Job Loss Crash Comparison Update / Stimulus Rant

A reader wrote in requesting an update to this February post, in which I criticized Nancy Pelosi’s misleading chart of job losses.

Here’s an update to the post-WWII job loss chart, courtesy of Calculated Risk, in which I’ve added a mark so you can see where the “stimulus” was passed.

Percent Job Losses in Post-WWII Recessions

Wow, good thing we changed direction to the tune of $787 billion*, huh?

*(Actual cost: much, much more)

If there is any doubt about who the stimulus was really directed at saving, just take a look at an update to the stock market crash comparison:

Dow Jones Crashes: 1929, 1973, 1987, 2001, & 2007

Woo, go Wall Street!

Finally, speaking of bailouts for Wall Street and the banks: Congress Poised to Keep Homebuyers’ Tax Credit

The Senate and House are poised to agree on a compromise measure to extend unemployment benefits that also would expand a popular $8,000 tax credit for homebuyers, despite a recent government report on extensive mistakes and suspected fraud in the program.

The Senate might pass its version as early as Wednesday, and aides to Congressional leaders say the House could accept it this week, sending the bill to President Obama to sign into law. After weeks of partisan delay in the Senate, Democrats are eager to show progress before Friday, when the October jobless report is again expected to show high unemployment.

Super! So while people continue to lose their jobs, and absolutely zero of the underlying problems in the economy have been fixed, let’s pour another ten or twenty billion dollars into the housing market to try to keep prices propped up (i.e. – keep homes as unaffordable as possible) a little longer so our buddies in the big banks that got us into this mess can avoid taking losses.

Sounds like a plan to me!

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

111 comments:

  1. 1
    bubblebuyer says:

    I think that there is a clear difference between this recession and prior rececissions. In the past, the USA economy encompassed the entire value chain i.e. we extraced commodities, designed and built goods, distributed and sold these products. When, economic activity increased at the end of a recession, people across the value chain benefited and it was this feedback loop that led to strong post recession growth and employment recovery. Unfortunately, today that value chain is much reduced. We don’t produce anything of value. We import manufactured goods from china, germany and japan and american consumers buy these products while treasury issues IOUs to CHina, Germany and Japan for payment by future generations.

    The US economy no longer produces high paying jobd and the evicerated manufacturing sector no longer generates net new jobs. What we are seeing today is the new normal. The situation will stablilize when wages in 3rd world countries equalize with those of the US adjusted for the cost imposed by regulation that increases the cost of doing business – things like cap and trade, healthcare etc.

    This sad situation is the result of congress and white house policy created by lawyers and other career politicians that have never held a real job in their lives where they have had to produce anything of value – this applies to both parties. THe corrupt practices in washington including lobbying, bribes and an imbalance in the competencey between american and Chinese trade negotiators are also to blame. Get used to minimum wage jobs and the threat of job loss, neither are dissapearing anytime soon.

  2. 2
    Anon. says:

    TIM,

    Look, I dislike Obama more than anyone else that posts here, but your argument may be invalid (that Obama was really just looking after those Wall street fat cats.) It could very well be that employment simply LAGS the stock market and if Obama was able to turn around the stock market, companies eventually feel confident enough to hire.

  3. 3
    James Lupori says:

    bubblebuyer – So, the so-called “free market” decided to eliminate jobs, dismantle our manufacturing base, ship jobs overseas, etc., etc. thereby making the private sector more efficient and profitable (in the eyes of Wall Street)…..but then you turn around and blame government? Thanks for the cutting-edge analysis.

  4. 4
    bubblebuyer says:

    By James Lupori @ 3:

    bubblebuyer – So, the so-called “free market” decided to eliminate jobs, dismantle our manufacturing base, ship jobs overseas, etc., etc. thereby making the private sector more efficient and profitable (in the eyes of Wall Street)…..but then you turn around and blame government? Thanks for the cutting-edge analysis.

    So what’s your solution? Cost and labor arbitrage does is not the same as increased effciency. Clearly the current scheme is not sustainable. Just look at our trade deficits – $59B a month before the economy collapsed and now in the $30B’s a month. The USA enacts all kinds of legislation. Things like anti child labor, minimum wage, environmental controls, OSHA, sets corporate taxation rates, product safety…… Then, the USA opens it’s market – the biggest consumer market in the world -to countries with none of these regulations effectively making the US non competitive with 3rd world countries. Consequently, all portable jobs migrate to low cost centers leaving minimum wage and for the moment, some high paying jobs. What’s your solution? Don’t come back with the ” we need to innovate and focus on creating knowledge job” bs. Clearly, free trade does not work if the playing field is stacked. We need balanced trade not free trade.

  5. 5
    David Losh says:

    RE: bubblebuyer @ 1

    I made the comment on another thread that when NAFTA was proposed and the Teamsters opposed it I strongly lobbied the Teamster’s Union to organize in Mexico. To me it was an opportunity to expand influence. The Teamsters of course chose the guise of protecting American jobs. The fight is still on to off load freight from Mexico at the border from Internationally owned trucks. It’s a ridiculous expense.

    Labor should raise wages. In my opinion it is labor’s responsibility to get more from the hand that feeds them. That sounds communist, but it’s a simple equation of capitalism. Profit, without investment is dead money. If you pay the money to labor it creates a demand for products. You can supply until the day you die, but if no one buys it there is no market place.

    Labor should be making demands for living wages. The employer should be the one lowering expectations for profit. Another problem is all the do nothing traders in stock profit portfolios as well as the government that supports that.

    Our education system is also to blame. We promise that if you stay out of the work force long enough and get a Degree we promise you will get a good paying job. We promise. Every body raise a hand who are architects, engineers, lawyers, doctors, administrators, or financiers who are worried about keeping a job. Anybody?

    We have to rethink a bunch of stuff because in my opinion it’s not just government, or corporate structure, it’s the whole system.

  6. 6

    RE: bubblebuyer @ 1

    Lagging Indicators

    That’s what the politicians’ [mostly attorneys] economists call America’s approx 50,000,000 unemployed and severely underemployed.

    Its a slap in the face. When do the “lagging indicators” get well? 50 years? LOL

    We need a good old fashion cup of “Martin Luther King and John Kennedy” coffee….this blatant pandering to the rich and elite simply isn’t my kind of Democrat and it appears that Independents [like me?] are switching and voting Republican across the country lately….gee, I wonder why?

    Speaking of welfare to the rich elite, this “Cash for Clunkers and Domiciles for Dupes” tax credit nonsense would have been embarrassing even to the Republicans years ago.

  7. 7
    mukoh says:

    Dave, I have yet to meet a doctor or a lawyer who is afraid of being laid off. You are a little misguided. People with education get laid off less then so called “labor”, i.e. people with technical skills and nothing else.

  8. 8
    scotsman says:

    Frustrated, Tim? ;-)

  9. 9
    AMS says:

    The Tim-

    Let’s get this out of the way: You generally have had the opinion that things are much worse than what’s been generally accepted, and it’s most prevalent when it comes to Seattle Housing.

    As far as I am concerned, this post should be about how bad things really were, even though the general consensus was that there was no problem present prior to August 2008.

    I am not suggesting that I agree with any of the actions that have been take, but I do enjoy my new car, and when I received the $4,500, I must admit that I enjoyed lapping it up.

  10. 10

    RE: AMS @ 9

    On Our Grandkids’ Dime?

  11. 11
    The Tim says:

    By Anon. @ 2:

    Look, I dislike Obama more than anyone else that posts here, but your argument may be invalid (that Obama was really just looking after those Wall street fat cats.) It could very well be that employment simply LAGS the stock market and if Obama was able to turn around the stock market, companies eventually feel confident enough to hire.

    So, you’re saying Obama = champion of trickle-down economics?

  12. 12
    3rd Genetation says:

    Speaking of disliking someone, Opie from Redmond strikes again in his quest to rule the world. Maybe he is getting RailRoad envy from his Pal in Omaha?

    Microsoft lays off 800 more

    Associated Press

    Posted: 11/04/2009 09:53:48 AM PST
    Updated: 11/04/2009 09:53:49 AM PST

    REDMOND, Wash. — Microsoft Corp. says it is cutting 800 more jobs. That’s in addition to the 5,000 layoffs it announced in January.

    Lou Gellos, a Microsoft spokesman, said Wednesday the cuts are being made in offices around the globe. He would not say what specific product groups or job types are affected.

    Gellos also says Microsoft had already let nearly all of the 5,000 go, in what was the company’s first-ever widespread layoffs.

    Microsoft also said in January it would continue to hire in key areas such as Web search. The software maker, based in Redmond, Wash., employed about 94,000 people as of the end of December 2008. At the end of September, about 91,000 people worked for Microsoft, indicating the company has added 2,000 jobs this year.

  13. 13
    3rd Generation says:

    Wow. What a week. First the elected political idiots running Washington get depth charged by Boeing and then this from Opie.

