Tuesday, July 10, 2012

Zombiconomy

Braaaaains. Braaaaains. Our leaders have no braaaaains, and that’s the problem. And the evidence is coming through loud and clear from the economy, which the scurrilous wags as CNBC have declared a Zombie Economy. This is gonna be ugly.

In normal times, an economic recovery following a recession will produce real economic growth of around 4-5% and will restore all the jobs lost plus add a few more. That’s not happening this time. Instead, growth has been an anemic 1-2%, and the economy has come close to dipping back into recession three times now. In effect, the economy is stumbling along at the edge of recession. How bad is it? Well, it’s the weakest recovery since 1948!

Moreover, the jobs numbers are horrid. Just to keep pace with population growth, our economy needs to produce 120,000-125,000 jobs each month. In June, this “recovery” produced only 80,000 jobs. In May, this was 77,000 jobs. In April it was 68,000. All told, only 2.6 million jobs have been created since June 2009, for an average of 72,200 per month. That means for the last three years, 50,000 people have joined the workforce each month without finding a job. And that is on top of the millions of people who lost their jobs when the recession began. Indeed, we still have about 5% fewer jobs than we had before the crash.

And it gets worse. As people are running out of unemployment benefits, they are trying to get onto permanent benefits like disability. Remember how the economy produced 80,000 jobs in June? Well, 85,000 workers left the economy that same month to go on disability. That’s right, and that wasn’t an unusual month. Since June 2009, the economy has produced 2.6 million jobs, but 3.1 million workers have gone on disability! That’s unsustainable.

These problems are going to get worse too. To get a genuine recovery, an economy must reach “escape velocity.” That’s the point where economic conditions become strong enough that the recovery sustains itself. In other words, the point where there is enough production that enough new workers must be hired that their incomes begin to spur demand, which requires more production and creates more jobs: a virtuous circle, where good things lead to more good things. If an economy can’t hit that point, then it will slip back into recession or stumble along at the edge of recession, like Japan has done for the past couple decades.

Right now, there are four things preventing the economy from reaching escape velocity:
1. There’s just not enough good news to make people believe the worst is over. Housing and factory orders are up, yes. BUT they are weak and consumer confidence is falling at the same time. The rental-market has hit an all time high in terms of number of people renting, meaning people aren’t buying. And China has slowed its buying.

2. Uncertainty more than anything keeps people from acting, and right now everything is uncertain. Right now no one knows how much of ObamaCare will ever kick in, and until that’s clarified, people won’t hire. Add in the fact that a business would be foolish to act before the election, and you have a recipe for inaction. Inaction means recession.

3. Business has gotten hooked on handouts from the Fed and the other central banks over the past four years, and they are waiting for their next hit of free junk. Ditto on the continuing “stimulus” bills. Why buy anything when Santa keeps coming back to your house?

4. Finally, those banks Obama fixed. . . the ones who now control so much of the economy. . . well, they aren’t fixed. Dozens of them are being caught up in an interest rate manipulation probe across several countries. JP Morgan lost $2 billion in bad trades. Many of them still hold debt that will never be paid. And Greece and Spain and Italy hang around their necks like an inflated albatross.
This is a recipe for stagnation and collapse before the election, not a recipe for growth and happiness. And that’s really bad for Obama. Now the Republicans need to work to make sure they know how to fix this once they take over. For that, I would recommend:
1. Stopping the continuous stream of handouts through stimulus bills and Fed “quantitative easing.”

2. Repealing unnecessary regulations. But this needs to be done in one shot so business won’t keep waiting for more.

3. Killing ObamaCare with any means possible as quickly as possible.

4. Breaking up the big banks into component parts and keeping people’s savings (the money taxpayers guarantee) from being used for speculation.
Thoughts?


P.S. Don't forget, it's Star Trek Tuesday at the film site.

79 comments:

Kelly said...

I just saw this interesting tidbit.

In a new poll for The Hill, 68% of likely voters believe Obama president has substantially transformed the country since his 2009 inauguration.

Now the catch: 56% of likely voters believe Obama has transformed the nation in a negative way, compared with 35% who believe the country has changed for the better.

Joel Farnham said...

