More Prosperity Found in the Economy's Seat Cushions

It's official. All of those pundits and even professional economists who used the payroll employment survey to make the claim of a "jobless recovery" and then use that to criticize the 2003 tax cuts, were wrong. Wrong. Plain and simple. These tax cut critics steadfastly refused to give any weight to the household survey despite its consistently raising red flags about accuracy of the payroll data. They clung fervently to the payroll data and the payroll data alone and screamed from the highest hilltops "JOBLESS RECOVERY!!!!" It became a political mantra, an accepted media talking point, even a popular mythology (in my daily life I've encountered numerous people who couldn't even accurately state the unemployment rate talk about a jobless recovery). And it was all wrong.

You might be inclined to shrug it off and say "good enough for government work," but these data are so influential. So much that affects us turns on these numbers. It is infuriating that they are so wrong so often.

More here.

Jobless Rate Rises in Swing States

While the MSM is desperate to preempt actual voting and declare Obama the winner already, joblessness is still rising in places throughout America, notably in some "swing states."

The jobless rate rose in August in five of 10 states considered battlegrounds in the U.S. presidential election less than two months before voters head to the polls.

Unemployment climbed in Wisconsin, New Hampshire, Iowa, North Carolina and Nevada, figures from the Labor Department showed today in Washington. The rate dropped in Colorado and New Mexico, and was unchanged from July in Ohio, Florida and Virginia. Joblessness in six of the 10 states is below the national average of 8.1 percent.

Three and a half years into Obama's presidency and we still have rising unemployment?  That's pathetic.  It is still inconceivable to me that the Lightworker is leading in the polls - either the crappy economy doesn't mean all that much to people, Romney's gaffes/truth-telling are indeed turning people off, or the polls are just dead wrong.  I don't know.  My hunch is that the lame economic news, the international chaos blowing up in Obama's face and a last-minute barrage of ads from Romney's war chest could put him over the top.  Definitely all is not lost, but Romney should have a commanding lead given Obama's incompetence.

MSM Will Give "Unexpectedly" Another Shot In Obama 2.0

Here we stand on the cusp of Obama 2.0 with all it portends - unrelenting expansion and entrenchment of the $1.3 trillion in-the-red-annually entitlement Leviathan coupled with raging anti-business fervor - and news of economic malaise is still "unexpected".  Good f**king God.

Jobless Claims in U.S. Unexpectedly Increased Last Week

More Americans than forecast filed applications for unemployment benefits last week, a sign improvement in the labor market remains uneven.

Jobless claims increased by 4,000 to 371,000 in the week ended Jan. 5, Labor Department figures showed today in Washington. The median forecast of 48 economists surveyed by Bloomberg called for a drop to 365,000. The prior week’s figures were revised to 367,000 from an initially reported 372,000.

The media pulled off a remarkable feat for over four years, incessantly advancing the notion that with a completely clueless economic illiterate, who never had a real job, occupying the White House, some how, some way, inexplicably, economic data was persistently disappointing.  Now, with four more years of malaise at best teed up, is the MSM is going to try to keeping foisting this on us.  Obama 2.0 is Obama Unleashed and yet somehow, some way these economic statistics remain peskily malaise-ish.  Unexpected indeed.  The corruption in the MSM is galling, they are simply too willfully blind to see. 

How Obama Put the Jobless In Jobless Recovery

I have laid it all out here before - the economy will improve but the job market will not and Obama and his team of economic all-stars will be choking on 10%+ unemployment for the remainder of their term. Here is the condensed version:
- Recessions are self-correcting and the credit markets are healing
but,
- Obama and the Democrats are waging all out war on business using every tool available
- Large Companies will divert capital and hiring overseas, or simply live lean
- Small companies, expecting higher taxes and forced to pay higher minimum wages, will hold back on hiring
- Profits will go into deleveraging and savings, not expansion

Numbers in for August continue to be bleak. But Rahm and Dear Leader, well, they saved the economy.

Prosperity is on vacation for a time.

Conclusion: with the amount of monetary and fiscal stimulus coursing through the economy things are bound to do OK, but that doesn't translate to meaningful job creation. Obama owns the "joblessness" of this recovery.

