US Economy

[a_majoor]

Untangling the metrics. US job figures are shady enough (my insistence on using U3 is based on wanting "real" statistics), but zerohedge shows just how bad the manipulation actually is. Note the Legacy media rarely reports the revised figures, so people may not even be aware that the awfule figures released last month have been revised upwards (the current employment figures are bad enough, but wait until the revision comes next month). The cumulative claims graph sums this up pretty well:

http://www.zerohedge.com/news/initial-claims-print-so-bad-it-actually-good-market-sees-it-bad

Initial Claims Print Is So Bad, It Is Actually Good, That Market Sees It As Bad
Tyler Durden's picture
Submitted by Tyler Durden on 09/20/2012 08:49 -0400

    BLS
    Bureau of Labor Statistics
    headlines
    Reality

Today's initial claims print was the 5th week out of 6 in which expectations missed: instead of coming in at the consensus number of 375K, down from last week's 382K, the BLS reported a miss to expectations of 7K, resulting in a seasonally adjusted number of 382K, or what is now once again secular shift higher. But, wait big miss was actually good news: why? Because the ever data-massaging BLS was kind enough to revise last week's print upward (for the 86th week in a row) from 382K to 385K (just as we predicted last week) which in turn led to such farcical headlines as " U.S. weekly jobless claims drop slightly to 382,000" from the WSJ. And so bad news is now great headlines: Orwell would be proud. Here is an alternative and realistic headline: "Initial Claims Rise Post Next Week's Upward Revision."

To observe the simply ridiculous disconnect between initial claims prints and subsequent revision, is the following chart of cumulative claims changes courtesy of John Lohman, which shows an epic gap of 131,000: based on -133K of cumulative initial announcements and just-2K per revisions. And there is your BLS data propaganda at work.

Another divergence: S&P vs Claims:

In a direct slap to the US nanny state, those receiving extended benefits dropped by 41K in the past week, and is now lower by 1.38 million compared to last week. Hopefully all these people have found a cushy retirement in the recesses of Disability and Food Stamps.

And finally, in what may be the greatest news yet, the bad news, which was good news, may actually, for the first time in a long time, be bad news for the market: unlike the past year when horrible claims prints were good news for stocks, this time around futures are finally tanking on reality as all QE to infinity and beyond has been priced in.

Ball is now in the Fed's court.

 

[Haletown]

Interesting take on the US budget situation . . at least he knows the size of the deficit.

http://www.youtube.com/watch?v=jboTeS9Okak

you can skip to minute 8+ . . .  that is where the meat hits the grill.

 

[a_majoor]

As Glenn Reynolds would say: "Unexpectedly!" Watching the US grid go down would be a catastrophy of the first order (especially since in places like Ontario we are starting to get our power needs serviced by coal generators in the Ohio Valley in order to meet ever growing demand and to stabilize our grid against fluctuations due to wind generators). The second order catastrophy will be the massive layoffs and resultant economic meltdown in the US as energy costs rise, affecting the ability of our biggest market to purchase our exports:

http://dailycaller.com/2012/09/21/report-more-than-200-coal-fired-generators-slated-for-shutdown/

Report More than 200 coal fired generators slated for shutdown

Within the next three to five years, more than 200 coal-fired electric generating units will be shut down across 25 states due to EPA regulations and factors including cheap natural gas, according to a new report by the American Coalition for Clean Coal Electricity (ACCCE).

Read more: http://dailycaller.com/2012/09/21/report-more-than-200-coal-fired-generators-slated-for-shutdown/#ixzz27FAOrq3p 

“This is further evidence that EPA is waging a war on coal, and a war on affordable electricity prices and jobs. EPA continues to ignore the damage that its new regulations are causing to the U.S. economy and to states that depend on coal for jobs and affordable electricity,” said Mike Duncan, president and CEO of ACCCE, in a statement.

However, ACCCE notes that EPA policies may have played a role more than 4,800 megawatts of announced closures not included on in their report which would bring total shutdowns to 241 coal generator in 30 states — more than 36,000 MW of electric generation or 11 percent of the U.S. coal fleet.

The most affected states include Ohio, Pennsylvania, West Virginia, Virginia, and North Carolina, which will see a combined 103 coal-fired generators shut down.

“Actually our utility rates are higher and the impact is such that it’s going to interfere with the quality of life that a lot of individuals have in my community,” said John McNeil, mayor of Red Springs, N.C., in an ACCCE video — one of the heavily affected states.