Just killing ObamaCare will create a great relief. Right now, businesses are creating only the jobs that are necessary for it to function at low ebb. Jobs that go beyond the simple maintenance at work can't be created in the current business climate.

Repealing the prohibition of off-shore drilling will do nicely as a kick-start to the economy. It also will create a situation where our oil-rich Muslims will have less money to throw around.

I hope the elected Republicans remember that we put them in the driver's seat and to not take for granted our support. There simply wasn't time to create a new party.

AndrewPrice said...

Kelly, Thanks. I'm thinking of writing about that tomorrow actually. Funny isn't it that Mr. Hope and Change has become so unpopular?

AndrewPrice said...

Joel, Just killing ObamaCare will be huge for the economy. Right now it would be intensely stupid for most businesses to hire because they have no idea what their costs will be.

I think expanding offshore drilling would be huge too -- reduction of energy costs, increased independence, tons of jobs. Ditto on the KeyStone pipeline and on natural gas approvals. Those things could make America hugely rich and productive again.

But the biggest thing is to stop this death by a thousand regulatory cuts that Obama had been doing. Every day some new $100 million rule comes out.

ScyFyterry said...

Before I read the article, did anybody see that despicable comment by Biden telling minorities that Republicans changed the law so they could be arrested if they vote?

http://www.weeklystandard.com/blogs/biden-republicans-have-changed-law-so-you-get-arrested-if-you-do-vote_648347.html

AndrewPrice said...

Terry, He claims he was joking, but again, what kind of humor is that if it plays into race hustling ideas?

Here's your link: LINK

ScyFyterry said...

Excellent article, Andrew! I think the economy is in real trouble. I don't know if we're headed for recession or not, but it feels like we're heading for a period of almost no growth, like with Japan. In fact, it sounds like we're in the middle of a real economic malaise. Where is Jimmy Carter when we need him? Oh, that's right, he changed his name to Barack Jimmy Obama.

LawHawkRFD said...

Andrew: Obama has a plan, and we just have to be patient. You see, with Obamacare, people will die before they're old enough to enter the work force, and then the jobs numbers will actually be positive rather than negative. Also, older people already in the work force will die off faster because of the death panels. That means job openings. It's kinda complicated, but very nuanced. I think that part of the plan is somewhere around pages 2,676-2,701.

AndrewPrice said...

Thanks Terry. I think the economy is in trouble, but not in the sense of collapse. Instead, I think the economy will keep dribbling along near recession until serious changes are made. I see nothing which will lead people to invest in the future, to create jobs, or to expect any sort of real improvement. And I think all the tinkering Washington is doing will only make that worse. they need to seriously cut back the government, cut back the handouts, get out of the way and stop trying to fix things.

AndrewPrice said...

Lawhawk, That makes as much sense as anything else Obama has done! LOL!

I think the damage ObamaCare has done to the economy really cannot be understated. Why would anyone want to hire until they know what this monster will do to them? And even then, there will be massive changes as people lose their healthcare, as employers shed people to get below certain thresholds, etc.

ScyFyterry said...

I agree. To me, it looks like the economy has stalled and doesn't have any reason to pick up again. I don't know what will change that?

AndrewPrice said...

Terry, Unfortunately, that seems likely.

T-Rav said...

Hmmm. How will the MSM report these economic problems? I wonder....

"A spike in the rental market is a sure sign that people are pumping money into the economy once again! Combined with lower-than-ever gas prices, experts are confident an economic recovery is in progress."

A riff, to be sure, but tell me you can't imagine these words coming out of Brian Williams' or Soledad O'Brien's mouths.

AndrewPrice said...

T-Rav, I could totally imagine them saying that too. They would call it built up potential or something like that, as in people must be about to start diving back into the economy.

In terms of how they will respond... so far the MSM has tried to lower expectations. They talk about 2% growth being the new normal as if it were just the way things were and wasn't the result of policies. Ditto on 8% unemployment, which they are dismissing as old news and as something we just need to get used to.

Ed said...

This spells real trouble for Obama. There is no way he can turn this around before the election.

rlaWTX said...

MSM response: and TOTUS just over-promised when he said he'd have the rate down to 5% in 2 years - it's not HIS fault it didn't make it down that low...

I'll admit that the economy part of things is a little less important given our local insane economy (see quote below); I am more upset about ObamaTax and government over-steps.

