Comments on: The Mother of All Jobless Recoveries? http://www.ritholtz.com/blog/2009/10/the-mother-of-all-jobless-recoveries/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 21:38:31 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: RodgerMitchell http://www.ritholtz.com/blog/2009/10/the-mother-of-all-jobless-recoveries/comment-page-2/#comment-222747 RodgerMitchell Mon, 05 Oct 2009 18:30:09 +0000 http://www.ritholtz.com/blog/?p=40018#comment-222747 Sorry. Should read " . . . but have resulted in much of the already-appropriated stimulus for NOT being spent. Sorry. Should read ” . . . but have resulted in much of the already-appropriated stimulus for NOT being spent.

]]> By: RodgerMitchell http://www.ritholtz.com/blog/2009/10/the-mother-of-all-jobless-recoveries/comment-page-2/#comment-222729 RodgerMitchell Mon, 05 Oct 2009 17:40:20 +0000 http://www.ritholtz.com/blog/?p=40018#comment-222729 On April 9, 2008, I wrote to the Chicago Tribune this note: "Every U.S. depression, and the vast majority of recessions,, have coincided with reduced growth in the money supply. Today again, the U.S. economy is starved for money, which no amount of interest rate reductions can cure. To a small degree, interest rate reductions actually reduce the amount of money in the economy, because the federal government is required to pay less interest on its debts. There is one cure, and one cure only, for a recession, or depression: Increase the money supply. How? By federal deficit spending. The federal government creates money when it pumps more money into the economy than it removes by taxation. The $150 billion stimulus package is an example, albiet too little and too late. " (http://rodgermitchell.com/medialetters.html) At the time I suggested a stimulus package of $500 billion to $1 trillion. Now we have gone so far downhill, we need a stimulus far beyond that, perhaps in the $4 trillion range. The unsupported beliefs of the debt hawks not only have limited the size of the stimulus packages, but have resulted in much of the already-appropriated stimulus for being spent. So, the unfounded fears that taxpayers will pay for the stimulus now are magnified into the worse punishment taxpayers feel from the recession. It was like not giving flu shots because the needle might sting, so instead we all got the flu. Thank you debt hawks. That original $ mailing to taxpayers actually was a good idea. If it had been $1 trillion, rather than $150 billion, our economy would be in far better shape, today. Rodger Malcolm Mitchell http://rodgermmitchell.wordpress.com On April 9, 2008, I wrote to the Chicago Tribune this note:

“Every U.S. depression, and the vast majority of recessions,, have coincided with reduced growth in the money supply. Today again, the U.S. economy is starved for money, which no amount of interest rate reductions can cure. To a small degree, interest rate reductions actually reduce the amount of money in the economy, because the federal government is required to pay less interest on its debts. There is one cure, and one cure only, for a recession, or depression: Increase the money supply. How? By federal deficit spending. The federal government creates money when it pumps more money into the economy than it removes by taxation. The $150 billion stimulus package is an example, albiet too little and too late. ” (http://rodgermitchell.com/medialetters.html)

At the time I suggested a stimulus package of $500 billion to $1 trillion. Now we have gone so far downhill, we need a stimulus far beyond that, perhaps in the $4 trillion range. The unsupported beliefs of the debt hawks not only have limited the size of the stimulus packages, but have resulted in much of the already-appropriated stimulus for being spent. So, the unfounded fears that taxpayers will pay for the stimulus now are magnified into the worse punishment taxpayers feel from the recession.

It was like not giving flu shots because the needle might sting, so instead we all got the flu. Thank you debt hawks.

That original $ mailing to taxpayers actually was a good idea. If it had been $1 trillion, rather than $150 billion, our economy would be in far better shape, today.

Rodger Malcolm Mitchell
http://rodgermmitchell.wordpress.com

]]> By: Dinocrat » Blog Archive » Scary http://www.ritholtz.com/blog/2009/10/the-mother-of-all-jobless-recoveries/comment-page-2/#comment-222578 Dinocrat » Blog Archive » Scary Mon, 05 Oct 2009 02:37:38 +0000 http://www.ritholtz.com/blog/?p=40018#comment-222578 [...] This is the worst recession since WWII in terms of job loss. How bad? This bad: [...] [...] This is the worst recession since WWII in terms of job loss. How bad? This bad: [...]

