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Friday, April 27, 2012

Romney's Magical Capitalism

From the Washington Post

By Published: April 25

Romney’s principled, radical view for America

    It turns out that there is at least one question on which Mitt Romney is not a flip-flopper: He has a utopian view of what an unfettered, lightly taxed market economy can achieve.
    He would never put it this way, of course, but his approach looks forward by looking backward to the late 19th century, when government let market forces rip and a conservative Supreme Court swept aside as unconstitutional almost every effort to write rules for the economic game. This magical capitalism is the centerpiece of Romney’s campaign, and it may prove to be his undoing.

    Here’s Romney’s problem. His best strategy is to cast President Obama as a failure because the economy has not come all the way back from the implosion of 2008. The most effective passages in his well-reviewedspeech after his primary victories Tuesday were about the shortcomings of the status quo.
    “Is it easier to make ends meet?” Romney asked. “Is it easier to sell your home or buy a new one? Have you saved what you needed for retirement? Are you making more at your job? Do you have a better chance to get a better job? Are you paying less at the pump?”
    And there was the line pundits were bound to love that played off James Carville’s memorable utterance from Bill Clinton’s 1992 campaign. “It’s still about the economy,” Romney said, clearly relishing the moment, “and we’re not stupid.”
    But Romney, unlike Clinton, is not offering a program through which government would take specific steps to solve the problems he catalogues. Instead, he is calling on voters to share his faith that our difficulties would go away if the state simply got out of the way, allowed the market do its thing and counted on the success of the successful to lift up everyone else.
    Romney is right in saying he has “a very different vision” from Obama’s, and this is where the magic comes in. He envisions “an America driven by freedom, where free people, pursuing happiness in their own unique ways, create free enterprises that employ more and more Americans. And because there are so many enterprises that are succeeding, the competition for hardworking, educated, skilled employees is intense, so wages and salaries rise.”
    Just like that, all would be well — as if we never needed the trust-busting of the Progressive Era, the social legislation of the New Deal, the health programs of the Great Society and the coordinated action of the world’s governments in 2008 and 2009 to keep the Great Recession from becoming something far worse.
    This is Romney’s true radicalism. I suspect it is a principled radicalism. And exposing its implications will be Obama’s opening to make the campaign about something other the economy, stupid. Romney’s speech Tuesday was every bit as important as his supporters said it was. It contained both the foundation of an effective campaign based on the electorate’s discontents and the basis for undermining the very argument Romney wants to make.
    Romney’s philosophical inclinations give the president ample room to speak to non-ideological, non-utopian voters, the 10 percent or 15 percent who will decide this election.
    They may not like government very much, but they are also wary about what capitalism does when the watchdogs fall asleep. They don’t cotton to further tax cuts for the wealthy. They reject the idea that worrying about how unequal the rewards in our society have become is the same thing as being “envious” of those who have done well. They are fully onboard that opportunity and not “entitlement” is the American way. But they rather welcome the help — low-interest student loans, for example — that government can offer to those looking to rise and prosper.
    That’s why Romney’s shift to Obama’s side in the president’s battle with House Republicans over student loans may be his most instructive flip-flop yet. It shows that Romney will do all he can to soften his underlying radicalism. His goal is to deprive Obama of ways to reveal the concrete impact of free-market utopianism — and the price of the cutbacks Romney embraced by endorsing Rep. Paul Ryan’s budget.
    What Romney has going for him is a journalistic presumption that he is either a closet “moderate” or so opportunistic that he is altogether lacking in a coherent worldview. The first is wrong. The second is unfair to Romney. What he believes matters, and it is the biggest obstacle between him and the White House.
    (http://eye-on-washington.blogspot.com) 

    Sheila Bair Has A Great Idea!

    From the Washington Post 4-13-12 By Sheila Bair


    Fix income inequality with $10 million loans for everyone!