UPDATE: More bad numbers for O.

UPPDATE: Confirmed, from the horse's mouth.

Jobless Sub-prime Mortgage Recovery...Or Something

Don Luskin nails the ridiculous state of sub-prime mortagage teeth-gnashing.

What we have here is the problem that you create when dumb people who have a penchant to borrow more money than they can afford meet a less than ethical salesperson who is incented to make a one-time deal and not based on the best interests of his client. A local paper around here recently chronicled the sub-prime mess with ridiculous "meet a victim" reporting that, inadvertantly, reveals the mixture of greed and stupidity that has landed many homeowners in unfortunate circumstances.


First, there is Ms. Quanda Moore, who borrowed 100% of the price of the home she bought, using an "80-20" loan. Here is Ms. Moore. "They get you into the home. ... There's no equity at all in the home when you buy it," said Quanda Moore, 36, who paused several times to compose herself. "I don't want anyone to go into the situation I've gone into." As if you are supposed to find some equity in box in the basement when you move in. Hey lady, you gotta put equity in, that is why "saving up to buy a home" is such an oft repeated phrase. If we could all borrow 100% of the value of a home, no one would have to save up.

Unfortunately, the stars all aligned and armies of wrongly incented mortgage brokers met with an army of Quanda Moores who for some reason or another embarked on the significant task of buying a home without any preparation or understanding of what is involved.

We survived the sub-prime credit card mess a few years back - when the same types of people bought flat screen TVs that they couldn't afford and there were companies greedy or dumb enough to lend to them - we'll survive the "sub-prime mortgage crisis". This oblique Bush bashing meme will go down in history right next to "jobless recovery."

BBC Outsources US Economic Reporting to 15 Year Old

The BBC has an inept report on the first new unemployment claims number in the US after Hurricane Katrina. There were 68,000 new jobless claims attributable to Katrina out of a total of 398,000 total claims and every attempt is made to make this rather dull number as sensationally dire as possible (to "sex it up" in BBC parlance). Here it is:

US jobless claims at 10-year high

Before Katrina struck, the US economy was creating new jobsUS unemployment has surged in the wake of Hurricane Katrina, with the weekly rise in the number of people claiming benefits jumping to 10-year highs. The US Labor Department said 71,000 people signed up for benefits last week - with 68,000 of those claims directly attributable to the effect of Katrina.

The increase is more than was seen after the 11 September terror attacks. President George W Bush is expected to announce moves to help people affected by the hurricane later on Thursday.

Economic pressure
There have been calls for the limit to be extended on the time a person can claim unemployment benefit. At present, they can sign up for a maximum of 26 weeks, but policymakers want that extended to 39 in order to ease the lives of those hit by Katrina. The total number of claimants in the week ending 10 September was 398,000 - its highest level in two years. The worry among economists is that the extra government spending will put increasing pressure on the US budget deficit at a time when it already is having to finance military operations in Iraq and Afghanistan. After hitting record levels last year, the budget deficit has been trimmed but is still running at unsustainable levels.

First, the title claims the number is a 10-year high. Well, the number is not a 10-year high as anybody who follows this number easily knows. The rate of increase from the last report, was the highest in 10 years. The number excluding Katrina claimants is actually relatively low.

The next sensational bit: "The increase is more than was seen after the 11 September terror attacks." Oh my God, things are worse than on 9/11! Crikey! Truth is that the majority of layoffs came weeks and months after 9/11/01 as the economic damage became clear. There is no way to know at this point how Katrina will compare, so any comparison is less than meaningless.

Then some drivel about "calls" for this and economists "worry" about that as we get the grand finale: "After hitting record levels last year, the budget deficit has been trimmed but is still running at unsustainable levels. "

It has been trimmed, has it? Yeah, try from $412 billion to $331 billion. Just a slight 20% trimming. Seems to me that if you lop something off at a rate of 20% per year, you can get it down to nothing in due time. So how is it that we are at unsustainable levels? How long do we have to right the ship? What are the consequences? We don't know, cause they don't say, but the clear implication is that things are looking bad for the good ole' US of A. Except that we're much less "unsustainable" than say France or Germany, as our budget deficit is 2.6% of GDP compared to over 4% in those countries.