    How will that affect Real Estate in the Puget Sound now that the Recession is Over?

  14. 14
    MATTHEW says:

    I can’t wait for the government induced sugar high to wear off…. Once the stimulus party is over it is going to be one hell of a hangover.

    J6P is going to feel like he just went on a 2 week bender to rival Rick James in his hayday!

    But hey, everything is A-OK and jobs are a lagging indicator! SOLD TO YOU! If anyone thinks we are going to have any sort of economic recovery in a service based economy without an increase in employment they are smoking something fierce.

  15. 15
    James Lupori says:

    RE: bubblebuyer @ 7 – Bubblebuyer – Thanks for your spirited response. It’s good that we have this discussion because it raises some fundamental questions about the economic/political position of the U.S. in the world today. Let me answer you this way:

    1) No matter what way you cut it, the U.S. has been on an economic race to the bottom for decades. The most emblematic example of this is Walmart (where Scotsman likes to shop). If your argument is that we should be defending high quality, good paying jobs here on-shore, there are legions of American consumers who respond by paying for low-cost goods and services. We cannot produce good jobs when everyone wants to pay nothing for goods and services.

    2) We have neglected our own infrastructures: roads, bridges, high speed rail, our cities, our schools….you know, all the stuff that needs to be maintained for a vibrant economy. The reason: because it has been more important for Americans to pay low taxes. As a result, even if we wanted to create the “technology” jobs you mention, we have not made the investments necessary to produce a workforce equal to the task. Our schools are still utilizing pedagogical methods from the 50’s and we aren’t willing to spend the money to increase the “educational band width” to produce a 21st Century workforce.

    3) Americans simply must get used to living less lavish lifestyles (I like that alliteration). The party’s over for middle-class America. Certainly, the vast majority of Americans will continue to overspend and buy big toys (they can’t afford) but sooner or later this feeding frenzy will end.

    I think we’re in an incredibly dangerous position today. We have a private sector that is very good at eliminating costs at the expense of human capital (which is what they’re supposed to try to do). We have a public determined to spend nothing for goods and services and pay no taxes (which is what they’re supposed to try too do). Unfortunately, this means that “wealth creation” has become nothing more than money laundering and pushing “junk” on each other.

    I know I’ll get slammed for writing this but here goes: Probably one of the only ways we will emerge from our current trouble is by spending a lot of money on our infrastructure in order to upgrade all of our systems. Think of it as a modern-day Marshall plan. Just a thought!

  16. 16
    Ray Pepper says:

    RE: AMS @ 9

    I must admit that I enjoyed lapping it up.

    Agreed! As long as THEY (Gov’t/Anyone) continue to give, we should accept and say thanks. The gravy train will end.

    Now I’m looking forward to Nov 27 Black Friday. Lets see what the retailers are unloading. My target is a 50 inch Plasma for 500.00. They seem to be holding at 749.00 at Costco and Amazon.

  17. 17
    Trigger says:

    RE: bubblebuyer @ 1 – I actually fully agree and this is why I was saying that you need to work more for less. In the past companies did not go to 3rd world countries because laws were unstable, govt could cease assets. But this is not the case with India and China and they add a lot of people to the market.

    I think companies will stay away from Africa but at some point even Africans will come to a conclusion that it is better to produce sthg.

    So wages will need to be somewhat equal. But certainly a situaton where an Indian developer earns 8K and a US counterpart earns 100K is not sustainable. There is some way to go before there is a new world order.

  18. 18
    Tyler says:

    RE: softwarengineer @ 10

    Remember, he got a Pontiac (a disguised Toyota!). I wish I could hear him trying to convince the person that he sells it to that it is basically the same as a Toyota.

    AMS, just giving you a hard time. I did the same thing when I bought a decked out Passat instead of the Audi A4. The person I sold it to said, “It’s a VW, not an Audi”.

  19. 19
    k2000k says:

    RE: James Lupori @ 15

    I have to disagree with your post about not spending enough money on education. The US has outpaced the rest of the world when it comes to spending on education, we spend more than double than some countries in Europe but get worse results, sounds like another problem in another sector of the US doesn’t it. We in the US, because of the wealth that does exist, have this mentality that if we throw enough money at the problem it will go away. Sort of deciding to fill the glass with more water when its half empty, the problem is that no matter how much water you pour in, if the glass itself is defective and has a crack in it, then the water will just leak out. Having just left the education system as a student, running the gamut from public to private institutions throughout my educational life, I can tell you the problem isn’t money, the problem is the system itself. Not enough control for the parents and teachers and too little ability to dump below grade teachers because of an intransigent teachers Union. The schools that were able to successfully teach their students and achieve above average results were ones, both public and private, that were able to give parents control and successfully dump below average teachers.

  20. 20
    Flying Ape says:

    Come on Tim your better than this. Basing the effectiveness of the stimulus on something as fickle as the stock market rally is weak. You can clearly see the market started to rally in March after the Fed’s QE policy (dollar carry trade, Bernanke put, blah blah blah) and its more of a monetary result than Obamas fiscal stimulus. Last time i checked less than half the stimulus has been spent so i doubt anyone can argue its effectiveness (that’s both pros AND cons for the stimulus). Yes, the stimulus could be a complete waste but you shouldn’t judge it based on unemployment (LAGGING indicator) which wont see the benefits until all the money is spent.

    On a side note, i hope your political views aren’t skewing this sites integrity. Your recent rants are alienating the left and independents (which i consider myself) and i don’t know if that’s what you want after seeing yesterdays election results. I occasionally enjoy you ranting on big government but I prefer equal emphasis.

  21. 21
    bubblebuyer says:

    Re James:- I agree with most of what you wrote with the exception of investing in infrastructure. While I agree that it has been long neglected. Significant improvements will require borrowing trillions of $s we do not have with the prospect of only seeing returns from these infrastructure investments in the distant future. In the meantime, China ramps up production and deploys (and self funds with its trade surplus) infrastructure as it scales its productive manufacturing base, services and consumer economy.

    I agree that we are in a race to the bottom. We are seeing the results of government regulation, free market trade policy and consumer behavior clearly for the first time. Consumers are about to realize that only paying low prices for low quality garbage drives companies to produce these products elsewhere, resulting in a declining manufacturing base, fewer job opportunities and lower wages. This leaves them with less money to purchase products driving them to curtail purchases and further pricing pressure. Companies are realizing that by outsourcing production and services they are eliminating significant portions of their customer base, severely impacting profitability. This is a death spiral and layer in the unsustainable borrowing of the federal government to keep the scheme going, the odds of it becoming a controlled descent are not good.

    American’s have made the decision, perhaps unwittingly, to sacrifice our standard of living so that inhabitants of third world countries can increase theirs until we reach near parity between 3rd world, developing and developed countries. This is an admirable sacrifice we have made and may continue to make. I would bet the majority of American did this through ignorance and stupidity. Now they look to the government to help them out.
    I look at the wars we are fighting in Iraq and Afghanistan and wonder if they represent the real threat. The real battle is for economic survival of our way of life. We sacrificed our economic well being by pushing free market global trade policies. Then we naively opened the largest consumer market in the world to everyone. Savvy countries have taken advantage of this to transfer US manufacturing base onshore. This is the real battle. However, leadership on this issue is MIA.

    There are no easy answers. I think Americans will be forced to live within our means. Countries are concerned about our ability to pay back our massive and ever increasing debt. They will no longer finance our excessive spending and consumption. We can make selective infrastructure investments but this amounts to stimulus of the economy for the most part requiring more borrowing. Ultimately, our quality of life will stagnate until that in third world countries reach equilibrium. Meanwhile, I hope I can hang on to my high paying job but at some point, our customers will disappear and I am not sure my employer will need me.

    Apologies on the long post but this is an issue close to my heart. I don’t understand the logic in life of trying to achieve a different outcome by repeating the same actions that got us into the mess in the first place. Unfortunately, this is the only strategy our unimaginative elected leaders know how to do.

  22. 22
    scotsman says:

    RE: MATTHEW @ 14

    ” jobs are a lagging indicator! SOLD TO YOU!”

    Agree 100%. With our economy as currently structured the traditional role of employment numbers as a lagging indicator is null. We won’t see any real recovery until this number turns up and holds for some time. This isn’t just a normal dip in the business cycle we’re looking at, but a major restructuring of our national economy and relative position in a now truly globalized world. It ain’t just more of the “same ol same old.”

  23. 23
    scotsman says:

    This is great! Lots of new posters coming on board! But guys, Tim’s dog is getting old- go to the comments box, click on “sign up with Gravatar” and add a clever pic, OK?

  24. 24

    RE: k2000k @ 19

    Kent School District has a 2010 Budget Surplus

    Its true. Even with that long teachers strike to get cave-in by both sides. Not that a budget surplus is a bad thing, but now-a-days its a dinosaur in Seattle area government.