    Are you concerned about growing income inequality in America? Are you resentful of all that wealth concentrated in the 1 percent? I’ve got the perfect solution, a modest proposal that involves just a small adjustment in the Federal Reserve’s easy monetary policy. Best of all, it will mean that none of us have to work for a living anymore.
    For several years now, the Fed has been making money available to the financial sector at near-zero interest rates. Big banks and hedge funds, among others, have taken this cheap money and invested it in securities with high yields. This type of profit-making, called the “carry trade,” has been enormously profitable for them.
    So why not let everyone participate?
    Under my plan, each American household could borrow $10 million from the Fed at zero interest. The more conservative among us can take that money and buy 10-year Treasury bonds. At the current 2 percent annual interest rate, we can pocket a nice $200,000 a year to live on. The more adventuresome can buy 10-year Greek debt at 21 percent, for an annual income of $2.1 million. Or if Greece is a little too risky for you, go with Portugal, at about 12 percent, or $1.2 million dollars a year. (No sense in getting greedy.)
    Think of what we can do with all that money. We can pay off our underwater mortgages and replenish our retirement accounts without spending one day schlepping into the office. With a few quick keystrokes, we’ll be golden for the next 10 years.
    Of course, we will have to persuade Congress to pass a law authorizing all this Fed lending, but that shouldn’t be hard. Congress is really good at spending money, so long as lawmakers don’t have to come up with a way to pay for it. Just look at the way the Democrats agreed to extend the Bush tax cuts if the Republicans agreed to cut Social Security taxes and extend unemployment benefits. Who says bipartisanship is dead?
    And while that deal blew bigger holes in the deficit, my proposal won’t cost taxpayers anything because the Fed is just going to print the money. All we need is about $1,200 trillion, or $10 million for 120 million households. We will all cross our hearts and promise to pay the money back in full after 10 years so the Fed won’t lose any dough. It can hold our Portuguese debt as collateral just to make sure.
    Because we will be making money in basically the same way as hedge fund managers, we should have to pay only 15 percent in taxes, just like they do. And since we will be earning money through investments, not work, we won’t have to pay Social Security taxes or Medicare premiums. That means no more money will go into these programs, but so what? No one will need them anymore, with all the cash we’ll be raking in thanks to our cheap loans from the Fed.
    Come to think of it, by getting rid of work, we can eliminate a lot of government programs. For instance, who needs unemployment benefits and job retraining when everyone has joined the investor class? And forget the trade deficit. Heck, we want those foreign workers to keep providing us with goods and services.
    We can stop worrying about education, too. Who needs to understand the value of pi or the history of civilization when all you have to do to make a living is order up a few trades? Let the kids stay home with us. They can play video games while we pop bonbons and watch the soaps and talk shows. The liberals will love this plan because it reduces income inequality; the conservatives will love it because it promotes family time.
    I’m really excited! This is the best American financial innovation since liar loans and pick-a-payment mortgages. I can’t wait to get my super PAC started to help candidates who support this important cause. I think I will call my proposal the “Get Rid of Employment and Education Directive.”
    Some may worry about inflation and long-term stability under my proposal. I say they lack faith in our country. So what if it cost 50 billion marks to mail a letter when the German central bank tried printing money to pay idle workers in 1923?
    That couldn’t happen here. This is America. Why should hedge funds and big financial institutions get all the goodies?
    Look out 1 percent, here we come.
    Sheila Bair is a former chairman of the Federal Deposit Insurance Corp. and a regular contributor to Fortune Magazine.
    (http://eye-on-washington.blogspot.com)

    You Don't like What You See Now, Romney Would Be Worse!


