 years time (after the inevitable wear and tear of time and geopolitics) has had a chance to give your thoughts some character…

  54. [...] have become more neutral and objective about Barack Obama, even disillusioned and cynical, but America still needs Democratic leadership over the next thirty sixtyyears.  VOTE DEMOCRATIC!  Still, none of us can rely on America getting future elections right, so I [...]

  55. Onlooker from Troy says:

    If indeed the banks actually are able to pay back all the TARP money and other bail out largesse, it will be because they’ve sucked money from other parts of the economy. They’re profiting from the artificially engineered yield curve at the cost of savers; they’re profiting from their trading operations; and all the other ways that they skim money from the economy because they produce very little of real value. They’re a black hole that’s sucking us dry.

    The only way they could actually pay us back, net net, would be if the assets that back their loan portfolios would somehow magically come back to par value in the near future, which is a fairy tale.

  56. Greg0658 says:

    this is a great debate site .. I wished we knew the rest of the story on anyone filling our heads with lifes struggle trivia (tv personalities too)

    like:
    1> the paycheck comes from who & line of work 2> education stats 3> work & residence history 4> financial bankruptcy history

    sometimes I get the feeling this bloggy stuff is not from the man in the mirror

  57. cvienne says:

    @onlooker

    1. Thanks for that article (earlier)…It basically re-iterates what most people on this blog say constantly…Look, I don’t even want to get into the game of “Blame Obama” for this…If the REPUBLICANS controlled everything at present, I bet many or most would have their straws in the milkshake and be sucking away as hard as they could too…

    2. (1:15) Forget about the STEEP YIELD CURVE…That’s not how banks are profiting right now (although that’s how they SHOULD be profiting)…Instead…

    - They have taken the TARP money
    - They are TRADING with it (bidding up equities and especially commodities) generating false signals 4 a recovery
    - With the euphoria in equities, they are issuing more common stock
    - When they are re-capitalized, they’ll pull the plug on equities, and pour into a SOLD OFF bond market
    - Then they’ll pay back the TARP money to the government…

    the whole thing amounts to “re-capitalizing” a gambler who lost his wad (but has a SURE THING in the 8th race)…

    all at the taxpayers expense…NO RISK…because if they lose, it’s the taxpayer who loses…

    and Obama is allowing it all to happen right under his nose…

  58. cvienne says:

    Maybe it will all work in the end…

    But don’t delude yourself into thinking that the Obama Administration is anything more noble than Gordon Gekko orchestrating “insider trading” maneuvers…

    Not referring to DIRECT insider trading…rather…the political control over the Fed, Treasury, and MEDIA to shepherd capital flows in a particular way…

  59. sbailey says:

    Barry, you are absolutely wrong about the birth/death adjustment.

    BLS has documented its methodology at http://www.bls.gov/web/cesbd.htm, and shown that the methodology improves the accuracy of estimates (see http://www.bls.gov/opub/ils/pdf/opbils70.pdf). [BR: You may safely assume I disagree with the BLS findings]

    You write that “the flaw in the adjustment was that the model radically overstated job creation at the end of the cycle”. What basis do you have for that statement? I’m not talking about the reasoning that follows your allegation, which I do not find compelling. I’m talking about a real data analysis that shows that the B/D adjustment “radically overstates” job creation.

    [BR: When 75% of the new jobs BLS cites comes from an inferred, rather than measured, metric, as in 2007, there is a modeling and measurement issue.]

    “Say a firm goes out of business, or lays off 100s of workers. They form new shops, incorporating these start ups. According to the BLS, that is job creation…But in reality, a steady paycheck with benefits has now been transformed into a start up with none of the above. And as we know, 90% of all new businesses eventually fail.”

    In reality, only a few of those workers start new businesses. Most of the workers, sooner or later, go to work for another business. [BR: What is your basis for this data point? What firms are the laid off construction workers going to? How about the former Wall Street employees? You assertion does not stand the sleightest of scrutiny]. At any point in time, including today, there are lots of businesses hiring. When you look at the microdata, there is an incredible amount of churn that is not reflected as a net change.

