We know, you’ve already begun to doze off. Don’t. Stick with us. You need to know this stuff; then come 2011, tell the kids or spouse it’s how you had it figured all along.
We noted in an earlier sketch that the error to the consensus forecast for near term economic activity is to the weak side, our view. That is, there will be more vigor than expected in 2011, particularly more vigor in payrolls.
Let’s take a look at where we are now. The Fed recently surveyed all 12 of its districts so we don’t have to. The Fed compiles this survey ahead of each FOMC meeting.
Here’s what the districts reported: Overall economic activity continued to rise, but at a modest pace. Manufacturing continued to expand with production and new orders rising in most districts. Consumer activity was up modestly; even travel and tourism picked up a bit. (Did we not just read discretionary activity - travel and tourism? I think we did!)
Vehicle sales were up a tad. Housing remained weak with most districts reporting sales below year ago levels. Same for commercial construction.
Prices of goods and services - mostly stable. Wage pressures were minimal. No surprise as we know the labor market is weak (thanks, BO) which naturally dampens wage pressures. But the weak labor market does not reflect weak employers. Read on.
Reported company earnings for Q3 are blowing through expectations, both consumer and industrial related (ex, MacDonald’s & Caterpillar). And it’s not just due to cost cutting; it’s also due to increased sales. Granted, much of the sales improvement is offshore, esp emerging markets, but fine, we’ll take that too.
Companies are hugely more efficient now than they were two years ago. But the changes they have made will in fact reduce the number of employees needed to get the job done. Why not? There are too many BO-imposed burdens attached.
We read from this week’s UK Telegraph, “This lack of investment in new jobs isn't because companies lack the resources. Corporate America, as in the UK, has an embarrassment of riches on its collective balance sheet. But having come through the crisis lean and mean, chief executives intend to stay that way.”
The Telegraph continues, “When it comes to investing, the risk and reward equation is skewed away from creating jobs and more towards buying rival companies to boost growth (while often cutting jobs) or buying back a company's own equity to enhance shareholders' returns and management's own share-based incentive schemes. After all, according to corporate America, what's the point of starting a business to create jobs when it will be weighed down by health care costs, taxes and red tape?” Thanks again BO.
And this is exactly where Nov/2 comes in. Given the seers are correct (recall Harry Truman holding up the copy of the Chicago Trib to know that they might not be) then we will have a great wave of fiscal conservatism sweep the country. Efforts to slash perhaps $100 bln from the federal budget will commence in January. And personal initiative will be celebrated as 1) tax cuts are maintained and 2) business tax cuts initiated. Next, the health heist will be repealed. Cap & trade, comatose anyway, will be sent to sleep with the fishes. Employer and consumer alike will be cheered by all of this.
In short, already healthy employers will see the risk of government interference, the risk of sudden change to their operating theater, sharply reduced. Jobs will follow.
Robert Craven
Wednesday, October 27, 2010
Wednesday, October 20, 2010
Forecasts
It is true that the crowd is usually looking in the wrong direction. This occurred Q4, ‘08, when most were expecting more of the same - the good times.
Now, the majority of forecasters (to whom the crowd looks for direction) expect more of the same once again; that is, a sluggish and weak economy. For those who do see a light at the end of the tunnel, most fear it’s a headlight, or a “double dip.”
Times have been tough on these folk, these forecasters. The Q4 ‘08 crisis rolled them over, flattening them into crow bait. Now they’re about to get up but are about to be flattened again, wrong again in their forecast.
Background:
Research analysts and economic scholars create a barrier of intimidating words (a favorite trick of Greenspan, perhaps the worst forecaster ever) to hide their insecurity. The fact is they don’t have any better idea than most of us. And the greater the uncertainty, the more their predictions seem to cluster, the forecasters shouting out together in the dark. Thus, when there is another unexpected major event, the more the consensus misses the mark.
Most economic forecasters are, well..... economists. But they’re not trained for the task. They’re trained to analyze, not forecast. They cannot sense intuitively. They invariably miss major turns in the road because they’re looking in the rear view mirror.
The error to the present consensus forecast is an under-estimation of economic vigor just ahead, our view.