    The bottom line and we all know it: we can’t teach math and science in public schools anymore without real mathematicians and scientists doing the teaching; and that ain’t gonna happen paying ’em present history degree type “cattle herd” teachers’ pay. Its that simple. And don’t expect Johnny to become a rocket scientist to teach science in public schools with unions/management paying ’em all the same.

    Speaking of local govenment taxes [like property taxes from home sales and rentals] supporting our Seattle schools lately, it just ain’t the 70s anymore, where kids mostly came from larger SFHs….a good percentage of them live in smaller apartments [with much less tax base per student] and whether we want to admit it or not, the rosy Bush/Obama economy and similar uncontrolled growth planning has forced a lot more per capita students into smaller and smaller tax base domiciles….no wonder public school graduation rates are heading to 25%…LOL

  25. 25
    James Lupori says:

    RE: k2000k @ 19 – Your argument would be more powerful if you didn’t rely on the same old “we throw too much money at the schools” argument. Let me cut to the chase on this:

    1) When the wealthy want better education for their kids THEY THROW MONEY AT THEIR PRIVATE SCHOOLS. If it’s good enough for them, then it’s good enough for all kids. Call me a socialist/commie, whatever you want. Simply put: if you’re going short-change all the basics at public schools (the buildings, the teachers, the resources, etc.) then don’t expect to have a future. Don’t keep saying “what about the children?”

    2) The educational system does, indeed, need re-engineering. So the solution is to spend even less on it??? Sure, starve that beast and we’ll get an even less educated population that still believes the sun revolves around the earth.

    3) Try not to confuse the notion of spending more on schools with “increasing educational bandwidth.” We need to start attracting the best minds to creating a 21st Century educational system. Forgive me for using a Wall Street dictum here but: “We need to pay more for talent or they will go somewhere else.” So if it’s good enough for Wall Street, why not our children???

  26. 26
    The Tim says:

    RE: Flying Ape @ 20 – Obama’s the one that pushed projections that showed the stimulus preventing unemployment from rising above 8%.

    As far as “alienating the left and independents,” I’m not sure where you’re coming from on that one. I was highly critical of Bush and his pals for pushing the TARP last year, I didn’t vote for McCain or Obama, and have consistently criticized bad policies, regardless of the letter next to the name of those who are pushing said policies.

    Do most left and independent voters really think that continuing to bail out banks and wall street at great expense to the taxpayers today and for decades to come is the best policy? Do they prefer “extend and pretend” over a plan to stop the looting and start prosecuting?

  27. 27
    David Losh says:

    RE: mukoh @ 7

    You’re uninformed.

  28. 28
    James Lupori says:

    RE: bubblebuyer @ 21 – bubblebuyer – Sometimes, when you want to put an addition on your house or put on a new roof, you borrow the money and make the investment. Sometimes you pay the debt off fast. Sometimes you pay long-term. Anyone who has owned a home for more than a few years knows that one must invest about 1% of the value of the home every year for upkeep alone. Why would anyone even read this blog (or worry about real estate) without understanding that basic principle.

    In a larger sense, the U.S. needs to borrow against it’s equity and upgrade, renew and repair all the stuff that’s falling apart. I recall a study in 2000 by the Army Corps of Engineers that forecast the necessity of a $1Trillion investment in our infrastructure. Then, thanks to the psychopathic lunacy in the White House, we shot that wad in Iraq. We continue to “invest” in schools (and other projects) in Iraq but cannot find the means to spend money here???

    I’m truly fascinated by the way in which people think about the big macro economic issues: If it’s a war, the money flows like water; if it’s a plan for high speed rail, then it’s pork. Both require borrowing, but the first revels in the “heroes” and the “missions accomplished” The second is criticized because we’re going to “burden our children.”

    This is why I was dead serious about how dangerous our situation is in the U.S.. We will continue to talk ourselves into investing in all the wrong things whilst the rest of the world passes us by. Talk to anyone who travels these days (in Europe and Asia) and you’ll be told that they have been spending money on all sorts of capital projects. The last time I visited my family in Italy, they were rebuilding roads, bridges and tunnels all over the place……IN ITALY!!! They can afford to do this, in part, because they aren’t contributing 1/2 of the world’s military spending as is the U.S..

    Big problems, no easy solutions.

  29. 29

    RE: David Losh @ 27

    I Agree With You Dave

    From my experience doing board work for contract nursing, MDs are horrified lately as hospital rooms lay empty and patients put off operations. I went to an autism conference this summer and two MDs stood up and gave parents and teachers of autistic people a commericial on how their services were unique and please make your appointment today…..rather than speaking on new educational facts on autism. I heard family doctors make like $85K a year, try buying a house on that income with a $200K college loan…LOL…the $65K they pay RNs with $20K college loans sounds much better. I hear they’re laying off RNs though and the LPNs are safer at lower wages.

    Attorneys, same conundrum, lower pay [or no pay], less clients.

    There’s no special tickets to the life boats, we’re all on this Titanic together heading for the ice berg.

  30. 30
    Anon. says:

    RE: The Tim @ 11

    Hahahaha… I think that smart people KNOW it works. Liberal smart people that want to win elections, pretend they don’t believe it though. Like Obama..

  31. 31
    Matsayswhat says:

    RE: Flying Ape @ 20

    I think you’re mixing up left/right idealogies with bear/bull. This site tends to be bearish and generally has bearish posters… Even if you’re a bull that doesn’t mean you can’t enjoy and learn from the very well put together graphs and statistics, which can often be intrepreted differently depending on your school of thought.

  32. 32
    Rojo says:

    By Trigger @ 17:

    RE: bubblebuyer @ 1

    So wages will need to be somewhat equal. But certainly a situaton where an Indian developer earns 8K and a US counterpart earns 100K is not sustainable. There is some way to go before there is a new world order.

    actually, the difference is not that large! The latest conversion factor for project planning we are using is 2.0 – 2.5X and decreasing fast. Compared to cost of living here, I would say, we are not overpaid :)

  33. 33
    AMS says:

    RE: softwarengineer @ 10 – Once again, let me say I do not have a positive or negative opinion about the whole situation, but that said, what’s the alternative?

    The alternative might be just as expensive, but in a different way.

  34. 34
    AMS says:

    RE: Ray Pepper @ 16 – Good call! I didn’t even consider targeting Black Friday like that. There are only 23 days left until the big day…

  35. 35
    HappyRenter says:

    By The Tim @ 11:

    By Anon. @ 2:

    Look, I dislike Obama more than anyone else that posts here, but your argument may be invalid (that Obama was really just looking after those Wall street fat cats.) It could very well be that employment simply LAGS the stock market and if Obama was able to turn around the stock market, companies eventually feel confident enough to hire.

    So, you’re saying Obama = champion of trickle-down economics?

    It’s quite interesting. Usually, European countries spend stimulus money in directly creating new jobs. For example, the town would start a project to remodel a city park. This would employ a lot of young masons, civil engineers and possibly architects. The local shops would also benefit because they would sell raw materials to them. In European countries, this is considered a way to stimulate the local economy. Has such a thing been done in Seattle as well? Or, is this too socialistic to ever be considered here?

  36. 36
    HappyRenter says:

    By AMS @ 33:

    RE: softwarengineer @ 10 – Once again, let me say I do not have a positive or negative opinion about the whole situation, but that said, what’s the alternative?

    What about creating jobs instead of throwing money at people? I thought the American dream was to be offered a job. A lot of staff people have lost their job at the UW. Why not spending part of the stimulus money in keeping those jobs?

  37. 37
    Trigger says:

    RE: Rojo @ 32

    Hey Rojo – This proably takes into account overhead that is created as a result of communicaion between SEA and India. Look a the site:
    http://www.payscale.com/research/IN/Country=India/Salary

    The dev earns 10.5K per year. In SEA such a dev earns more like 60K. So the difference is not 2 or 2.5. But with additional overhead I agree it can be 2 or 2.5.

    So the Indian salary will need to be hovering at around 25K in order for a US business to make a decision not to outsource.

    And remember that about 35% of the world population is living in India or China! The pressure should remain strong.

  38. 38
    HappyRenter says:

    Actually, let’s keep bombing the moon until we find some water up there. Maybe, below the moon surface, we also discover some oil, so Sarah Palin can run for president ;)

  39. 39
    Flying Ape says:

    RE: The Tim @ 26

    As stated in my original post its a moot point to argue pros/cons of the stimulus this early in the “recovery” so Obama’s argument is as subjective as your claim. IMHO neither argument has any legs at this point.

    Regarding personal opinion, all i am trying to say is that every time i read an opinion piece it seems to be about how horrible the big bad government is. Yes, the government is indirectly funding speculators with programs intended to prop us the general economy but its far better than doing nothing. You of all people understand how “irrational exuberance” can inflate asset prices, so why can’t this “exuberance” drive down prices if things go sour, and i mean hard. If everyone in the US were real estate prema-bears they would stop buying houses and prices would fall much lower than they need to go (e.g. deflation). This would lead to a repeat of Japan, GD2.0, and Sniglet becoming the great oracle. All i am saying is its easy to rant about the government providing funds for the speculators, why isn’t anyone going after the speculators.