    In my job I do a lot of analysis for the State of Washington piece of the picture–the database of 200,000 employers and their monthly employment going back almost 20 years. This is the data that underlies the revised nonfarm employment. I can tell you that in good times and bad, there are always lots of jobs created by births, and lots that are lost through deaths. But that action is much smaller than the jobs gained and lost through expansions and contractions.

    [BR: Washington state is not one of the harder hit regions in this downturn; I would suggest you should not overly rely on local, anecdotal evidence]

    Nationally, the data shows that on average, there are about 2 million jobs created every month due to expansions, and about 2 million lost in layoffs. There are about half a million jobs created through births, and half a million lost in deaths. In bad times, the balance shifts towards layoffs and closures. But in all times, the net job loss reported monthly is small compared with the gross changes.

    [BR: Exactly. That’s why prior to the 2001 B/D changes, they amounted to a tiny percentage — 5% or so — of total jobs. 75% is an absurdity ]

    You state that “in 2007, 75% of the BLS newly created jobs were due to the B/D adjustment. That did a nice job masking the actual problems beneath the surface.” Let’s parse that out. First of all, if you read the methodology, you will find that the birth/death adjustment is a secondary correction. BLS is not claiming that (for example, this past month) there were 220,000 more jobs created from births than deaths. BLS is claiming that the first step of their estimation process (applying the percentage change in the sample of employers to the previous month’s employment) undercounts the birth/death differential by 220,000–not seasonally-adjusted. So to total up the birth/death adjustments for a year and compare it with net job growth is an apple-to-hippopotamus comparison.

    Second, BLS has shown that without the b/d adjustment, preliminary estimates in 2007 would have been substantially underestimated. Remember the revised numbers are based on quarterly unemployment insurance tax returns from the universe of employers. On the form the employers report their employment for each month of the quarter. The revised numbers contain no b/d adjustment, because the births and deaths are there in the data. The March 2007-March 2008 estimation period was BLS’s most accurate period of the past five years.

    Third, how do accurate employment estimates “mask” problems beneath the surfact? Was BLS supposed to have faked employment losses to suggest that the financial meltdown was at hand?

  60. CNBC Sucks says:

    @cvienne: Bingo on your 1:24 PM, but on your 1:33 PM, not so much.

    The political reality is that Obama has NO CHOICE but to allow it all to happen right under his nose. Wall Street effectively has a gun to his head – any economic collapse in Michigan, Ohio, and any battleground industrial state and his re-election is toast. The political margin of error for Obama or any other Democratic leader is much thinner than the opposition. There are a block of states known as the former Confederate of States of America – combined with neo-Confederate states such as Kansas and Alaska – that will vote for the GOP for social causes and long-running myths such as “free markets”, “clean and safe nuclear power”, etc., no matter how the Republicans openly, systematically, and relentlessly destroy their economic self-interests. Add Thomas Frank’s What’s the Matter with Kansas? to my book recommendations on this thread.

    In other words, sucks to be us.

  61. cvienne says:

    @CNBC

    Then you made my point for me…

    “The political reality is that Obama has NO CHOICE but to allow it all to happen right under his nose. Wall Street effectively has a gun to his head – any economic collapse in Michigan, Ohio, and any battleground industrial state and his re-election is toast”

    Look, let’s face it…Obama & the Congress can do anything they want…They have been quick to point out that THEY WON THE ELECTION (and therefore behave as if it’s a CARTE BLANCHE mandate)…

    As far as any “guns” to anybody’s “heads” is concerned…Obama & Congress hold the ultimate gun because they could just sit back, pass law, and let anybody succeed or fail as they please…

    Of course doing so would jeopardize THEIR OWN political future so the perfect stalemate is reached…

    So it’s what I’ve said all along…Obama or the Congress don’t care IN THE LEAST what’s best for America…their only concern is for their own power and legacy……

    Just like any politicial, king, or dictator for that matter…Just average ordinary people in EXTRAORDINARY positions of power…

    I feel more sorry for the dregs who actually ‘believe’ they actually stand for something…

  62. cvienne says:

