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I have just one thing to say to those who believe that the Fed can keep us permanently below the long-term median.
Good luck on that theory.
Source Data:
St. Louis Fed: Initial Claims / Nonfarm Payrolls
Real Estate Newsletter Articles this Week: Existing-Home Sales Increased to
4.15 million SAAR in November
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At the Calculated Risk Real Estate Newsletter this week:
[image: Existing Home Sales]*Click on graph for larger image.*
• NAR: Existing-Home Sales Increase...
11 hours ago
24 comments:
For what it is worth, I lost my desire to invest in the stock market back in 2004. It's based on a permanent change in my long-term outlook.
I have absolutely no desire to invest in the stock market when we're this far below the median. First inning of the recovery my @$$.
Just opinions of course! This is not investment advice.
The market is so disconnected from reality that all you can do is hold your nose and buy with both hands... which of course I can't get myself to do. Too bad; would've made some nice gains in my retirement accounts.
p.s.: Why did you ever put "Retirement Blues" on your blog list. That guy has lost it.
TJandTheBear,
Why did you ever put "Retirement Blues" on your blog list.
We have and have had a substantial difference of opinion about Krugman. I don't really have a problem with that though. We still get along pretty well. We've posted comments on each other's blogs quite a few times. It's always been friendly.
If I had to agree with everyone on every topic then I'd never leave the house. I'd be holed up as a 100% introvert playing video games or something, lol.
D'oh!
For the record, I left my house just last week! I swear! ;)
Hey, I'm all for healthy discussion among those with differing opinions; heaven knows we have some. He seems to be off in another world, though.
Meanwhile, you better get out of the house, even if it's just to walk the dog or take the lady out to dinner!
One reason we might be seeing fewer layoffs for now is Obamacare. It has created an incentive for business to hire more workers, but make them all part time and give them less than 30 hours so they don't have to provide health insurance.
If you look at the raw numbers, most of the job gains since 2008 have been part time workers. It's a part time paradise out there!
A number of people have argued for years that we need to force shorter workweeks to employ more people in an age of automation and higher productivity.
Of course, I don't think this is exactly what they had in mind.
Good luck on that theory.
Come on now. What's up with the negative vibes? Lets give credit even where it isn't due. That's kind of our unofficial official policy isn't it?
Look at it this way. The median during the Greenanke Fed period is much lower than the historic median shown in your chart. And look at the results!
Did anybody think that Greenspan's policies, which were designed to "help" Main St. would actually end up helping Wall Street? Did anybody think that financial bubbles and extractive credit issuance would put 47 million Americans on food stamps while simultaneously making the top 1% wealthier than ever?
I can easily envision more of the new normal. Hamsters running in place did better than the majority under the Greenanke Fed. *sigh*
TJandTheBear,
Meanwhile, you better get out of the house, even if it's just to walk the dog or take the lady out to dinner!
I jest. I've been outside quite a bit this winter (from hiking to snowshoeing). :)
Of course, I don't think this is exactly what they had in mind.
It's only February and the Understatement of the Year is already facing some tough competition!
Mr Slippery,
It's a part time paradise out there!
My girlfriend will be working 15 hours this week in theory! Yes!
I don't have the exact numbers but I think that's got to be a million percent increase over her average weekly hours over the last three years. I wish I was greatly exaggerating for comedic effect!
mab,
I can easily envision more of the new normal.
Honk if you've been new normalized!
What do you think? I'd laugh nervously if I saw it on a car that miraculously survived the cash for clunkers program, lol. Sigh.
Gallows humor.
Mr. Green$pan found a flaw in the ideological model that he perceived as the critical functioning structure of his conceptual framework that defines how the world works with very considerable evidence that it was working exceptionally well for 40 years or more in a meaningful way.
So to speak. Or something like that.
Should we be shocked at Green$pans shocked disbelief that the economic crisis was reared by faulty models? And not by a plethora of deregulation that allowed the banks to pile on excessive risk and debt with no regard to the possible downside.
Been to many depressing conferences based on the Fed God uber alles and point out that unsustainable debt with declining wages is a disaster. The Fed God sees only prosperity in the destruction of the indebted.
dd,
"The Fed God sees only prosperity in the destruction of the indebted."
I disagree.
The Fed thrives on indebtedness and the indebted. Why else would savers like me be punished the way we have been the past 3-4-5 years now?
It's Irving Fisher to the rescue at the Fed. Debt deflation is not an option. The Fed is going to do whatever it takes to ensure that the excessive accumulation of debt taken on during the housing bubble can be serviced perpetually. Devaluation of the USD is the key.
The Fed is trying to save all of us from the perverse consequences of debt-deflation. Something, IMO, that we've needed all along.
Inflation is the debtors friend, it erodes the value of the original debt. Thus, the idea behind QE to the power of n.
Why else would savers like me be punished the way we have been the past 3-4-5 years now?
Saving at the personal level is either destructive to velocity (putting money in the mattress) or requires a debtor to borrow your savings from you.
The problem in our economy is that we have a few big "savers" -- the top 5% -- who are making 33% of the income and redistributing their winning back into the game not as productive, wealth-creating industry but in more profit-seeking.