June 15, 2012: "The Texas Workforce Commission said Friday the Midland metropolitan statistical area posted an unemployment rate of 3.8 percent in May, up from 3.5 percent in April but below the 4.3 percent reported last May. Midland continues to record the state's lowest unemployment rate."

tryanmax said...

It's a good article, but unfortunately it only raises my frustration levels. I've been in countless arguments with liberals who simply don't believe in economic uncertainty, who only understand regulation as a positive thing, and who literally think the economy is kept aloft on happy thoughts alone. This article puts me in mind of that.

Now, normally I would think you could get some Democrats to agree to breaking up banks. But as soon as a Republican suggests it, they will attach it to some imaginary evil motive. Democrat reasoning in a nutshell: If a Dem hits you in the jaw, he musta had a good reason to do it. If a Rep tries to patch you up, he's just trying to get your vote.

AndrewPrice said...

Ed, This is disaster for Obama. And no, there is no way to turn this around. For one thing, the conditions causing the problems haven't stopped yet.

AndrewPrice said...

rlaWTX, There are pockets of good economic news everywhere. And I saw the other day that every state which elected a Republican governor recently has seen unemployment fall.

But overall, the national economy is hurting and it's not going to get better as long as we continue the current policies.

tryanmax said...

Also, this "Zombie Economy" nonsense is just about making up new gobbledygook to excuse the president's failures. What does it even mean, anyway? That the economy is undead? It's an admission of defeat. The only way to stop a zombie is to blast it in the head, and then it's dead-dead. So Obama stands at the crossroads between an undead economy and a dead-dead economy. What an optimist! I think I need me a shotgun. And it won't be for the zombies!

AndrewPrice said...

tryanmax, I know what you mean. And it's really frustrating that the answer to these problems is so obvious and yet you and I both know that few people in power will accept the obvious.

The interesting thing I've found about the uncertainty argument is that liberals actually have found a way to accept it. Liberal economists claim that the problem is not regulation, it's the uncertainty of not knowing what the regulations will be. And once those regulations are known, everything goes back to normal. In other words, regulations don't destroy jobs or affect business in any way -- only not knowing what the regulations will be prevents people from hiring. Talk about twisted!!

Seriously, think about that. If regulations didn't matter, then why would it matter if you didn't know what the regulations would be?

Regarding banks, for all their talk of populism and hating Wall Street, the Democrats love big banks. They love the consolidation of power because it makes it easier to control. And they have used these banks as drivers of social policy by making them lend to certain groups and for certain things banks wouldn't normally do. Not to mention, they love the campaign money they get from them.

AndrewPrice said...

tryanmax, I agree. All of this has a feel of desperation to it. It's like they need some way to explain away Obama's failures so there are a LOT of articles now about how this is a blame-less failure. This is just an historical accident, and unexpected banking crisis, a world slowdown, the way things are. . . there is nothing anyone can do and we all need to lower our expectations.

That's what a lot of this strikes me as, an attempt to deflect blame.

Individualist said...

A Zombie economy is created in the same way that Zombies are created. A virus that kills and animates the dead turning them into mindless creatures that attack anything on sight eating every living thing in their path.

This virus causes a cancer called Socialism. It is where those who produce are punished and attacked to provide for those who don't. Much in the same way healthy cells are overrun by useless cancer cells. Progressivism is a cancer.

AndrewPrice said...

Indi, Well said! And if you want the perfect example, look no further than Wall Street. You had these big huge banks which took stupid risks and should have gone under, making way for the next tier of banks.

Instead, the government stepped in and propped these banks up. Now they are bigger than ever and they've been eating up all the other banks, who would have been fine if they had gone under. And in the process, they are getting more and more control over Main Street because they now hold all the money Main Street needs.

In effect, it's a zombie virus spreading through the economy.

Ed said...

Indi, That's a great analogy!

T-Rav said...

Andrew, considering 2% growth and 8% unemployment is thought of as boom times in the European countries the media and other liberals wish to emulate, that's no surprise.

AndrewPrice said...

By the way, here's a fascinating article on the effect of a "soak the rich" tax in Maryland. The state lost 31,000 residents in three years, with the highest concentration in rich counties. And the tax cost the state $1.7 billion in lost tax revenue.