    @CNBC

    Oh and by the way…

    re: “any economic collapse in Michigan, Ohio, and any battleground industrial state and his re-election is toast”

    He doesn’t have to worry much about Michigan, Ohio, Illinois, or Indiana at thios point because by “shafting” the bondholders and giving GM & Chrysler to the UAW & the USG, he has essentially made all those employees US government workers…(so he’s locked up THEIR votes)…

    Now he just needs to turn to California & Florida…

    That sould be easy…

    He’ll “guarantee” California bond debt (with taxpayer $$)…So that will sew that up…

    With Florida…His appointment of Sotomayor will lock up the latino vote…

    You don’t really need to look too hard in studying the moves he’s made since he’s been in office to see that all he’s REALLY about is getting RE_ELECTED…

  63. primordial_ooze says:

    The US does have a huge supply of coal, as does Canada. The problem is we can’t burn it without
    driving global warming up considerably. We need to start building many nuclear power plants.
    France produces a much higher percentage of its electricity from nuclear power than the US,
    and has done so for a few decades now. We can store the waste in the former nuclear test site in
    Nevada, no one is going to live there ever anyway. This should be a big part of our drive to divorce
    ourselves from foreign oil, and could create a lot of jobs here for the new 10-20 years, and reduce
    our contribution to global warming.

  64. CNBC Sucks says:

    @ cvienne: Re-election is the first priority of EVERY politician, but fair enough.

    @ primordial_ooze: “We can store the waste in the former nuclear test site in Nevada, no one is going to live there ever anyway.” Somehow, the elegant and self-assured simplicity of your argument appeals to the Republican in me. You make me happy that I stayed a registered Republican.

    This concludes my “emo or indie” page view campaign to commemorate the one-year anniversary of CNBC Sucks. In closing, I love the way the people on this blog get so caught up in these discussions, but I will also point out that nobody else cares. If you do not know whether you are emo or indie, you are out of touch with the rest of society. Also, as thoroughly f*cked as I think our situation is, no one can predict the future. Sometimes, what is seemingly bad might turn out to be good. It just might all work out in the end.

    Until my next retirement…

  65. Bruce in Tn says:

    franklin411 Says:

    June 6th, 2009 at 12:50 pm
    @Bruce
    What happens if Franklin lives longer than expected, and runs out of Franklin’s dollars? What happens if Franklin lives as long as expected and saves much more than he anticipates needing, but the cost of living soars unexpectedly and Franklin runs out of Franklin’s dollars?
    ….I guess then, that you should be entitled to someone else’s money?

    ….Perhaps someone else should just get some of the money you set aside Frank….? Why not?

    ….Perhaps you should pay more taxes to help out your friends?

    If you are young and not a liberal, you have no heart..
    If you are mature and not a conservative, you have no brain…

    Churchill..

  66. DL says:

    cvienne @ 2:16

    I agree; there’s no way that Obama will lose Michigan, Ohio or Indiana in the next election…. he’ll pay any price he has to (using taxpayer money) to win those states.

    As for California, there’s a zero percent chance that a Republican will win this state in the next election; Obama’s got that state in the bag no matter what he does (besides, in CA, they like the idea of little green cars, even if they’ll never buy them).

    Florida is usually hard to predict, although I would give Obama the edge, even without knowing who the Republican nominee will be.

    If the unemployment rate is below 7% on election day, Obama will win at least 60-70% of the electoral college vote.

    But all of the foregoing actually supports the proposition that the secular bear market has many more years to run.

  67. rootless_cosmopolitan says:

    @Franklin411:

    You wrote:

    “What is the alternative? I haven’t seen a single reasonable proposal from anyone else on how we’re going to break our dependence on foreign money and foreign energy and foreign goods and foreign engineers.”

    Why should I, personally, even be concerned about this question?

    rc

  68. Bruce in Tn says:

    By the way Franklin…one last thing. I know you are bright enough to realize that YOU and your generation will be paying extra for boomers like me to retire, under the good will of the government. So I am pleased that you think this is fair, I don’t, but your generation will be subsidizing the poor decisions of my generation. My fellow boomers say, “THANKS IN ADVANCE!”