After that feast of specificity, context and insight, we have...nothing. Unsustainable levels, full stop, as they say. Is this bias or some assistant deputy junior intern banging out some copy before dashing out for pints after work?

Back Pat Time

Time for a little 'told ya' so'. I said Ford was at a disadvantage due to the government's massive subsidizing of GMAC. Ford is now saying the same thing.

I said a jobless recovery was highly likely. The San Fran Fed is saying that it is plausible.

I said the "stimulus" was crap (and that everyone would catch on and it would bite back at Obama). Recent figures have forced the Administration to go back and re-sell or at least re-PR this piece of crap.

I said that (hopefully) Ballmer's criticism of Obama's tax plan would open the flood gates for other corporations to launch much needed criticism. In a larger sense, I said that all the former Clintonites that gravitated to Obama would not stick around forever, that they would start to peel off when Obama lost his media created/maintained sheen. Could this tech industry/Shapiro tie-up be the first move in a split between Obama and his newfound acolytes, who were mostly old Clinton acolytes?

I also said - not on this blog, but to an Obama-loving neighbor on the train the other day - that California would resort to the unthinkable to help get themselves out of their fiscal mess...allow oil drilling offshore. Sure enough, to keep their precious, big-government, liberal paradise it looks like previously intransigent greenies might be softening their position.

UPDATE: Here's another one. You heard it here first.

Unexpectedly!

"More Americans unexpectedly applied for jobless benefits last week, a sign the labor market recovery may be slowing."

Yes. Totally. Unexpected.

Gas and Unemployment: Obama's Crucibles

Dan Henninger has a great column today in the WSJ, talking about what we are losing as a nation that is so deep and important yet so subtle as to be easily missed. I understand this, big time. But what struck me is Henninger's off-hand quip about some frightful green bureaucratic agency instituted in Barack Obama's second term. This may be wishful thinking on my part but I see serious obstacles to an Obama second term. Sticky wickets like North Korea and Tea Parties aside (which ought not be dismissed, as they represent a real and legitimate concern over the mismatch between what citizens want out of their government and what government wants for itself), I think the two principal barriers to Obama's re-election are going to be energy prices and unemployment. In my opinion, it is a better than 50% chance that the nation will go into the 2012 election cycle with $4+ per gal. gasoline, and 10+% unemployment. This is not mindless Obama=Jimmy Carter reductionism. Most analysts agree that crude prices are likely to jump in a few years as a return of demand will stress anemic supply growth. The bursting of the oil bubble since July 2008 has substantially reduced capital expenditures on oil and gas exploration, drilling rigs have been shut down at a staggering rate and energy companies are retrenching heavily. This is what one would expect to happen based on fundamentals, but as they say in the oil business, "low prices cure low prices" meaning this decline is eminently reversible. However this old maxim may not play out true to form this time around when you consider the policy obstacles that may prevent the natural self-correction of energy production. The policy environment is so hostile, and set to get worse, for energy producers in this country that their domestic exploration budgets won't come back even close to 2006-2007 levels until the anti-hydrocarbon attack is toned down substantially. Put simply, energy producers are hiding under their desks. If they are spending money, it is abroad. The domestic energy exploration business is going on an extended vacation. Any energy that is produced abroad is subject to competitive bidding by the Chinese and the Indians, whose economies will be consuming ever-greater amounts of crude oil. It is a virtual certainty that oil prices will rise by 2011, potenitally substantially. Here though is my less certain prediction (20% probability): gasoline prices over $4 during the heart of the election cycle will weigh on Obama in the polls and he will tap the Strategic Petroleum Reserve to mitigate high prices (e.g. save his ass).