Maryland Tax

AndrewPrice said...

T-Rav, That's a good point. Not only is it the "new normal," but we're the "new Europe." Barf.

T-Rav said...

tryanmax, that's what happens when you get people who can't think in terms of trade-offs or other features of economics. The only thing that matters is whether someone is, in their opinion, being mean to someone else. Is a high minimum wage counterproductive to the working class, especially where the youth and minorities are concerned? Doesn't matter, because only someone who doesn't care about the poor would suggest lowering or eliminating it. Would enforcing a price ceiling on fuel lead to rationing and other features of the Carter era? "Well, it shouldn't, but those fat-cat oil executives will make sure it does, because they don't care about the rest of us." This is why people like Obama get elected--there are so many simple-minded people out there who unfortunately have figured out how to vote.

tryanmax said...

T-Rav, too true. It seems we have two very similar conversations going on over here and at the film site, because what you've said perfectly demonstrates how the left is obsessed with motives, whether real or imagined, to the absolute neglect of actual outcomes.

AndrewPrice said...

T-Rav, That is sadly very, very true. There are far too many people out there who don't understand tradeoffs and who see the world in these simplistic (and wrong) ways. There is a real sense among too many people that if something can be shown to benefit someone, then we should do it -- without ever worrying about what the negative consequences will be to other people.

And you're right that when their simpleton view of the world doesn't come to pass, they end up looking for a conspiratorial sort of blame to pass around. Oh, no jobs were created? It must have been those evil companies trying to make the plan look bad. Oh, tax income went down? Those evil rich must be hiding their money. These people simply don't grasp that the world isn't static and can't be manipulated that easily or with easy to predict results.

AndrewPrice said...

tryanmax, I was thinking that too. These two conversations have very much started to head in the same direction. Fascinating!

ellenB said...

I love your intro about the braaaaaains. :D

T-Rav said...

The universes have started to merge.

AndrewPrice said...

Thanks Ellen!

ellenB said...

In my life, the American economy has always been very resilient and capable of bouncing back. But I don't have that sense in the past decade. Even when we've had good growth, it still never felt like a strong economy and I think the problem is what you identified in a prior article about the middle class moving backwards.

AndrewPrice said...

T-Rav, LOL! Yes, the universes are merging and soon there will be many of us... all just a little different... all vying to use the bathroom at the same time. :(

AndrewPrice said...

Ellen, I'm never one to count out the American economy, but in the past 10-12 years, we have definitely worked hard to kill the parts of the economy which make it thrive. And I think we're paying the price for that now.

ellenB said...

Andrew, I get a similar feel. It's like we've choked off all the innovative people with regulations, taxes on success, and lawsuits. It's much easier today to just be an employee than it is to start a business and take risks.

AndrewPrice said...

Ellen, That is exactly the problem. It's not any single thing, it's the death of a thousand cuts. Every year, hundreds of new regulations are dropped on people, each of which make it that much more complex to hire people and run a business. Taxes go up every time you turn around -- and talk about a complex and distorting tax code! Lawsuits make people overly-cautious.

And as the government makes the world more complex, only large companies are remain capable of swimming the regulatory channel. Soon, everything is run by a small number of large firms. At that point, it becomes very hard for anyone else to enter the market and thus innovation stalls.

T-Rav said...

Andrew and Ellen, that's why the line about conservatives being controlled by Big Business is so hilarious. Big corporate CEOs and their companies do better under extreme regulation only they can survive than in a completely free market. In fact, many of the regulatory codes during the Progressive Era and the New Deal were written by those titans, to drive out their smaller competitors. Besides, how often do you see any of them contributing to the Tea Party? Is Warren Buffett known for demanding a flat or fair tax? Morons.

T-Rav said...

Excuse me while I go start writing my new book, "Crisis on Infinite Commentaramas"...

tryanmax said...

...in the past 10-12 years, we have definitely worked hard to kill the parts of the economy which make it thrive.

It's like we've choked off all the innovative people...

Too true. I'd say it's been going on a bit longer than that. I was barely politically literate in college, but even then I understood that going the entrepreneur route was growing increasingly foolish. Of course, all the business profs talked up starting small businesses and put stars in their pupils eyes. I recall one time I challenged the idea with some halfway smart-ass remark about regulatory burden (a concept I barely understood at the time) to which my prof astoundingly only replied that I had a good point.

