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Catching Up

It’s well above freezing in St Paul and what little snow there was has melted away.  The High School Boys’ Hockey Tournament is starting today, so by tradition there should be one last gasp of Winter left.  But we have a change of seasons, and that’s a good time to catch up on a few of the topics that we have covered in Barataria that are always still developing.

Jobs:  The ADP Employment Report came out this morning, showing a very solid gain of 216k jobs in February.  This isn’t the official report, which comes out next week, but the two have been running close lately.  Manufacturing added its usual 10% of the take, 21k jobs.  One more month like this and we will be talking about net job creation during the Obama administration.

The turnaround is stunning because by most accounts job growth is leading general economic growth.  That is unheard of in a postwar recovery after a recession, but as we all know this is a very different economic event.  Part of the issue has to be pent-up demand for employees caused by a lack of hiring during the last decade.  There also appears to be solid restructuring, as the biggest net gains were in small and medium sized companies.

Republican Screwups:  Rush Limbaugh’s attack on Sandra Fluke shows that the bloodletting will only continue for the Republicans.  This is a story that will not end because it has become an emblem of so many problems for the party, inside and out.

Many commentators have noted how the disgusting remarks laid bare that the issue at hand was indeed about contraception, not religious freedom as it was carefully pitched before that.  The spin was totally blown, and that is a problem.  But the reaction, coming as it did after the Komen Foundation flap last month, has been even more galvanizing.

In both cases, the initial stories were quite blunt in nearly all news accounts that women’s reproductive choices were the main issue at hand.  What followed was a social media firestorm that kept on for days.  In both cases, this eruption caused major change – Komen reversed themselves and the controversial VP quit, and Limbaugh’s advertisers are leaving in droves.  There are three lessons being taught:  there are dark forces that really are out to challenge your reproductive rights, you are far from alone in your outrage, and activism gets results.

Take these together and you have two object lessons bound to fire women up like they have not been in a long time.  This will have an affect on the election.

Debt:  Twitter friend @sumnums took the chart showing our crushing debt as just one data point – the ability to service the debt seemed at least as important to him.  So he created this chart from Bureau of Economic Analysis data showing debt service as a share of the economy (by GDP):
There are some striking features.  Note that debt service has not been below 18% of GDP since 1980, once again a year that seems to show a big inflection.  Also note that the spikes on this chart clearly show each recession since 1960, meaning that debt service has likely been the main cause of economic slowdowns – which explains the tremendous attention the Federal Reserve has had in this time.  But what is especially interesting is that despite the large amount of debt currently owed, service costs are at a post-1980 minimum because interest rates are very low.  This is a topic worth digging into more heavily.

Speaking of 1980’s inflection point, Reagan’s famous budget director David Stockman had a thoughtful interview in the Burlington Free Press.  He also talked about private debt as a crushing problem, and declares that significant growth is impossible under these conditions.  More to the point, when it crashes he says “The carnage will be unimaginable.”  One figure he points to is that since 2000 non-residential capital investment has grown by only 0.8% – meaning that we stopped investing in our economy about when this Depression started.

I think we can see how history will describe the era we live in now – a financial bubble from 1980 on which deflated in 2000 into a Depression that all the king’s horses and all the king’s men did their level best to contain but were still unable to entirely prevent.  What this will mean socially and politically for the generation coming of age right now should be interesting.

Greece:  There is a lot of news out of Greece, and yet there is nothing new at all.  It’s been two years of solid crisis at this point and yet … it just will not fully resolve.   Faith in the EU has to be grinding down to nothing by now.

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13 thoughts on “Catching Up

  1. I am one of those women who is really pissed off and ready to take action. You are right that things have changed and the lines are very clear. I can’t believe we are talking about contraception in this day and age. This is totally ridiculous and there will be a huge backlash. Just look at what you wrote about here, there are better things to deal with right now but they don’t care.

    • I am sure you are not alone, too. Consider that about 60% of all voters are women. Tick off north of 80% of them, and the election is just plain over – up and down the ticket.

  2. I am so fed up I can’t even say.
    “dark forces that really are out to challenge your reproductive rights, you are far from alone in your outrage, and activism gets results”
    That is so true and I am ready for anything now.

    • Just image every household in the US with not just a liberal voter, but a liberal activist. That’s what is at stake by really pissing off women. It is a game changers. Then, consider for a moment the generation gap that every mother feels with her daughter – things have changed so rapidly that women under about 30 really don’t know what it was like for their parents. Now, they do.
      The Republicans are about to lose a generation of women forever if they keep this up. One more issue that demonstrates the need and the value of activism and it is all over for them – for a long time to come.
      You are very, very much not alone. And I’m pretty sure you know it, too.

  3. The turnaround in jobs is so big that it is hard to believe but this does seem to confirm it. Just in time for Obama too.
    I think this election is over already.