    Death of a Fairy Tale

    This was the month the confidence fairy died. For the past two years most policy makers in Europe and many politicians and pundits in America have been in thrall to a destructive economic doctrine. According to this doctrine, governments should respond to a severely depressed economy not the way the textbooks say they should — by spending more to offset falling private demand — but with fiscal austerity, slashing spending in an effort to balance their budgets.
    Critics warned from the beginning that austerity in the face of depression would only make that depression worse. But the “austerians” insisted that the reverse would happen. Why? Confidence! “Confidence-inspiring policies will foster and not hamper economic recovery,” declared Jean-Claude Trichet, the former president of the European Central Bank — a claim echoed by Republicans in Congress here. Or as I put it way back when, the idea was that the confidence fairy would come in and reward policy makers for their fiscal virtue.
    The good news is that many influential people are finally admitting that the confidence fairy was a myth. The bad news is that despite this admission there seems to be little prospect of a near-term course change either in Europe or here in America, where we never fully embraced the doctrine, but have, nonetheless, had de facto austerity in the form of huge spending and employment cuts at the state and local level.
    So, about that doctrine: appeals to the wonders of confidence are something Herbert Hoover would have found completely familiar — and faith in the confidence fairy has worked out about as well for modern Europe as it did for Hoover’s America. All around Europe’s periphery, from Spain to Latvia, austerity policies have produced Depression-level slumps and Depression-level unemployment; the confidence fairy is nowhere to be seen, not even in Britain, whose turn to austerity two years ago was greeted with loud hosannas by policy elites on both sides of the Atlantic.
    None of this should come as news, since the failure of austerity policies to deliver as promised has long been obvious. Yet European leaders spent years in denial, insisting that their policies would start working any day now, and celebrating supposed triumphs on the flimsiest of evidence. Notably, the long-suffering (literally) Irish have been hailed as a success story not once but twice, in early 2010 and again in the fall of 2011. Each time the supposed success turned out to be a mirage; three years into its austerity program, Ireland has yet to show any sign of real recovery from a slump that has driven the unemployment rate to almost 15 percent.
    However, something has changed in the past few weeks. Several events — the collapse of the Dutch government over proposed austerity measures, the strong showing of the vaguely anti-austerity Fran├žois Hollande in the first round of France’s presidential election, and an economic report showing that Britain is doing worse in the current slump than it did in the 1930s — seem to have finally broken through the wall of denial. Suddenly, everyone is admitting that austerity isn’t working.
    The question now is what they’re going to do about it. And the answer, I fear, is: not much.
    For one thing, while the austerians seem to have given up on hope, they haven’t given up on fear — that is, on the claim that if we don’t slash spending, even in a depressed economy, we’ll turn into Greece, with sky-high borrowing costs.
    Now, claims that only austerity can pacify bond markets have proved every bit as wrong as claims that the confidence fairy will bring prosperity. Almost three years have passed since The Wall Street Journal breathlessly warned that the attack of the bond vigilantes on U.S. debt had begun; not only have borrowing costs remained low, they’ve actually fallen by half. Japan has faced dire warnings about its debt for more than a decade; as of this week, it could borrow long term at an interest rate of less than 1 percent.
    And serious analysts now argue that fiscal austerity in a depressed economy is probably self-defeating: by shrinking the economy and hurting long-term revenue, austerity probably makes the debt outlook worse rather than better.
    But while the confidence fairy appears to be well and truly buried, deficit scare stories remain popular. Indeed, defenders of British policies dismiss any call for a rethinking of these policies, despite their evident failure to deliver, on the grounds that any relaxation of austerity would cause borrowing costs to soar.
    So we’re now living in a world of zombie economic policies — policies that should have been killed by the evidence that all of their premises are wrong, but which keep shambling along nonetheless. And it’s anyone’s guess when this reign of error will end.
    *****************************************


    FOMC Statement April 2012, Redacted Version

    by david merkel 4-25-12

    March 2012: Information received since the Federal Open Market Committee met in January suggests that the economy has been expanding moderately.
    April 2012: Information received since the Federal Open Market Committee met in March suggests that the economy has been expanding moderately.
    Comments: No real change.

    March 2012: Labor market conditions have improved further; the unemployment rate has declined notably in recent months but remains elevated.
    April 2012: Labor market conditions have improved in recent months; the unemployment rate has declined but remains elevated.
    Comments: No real change. The unemployment rate is down, but few jobs are being created, and people are dropping out of the labor force. The improvement isn’t that large.

    March 2012: Household spending and business fixed investment have continued to advance. The housing sector remains depressed.
    April 2012: Household spending and business fixed investment have continued to advance.Despite some signs of improvement, the housing sector remains depressed.
    Comments: Shades up their view of inflation, finally. TIPS are showing higher inflation expectationssince the start of the year. (5y forward 5y inflation implied from TIPS.)

    March 2012: Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.
    April 2012: Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.
    Comments: No change. Mentions of the statutory mandate are always meant to hide the distasteful aspects of what they do.