In the present situation a great spark will be provided by the US masses, suddenly aware that they’ve been taken. That spark to be provided through the voting booth. This is not accounted for in forecasting models! Neither is the celerity with which the process will be accomplished, the overturning of BO’s agenda with the health heist first in line. Neither is the thoroughness in the de-lousing of an economy for two years contaminated by statists. All of this provides fire. Most see a rout by the Republicans but few understand the economic traction to come of it.
There is a malaise which has settled on this country. Reagan righted the last one. The majority will see to this one, and sooner than most expect.
Robert Craven
Now, the majority of forecasters (to whom the crowd looks for direction) expect more of the same once again; that is, a sluggish and weak economy. For those who do see a light at the end of the tunnel, most fear it’s a headlight, or a “double dip.”
Times have been tough on these folk, these forecasters. The Q4 ‘08 crisis rolled them over, flattening them into crow bait. Now they’re about to get up but are about to be flattened again, wrong again in their forecast.
Background:
Research analysts and economic scholars create a barrier of intimidating words (a favorite trick of Greenspan, perhaps the worst forecaster ever) to hide their insecurity. The fact is they don’t have any better idea than most of us. And the greater the uncertainty, the more their predictions seem to cluster, the forecasters shouting out together in the dark. Thus, when there is another unexpected major event, the more the consensus misses the mark.
Most economic forecasters are, well..... economists. But they’re not trained for the task. They’re trained to analyze, not forecast. They cannot sense intuitively. They invariably miss major turns in the road because they’re looking in the rear view mirror.
The error to the present consensus forecast is an under-estimation of economic vigor just ahead, our view.
In the present situation a great spark will be provided by the US masses, suddenly aware that they’ve been taken. That spark to be provided through the voting booth. This is not accounted for in forecasting models! Neither is the celerity with which the process will be accomplished, the overturning of BO’s agenda with the health heist first in line. Neither is the thoroughness in the de-lousing of an economy for two years contaminated by statists. All of this provides fire. Most see a rout by the Republicans but few understand the economic traction to come of it.
There is a malaise which has settled on this country. Reagan righted the last one. The majority will see to this one, and sooner than most expect.
Robert Craven
Sunday, October 17, 2010
November/2 - Implications
It is expected that we may all look for relief, for a break from the desultory polices of the far-left after Nov/2. That being the case, let’s consider the aftermath (leaving bond and equity prices, gold and the dollar to the seers).
Certainly major employers will be cheered as uncertainties and hindrances are removed, or appear likely to be removed. The more the odds increase in 2011 for this event, the more payroll will increase and the greater the transition from temporary to permanent help. That’s a good thing.
Next, US business investment spending (which for the last 2 qts has outpaced consumer spending, a good thing) will expand further because business confidence will grow. That’s a another good thing.
Next, consumer spending will increase. Recall that retail sales are not in the tank but have been fairly strong, considering. But consumers with a new job, or, at least relieved of the threat of higher near-term tax burdens might even buy a discretionary item or two or three, something they are not doing now.
Finally, major world credits will take note; most have come to understand that statism means failure. They learned the hard way and now they’re wondering what we’re up to, a one-time beacon now moving left as they’ve moved right?! Thanks to Obama they’ve lost respect.
Michael Boskin writes following the G-20 summit, “Obama was soundly rebuffed by Canadian Prime Minister Stephen Harper, Great Britain’s new prime minister, David Cameron, and German Chancellor Angela Merkel, among others, on his demand for additional fiscal stimulus (more government spending). They are instead pursuing fiscal consolidation...”
Once the paladin of free markets, once the world’s champion meritocracy we have become suddenly hostile to initiative and innovation, looking instead for bureaucrats, for levelers to plan our economy, and, as world leaders now predict, kill us with debt. Everyone else can see this is the road to serfdom except Obama. When his policies are thoroughly rejected Nov/2, when voters stop the damage and then look for repairs, foreign investors will once again flock to the US as a place for safe and sound investment. We will all prosper as a result.
Robert Craven
Certainly major employers will be cheered as uncertainties and hindrances are removed, or appear likely to be removed. The more the odds increase in 2011 for this event, the more payroll will increase and the greater the transition from temporary to permanent help. That’s a good thing.
