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The Right Wing Noise Machine is at it again.  The liberal Press is out to destroy the president by not reporting good economic news.  I swear I could set my watch by this complaint - or maybe it's tied into the lunar cycle.  Whatever the reason, the familiar refrain is starting again.  It never occurs to anyone on the right to look at the underlying numbers of anything in the economy.  So long as the macro-number is good, it's all good.


According to the Census Bureau, median household income has decreased for the last 4 years (2000-2004), from $45,065 in 2000 to $44,398 in 2004 (in 2004 dollars).  The mean (average) income has dropped as well, from $62,114 to $60,528.  Over the same time, the poverty rate has increased from 11.7% to 12.7%.  The three year rolling average of the number of families in poverty has increase from 32,907,000 to 36,997,000.

Let's see, incomes are down the poverty rate is up.  That's some great economic policy in action.

Business Failures

In the last 4 years, we have seen two large areas of US business slowly slide into economic oblivion - airlines and auto companies.  GM recently announced they would lay-off 30,000 employees and undertake a corporate restructuring.  Ford just announced they would lay off 7500 workers and close 8 plants.  The airlines are facing similar problems.  5 airlines are currently in bankruptcy.  The industry faces losses this year of 10 billion dollars.  These two industries employee over 1 million people.  When big US business is in trouble, people get concerned.

Weak Job Growth

The Bureau of Labor Services breaks the job market down into 15 sub-areas.  Since January of 2001, only 5 of these areas has shown an increase in the number of jobs - education and health employees (+2,000,000), government (+1,000,000), construction (+550,000), leisure and hospitality (+700,000), professional services (+200,000).  All other areas of employment have experienced a net decrease in the number of jobs available.  In other words, this expansion is narrowly tailored to a few areas of the economy, as opposed to everybody benefiting.  

Let's say you use to work in a factory, but your previous employer closed.  Now you are looking for work at another factory.  Well, you are not alone because the US has lost 2.8 million manufacturing jobs in the last 4 years.  How about programmers?  That industry has lost almost 600,000 jobs in the last 4 years.  Hell, you can always work in the "leisure and hospitality" industry for half the pay.  But, at least you have a job.

Weak Wage Growth

Inflation adjusted wages are near stagnant for the last 5 years.  After inflation, non-supervisory wages have increased a scant .5% since January 2001.  This represents the salary of between 70%-80% of the workforce.  In other words, most people aren't making any more money than they were 5 years ago.

So, what's holding it all together?  

Cheap money.  Drop interest rates to a negative rate after inflation which encourages people to borrow.  That's the whole secret of this economy.  Greenspan dropped rates in the 2000-2001 period to literally nothing.  He only started raising rates in the last 12 months from a ridiculously low level.  By historical standards, money is still cheap.  The Fed appears to be targeting a neutral policy stance - one where rates neither stimulate nor restrain growth.  Only time will tell if they are effective.


Median and Average incomes are down; poverty is up.  Most wages are stagnant after inflation.  Headline grabbing news of big US business being bankrupt or downsizing is prominent.  Job Growth is limited to a few select economic areas.  No wonder people are concerned about the economy - they have every reason to be.  

Originally posted to bonddad on Wed Dec 07, 2005 at 07:21 AM PST.


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Comment Preferences

  •  So true (4.00)
    Too bad they won't be reporting these numbers in the so called "liberal" media.
    •  Because looking at the intricate numbers (none)
      would take effort and time away from being in the wingnut echo chamber.

      The Only Constant is Change

      by proudprogressiveCA on Wed Dec 07, 2005 at 08:13:44 AM PST

      [ Parent ]

    •  Only numbers that matter (none)
      are S&P 500 and NASDAQ ... Right?  Don't those tell everything that we need to know?  Don't they? They don't?

      What passes for "business" and economic reporting in this country is far too frequently a joke and a travesty.  Too many people believe that a 30-second report on the markets and they know everything they need to know.

      Why aren't health insurance coverage numbers, wage growth (decline), poverty figures, savings rates, etc treated with the same respect as the DOW?  Because, those would actually require some thought?

      9/11/05, Day 1469, A count worth keeping? Or, Osama Bin Forgotten?

      by besieged by bush on Wed Dec 07, 2005 at 12:47:40 PM PST

      [ Parent ]

      •  to the business channels yeah (none)
        I read something a while ago (a Kevin Phillips book perhaps, dont' remember offhand) that during the Truman and Eisenhower administrations, the stock market was lackluster but real median wages steadily increased.  

        If we had that kind of economy today, most Americans would be economically better off and the CNBC talking heads would be calling it a depression.

  •  Economically stay the course. (none)
         Just like the disaster in Iraq.

    "Those are my principles. If you don't like them, I have others." Groucho Marx

    by irate on Wed Dec 07, 2005 at 07:28:57 AM PST

    •  new number (4.00)
      I tag it here.


      Ford just release new number it's not 7500, but 30,000

      Ford to cut 30,000 jobs, 10 plants: report

      NEW YORK (MarketWatch) - Ford Motor Co., in a move aimed at bringing its costs in line with its flagging U.S. business, plans to slash up to 30,000 jobs and close at least 10 plants in the next five years, according to a report published Wednesday.{66BE28D1-4B80-4971-A0A8-2386ABCAD98A}&siteid=myyahoo&dist=myyahoo

      •  more news: 800,000 jobs LOST (none)
        A new report states the obvious:  The U.S. housing market will see a sustained decline next year.

        The cooldown in the housing sector is likely to be spread over several years, with as many 500,000 construction jobs and 300,000 financial sector jobs lost, the report said.


        "If the housing market slows more than we are expecting, a recession is not out of the question," Ratcliff wrote.


      •  Burns me up (none)
        The thing that gets me mad about the auto industry is this knee jerk reaction to blame employee compensation.  They don't need to fire the workers, they need to fire the managers, the engineers, all the people at the top who thought they could base their business on massive gas-guzzling tanks in an era of sky high gas prices.  

        There excuse shows the rot that the Bush Administration has places on the economy.  They say 'oh, it's not our fault gas prices have gone up, how were we supposed to know?'  We are in the era of corporate unaccountability.  We can screw up as much as we want, we'll just have the workers pick up the slack.

        Now we have this ass-jacket from Ford in commercials talking about how visionary and environmentally conscious he is, trying to make himself out as the Steve Jobs of the auto industry by talking about hybrid technology and fuel cells and such.  Hey Sparky, if you had been paying attention 5 years ago instead of getting all excited about firing American workers and paying Mexican workers $2 a day, you may of noticed that the Japanese were a few steps ahead of you.  Now we are supposed to get all excited when the CEO of a company realizes the market has changed and is forced to play follow the leader to stay in business.  Isn't that what he's supposed to get his paycheck for?  Now we are supposed to give these guys cookies because they've come off the golf course long enough to do their fucking job?

        •  they needed to fire the managers 30 years ago (4.00)
          Detroit laughed at those first little Honda Civics, while Honda laughed all the way to the bank. Detroit bet on hydrogen. Japanese manufacturers bet on hybrids. Detroit lost.  The Japanese poured yen after yen into long term product development and quality production. Detroit scrambled to keep its books glossy and its stock prices high quarter by quarter. Detroit lost again. Do I feel sorry for them? NO.
        •  Blaming The Worker Again (none)
          It struck me reading business articles and the George Will column about GM downsizing that these people were in some way delighted that auto workers  will be getting the shaft. And it was absolutely disgusting.

          In the specific context of the auto industry, it was not really about slashing benefits and wages and busting organized labor. If anything, workers Germany and Japan get a better deal overall than Americans. If we had a national health care system, companies wouldn't sink under the weight of providing health care under a pension system.  

          But never mind that. Make no mistake about it; most of this crowd wants people in the US turned into serfs and peasants.

          Check out Answer Guy Online. Thoughts from a bottomless pool of useless information.

          by Answer Guy on Wed Dec 07, 2005 at 12:08:44 PM PST

          [ Parent ]

          •  Hold on to your hat's folks (none)
            Cuz the market is about to be flooded with Chinese SUV's...brought to you by their partner in crime, Ford!

            In the land of expensive gas, only the rich will drive.

            Parties divide, movements unite.

            by Gegner on Wed Dec 07, 2005 at 12:39:23 PM PST

            [ Parent ]

  •  Glad to see you bonddad (none)
    Haven't seen you in a while-don't know if you haven't been posting or if I have just been missing your diaries.  Another great one by the way.  I think our only hope is the fact that the real people affected by this economy will actually be the ones that realize all bushco's hoopla is just that.  Those of us in the real world have been watching our buying power slip away and have seen normally 'safe' jobs leave the US for corporate profits in faraway lands.  I think some of the Dems do indeed get this and are starting to speak up--unfortunately our liberal media doesn't seem to want to give their opinions a voice.

    "Do Iraqi children scream when the bombs fall if no one is in the White House to hear them?" Bernard Chazelle

    by dmac on Wed Dec 07, 2005 at 07:30:46 AM PST

    •  I'm working now (4.00)
      so I am trying to balance writing and work.  

      "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

      by bonddad on Wed Dec 07, 2005 at 07:39:45 AM PST

      [ Parent ]

      •  My question (none)
        How do we even know that the numbers being reported are accurate?  Since this administration has the policy of infilterating every branch and office of the federal government, what is to say that they aren't fudging the numbers?

        its a non-stop disco betcha its nabisco betcha didn't know
        Auto Transport

        by kharma on Wed Dec 07, 2005 at 07:52:02 AM PST

        [ Parent ]

        •  Tell me how they fudge the numbers (none)
          I'd really like to know.  I help put out and ensure the accuracy of government statistics for a living.

          If Rove concealed the fact that he was a leaker from the President, why hasn't the President fired him?

          by wintersnowman on Wed Dec 07, 2005 at 08:04:49 AM PST

          [ Parent ]

          •  they have and do (none)
            tend to fudge the numbers in their Pontificational Speeches (tm). However, they seem to not be smart enough to become friends with White-Out. But then wasn't it the Onion which reported their obsession with black highlighters?

            /there are no rules except discovery /the only tradition is invention. -rachel pollack

            by joseph rainmound on Wed Dec 07, 2005 at 08:18:23 AM PST

            [ Parent ]

          •  one way is (none)
            by taking fast food workers and reclassifying them as manufacturing jobs

            "You might think that. I couldn't possibly comment." Frances Urquhart (House of Cards)

            by Yankee in exile on Wed Dec 07, 2005 at 10:00:00 AM PST

            [ Parent ]

          •  This is a better link (none)

            "You might think that. I couldn't possibly comment." Frances Urquhart (House of Cards)

            by Yankee in exile on Wed Dec 07, 2005 at 10:09:49 AM PST

            [ Parent ]

          •  Cherry picked Economic numbers. (none)
            They pull numbers they don't like out of things, like recently it was hotel rates, they pulled out the business travel sector because it was weak. Hell they flat quit reporting M3, which contains the Repurchase agreements, the Fed's weapon of choice in expanding cash. The point of this latest round of rate hikes is to help monetize the debt, which prompted a policy statement from Fed Gov Fisher on the matter. (he's against it, but he meant to say sometimes we go a little overboard) The hikes strengthen the dollar, and caused the ECB to respond, so we're competing for the same foreign dollars to keep our economy running. The result is the Yen falls, while Asia and Japan compete for those dollars. you are like that guy who said I told you there was no Iraq uranium deal...

            "Republicans hate the French Revolution, and everything it stands for; Liberty, Equality, Fraternity, but they love the Guillotine.

            by agent double o soul on Wed Dec 07, 2005 at 12:43:29 PM PST

            [ Parent ]

          •  I don't know about actual fudged numbers, (none)
            but they can come up with some really stupid statistical materials.  