The second obstacle for an Obama re-election will be unemployment. Let us here distinguish between the economy, the stock market and unemployment. The economy can be doing fairly well, as can the stock market, while employment can be in relatively bad shape. The Democrats drove home this point a few years back with their incessant lamentations of "jobless recovery." We can certainly have one. Looking at the landscape holisitically, the incentives for companies to invest in hiring US workers over the next couple of years are underwhelming. Companies are likely facing input cost inflation driven by cap-and-trade legislation that will drive up energy and compliance costs. They may face the prospect of advancing unionization made easy through card check legislation (see here for the real danger in this terrible idea). They face higher taxes on income earned abroad, taxes which their foreign competitors do not pay. They face potentially intense anti-trust scrutiny. They face head-on regulatory attacks on their industry (just ask the credit card industry). The upshot of all this is that US corporations will be struggling to maintain their level of profitability, and when they do contemplate growth the incentives are for them to invest in productivity tools rather than people or to invest in workers abroad rather than domestically. Trust me, China and Brazil want US corporations to build factories in their countries and they won't have anything like cap and trade to make potential investors think twice. It is a long shot to conceive of large corporations, companies whose hiring registers on the establishment survey, hiring aggressively soon after having near death experiences and facing this set of disincentives. Small businesses too will be under severe pressure from many of the same forces I noted and since the small businessman or woman is the last to get paid, they will be reluctant to divvy up their uncertain pie with more employees. So, my sense is that unemployment is almost certainly not going to approach 6% in Obama's first term. The best we can probably do over the next four years is 8% and even that may prove a struggle; but, it is a very real possibility that it will be at 10% when the mid-term congressional elections roll around, and depending on a few to-be-determined legislative outcomes , 10% unemployment could persist into 2011.

So if we contemplate gas over $4 and 10% unemployment in 2011, how do key Obama constituencies react? What do recent and soon-to-be college grads, who are disproportionate liberal voters, do? Do they entertain pocketbook issues or do they maintain a youthful idealogical posture? Hard to say exactly, but it's easy to imagine some slippage among this group if they can't find jobs. Businessmen? A large chunk of the business community went for Obama in 2008. Will they be there for him? With the exceptions of those who directly benefit from Obama's agenda (think subsidized green enegy outfits), this is the area where Obama has created the biggest risk of losing 2008 supporters. These are the obvious ones. Less obvious is private sector unions. Sure, Obama will pull out all the stops to help them, but what if his actions backfire? What if trying to hand the auto unions a leg up raises the cost of capital and hampers employment at other unionized shops (i.e. CAT)? Do the rank and file vote Obama's intentions or his results?

So while North Korea, SCOTUS nominee Sotomayor are grabbing the headlines, these could turn out to be tangential issues for Obama and for voters come 2012. President Obama has sown alot of risk into core, pocketbook issues for the next election. It will test his political abilities to the hilt to avoid reaping bitter fruits.

I Was Early In Calling Exactly Where We Are Today

Just thought I'd reprise some of my perspicacious calls on the inevitable Obama meltdown that is now in fourth gear and headed downhill. Note these are just the greatest hits from 2009...

Oct 1, 2009:

"The die is cast on the overwhelming concern of the American people, the economy. Based on the last nine months' policy coming from Washington DC, decisions have already been made that have cemented an unexciting, jobless, recovery for at least the next 12-18 months. Stumbling on foreign policy has let loose forces that will prove intractable in the short run. Unattainable success on key issues has been over-hyped to the true believers who will almost certainly be disappointed. The loyalist media is just now starting to shine a critical light. The silent majority is no longer silent, exercised over the venality, arrogance, and buffoonery pervading our government. On present course, historians will be able to sum up the Obama presidency quite succinctly: "it seemed like a good idea at the time."

Oct. 22, 2009:

Remember you heard the precise path here:
1 - Media sheen fades
2 - Never loyal hangers-on (essentially everybody) peel off
3 - Effectiveness is gone
4 - America Moves On

Feb. 19, 2009:

"I guess what I am saying is what I have said before...if The One thinks he can shit on capital and business leaders for four years he's got another thing coming. People who hire other people will hide under their desks, the campaign money will dry up, the layoffs will accelerate, and his base will be be too fat and happy with their bailed-out mortgages and welfare checks to get off their asses to vote for him again. Your average, hard-working, tax-paying American...perhaps not. If Volcker and Buffett love this guy so much they'll do him a favor and whisper in his ear to get ahold of himself and just stand down for a spell. Otherwise, it is One Term City for the Big O...this guy's well of goodwill is a mile wide and an inch deep."