    March 2012: Inflation has been subdued in recent months, although prices of crude oil and gasoline have increased lately.Longer-term inflation expectations have remained stable.
    April 2012: Inflation has picked up somewhat, mainly reflecting higher prices of crude oil and gasoline. However,longer-term inflation expectations have remained stable.
    Comments: Shades up their view of inflation, finally. TIPS are showing higher inflation expectations since the start of the year. (5y forward 5y inflation implied from TIPS.)


    March 2012: The Committee expectsmoderate economic growth over coming quarters andconsequently anticipates that the unemployment rate will decline gradually toward levels that the Committee judges to be consistent with its dual mandate.
    April 2012: The Committee expects economic growth toremain moderate over coming quarters andthen to pick up gradually.Consequently, the Committee anticipates that the unemployment rate will decline gradually toward levels that it judges to beconsistent with its dual mandate.
    Comments: Shades up its views of future GDP growth.


    March 2012: Strains in global financial markets have eased, though theycontinue to pose significant downside risks to the economic outlook.
    April 2012: Strains in global financial markets continue to pose significant downside risks to the economic outlook.
    Comments: Shades up its view of risks from global financial markets.


    March 2012: The recent increase in oil and gasoline priceswill push up inflation temporarily, but the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate.
    April 2012: The increase in oil and gasoline prices earlier this year is expected to affect inflation onlytemporarily, and the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate.
    Comments: No real change.

    March 2012: To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy.
    April 2012: To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy.
    Comments: No change.

    March 2012: In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014
    April 2012: In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.
    Comments: No change.


    March 2012: The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability. 
    April 2012: The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.
    Comments: No change.

    March 2012: Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Sarah Bloom Raskin; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen.
    April 2012: Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Sarah Bloom Raskin; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen.
    Comments: No change.

    March 2012:  Voting against the action was Jeffrey M. Lacker, who does not anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate through late 2014.
    April 2012: Voting against the action was Jeffrey M. Lacker, who does not anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate through late 2014.
    Comments: No change. Thank you, Mr. Lacker.

    Comments:

    *No significant changes from last time. They shaded up their views on housing, inflation, and global financial risk. That’s all.

    *In my opinion, I don’t think holding down longer-term rates on the highest-quality debt will have any impact on lower quality debts, which is where most of the economy finances itself.

    *Also, the reinvestment in Agency MBS should have limited impact because so many owners are inverted, or ineligible for financing backed by the GSEs, and implicitly the government, even with the recently announced refinancing changes.

    *The key variables on Fed Policy are capacity utilization, unemployment, inflation trends, and inflation expectations. As a result, the FOMC ain’t moving rates up, absent increases in employment, or a US Dollar crisis. Labor employment is the key metric.

    *The Fed is out of good policy tools, so it will use bad policy tools instead, and for longer than before.

    *Do they want the yield on 30 year TIPS to go negative? Looks that way.

    *GDP growth is not improving much if at all, and the unemployment rate improvement comes more from discouraged workers. Inflation has moderated, but whether it will stay that way is another question.

    Questions For Mr. Bernanke:

    • Is it possible that you don’t really know what would have worked to solve the Great Depression, and you are just committing an entirely new error that will result in a larger problem for us later?
    • Why do think extending the period of accommodation by a little more than a year will have any significant effect on the economy, aside from stock and bond prices?
    • Discouraged workers are a large factor in the falling unemployment rate. Why do you think the economy is doing well?
    • Couldn’t increased unemployment be structural, after all, there is a lot more competition from labor in emerging markets?
    • Why do you think that holding down longer-term rates on the highest-quality debt will have any impact on lower quality debts, which is where most of the economy finances itself?
    • Why will reinvestment in Agency MBS help the economy significantly? Doesn’t that only help solvent borrowers on the low end of housing, who don’t really need the help?
    • Isn’t stagflation a possibility here? I mean, no one expected it in the ‘70s either.
    • Could we end up with another debt bubble from keeping short rates so low?
    • If the Fed ever does shrink its balance sheet, what effect will it have on the banks?