            Case in point, on the Department of Education site, there is this tool: State Education Data Profiles.

            You can use it to compare stats from various ED surveys across states.  So far, so good.  

            For each of these stats, the average (mean) value for the United States is also calculated. I can't imagine why--this value is almost always completely useless as a point of comparison!

            What does it tell you if the Total Number of Schools in Ohio is 3,988 and the U.S. average is 1,885? Not. One. Damn. Thing!

            And then, they graph it.

            "Help us to save free conscience from the paw -- Of hireling wolves whose gospel is their maw." --John Milton

            by ohiolibrarian on Wed Dec 07, 2005 at 01:38:13 PM PST

            [ Parent ]

          •  well... (none)
            They could just stop releasing the numbers.  

            They could use the wrong methodology.

            It could be a mathematical error.

            They could use political pressure to get people to  suppress data or change recommendations.

            Or it could be an outright scam.

            "Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist." - Kenneth Boulding

            by randym77 on Wed Dec 07, 2005 at 03:01:13 PM PST

            [ Parent ]

    •  Missing bonddad's diaries? (none)
      Hope you were just kidding.

      Find any missed ones:
      Set the "Sort by" to "Tags"
      Type in "economy"
      Hit "Set"

      -- In Your Face From Outer Space

      by mike101 on Wed Dec 07, 2005 at 08:06:07 AM PST

      [ Parent ]

  •  Recommended (none)
    Great data and sources.
  •  Great post in punchy style! (none)
    You've hit the salient points with crisp explanations here. I've been missing this kind of analysis and the major points you are making.

    Poverty is my biggest issue. I believe that Kossacks and everyone else are ignoring the worst problem there is in this country.

    Iraq is huge and wrong and a terrible mess. But there are millions, millions, of American poor who get vitually no attention.

    Also, what can you say, Bonddad, about food price inflation? Everyone keeps insisting there is no inflation but I maintain that food price inflation which hits the poor has been high the last few years. Do you know if the way in which this is indexed or figured into the inflation index has changed in the last ten years? I've tried to research it but got nowhere.

    •  It's all tied together (4.00)
      The war in Iraq has taken money away from a lot of government social programs that help the poor, so it's not like the two are unrelated.  If we were able to stop the war, all that money could go back towards helping people in this country.

      Granted, I wouldn't trust Bush or the Republicans to spend it well, but it is possible that the money could either be spent to help people or improve things at home to promote jobs.

      •  BushCo would just spend it on more (none)
        tax cuts for the uber-wealthy.  The poor?  Send in the 82nd Airborn to keep them in line.

        Everything is funny as long as it is happening to somebody else. --Will Rogers

        by groggy on Wed Dec 07, 2005 at 08:42:23 AM PST

        [ Parent ]

        •  Military pay (none)
          Did anyone see in this past week's The Nation the average salary for a private (First Class)? After 3 years, they make approx $25,000. (of course their housing and food are covered, but . . .) Doesn't sound like a good deal to me. Working Poor, Working Poor.

          OOOOOMMMMM . . . . .

          by MarkosNYC on Wed Dec 07, 2005 at 09:14:11 AM PST

          [ Parent ]

    •  Good question re: inflation (none)
      It seems to me that the inflation rate is skewed heavily downward by the low cost of consumer goods i.e. stuff from China.
    •  there is (4.00)
      food price inflation. my parents noted that stuff costs the same but comes in smaller packages---or it costs way more than it should. They've been shopping for families since they were both very, very young and both have a sound understanding of economics---heck my mom worked in the financial industry for 20 years!--so they know what they are talking about.
      •  If you need to landscape your (none)
        house you'll notice that you have to now buy one plant for $2 instead of six baby plants for $1.

        I need some pink flowering Indian Hawthorn plants. Home Depot no longer sells them in one gallon pots where I live.

        I will try to grown them from seeds.

        •  Check out the gardening blog on (none)
          Saturday mornings - though I don't know if Mrs. Frankenoid does them in winter?  Go on internet - there are always great sales or free delivery, for instance.  

          The beneficiaries are likely to be...large corporations and development firms. (O'Connor, J. dissenting in Kelo). God bless you, J. O'Connor.

          by xanthe on Wed Dec 07, 2005 at 03:54:40 PM PST

          [ Parent ]

    •  Food (4.00)
      has definitely gone up, so far as I can tell, along with energy prices and a few other factors, IMO. Bear in mind that our conventional agricultural industries rely heavily on petroleum-based stuff for fertilizers and pesticides, not to mention the actual gasoline costs involved in food transport, which is one of the larger expenses in the industry.

      I find it bizarre that we (as a country) spend very little time focusing on prices in food, rent, and energy -- when these are the things that make up most, by percentage, of the spending of the poor. These are the necessities, and by the time I'm done paying for them, I frankly don't have much left for those dandy consumer goods which have had such low inflation.

      •  It IS bizarre how food price increases (4.00)
        are ignored, as well as the other basic expenses we have.

        Glad to see that last two posts have confirmed my view because when economists talk I think maybe I'm crazy. But I've paid attention to price rises on food even when I had lots of money to pay for things. Now that I don't have much it hurts more but I challenge anyone to look at specific prices and not see the rise. It may sound petty but it hurts poor people like a kick in the stomach to put it bluntly.

        People with money might grumble about the rise in gas prices, but for the poor those rises are not just an annoyance but a horrid reality meaning a change in their lives for the worse. They cannot pay the increased price and have to go without. But most economists do not have to face this reality and do not come face to face with poor people and their situation.

        •  "core" vs "non core" inflation (4.00)
          Food and energy prices are routinely stripped out of inflation calculations because of their volatility. This started in the 1970s during the oil crisis becasue it was assumed that the inflation caused by energy price increases was temporary and therefore should not be included into decisions on economic policy. It wasn't a bad decision at the time, but the policy probably needs some overhauling.

          So when you hear or read discussions of inflation, you need to check to see which version of inflation they're talking about -- 'core'(food/energy taken out) or 'non-core'.

      •  plus medical and energy (none)
        Medical costs and energy costs are basically flat across the population - you don't drive your car more because you're rich, or get sick more often because you're rich (or less often because you're poor).  THOSE things have seen double-digit inflation for, well, ever since Bush took office, and probably before that as well.

        "we have to work... the dark side, if you will"
        -Vice President Cheney, as quoted in Newsweek

        by Leggy Starlitz on Wed Dec 07, 2005 at 10:20:32 AM PST

        [ Parent ]

        •  Preventive care (none)
          The poor actually get sick more often because they can't afford to go to the doctor unless something's falling off or bleeding to death.

          I know this isn't in disagreement with you, just saying.

          Jumping on the bandwagon: (-3.63, -3.03) - Does that make me part of the right wing here?

          by someone else on Wed Dec 07, 2005 at 11:29:20 AM PST

          [ Parent ]

  •  A thought or two about tax policy (4.00)
    I saw a couple of morons on CNBC this morning, talking about why we should cut dividend and capital gains taxes to zero.  Their primary theory was that dividends and capital gains taxes discourage investment, and investment is what our economy, and all the jobs that are created by it, is built on.

    Their secondary theory was that dividends and are double-taxed, because they are paid from corporate profits after taxes.


    1. "Dividends and Capital Gains" are often combined like this, which ignores the fact that they are derived from completely different investment strategies, and represent different methods of collecting wealth.

    2. Taxes in general do not discourage investment, or give investors more money with which to invest.  In fact, higher taxes ENCOURAGE investors to invest.  Investors and companies are smart, they put money away in order to AVOID showing income or profits on which they will be paying taxes.

    3. Dividend taxes are designed to DISCOURAGE the taking of dividends.  That's why they are double-taxed.  We should instead encourage companies to re-invest their income, applying it to R&D before taxes, which creates jobs and encourages innovation.

    Dividends act like a steam valve on a radiator, reducing pressure.  I would rather watch companies keep their investments internal, thus cooking up ideas and creating good jobs.  So I would recommend doubling dividend taxes.

    Capital gains are based on this type of growth, but we should still want to discourage the taking of profits, so we should raise capital gains taxes by 50%.

    Believe it or not, this will create jobs.  Millions of them.  Out of my mind?

    •  Work versus Wealth (4.00)
      This is one of my big bugaboos - we only have so many hours in a day for work (wages) and thus have limited gain on that time.  We should be taxing work less than wealth that has an unlimited potential.  Or at least a flat (low) tax on work and a progressive tax on wealth.

      I fear very much about the "tax simplification" that this administration is looking into.

    •  Heard the same shit on NPR (4.00)
      the other night. The wingnut talking points go like this: Cutting capital gains taxes encourage investment in companies, which spend the money on new equipment, thereby increasing effiency, which leads to increased productivity, which leads to higher wages. We all win, whoo-hoo!

      It's seductive bullshit, because it's partially true: cutting taxes for the investor class DOES give them more money to invest, which DOES lead to companies buying new equipment for their factories--IN CHINA! And the increased productivity does lead to higher wages--FOR CEOs!!!

      It just galls me that a lot of middle class Reagan Rethug types hear this kind of overclass propaganda and take it at face value, hook, line, and sinker. No one ever stops to point out, "Hey, we've BEEN cutting taxes on investment income for 25 years, and all we've gotten is layoffs, benefit cuts, and outsourcing. All the gain is going to the top 10%"

      They're pissing on our faces and telling us it's a rain of gold. That's "Trickle-Down" economics, folks!

      Al Qeada is a faith-based initiative.

      by drewfromct on Wed Dec 07, 2005 at 08:35:47 AM PST

      [ Parent ]

      •  How about linking the trickle down tax (none)
        cut theory to reality?

        How about requiring the tax cuts to the rich be used exclusively in "trickle down" expenditures?

      •  It doesn't work! (none)

        1. nobody can afford buying new car (plus gas price)  Car companies collapses. (yeah so CEOs have golden parachutes)

        2. Airline industry collapses, everybody cutting back on travel + gas price not affordable)

        Coming next:

        - Big media who depends on ad revenue will get hurt BIG TIME. Soon, the effect will be here... Time warner is already in slight trouble.

        -Chemical industries and metal will soon have to battle chinse over supply (give it less than 5 years)

        -Boeing doing a slow collapse and ever more dependent o military contract.


        Trickle donw economy doesn't work. Big fat profitable oil companies don't do jack to the economy.

      •  not quite. . . (none)
        cutting capital gains and dividends taxes don't encourage investment.  they encourage investors to take their money out of businesses.  

        a cut in business taxes or a rise in dividends taxation would encourage firms to keep that money in the business, rather than paying it out as dividends.  then they can use that money to reinvest.  

        as you note, without controls on capital mobility, this can lead to firms moving that money overseas if they think that's where they'll find a better rate of return (i.e. if doing so will cut their costs with a more productive labor force, etc.).

        if that money were to stay in-country, it would promote investment and therefore employment.

        the secretary of war is out of order. so's the plumbing. make a note of that. -groucho marx

        by rufustfyrfly on Wed Dec 07, 2005 at 10:05:49 AM PST

        [ Parent ]

    •  Investment is China. America is Charity n/t (none)

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy....--ML King, "Beyond Vietnam"

      by Gooserock on Wed Dec 07, 2005 at 08:36:01 AM PST

      [ Parent ]

    •  double taxation meme = obvious fraud (4.00)
      Anyone who earns a living, pays income tax on it, and then pays sales tax, or gas tax, or liquor tax, or state income tax, or property tax or an auto excise tax is being "doubletaxed."  

