Expect the unexpected
Posted by aogSaturday, 17 April 2010 at 20:06
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Once again, the jobless claims increase is unexpected. I remember the later years of the previous Adminstration, when Old Media would report gloom and recession even while the economic indicators looked good. Since the current adminstration, however, Old Media has been repeatedly stunned by bad news. It almost makes you think that they are not cynical ideologues but actually so weak minded that their opinions and views are actually altered by the change in party of the White House.
Tuesday, 20 April 2010 at 08:09|
A Goy and his Blog’s infoporn is fun, BUT, most of the charts miss the forest for the trees. If we don’t exclude the effects of the housing bubble fraud, then it’s simply garbage in, garbage out.
For instance, the charts on Personal Disposable Income Per Capita and Federal Revenues Rising need to be adjusted for the record levels of private debt that was accumulated over the given years. If I take a $10,000 advance from my credit cards every year, OF COURSE my disposable income will seem to rise - but in an unsustainable and negative way. Eventually my disposable income will not only fall to the pre-credit-advance level, but indeed it will fall below that level, as I must repay those loans - with interest.
Borrowing from the future and pulling forward demand can make good sense, but only if the monies are used for capital spending. Which they weren’t.
Similarly, all of this “free” cash flooding the economy leads to boom times, plenty of activity, the velocity of money is high - so the gov’t reaps a windfall of income tax and corporate profit monies. But again, it’s inherently unsustainable.
It would be as if inflation were running at 15% annually, and Goy had presented us with charts in nominal dollars: “Hey look, personal disposable income is up 50% over the past five years!!” Brilliant, Holmes, ‘cept the purchasing power of that income is down 50% over those five years too, so in real terms personal disposable income would be down by 25%. That’s the kind of distortion we get if we don’t adjust for the FIRE bubble.
As far as the unemployment and growth of deficit charts: Those would look substantially the same regardless of whether McCain or Obama had won in ‘08, or whether there was a GOP or Dem majority in Congress. Once the nation hit the limit of its aggregate credit, there WAS going to be an economic downturn, unemployment WAS going to rise, and whoever was in power WOULD spend money on relief efforts. That’s a given.
The one difference that I would grant is that a GOP-controlled Congress and White House probably would be running a deficit of only $1 trillion, rather than Obama’s $2 trillion. A trillion dollar difference is still real money, even today.