Next, US business investment spending (which for the last 2 qts has outpaced consumer spending, a good thing) will expand further because business confidence will grow. That’s a another good thing.
Next, consumer spending will increase. Recall that retail sales are not in the tank but have been fairly strong, considering. But consumers with a new job, or, at least relieved of the threat of higher near-term tax burdens might even buy a discretionary item or two or three, something they are not doing now.
Finally, major world credits will take note; most have come to understand that statism means failure. They learned the hard way and now they’re wondering what we’re up to, a one-time beacon now moving left as they’ve moved right?! Thanks to Obama they’ve lost respect.
Michael Boskin writes following the G-20 summit, “Obama was soundly rebuffed by Canadian Prime Minister Stephen Harper, Great Britain’s new prime minister, David Cameron, and German Chancellor Angela Merkel, among others, on his demand for additional fiscal stimulus (more government spending). They are instead pursuing fiscal consolidation...”
Once the paladin of free markets, once the world’s champion meritocracy we have become suddenly hostile to initiative and innovation, looking instead for bureaucrats, for levelers to plan our economy, and, as world leaders now predict, kill us with debt. Everyone else can see this is the road to serfdom except Obama. When his policies are thoroughly rejected Nov/2, when voters stop the damage and then look for repairs, foreign investors will once again flock to the US as a place for safe and sound investment. We will all prosper as a result.
Robert Craven
Thursday, October 14, 2010
Retardant #1
We return to that primary retardant hampering this recovery. Those immune to economic cycles or those who may consider themselves so situated perhaps don’t care. For the rest of us, especially for those of us who depend on discretionary consumer activity for sustenance (restauranteurs, plastic surgeons, nurserymen) business is off; our guess, after our own crude survey - 40% vs H1, 2008 for this segment of the economy.
This is not a complex issue (although lefty economists want you to believe that it is). Banks are not the answer; they have nothing to do with it. Corporate liquidity in not a problem. Nor is consumer demand moribund; that won’t work for an excuse either. Of course they're not buying vacation homes or new plants or getting face lifts, that's for sure, but in fact consumers’ core retail spending is 4.8% ABOVE its year ago level, its tenth straight year-on-year increase. What’s that you say? Can’t be? Yes it can. It's spending on necessary items. Retail sales may be 3.5% below their 7/08 peak, but they’re not in the tank. Key - there is enough there to encourage employers.
So what is it? Simple. Major employers are unwilling to sign permanent help, even though they sense the demand, domestic and foreign. But it is only permanent employees who really spend $. There is no trickle down without them.
There are two reasons for the employers' reluctance: First, the very real burdens placed on the employer by Obama -something we and others have detailed endlessly. Next, and carrying even more horsepower, the major uncertainty that goes with a bona fide statist in the WH. Even the IMF senses BO’s fiscal recklessness. What might be next?
This conclusion is not ours (although most any fool could figure it out). No, we have it from the employers directly.
We can’t call every major employer although we have quoted the likes of Intel, GE and most recently, Federal Express. Their message is the same. But to gather more in just one call we spoke today to the owner of a major employment firm in CA, actually in Marin. This guy talks to the employers so we don’t have to. His business is booming, but, for temps only. And from every single major employer, from LA to Redding, Dem or Rep, the message is the same. Until BO’s agenda is reversed, we’re not doing a thing.
Now if this doesn’t tell you something folks then you live under a rock.
Most of these potential employers look as we do to Nov for relief. Anybody who owns a business - perhaps our nursery pals - had better hope they’re right.
Robert Craven
This is not a complex issue (although lefty economists want you to believe that it is). Banks are not the answer; they have nothing to do with it. Corporate liquidity in not a problem. Nor is consumer demand moribund; that won’t work for an excuse either. Of course they're not buying vacation homes or new plants or getting face lifts, that's for sure, but in fact consumers’ core retail spending is 4.8% ABOVE its year ago level, its tenth straight year-on-year increase. What’s that you say? Can’t be? Yes it can. It's spending on necessary items. Retail sales may be 3.5% below their 7/08 peak, but they’re not in the tank. Key - there is enough there to encourage employers.