      The Rethughs don't care about that and never have.  They've been in favor of sales taxes all along because they hit the poor.  And that's why they're against capital gains and dividend taxes - because they hit the wealthy.  It's simple.

      •  Cambridgemac, good point! (4.00)
        "Anyone who earns a living, pays income tax on it, and then pays sales tax, or gas tax, or liquor tax, or state income tax, or property tax or an auto excise tax is being "doubletaxed." snip

        Add this: payroll taxes. Anyone that is paid a wage is taxed for social security and medicare only to pay the same taxes again after Congress spends every penny of surplus funds the original tax created. Double taxation.

      •  oh... (none)
        i just said this up thread before i saw your comment.

        you said it much more succinctly and eloquently than i did.

        forgive my double posting.

      •  Douible taxing (none)
        of corporations is because they, as a separate entity, (the corporation) have needs too. They need fire and police protection Separate from their shareholders, they need roads to get people to work and courts to handle their commercial legal issues with each other, etc. They need a stable climate in which to operate, they need an SEC and a stock market, and it costs money to provide the environment in which they can operate and make money.
    •  This just drives me nuts (4.00)
      They act like every penny given to a worker means the company can't invest in anything.

      I heard the Dean of Columbia Business School on NPR the other day, and I about drove off the road, I was so pissed. Such a MORON!!! No wonder business is so screwed up. The people running it think that you can't build the cost of taxes and routine upgrades/maintenance into the price of your product.

      MORONS. Big business in this country is being run by morons.

      •  Excellent point! (none)
        I love the way you put it, and no one ever says this!

        "They act like every penny given to a worker means the company can't invest in anything."

        I believe this whole perception is a key factor in workers getting the shaft. Capitalist dogma says capitalism cannot thrive unless profits are maximized and then returned only to owners, investors and executives.

        •  this only works (none)
          if workers are considered an expense.  Workers are only an expense if they are interchangeable and skill/training is meaningless. Then any worker can be exchanged for any other worker. A better and I think more productive way of seeing it is: I am not paying my employees for their time. I am paying them for their expertise. Their expertise is a company asset. It's really simple--if the expertise of my work force declines then so does the value of my company.  This doesn't show up on the balance sheet directly, but if a company is run by people who give a rats ass about the customers and the product then it should show up on the revenue side.
          •  exactly (none)
            when i had jobs, i maintained an attitude that they were getting a valuable skill set and problem-solving ability with hiring me.  other people aren't as good at several things than i am.  they are getting value added to their company by using me.

            i always made huge lists of my positive skill sets and how the company could better make use of them during any review i would have.

          •  Western Capitalism (none)
            has had a 30 programme of firing their richest customers, ie, western workers, and repalcing them with their worst customers, ie, slave labour.

            This works as long as I fire your customers faster than you fire mine, but at some point we have both fired all of each other's best customers and we are both producing relatively expensive products with slave labour.

            Next question. Who buys these products?

            For all his failings, Henry Ford understood that if he paid his workers enough money they would buy his cars and he would get a chunk of it back. Plus they would work better knowing it was their own vehicles they were making.

            Now, Nike makes $150 shoes using people who get $1 a day. The workers can't afford the shoes they make, which means the product has to be exported.

            But if all the customers for $1450 shoes are now unemployed or living on the economic edge, who buys the shoes?

            This thing was set up to fail, it just takes a lot longer than the average CEO tenure, so it doesn't matter.

      •  They're Not All Morons (4.00)
        ... but many of them think we are.

        Their talking points are everywhere. Reframing the fiscal and tax policy debate is a HUGE task facing us, especially given the media's face-folk being members of the investor class. ... somebody really ought to register this domain name ...

        by wystler on Wed Dec 07, 2005 at 09:55:31 AM PST

        [ Parent ]

    •  I have to disagree on one point... (none)
      Dividends act like a steam valve on a radiator, reducing pressure.  I would rather watch companies keep their investments internal, thus cooking up ideas and creating good jobs.  So I would recommend doubling dividend taxes.

      Microsoft sitting on $40 billion is not investing internally cooking up ideas and jobs. Also, two things can happen to dividends, the receiver spends them which results in money going to some one who produces something that people want or need.  Or, they get reinvested into either the same company or another that requires the investment. The difference between a company keeping the dividend or giving them out is more in the concentration of the spending/investing decision into a limited number of hands vs the hands of the shareholders.  I personally like the spread out the decision making.  Sort of the shotgun approach where some decisions will be bad, but so many choices wil be funded that some will work out and some of those spectacularly.

      Secondly, doubling capital gains taxes or dividend taxes makes investment in stocks less attractive, and investing in CDs, bank notes, and debt more attractive.   It also could have the impact of discouraging savings which considering the national savings rate would be really bad news.  Personally, I think using the tax code to influence economic behavior is a load of crap, who really knows if the behavior that is being encouraged is really better.

      My opinion is tax all income the same and let the people decide what is the better thing to do with their money.  If we want a slight bias in favor of  saving reduce dividend and capital gains taxes by a percentage of the income tax, but maintain a progressive tax.  That is one of the worst things about the change to the dividend tax, it is flat.  The middle class wage earner scrimping and saving to invest in some solid dividend bearing companies gets taxed at the same rate as the rich guy who is living off the dividends of his millions.

      I will add one more point. I am also against screwing with taxes to try to stimulate the economy. It doesn't work.  There may be a slight blip in short term growth that after a couple years will be overwhelmed by long term inherent growth and effectivly put the economy exactly where it would have been if nothing had been done.  All changing the tax code does is perturb the economy. And, where that perturbation ends up is really unpredictable.  If taxes are reduced does that necessarily put more money in workers pocket long term, or does it simply result in a reduction in wage increases, and a commensurate reduction in price of goods effectively putting everyone exactly where they would have been otherwise.  Except for those who might profit from the arbitrage of the time delays between these effects.  i.e. corporations where the wages and taxes decrease before prices thereby increasing profits until a new equilibrium is reached.


      •  Good discussion (none)
        You definitely deserve a well-thought-out response.  I like discussing the best tax policy for our country, especially since the one we have is so destructive.  In general, I agree with you about social engineering through tax policy.  People will continue doing what they like to or need to do.  The smartest businesses and investors, however, will move very quickly to match whatever the policy suggests they do.

        I do not consider Microsoft a great friend, but they did not get where they are by ignoring R&D.

        Anybody who takes a dividend, pays taxes on it, and then re-invests it into the same company needs to get better advice (If you mean rolling it over, well, that's reinvestment).  If it is spent in the economy, it may very well create a job, but has nowhere near the impact it could have as reinvestment.

        As for a corporation's decision to pay a dividend, you are right, it is mainly up to the directors and major shareholders.  And they get the largest allocations.  Be sure their decision will be based on tax policy.

        You are also correct that banking and debt will become more attractive to investors.  That means more capital for small businesses to borrow.  The savings rate is more a function of cost of living and declining wages.

        Now we come to the flat tax.  Remember that most people earn mostly wages, and have no real control over the makeup of their income.  These people would suffer under a flat tax, because they have fewer options to hide their money, and they consume a higher percentage of their income.  Let's face it, the cost of living is the "fixed" component, and everything else is discretionary.

        The average annual salary is about $30,000, so let's offer a flat tax of 20%, taken from dividends, interest, wages, capital gains, inheritances, and corporate profits, with no deductions, except for a $30,000 exemption for each person.  Now THAT's flat.

    •  The government hopes to eliminate the (none)
      dividend tax so the price of stocks soars and they can tax the capital gains that from the higher stock prices.

      In other words, the government simply wants to trade future dividend tax revenue for short-term capital gains tax revenue.

      I have bought stocks at $1 for about five cents in annual payments.

      The Bush government wants give up about five cents in tax revenue each year for $1 in the near future so the Republican swine can continue to wallow in taxpayer money.  

    •  i hate the "double tax" argument (none)
      because f*cking everything is taxed, everytime money changes hands.

      a factory pays tax on the raw materials it buys (or imports).  the distributor pays tax buying it from the factory.  the store (i think, i could be wrong) pays tax buying it from the distributor.  (i do know that all those entities pay income/corporate tax).  and i pay tax buying the candy bar or whatever it is.

      everytime money (or value) changes hands, it's taxed.  that's how the economy survives.  using the same logic, i shouldn't pay tax on the candy bar because someone payed import tax on the chocolate many months before me.

    •  My thoughts: (and please respond. I'm curious) (none)
      My thoughts:  

      Higher capital gains taxes would not encourage further investment.  It would keep money in one place and discourage the movement of that money.
      Movement of money from one place or investment  to the other is what keeps the economy rolling.  Capital gains is a bullshit tax that makes
      it hard for people like you and me to make money and get ahead.  For example, when I sell my house, I will have to pay a significant chunk to
      the government on the gain in value of the home even though I have already paid income taxes to the feds, sales tax on the purchase of the
      home originally, and real estate taxes while I owned it.  Yes there is something called a 1041 exchange, allowing me to move gains from this
      property to the next tax free, but what if I wanted to use that money for another purpose?  Say my kids education?  The government gets a huge chunk.

      Saying that taxes encourage investment is a stretch.  Yes moves are made, like the 1041 exchange I referred to above in an effort to avoid taxes, or "shelter" the money, but there is no doubt that the more money you take out of my pocket the less I have to spend.  It is that simple. Let's say my current income tax bracket was lower.  I would have taken more money and invested into such and such a Company.  I would have put more in the kids college fund.  I would have put more in my 401K. I would have, well you get the idea.   I paid my taxes so I had less to
      invest, not more.

      On the subject of dividends, I will get some dividends after the first of the year so I am beginning to understand how they work.  Xc company will make a profit as a company.  That profit will be taxed by the government.  After the taxes are paid, I will get a share of the profit remaining or the "net" because I am an owner of the company. Let's say my share, or dividend is $100.00.  My goal will be to take as much of that dividend as I can and up my investment in the company, in the college fund, etc.  The government takes $40.00 of this dividend.  So I get $60 to reinvest.

      But wait, the company was already taxed once and since I am an owner I participated in paying those taxes.  Now I will pay again.  Why twice?

      Tell me again how this encourages me to invest?

      -9.0,-5.54 A real soldier died in his Hummer so you could play soldier in yours.

      by environmentalist on Wed Dec 07, 2005 at 07:49:09 PM PST

      [ Parent ]

      •  Sorry about the wait (none)
        >Higher capital gains taxes would not encourage further investment.  It would keep money in one place and discourage the movement of that money.

        True!  My theory (just a theory) is that one of the problems with our economy today is that lower investment taxes encourages "cashing out" in the form of dividends and sell-offs.  Keeping investment dollars in one place will encourage growth within companies, which means innovation and job creation, as opposed to "cash in for the yacht."

        Further investment is encouraged by the growth of these innovative businesses and the revenue they take in from people who now have better jobs.

        >Movement of money from one place or investment  to the other is what keeps the economy rolling.

        Only in terms of Wall Street and Real Estate banker fees.  Those guys are doing incredibly well (Wish I was one).

        >Capital gains is a bullshit tax that makes
        it hard for people like you and me to make money and get ahead... (edited for space)

        There is a $500,000 exemption for capital gains on the sale of a home.  This, in addition to interest rates, is one of the reasons for the housing bubble.  Let's remove the exemtion for non-primary residences, but extend the exemption to include small businesses.

        >Saying that taxes encourage investment is a stretch...

