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Some Good News For Once

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Since the Great Recession began three years ago, Americans have been receiving a daily dose of the most miserable news imaginable.  Our prevalent nightmare concerns the possibility that gasoline prices could find their way up to $10 per gallon as Muammar Gawdawful takes Libya into a full-scale civil war.

Some people tried to find a thread of hope in the latest non-farm payrolls report from the Bureau of Labor Statistics.  The report was spun in several opposing directions by various commentators.  The single statement from the BLS report which seemed most important to me was the remark in the first sentence that    “. . .  the unemployment rate was little changed at 8.9 percent . . .”.  Nevertheless, David Leonhardt of The New York Times noted his suspicion that “the government is understating actual job growth” while providing his own upbeat read of the report.  On the other hand, at the Zero Hedge website, Tyler Durden made this observation:

Wonder why the unemployment rate is at an artificially low 8.9%?  Three simple words:  Labor Force Participation.  At 64.2%, it was unchanged from last month, and continues to be at a 25 year low.  Should the LFP return to its 25 trendline average of 66.1%, the unemployment rate would be 11.6%.

Indeed, the ugly truth is that as you spend more time pondering the current unemployment situation, you find an increasingly dismal picture.  Economist Mark Thoma came up with a “back of the envelope calculation” of the benchmarks he foresees as the unemployment situation abates:

7% unemployment in July of 2012

6% unemployment in March of 2013

5% unemployment in December of 2013

4% unemployment in September of 2014

If anything, relative to the last two recoveries, this forecast is optimistic.  Even so, it will still take two years to get to 6% unemployment (and if the natural rate is closer to 5.5% at that time, as I expect it will be, it will take another five months to fully close the gap). Things may be looking up, but we have a long way to go and it’s too soon to turn our backs on the unemployed.

Only three more years until we return to pre-crisis levels!  Whoopie!

For those in search of genuinely good news, I went on a quest to come up with some for this piece.  Here’s what I found:

For the truly desperate, the Salon website has introduced a new weekly feature entitled, “The Week In Uppers”.  It is a collection of stories, often including video clips, which will (hopefully) make you smile.  The items are heavy on good deeds – sometimes by celebrities.

I was quite surprised by this next “good news” item:  A report by Rex Nutting of MarketWatch, revealing this welcome fact:

.   .   .  the United States remains the biggest manufacturing economy in the world, producing about 20% of the value of global output in 2010  . . .  (Although fast-growing China will pass the United States soon enough.)

Even though we may soon drop to second place, at least our unemployment rate should be in decline by that point.  Here are some more encouraging factoids from Rex Nutting’s essay:

In 2010, U.S. factories shipped $5.03 trillion worth of goods out the door, up 9% from 2009’s horribly depressed output, according to the Census Bureau.

*   *   *

In 2010 alone, productivity in the manufacturing sector surged 6.7%. Fortunately for workers, it looks as if companies have squeezed as much extra output out of labor as they can right now.  For the first time since 1997, factories actually added jobs during the calendar year in 2010, as they hired 112,000 additional workers.

There will be further job gains as factories ramp up their production to meet rising demand, economists say.

According to the Institute for Supply Management’s monthly survey of corporate purchasing managers, business is booming.  The ISM index rose for a seventh straight month in February to 61.4%, matching the highest reading since 1983.

*   *   *

What is the ISM telling us?  “The manufacturing sector is on fire,” says Stephen Stanley, chief economist for Pierpont Securities.  The new orders index rose to 68%, the highest since 2004, and the employment index rose to 64.5%, the highest since 1973.

Factories are hiring because orders are stacking up faster than they can produce goods.

What’s behind the boom?  In part, it’s domestic demand for capital goods and consumer goods.  Businesses are finally beginning to believe in the recovery, so they’re starting to expand, which means new equipment must be purchased.

Be sure to read the full report if you want to re-ignite those long, lost feelings of optimism.

It’s nice to know that if you look hard enough you can still find some good news (at least for now).


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Jackass Of The Year Award

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January 1, 2009

At year’s end, we see retrospectives of the most important events, numerous top ten lists and recognitions of achievement in one area or another.  2008 brought a record level of cynicism to the American people because of the economic catastrophe, the Bernie Madoff scandal and the cartoon-like escapades from the Presidential campaign.  Accordingly, it seems only appropriate to pay homage to the biggest Jackass of the Year.  Since I advertise this website as a “Blago-free zone”, the current Governor of Illinois is automatically disqualified from the competition.  So, let’s take a look at some of the runners-up and finally, the winner of the Jackass of the Year Award.

Our first contestant is John Ensign.  He is chairman of the National Republican Senatorial Committee, representing the State of Nevada in the United States Senate.  On November 2, 2008 he appeared on the CBS television program, Face The Nation with Bob Schieffer.  Election day was two days away and Ensign found it necessary to blame the likely Republican losses on the economic downturn.  He described the Republicans’ fate in these terms:

“And we were starting to do very, very well, but when the financial crisis hit, that financial crisis really is — has been a — almost a body blow to Republicans.  And unfortunately, it was allowed to be portrayed that this was a result of deregulation, when in fact it was a result of overregulation.”