  40. 40
    AMS says:

    RE: HappyRenter @ 36 – I have said, and I stand by this, we need to concentrate on manufacturing. I’d have a commission on manufacturing if I were the President.

  41. 41
    Flying Ape says:

    RE: Matsayswhat @ 31
    I’m actually generalizing Republicans(libertarians) vs Democrats (bigger government).

  42. 42

    RE: HappyRenter @ 36
    Yeah…Like “We the People” Once Again

    Instead of “We the Pimples”

  43. 43
    The Tim says:

    By Flying Ape @ 39:

    Regarding personal opinion, all i am trying to say is that every time i read an opinion piece it seems to be about how horrible the big bad government is.

    Looking through the last two pages of archives in the Opinion category, I count five of twelve posts that could be classified as rants on the subject of “how horrible the big bad government is.” That’s less than half. I guess you just have bad timing as to when you drop by the site and read the occasional opinion piece I post.

  44. 44
    HappyRenter says:

    By AMS @ 40:

    RE: HappyRenter @ 36 – I have said, and I stand by this, we need to concentrate on manufacturing. I’d have a commission on manufacturing if I were the President.

    How exactly would you do that? Give money to Chrysler and General Motors? Penalize imports from China? The current administration has already been doing that by penalizing tire imports from China. To me, it seems easier and, at least in the short term, beneficial to try to keep the current jobs alive instead of spending money in a strategy which might provide some (questionable) success in ten years. I’m exaggerating a bit: It doesn’t help much to produce goods in the country if unemployment is high and people do not purchase goods. You should first give jobs to people (in the short term) and then solve all other economic problems (in the mid to long term).

  45. 45
    Anon. says:

    RE: The Tim @ 43
    And flying ape, a big government Is a bad one so your phrase contains redundancies by the way :)

  46. 46
    AMS says:

    RE: HappyRenter @ 44 – I would not just toss money one way or another. What I would do is have a commission on manufacturing. I would then review their findings. Do they need specific infrastructure? Are we, as a nation, better off sending manufacturing elsewhere? Do we need more training for labor? What part do Unions play? …and so on.

    I don’t know of any part of our government that is focused on the needs of manufacturing.

  47. 47
    PNW11 says:

    Well, the extension of the homebuyer credit has made it through the Senate with a whopping 98-0 vote.

    Senate Passes Expansions of Home Buyer Credit, NOL Carryback in UI Bill
    Posted November 4, 2009, 6:02 P.M. ET
    The Senate Nov. 4 voted 98-0 to pass legislation (H.R. 3548) that would extend and expand home buyer tax credits and the net operating loss carryback.
    The Worker, Homeownership, and Business Act provides a continuation of the $8,000 first-time home buyer tax credit through April 30, 2010, and creates a new $6,500 for tax credit for existing homeowners who want to purchase a different house as their primary residence. The bill also expands the NOL carryback provision from the American Recovery and Reinvestment Act (Pub. L. No. 111-5) to allow any business with a loss in either 2008 or 2009 to claim refunds of taxes paid within the prior five years. Under ARRA, only small businesses were permitted to claim the five-year NOL carryback.
    The bill, which began as a simple extension of unemployment insurance benefits for individuals whose benefits were about to expire, also would increase penalties for S corporations and partnerships that fail to file their tax returns and would require paid individual tax return preparers who expect to prepare 10 or more returns per year to file electronically.
    To pay for the extension of unemployment benefits, the bill would extend the 0.2 percent Federal Unemployment Tax Act (FUTA) surtax through June 30, 2011.
    House Majority Leader Steny Hoyer (D-Md.) told BNA Nov. 3 that the chamber may bring the package to the House floor under an expedited process to complete it before the Veterans Day recess.

  48. 48
    The Tim says:

    By PNW11 @ 47:

    Well, the extension of the homebuyer credit has made it through the Senate with a whopping 98-0 vote.

    Well of course it did since they succeeded in attaching it to an unrelated unemployment benefits extension. That kind of nonsense game should really be outlawed.

  49. 49
    cheapseats says:

    Maybe when we finally leave IraqAfghan we can put all that experience in building infrastructure to use here!

  50. 50

    By The Tim @ 48:

    By PNW11 @ 47:

    Well, the extension of the homebuyer credit has made it through the Senate with a whopping 98-0 vote.

    Well of course it did since they succeeded in attaching it to an unrelated unemployment benefits extension. That kind of nonsense game should really be outlawed.

    But if they outlawed that, you wouldn’t have all those nice campaign commercials about how Senator X voted against legislation that would have outlawed the rape and torture of disabled babies who are orphans (that was attached to legislation to authorized the go ahead on the most expensive weapons system in history).

  51. 51
    Flying Ape says:

    RE: The Tim @ 43

    Don’t get me wrong i do enjoy your opinion pieces. Maybe it just is the timing with the extension of the home buyer tax being discussed.

  52. 52
    The Tim says:

    By Flying Ape @ 51:

    RE: The Tim @ 43

    Don’t get me wrong i do enjoy your opinion pieces. Maybe it just is the timing with the extension of the home buyer tax being discussed.

    And with that, Seattle Bubble moves into a five-digit hexadecimal comment count!

    I wish I had a cool prize for Flying Ape for making the 0x10000th comment.

  53. 53
    Flying Ape says:

    RE: Anon. @ 45
    And Anon, looks like you live in a region that seemed to have rejected legislation (I-1033) to limit government size. :)

  54. 54
    Flying Ape says:

    RE: The Tim @ 52
    Congrats Tim! Keep up the good work.

  55. 55
    Alright says:

    RE: The Tim @ 48 – Tim. Did I read that article correct in that they are adding a $6,500 credit to people who have lived in their houses 5+ years and are looking to move up?

    “The $8,000 tax credit for first-time homebuyers, enacted as part of the stimulus package last February and set to expire this month, would be extended and expanded to include a $6,500 credit for people who have lived in their current residences at least five years.”
    “The new $6,500 credit for existing homeowners, said Sen. Johnny Isakson, R-Ga., a cosponsor of the measure, “is going to help us boost what is the problem in the U.S. housing market today and that is what is called the move-up market.”

    Please tell me that they didn’t add a $6,500 credit if you’ve lived somewhere 5 years and are looking to move up. If I did read it correct though, this is just frustrating. You get a 30 year mortgage, but if you stay somewhere 5+ years let’s help get you to move to a bigger and better house and take out another 30 year mortgate, etc. etc. etc.

    Just when I was getting frustrated enough about the $8,000 first time home buyer credit they go and do this. Again, please tell me I read this wrong. Please?

  56. 56
    mydquin says:

    Stick to the local housing market, Tim. You clearly are in way over your head when it comes to macroeconomic policy.

  57. 57
    The Tim says:

    RE: mydquin @ 56 – Yeah clearly I am not sophisticated enough to understand how rewarding the institutions that got us into this mess, and continuing / expanding the same policies that caused the problem in the first place are obviously the best way to fix things.

    Give me a break.

  58. 58
    HappyRenter says:

    By The Tim @ 57:

    RE: mydquin @ 56 – Yeah clearly I am not sophisticated enough to understand how rewarding the institutions that got us into this mess, and continuing / expanding the same policies that caused the problem in the first place are obviously the best way to fix things.

    I have to add here. When I came to this country (I’m from Europe) I was surprised to hear Americans say “Americans are too stupid to be given decision power, that’s why we have referendums which are advisory only.” What??? And Europeans think America is the country of technological and scientific advancement? Why is it that Americans keep blaming each other to not be smart enough to understand things like macroeconomic policy? There are a lot of smart people in this country. Why are they made shut up? Why is it bad to give citizens more decision power? Why are referendums advisory? Why can’t America establish “direct democracy”?

  59. 59
    mukoh says:

    RE: softwarengineer @ 29 – Softwareengineer, maybe a glass is half empty or half full, thats what I think are the differences we are seeing here, a friend of mine from a long long time ago got to be a PAC four years ago, she is consistantly getting raises, workes for a medium size clinic down south. Her wages? $65 an hour. Does that equate to $80k? She has no loans as she worked through school.

  60. 60
    David Losh says:

    RE: mukoh @ 59

    What an odd choice for a comment.

  61. 61

    The problem with jobs in this recession/depression is that we don’t have manufacturing jobs that would recover after a heavy draw down in inventories when stimulus is applied. By the way, the street definition of the difference between a recession and a depression is, a recession is when your neighbor loses his job. A depression is when you lose your job.
    Jobs are going to be hard to come back. This will keep the recovery slow. The best thing would be for real estate to keep picking up. It would put a lot of people back to work.

  62. 62
    mukoh says:

    RE: David Losh @ 60 – Your comment is definately an odd one on my comment, to his comment.

  63. 63
    AMS says:

    RE: mukoh @ 62 – odd.