        Not really.  I should be clear: We're not talking about "taxes", we're talking about "tax rates".  Tax rates are a deterrent to certain behavior, because a government wants to drive behavior in order to maximize revenue, efficiency, the growth of its economy, and (I would hope) the morale of its people.  By raising a tax, the government is essentially saying "Don't do that."  By reducing a tax or allowing an exemption, like the one you get on investments when you retire, it is saying "Do this."

        >...I would have taken more money and invested into such and such a Company.  I would have put more in the kids college fund.  I would have put more in my 401K.

        You're now talking about wage taxes reducing your take-home, not dividend or capital gains.  Remember that your 401K contri is likely before taxes, like your health insurance payment.  I am all for reducing wage tax rates on everyone making less than $40,000 per year, maybe even to 0%.  Like me, the vast majority of people are going to make their money from wages.

        >On the subject of dividends, I will get some dividends after the first of the year so I am beginning to understand how they work.  X company will make a profit as a company...

        The company will pay massive bonuses to its execs first.  You should have the option of re-investing your total dividend, tax-free, or take the payment.  You wouldn't want to take the check, pay tax on it, then re-invest it.  The tax would be $15 on $100, I believe.  You'd be more likely to let it ride if the tax rate were 30%.  That encourages you to invest.

  •  But, but (none)
    the CEO's and Bush's base are happy.  Everything is on the up and up. Plenty of no bid contracts to go around.

    Theocracy is tyranny

    by Druidica on Wed Dec 07, 2005 at 07:45:37 AM PST

  •  Great diary! (none)
    Like your brief and "to the point" analysis.

    Bush is NOT America!

    by annefrank on Wed Dec 07, 2005 at 07:47:07 AM PST

  •  What They Want (4.00)
    Isn't this a clear indication that the Ultra-Wealthy are trying to reshape the American work force back to the pre-labor movement era of the Gilded Age? Pretty soon, we'll have a servant's class again. The cost of labor in the U.S. is their biggest complaint, and they are trying their hardest to downgrade all but the professo-technocrats to working class wage structures.

    I mean, really, do we really need a consumerist culture here? Not really, let them not eat cake. So what if the working poor can't buy luxury goods, they are still spending every bit of their wages on utilities, rent & other real estate, taxes and bare minimumns in food and medicines. If you take all their money, does it really matter what it is that they buy? No.

    Most of us are headed to the working poor class if we let this downward spiral noted in the diary to continue. It may take 20 or 30 more years, but they'll achieve their goals unless we decide not to be cowed by their machinations.

    OOOOOMMMMM . . . . .

    by MarkosNYC on Wed Dec 07, 2005 at 07:47:51 AM PST

    •  Not in my country (4.00)
      This outcome is unacceptable.  We ensure the downward spiral gets righted again by electing a Democratic administration.

      Fixing Republican screw-ups:  it's what Democrats have been doing for over 100 years.  

      If Rove concealed the fact that he was a leaker from the President, why hasn't the President fired him?

      by wintersnowman on Wed Dec 07, 2005 at 08:08:05 AM PST

      [ Parent ]

      •  New tagline! (4.00)
        "Fixing Republican screw-ups:  it's what Democrats have been doing for over 100 years."

        That makes a great new tagline if you don't want it!

        Fixing Republican screw-ups: it's what Democrats have been doing for 100 years

        by SonofFunk on Wed Dec 07, 2005 at 08:39:52 AM PST

        [ Parent ]

        •  You can have it... (none)
          And the 100 years part was off the top of my head.  Going back any farther and you're not really talking about what you would currently consider a Democrat.

          If Rove concealed the fact that he was a leaker from the President, why hasn't the President fired him?

          by wintersnowman on Wed Dec 07, 2005 at 10:01:29 AM PST

          [ Parent ]

    •  Divedends & Capitol Gains... (none)
      ... these people havn't a clue of what "Earned Income" is anymore. Work for money? Banish the thought. Kinna like when Maynard G. Crebbs would squeal the word whenever it was mentioned!  LOL

      Either you're wit' us or a Guinness -- Brilliant!

      by Unforgiven on Wed Dec 07, 2005 at 08:11:18 AM PST

      [ Parent ]

    •  can't get people to believe the truth (4.00)
      I am now teaching an American history class (1869-now).

      It is almost impossible to convince kids that the poor during the gilded age worked damn hard, and were still poor. I'm sure because this is a reflection of what their middle/upper middle class kids are told at home. Somehow we need to get the message out that poverty is not just a result of laziness, a message which the Republicans have been getting out.

      SOCIAL SECURITY: Invented by Democrats yesterday, Protected by Democrats today

      by mollyd on Wed Dec 07, 2005 at 08:14:48 AM PST

      [ Parent ]

      •  Good point. Let them work at min wages! (none)
        See what the kids think of living on a minimum wage salary with nothing from Mom and Dad!

        Have them prepare a budget based on min wages!!

      •  Working for a Gilded Age Yacht Builder (4.00)
        Image Hosted by

        It seems remarkable today that such a small crew of men could turn out so much work. You must remember, however, that things were quite different then: the men went to work at seven in the morning and, excepting for the noon hour, worked right through to six at night.[....] There were fewer holidays then for the workers of the Herreshoff Manufacturing Company, and as I remember it, they were New Year's, Fourth of July, Labor Day, Thanksgiving and Christmas. Of course they worked all day Saturday.[....]
        They were able to work hard, and they liked it; they could saw or plane continuously for hours without stopping to rest, and that is one of the reasons they built so many yachts in 1900 with a small crew. [....] I glory now in having known and seen those Sampsons and Vulcans at work, but I fear the mold they were cast in is lost and that we will never have such accomplishments again.
        The workmen at this time were paid less than fifty cents an hour, generally, although the Herreshoff Copany at that time was noted for its high rate of pay.

        --Capt. Nat Herreshoff

        Now tell your kids what the manufacturing laborer's lifespan was in 1900. Tell them how many of those workers were able to buy the boats they built. Tell them how many of them retired with pensions. Tell them about the economic status of these workers who lived long enough to stop working. Tell them what the leading cause of death of the elderly was (hypothermia). Tell them it was this generation and their parents who made the New Deal for their little children who we now call the Greatest Generation.

        We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy....--ML King, "Beyond Vietnam"

        by Gooserock on Wed Dec 07, 2005 at 08:48:16 AM PST

        [ Parent ]

        •  This line kills me (none)
          "They were able to work hard, and they liked it; they could saw or plane continuously for hours without stopping to rest,"

          They liked it? Suuuuuuuuuuuuuuurrrrrrrrrrree they did.

          SOCIAL SECURITY: Invented by Democrats yesterday, Protected by Democrats today

          by mollyd on Wed Dec 07, 2005 at 09:22:00 AM PST

          [ Parent ]

          •  Actually They Did and Still Do (none)
            As I type I'm watching the neighbor's Mexican landscaping crew hustling around trimming and weeding etc. It's Puget Sound where the climate supports landscaping work just about year-round.

            These guys and gals definitely hustle. I see this crew in the area working long hours 6 days a week much like that gilded age boatbuilding team. They're part of that Godsend of a wave of immigrants willing to do work and maintain a pace that Americans don't "want" to do any more.

            I've done unskilled labor myself, and I know that a team momentum and work ethic and a cavalier attitude towards safety procedures and gear can get going that could in the long run be contrary to peoples' long or even short term health and safety interests. I still thank God that 35 years ago a toothless old W. Va. ditch digger told me to get a dust mask for cutting concrete. "That dust'll kill ya" he said. So I was well equipped for another job digging into 50 pound sacks of asbestos fiber to make contemporary boatbuilding putty. Otherwise I'd already be a statistic.

            Those yacht builders never conceived of another way of life. The "weekend" and the "spare time" had not yet been invented for anyone except the Gildee class.

            My question with respect to the hardworking-immigrant "debate" that I've not seen addressed is: what are the lifespan and old age prospect of these noble volunteers for the jobs Americans don't "want"? Somehow I suspect the answer is "not good."

            We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy....--ML King, "Beyond Vietnam"

            by Gooserock on Wed Dec 07, 2005 at 10:28:20 AM PST

            [ Parent ]

            •  specially short life for some (none)
              Photographic developers used mercury fumes in development, they could not have lived long. Painters used a color called flack white made from lead and a certain shade of green used arsenic. Poisoning was so common amoung painters that there was a disease called painters chorea. Coal miners got lung disease. And children worked in tunnels too low for men to stand up in. The children who swept chimney didn't live very long either.

              Laws against cruelty to animals were passed BEFORE laws against cruelty to children. In fact at least once a child abuse case was brought under the no cruelty to animals laws.

              SOCIAL SECURITY: Invented by Democrats yesterday, Protected by Democrats today

              by mollyd on Wed Dec 07, 2005 at 10:48:27 AM PST

              [ Parent ]

      •  Giv'm a homework assignment. (4.00)
        1. Have them look up renting a nice 1-bedroom apartment in a not bad place in town.
        2. Introduce them to the concept of "first and last month plus one month security."
        3. Figure out deposit, and monthly payments on phones, electric, gas, and cable.
        4. Come up with a monthly figure to live alone.
        5. Introduce concept of $5.50 minimum wage.
        6. Figuring $2,200 a month to live, show cross-teaching mathematical concept of short division, and educe fact of working 400 hours a month.
        7. Teach students how to cancel gas and phones (keep the cable).

        Do you have a child? Will you send her to the war?... anon

        by andreww on Wed Dec 07, 2005 at 09:26:48 AM PST

        [ Parent ]

    •  We'll have a servant's class again? (4.00)
      More like feudalism.  The guilded age is exactly where we're headed.  Back to the robber barons passing out shiny new dimes to the children of the serfs.

      Bring back the middle ages! Add theocracy to the mix and we have the inquisition.

      Sorry, this one kind of ran away with me.

      Everything is funny as long as it is happening to somebody else. --Will Rogers

      by groggy on Wed Dec 07, 2005 at 08:56:55 AM PST

      [ Parent ]

    •  And, I would suggest... (none)
      ..that if they can't find home-grown people to work for lousy wages and no benefits, they'll import them from Mexico or some even more remote locale.
  •  Don't just look at the stats. (4.00)
    Look at the ongoing human suffering.  There are 750,000 Americans who have been displaced from their homes, and searching for a permanent residence for them and their children, who must say goodbye to their new schoolfriends every months.

    We have over 2,100 American families who have lost a love one.  These people -- and other Americans -- are suffering.

    I say all this as an economist.  We must always remember that public policy is about humans and not just economic theory.

    The quest for freedom, dignity, and the rights of man will never end. - Justice Brennan

    by jim bow on Wed Dec 07, 2005 at 07:49:15 AM PST

  •  Why the title of this diary. . . (none)
    stinks could be more accurate.

    This diary makes a number of good points but the overriding one, that the economy stinks, is not clearly supported by the data, even the data quoted in the diary.  [PS: I don't really think the title stinks, I just couldn't resist the play on words.]

    I don't want to get pushed into a position of defending the Bush Administration's economic policies, but we also need to watch out for making economic claims (or any claims) that won't be believed by the general public.  Even if we have a point to make, we need to make it in a way calculated to positively influence the debate -- not have ourselves written off as the fringe.  There is unfortunately a surplus of "the sky is falling" economic speculation here at dKos (witness Jerome's mea culpa diary of a month or so ago).

    From listening to the news, I believe the consensus of economists is that the economy is, in fact, on the rebound.  Earlier in the Bush Administration the economy was in the tank.  I wonder to what extent the negative indicators cited in the diary accrued during that period.  In what direction are the indicators moving over the last year or so?

    In the meantime, job growth has been running a little ahead of expectations and job loss after Katrina was (apparently) surprisingly low.  This is true despite the massive problems in the sectors that Bonddad cites.