Feb. 3, 2009:

"Finally, and this is not a blunder but rather a fundamental flaw, Obama's legislative support is only as good as his public sheen. The reason he had to stack his administration with Clintonites is that he had no decent network to speak of. His limited experience in government, and life actually, has left him lacking in broad and deep connections to people who can achieve things and stand by him. His quick rise to popularity and electoral promise has attracted a cadre of government and business types to fill the ranks now, but they do so for the sake of Democratic power in and of itself. Does anyone think that previously loyal Clintonites/now Obamites will stay loyal if the bloom starts to come visibly off the rose? I truly wonder how much uphill sledding those around Obama now are prepared to endure. I guess some, but not much."

Senate Republicans: Hang Tough and Scuttle the Stimulus

I said the Republicans would have to endure some name calling, and I was right - "Obama to call stimulus delay "inexcusable and irresponsible" amid "devastating" jobless numbers." It's just words. Hang tough Republicans. This is not Obama's stimulus bill, there is no input from all the economic minds that Obama paraded before us in the campaign. It NancyPelosi's bill. The CBO even says the bill would do more harm than good over time. Ignore the President (or in the words of some famous liberal nutter somewhere "Screw Them."

Former BLS Economist: U-3 Is Garbage, U-6 Is Better

Use U-6 to find out true picture of the economy, which btw is not good.  We knew this of course, but it helps to have one of the top gnomes at the BLS say so publicly.

Think the economy is bouncing back quickly? Think again, says the former top number-cruncher in charge of the Washington Bureau of Labor Statistics. Keith Hall tells the New York Post Thursday that the BLS, White House and media are wasting time focusing on an edited set of data and using it to paint an incorrect picture of the American jobs market on the mend.

The current U.S. unemployment level is reported to be around 7.6 percent. “Right now [it’s] misleadingly low,” Hall told the New York paper. Hall, like many other economists, believes that the more accurate reading of Americans who want a job but can’t find one is north of 10 percent. He says the jobless rate that grabs the most headlines -- called the U-3 -- doesn’t factor in people who have stopped looking for work, but does count employed people who have clocked in as little as an hour of work during the prior month. Hall says another more accurate indicator of the country’s economic health is in the U-6 number, which factors in the underemployed. That number, he said, jumped in June to 14.3 percent from 13.8 percent the month before.

Bloomberg Hides Blue v. Red State Economic Disparity

So check out this headline:

"Tight Job Market in U.S. Cities Prompts Higher Pay"

Sounds awesome right?  So, if you are a struggling millenial in New York, Chicago, LA or Boston, this is good news, right?

Maybe not.  If you read the article, it's basically about Texas and maybe a few other states like North Dakota and Louisiana.  Savvy readers will note that these are energy states.  So the article is basically saying that oil states are booming, but the title says "cities."  And the cities argument is a little thin...

Forty-nine, or 13 percent, of the 372 metro areas reported jobless rates below 5 percent that month, the most for February since 2008, two months after the start of the recession. The lowest was 2.8 percent in Houma-Bayou Cane-Thibodaux, Louisiana, because of offshore-oil exploration in the Gulf of Mexico.

13%?  Houma, LA?  Finally, Bloomberg helpfully gives us a map.  The map is hardly heartening to "city" folk.  It shows, broadly, California and Illinois are still disasters, the northeast is meh and places like super-cool and super blue urban Oregon are struggling big time. 

Contrast that with the soutwest (Texas, Oklahoma, Kansas, Missouri) and the deep South (Mississippi, Alabama, Georgia, South Carolina). 

On the evidence, the reality is clear and the story ought to be "Blue state are struggling, Red states doing much better."  Nope, just "cities" are doing better.

Do we think this is a typical example of micro-bias at Al Hunt's Bloomberg News to give struggling millenials hope and to try to convince people that Obamanomics is turning the corner?

In The Spirit of Tom Lehrer...

Some numbers out this AM. Inflation up and jobless claims up (I'm not gonna link, go read the damn news yourself). In other words, stagflation.

Sometimes you gotta laugh to keep from crying, so I thought I'd start a fun little project to re-write the Johnny Cash classic in line with a classic NBfPB blog post. I'll kick it off with the first verse.