In arabic digits the true import of this reality is rather hidden.
I prefer to break it out in kindergarten terms of one out of twenty people:
x o o o o o o o o o o o o o o o o o o o
clearing one out of THREE:
[_ $ _] [_ _ _] [_ _ _]
of the dollars in circulation each turn.
This is unsustainable on its face, and the system is using debt take-on to keep the velocity going as it is.
Quite frankly, or present economy is about as badly unbalanced as the Soviet Union's got ca. 1980.
Or our own, ca. 1929.
It doesn't have to be this way but idiocy rules the day and AFAICT Nobody Knows Anything anymore.
Troy,
Given the problem as you describe it, how then, do you sell the liberal idea of confiscating the wealth a man accumulates when he dies rather than allowing him to pass it on.
There are terrific arguments to be made in either direction. The CONservative idea that "he earned it", to the liberal idea that children of the wealth accumulators already have distinct advantages so why make money yet another one of those advantages.
And so on and so forth.
Further thoughts?
how do you sell the liberal idea of confiscating the wealth a man accumulates when he dies rather than allowing him to pass it on.
I just look at the ongoing harm and the asymmetric flows between rich and poor today. Someone inheriting their fortune is orthogonal to that, the important bit is HOW and FROM WHOM this fortune is collecting income.
Outside of very rare individual talent in pro sports etc , where there are economic rents, there are broken markets.
Mickelson caught a lot of crap recently complaining about high CA income taxes, and so did that French actor who decided to bug out to Russia last year.
But I see their point -- they are actually working for their very high incomes -- their money, er, "savings", isn't working for them, they create new (albeit ephemeral) wealth that people are willing to collectively pay a lot for.
The problem with our discussion is that we cannot see what wealth is, who is really earning it, and who is really confiscating it! (And that's the way the people at the top like it -- 100+ years ago the wealthy bought and corrupted the field of economics and it hasn't recovered yet.
Wealth at its most elemental is that which makes us well. Thing is, the free market economy runs into hard limits about the provision of certain forms of wealth -- land is probably #1, followed by health care services.
Try living a modern life without tenancy in land, LOL.
Try going through life without health care. Might be a quick trip.
I'd like to think if we eliminated the rent-seeking in land and health care we'd fix the biggest imbalances of how the 5% are siphoning the incomes of the 95% below them.
Another imbalance is this:
http://research.stlouisfed.org/fred2/series/CP/M
A lot of that is wages that ain't being paid any more.
What ticks me off about Krugman and the inflationists is that they just want to throw more money into the broken system and not argue for the reforms that are needed.
We don't have a "business cycle" any more, we have a system heeling ever-more off kilter.
http://research.stlouisfed.org/fred2/series/NETEXP
is another problem. Show me a nation with a healthy accumulated trade surplus, and I'll show you a pretty happy place.
The people running things are selling us down the river.
Great discussion. I'm just sitting back absorbing it.
Isn't it amazing what we've witnessed in the past two decades. From a standpoint of eCONomic performance, Clinton's bubble was hugely successful. The benefits extended down the eCONomic ladder. It was the most successful eCONomic strategy of a generation. It had both rapid technological change and full employment and accomplished this without inflation, greater equality of pay, and an increase in the average living standards that actually mattered to most people.
While it lasted. Oh, and we had a stronger USD too. Nevermind that Clinton's rule represented a new compromise between the leadership of the Democratic Party and the very rich (Winnick anyone?)
By the time the Clinton administration ended, so did the IT boom. Along comes Bush governing on behalf of a new narrow group of Plutocrats. Bush had no particular interest in the tech sector. Almost overnight, the tech bubble unraveled and the Bush recovery took hold. The new winners were those living off of natural resources, drug and media monopolies, health insurance, and new home financing.
In my mind, inequality is not so much about the popular argument, "supply and demand for skills", as it is about inequality of pay and, as Troy explains, the flow of funds from the financial markets through banks and brokers into whatever the hot sector is at the time. That is a source of demand, not a stabilizing force. In the tech boom working people benefitted because there were more jobs. But income inequality also went up because the incomes generated by the stock bubble flowed to a tiny handful of people in Northern California, King County Washington, and the financial center of NYC.
And the same was true in the next expansion, though driven by entirely different policies and favoring an entirely diffent group of people. Public policy can move wealth around in spectacular ways. We do live in an oligarchy, it's just that each new one that appears on the scene destroys the last one and rules until the new one destroys it...and so on and so on...
LOL on the Krugman thing, just read through RB self lauded "rant" on Mish. Too funny.
Wouldn't it be more accurate to graph the weekly initial claims versus the covered workforce?
Fritz_O,
It had both rapid technological change and full employment and accomplished this without inflation, greater equality of pay, and an increase in the average living standards that actually mattered to most people.
That was then, this is now. Sigh.
GYSC,
Well, of course you'd find it funny. Got Krugmonster? ;)
Anonymous,
Guilty as charged. Here's a more accurate chart. Thanks for pointing it out! I'm just so used to referring to PAYEMS that I didn't give it a second thought.
Initial Claims / Covered Employment
Same story, slightly different numbers.
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