The Green Shoots Are Dead

[interestrateripoff]

http://www.guardian.co.uk/commentisfree/ci...-obama-stimulus

The latest jobless figures show America's economy is stuck in the doldrums. The US urgently needs a new stimulus injection

The June US employment report should convince even the determinedly ignorant that the time has come for another round of stimulus for the American economy. The economy is continuing to shed jobs and work hours at a very rapid pace. The unemployment rate is virtually certain to cross 10% by the end of the summer and will likely hit 11% before we are very far into 2010. This is a scenario much worse than the Obama administration had expected when it crafted its stimulus package. It is time for it to adjust its plans accordingly.

When the Obama administration put together its stimulus package in January, it was projecting that, in the absence of any stimulus, the unemployment rate would peak at just over 9% early in 2010. With the unemployment rate reaching 9.5% in June, they clearly underestimated the size of the downdraft hitting the US economy.

The June data showed the economy shedding 465,000 jobs – but even more striking was the fact that hours worked fell by 0.8%. This rate of decline in hours worked is the same as in the period of economic free fall from October to April. It's good that employers cut back hours per worker, rather than lay people off, but it still means that the demand for labour is plummeting. If hours per worker did not change, this would be equivalent to a loss of more than 900,000 jobs in June.

While few would argue that the economy is already turning, some economists maintain that we have to wait longer to feel the full effects of the stimulus package. To refute this argument we need only look at the size of the package.

More than 60% of the stimulus package ($480bn out of $790bn) was in the form of either tax cuts or mandatory spending such as expanded unemployment benefits. These tax cuts and spending measures have already fully kicked in. While most of the money has not yet been spent, we are already paying taxes at a lower rate, due to the tax cut, and collecting higher benefits as a result of the stimulus package.

Consumption in April, May, and June was undoubtedly higher as a result of these stimulus measures, but there is no reason to believe that they will provide further additional boost in July, August, and September. In other words, we are now feeling the benefits of this stimulus, and we will continue to feel the benefits. But it is just not sufficient to offset the downward momentum from the collapse of the housing bubble.

If we expect a further boost from the stimulus, then it has to come from the direct spending portion. As many commentators have rightly noted, most of this money has not yet gone out the door. However, the amount at issue is too small to have much impact.

The Congressional Budget Office projects that we will spend $110bn from this portion of the stimulus package in the fiscal year beginning in October. However, almost $30bn of this spending is designated as a state and local fiscal stabilisation fund. This money will prevent cutbacks at the state and local level. This is very useful spending, but this money is just preventing further contraction, not pushing the economy forward.

That leaves us with just $80bn as a net stimulus for 2010 compared with current tax and spending levels. This is just a bit more than 0.5% of GDP. It is less than one-fifth as large as the falloff in housing construction from its peak at the height of the bubble. It is only a bit more than one-tenth as large as the falloff in consumption due to the disappearance of housing bubble wealth. In short, it cannot possibly be large enough to turn the economy around.

This is why we badly need a third stimulus package. There is nothing on the horizon to prevent the unemployment rate from staying high long into the future. As I have written before, the obvious form for a third stimulus would be an employer tax credit to give workers paid time off.

This "pay for play" tax credit would give employers an incentive to shorten work time with paid family leave, paid sick days, paid vacations and/or shorter workweeks. It is likely to have an impact very quickly, since employers would be throwing money away by not moving as quickly as possible to take advantage of the tax credit. As a result, it would both put more money into the economy and also redistribute employment so that fewer workers are unemployed. If we all worked five per cent fewer hours, then seven million more workers could have jobs at the same level of demand.

The people who make economic policy gave us this recession because they were too bullheaded to see an $8,000bn housing bubble right in front of their face. There are ways to get us out of the mess they created, if our leading economic policymakers could finally start to open their eyes and think seriously about the economy.

Arguing for another stimulus but making some good points about why the US is not in recovery.

Obama's team are clearly useless and have no idea what's going on. To admit what's going on would probably raise serious questions over the Bush Presidency and that just isn't going to happen, instead it will all be blamed on Obama.

Another stimulus is only going to make things worse and there is no money for another stimulus.

[SarahBell]

Stimulus means stoppign imports. make americans work for americans.

Same for us here.

Every service and product we buy that's made or carried out abroad means thats 1 less job for us.

[lowrentyieldmakessense(honest!)]

http://www.guardian.co.uk/commentisfree/ci...-obama-stimulus

Arguing for another stimulus but making some good points about why the US is not in recovery.

Obama's team are clearly useless and have no idea what's going on. To admit what's going on would probably raise serious questions over the Bush Presidency and that just isn't going to happen, instead it will all be blamed on Obama.

Another stimulus is only going to make things worse and there is no money for another stimulus.

third stimulus package

can they make it to ten

before the paper dollar is no more

any takers

[shedfish]

has the missing 350 Bln USD from TARP 1 been accounted for yet, or has that vanished along with certain members of the old administration?

[porca misèria]

Oh dear, we're not out of the hole yet. Must dig harder.

[Kilham]

Another stimulus is only going to make things worse and there is no money for another stimulus.

'As long as we have our paper and our ink, there will always be money for another stimulus'

[brassed off brit]

As we have no more money for stimulus, lets do a california and give everyone one million pounds in an IOU only redeemable at the tax office....sorted, everyones tax for the next ten years instantly paid....loads of dosh for stimulus plan x y z...by jove I think i'm getting the hang of this economy lark!

[US Citizen]

What happens if there is no stimulus package ? Things get worse.

What happens of there is severla stimulus packages ? Things get worse.

Save the ink and paper.