That’s right.  Ensign Douchebag thought he could convince the public that the economic crisis was the result of over-regulation of the financial system, rather than the deregulation described by everyone else in the world.  That noble statement certainly rates runner-up status for the Jackass of the Year Award.

Our next contestant is Reverend Jeremiah Wright, former pastor of Chicago’s Trinity United Church of Christ and embarrassment to Barack Obama.  Thank God Reverend Wright’s fifteen minutes of fame are finally over.  Although his infamous sermon with the less-than-patriotic remarks about America was given in 2003, by April of 2008, Rev. Wright made a point of resurrecting the controversy concerning his disappointing association with Barack Obama.   At that time Wright hit the road, appearing on Bill Moyers Journal, speaking before the NAACP and giving a grand performance before the National Press Club.  He made a fool of himself all three times and (perhaps to his disappointment) his bad karma never rubbed off on Barack.  The pastor has also been a disgrace to the name of the Right Reverend Carl Wright (comedic sidekick of Chicago blues maven, Pervis Spann).  Although Jeremiah Wright rated recognition, the competition for the Jackass Award was tough this year.

We cannot overlook the valiant efforts of Joe “The Tool” Lieberman to win this honor.  Although the people of Connecticut elected Joe to represent their state in the Senate, The Tool spent most of 2008 looking like a stray dog, following candidate John McCain around the campaign trial.  You can find my prior rants about Senator Lieberman here, here, here and here.

We must also give consideration to Christopher Cox, the chairman of the Securities and Exchange Commission.  John McCain was on to him.  It just wasn’t fair that poor, old Senator McCain took so much heat for pointing out that Cox had to go.  McCain made the mistake of stating that he, as President, would have authority to fire Cox.  Although he was wrong about that, he was right about the notion that Cox had been a problem for the SEC.  On December 16, Jessie Westerbrook of Bloomberg news reported that Cox was blaming his subordinates for the enforcement lapses that allowed the scam, perpetrated by Bernie Madoff, to continue for several years after the SEC should have stopped it.  Cox apparently believes in the doctrine that “the buck stops” several levels below himself on the SEC food chain.  The environment at the SEC, with Cox at the helm, was best summed up in a December 27 article from the Los Angeles Times by Amit Paley and David Hilzenrath.  Here’s what they had to say about the tenure of Chairman Cox and his performance during the economic crisis:

Though Cox speaks of staying calm in the face of financial turmoil, lawmakers across the political spectrum counter that this is actually another way of saying that his agency remained passive during the worst global financial crisis in decades.  And they claim that Cox’s stewardship before this year — focusing on deregulation as the agency’s staff shrank — laid the groundwork for the meltdown.

“The commission in recent years has handcuffed the inspection and enforcement division,” said Arthur Levitt, SEC chairman during the Clinton administration.  “The environment was not conducive to proactive enforcement activity.”

*    *    *

But former officials said enforcement suffered during his tenure.  A pilot program begun last year required enforcement staff to meet with the commissioners before beginning settlement talks in certain cases involving nonfinancial firms.  Some former officials said the change was just one example of new bureaucratic impediments that slowed enforcement work.  The commissioners also made clear that they thought staff members were being too aggressive in some cases, the officials said.

”I think there has been a sentiment communicated to rank-and-file staff, lawyers and accountants that you don’t go after the establishment,” said Ross Albert, a former special counsel in the enforcement division.
*    *    *
An analysis by law firm Morgan, Lewis & Bockius showed that the SEC’s actions against broker-dealers, who serve as intermediaries in financial trades, dropped about 33%, from about 89 cases in fiscal 2007 to 60 cases in fiscal 2008.

Heckuva’ job, Coxey!   Nevertheless, you have been overshadowed in this year’s competition.

The winner of the 2008 Jackass of the Year Award is a professor from Russia, named Igor Panarin.  He is a former member of the KGB, who is apparently so upset over the breakup of the Soviet Union, that for the past ten years, he has been predicting that the United States would also break up.  On December 29, Andrew Osborn reported in The Wall Street Journal that Panarin has been doing two interviews per day, discussing how “an economic and moral collapse will trigger a civil war and the eventual breakup of the U.S.”  The article explained:

Mr. Panarin posits, in brief, that mass immigration, economic decline, and moral degradation will trigger a civil war next fall and the collapse of the dollar.  Around the end of June 2010, or early July, he says, the U.S. will break into six pieces — with Alaska reverting to Russian control.

Worse yet, the other five parts of the country will supposedly become republics that will be part of or under the influence of Canada, the European Union, Mexico, China or Japan.  Osborn’s article included a picture of Panarin’s map, showing how the various segments of the country would be apportioned.  Panarin’s ideas have brought him quite a bit of publicity  . . . and TheCenterLane.com’s Jackass of the Year Award for 2008!  Congratulations, Jackass!