Archive for November 5, 2010

We think we get it now…

November 5, 2010 Leave a comment

So, we guess what you are saying, Jamie, is that…

It was Summers…

or, Bernanke…

or, Geithner…

or, Rahm…

or, The Chinese…

or, the banks…

Anybody but the Messiah.

Anybody but the one you actually voted for.

Because, you see, you don’t want to blame yourself.

That you got suckered.

That you bought into your own progressive bullshit…


Zero Hedge: Obama Need To Stimulate 232,400 Jobs A Month To Get Back To Pre-Depression Job Levels By End Of His Second Term

November 5, 2010 Leave a comment

The American social safety net is not prepared to have tens of millions of otherwise able-bodied citizens unemployed and without work for six years.

When Rand Paul and the rest of the Tea Party fiscal deficit chicken-hawks begin to contemplate these numbers, they will be presented with a gut-wrenching choice: End the Washington-Wall Street consensus forever and bring on the Keynesian Apocalypse, or betray their most fundamental principles and quietly line up for handouts from K Street lobbyists.

Our money says these empty suits fold.

From Zero Hedge:

When two months ago we looked at what the implied job creation rate must be for the US to get back to the same level of jobs as December 2007 when the original depression started (now that the recession is over) by the end of Obama’s now extremely improbable second term, we arrived at a number of 229,300 per month. Updating for the data two months later, after today’s NFP data, results in a breakeven growth rate of 232,400 per month. In other words, America now needs to create an additional 3,100 jobs per month compared to two month earlier, to merely revert to the state in employment last seen in December 2007, let alone create additional jobs. Keep in mind that unlike the economists in the government, we actually index the growth rate to adjust for the growth in the projected labor force which grows at 90,000 per month.

The chart below shows the actual and projected monthly change in NFPs (ex. census) to get to a breakeven by November 2016.

How quantitative easing works — or doesn’t (Niall Ferguson on the Collapse of Keynesian Economics)

November 5, 2010 Leave a comment

Vodpod videos no longer available.

As part of this series, we offer this discussion in which Niall Ferguson explains why Keynesian stimulus no longer works. In the clip, Ferguson employs the so-called leakage hypothesis to explain the collapse of national economic policy:

…the US economy is more open than it has ever been. That means that stimulus, both monetary and fiscal is very prone to what is called leakage. We’ve had an enormous of stimulus in the US, it’s the biggest fiscal stimulus in the world, and huge unprecedented monetary stimulus. What’s been stimulated? Not jobs in Michigan. What’s been stimulated has been commodity markets and emerging markets. Because the liquidity just leaks out, and that’s why another round of stimulus would not stimulate in the promised way. It would stimulate the wrong things. And those things, commodity markets and emerging markets, are already overstimulated to the point of being nearly bubbles.

Of course, by Keynesian stimulus Ferguson means a purely national economic policy of domestic price inflation. Keynesian policy as national economic policy collapsed as production and prices became globalized.

As we have argued, there is no longer a US economy, nor is there a British economy, Chinese economy, Russian economy, etc. The actual economy is a globalized production process that straddles the entire world market.

Once this reality is grasped, it becomes obvious that the Federal Reserve’s second round of quantitative easing is not aimed at “stimulating the US economy”, but at stimulating the entire world economy.