[BossCat]

From the stock-gambler who sat in the Assembly to the small land speculator in the rural districts; from the sleek inventor of canards on the Paris Exchange to the lying stock-jobber in the market town, all pressed vigorously for new issues of paper; all were apparently able to demonstrate to the people that in new issues of paper lay the only chance for national prosperity.

Dorisy declared "There is not enough money yet in circulation; if there were more the sales of national lands would be more rapid." And the official report of his speech states that these words were applauded.

If the above language seems somewhat antiquated it is because the above events and comments took place in France in December 1791. This was after the third issue of Fiat paper in an attempt to boost an indebted France. Ultimately the issue of assignats, paper money, in replacement of specie and the banning (on punishment of death) in trading of gold or barter, led to the utter collapse of the French economy which took many decades to recover.

This is taken from a book called "Fiat Money Inflation in France: How it came, what it brought, and how it ended". The book was written by Andrew Dickinson White in 1896. For those of you who might believe "it is different this time" a cursory review of this will rid you of any confidence you may have had.

[eric pebble]

Oh dear, we're not out of the hole yet. Must dig harder.

You're not Mandelstein's boyfriend are you?

[OnlyMe]

The June US employment report should convince even the determinedly ignorant that the time has come for another round of stimulus for the American economy.

See my post - Survival+, an interesting book. It has a section on marketing and propaganda. See how many elements you can tick off. Particularly like the way that this piece starts, by stating that only the determinedly ignorant could find anything wrong with more stimulus. Sets the tone for the rest quite nicely for the rest of the piece.

http://www.oftwominds.com/blogapr09/propaganda04-09.html

<i>The authors did a research of propaganda techniques and set four stratagems of persuasion:

# You create favorable climate for the message (called pre-persuasion). You subtly outline what picture has to be drawn in the end. Here you decide what way thoughts and perceptions of the audience will be shaped and channeled. Having established right basis for further discourse you secure the results you seek. At this stage you should identify some statements as axioms, i.e. `what everyone takes for granted' and `what everyone knows'. You attribute labels (positive or negative) to objects of further discussion, put black-or-white colors in non-disputable way. You use generalities to depict the situation - they are usually so ambiguous that you may change their meanings in the future. You use rumors and gossips.

# You create a 'source credibility', i.e. establish a favorable image in the eyes of the audience. The message must come from `experts' or `unbiased' and, of course, personally attractive communicators. Try to switch on the self-persuasion mechanism of the audience.

# You create a message that focuses the target's attention and thoughts on exactly what you want them to think about. Research has identified at least five conditions that are likely lead to heuristics. Heuristics are most likely to be used when people do not have time to think carefully about the issue, when they are so overloaded with information that it becomes impossible to process it fully, or when they believe that the issues at stake are not very important. Heuristics are also used when people have little other knowledge or information on which to base a decision and when a given heuristics comes quickly to mind as they are confronted with a problem.

# You create an emotion of the target that will help you channel thoughts of audience in right direction. Fear appeals are most effective when they raise high levels of fear and suggest a doable and effective response (the authors also explain why sometimes fear does not work). Guilt: once we are filled with guilt, our thoughts and behavior are directed towards ridding ourselves of this feeling that's where propagandists take advantage of us. Feeling of obligation and indebtedness: large initial request and immediate concession by the requester invokes the norm of reciprocity -we concede. Feeling of commitment based on our desire to be self-consistent.

For example, to 'soften up' the target you make him involved in a much smaller aspect of the action. This serves to commit the individual to `the case'. Once people are thus committed, the likelihood of their complying with the larger request increases. Another way is to show uniqueness of the offer (scarcity sells). Use the `minimum group paradigm': You are on my side (never mind that I created the terms); now act like it and do what we say.

</i>

[OnlyMe]

As we have no more money for stimulus, lets do a california and give everyone one million pounds in an IOU only redeemable at the tax office....sorted, everyones tax for the next ten years instantly paid....loads of dosh for stimulus plan x y z...by jove I think i'm getting the hang of this economy lark!

The best the US public is going to get is the few hundred dollars they got in the post (I think before) the real stimulus was given to those intended (the banker/corporate elites). Good mind-****** that one, whilst the plebs were huddled over little envelopes wondering what to do with this peppercorn giveaway they were gang-raped from behind.

Edited July 7, 2009 by OnlyMe

[lowrentyieldmakessense(honest!)]

If the above language seems somewhat antiquated it is because the above events and comments took place in France in December 1791. This was after the third issue of Fiat paper in an attempt to boost an indebted France. Ultimately the issue of assignats, paper money, in replacement of specie and the banning (on punishment of death) in trading of gold or barter, led to the utter collapse of the French economy which took many decades to recover.

This is taken from a book called "Fiat Money Inflation in France: How it came, what it brought, and how it ended". The book was written by Andrew Dickinson White in 1896. For those of you who might believe "it is different this time" a cursory review of this will rid you of any confidence you may have had.

yes but people cant be arsed to read it

i think they may manage to get to 6 new issues this time before the currency collapses

[interestrateripoff]

If the above language seems somewhat antiquated it is because the above events and comments took place in France in December 1791. This was after the third issue of Fiat paper in an attempt to boost an indebted France. Ultimately the issue of assignats, paper money, in replacement of specie and the banning (on punishment of death) in trading of gold or barter, led to the utter collapse of the French economy which took many decades to recover.

This is taken from a book called "Fiat Money Inflation in France: How it came, what it brought, and how it ended". The book was written by Andrew Dickinson White in 1896. For those of you who might believe "it is different this time" a cursory review of this will rid you of any confidence you may have had.

Fiat Money Inflation in France: How It Came, What It Brought, How It Ended

Book can be downloaded here.