So what is it? Simple. Major employers are unwilling to sign permanent help, even though they sense the demand, domestic and foreign. But it is only permanent employees who really spend $. There is no trickle down without them.
There are two reasons for the employers' reluctance: First, the very real burdens placed on the employer by Obama -something we and others have detailed endlessly. Next, and carrying even more horsepower, the major uncertainty that goes with a bona fide statist in the WH. Even the IMF senses BO’s fiscal recklessness. What might be next?
This conclusion is not ours (although most any fool could figure it out). No, we have it from the employers directly.
We can’t call every major employer although we have quoted the likes of Intel, GE and most recently, Federal Express. Their message is the same. But to gather more in just one call we spoke today to the owner of a major employment firm in CA, actually in Marin. This guy talks to the employers so we don’t have to. His business is booming, but, for temps only. And from every single major employer, from LA to Redding, Dem or Rep, the message is the same. Until BO’s agenda is reversed, we’re not doing a thing.
Now if this doesn’t tell you something folks then you live under a rock.
Most of these potential employers look as we do to Nov for relief. Anybody who owns a business - perhaps our nursery pals - had better hope they’re right.
Robert Craven
Tuesday, October 12, 2010
Off To Your Room Kids
In the US, it's all about jobs. So you might think that the rest of the developed world has a jobs problem. It doesn’t.
Let’s take a look. What can we learn from this?
In an earlier sketch (World Order Reversed) we noted that election results in the UK and Europe have moved decidedly right, this after lessons learned the hard way. From that piece: “If you look across Europe, the political center of gravity has clearly moved to the right,’ notes Charles Kupchan, sr fellow at the Council on Foreign Relations, ‘There were deep and broad structural problems of the economy that Europeans had to tackle.” The nearest role model was the UK under Thatcher. “Now that process,” continues Kupchan, “of undoing large state-centered economies is moving to the Continent.”
Europe, the UK and Australia (5.1% unempl.) are already looking to be in reasonable shape after the crisis, at least if measured by joblessness, which is most cases is now at pre-crisis levels. But of course not the US. Why?
From the recent IMF annual meeting, the mood as one headline suggested is that, “ Jobless American threatens to bring us all down.”
My goodness sakes alive folks, they’re looking at us as cripples! The IMF is lecturing the US? This can’t be true! Ah, but yes it is. With policies that look reckless in comparison with the rest of the developed world, why not?
There is nothing new under the sun. Rich Rahn at the Cato Institute: “Mankind seems to be programmed not to remember the reasons for economic success and failure - and these lessons seem to need to be relearned every few years. The normal course of events is for free and prosperous economies ... to move toward less freedom - more government spending, taxation and regulation - until the burden of government brings growth to a halt or near-halt.”
Well Rich ol buddy, maybe not “mankind” but certainly the US left, suffering as they do from amnesia. So like children at the dinner table, making nothing but noise and a mess, they were scolded; they are now being put to their room.
But guess what? The kiddies rarely learn a thing.
This dear readers explains the cycle; this in fact is why progress is retarded, moving only in ratchet fashion yet with slippage along the way. We all suffer for it.
A party controlled by radicals at the national level, gained traction; the rest is history. Using gov’t in the fields of stimulus and health, and with union payoffs BO, Pelosi, Frank and the rest are simply repeating early errors of the UK and Europe (errors now being reversed).
But then we all know that don’t we? Yes indeedee, there must be something else and there is. BO’s gang, being not completely stupid understood that neither health nor stimulus would deliver in the conventional sense anyway. That wasn’t what this was about. It was about leveraging a crisis for a long hibernating statist agenda, an agenda so firmly welded to the far left’s consciousness that many where willing to self destruct - hari kari sytle, off the cliffs - to see to its fruition.
Robert Craven
Let’s take a look. What can we learn from this?