    ***************************



    EPIC FAIL – PART ONE

    “Facts are to the mind what food is to the body.” – Edmund Burke
    No wonder one third of Americans are obese. The crap we are shoveling into our bodies is on par with the misinformation, propaganda and lies that are being programmed into our minds by government bureaucrats, corrupt politicians, corporate media gurus, and central banker puppets. Chief Clinton propaganda mouthpiece, James Carville, famously remarked during the 1992 presidential campaign that, “It’s the economy, stupid”. Clinton was able to successfully convince the American voters that George Bush’s handling of the economy caused the 1991 recession. In retrospect, it was revealed the economy had been recovering for months prior to the election. No one could ever accuse the American people of being perceptive, realistic or critical thinking when it comes to economics, math, history or distinguishing between truth or lies. Our government controlled public school system has successfully dumbed down the populace to a level where they enjoy their slavery and prefer conscious ignorance to critical thought.
    The next six months leading up to the November elections will surely provide a shining example of the degraded society we’ve become. Both parties and their propaganda machines, SuperPacs, and corporate media sponsors will treat the igadget distracted masses to hundreds of hours of lies, spin, and vitriol, designed to divert the public from the fact that both parties act on behalf of the same masters and have no intention of changing course of the U.S. Titanic to avert the iceberg dead ahead. We will be treated to storylines about race, gun control, the war on women, energy independence, global warming, the war on terror, the imminent threat of Iran and North Korea, Obamacare, Romneycare, and of course the economy, stupid.
    There are 240 million voting age Americans. About 130 million will likely vote in the 2012 election based upon recent voter participation results. This means that 110 million Americans don’t give a crap about who runs this country or they’ve come to their senses and realize our votes don’t matter. Between 1840 and 1900 voter participation ranged between 70% and 82% as Americans took their civic duty seriously and believed their vote counted. Since 1913, when the politicians relinquished control of our currency to a private bank controlled by a small group of powerful men, voter participation for President has ranged between 49% and 62%. It hasn’t surpassed 57% since 1968. Now that corporations are people and our candidates are selected by a few rich men, the transformation from a republic to a corporate fascist state is almost complete. During the coming interminable political campaign you will hear about jobs until your ears bleed. I can guarantee that 98% of the rhetoric will be false. Neither party wants the American people to understand the truth about what happened to our economy and jobs over the last 100 years. It has been a bipartisan screw job and ignoring the facts doesn’t change them.
    The first fact that can’t be ignored is how many Americans are actually unemployed today. Here is some truth you won’t get from a politician or media talking head:
    • There are 243 million working age Americans.
    • There are 142 million employed Americans.
    • Only 101 million of the employed Americans are working more than 35 hours per week. This means that only 41.6% of all working age Americans have a full-time job.
    • According to the government drones at the BLS, 88 million Americans have “chosen” to not be in the labor force – the highest level in U.S. history.
    • The percentage of Americans in the workforce at 63.8% is the lowest since 1980 and down from a peak of 67.1% in 2000. The difference between these two percentages is 8 million Americans.
    • The BLS reports there are only 12.7 million unemployed Americans in the country, down from 15.3 million in 2009.
    • The BLS reports the unemployment rate has dropped from 10% in late 2009 to 8.3% today. Over this time frame the working age population grew by 5.7 million, while the number of employed Americans grew by 3.6 million. Only a government drone could interpret this data and report a dramatic decline in the unemployment rate.
    jobs underemployment total swa live1 EPIC FAIL   PART ONE