    Se la vie..

  69. gluth says:

    Let’s see. In 2008 42% of the net new jobs created by the birth/death model are identified as Leisure and Hospitality. Year to date (2009), fully 62% of 338,000 new jobs are in Leisure and Hospitality. Apparently these folks are setting up shop somewhere other than Las Vegas.

  70. super_trooper says:

    @Bruce in Tn, good luck getting your Medicare benefits in 10+ years. I don’t know how French spelling works in TN, in most parts of the world it’s C’est la vie.

  71. call me sally says:

    from Naked Capitalism-

    “As Americans live longer, the gap between existing benefits and personal wealth will widen. Directly or indirectly, the U.S. Government is the insurer of last resort, whether it is via the PBGC or as the medical provider via social or entitlement programs. Pensions and OPEB have become engulfed as a social and political issue, with the key questions being coverage, expense and how to pay for it. Eventually, the government, in conjunction with the private sector, will be forced to address the situation and take the necessary painful steps. . . In the end, individuals, either as taxpayers or consumers, will need to pay the bill, as well as live with the reduction in benefits and lifestyle.”

    the future of America- reduced standard of living- no-one to blame but ourselves- we have allowed success to slip out of our hands and now wrap ourselves in the flag and cling to the platforms of our party of choice- regardless of whether the outcome is different then the promise-

    Obama will be in charge of the dismantling of the American Empire- good riddance- never was what this country was all about- maybe after years of wandering in the wilderness we can re-invent ourselves- Germany came back from financial as well as actual obliteration- maybe we can too- or maybe we will be like the British Empire- a mere shadow of our former selves

  72. Onlooker from Troy says:

    sally, do you know a guy named ahab? He used to frequent these pages. A relative perchance? Tell him we miss him. :)

  73. Wes Schott says:

    Mrs Tibbs?

  74. Jeff Miller says:

    @sbailey — Thanks for an excellent and factual analysis, from someone who has obvious expertise. It would be helpful if more people understood the massive shifts in job gains and losses. In particular, the b/d adjustment is a “tweak” compared to the other processes for measuring job creation. It is a good tweak, since it has dramatically improved the ability to count jobs.

    I have been writing about these same arguments for many months, especially the scope of job creation, which is about 100,000 jobs per business day. I looked at actual data from the last recession http://oldprof.typepad.com/a_dash_of_insight/2009/01/the-bias-in-rep.html.

    I have also highlighted the JOLTS report, which showed for the twelve months ending in March 58.9 million separations and 54.6 million new hires. http://oldprof.typepad.com/a_dash_of_insight/2009/04/jolts-from-the-bls.html.

    Briefly put, the b/d adjustment is a very small part of measuring job creation.

  75. Bruce in Tn says:

    Super:

    Se is ok for C’est…look it up. Besides, no one follows the French anyway..

  76. Simon says:

    @ Call me Sally Nice post. Ms Smith is a very wise commentator I love her stuff. I just hope the majority of people are as pragmatic as you about declining American so called superiority.

  77. Bruce in Tn says:

    http://www.nytimes.com/2009/06/07/weekinreview/07rosenbloom.html?_r=1&ref=business

    “We’re seeing a movement away from protein into carbohydrates,” Mr. Fleming said. “It stretches the dollar a lot further.”

    At Wal-Mart, sales of baby formula and clothing are up. Still, Mr. Fleming said Wal-Mart could tell when parents were strapped: in the first weeks of the month they buy packs of 88 diapers; by the end of the month they’re buying the 40-pack. And at Sam’s Club, sales of pull-ups — that intermediate step between diapers and underwear — are down, suggesting parents are moving their children directly to underwear to save money.

    Less browsing in the aisles, for one thing. Consumers now are “very disciplined in terms of making sure that they don’t go beyond what they have on their lists,” Kathryn A. Tesija, Target’s executive vice president of merchandising, told investors recently.