]]> By: contrastockhunter http://www.ritholtz.com/blog/2009/10/the-mother-of-all-jobless-recoveries/comment-page-2/#comment-222533 contrastockhunter Sun, 04 Oct 2009 20:48:12 +0000 http://www.ritholtz.com/blog/?p=40018#comment-222533 The "jobless recovery" at this point is a given. No one expects any recovery in employment anytime soon. The trial balloons sent out this weekend from the administration will only extend the jobless recovery. Retraining programs (free school is better than work) and extended unemployment benefits (free money is better than work) will only make it more attractive to learn how to do something new. Notice the correlation in the chart to length of time until recovery and government the lengths government went to hep "solve the problem." The “jobless recovery” at this point is a given. No one expects any recovery in employment anytime soon. The trial balloons sent out this weekend from the administration will only extend the jobless recovery. Retraining programs (free school is better than work) and extended unemployment benefits (free money is better than work) will only make it more attractive to learn how to do something new. Notice the correlation in the chart to length of time until recovery and government the lengths government went to hep “solve the problem.”

]]> By: Flattening Yield Curve Points to Double-Dip Recession http://www.ritholtz.com/blog/2009/10/the-mother-of-all-jobless-recoveries/comment-page-2/#comment-222401 Flattening Yield Curve Points to Double-Dip Recession Sun, 04 Oct 2009 03:56:34 +0000 http://www.ritholtz.com/blog/?p=40018#comment-222401 [...] the economy may be worse than reported. The Big Picture shows this depressing chart of unemployment compared with all other post Depression recessions. [...] [...] the economy may be worse than reported. The Big Picture shows this depressing chart of unemployment compared with all other post Depression recessions. [...]

]]> By: RodgerMitchell http://www.ritholtz.com/blog/2009/10/the-mother-of-all-jobless-recoveries/comment-page-2/#comment-222273 RodgerMitchell Sat, 03 Oct 2009 18:18:19 +0000 http://www.ritholtz.com/blog/?p=40018#comment-222273 Next year, the Fed may be faced with stagflation, the simultaneous occurrence of economic stagnation and inflation. Sadly, the Fed cannot cure stagflation. A more complete discussion of this phenomenon is at http://rodgermitchell.com/inflation.html, but here is a quick overview: Money is the lifeblood of an economy. During a recession, an economy suffers from "anemia," a shortage of money. The treatment for anemia is to increase the blood supply. But typically, the Fed tries to cure recession by cutting interest rates. It tries to cure inflation by increasing interest rates. Since inflation is not the opposite of recession, doing the opposite doesn’t work. To cure inflation it is necessary to raise interest rates, increasing the reward for owning money. To cure stagnation it is necessary to treat the anemia, i.e to deficit spend. The former is the task of the Fed. The later is the task of Congress. That’s why the Fed alone cannot cure stagflation. Unfortunately, the Fed wrongly believes high interest rates slow the economy, so when stagflation appears, the fed will urge a reduction in deficit spending (bleeding the anemic), which it considers "prudent" while only reluctantly and incrementally raising interest rates. This will continue the Greenspan and Bernanke policies, which will extend the recession. Rodger Malcolm Mitchell Next year, the Fed may be faced with stagflation, the simultaneous occurrence of economic stagnation and inflation. Sadly, the Fed cannot cure stagflation. A more complete discussion of this phenomenon is at http://rodgermitchell.com/inflation.html, but here is a quick overview:
Money is the lifeblood of an economy. During a recession, an economy suffers from “anemia,” a shortage of money. The treatment for anemia is to increase the blood supply. But typically, the Fed tries to cure recession by cutting interest rates. It tries to cure inflation by increasing interest rates. Since inflation is not the opposite of recession, doing the opposite doesn’t work.
To cure inflation it is necessary to raise interest rates, increasing the reward for owning money. To cure stagnation it is necessary to treat the anemia, i.e to deficit spend. The former is the task of the Fed. The later is the task of Congress. That’s why the Fed alone cannot cure stagflation.
Unfortunately, the Fed wrongly believes high interest rates slow the economy, so when stagflation appears, the fed will urge a reduction in deficit spending (bleeding the anemic), which it considers “prudent” while only reluctantly and incrementally raising interest rates.
This will continue the Greenspan and Bernanke policies, which will extend the recession.