    One thing that Bonddad doesn't say, but should, is that the right's claim that the media doesn't report good economic results is silly.  It's the bad economic news, as explicated in this diary, that the media doesn't report (well, they do report on the auto and airline sector problems, but not as a sign of a bad economy).

    I think a better title for this diary would have been "Underlying Weakness -- Why the Economy Isn't As Good As The Media Claims."

    Is America finally suffering from Idiot Fatigue?

    by LarryInNYC on Wed Dec 07, 2005 at 08:00:10 AM PST

    •  Depends on your vantage point (4.00)
      It STINKS if you are:

      -Someone whose job has been eliminated in a corporate downsizing
      -Someone who works two jobs but doesn't have health benefits and other "perks" many take for granted
      -Someone who lost most of their savings in the tech bubble because they listened to Wall Street shills
      -Someone who is maxed out on credit card debt to try to maintain their standard of living.

      I could go on, but my point is: "Stinks is in the eye of the beholder".  

      •  That's ALWAYS true. (none)
        The issues you point out are true in all economies even the whiz-bang Clinton economy (remember the old joke -- "Sure there are lots of jobs, I've got three of them!".

        There are always individuals suffering.  If the numbers of individuals suffering is going up (as it was at least during the first four years of the Bush Administration) then the economy is bad.  If it's going down, the economy is not so bad.

        Is America finally suffering from Idiot Fatigue?

        by LarryInNYC on Wed Dec 07, 2005 at 08:32:35 AM PST

        [ Parent ]

        •  Yes, good point (4.00)
          Don't you agree, though, that the number "suffering" is going up?  When I talk to many of my friends, family members, and acquaintances, I hear real pain in their voices.  My upper class friends are doing fine but my middle or lower class family and friends are hurting:  Thousands of dollars in credit card bills, home heating bills through the roof, local taxes going up, no idea of how they are going to send the kids to college.  GDP and other economic statistics give a picture of overall wealth:  The economic "good news" is not being shared by the average American.  All that's "trickling down" to them is debt (national and personal!!).      
          •  I have no idea. (none)
            Don't you agree, though, that the number "suffering" is going up?

            I don't know the answer to that.  I was, frankly, surprised at the relatively low decrease in the indicators cited by Bonddad and, giving the genuinely lousy jobs picture during the earlier years of the Bush Administration, I think it's possible that the indicators over the last year or so may be moving up again.

            For what it's worth (which is nothing when looking at the nationwide figure) I don't see increasing misery at present here in New York -- but we also hit a lower low than the rest of the country after 9/11.

            Once again, that doesn't negate the fact that individuals are suffering or that the economy may not be as good as we want it to be.

            Is America finally suffering from Idiot Fatigue?

            by LarryInNYC on Wed Dec 07, 2005 at 08:57:32 AM PST

            [ Parent ]

            •  But ... (none)
              Note the import of the housing/real estate market. Analysts are speaking nearly in unison in projecting a downturn. Construction had been one of the areas of job growth. The blowback from a slide here could have a truly chilling ripple effect.

              Your phrase, Larry: "From listening to the news ..."

              If we'd paid attention only to broadcast news, we'd know (until recently) that we've turned the corner in Iraq, terror was on the run, and Dubya was the bestest prez'nit ever. If your point was that the public echo chamber is making light of forward-looking potential pitfalls, and projecting a rosy future, I'd suggest that the talking heads have been mouthing those words previously during the Chimperor's reign. It's just not clear (2me) whether your suggestion is one of personal belief, or a warning that the genpop is getting a quite rosy message.

              I'm not going to begin to suggest that I believe the US economy is on a one-way ride to a neofeudal age. Hell, my retirement's invested, and the horizon's not as long as I need for the kind of nongrowth that the BushEconomy has gifted us all with. I'd like to see a return to normalcy in the equity markets, stable job growth, all that. What I do see, though, is:

              • failed stewardship by the folk in DC that has inhibited economic growth thru drunken sailor fiscal policy,
              • tax policy that ignores Main Street spending, the pinch of rising energy prices,
              • a super-heated real estate market, continued irreversable job loss in manufacturing,
              • disturbing job loss in many service sectors, and
              • a cancerous Bentonville growth plan that finances bottom rung workers on the back of taxpayers.


     ... somebody really ought to register this domain name ...

              by wystler on Wed Dec 07, 2005 at 10:28:04 AM PST

              [ Parent ]

        •  Poverty IS on the rise... (4.00)
          So, by your definition things are bad.

          And, actually, in this rich country don't you think we should be working on lessening poverty all the time so that almost 40 million people, and that's a LOT of people, are not living in poverty? A better measurement of the "economy is not so bad" is whether poverty rates are falling.

          •  As I said in my post (none)
            it's not clear to me from the diary that poverty rates are currently on the rise.  It's possible that the poverty rate rose more than the current figure during the earlier years of the Bush Administration and has started declining (I don't know if that's the case, there's no figure cited for the past year).

            Bonddad's figures cover the period 2000 to 2004 -- that is, from the last bubble through what everyone agrees was a really bad economy.  It's a fallacy to apply those numbers to the current economy, which may not be so bad.

            Is America finally suffering from Idiot Fatigue?

            by LarryInNYC on Wed Dec 07, 2005 at 09:11:31 AM PST

            [ Parent ]

            •  Well, the latest figures (none)
              show an increase in poverty. Why assume it is NOT continuing in that direction? The policies that caused the rise are continuing and they may impact it more than the economic indicators, no?
              •  Because. . . (none)
                those figures cover a period in which there was a much reported net loss of jobs in this country.  A period of net job loss coupled with increased poverty makes sense.  It does not make sense to assume that the increase in poverty will necessarily continue when the jobs situation changes, which it has.

                We simply don't know from this diary about the change in poverty statistics in the last year.  It is a fallacy to argue from the older data (which does indicate a bad economy) about the state of the current economy.

                Is America finally suffering from Idiot Fatigue?

                by LarryInNYC on Wed Dec 07, 2005 at 09:26:39 AM PST

                [ Parent ]

                •  Poverty != Unemployment (4.00)
                  Also, unemployment != number of people not working.

                  Wal*Mart is the nation's biggest employer.  Ask the average Wall*Mart employee how far above the poverty line they are, even when employed full time.  Remember 32 hours / week is "full time" for Wal*Mart.

                  Second, the unemployment number has little to do with the number of people looking for jobs.  After 16 weeks you are no longer counted as unemployed even if you're still looking for a job!

                  So you can definitely have a case where unemployment is "low" or declining while the number of people in poverty is increasing.

                  "Strength and wisdom are not opposing values" - Bill Clinton.

                  by RAST on Wed Dec 07, 2005 at 09:47:55 AM PST

                  [ Parent ]

                •  for sufficient growth (none)
                  Job growth/loss figure needs to be sufficiently large enough to absorb a net gain in new workers.

         ... somebody really ought to register this domain name ...

                  by wystler on Wed Dec 07, 2005 at 10:32:30 AM PST

                  [ Parent ]

    •  Disagree (4.00)
      This economy really stinks.

      It might smell rosy to some, but that is because the perfume of cheap money and easy debt is masking something really rotten that will return and bite all of us, no matter what income level.

      I think that plain-speaking is required here.

      "When you starve the beast, you starve the people. And the bathtub was a reference to New Orleans." -- bink

      by bink on Wed Dec 07, 2005 at 08:15:25 AM PST

      [ Parent ]

    •  I don't think the sky is falling, but there are (4.00)
      some serious dark clouds hanging over people right now.

      If you look at the DOW and see numbers approaching 11,000, increased jobs, better consumer confidence, etc, you might think that things are going great.  But a lot of Americans are walking a tight rope act right now, one that they could fall from any day now.

      I have a friend who works for a major investment company and to talk to him you'd think things are fine.  He's making money, his clients are making money, but he's going through this all with a self selecting sample.  He doesn't talk to people who are having a hard time right now, because they don't have money to invest.  In fact, they probably don't own any stock at all.  It isn't because they don't have the knowledge to do so, it's because they can either make the car payment or invest, make the house payment or invest, pay for education or invest, put food on the table or invest.  You get the idea.

      There are a lot of people out there right now who are surviving because Visa, Mastercard, Amex, and Discover are allowing them to.  If they have cash it's because they were able to get out from under their 1980 mortgage and refinance.

      Average Americans savings are $0.

      To Bush and his buddies the outlook is fine because they are part of the class that has the luxury of being able to invest.  Everytime a company closes a plant and improves the bottom line, Bush get a dividend check and 30,000 factory workers get a McDonalds uniform or a Walmart apron.  Where do people think all those service and hospitality job numbers come from?

      Many, many families in this country didn't work for generations to educate their children and improve their conditions so that one of the most corrupt governments in US history could roll through and slap them in the face by destroying the budget, giving away our tax money through no-bid wasteful contracts, and changing the laws so that the richest among us (including corporations) pay nothing, NOTHING, into the tax system.

      For anybody living in realityville, the economy does stink - big time.

      •  Debt and No Savings (4.00)
        are huge issues waiting to hit hard on the US economy.

        Household debt as a percentage of GNP increased from a little over 70% in 2000 to over 90% in the second  quarter of 2005.

        Economic Savings -- gross income minus consumption -- has been negative for the last 7 months, and very low for the preceding few years.  It has been dropping for the last 20 or so years.

        But other forms of putting money away are horribly low.  The best figure for pension contributions in the last 4 years was froom IRAs, which comprised at most 2% of GDP.  

        "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

        by bonddad on Wed Dec 07, 2005 at 08:39:31 AM PST

        [ Parent ]

        •  Conflicting signals... (none)
          This being the Christmas season, retail sales is the indicator of choice right now.  But every dollar spent to buy more electronic gizmos is a dollar that Americans don't save, and savings is another positive indicator.  So which is it, guys, ya want we should spend, or ya want we should save?  Or do ya want us to make more money so that we can do both?
          •  Given the cold choice between the two (none)
            savings is always going to win out over buying more useless crap designed for planned obsolesence.

            Normally in a healthy economy a persons budget would be nicely sliced into saving, investments, debts/bills, and consumer spending.  But right now that whole model has been thrown out the window.  

            Most people in this country aren't spending their money, their spending their banks or their credit card company's.  Thats fine for the short term but the American people can't be expected to keep doing this.  Where I work right now, we get so many credit card rejections and people frantically calling to cancel because of overdrafts that it isn't even funny.  And we are talking SMALL charges that are bouncing like superballs.

            This cannot keep going on.

            •  agree we need to save more (none)
              But I'm also worried about '70s-style inflation.  Maybe even Argentina-style inflation.  Driven by energy prices, and possibly a shift from the petro-dollar to the petro-euro.

              If inflation is high, you might be better off spending your money, while it's worth something.  Though not on useless crap, of course.

              Right now gas prices have gone down a bit, but I suspect it's due to the withdrawals from our Strategic Petroleum Reserve, and Europe's. These are not only one-time deals, they are supposed to be paid back.  IOW, just another way we're living off credit.  

              I think we're being set up.  They want us to spend money during the all-important holiday season.  After Christmas, they're going to lower the boom.  No more SPR withdrawals. Higher credit card rates and minimum payments.  Rising interest rates pushing up the adjustable rate mortgages of those who can least afford it.  Rising heating and electricity costs.  The spit is going to hit the fan, but they're shielding us from it, as much as they can, until after the holidays.