    ….From the NYT about sales to the consumer today…

  78. Bruce in Tn says:

    http://www.cnbc.com/id/31106964/

    Dollar Crisis Looming — Don’t Short the Market: Jim Rogers

    Always opinionated, always thought provoking…

  79. jc says:

    Jim Rogers simply says “you can’t believe the gummint”. That is true in spades when the gummint sees lifting morale as one of it’s tasks in ending this drecession.

    Lets see how the actual GDP turns out this Q, subject to subsequent worser revisions.

  80. jc says:

    The gummint is piping sunshine up our butts. In a normal world you’d expect about half the prelim gummint numbers to be revised better and half worse but it hasn’t been even close to that with jobs, housing, GDP, I wonder what the composite number is on these revisions. We always get the headline – “Home sales increase”, “Job losses abate”, then the subsequent months revisions show the negative trends continuing.

  81. jc says:

    OK, a widget assembler making $80K a year has his job shipped to south China so he gets a taxi license and a permit for a roadside hotdog stand, works his ass off and makes $40K a year. The state reports the new licenses and the BLS has the net gain of a job with their B/D alchemy

  82. TrembleTheDevil says:

    Nice post, so do you stand by your statement from Friday that we’re in “an ordinary but not historic” recession? Or would the B/D adjustments and other considerations make the unemployment numbers pretty freaking historic?

    This chart, which I assume is from official numbers and not ones closer to reality, looks fairly historic:

    http://www.businessinsider.com/chart-of-the-day-decline-from-peak-employment-2009-5

  83. km4 says:

    A Better Solution for GM
    http://kmedge.org/2009/06/a-comedy-of-incompetents.html

    Toyota, Nissan, and Honda are likely to be smiling today. Not because of the GM bankruptcy. It would definitely be un-Japanese to gloat.

    They’re smiling because the U.S. government thinks all it has to do is follow the management guidance of the White House auto team, give GM lots of money, fire the CEO, get labor concessions, set fuel efficiency standards, urge the company to create hybrids, and competitiveness will be magically restored.

    According to The New York Times, this miracle will be wrought by a 31-year-old; a very bright young man who has never set foot in an auto plant, has never run a manufacturing business, and is advising the already laughable “auto rescue team” about running a competitive auto company in a market where Toyota is already whipping their body parts!!!

    I started to laugh because I thought this was part of the Jay Leno farewell skit. No one could make this up!

    What if Obama gave Y-Combinator 40 Billion Dollars
    http://zaid.posterous.com/what-if-obama-gave-y-combinator-40-billion-do

    Now for some numbers ( hypothetical ) but you get the point

    * 600,000 new startups with 1,020,000 people employed vs
    * 125,000 people employed by GM.

    There we have it folks…..Obama is all ‘shuck and jive’ when it comes to REAL hope and change !

  84. jc says:

    Here’s the benefit of the B/D adjustment:Obama Officials See Hope in Jobless Numbers
    June 7 (Bloomberg) — White House officials said they see encouraging signs in the slowing rate of job losses and defended the Obama administration’s handling of the bankruptcy of General Motors Corp.

    The economy lost 345,000 jobs last month, fewer than expected and the lowest number since September, the Department of Labor reported June 5. Unemployment rose to 9.4 percent.

    “Hopefully, that is a sign that this is turning,” David Axelrod, senior adviser to President Barack Obama, said on CNN’s “State of the Union” television program. “While it’s going to take some time for these unemployment numbers to turn around, for the momentum to completely stop and turn in the other direction, it feels as if we’re moving.”

  85. jc says:

    Axelrod and Goolsbey were on the Sunday talk circuit talking up team O’B’s success with jobs etc

  86. thetanman says:

    I just got a green shoot. A developer wanted to buy my land for $5k/acre last fall, a few days ago called me out of the blue and offered $8k/acre. I think he is afraid of falling behind as we have a mini building boom going on, despite an already massive oversupply. I guess I’ll sell.

  87. [...] which faded by day’s end. My guess why is that the BLS data was looked at askance, as the Birth Death adjustment Goosed NFP. Perhaps that process continues [...]

  88. [...] And further analysis of the “Birth Death” model at The Big Picture. [...]

  89. [...] -345 k werden von allen seiten angezweifelt. haupts