AndrewPrice said...

T-Rav, I couldn't agree more. Big Business is not conservative and conservatives should never think that it is. Nor should we equate Big Business with capitalism. Big Business is cronyism. They use their power to buy regulations and favors from the government which they use to squeeze the market place to crush competitors, keep out new entrants, stifle the need for innovation, and control consumers.

The word for that is not conservatism or capitalism, it's socialism.

AndrewPrice said...

T-Rav, LOL! "Crisis on Infinite Commentaramas"! What a great title! :)

AndrewPrice said...

tryanmax, That's true. It's been going on a long, long time. But I think it's gotten really bad lately because of environmental legislation and because they've really gone full-crony in so many bills.

Obamacare is the perfect example. Large parts of that bill have nothing to do with healthcare and are all about regulating business. And not just large business. One medical-related example is the ban on doctor's owning hospitals. Why? Because the insurance carriers who agreed not to fight want to own all the hospitals, so they passed a law to stop the competition.

There was an article about a guy the other day who invested a fantastic new mirror for cars, but it can't be used because it's not perfectly flat (it's almost perfectly flat) and there's actually a regulation requiring that mirrors on cars be flat. What purpose could that regulation possibly serve? And if they are regulating something that simple imagine how much legal crap you would need to know to build a car?

Tennessee Jed said...

those are good prescriptions, Andrew. Romney has to push hard to keep the focus where it needs to be. Obviously the L.S.M. will not help here. They will try and help "O" shift to Bain, horses, Bush, Clinton . . . anything but his own failures. Now I understand there is a balance needed this early. You do not want to burn yourself out too soon. But the flip side is you do NOT want to Axelhole to define the terms of the debate.

I would add lowering corporate and capital gains tax. This may have been said already, but I didn't get a chance to real all the comments yet.

One other thing I'd like to get your take on (and anybody else's for that matter.) A typical liberal tactic is to claim that over the last 20-30 years, the recoveries have not helped the middle class. That is, real growth in wages has not occurred except at the very top, and most wages have stagnated. This does seem to be resonating a bit with the masses so our side needs to be able to effective and decisively counter. Ideas?

Doc Whoa said...

A lot of great comments and an excellent article, especially for such a slow period. I think this is all really bad news for Obama, but I don't think any of it is insurmountable for Romney and the Republicans if they are smart.

AndrewPrice said...

Thanks Doc. It's been a very slow news summer. There are the occasional big stories, but between there isn't much. That makes it hard on us bloggers!

I think Romney and the Republicans can overcome these things too, but they will need to act boldly.

AndrewPrice said...

Thanks Jed! I think this would be an excellent way to improve the economy right away and for the long term. I totally agree about the corporate and capital gains taxes too. Those are foolish.

And you're right, the MSM is not going to help Romney on this. They are going to spin and spin and spin until they can't spin anymore!

AndrewPrice said...

Jed, On the middle class issue, I honestly think there is a problem. The middle class has been getting crushed by our economy for several decades now. It's not because the rich are "taking more" it's because our policies have been crushing the very things that are needed to produce solid middle class jobs.

I think the Republicans first need to adopt the rhetoric. Stop talking about rich and poor and focus entirely on the middle class. Secondly, they need to start implementing policies which create medium-high paying jobs. A classic example is to aid the conversion to natural gas and then open up drilling throughout the US. If we started shipping hundreds of billions of energy dollars each year to middle American instead of the Middle East, you would see an explosion in the middle class and a rebirth of middle America. That change alone would remake America.

Tennessee Jed said...

agreed, Andrew. I also think people need to realize, if you want to have a nice income, you MUST find a way to gain skills that are valued in the marketplace. This comes either from having a skill few others have (e.g touring professional golfer,) or a skill set where the demand is outstripping the demand. I think in today's world there probably is a great need for math and engineering skills and our public school system seems to be mostly turning out mush heads.

DUQ said...

Late to the party. You don't even need to know the numbers to know the economy is bad. You can feel it everywhere. People aren't working and there's no sense of energy out there. Heck, we've got roofers and plumbers going door to door looking for work. That doesn't happen in good times.