  64. 64
    AMS says:

    RE: The Tim @ 52 – How does one translate the comment number we see to the 65,536? For example, your comment appears to be #86,446, not #65,537.

  65. 65
    Yai says:

    -Once the Fed stops buying both Treasuries and MBS paper, increasing rates will start to counter any effect that the housing related welfare payments have on home prices.

    -How or why anyone thinks that borrowing money to re-inflate the prices of an already overpriced asset instead of championing policies that increase real worker productivity amounts to anything other than a shell game that will ultimately destroy far more jobs and wealth than it creates is beyond me.

    The only driver for real wage growth and an ensuing increase in real wealth (that can sustainably drive home prices higher) is an increase in real productivity. Lacking that, the name of the game seems to be lobbying the government to pick favorites and forcibly transfer wealth from the rest of society to various labor/commercial cartels.

  66. 66
    disbelief says:

    I believe the economic woes we are facing are not so much the result of bad fiscal policy as they are the result of our degenerated culture-one that ‘s placed immediate profit over long term stability and the belief that if we protect the trade standing and economic wellbeing of the nation as a whole, we’ll all be better of as a result.

    If you allow business to canabalize your own economy and workforce to enrich a relative few at the expense of the majority, you will pay the price eventually. This sin’t to say that it’s all the fault of business and those in power. Obviously there’s something very wrong with our work ethic and our perception of entitlement when many feel it’s ok for someone to demand an $80,000 salary to leisurely ride a tricycle around and polish the scratches out of a paint job on an aircraft assembly line, while some poor schlepp at your local Wallmart/gas station gets less than 20K annually for a year of what many wouldn’t tolerate for a week. Sins of the father, as it were.

  67. 67
    disbelief says:

    Hey The Tim, is there something wrong with the edit function or is it on my end?

    I just tried to edit my comment at the bottom of the second paragraph and the text in the box kept automatically scrolling up not allowing me to highlight/erase a word.

  68. 68
    Jonness says:

    “this blatant pandering to the rich and elite simply isn’t my kind of Democrat and it appears that Independents [like me?] are switching and voting Republican across the country lately”

    Hmmm, that foul odor is very familiar. Where have I smelled it before? Perhaps when the republicans were voted out during the last election, and the democrats were voted in? It appears, the wheel has made a half revolution.

    The game is set up with a 2 party system where both parties give equally to the special interests who support them. It appears to onlookers the parties are different, but that’s because each party is sponsored by its own corporate set. This gives each party a slightly different hue and odor that imparts a distinct flavor to the ballots.

    The key to the con is convincing people that when things go bad they can win the game by voting for the other party. Thus, there is no need for changing the system itself.

    It is the perfect system, and people will go to their graves defending its honor before they revolt against it.

  69. 69
    Jonness says:

    By AMS @ 9:

    I am not suggesting that I agree with any of the actions that have been take, but I do enjoy my new car, and when I received the $4,500, I must admit that I enjoyed lapping it up.

    Hopefully you don’t have substantial cash in the bank. Otherwise, you’ll lose far more than the $4500 your neighbors spent on your car.

  70. 70
    Jonness says:

    Then again, as long as you’re losing the money anyways, you might as well average the losses through the neighbors’ future wallets. I mean, if you need a new car and have the money, why not?

    As far as the economy goes, I’m beginning to wonder if there is anything left other than debt games and spending perks? It seems to me the country has a fresh stash of h and is currently glib about being alive. I’m curious to see what happens when the h runs out again?

  71. 71
    Jonness says:

    By Ray Pepper @ 16:

    Now I’m looking forward to Nov 27 Black Friday. Lets see what the retailers are unloading. My target is a 50 inch Plasma for 500.00. They seem to be holding at 749.00 at Costco and Amazon.

    I bought a 50″ Panasonic plasma at Vann’s 2 years ago on Black Friday. After 11 months, the panel went out. I got it replaced free under warranty (barely beat the clock on that one). Another year has passed, and the TV is working superb. My GF said I should have paid the extra $350 for the extended warranty. But truthfully, by the time this thing finally gives up the ghost, I can pick up a new improved model for about the cost I would have paid for the extended warranty.

  72. 72
    patient says:

    RE: Richard Stabile Bergen County Real Estate @ 61
    “The best thing would be for real estate to keep picking up. It would put a lot of people back to work.”

    Partly good idea, terrible timing imo. To me it would be much better if real estate was left to properly correct or even over correct relative to the current economy. First it would create a sustainable, stable and healthy real estate market and if people can buy homes for much less they will have increased real disposable income ( not through debt from refis etc ) that they can spend on all kinds of services and goods and lift all businesses not only real estate. Lower housing costs will work as massive tax cut and stimulate all industries. So bring on the home price declines for the sake of future growth, stability and competetivness for the US economy, industries and workers.

  73. 73
    what goes up must come down says:

    Wow, this blog finally jumped the shark and now has become a political blog — Go Fox News.

  74. 74
    scotsman says:

    RE: Yai @ 65

    … and there it is, in a nutshell. Very nice. It may take a long time for that reality to sink in though…

  75. 75
    mydquin says:

    RE: The Tim @ 57 – Tim, now you are just making things up that have nothing to do with your original point. The stimulus is NOT an extension of the policies that previously existed. There are certainly some policies that still need to change, especially rating agency regulation. But that was not your original point.

    By the way, you do realize that only about 22% of the stimulus has been spent so far, right? Because your snarky reference to the total $787B suggests that you don’t have a clue what is really happening.

    Moreover, the second you start trying to anthropomorphize banking institutions with the “moral hazard” argument, you immediately reveal how little you understand about the macroeconomic & political situations.

    So please, give me a break.

    I love the local real estate stats you provide. I really appreciate the way you have taken on the local media cheer leading. But until you are ready to start seriously considering economic issues, like liquidity traps, accelerator effects, general gluts, and M3 replacement, you really should stick to local real estate because you are starting to sound more like a very un-entertaining version Rush Limbaugh or Keith Olbermann than a respectable source.

  76. 76
    scotsman says:

    RE: what goes up must come down @ 73

    Politics= economics=housing prices. It’s not much of a jump at all.

    Fox News? You can do better than that. I’d say 98% of the folks here want to deal with the facts, learn the relationships, and understand how we got here and where we may be headed in the future. “Spin” doesn’t do much to help you prepare for the reality ahead. And last time I checked the facts didn’t have any political affiliation. But it you want to tie your future to a political perspective instead of reality and survival, that’s your choice.

    The other 2%? They’re too busy fighting for position to lick the spittle from Keith Olberman’s chin.

    “What say you?”

  77. 77
    Herman says:

    RE: Yai @ 65 – Yai is correct.

  78. 78
    One Eyed Man says:

    So how do you fix the employment situation? I’ll tell you what I think at the end of this comment. But first, in evaluating the legitimacy of the hypothesis presented in Tim’s Post, consider the following matters related to unemployment. I’m not necessarily saying that The Tim is wrong. But I do think there is another arguably legitimate point of view that should be presented.

    The last time we had 10% unemployment was during the 2nd and 3rd year of Reagan’s first term, Sept ’82 to June ’83 with a peak of 10.8% in December of 1982. Some would say that we turned it around with supply side tax cuts, not with an Obama/Pelosi left wing Keynesian spending packages. But, others would say that when you run the biggest budget deficits in history like Reagan did at that time, it’s pure Keynesianism. For a discussion presenting that case see the following:

    http://www.huppi.com/kangaroo/6Economy.htm

    So, if it was good enough for Ronald Reagan, why isn’t it good enough for The Tim? (Am I pissing you off yet Tim?;-) I didn’t vote for McCain or Obama either. But I’m more of a “civil” libertarian than an “economic” libertarian as I believe that economic freedoms are deserving of less protection and can be more highly regulated than civil liberties, but that’s a separate extremely long discussion.)

    But why hasn’t the current stimulus turned unemployment around? First, we’re only 9 months into Obama’s term and most of the stimulus has yet to be spent. We need to give it time. Per BEA, the 1982 recession ended in the 1st quarter of 1982, but unemployment didn’t start decreasing until the first quarter of 1983. Second, this isn’t your normal inventory recession and the recovery will likely be less robust and unemployment will take more time to correct. And third, even though US manufacturing has grown substantially through the last couple of decades, we’ve been losing manufacturing jobs for years, even during times of strong economic growth.

    http://www.uschina.org/public/documents/2006/09/us-manufacturing.pdf

    If you don’t like the economic statistics in the US China Business Council report and think they might be bias, most of them match the data on US manufacturing from other sources including the international statistics published by the UN. Check ’em if you doubt ’em.

    So, even if we are out of the recession in Q3 of 2009, our unemployment is growing and our manufacturing employment will shrink even if our manufacturing output increases. You grow the economy, but it needs less labor. The rich get richer and the poor get poorer. You’ve ended the recession but you can’t decrease unemployment. What are you gonna do?