In an earlier sketch (World Order Reversed) we noted that election results in the UK and Europe have moved decidedly right, this after lessons learned the hard way. From that piece: “If you look across Europe, the political center of gravity has clearly moved to the right,’ notes Charles Kupchan, sr fellow at the Council on Foreign Relations, ‘There were deep and broad structural problems of the economy that Europeans had to tackle.” The nearest role model was the UK under Thatcher. “Now that process,” continues Kupchan, “of undoing large state-centered economies is moving to the Continent.”
Europe, the UK and Australia (5.1% unempl.) are already looking to be in reasonable shape after the crisis, at least if measured by joblessness, which is most cases is now at pre-crisis levels. But of course not the US. Why?
From the recent IMF annual meeting, the mood as one headline suggested is that, “ Jobless American threatens to bring us all down.”
My goodness sakes alive folks, they’re looking at us as cripples! The IMF is lecturing the US? This can’t be true! Ah, but yes it is. With policies that look reckless in comparison with the rest of the developed world, why not?
There is nothing new under the sun. Rich Rahn at the Cato Institute: “Mankind seems to be programmed not to remember the reasons for economic success and failure - and these lessons seem to need to be relearned every few years. The normal course of events is for free and prosperous economies ... to move toward less freedom - more government spending, taxation and regulation - until the burden of government brings growth to a halt or near-halt.”
Well Rich ol buddy, maybe not “mankind” but certainly the US left, suffering as they do from amnesia. So like children at the dinner table, making nothing but noise and a mess, they were scolded; they are now being put to their room.
But guess what? The kiddies rarely learn a thing.
This dear readers explains the cycle; this in fact is why progress is retarded, moving only in ratchet fashion yet with slippage along the way. We all suffer for it.
A party controlled by radicals at the national level, gained traction; the rest is history. Using gov’t in the fields of stimulus and health, and with union payoffs BO, Pelosi, Frank and the rest are simply repeating early errors of the UK and Europe (errors now being reversed).
But then we all know that don’t we? Yes indeedee, there must be something else and there is. BO’s gang, being not completely stupid understood that neither health nor stimulus would deliver in the conventional sense anyway. That wasn’t what this was about. It was about leveraging a crisis for a long hibernating statist agenda, an agenda so firmly welded to the far left’s consciousness that many where willing to self destruct - hari kari sytle, off the cliffs - to see to its fruition.
Robert Craven
Friday, October 8, 2010
Employment
Today’s Sep Payroll number surprised to the weak side, down 95M. There was another huge decline in census workers, and a large decline in state and local gov’t workers (which can’t be a bad thing!).
Private sector jobs rose a tad (+64M). After falling steadily between Dec/07 and Oct/09, private sector employment has increased modestly every month this year, averaging 95M per month. Translation - sustained but modest increases in these jobs.
Employment is now 7.6MM below the Dec/07 peak level.
The unemployment level was unchanged (9.6%) vs expectations of 9.7%. This was due to a smaller increase in the labor force (+48M) than in household employment (+141), resulting in a decline in unemployment (-93M). There are now 14.8MM people unemployed.
Naturally this release will provide fuel for conservatives in November.
Weakness in job creation simply did not have to be; it was not baked in the cake following 2008 or any other downturn for that matter. Most of us knew that limited gov’t interference, and lower tax burdens both on consumer and business, will do the trick. It worked for JFK and it worked for Reagan.
Finally, some of us knew that it is impossible for gov’t “stimulus” plans to create jobs on a net basis. Most of Obama’s people knew it too. We must ask, have they no decency?
No, none of this had to be. It is such a tragedy.
Robert Craven
Private sector jobs rose a tad (+64M). After falling steadily between Dec/07 and Oct/09, private sector employment has increased modestly every month this year, averaging 95M per month. Translation - sustained but modest increases in these jobs.
Employment is now 7.6MM below the Dec/07 peak level.
The unemployment level was unchanged (9.6%) vs expectations of 9.7%. This was due to a smaller increase in the labor force (+48M) than in household employment (+141), resulting in a decline in unemployment (-93M). There are now 14.8MM people unemployed.
Naturally this release will provide fuel for conservatives in November.
Weakness in job creation simply did not have to be; it was not baked in the cake following 2008 or any other downturn for that matter. Most of us knew that limited gov’t interference, and lower tax burdens both on consumer and business, will do the trick. It worked for JFK and it worked for Reagan.