              "Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist." - Kenneth Boulding

              by randym77 on Wed Dec 07, 2005 at 03:25:06 PM PST

              [ Parent ]

          •  Save (none)
            My gifts this year will be all made (I'm an artist) by me.  I'm saving.  I'm encouraging my family and friends to save.  If they have to buy - buy only locally.  ONLY locally.  Or give to a charity.  Like, by a tree to plant in my name or something.  But first choice is to SAVE.

            "Im not afraid of storms, for I'm learning to sail my ship." - Louisa May Alcott

            by smugbug on Wed Dec 07, 2005 at 10:37:33 AM PST

            [ Parent ]

      •  Just read this post and must say (none)
        you put it very well. I agree 1000% about the wealthy being so out of touch and the slap in the face! Amen. Amen. I sure hope we can do something about it. I just hate to think of Bush being able to make a comeback instead of declining more. Hopefully if Rove gets indicted it will add more fuel to the fire and bring more corruption to light.
    •  "Consensus of economists...." Yeah, so? (none)
      That's what this diary was about, saying that the economists' view of the econmy doesn't reflect true reality. The effects of the economy on non-wealthy people are not exactly glowingly good!

      "Depends on your vantage point" got it right, LarryinNYC. What is your vantage point? You think and believe that the economists are correct but sometimes societal impacts are not captured by the numbers. This is seen in current attitudes relecting unhappiness with the economy. For people whose real wages have not increased it is not a pleasant time, especially when food, gas, rents, etc. have gone up.

    •  There are two segments to determine... (none)
      ...economic health amoungst the common folk.

      The first is unemployment.  This is rather low.  This is the easiest number for most people to look at, so, judging just from this, the economy is in good shape.

      The second is average income, number of people in poverty, average standard of living, etc.  Usually, when unemployment is low, these numbers are also good.  For some reason, they are not.  There is a disconnect.

      This may be due to foreign competition from cheaper countries (China, India, etc.).  But what's weird about this is that people in the US aren't losing thier jobs; it's just that thier wages aren't increasing enough to keep up with inflation (or are actually decreasing).

      Another thing to keep in mind is that, under Clinton, the economy was artificially great because of the dot com thing.  Wages were artificially high, unemployment was artificially low.  That alone, plus the after effects of 9/11, may explain a lot of this drop (instead of foreign competition).

      However, none of this changes the fact that the average American is worse off today, standard of living wise, debt wise, income wise, than when Bush took office five years ago.

    •  Measuring stinkiness (none)
      The diary proposes median income as a measure of stinkiness.  I think that's a good yardstick.

      Another approach would be to compare this cycle to others.  By that measure, this is a woefully weak recovery, generating far fewer jobs at this point in the cycle than previous recoveries.  With 150,000 jobs needed just to keep up with population growth, the US economy's "growth" is tepid.

      The fact that things are better "than expected" on certain measures is a function of how successfully the White House has lowered expectations.

    •  I see your point (4.00)
      but on this:

      From listening to the news, I believe the consensus of economists is that the economy is, in fact, on the rebound.

      They've been saying that for years now.

      And for certain segments of the country, they're probably right. The problem is that they're looking at those couple of segments, seeing things getting better for them, and not asking the question, "how is everybody else doing?".

      Increasingly, IMO, we have multiple "economies" that are becoming utterly disconnected from each other. The one for people who have significant money to invest and can buy luxury automobiles is the one that economists tend to call "the economy". The others get ignored because it's assumed that if "the economy" is doing better, it will eventually filter down to the working & middle classes. That assumption is frankly looking less and less valid.

      I'm not even blaming that all on Bush, BTW. The 90's, with the "booming economy", were a time of horrible hardship for many of us at the bottom -- yeah, wages went up slightly, but not enough to even begin to handle the increases we saw in rent. Most of the people I know struggled horribly through the 90's "boom". Their realities were nowhere reflected in the economic news. But if "economics" is not at least partially the study of distribution of economic well-being, then what the hell is the point?

    •  Results matter (none)
      The snapshot numbers that are closely followed by the media are either strong or unconvincingly mediocre.  I believe all of that is by design, so I go to the tape.

      If tax cuts create jobs, then we should look at job growth to see if that is true.  Last year, net job growth was 2.1 million (not great).  This year, it is 1.7 million so far (we need 400,000 in December just to match).  In the three years before 2004 the numbers were negative, and this followed 8 straight years of 2.5 million (avg) or more added per year.

      The snapshots are meant to throw us all off the trail.  The trend in job growth is where you find the smoking gun.

      •  Using the job numbers (none)
        what you come up with is eight great years, followed by three sucky years, and then two ok years.

        The jobs numbers aren't the be-all and end-all of economic figures, but I think that, on the whole, that may not be a bad description of the economy.

        Of course, there are hidden factors in the current economy (as there were, by the way, in Clinton's economy).  Those factors are interesting and worrying -- but no one is going to pay attention to people bringing them up if those people also try to claim that the 2005 economy is the same as the 2002 economy.

        Is America finally suffering from Idiot Fatigue?

        by LarryInNYC on Wed Dec 07, 2005 at 09:38:10 AM PST

        [ Parent ]

        •  The jobs numbers are falsified -- as are inflation (none)
          Have you ever heard of the "birth-death of businesses"? It's an assumed, fictitious number that the BLS comes up with every month and adds to the total jobs number. Many months would show a contraction in jobs if not for this fictitious addition.

          Do you know what the BLS did regarding the jobs lost to Katrina/Rita? They completely disregarded them for the affected months. If you read the state-by-state details for the months affected, the BLS neglected to report the lost of approximately 500,000 jobs.

          Inflation is understated by about 100%. Every time they don't like the inflation result, they change the way it is calculated. For proof, try living on a fixed income.

          Most of our GDP growth is consumption (debt/equity-extraction) and inflation that has been improperly accounted for.

          The economists you hear extolling the virtues of our economy are shills. Most of them come from the financial sector, and they don't make bundles of money if you don't believe the economy is doing well. Why? Because people who don't believe things are great don't invest.

          •  Do you have source about inflation figures (none)
            being deflated? I'd love to get my hands on them. I can't find anything relating to the subject which is of great interest to me. I know that food prices have been going way up but can't get any figures. I'd love to get this information.

            Re Katrina job losses, I'd wondered what they did with that....and also about the jobs created from the disaster which are temporary jobs.

            Your post was very welcome because when I posted on a previous diary about inflation figures being cooked a couple of people commented that that was ridiculous.

        •  There is one number (4.00)
          that we should really pay attention to.  The manufacturing jobs.  Bush 41 presided over the loss of about 1.3 million.  Clinton presided over growth (not large, about 400,000), while the current Bush has presided over the loss of 2.8 million.  This means we've lost any chance to lead the world in innovative products ever again.  This is why we've lost union power, why we have a massive trade deficit, and why so many people are unhappy.  That manufacturing jobs number, to me, is sitting there like a warm Beretta on the floor.  We will not all be tech service providers, we will not all be Wal-Mart greeters, and we will not all be carpenters.  We need to build things, new things, if this country has a future.
  •  I was watching CNBC for a little while last night (4.00)
    for reasons still unknown and they were talking about the latest annoucement from Verizon.  In case you haven't heard they told all of their middle managers that effective immediately the pension program is frozen and will be allowed to drain out.

    Everyone now has to scramble to set up 401k's or IRA's if they want to retire.  This was expecially interesting because Verizon is actually doing well right now and is in the process of buying MCI and other small telecom groups.

    They see this as a preemptive move that was needed to keep up with the changing times.

    The new corporate motto:

    "Thanks for the profit, benefit cuts anyone?"

  •  Health care: The 'other shoe' dropping (4.00)
    40 million plus, and increasing, without any health insurance coverage.  That's a lot of people who are one serious medical incident away from total ruin.
  •  Real Estate (none)
    I read a Paul Krugman article about his thoughts of what is keeping it all together as well.  Real Estate.  We don't produce anything new - we just buy and sell each others houses.  The real estate value bubble is evident in most big cities and is already showing signs of no new construction in many areas.
  •  An in-depth look at one state - IL (4.00)
    Northern Illinois University - an institution near and dear to the heart of Kos himself - recently released a very in-depth look at how the economy in Illinois has fared over the last 15 years. The conclusion:

    The buying power of the average Illinois  household  is the same as it was in 1989. Or, put another way, it's as if those golden days of the 1990s economic boom never happened.

    Not surprisingly, the big culprit has been the loss of well-paying manufacturing jobs, which have been replaced by lower-paying service sector jobs. Sure, the number of jobs have continued to grow (hurray for the Republicans!) but the ability of those jobs to support a family is non-existent (damn, I knew there was a catch).

    The complete report, and an excellent summary, can be found online at:

    I'd rather my country be respected than feared.

    by GreatMidwest on Wed Dec 07, 2005 at 08:20:44 AM PST

    •  That's good compared to Michigan..... (none)
      Talk about economic woes, Michigan is really hurting.  High unemployment, jobs disappearing, lay-offs continuing, wages down, schools hurting, roads full of chuck holes.  It goes on quite a bit more.....

      "I refuse to fight in war that was started by men who refused to fight in a war." FreewayBlogger

      by dkmich on Wed Dec 07, 2005 at 09:00:42 AM PST

      [ Parent ]

      •  you are right... (none)
        in fact, the report notes that the 12 percent decline in median family income in Illinois since 1990 was exceeded only by the 19 percent decline in Michigan.

        I'd rather my country be respected than feared.

        by GreatMidwest on Wed Dec 07, 2005 at 09:25:51 AM PST

        [ Parent ]

  •  I saw some idiot Repug on CSpan yesterday (4.00)
    talking about how the tax cuts have stimulated the economy as they said they would.  He had charts showing how great the GDP has been since the tax cuts were implemented.  He claimed it was all because of the tax cuts.  He went on to say how the evil democrats want to raise taxes again.  What an ass, they seem to forget that we also drove up the national debt by huge leaps and bounds during the same period.  Wonder if this had anything to do with the GDP.  The Repug party talks about tax cuts but refuses to pay the bills.
    •  Faith-based economy (4.00)
      There is a belief, which is partly reflected in reality, that optimism about the economy begats a genuine improvement. So even if they weren't insane, Republicans would still have a strong motivation to talk up the economy when they are in charge.

      The problem for them is that this only really works if other things are going in the right direction. The deficit, and a typical "starve the beast" lack of willingness to invest in things like infrastructure and education and research, seems to be functioning as a big ball and chain around the ankle of the economy as it tries to move forward.

      The problem for us is that Democrats seem remarkably unwilling to call them on it.

      The problem for everyone is that we have been kept limping along for five years with a modern version of "prosperity is just around the corner" in which Mr./Ms. Average American keeps going deeper and deeper into debt with the promise that things will improve Real Soon Now. In fact, they're already terrific! Maybe not for you, not yet, but if times are good for someone, they're bound to start improving for you Any Day Now. Right? Right?

      On our current trajectory, there is no way we can avoid going broke. Gradually, then suddenly.

  •  I find this statistic very telling (4.00)
    Since January of 2001, only 5 of these areas has shown an increase in the number of jobs - education and health employees (+2,000,000), government (+1,000,000), construction (+550,000), leisure and hospitality (+700,000), professional services (+200,000).

    So the biggest growth area is in health and education, industries that are either heavily subsidized or , in many instances, wholly owned and operated by the government. Next, you have the government category, which is self-explanatory. An increase in Construction jobs would be expected due to the booming housing market and cheap credit, but I actually think those job creation numbers are a bit soft considering the sheer wealth that has been created in that industry over the last five years.

    Leisure and Hospitality jobs show strong growth, but as bondad mentioned, they mostly pay like shit. Only professional services, accounting for all of 200,000 new jobs, could be considered well-paying jobs created mostly through private sector growth.