Obama's economy has just turned three
And it doesn't yield much for ma and me
Just this old guitar and an empty bottle of booze.
To Martha's Vineyard, he run and hid
But the meanest thing that he ever did
Was before he left, he went and brought on "Stagflation"

Here are the lyrics. I encourage all to join in on the fun!

Now Obama Really IS Operating Above His Pay Grade

So, this is curious.  The Lightbringer is trying to jaw-jaw the stock market into a swoon.

Couple things.  Someone named Adrian Gray worries:

No one wins from a President trying to talk Wall Street into a crisis. Bad if markets tank. Bad if markets ignore a president.

Actually, no.  Not bad in the least if the stock market ignore a President.  Not in theory and not in practice.  I know of absolutely no theory of corporate finance or capital markets that says that a market must follow along with the preferences of a government official, even a very high one.  And, as readers well know, I have argued that the stock market is already ignoring the Lightworker.  Well, not ignoring him, but discounting him certainly.

Furthermore, to the extent that "Wall Street" gets spooked, I suspect the damage will be alot worse for Treasuries than stocks.  Right now, stocks are your inoculation against dumb ass government, government bonds are your exposure to such.

Finally, bring it on Sparky.  I'm sitting on a pile of cash and would love to increase my ownership stake in corporate America at lower prices.  I'll bet you Warren Buffet is teed up and ready to buy.  Just one more of the many ways that Dear Leader is helping us millionaires and billionaires.

UPDATE:  Futures pointing slightly lower.   Conclusion:  either it's too early to measure Lightworker's impact or he has NO impact.

UPPDATE:  Futures are down marginally, essentially signalling no impact.  Just as I expected, the market deems Obama essentially irrelevant, which is what I have been saying for awhile.  Sorry, Mr. Gray, the stock market doesn't have to pay attention to the President, nor should we be concerned that it doesn't.

UPPPDATE:  Futures have turned UP!  It actually probably has more to do with the jobless claim numbers, but it sure is delicious to think that the market is saying "Obama who?"

UPPPPDATE:  CNBC:   "Wall Street wonders if Obama wants a selloff"  Translation:  "What is this d**khead doing?"

Jobless Recovery Gets More Joblessy

Unemployment still ticking up. When you tax and hamstring business with every possible tool in the government arsenal and you expect doling out borrowed money to create economic growth, well this is what you get. Hate to say it...told 'ya so.

Rehabilitation of the Household Survey

Back in 2004 and 2005 there was a bit of a tug o' war between the establishment survey of employment and the household survey of employment. They are two different things and tell us slightly different things about the employment landscape. True market analysts, who are trying to make money, understand the differences and approach the data with political agnosticism. Not so pundits and the MSM. The difference and the interplay between the two surveys was shamelessly ignored and manipulated to score political points a few years ago. The key talking point on the left throughout 2004 was the "jobless recovery" which was meant to discredit the 2003 tax cuts and George W. Bush going into the November election; and, if you were out to bash the economy, the establishment survey numbers were for you. Big company employment lags the more informal sector and tax cuts spur more entrepreneurial expansion, which would tend to show up in household survey. So the MSM ignored the positive signs inherent in the household data and focused exclusively on the establishment data. Conversely, if you wanted to look for positives and proof that the tax cuts were working, the household survey was where to look, and rightward media outlets were the only place you could learn even a smidge about the household data. (Some background here.)
The US economy is a convoy of giant tankers and small speed boats. When they all decide to make a turn, you can see it in the speed boats first, well before it becomes evident that the tankers have turned. Ironically, today, the political motivations are shifted. The fawning, Obama-entralled MSM is likely desperate to illuminate the leading indicators and small glimmers that indicate the economy is turning around. Natually the MSM is likely to flip the 2004 strategy on its head and begin to emphasize the household survey and studiously put the establishment survey in context, which they utterly failed to do in 2004. Look for the household survey to get heavy play along with assertions that this is all related to the "stimulus package" and/or anything at all the Barry O has done. Watch too for the establishment survey to get ruthlessly parsed and qualified.

