An Unusual Source Speaks the Truth

Today (Monday, April 25) CNN has an opinion piece from former George W. Bush staffer David Frum that shocked me, and not in a Capt Renault kind of way.

Technically speaking, the U.S. economy is recovering right now. GDP growth has been positive since the summer of 2009. Employment is growing. If you like, you can say the recession is over.

But don't say it too loud. With 13.5 million people out of work -- 6.1 million out of work for 27 weeks or more -- the odds are high that one of them may hear and take offense.

The recovery is weak, and job creation is slow. Everybody knows that. But here's something that we don't know, or anyway don't think about enough: Isn't it weird that in this dismal economic situation, neither of the two great U.S. political parties is offering a plan to do anything about the job situation?

Frum goes on to note that the Republicans at least have a "plan" (Rep Paul Ryan's "budget"), even though the "plan" does nothing to help the unemployed, nor does it actually do anything on the budget. He also notes that the Democratic "plan" consists primarily of blasting the Ryan plan.

The administration does however have a political plan: Blast the Ryan plan. Since the Ryan plan is highly politically vulnerable, the blasting will likely hurt the GOP and help President Obama. The blasting will not, however, do much for the unemployed. But then we've all sort of given up on them, haven't we?

The Economy for 2011 Still Screwed - Or Is It?

When I was surfing through the news this morning I came across this article in the NY Times from Sewell Chan about economists thinking the economy will be growing during 2011:

WASHINGTON — Eighteen months after the recession officially ended, the government’s latest measures to bolster the economy have led many forecasters and policy makers to express new optimism that the recovery will gain substantial momentum in 2011.

Economists in universities and on Wall Street have raised their growth projections for next year. Retail sales, industrial production and factory orders are on the upswing, and new claims for unemployment benefits are trending downward.

Despite persistently high unemployment, consumer confidence is improving. Large corporations are reporting healthy profits, and the Dow Jones industrial average reached a two-year high this week.

Given how often economists make wrong predictions and are then "surprised," my first inclination was to conclude that things will not only not get better but are likely to get worse.

You Know They Really Are Insane

I went looking through der Google for the origin of the aphorism

The definition of insanity is doing the same thing in the same way and expecting to get different results.

Well, I found it attributed to Benjamin Franklin, Alfred Einstein and even one attribution to Rita Mae Brown.

Regardless of who first said it, we are witnessing it in operation in Washington, DC right now. We are seeing it in the current dance around another extension of Unemployment benefits (after having it killed last week). We are seeing it in the calls for fiscal integrity and "balance the budget" and the President's Deficit Commission (aka Cat Food Commission).

In May 2010, the economy created 431K jobs but the vast majority of those jobs were temporary Census positions. Today there are reports that the private sector has added 13K jobs for June after adding only 41K of the 431K jobs added in May. Yet, the Senate (and House) just seem to want to dance their little dances. They have to be operating under the belief that to do nothing is to do something because it all works out some way or another in the end.