Finally, some of us knew that it is impossible for gov’t “stimulus” plans to create jobs on a net basis. Most of Obama’s people knew it too. We must ask, have they no decency?
No, none of this had to be. It is such a tragedy.
Robert Craven
Wednesday, October 6, 2010
JOBS
Friday we have the employment report for September. Formally known as the Non-Farm Payroll report, the BLS gives us a monthly read for payroll in all categories except farm, domestic help, general gov’t employees and some non-profit types.
Key concern nowadays - jobs. Thus, this release carries the potential to move voter attitude significantly +/- if the result varies from consensus.
Observers expect a lift in the unemployment rate to 9.7% from August’s 9.6%. Employment is expected to be unchanged after a 54M drop in August.
The length of the average workweek is expected to remain unchanged (34.2 hours); total hours worked are expected to increase 0.1% from an unchanged figure for August.
Finally, hourly earnings are expected to rise by 0.2%, putting the Sep level at just 1.8% above its year ago level, one of the smallest increases of the last 6 years.
“General gov’t employees” could care less what numbers pop up on Friday. For working Americans, and especially for the rest of us who are in markets tagged to discretionary spending we know payroll activity is key - trickle down.
The US economy is firing on 5 or perhaps 6 of 8 cylinders. Wonder why?
That is what the November elections are about. To the extent Obama’s agenda can be reversed and significant uncertainties plaguing the employer can be eliminated, Payroll numbers will trend higher, 2011. It’s that simple.
Most Americans understand that it's critical that we do away with all that a statist president has placed in front of a meaningful recovery - tax & nationalized energy scheme, the health heist, the stimulus tragedy, GM/union bailout, the risk of much higher taxes, corp and individual, the threat of even more gov’t control of even more segments of this economy.
With this dread ahead, no one will hire. You kidding me?
We return to our slogan: First, stop the damage. Next, make repairs.
Robert Craven
Key concern nowadays - jobs. Thus, this release carries the potential to move voter attitude significantly +/- if the result varies from consensus.
Observers expect a lift in the unemployment rate to 9.7% from August’s 9.6%. Employment is expected to be unchanged after a 54M drop in August.
The length of the average workweek is expected to remain unchanged (34.2 hours); total hours worked are expected to increase 0.1% from an unchanged figure for August.
Finally, hourly earnings are expected to rise by 0.2%, putting the Sep level at just 1.8% above its year ago level, one of the smallest increases of the last 6 years.
“General gov’t employees” could care less what numbers pop up on Friday. For working Americans, and especially for the rest of us who are in markets tagged to discretionary spending we know payroll activity is key - trickle down.
The US economy is firing on 5 or perhaps 6 of 8 cylinders. Wonder why?
That is what the November elections are about. To the extent Obama’s agenda can be reversed and significant uncertainties plaguing the employer can be eliminated, Payroll numbers will trend higher, 2011. It’s that simple.
Most Americans understand that it's critical that we do away with all that a statist president has placed in front of a meaningful recovery - tax & nationalized energy scheme, the health heist, the stimulus tragedy, GM/union bailout, the risk of much higher taxes, corp and individual, the threat of even more gov’t control of even more segments of this economy.
With this dread ahead, no one will hire. You kidding me?
We return to our slogan: First, stop the damage. Next, make repairs.
Robert Craven
Friday, October 1, 2010
US Economy Ahead - A Layman's Guide
Let’s expand a tad on the Sep/20 sketch.
In explaining the delayed recovery there’s no need to get tangled up in page-long equations and econ mumbo jumbo. (Others, more qualified, have already done the heavy lifting.)
Observers have highlighted the parallel - this experience and the Depression. Great sums of $ were spent by FDR and Obama. In both cases, the employment situation worsened significantly soon after.
Readers will recall from an earlier sketch that unemployment peaked at 9% two months after the Oct/29 crash, then headed downwards, to 6.3%, June/30. Then came the first federal spending spree. Unemployment hit double digits, Dec/30.