    Any critical thinking human being would examine the data being reported as fact by our government and regurgitated without question by the corporate mainstream media and conclude it is false, misleading and manipulated. The economy was booming in 2000 and 67.1% of the working age population were in the labor force. Today the economy is in much worse shape. More people NEED to work in order to just make ends meet, but according to the government, 8 million Americans have chosen to not work. Only an Ivy League economist or CNBC bimbo pundit would believe such a blatant distortion of reality. A comparison to prior decades provides all the evidence you need:
    • In 1980 the working age population was 168 million and the labor force totaled 107 million.
    • By 1990 the working age population grew by 21 million and the labor force grew by 19 million.
    • By 2000 the working age population grew by another 23 million and the labor force advanced by 17 million.
    • Since 2000 the working age population has grown by 30 million, but shockingly the labor force has supposedly grown by only 12 million.
    Wallace%2BClaims%2B2012 04 13c EPIC FAIL   PART ONE
    This data is so twisted that there is absolutely no doubt the Federal Government is purposely manipulating the numbers to make the economic situation appear better than the reality. During the Great Depression propaganda and spin had not been perfected. There weren’t multiple definitions of unemployment designed to confuse and mislead the public. The peak level of unemployment in the 1930s was 25%. The current reported level is 8.3%. On a comparable basis to the 1930s, including short-term discouraged workers, those forced to work part-time, and the long-term discouraged workers which were defined out of existence in 1994 by the BLS, the real unemployment rate is 22% today. It feels like a depression for millions of Americans because it is a depression.
     EPIC FAIL   PART ONE
    The rhetoric from the Obama administration about a jobs recovery is laughable. Full time employment peaked in July 2007 at 122.4 million. Today there are 113.9 million people classified as full-time, with only 101.3 million working more than 35 hours. There are 8.5 million fewer people with full time jobs today than there were in 2007. That fact is even more disheartening considering the working age population has grown by 10.5 million over the same time span. Taking an even longer term view provides the perspective needed to assess our true economic state. Total nonfarm employment hasn’t grown in twelve years, while the working age population has grown by 30 million people.
    nonfarm payroll 2012 03A EPIC FAIL   PART ONE
    Obama will tout the fact that we’ve added 3.6 million jobs since the bottom of this recession. What he won’t tout is that hiring of temporary workers surged by 37% and accounted for 25% of all the jobs added since 2009. I’m sure these temporary workers, with no health or retirement benefits, are confident about their future. The facts about jobs and employment are consistent with the 47 million Americans on food stamps (up from 35 million when the recession supposedly ended). It’s a sure sign of recovery when spending on food stamps doubles in the last two years. No depression here, just move along.
    food stamp costs EPIC FAIL   PART ONE
    Record numbers of Americans being added to the SSDI rolls for depression and other illusory disabilities is surely a positive development pointing to a strong economic recovery. In just the first four months of this year, 539,000 joined the disability rolls and more than 725,000 put in applications. “We see a lot of people applying for disability once their unemployment insurance expires,” said Matthew Rutledge, a research economist at Boston College’s Center for Retirement Research. The number of applications last year was up 24% compared with 2008, Social Security Administration data show. Why participate in the labor market when you can collect a government check for life because you are obese or depressed. These are the people no longer in the labor force. Once they go on SSDI, they rarely go back to work again.
    WEBdis600.gif EPIC FAIL   PART ONE
    The government reported figure of 12.7 million unemployed Americans is an utter falsehood. There are in excess of 30 million Americans that are either unemployed or working part-time that want full-time jobs. Government propaganda doesn’t change the facts.
    “Facts don’t cease to exist because they are ignored.” – Aldous Huxley