    First, attack the balance of trade issue. But how do you do this when it costs more to employ a US worker than an Asian, Mexican or South American worker. The answer is you switch energy usage to stop importing 350+ Billion Dollars of petroleum. Our current balance of trade deficit is running at about 30 billion a month, down from double that. But if you could cut the 30 to 15, you would keep 180 billion a year in our economy. In the long run, you spend tens of billions per year working on alternative energy until you get it right and become the world leader in alternative energy technology. That would cost less than the current 700 billion plus stimulus package and probably have more long term benefits.

    In the short run, over the next 4 or 5 years, you spend about 50 billion in stimulus money to switch truck and bus fleets to CNG, and to put in CNG fueling stations across the country. Even if it costs a million dollars per station to put in CNG, you could put in 25,000 CNG stations for 25 billion dollars. That’s 500 CNG truck stops per state for each of the 50 states.

    In addition to helping the balance of trade, it employs thousands in installing CNG infrastructure, it helps strengthen the dollar and it hedges against escalating petroleum prices. Of course, you have to ramp up natural gas production and manufacture and sell natural gas trucks, buses and cars. A tax credit will help move that forward. I think it costs about 5K to retrofit a car to burn CNG. I don’t know what it would cost per vehicle to put it on vehicles on the manufacturing lines but it would presumably be significantly less per vehicle. You might also have to subsidize CNG if gas and diesel prices fall below $2.50 due to decreasing demand, but hedging always has a price.

    Thats a start to providing long term job growth with new and inovative technologies. I’ve heard there is a bill making it’s way through Congress right now to implement some version of the “Perkin’s Plan” including some of the above ideas. It supposedly has broad bypartisan support. I just wish it was first priority in fornt of health care and cap and trade.

    The harder part of decreasing unemployment is to free up capital by cutting government spending. This requires cuts to military spending, cuts to SSI, health care rationing through cuts to medicare and other government sponsored health programs (whether in the form of a public option or otherwise, etc. I don’t know if any politician has the charisma to survive cutting everybody’s pork like that. The left might cut defense spending and the right might cut social welfare spending, but nobody will cut both. During the Reagan administration, the compromise was to increase both. It will take a hell of a charismatic leader to get them to cut both. If Obama does that, I’ll become a believer. Until then, like they said in “Miracle on 34th Street,” he’s just another nice old man with whiskers (aka Santa Claus).

  79. 79
    scotsman says:

    RE: mydquin @ 75

    “Anthropomorphize?” Odd choice, since the banks are really nothing more than the sum of their human inputs. They don’t manufacture, no natural resources except time are consumed or produced, they are nothing beyond the collective humanity that comprises them. Greed, lust, envy, pride, sloth, gluttony and wrath, the seven deadly sins, the definition of the dark human condition, the very essence of humanity. ” Anthropomorphize” and banks go hand in hand.

    The current mess has clear roots. A few large banks, along with the political class, expressed their own humanity through greed, lust, envy, etc. by facilitating and subsequently taking advantage of the exact same traits in the greater population at large. It’s really pretty funny in a dark way. But what was essentially a ponzi scheme has come to an end and none of those responsible are willing to man up and suffer the consequences.

    The economics isn’t complicated. We can b.s. all day about velocity, M1-3, U1-6, the carry trade, whatever. It doesn’t matter. the bubble has burst, and we now find ourselves with more debt than we have productive assets to support that debt. So the debt is going to default, the losses will have to be taken, and the economy will have to rebuild on a more sustainable scale. Unfortunately, while we were having our little credit fueled binge the rest of the worl caught up with (or even exceeded) our productive capacity. so now. as we rebuild, it is within the confines of a more competitive and wage restrictive model. Translation? Uphill, through the snow, into the wind, both ways. In the dark.

    Seems to me Tim has a pretty accurate grasp of the situation, Unlike many, he doesn’t put on the rose colored glasses or blinders when looking at the facts. It must be something about engineers. If you think some of us are missing the magical exit strategy you seem to see, please turn on the light.

  80. 80
    scotsman says:

    RE: One Eyed Man @ 78

    Wow, you certainly type faster than I do.

    Factual note: Reagan’s tax cuts did increase economic growth and tax revenues. Trickle-down works. But he and the congress blew it by increasing spending at an even faster rate. The result was deficits. Too often folks look at the whole, failing to realize the roles played by component parts.

    Had Obama cut taxes at a rate equivilent to the “stimulus/porkulus” cost it would have had a much greater and immediate impact. That, coupled with forcing banks to take their losses and regroup/move on would have us well on our way out of this mess. Legitimate regulation reform would prevent the same from happening again. A balanced budget ammendment would be nice.

    But for politics, greed, and corruption we would be healed.

  81. 81
    what goes up must come down says:

    RE: scotsman @ 80 – wow it is amazing you have all the answers, “But for politics, greed, and corruption we would be healed. ” Yes and while we are at it less change the human condition – let me guess you believe capitalism unregulated improves everything for everyone

    yeah, Reagan economics worked sure they did if you weren’t getting trickled on, what was it that Bush one called it oh that is right Voodoo economics.

  82. 82
    mydquin says:

    LOL @79. Yeah, I guess you are right. Banks are just like people. Capital and infrastructure have nothing to do with banking. We should just spank those bad banks on their bottoms and send them to their rooms. It’s not like holding back their allowances could bankrupt thousands of other business or cause runs on deposits. And when we punish those bad banks, I am sure that all of the bad employees who caused the problems will do the right thing and go down with the ship instead of just changing jobs.

    By the way, I find it really interesting how a lot of people don’t seem to know the difference between the stimulus bill and the original loans used shore up bank balance sheets.

    I also find comments, like “more debt than productive assets to support that debt,” interesting in light of the fact that our national current debt as a percentage of GDP is half of what it was in 1946 and not that much higher than it was at the end of the Reagan-Bush administration.

    No one is saying America doesn’t have a tough slog ahead of it. And I am just as pissed off about the scam that the investment banks and the credit rating agencies pulled on America as the next guy. But that doesn’t justify the kind of fiscal ignorance that caused the 1937 double dip recession. Populist alarmism is not sound economic logic. Sure, the stimulus is imperfect because of politics, but it is way better than doing nothing, especially when you start to consider the secondary economic outcomes like investments in new battery technologies, infrastructure, preventing crime, funding education, installing LED lighting in commercial and govt buildings, preventing homelessness. And don’t take my word for it, just look at what the richest, smartest investors in the world are doing right now. They are buying assets in a hurry while the price is right. Do you think you know more than Warren Buffet who just placed a $34B bet on Burlington northern? I don’t think so.

  83. 83
    Jonness says:

    According to the U.S. majority consensus, all’s we need to do is keep printing money, and everything will be fine. Apparently debt is a suitable replacement for income. Why fix the real economy when you can pump up a new bubble via a massive carry trade?

    It hurts to be holding dollars right now.

    http://graphics.thomsonreuters.com/119/GLB_USDRES1109.gif

  84. 84
    David Losh says:

    RE: mukoh @ 59

    Your rebuttal is you know some one who is employed, so there is no unemployment.

    It’s odd that you would seize on my comment about doctors.

    Let’s take radiology as an example. Each hospital would have one or two radiologist on staff. Now X-Rays can be read remotely, by internet, through a secure server. Hospitals are businesses that are looking to cut costs. Physician Assistants do more work, nurses aids do more work, nurses do more work that fewer doctors can direct.

    It makes no difference actually. It an old study that says by keeping working age people out of the work force longer helps lower unemployment. The military does the same thing. If the wars end many people would be entering the private sector work force.

    I wanted to acknowledge your comment without disrupting what is a great discussion, but it is odd that you have a fascination with my opinions.

  85. 85

    […] Seattle Bubble hit a geeky milestone yesterday, with the posting of its 0×10000th comment! That’s hexadecimal—base 16—65,536 for you non-geeks out there. The 0×10000th comment was posted by Flying Ape. […]

  86. 86
    sead97 says:

    By Flying Ape @ 20:

    CYes, the stimulus could be a complete waste but you shouldn’t judge it based on unemployment (LAGGING indicator) which wont see the benefits until all the money is spent.

    Gosh, if I were spending the stimulus money I’d sure try to use it to create jobs immediately, not hand it out to people with the hopes that they’d go spend it on things that would then create jobs for Americans. Let’s look at two examples.

    1) During the Depression, “stimulus” money funded the WPA. They employed people immediately and built beautiful things that we are still enjoying today – maybe even generating tourism and ongoing income.

    2) Today, we give people tax breaks and cash for clunkers/first-time buyers credits. Many of these people go out and buy a car built abroad (creating jobs there) or new electronics made in Asia to deck out their new homes (creating jobs there). These items are consumption and will never generate income for America.

    America is clearly a great power in decline. And we’re going to waddle fat and oblivious right off the cliff.

  87. 87

    By The Tim @ 57:

    RE: mydquin @ 56 – Yeah clearly I am not sophisticated enough to understand how rewarding the institutions that got us into this mess, and continuing / expanding the same policies that caused the problem in the first place are obviously the best way to fix things.