    To me, a non-economist, these job creation numbers look suspiciously like the result of public sector borrowing and Keynesian-style stimulus coupled with a single industy (Construction/Housing) experiencing it's go-go boom years due to favorable monetary policies.
    I don't know how anyone can see falling real wages and increaingly depleted savings and not be concerned that our economic "recovery" is mostly smoke-and-mirrors.

    •  I read an article (4.00)
      that said many US banks have something like 80% of their loans tied up in real estate.  That should tell people everythign they need to know.

      Housing bubble anyone?

      •  What happens when things go downhill (none)
        What happens to all the people who have mortgages with these banks if they (the banks) go under?  Who takes on the debt or do the auditors call in the mortgage and repossess the house?
        •  Consolidation (none)
          When banks go under, or are showing signs of going under, they sell the mortgage to a larger fish.  The larger fish will change your terms, but they don't want to own real estate.  They just want your interest payments.  You'll notice little difference.

          But the mortgage bills may start coming from Wal-Mart.  I hear they want to get into financial services.

      •  80% of their loans tied up in real estate? (none)
        I don't think so, the author was blowing smoke up your butt.

        Banks do not carry mortgages.

        Banks sell all conforming mortgages to the secondary market. (Freddie Mac, Fannie Mae, etc.)

        The bank loans mony for a mortgage, sells the mortgage, gets its money back, loans the money for another mortgage, etc, etc.

        Banks do not carry loans, they service loans.

        •  Its not that they're carrying the loan (none)
          they could very well be dumping it on other people.  The point is that a very large amount of the loan business coming into the doors of banks is housing related.

          People are doing everything they can to get money out of their houses to make up for the shortfalls elsewhere.  Reverse mortgages are becoming increasingly popular options for older people to get cash and home equity loans have skyrocketed in recent years.

          With the housing bubble people have also been doing a lot of business in flipping properties.  Housing for a lot of people has become akin to trading stocks.  The Chicago Mercantile Exchange is even starting futures trading on housing prices.

          If the housing bubble bursts, a lot of people are going to be left holding properties that they can't afford to pay for.  It is also allowing people to take out huge equity loans that they may not be able to repay should the economy tank.

        •  Wasn't Freddie in trouble recently (none)
          for creative accounting? I can't remember if Fannie was involved too or not, but both are more or less backed by the government anyway.

          Jumping on the bandwagon: (-3.63, -3.03) - Does that make me part of the right wing here?

          by someone else on Wed Dec 07, 2005 at 11:21:32 AM PST

          [ Parent ]

  •  Update on Ford job cuts (4.00)
    Ford just announced they would lay off <strike>7500</strike> 30,000 workers and close <strike>8</strike> 10 plants.


    This really can't be good.

    (-7.38,-6.87) On Bush's Legacy: If you try to polish a turd, you're gonna end up smearing it all over.

    by jrm78 on Wed Dec 07, 2005 at 08:28:40 AM PST

    •  asdf (none)
      Strike tags not working?

      (-7.38,-6.87) On Bush's Legacy: If you try to polish a turd, you're gonna end up smearing it all over.

      by jrm78 on Wed Dec 07, 2005 at 08:29:22 AM PST

      [ Parent ]

      •  Try [s] and [/s] instead (none)
        inside the angle brackets, of course.
        •  thanks (none)
          I found out the hard way that different websites use different tags.

          (-7.38,-6.87) On Bush's Legacy: If you try to polish a turd, you're gonna end up smearing it all over.

          by jrm78 on Wed Dec 07, 2005 at 08:53:46 AM PST

          [ Parent ]

          •  Ford Cuts (none)
            From the Detroit News

            The new plan, which will guide the company through 2011, calls for 25,000 to 30,000 blue collar jobs to be eliminated in North America. Ford had 87,000 UAW-represented workers in North America at the end of 2004. It has about 11,600 union workers in Canada.
            Ford will make the case that its hourly work force won't be alone in accepting sacrifices. The automaker already has announced plans to cut about 4,000 salaried jobs in the first quarter of 2006 on top of 2,750 white-collar cuts made this year.

            So 30% Reduction in Blue Collar Jobs, and roughly 20+% in White Collar.

  •  Crime rate rising? (4.00)
    There seems to be a correlation between economic conditions and the crime rate too. Our local media is reporting the murder rate has risen for the third year in a row in St. Louis and it wouldn't surprise me to find similar trends in other cities. The hardest hit areas are the poor and black communities, which tend to be hit hardest when the economy is not doing well.

    But this is all too abstract for the average Joe to take in. I think it's too much to ask plain folk to think about cause and effect and wonkish underlying economic statistics. The national debate will turn when people who have accrued a certain measure of wealth and comfort lose it. Citing all the statistics in the world won't be as persuasive as that.

    •  Hey a follow STL resident! (none)
      My favorite story this month is from the theives in Baltimore that are now cutting down aluminum lightpoles and selling them for scrap.

      Apparently they have even gone out in the middle of the day, put out safety cones, and sawed down the 30ft poles like it was nothing.

      Ah innovation, hard times bring out the creativity in us all.

    •  Diary pimp coming through (none)
      I wrote a diary about the WaPo editorial on crime, the problem in boston with crime, and the dems opportunity to make this a B&B (bread and butter) issue the way Rethugs did for years. check it out at Another B&B Issue for Dems
  •  long time... (4.00)
    This has been going on for over 25 years.  Some reporters won a pulutzer prize for a book titled:What went wrong with America.  This book chronlocaled the flight of capital to second world countries begining in the 70's.  The working poor are the largest growing segement of our economy and have been for a long time.  That is people who work full time and are still below the poverty line.

    it is our cares which organize the human mind....

    by wildwisefree on Wed Dec 07, 2005 at 08:45:41 AM PST

  •  Housing Slowdown May Claim 800,000 Jobs (none)
    LOS ANGELES - A sustained decline will hit the U.S. housing market next year, costing the nation as many as 800,000 jobs, according to a new economic report released Wednesday.

    The slowdown is likely to last several years, with as many as 500,000 construction jobs and 300,000 financial sector positions lost, the quarterly Anderson Forecast predicted.

    So what does Bush talk about....

    WASHINGTON - Trying to build support for
    Iraq war strategy, President Bush acknowledged Wednesday that reconstruction has proceeded with "fits and starts" but spreading economic progress is lifting people's hopes for a democratic future.

    The smoke and mirrors spin continues....

  •  Sone good economics blogs (none)
    For folks who are interested in current events in economics from a left leaning or at least politically neutral perspective, here's a few blogs to check out:

    Angry Bear  (my favorite)
    The Big Picture
    Economist's View


  •  Salaries are only part of the problem... (4.00)
    ..for the working class, as we all know.  It's also about deteriorating pensions, higher costs for health care and insurance, high housing costs, high fuel prices.  Is there an index somewhere that looks at the total salary and benefit package, and how it's trending vs. the cost of the basics, food, shelter, transportation?  I've got to believe that would show in sharp relief the middle-class and low-income squeeze that's going on in this country.
  •  Auto industry (none)
    The auto industry is not as bad as GM's and Ford's numbers look.  As GM and Ford close plants, Hyundai and Toyota and other foreign companies open new ones.  Now, there is some leakage to the home countries of these companies, but for the most part, these companies have decided it is in thier best interests to make as much of the product locally where they are sold, and the market for vehicles in the US (overall) is stable (although sales of highly profitable large trucks and SUVs are down, with sales of cars being up).

    Now, one threat that is upcoming is the possibility of Chinese cars coming to the US.  Malcom Bricklin and his company (Visionary Vehicles) is actively trying to import Chinese made cars (made by Chery) to the US.  It's unclear if he actually can pull this off, however.  Reportedly, due to inefficiencies, it is actually more expensive at this point to build a car in China than the US or Japan or Europe or South Korea.  His plans also have him eventually building cars in the US, too.

  •  Great post (none)
    thanks for the hard-hitting style. BTW, I previously mis-rated a comment of yours, and heard I could retroactivly fix that.  If you know how, I would be happy to fix it (its kind of embarassing - there are like 7 4s tied to the comment and my only 1.  I look like a troll!)
  •  great economy (none)
    the more bush tells people how good the economy the more pissed off they will get at him because they don`t feel it.
    my boss is a die hard rightie and he even admits
    something doesn`t add up.every time i hear how great it is i just remember how much better it was under clinton.the big question is how bad it will be 2nd half of 2006.that could really sink the gop along with iraq!
  •  Poverty is up! Take us for example: (none)
    My husband and I have both recently been laid off from our well-paying, white collar jobs in the pharmaceutical industry.  We have no insurance, and in fact, ironically, have been RUINED by the healthcare industry as my husband for years has been struggling with a serious and expensive illness.  The Pharma industry has been laying off for years - this is the 8th time for us (4 times each) - and will continue to do so.  We have no health insurance as COBRA just illegally dropped us (due to my husband's extremely costly monthly treatment.) We have been wiped out of all of our savings, 401Ks, and stock options as a result of the multiple layoffs and outrageous hospital bills, physician,  and prescription costs.  We are literally down to our last $100.00 and hope we will not lose our condo.  The job market has been very tight here in Chicago.  

    In addition, my downstairs neighbor was just laid off from her 10 year job, and a friend just called 2 weeks ago to say that he was just laid off from his 9 year job.  (Neither in the pharma industry or the industries recently publicized as laying off workers.)  

    This is REALITY.

    Is this what I went to college for?  

  •  What constitutes a service industry job? (none)
    A couple of days ago Faux News was reporting that the economy was great (of course) and the there was a rise in the service industry.

    They said this as they showed footage of people in cubicles...wearing ties...reading reports...on the phone...etc.

    To me the service industry is restaurants...janitors...people who bust their ass at the more non glamorous jobs.

    Am I wrong?

    •  Actually, (none)
      Some people will put what companies like H&R block do in the service industry - its a fine line, given that they are essentially providing a service to a customer and not much else.  Sure, you could put them in the financial sector, but do we really want to show how lop-sided the economy is towards those who already have their money?
      Oh yeah, we do want that .
      •  I take "service sector" to mean... (none)
        ..pretty much anything that isn't manufacturing anything, and isn't government.

        So how would we classify an accountant, or a consultant who is hired by the Sphincter Corporation to set up their Six Sigma program?

    •  there are a few more (none)
      There is a big trend now among a lot of industries to move from producing things into servicing existing products.  My dad used to install fire and security systems but now works for a company that just does emergency calls and maintenance on them.  He is now considered a "service" worker.

      Likewise with manufacturing gone, many design firms are now divorced from the manufacturing category and are being realigned with the service sector.

      I think you will also see a lot of people in this country placed into the service sector for doing things like logistics support and call center operations.

  •  The Economy Breaths OK if we don't unplug it (none)
    The simple problem we have is this - the disapperance of the cutting edge. High wage countries will never keep old jobs - over time technology will get cheaper, other people will get more educated, and economies of scale will demand more production. In short we should be happy that the Chinese are making cars, Indians are manning call centers.

    By the same token, what we should be absolutely outraged about is how the development of the future is crawling to a halt. That is what the US is going to make money doing, and Europe as well. If there isn't enough money poured into this, jobs will flee one way or another and no policy gadget will stop it for long. Not Republican Borrow and Squander, not Hillaroid Defense build ups, not Perotista Protectionism. Nothing.

    "If you want to stay on top, you have to stay ahead." We've stopped doing this, and the consequences are being paid by millions of people across the country.

