Grasping at Straws on the Economy

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So, I guess it has been a rather eventful week in the world economy and the lives of the Beltway Village Idiots Politicians, Pundits, and Courtiers. I'll let Paul Krugman and Jane Hamsher do the honors of eviscerating the Standard & Poor downgrade of the US credit rating but do want to add my 2¢ in agreement that supposed neutral arbiters who sold their souls and "independent analysis" for the banksters crappy mortgage based securities should be well advised to STFU rather than interject themselves politically.

To the non-surprise of most folks living in the reality based world, the passage of the debt ceiling increase did absolutely nothing towards improving the overall economy and the budget slashing accompanying the increase is likely to push the economy back into recession (at least that's my prediction here, here, and here). Reuters had this on the "small blessings" of the debt deal:

Is There a Possibility of a Glimmer of a Clue?

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No. It probably isn't. Probably just some more wishful thinking on my part. Nevertheless, I was quite surprised this morning to see a few pieces around the web pointing out that a "new Republican Jobs bill" was just another tired rehash of the same failed policies of the last thirty years. Ezra Klein at the Washington Post, Paul Krugman at the NY Times, Steve Benen at Washington Monthly all pounded on the Republican "Plan" and for good reason. From the Klein link:

The best evidence that Washington has forgotten about the jobs crisis is to look at the plans emerging to address it. Yesterday's House GOP plan was a perfect example. It was, as MIT economist David Autor told me, a classic case of "now-more-than-everism": Everything on the agenda was also on the GOP's agenda in 2006, in 2002, in 1987, etc. It's lower taxes, less spending, fewer regulations, more trade agreements, more domestic oil production. You can argue about whether these proposals are good for the economy. But as Autor says, there's "no original thinking here directed at addressing the employment problem."

Actually, you can argue whether those "proposals" are good for the economy as we have thirty years of evidence that they are not good for the economy.

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?

More Economic Cluelessness from Economists

So there I was this morning, after my usual morning search for something approaching a full time job in my chosen career (generally unsuccessful of course) and going on to the standard search of the various news sites just to see what is happening in the world around us, I came across this article over at CNN:

Economists' biggest worry: Federal budget deficit

Once again, when I think I have seen just how totally clueless economists are, it is articles such as this that let me know we still have such a long way to go. From the article:

NEW YORK (CNNMoney) -- Government deficits are the biggest long-term worry of top U.S. economists, according to a survey released Monday.

The survey of 47 top economists by the National Association of Business Economics predicted that the Federal deficit will jump to $1.4 trillion in the fiscal year ending in September. In the November survey, the economists had forecast a $1.1 trillion deficit.

...snip...

The previous survey was taken before Congress agreed to extend Bush-era tax cuts for all income brackets and have a one-year holiday on a portion of the payroll tax. The payroll tax holiday, which hadn't been widely expected, by itself added about $112 billion to the federal deficit.

Asked to rank the seriousness of various economic problems, with one meaning no concern and five equaling extreme concern, the federal deficit was the biggest worry, with an average score of 4.1.

Why do I think most of these 47 economists that were polled probably supported the Tax Cut extensions?

They Really Are Insane, Part II

It gets somewhat frustrating to read the cheerleader stories on the economy, or from the supposed economic experts on the same day and in the same paper where there are other stories plumbing the economic problems of average, everyday, yes, real Americans.

First off, we have the somewhat ludicrous cheerleader opinion piece from Treasury Secretary Tim Geithner in today's (Tuesday August 3) NY Times titled Welcome to the Recovery. It's impossible for me to pull out a couple of points of idiocy from this piece as almost every line of it is a misdirection, strawman, or flat out untruth.

From there, we go to this piece discussing a speech Monday by Fed Chair Ben Bernanke:

While the United States has “a considerable way to go” for a full recovery, “rising demand from households and businesses should help sustain growth,” Mr. Bernanke said on Monday in a speech in Charleston, S.C. “We are maintaining strong monetary policy support for the recovery,” he said in response to an audience question, without discussing any further action the Fed could take to aid growth.

The remarks signal that Mr. Bernanke and his colleagues, when they meet in Washington next week, will stop short of making major changes in their policy statement or taking new steps to lower interest rates and reduce unemployment, said John Ryding, a former Fed researcher. Consumer spending, which accounts for about 70 percent of the economy, “seems likely to pick up in coming quarters from its recent modest pace,” Mr. Bernanke said.

Yeah, who cares about nearly 10% official Unemployment and the Un/Underemployment nearly double that? David Dayen had a post at FireDogLake yesterday on a Krugman column on how this is the "New Normal" for employment. Looks like Krugman is correct (not that that is a shock mind you.)