    Would You Like a Side Order of Facts with That Propaganda?

    When you watch the Wall Street scam artists paraded on CNBC declaring the number of people not in the labor force is going up due to Baby Boomers retiring, you should understand they are propagating a falsehood. They are either intellectually dishonest or too lazy to do the most basic of research. They are paid millions to impart false storylines to anyone dumb enough to watch CNBC expecting facts or a smattering of truth. If you want some truth, turn to John Mauldin and John Hussman. CNBC doesn’t invite these outstanding honest analysts on their station when they can roll out a shill like Abbey Joseph Cohen or James Paulson. They wouldn’t want some factual analysis when they can have Becky Quick do one of her frequent handjob interviews with that doddering old status quo fool Warren Buffet.
    A critical thinker might wonder how could real disposable income be dropping over the last three months and only have risen by 0.3% in the last year if we’ve had the strong job growth touted by Obama. Could it be the jobs being created are extraordinarily low-paying? There are signs of desperation everywhere you look. The two charts below, from one of John Mauldin’s recent articles, reveal the truth about the Baby Boomers retiring storyline. The first chart shows the employment level for those over the age of 55 since 2007. There were 25.3 million people over the age of 55 working in 2007 and there are 30.1 million working today. People over 55 have seen their total employment level rise by 4.8 million jobs since the beginning of the recession, and over 3 million jobs since the 3rdquarter of 2009. Total employment is down by 4 million since 2007, while employment among those over 55 is up 19%. John Hussman described the reality about employment in his recent weekly article:
    “If you dig into the payroll data, the picture that emerges is breathtaking. Since the recession “ended” in June 2009, total non-farm payrolls in the U.S. have grown by 2.32 million jobs. However, if we look at workers 55 years of age and over, we find that employment in that group has increased by 3.04 million jobs. In contrast, employment among workers under age 55 has actually contracted by nearly one million jobs, regardless of which survey you use. Even over the past year, the vast majority of job creation has been in the 55-and-over group, while employment has been sluggish for all other workers, and has already turned down.”
    I wonder how Larry Kudlow will spin this.
    041412 02 EPIC FAIL   PART ONE
    Now for the really eye opening facts. While the labor participation rate has been plunging, the Boomer participation rate has been skyrocketing. The participation rate for the over 65 age group is now at an all-time high. Do you think this has anything to do with home values dropping 36% since 2005, gasoline prices doubling since early 2009, food prices surging by 25%, the 1.4% annual return of stocks since 1999, or the .15% senior citizens can earn on their money today versus the 5% they could earn in 2007?
    041412 03 EPIC FAIL   PART ONE
    Intellectually dishonest ultra-liberal Ivy League defender of the Federal Reserve – Paul Krugman had this to say about Ben Bernanke’s zero interest rate policy on senior citizens:
    “Finally, how is expansionary monetary policy supposed to hurt the 99 percent? Think of all the people living on fixed incomes, we’re told. But who are these people? I know the picture: retirees living on the interest on their bank account and their fixed pension check — and there are no doubt some people fitting that description. But there aren’t many of them.”
    It must be comforting living in an ivory tower or penthouse suite and looking down upon the ignorant masses while caressing your Nobel Prize. The millions of senior citizens with $100,000 of savings could earn $5,000 of interest income in 2007 to supplement their $18,000 of Social Security income. Today, they can earn $150 while the Wall Street banks receive the benefits of ZIRP by borrowing for free from the Federal Reserve and earning billions risk free. Paulie doesn’t think the $4,850 reduction in income and the 15% increase in inflation since 2007 had a negative impact on senior citizens. They must be pouring into the work force because they are just bored, after working for the last 45 years. John Hussman has a slightly different viewpoint, based upon facts rather than a false disproven ideology:
    “Beginning first with Alan Greenspan, and then with Ben Bernanke, the Fed has increasingly pursued policies of suppressing interest rates, even driving real interest rates to negative levels after inflation. Combine this with the bursting of two Fed-enabled (if not Fed-induced) bubbles – one in stocks and one in housing, and the over-55 cohort has suffered an assault on its financial security: a difficult trifecta that includes the loss of interest income, the loss of portfolio value, and the loss of home equity. All of these have combined to provoke a delay in retirement plans and a need for these individuals to re-enter the labor force.
    In short, what we’ve observed in the employment figures is not recovery, but desperation. Having starved savers of interest income, and having repeatedly subjected investors to Fed-induced financial bubbles that create volatility without durable returns, the Fed has successfully provoked job growth of the obligatory, low-wage variety. Over the past year, the majority of this growth has been in the 55-and-over cohort, while growth has turned down among other workers. Meanwhile, broad labor force participation continues to fall as discouraged workers leave the labor force entirely, which is the primary reason the unemployment rate has declined. All of this reflects not health, but despair, and helps to explain why real disposable income has grown by only 0.3% over the past year.”