    •  What can the future possibly offer (none)
      to replace all that my many years on Earth have proven to be enough and can mostly be provided at lower costs by healthy immigrants sharing a home with a dozen others or by foreign factory workers?

      A new drug or other future product may make a few people filthy rich, but it is no substitute for the guts of a $7 trillion economy being rapidly shipped to China and elsewhere.

    •  Maybe there is no cutting edge any more? (none)
      Some perfectly respectable scientists think we have reached The End of Science.  Science and technology are as subject to the laws of diminishing returns as anything else.  The easy and most valuable discoveries are made first.  It becomes more and more difficult and expensive to gain new knowledge, and the benefits gleaned are ever smaller.  Eventually, Rome found it could not keep using its strategy of conquering ever more distant lands, because it became more trouble than  it was worth. We may find the same thing happens with our strategy of technical innovation.  


      "Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist." - Kenneth Boulding

      by randym77 on Wed Dec 07, 2005 at 03:37:33 PM PST

      [ Parent ]

  •  Bonddad for Front Page (none)
    Because this site NEEDS more ECONOMIC blogging!

    Everybody talks about John Edwards' energy, intellect and charisma -- Bill Clinton

    by philgoblue on Wed Dec 07, 2005 at 10:12:31 AM PST

  •  Treading water; sinking slowly ... (none)
    and that's if you are doing WELL.

    Surplus production means surplus workers means no demand for workers that would increase wages. The resulting meager wage gains are routinely more than offset by higher health care costs, premiums and deductables (or worse, loss of insurance), higher tuition for kids' college, loss or instability of employer-funded pensions and, coming to a utility near you, higher home energy costs.  Or you could be employed in an industry, like airlines, where you are faced with no choice but giving money BACK to the company to keep your job or you've otherwise been hit by changes in overtime or expense policies adverse to the worker.  

    So what's this I hear about inflation being "in check"? Are they talking about prices for yachts, corporate skyboxes, Renoirs, or what, exactly?

    Quis custodiet ipsos custodes? (Who will watch the watchers?)

    by The Crusty Bunker on Wed Dec 07, 2005 at 10:20:23 AM PST

  •  War makes work (none)
    Has anyone assessed how the various wars (Iraq, Afghanistan, Terror, drugs) contribute to the recent 'good' economic data? Wartime means boom times in more ways than one.  
  •  I guess to each their own... (none)
    ...but I caught this segment while I was channel flipping last night on the growing trend of the wealthy spending untold amounts of money on parties for their offspring.

    Bat mitzvahs...sweet sixteens...whatever the occasion.

    I understand that it is their money to spend as they choose.

    The part that blew my mind was that the 200G spent on a party for a 13 year old could have, for me, personally:

    bought my house outright
    paid off my student loan
    paid off all credit card debt in my household
    paid off the remaining car debt

    and I am pretty sure I would still have enough left over to buy food for a year.

    I mean...damn.


    •  A principal cancelled prom in Long Island, NY (none)
      this year because he was tired of the increased opulence at prom events.  What started out with someone getting a regular lincoln town car limo has now turned into stretch bentley's, $1,000 dollar champagne, and rented party homes in the Hamptons.

      People were spending hundreds of thousands so that a group or 16 year olds could act like Paris Hilton for a night.  What a waste.

      The only thing that makes me want to vomit more than pseudo-elites are their disrespectful offspring.

    •  Are you talking about that Bat Mitzvah? (none)
      There was a spoiled little princess whose father got 50 Cent, Tom Petty, Stevie Nicks, and a few other big acts to play her bat mitzvah.  I heard that the total price was $10 000 000.  AND that the Defence contractor dad stiffed the wait staff on their premium for working overtime.  As long as Fitty got his million, who cares about the little people?

      $10 000 000.  That would buy a lot of people relief from their struggles - I sure hope that it was a good party.

      "Passing the gun from father to feckless son; We're climbing a landslide where only the good die young." Leaders of the Free World - Elbow

      by Dave Brown on Wed Dec 07, 2005 at 11:44:58 AM PST

      [ Parent ]

  •  another area high tech (none)
    I don't have the numbers from high tech, but I believe the a decrease in the number of new business and failed business has shot up dramatically.  I also think the stats on patents/innovations has dropped down significantly.

    In other words, through offshore outsourcing and of course the idiot scammer VCs funding any of their buddies business plans in the 90's have put a big hole in innovation within the US and that's a jobs generator of the future.

    Then they believe they will replace it with biotech/nanotechnology but other nations have the same idea and are now way ahead.

    The obvious is to create innovation in alternative energy but seemingly that is still nowhere, surpressed also by "Cheney energy policy" and no investment dollars so startups can form.

    by BobOak on Wed Dec 07, 2005 at 11:40:07 AM PST

  •  If they can keep the macro numbers good... (none)
    The Federal Reserve can only influence certain limited things. It can tighten the money creation reins to prevent inflation, but lack of overall inflation cannot in itself prevent people from needing goods and services which they cannot afford.

    Likewise the Fed can avoid catastrophic deflation by making sure enough money is available for lending.

    Actual creation of wealth is in a different category from the above. And in the current world situation, it's hard to see how the U.S. can do better than stagnate. That is why BushCo wants to conquer new territory and open up new captive "markets."

    Successful capitalism requires some sort of expansion... and we have run out of low-hanging fruit to feed such expansion. The dire necessity of importing almost inconceivable quantities of fuel from around the world has made desperados of our leaders.

  •  When education hits the job market (none)
    I work at a software company. We have open head count for developers with skills sets that are at the high end of the spectrum. We've had the open head count since Nov 2004. We tried to ship some development to India but found that the skill sets of the offshore developers weren't quite there. We cut back the number of offshore developers and have 2 dedicated senior developers overseeing their work.

    So our company does not hire junior or entry level developers. We offshore those to India. We get lots of resumes and even have 4 headhunters out there trying to find us candidates. This last year we have hired two senior level developers but have lost 10 who have found jobs elsewhere.

    Why is it so difficult to find developers? The answer is education. You don't have to have a college degree in order to qualify. You do have to spend time learning the various skill sets in order to do the work. I spend about 15 hours a week improving my skill set. I got my CompSci degree in 1990 at the age of 44 from the University of Washington. Since then I have continued to learn the newest and greatest technology. I do this via the internet and buying books and actually writing personal programs that apply the knowledge I get.

    If you want to success in America you need a good education. Once you get the job you need to continue improving your skill set. The lost of jobs in the computer industry is because most people don't spend the time to keep up with the technology. If you are a 'better than most' developer you can find work in America. This also applies to other areas of technology and not just to development.

    Get an education and don't be afraid to go back to school. I did it and have not been unemployed even after the dot-com bomb. I know many people who have been able to stay employed. Some day I may work for an Indian company here is America. I don't know what he future has in store for me and what impact 'globalization' will have on me. I do know the key to success is education.

    •  This has me concerned (none)

      So our company does not hire junior or entry level developers. We offshore those to India. We get lots of resumes and even have 4 headhunters out there trying to find us candidates. This last year we have hired two senior level developers but have lost 10 who have found jobs elsewhere.

      This is a trend in many industries that has me concerned.  

      •  A trend yes but... (none)
        What is the difference between senior developers and the rest? It is based on what you know. A senior developer knows more than one programming language like C# and java. A senior developer knows web page languages like HTML, JSP and ASP. They know javascripting and vbscripting. They know how to set up application servers like Tomcat or JBoss or WebLogic or WebSphere. They know how to use various programming tools like ant, hibernate, maven, junit or the Microsoft counterparts. They know how to install and admin databases like Oracle, MS SQL Server or MySql. They know how to write SQL statements and stored procedures. They know about design patterns and where and when to apply them.

        You want to be a senior level developer then you need to be able to use these skills and more. You don't have to be an expert at all of these but you do need to be able to work with them.

        The only thing that separates senior level developers from all the rest is education. Even though I have a degree in CompSci I rarely have to  use it. I have taught myself the skills so I can compete with other developers. In 1990 I was competing with developers in the Seattle area. Now I compete with developers all over the world. When I stop spending the time to educate myself is when I'll lose my senior status and end up 'passing hamburgers through a window'.

        •  No argument on the Eductaion part (4.00)
          Just the junior level employment part.  In many industries, mine being robotic assembly systems, there is really no other way to train "Senior" personnel other than OJT.  Without the bringing of entry level or junior personnel into the system we lose many of the senior personnel in the future.  The outsourcing of the "Junior" work to other nations, actually develops the senior personnel in the other nations, thus putting us at a competitive disadvantage in the future.


          •  My point is... (none)
            You want to be a senior level programmer there are ways to do it besides learning OTJ. One avenue is to  get involved with open source projects. Another is to volunteer your entry/junior level skills to a non-profit organization. Another approach is to participate in user groups for Oracle, java, .NET, MS SQL Server, etc.

            If you want a job then you need to become competitive in the world market. Unless you're gifted with high intelligence (I'm not) then you need to work at it. If you work hard at it then you will most likely succeed.

            Right now in the high tech industry America is the innovator. I don't worry about the jobs going to India or elsewhere because America needs workers with high skill set. America also needs engineers and nurses. You want a job in the future then work hard now to gain the education. You want to keep that job then work hard to continue your education.

            The thing that will hurt America is when the rest of the world quits taking our jobs and starts taking our innovative edge. That's when I'll be working for an Indian/Romanian/Chinese/Taiwanese company.

            Even though I spend a lot of time working and learning I still have lots of time to pursue other interests. What I don't do is sit in front of a TV at night watching 500 different channels. Instead I sit in front of a computer and learn new skill sets.

            I just don't buy into the entry/junior level jobs being shipped overseas being a bad thing. What is bad is the lack of education and the lack of desire to pursue continuing education. If America doesn't fix the education problem then we will lose our innovative edge. That's when the rest of the world will take away our jobs.

  •  New AP article: Housing Slowdown May Claim 800,000 (none)

    Housing Slowdown May Claim 800,000 Jobs

    Housing Slowdown May Claim 800,000 Jobs

    AP Business Writer

    LOS ANGELES (AP) -- A sustained decline will hit the U.S. housing market next year, costing the nation as many as 800,000 jobs, according to a new economic report released Wednesday.

    The slowdown is likely to last several years, with as many as 500,000 construction jobs and 300,000 financial sector positions lost, the quarterly Anderson Forecast predicted.

    "We expect housing to start slowing the economy this quarter or the next," said Edward Leamer, director of the study done at the University of California, Los Angeles.

    "Some jobs in manufacturing might well disappear as a result of weakness in housing, but this may be offset by jobs brought home or not lost to foreign competition," he wrote.

    The forecast said eight of the last 10 economic recessions were started by housing market slowdowns. Though the coming cooldown will cause a drag on the nation's economy, it will fall short of triggering a recession, the forecast said.

    The report cited several signs that the decline could be under way:

    • New construction of housing in October was down 5.6 percent from the previous month, with new construction of single-family housing accounting for a 3.7 percent dip.

    • New home sales have declined.

    • Applications for home mortgages have trended downward since late September as rates increased.

    • In some regions, homes are remaining unsold longer and the pace of housing construction is outpacing population growth, which could spell a decline in demand.  (snip)  

Hey folks, remember, the economy is booming!!

Reality is just... a point of view - Philip K. Dick; Beautiful thing, the destruction of words. (from Orwell's 1984)

by LionelEHutz on Wed Dec 07, 2005 at 12:03:56 PM PST

  •  Good stuff, Bonddad (none)
    I always like your diaries.  But this is a particularly good example of the journalistic style at its best on the Internet.  It's short, pithy, easy to understand, and accurate.
  • Close


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