Rodger Malcolm Mitchell

]]> By: Myr http://www.ritholtz.com/blog/2009/10/the-mother-of-all-jobless-recoveries/comment-page-2/#comment-222258 Myr Sat, 03 Oct 2009 17:49:53 +0000 http://www.ritholtz.com/blog/?p=40018#comment-222258 Calc Risk has a much more informative version of that same chart using the preliminary estimates of the coming revisions to the govt numbers: http://www.calculatedriskblog.com/2009/10/comparing-employment-recessions.html This economy looks far worse than '73 - '74 and our collective balance sheet looks like 1929...and you're 75% long? Good luck. You've made good calls so far, but you're very wrong at this point. Judging by your appearance on Kudlow, you appear to be digging in your heals with your current bullish stance and sanguine outlook. Calc Risk has a much more informative version of that same chart using the preliminary estimates of the coming revisions to the govt numbers:

http://www.calculatedriskblog.com/2009/10/comparing-employment-recessions.html

This economy looks far worse than ’73 – ’74 and our collective balance sheet looks like 1929…and you’re 75% long? Good luck. You’ve made good calls so far, but you’re very wrong at this point. Judging by your appearance on Kudlow, you appear to be digging in your heals with your current bullish stance and sanguine outlook.

]]> By: Unemployment: Looking For Light In The Woods « Kicking Over My Traces http://www.ritholtz.com/blog/2009/10/the-mother-of-all-jobless-recoveries/comment-page-2/#comment-222240 Unemployment: Looking For Light In The Woods « Kicking Over My Traces Sat, 03 Oct 2009 16:57:28 +0000 http://www.ritholtz.com/blog/?p=40018#comment-222240 [...] (Hat tip: Barry Ritholtz at The Big Picture.) [...] [...] (Hat tip: Barry Ritholtz at The Big Picture.) [...]

]]> By: danm http://www.ritholtz.com/blog/2009/10/the-mother-of-all-jobless-recoveries/comment-page-2/#comment-222177 danm Sat, 03 Oct 2009 13:53:37 +0000 http://www.ritholtz.com/blog/?p=40018#comment-222177 You just can't compare the last 30 years to taoday. The demographics a much too different. For example, there is a huge group of boomers probably being forced into early retirement. These do not appear in the unemployment numbers. Many will probably come back into the workforce in a few years when their money runs out. You probably also have a large number of women who stayed home to care for the children and used the house ATMs during those years. How attractive it must have been when house prices were doubling every few years. They don't get into the unemployment stats either. They will soon be knocking on doors also. Using past data to predict the future in a transition phase is a farce. You just can’t compare the last 30 years to taoday. The demographics a much too different.

For example, there is a huge group of boomers probably being forced into early retirement. These do not appear in the unemployment numbers. Many will probably come back into the workforce in a few years when their money runs out.

You probably also have a large number of women who stayed home to care for the children and used the house ATMs during those years. How attractive it must have been when house prices were doubling every few years. They don’t get into the unemployment stats either. They will soon be knocking on doors also.

Using past data to predict the future in a transition phase is a farce.

]]> By: How the Common Man Sees It http://www.ritholtz.com/blog/2009/10/the-mother-of-all-jobless-recoveries/comment-page-2/#comment-222152 How the Common Man Sees It Sat, 03 Oct 2009 07:55:59 +0000 http://www.ritholtz.com/blog/?p=40018#comment-222152 I hear Canada and Mexico are thinking of erecting fences in order to keep American refugees out of their countries. Just kidding.....I think. @ constantnormal I sure wish Barry would install a thumbs up meter. I'd go out and get a whole bunch of new aliases just to recommend your posts a few dozen times :) I hear Canada and Mexico are thinking of erecting fences in order to keep American refugees out of their countries.

Just kidding…..I think.

@ constantnormal

I sure wish Barry would install a thumbs up meter. I’d go out and get a whole bunch of new aliases just to recommend your posts a few dozen times :)

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