    Do you believe Krugman or Hussman? The key takeaway from the data is the desperation exhibited by average Americans, while the political governing elite and Wall Street pigs continue to gorge themselves at the trough of free money provided by the Federal Reserve, while paying themselves obscene bonuses for a job well done buying the corrupt Washington politicians.
    0 EPIC FAIL   PART ONE
    Over the next six months we will hear unceasing rhetoric from Obama and Romney about how they are going to create jobs. Neither of these government apparatchiks have a clue about jobs or desire to change the course that was set one hundred years ago with the creation of the Federal Reserve. Obama never worked at a real job in his entire life, while Romney has spent his life firing people and spinning off heavily indebted companies to unsuspecting investors. The current deteriorating jobs picture has been decades in the making and a truly bipartisan effort. The rhetoric about America being an engine of growth and the world leader in innovation and entrepreneurship is laughable when examined with a critical eye. We are an aging empire living in the past as the facts portray an entirely different reality. Our fastest growing industries include:
    • Solar panel manufacturing (subsidized by your tax dollars)
    • For-profit universities (diploma mills subsidized by your tax dollars)
    • Pilates and yoga studios
    • Self-tanning product manufacturing
    • Social network game development
    • Hot sauce production
    The “surge” in jobs in the last three months is being driven by these industries:
    • Food services and drinking places
    • Administrative and support services
    • Ambulatory health care services
    • Credit intermediation
    • Hospitals
    Is this the picture of a world leading jobs machine or a delusional, paper pushing, self-involved, obese, sickly, overly indebted crumbling empire? The job openings in industries that actually produce something are barely identifiable on the chart below. Maybe the University of Phoenix can successfully retrain construction and manufacturing workers to be waiters, waitresses, and Wal-Mart greeters if the Federal government can funnel more of our tax dollars into student loans.
    Jobs jolts by sector2 EPIC FAIL   PART ONE
    If you thought low wage work was only for Chinese, Indians, and Vietnamese, you haven’t been paying attention. The United States is a world leader. We are by far the world leader among developed countries in percentage of low wage workers at 24.8%. I find it hysterical that the dysfunctional insolvent countries of Greece, Spain, Portugal, and Italy have a much smaller percentage of low wage workers than the great American empire. We have 142 million employed Americans and 35 million are slaving away in low paying thankless jobs. This explains why the half the workers in the country make less than $25,000 per year.
    low wage 2 EPIC FAIL   PART ONE
    The top three employment occupations in the country are:
    • Office and administrative support work
    • Sales & Related
    • Food preparation and serving related
    employment by sector EPIC FAIL   PART ONE
    There are high paying good jobs in America, but there aren’t many and on-line college graduates from the University of Phoenix aren’t going to get them. The highest paying jobs today require a high level of specialization and education, especially in the healthcare and technology industries. This disqualifies the vast majority of government run public school graduates. High paying manufacturing jobs which were the backbone of the country during the 1950s and 1960s are gone forever. The reasons for this transformation are multifaceted and will be addressed in Part Two of this article. It didn’t happen by accident and there are culprits to blame. The conversion of our country from making high quality things other countries needed to a debt driven service economy of paper pushers, hash slingers, and retail “specialists” has slowly but surely destroyed the middle class. The masses are distracted by the latest technological marvel that allows them to waste another two hours per day posting how they feel about the latest episode of America’s Got Something or America’s Top Whatever. We have become a country that glories in our materialism and shallow culture while acting like a thug around the world with our unparalleled military machine.
    This result is not an accident. It was set in motion by the actions of a handful of rapacious, wealthy powerful men that have been calling the shots in this country for the last hundred years. It wasn’t a planned conspiracy but the logical result of man-made inflation, a fiat currency not backed by gold, the craving of rich men to become richer, a willfully ignorant populace, and a slow devolution of our society into a corporate fascist state. We praise and honor psychopathic criminals while scorning and ridiculing the middle class workers that built this country. The American dream has become a nightmare for the millions of unemployed and underemployed. The acceleration of debt accumulation and money printing guarantees this rotting carcass of a country will go belly up in the foreseeable future.
    “Thus did a handful of rapacious citizens come to control all that was worth controlling in America. Thus was the savage and stupid and entirely inappropriate and unnecessary and humorless American class system created. Honest, industrious, peaceful citizens were classed as bloodsuckers, if they asked to be paid a living wage. And they saw that praise was reserved henceforth for those who devised means of getting paid enormously for committing crimes against which no laws had been passed. Thus the American dream turned belly up, turned green, bobbed to the scummy surface of cupidity unlimited, filled with gas, went bang in the noonday sun.” - Kurt Vonnegut
    In Part Two of this article I will examine how we got to this point and what is likely to happen next.
    (http://eye-on-washington.blogspot.com)