AndrewPrice said...

Jed, I couldn't agree more. People are not learning valuable skills these days. The problem isn't that people are over-educated, it's that they are under-educated because so many end up with things like "Gender Studies" degrees, but have no useful skills for anything else.

I'd like to see a much greater emphasis early on on math and science. I would also like to see us become more welcoming to truly talented foreigners. Right now we tend to focus on letting in by numbers or familial relationships when we should be giving highest priority to people with skills that can keep us moving forward.

AndrewPrice said...

DUQ, It's never too late around here! And you're right, all the signs are that things are bad right now. And like you, we get those same people coming to our door. They didn't do that when the economy was great.

Doc Whoa said...

I think you're right about the Republicans needed to claim the middle class. Right now they let the Democrats paint them as the party of the rich and that's bad. They need to start talking about the middle class.

AndrewPrice said...

Doc, I think it's vital. 80% of the public thinks they are middle class and they all know they are getting crushed. And Republican values fit with these folks perfectly. So this should be a natural fit.

Patti said...

i'll get the pitchforks and torches. let's kill obamacare, now. and show that mofo no mercy. put a couple of tines in its heart. got it? good. ~here's your torch and pitchfork~

AndrewPrice said...

Patti, I love the way you think! I'll get my pitchfork and meet you at the bon fire! :)

I will bet you that killing Obamacare alone will be worth 1% of GDP almost immediately.

rlaWTX said...

do the Koch brothers reimburse for pitchforks?

and if we all flush at the same time (in these merging universes) will we invert ourselves so we are now merged and inside-out?

I have the same reaction to things I read that say how conservatives luv Big Biz... "seriously, hasn't anyone been listening??!!"

AndrewPrice said...

rlaWTX, LOL! That's really funny! I'll have to ask the Koch brothers the next time I go to pick up my "right wing" check. :)

I honestly don't understand why anyone would think Big Business is a conservative thing? I know the left says it as a smear and I know some Republicans are bought and sold by Big Business, but how could anybody really think what Big Business does is conservatism or capitalism?

Jen said...

Patti, I have a few extra pitchforks, and bonfires are fun--I can be a pyro too (but not right now, that would be disastrous)!

This is beginning to look like deja vu here, again. So much of this sounds like conversations I've already had (in person, and email).

I've got a few other nifty tools that will do in case I run out of pitchforks. They may need a little sharpening though, but they'll do in a pinch.

AndrewPrice said...

Jen, The world needs more pitchforks!

And yeah, I think right now a lot of people are having the same conversation all over the country.

Jen said...

Andrew, The nice thing about pitchforks? They can go undetected, because they are a work tool. They can remain in plain view (and easy access), and no one usually thinks twice about their presence.

AndrewPrice said...

Jen, LOL! Anyone carrying a pitchfork into the White House will not go unnoticed! ;)

Jen said...

Andrew, I didn't mean there. That's in case they come here! :D

I'll have to tell you about a particular incidence sometime. It didn't involve a pitchfork, but it was noticed by someone.

AndrewPrice said...

Jen, LOL! Ohhhh. I see. (wink wink)

I'd love to hear it. :)

Doc Whoa said...

I wonder how many pitchforks they confiscate at the White House these days? It must be bunches!

AndrewPrice said...

Doc, I'm betting it's a lot indeed!

Jen said...

You see, that's when you throw them for a loop, if you know what I mean. It doesn't always have to be pitchforks. :D

AndrewPrice said...

Jen, I suppose not. But I personally like the pitchfork idea. That would be deeply satisfying, if you get my drift. ;)

Jen said...

Andrew, you'll find out shortly...

AndrewPrice said...

LOL! I'm waiting breathlessly.

Jen said...

It should be there momentarily.

AndrewPrice said...

I got it. :)

Jen said...

Andrew, I also want to have some harmless fun. I want to use all the words the PC police say we can't use--retard is the first one that comes to mind. What are the other words? I wanna make them squirm!

AndrewPrice said...

Jen, Retard is an excellent and useful word. It's very descriptive.

Jen said...

Andrew, yes it is! So, what are those 'other' words? I've lost track.

AndrewPrice said...

Jen, In this day and age, I'd say it's any word that is the least bit descriptive. :(

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