    I’m not so sure you can judge something as being wrong because it was done before and now. For example, let’s say you were in a flash flood area in Nevada as a result of having driven there at 100 mph. Would that mean that driving 100 mph to avoid the flood would be a bad thing? Things we did before, particularly deficit spending, wasn’t necessarily good because it was done nearly constantly and thus at the wrong time. That doesn’t mean that deficit spending now is bad. Near constant deficit spending is bad.

    As to something more clearly bad, a lot of what got us into this mess was mergers and acquisitions. I’m not convinced that having a failed entity merge with an already large entity is necessarily good. I’m thinking specifically of BoA. It would probably be a lot stronger entity but for the failed entity acquisitions, and now it’s even bigger than it was, making its potential failure even more catastrophic than it was.

    Anyway, the point is some of the past practices may be good now and some bad. They aren’t bad just because they were a past practice.

  88. 88
    WestSideBilly says:

    By scotsman @ 80:

    RE: One Eyed Man @ 78

    Wow, you certainly type faster than I do.

    Factual note: Reagan’s tax cuts did increase economic growth and tax revenues. Trickle-down works. But he and the congress blew it by increasing spending at an even faster rate. The result was deficits. Too often folks look at the whole, failing to realize the roles played by component parts.

    Had Obama cut taxes at a rate equivilent to the “stimulus/porkulus” cost it would have had a much greater and immediate impact. That, coupled with forcing banks to take their losses and regroup/move on would have us well on our way out of this mess. Legitimate regulation reform would prevent the same from happening again. A balanced budget ammendment would be nice.

    But for politics, greed, and corruption we would be healed.

    How would reducing the tax burden on those who are employed (and in many cases worried about losing their job) improve the situation for those who are unemployed? And how would it be immediate?

  89. 89
    Nell Plotts says:

    RE: James Lupori @ 15

    I think you nailed the macro issue. Washington State is Example 1.

    What concerns me is that the stimulus projects are neither building assets for the future or have a high labor input component. I watched the program about the Civilian Conservation Corp on public television the other day and noticed that their projects met both tests.

  90. 90
    Matsayswhat says:

    RE: Jonness @ 68
    Very well put. Until we have some significant systemic changes we might as well be on a merry go round because it’s all the same ride.

    RE: One Eyed Man @ 78
    I like your thinking. There has been a lot of “end our dependance on foreign energy” talk lately and I have hope that even with how messed up things are right now that we might make some progress on this. I’ve read quite a bit about the uniqueness of our sun belt in the world and it’d be great if we could start using that whether it be via solar, or creating algae to make oil, etc.

  91. 91
    scotsman says:

    RE: mydquin @ 82

    While you’re correct that federal debt as a percentage of GDP has been higher, total debt- consumer, federal, state, commercial, etc. is off the chart and has never been this high. That’s the number that counts. That’s the number that the total output of the country has to service- and can’t.

    Warren Buffet’s BRK-A and BRK-B are both down about 35% from their pre 2007 highs so I’m not sure he’s the best example of financial wisdom. And there’s quite a bit of discussion on the wisdom of his choices going forward, especially some of his longer term bets. We’ll see. My investing follows a different path.

  92. 92
    scotsman says:

    RE: WestSideBilly @ 88

    By cutting or eliminating both FICA and income taxes now consumer’s paychecks would increase by 8-40% depending on their tax bracket. That money would be available to the consumer to pay off debt, increase purchases, whatever they chose. That spending would boost existing businesses, reducing unemployment. Since consumers are 72% of GNP it would give a substantial boost to the national economy. Unlike the stimulus, the majority of which hasn’t even been spent, the tax cuts could be made immediate, even retro-active if desired and their effect would have been felt by now. And from the government’s perspective a cut in tax revenues is the same as an increase in deficit spending except for who has control of the money. Since it’s the tax payer’s money, not the government’s, why not let the consumer have control?

  93. 93
    patient says:

    RE: scotsman @ 91 – I think the “Warren Buffet” bets on the US and it’s recovery can be a misinterpretation of his purchase of the railway company Burlington. It can simply be a hedge against high oil prices. I think railway is a much cheaper mode of tranportation than lorries when oil prices shoot up. There is nothing in that theory that shows a belief in a bottom or recovery. It’s also viewed as a “green” aternative that can become more important once the crisis is over and we can afford to be prudent about things like global warming again.

  94. 94
    scotsman says:

    RE: mydquin @ 82

    Final comment- the largest 4 or 5 banks in this country really do very little of true value, and hardly anything essential that couldn’t be handled on a local level by either a consortium of smaller banks or one medium bank. When I was a banker we often participated in huge deals, well beyond the possabilities of our own capitalization by buying into packaged deals where we might own 2-10% of the total loan. The borrower got their funding, and the risk was spread out over many banks, not one that then became “too big to fail.” It’s a better model in the long run.

  95. 95
    SeattleMoose says:

    Wow….nothing getting to the root of the problem and fixing it.

    1) Corrupt banking fails without govt bailout
    2) Corrupt WS fails without govt bailout
    3) Incompetant car companies fail without govt bailout
    4) Housing/RE continue to fall even with govt bailout
    5) Jobs continue to get trimmed

    NONE of the underlying conditions/problems have been fixed….only propped up with our money

    NOBODY is being held accountable for anything

    Things look even more grim than they did before because all the “good news” is just a facade over all the rot, lack of oversight, and corruption that caused it all in the first place. So we’ve spent all this money and none of the root causes have been addressed……can you say “black hole”?

    And the stock market goes up??????

    I never thought I’d live to see so much delusion and denial on such a large scale….

  96. 96
    scotsman says:

    heh, heh. Here it comes……….. “Black Hole!”

    Big, big, black hole. Followed by “reset.” Or a war.

  97. 97
    Yai says:

    Scotsman:

    Kudos to you for your tireless efforts to argue against the ongoing experiments against reality that seem to have a dedicated fan-base here.

    The sad fact is that the incentive/regulatory regime that generated the housing mega-cluster resulted in an a massive, massive missallocation of capital into credit sensitive sectors that can no longer be supported by consumer demand, and it’s going to take years and years to re-align our productive capacity with real consumer preferences. Capital has a real, physical structure – and you can’t just push a button and magically convert the human and physical infrastructure dedicated to churning out condos and SUV’s into assets that generate a positive economic return.

    The machine tools on the Chevy Suburban line have to be physically removed and sold for whatever someone will pay for them. They may find their highest value being sold for scrap, melted down, and converted into machinery in China that’s actually used to produce and output that can be sold for a price that exceeds the cost of the inputs. The guy turning a wrench on the line for a total comp of $85/hour is going to have to figure out another way to make a living in an industry where the value of his labor inputs actually exceeds the total value of his annual compensation. Ditto for the bankers and attorneys who shuffled MBS paper. Multiply this process by a few hundred million and you get some idea of the real, micro-level processes that are going to be necessary to drive any sustainable macro-level recovery. There’s no escape from this.

    Unfortunately, the current consensus of opinion seems to favor political distortions that perpetuate or exacerbate the existing misallocations will only prolong the pain, further amplify the losses, and forestall a true recovery.

  98. 98
    AMS says:

    RE: Yai @ 97 – “The guy turning a wrench on the line for a total comp of $85/hour is going to have to figure out another way to make a living in an industry where the value of his labor inputs actually exceeds the total value of his annual compensation.”

    How many guys on a modern automotive assembly line actually turn a wrench?

  99. 99
    scotsman says:

    RE: Yai @ 97

    Exactly. I get a kick out of the folks looking for and debating whether this will be a “V” or “W” recovery. It will be neither. What we are headed for is a flat line down for many, many years. Our economy must transition from credit fueled consumption to real production, something we haven’t seen for decades. And as I said above, while we’ve been playing the world has changed. We’ll have to fight pretty hard to come back to anything close to the standard of living we’ve collectively experienced for the last twenty years. And the longer we continue to cling to the past and fail to embrace the challenges ahead, the harder it will be.

  100. 100
    AMS says:

    RE: scotsman @ 99 – While I generally agree with what you claim, let me remind everyone that it’s a bumpy ride, so there will be plenty of “Vs,” “Ws,” as well as “vs,” “ws,” “Ls,” “Js,” and so on the way down.

    Do I expect sudden upswings? Yes. Do I expect sudden downswings? You bet.

    “And the longer we continue to cling to the past and fail to embrace the challenges ahead, the harder it will be.”

    Given the number of baby boomers, retirees, and so on, I suspect that the challenge is going to take some time. Failed pension funds, such as sudden rise in failed municipal pensions, is going to be a long-lasting problem.

    I should also add that there are a good number of those who have their pensions reduced because the PBGC’s maximum is less than the amount formerly paid.