Phil Gramm recounted this experience in today’s WSJ. Gramm also quoted FDR’s treas secty, Henry Morgenthau, just as we did several months ago. Morgenthau summarized as follows when before Way and Means, Apr/39: "Now, gentleman, we have tried spending money. We are spending more than we have ever spent before and it does not work . . . I say after eight years of this administration we have just as much unemployment as when we started . . . and an enormous debt, to boot.”
We called gov’t spending a “tragedy” and noted the exercise would be at best a wash, likely a retardant. It proved to be a retardant.
It never works folks. If you didn’t take our word for it two years ago, do it now. The stimulus deal was a scam. Obama is not entirely stupid. He knows this the same as we do. He just figured he’d take in the masses (who in fact excused FDR but won’t BO, not for this nor the health heist).
The other similarity between the two experiences is that in both cases the presidents refused to cut taxes. We know from Kennedy / Reagan that this works. Since Obama is more concerned with not offending far-left zealots than seeing to the welfare of America, he won’t do that.
And this brings us to Oct/2010. Where now? First, tune out the TV prophets, the ex -spurts.
Next, put your ear to the ground. We did. We listened to major employers. Sure, they are risk takers yet there is just too darn much legislative-driven uncertainty ahead for even them to do anything but sit on their cash. Why? A statist at the helm is a death threat.
What then will provide the spark to potential employers and consumers alike? We all know the answer, not tough at all. First comes Nov/2010 when major harm being inflicted is stopped (with our 40% risk that Dem lame ducks will twist the knife). Next will be the period of resuscitation, that of 2011, when the health heist is reversed, tax cuts ironed in, cap & trade put to bed. By that time the economy - short of a major international wild card event - will be moving along very well.
Our plastic surgeon pal will be doing more lifts. Our nursery pals will be selling more plants. And, the Maui vacation-home market will come alive!
Robert Craven
In explaining the delayed recovery there’s no need to get tangled up in page-long equations and econ mumbo jumbo. (Others, more qualified, have already done the heavy lifting.)
Observers have highlighted the parallel - this experience and the Depression. Great sums of $ were spent by FDR and Obama. In both cases, the employment situation worsened significantly soon after.
Readers will recall from an earlier sketch that unemployment peaked at 9% two months after the Oct/29 crash, then headed downwards, to 6.3%, June/30. Then came the first federal spending spree. Unemployment hit double digits, Dec/30.
Phil Gramm recounted this experience in today’s WSJ. Gramm also quoted FDR’s treas secty, Henry Morgenthau, just as we did several months ago. Morgenthau summarized as follows when before Way and Means, Apr/39: "Now, gentleman, we have tried spending money. We are spending more than we have ever spent before and it does not work . . . I say after eight years of this administration we have just as much unemployment as when we started . . . and an enormous debt, to boot.”
We called gov’t spending a “tragedy” and noted the exercise would be at best a wash, likely a retardant. It proved to be a retardant.
It never works folks. If you didn’t take our word for it two years ago, do it now. The stimulus deal was a scam. Obama is not entirely stupid. He knows this the same as we do. He just figured he’d take in the masses (who in fact excused FDR but won’t BO, not for this nor the health heist).
The other similarity between the two experiences is that in both cases the presidents refused to cut taxes. We know from Kennedy / Reagan that this works. Since Obama is more concerned with not offending far-left zealots than seeing to the welfare of America, he won’t do that.
And this brings us to Oct/2010. Where now? First, tune out the TV prophets, the ex -spurts.
Next, put your ear to the ground. We did. We listened to major employers. Sure, they are risk takers yet there is just too darn much legislative-driven uncertainty ahead for even them to do anything but sit on their cash. Why? A statist at the helm is a death threat.
What then will provide the spark to potential employers and consumers alike? We all know the answer, not tough at all. First comes Nov/2010 when major harm being inflicted is stopped (with our 40% risk that Dem lame ducks will twist the knife). Next will be the period of resuscitation, that of 2011, when the health heist is reversed, tax cuts ironed in, cap & trade put to bed. By that time the economy - short of a major international wild card event - will be moving along very well.
Our plastic surgeon pal will be doing more lifts. Our nursery pals will be selling more plants. And, the Maui vacation-home market will come alive!
Robert Craven
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