    • I was a bit slow to accept it, too, but I’m sure it’s real. The BLS might be able to fake unemployment rates, but I doubt ADP can be bought off. The numbers are there every month and growing.
      I agree – this election is over if all this continues. But that’s why I put the little blurb about Greece at the end – there are still things out there to mess it all up before November. Read the interview with Stockman if you want a longer list of potential problems. Yeesh!

  4. We live in…interesting times. I’ll just go back to my fantasy fiction, if it’s all the same to you. 😉

  5. I’m sick of big media politics and all the gotcha crap. The stories on the economy are much more interesting because it does look like its getting better. But that debt load is dragging us down as Stockman said, good article. He was really negative over the long term but I see your point about inflection points. History will judge us badly I think for not seeing this coming but its too late now. I like it better when you talk about what we can do to get out of this because we need new ideas and approaches. Leadership is hard to find.

    • The “gotcha” here is more from small, social media. It’s only important in that it is bound to fire people up like crazy – especially if there is one more event like this.
      The debt is a very big story, since it’s very big debt. Stockman is right that this will limit our ability to grow, which is how we’ve tackled debt at every other spike on that curve – we grew our way out of it. Very low (heck, even negative?) interest rates are clearly helping us manage it, but it still has to end badly at some point.
      I agree, figuring out how we will grow our way out of this is very much the key. We have to restructure and transform our economy one way or the other to make that happen. There are some very nasty things on the horizon for the US Dollar that I may write about on Friday, so this could get much more ugly in the medium term. In the short run, however, we do have job growth ahead of what we’d expect for an economy growing at a rate less than 3.3% annually. That’s something. It may prove to not be sustainable for this very reason, but it will help.

  6. In the 1990s we cut budget deficits. The only downside of this is the debt went into the private sector–businesses and households. Where else would it go. I don’t really subscribe to your story that our depression started in 2000. I think the real problems started in 1973 when oil prices went up and productivity went down. The shock of those things have been reverberating and the responses on both the left and right have been controversial. As you may recall 1973 is when classic cars ended and the traditional post war boom ended, in my view. It is also the year we lost the war in Vietnam and Watergate was up and running.

    One thing that hasn’t been metioned is that there are large cycles in oil prices and that we need low oil prices for the economy to grow. There is a large lag between oil production investment and the impact on price. We have seen oil prices collapse a couple of times in the last 30 years. We are hydrocarbon dependent in the short term. In the long term we want to get away from that. Of course we need to go to something cleaner, but something cheaper. The paradox is that investing in the infrastructure for a green economy takes a lot of time and conventional energy. To me I think Republicans are right: we must increase the US and world production of oil for the next 50 years. We can’t have oil going through the roof. Obama ought to be accountable for keeping oil low because it will be disastrous for the recovery if it does. The ones who will hurt the most are the poor in the developing. They will have less money for food.

  7. (I responded a few days ago, but it appears that my post was eaten – this has been happening a lot lately!)
    My contention is that there was no typical recovery from the official recession of 2001. Despite tremendous stimulus in the form of deficit spending and historically low interest rates the private part of the economy continued to contract and job growth never rebounded. That links it into the recession of 2007 – and once those two merge you have a long-term phenomenon that can only be called a “Depression”. This recovery, too, has characteristics that are fairly unique compared to postwar downturns, also suggesting it was a very different kind of event.
    But history is a continuum, and I do agree that something changed significantly a long time before our current troubles. You could easily date that to the 1973-74 oil price shocks or the 1971 end of the gold standard. There are some inflections in manufacturing as a share of both GDP and jobs around 1968. When is the real inflection point? It depends what you are looking for. Taking the Fisherian view that this is all about debt cycles, you see a real inflection at 1980. I’m starting to take that as significant, but other arguments are of course very reasonable.
    As for oil, I do not entirely disagree with you. However, the cost of most of obtaining most of our domestic oil is pretty high, so significant capital investment assumes high prices if we are to have a decent return. There is nothing stopping some of the projects, like shale, other than the lack of some kind of guarantee from the US government – and I do not necessarily think that is wise. Our reserves of natural gas are much more plentiful, so developing systems based on methane are more likely to come in at a lower price without subsidy or guarantee from what I can see. These have the additional benefit that there are many sustainable ways to produce methane from crops, garbage, etc that could plug into such a system over the long haul. So I would say that if the Feds are going to invest in something new, methane systems have a much longer term promise.
    However, the point remains that we do not have an actual energy policy with long-term goals at all – a position unique among developed nations. It’s rather embarrassing. If developing such a policy means a compromise that includes some more support for deepwater drilling and so on, I’m game.

  8. Pingback: Gaps & Gaffs | Barataria – The work of Erik Hare

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