  101. 101
    scotsman says:

    RE: AMS @ 100

    Agreed, pensions and SS solvency are a huge problem lurking on the horizon that very few are even talking about and no one that I’m aware of is seriously addressing. It’s gonna leave a mark..

  102. 102
    AMS says:

    RE: scotsman @ 101

    My own personal observations:

    Baby Boomers expect the system to save them.

    Generation Xers are suspicious of the system, but generally live within it. This is especially enforced because of their close connection to the Baby Boomers.

    Generation Y is having it tough, and there is no where to go.

    The next generation is going to have it even worse.

    The problem, as I see it, is that the boomer are expecting more when the system has less to give, and this is the very system that’s supposed to save the boomers.

  103. 103
    scotsman says:

    Bottom line, a lot of boomers are going to be working again, or longer, or up to the end. And the rest will be taxed to support them while left more to their own for personal retirement needs. It all spells “contraction” to me.

  104. 104
    Yai says:

    We’ve just seen the first few lines of the failed municipal (and every other public sector) pension story. The housing bubble collapsed because there wasn’t enough real income to support the debts incurred while inflating it.

    The same rules of arithmetic apply to public sector pensions. There’s just not enough real income to support them under any tax regime, and barring a miraculous increase in real productivity – there never will be.

    What’s most amazing to me is that the public sector unions have been able to successfully employ the rhetoric of the little guy while employing ever lever of state power that they can get their hands on to pry money out of the average person’s pockets to fund a suite of benefits and insulation from economic realities that virtually no-one in the private sector will ever see in their lifetime.

    Ditto for the labor cartels that rig the game with tariffs, subsidies, and set-asides that make everything from cars to groceries more expensive for everyone outside the cartel.

    Pretending that increasing unionization has, is, or could ever lead to an increase in real productivity and real incomes for everyone relies on the fiction that everyone can live at everyone else’s expense. Unfortunately, there’s no indication that the general public has figured that out, so the unfunded and manifestly unfundable pension and healthcare liabilities that unions – particularly public sector unions – heaped on other people’s shoulders will continue to accumulate until the rules of arithmetic can no longer be ignored.

    AMS:

    Name a skill-set present on any assembly line that can generates a return sufficient to justify the wages on a UAW line. There are none. The only way that such wages can persist is if their shielded from competition via tarriffs, subsidies, or other regulations that effectively force consumers to pay the excess costs.

    The UAW’s only prayer for long-term survival is a continuing spigot of government largesse that manifests in one form or another, or radical restructuring of the production processes that they participate in coupled with massive capital investments that dramatically increase their productivity.

    (The most amusing thing about the UAW’s fan-base here in Seattle is that the vast majority of the folks who are ostensibly concerned about their plight are amongst the least likely to be caught dead driving *any* of the vehicles that their comrades back in Detroit actually produce. If you really want to help them out, drive to the nearest GM lot and trade in the Prius for a Cobalt. I’m sure they appreciate the lip-service, but it’s not going to cover the annual COLA on their pensions, much less gastric and coronary bypasses that they’ll need shortly after they retire at 55).

  105. 105

    RE: AMS @ 102

    I Don’t Expect It To Save Me

    And I’m a Boomer [and most of the Boomers I talk to too have my opinion too, BTW]….be careful with labels, they more than likely will bite you in the rear.

    What gets me though with the brainless elite-type Boomers, thinking that uncontrolled growth below Generation Y wages will bail out SS….LOL….it would take 10 of them working [BTW working where? Your’s and my jobs?] to equal one good baby boomer or gen X pay slot….it ain’t gonna happen, look at the mounting “lagging indicators” [unemployed and underemployed] snowball getting bigger by 512K in October and add in about 100K/mo uncontrolled growth with no jobs to come to [except your’s and mine], to that figure too…ask our USCIS agency if you don’t believe me…..LOL

  106. 106
    WestSideBilly says:

    By scotsman @ 92:

    RE: WestSideBilly @ 88

    By cutting or eliminating both FICA and income taxes now consumer’s paychecks would increase by 8-40% depending on their tax bracket. That money would be available to the consumer to pay off debt, increase purchases, whatever they chose. That spending would boost existing businesses, reducing unemployment. Since consumers are 72% of GNP it would give a substantial boost to the national economy. Unlike the stimulus, the majority of which hasn’t even been spent, the tax cuts could be made immediate, even retro-active if desired and their effect would have been felt by now. And from the government’s perspective a cut in tax revenues is the same as an increase in deficit spending except for who has control of the money. Since it’s the tax payer’s money, not the government’s, why not let the consumer have control?

    You would also quickly eliminate 100% of the the income many elderly/retired people rely on because FICA pays for Social Security. You would quickly eliminate a huge percentage of revenue that hospitals and doctors rely on, because FICA pays for Medicare, likely driving many hospitals out of business. Since federal individual income tax pays for 100% of the discretionary federal spending, you’d have to lay off the tens of millions of Americans who work for the federal government. In other words, eliminate the government all together. Is that really what you’re suggesting?

    I suppose the logical followup to your abolish-the-government tax plan would be a federal sales/consumption tax. This, of course, would punish the taxpayers it purports to help by raising their effective taxation significantly. Unless you’re rich and save most of your money, of course.

    Ignoring the radicalism in your post and the hyperbole in my reply, marginal reductions in tax rate would have little effect on the economy. The advantage stimulus has is that it can be directed directly at what you’re trying to fix – in our case unemployment. Unfortunately the major stimulus package passed last winter mostly failed at doing that. But giving money back to people and relying them to spend it on ways that benefit the economy have failed repeatedly – reference the “rebates” W’s people tried twice. Most likely they end up saving it (or paying down debt), which doesn’t contribute to the GNP, or they buy more of the same stuff they’ve been buying – which is of course mostly imported.

  107. 107
    sead97 says:

    By WestSideBilly @ 106:

    By scotsman @ 92:

    RE: WestSideBilly @ 88

    By cutting or eliminating both FICA and income taxes now consumer’s paychecks would increase by 8-40% depending on their tax bracket. That money would be available to the consumer to pay off debt, increase purchases, whatever they chose. That spending would boost existing businesses, reducing unemployment. Since consumers are 72% of GNP it would give a substantial boost to the national economy. Unlike the stimulus, the majority of which hasn’t even been spent, the tax cuts could be made immediate, even retro-active if desired and their effect would have been felt by now. And from the government’s perspective a cut in tax revenues is the same as an increase in deficit spending except for who has control of the money. Since it’s the tax payer’s money, not the government’s, why not let the consumer have control?

    .

    My gosh, that’s brilliant. Why hasn’t anyone thought of that before. I mean, the government can just print any money it needs. Problem solved. And we can change the name of our country to Zimbabwe.

  108. 108
    scotsman says:

    RE: WestSideBilly @ 106
    That’s total B.S. The government would still pay for all of its current programs the way it is now- by borrowing from the rest of the world and the Fed. The only part that changes is instead of borrowing to fund a “stimulus” that will accomplish nothing except the repayment of political debts, the government would give up an equivilent amout of tax receipts, in effect giving the people back some of their own money. The proposal is revenue neutral, and far from a “radical’ concept.

    As for your last paragraph, I don’t even know where to start if you really believe the government is smarter and more effective than the people at managing individual choice. That’s a whole different topic.

  109. 109
    scotsman says:

    RE: sead97 @ 107

    Again, it’s revenue neutral. Get a clue. You are aware that total tax receipt for the feds this year are only about $1.0 trillion while they are spending closer to $4.0T? Accounting tricks (inter-agency transfers, off budget items, etc.) make it look like less, but that’s the reality. And you think the porkulus is going to help? We are so hosed, and the vast, vast majority of Americans so totally clueless that the light will never come on in the exit sign.

  110. 110
    AMS says:

    RE: softwarengineer @ 105 – Label only applies to the majority, the general sentiment. I am not pointing to any one specific boomer, but given a lineup, many will fit that mentality. Boomers do trust the system, generally speaking. No, I am not going to dig up the research. Generation X, on the other hand, is distrustful, but very connected to the system via the boomers. Again, there are outliers in Generation X–some are not as connected as others. Some are more trusting of the system than others. I don’t think you will find many Generation Xers, however, that would support Johnson’s “Great Society.” Boomers, maybe, but not Generation Xers–once again, I am talking in terms of generalities, not specific individuals.

    Generation Y? Disconnected. And even more so than in the past.

    I’d love to take a look at longevity versus family size. It’s my guess that family size is getting smaller, especially after the boomers, and yet longevity is increasing. Thus we have less to support an aging population. The Greatest Generation, on the other hand, gave birth at a high rate, and so there are many babies to support this group.

    So we have an aging society with entitlements with less and less of a population to support it. Even if the population in growing, the ratio of old to young is increasing because of the bulk of the population being in the baby boom. This illustrates that the population growth is in part a result of increased longevity, yet the productivity of those over 70 isn’t so high.

  111. 111

    […] Tim claims (yes, there’s a graph), unemployment is now one percent higher than that predicted by administration economists without […]

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