Today's Headlines

Well well, the headlines of the day fit nicely with some themes I've hit upon in the past here at NBfPB. First, the front page of the WSJ has an amusing item about how Goldman Sachs is trying to make the pill of their big bonuses go down easier with a PR campaign. Too funny. I don't begrudge them their bonuses one iota, but the public scorn is all their fault. That firm is a hive of cocktail party liberals who swooned over Obama and supported all the Sausage Factory bozos who have led the charge in getting the public to hate...Goldman Sachs. A buddy of mine - a Prius-driving, universal healthcare-loving, Palin joke-a-minute guy who happens to make a couple million a year - expressed to me shock, shock!, at the "communist lynch mob" that directed it's venom at Goldman over the last year and a half. I gave him the dual Claude Raines/Political Unsophistication Award. Socialists hate capitalists, period. If you are a capitalist, as one needs to be to work at Goldman, then don't try to put socialists in power and don't be surprised when they come after your paycheck. It's pretty simple to me, if you believe in capitalism, don't vote for people who hate it - something the million dollar geniuses at Goldman are too sophisticated to figure out (not unlike a Harvard-educated President not figuring out that if you talk all the time, people give less weight to what you say).

Second item today, is the jobless claims number. I guess it is good that businesses are firing at a slower rate, but they are still firing in pretty large numbers. This has to stop before it can reverse, and it is far distance from stopping. The employment situation, it is obvious to be, is terrible with little good news on the 12-18 month horizon. That spells big trouble for the party in power and Dear Leader, he of economic genius despite never having worked in the private sector. Told ya' so.

I Called It: Productivity Over People

Back in May, I said this:

"The economy can be doing fairly well, as can the stock market, while employment can be in relatively bad shape. The Democrats drove home this point a few years back with their incessant lamentations of "jobless recovery." We can certainly have one. Looking at the landscape holisitically, the incentives for companies to invest in hiring US workers over the next couple of years are underwhelming. ... The upshot of all this is that US corporations will be struggling to maintain their level of profitability, and when they do contemplate growth the incentives are for them to invest in productivity tools rather than people or to invest in workers abroad rather than domestically.

Ford Motor today: "Ford Plans $155 Million Plant Upgrade, No New Hiring"

Bloomberg News' New Bash Target...Free Markets in Healthcare

I am not sure why or how Bloomberg reporter Ryan Donmoyer extrapolates from an unreleased Joint Committee on Taxation report that President Bush's healthcare reform proposal from the SOTU will do nothing for healthcare costs. As mentioned the report hasn't even been released and even Donmoyer characterizes it as "very preliminary", yet it "calls into question administration claims of cost and tax savings."

The report apparently says that the reform proposal will begin imposing higher taxes by 2011, and somehow this is supposed to mean that healthcare costs won't go down. Not even the Brookings Institution analyst that Donmoyer hauls in knows what it all means. The tone and content of the article is clearly meant to make Bush's reform proposal look dubious, either by being convoluted or simply unsuited to the putative goals. As someone employed by a leading financial media firm, Donmoyer ought to know that prices for goods and services and taxes are not the same thing and that higher taxes paid does not mean higher prices paid. In fact, if Donmoyer was at all proficient in healthcare economics he would find nothing wrong with Bush's reform ultimately generating higher tax revenue. As I posted on this blog, Glenn Hubbard - one of Bush's former advisors, a current Romney advisor, and a pro-free market healthcare reform advocate - has outlined in his book how removing the distortions currently embedded in the tax code will cause people to buy low cost, high-deductible insurance that is truly insurance and thus opt for increased cash wages in lieu of employer-provided healthcare and thus pay taxes on those higher cash wages. Here is how I reported it (here):

"Furthermore, as people are free to make real choices about what kind of insurance they need, they are likely to opt for high-deductible, catastrophic policies, which will result in them taking higher wages (i.e. less compensation in the form of healthcare) which will be taxed. The incremental taxes from those increased wages, can fund government subsidies for the thorny problems of the chronically ill and the truly poor."

If Donmoyer doesn't understand this he is overemployed, but I think he is just acting on orders from Al Hunt. It appears to be an institutional mission at Bloomberg to attack free market healthcare reform just like it was an institutional mission to spread the fiction of the jobless recovery. Donmoyer has been caught before peddling his biases as news, but I'm afraid his attempt to sow deeper doubt and skepticism was probably effective.