According to ACCCE, coal provides more than half of North Carolina’s power. Poorer areas, like Red Springs, where a number of residents are on fixed income or live below the poverty line, are adversely affected by higher electricity bills because they eat up a greater portion of their income.

“During my lifetime, Red Springs has gone through some fairly significant changes. We don’t have the large textile plants which provide employments opportunities for many people. We’ve just shifted away,” said John Roberts of John’s Fuel Service, also in Red Springs.

“They can’t say ‘hey, I need fourteen dollars an hour as compared to twelve an hour to offset my energy price,’” he argued.

On Friday, the coal industry caught a slight break as the House voted 233 to 175 to stop the Obama administration’s so-called “war on coal,” passing a bill that would limit the EPA’s regulatory authority over greenhouse gases and limit the Interior Department’s ability to issue coal mining rules.

“Since taking office, the Obama Administration has waged a multi-front war on coal — on coal jobs, on the small businesses in the mining supply chain, and on the low-cost energy that millions of Americans rely upon,” said Washington Republican Rep. Doc Hastings on the House floor Thursday.

Earlier this week, coal company Alpha Natural Resources announced it would be laying off 1,200 workers and closing eight coal mines to face two new challenges: cheap natural gas and “a regulatory environment that’s aggressively aimed at constraining the use of coal.”

“These lost jobs aren’t random events — they are the direct result of the policies and actions of the Obama Administration — these are the outcomes of their regulatory war on coal,” Hastings added.

Follow Michael on Twitter

Read more: http://dailycaller.com/2012/09/21/report-more-than-200-coal-fired-generators-slated-for-shutdown/#ixzz27F7CkNxY

and from the blog of an individual who works in the industry:

http://bluecrabboulevard.com/2012/09/22/electricity-rates-would-necessarily-skyrocket/

Look, folks, I am in this field. I have been for more than 30 years. Losing 36,000 MWs of the most cost-efficient generation capacity in the US is a disaster. You have no idea how bad the increases are going to be. They will be disastrous to the individual energy consumers and apocalyptic to large users – those who create jobs.

I shudder to think of what this is going to do to grid reliability as well. A lot of those coal plants help support the grid during disruptions. They regularly provide both energy and MVARs (Mega Volt-Ampere Reactive) that keep the grid from collapsing when large loads are added or lost. (That’s about as simple as I can make it and still be understood.) Losing these stabilizers will make it very hard to hold the grid. I pity the load dispatchers.

Trust me, people, this is a very big, very bad thing that is happening as a direct result of Barack Obama’s war on coal.

Oh, and his one fulfilled campaign promise.

Update: Ok, I found a fairly good explanation of MVARs that isn’t too engineering-heavy.

Update: Thanks to Glenn Reynolds for the link. Visitors, please do take a look around – and thanks for following the link over.

 

[a_majoor]

One reason that the US economy is tanking has to do with the level of understanding most people (even so called "elites") have about economics. This inadvertently hilarious segment has a panel puzzled over why anyone would think ‘redistribution of wealth’ is bad.

http://www.mediaite.com/tv/msnbc-panel-baffled-why-anyone-would-think-redistribution-of-wealth-is-bad/

MSNBC Panel Baffled: Why Anyone Would Think ‘Redistribution Of Wealth’ Is Bad?
video
by Noah Rothman | 1:25 pm, September 20th, 2012

On Thursday’s panel discussion on MSNBC’s NOW, reporters and columnists from esteemed publications like the Chicago Sun-Times and the New York Times tackled a recently released video of President Barack Obama in 1998 advocating for programs that would augment the government’s redistributive powers. The panel noted that Mitt Romney’s presidential campaign has pounced on the video, but they were nearly universally perplexed as to why anyone would view Obama’s comments about redistribution in a negative light. After all, they said, government’s most successful programs redistribute wealth in some degree. Some panel guests concluded by urging the president and his supporters to engage in a debate over the beneficence of an activist government. Conservatives who know that the debate over the proper role of government is one they most often win would likely agree.

The recently uncovered tape of Obama addressing students at Loyola University in 1998 has caused a stir. In the tape, Obama expressed his admiration for redistributive government programs and advocated for free-market delivery systems to ensure the spread of similar programs:

    I think the trick is figuring out how do we structure government systems that pool resources and hence facilitate some redistribution because I actually believe in redistribution, at least at a certain level to make sure that everybody’s got a shot. How do we pool resources at the same time as we decentralize delivery systems in ways that foster competition, can work in the marketplace, and can foster innovation at the local level and can be tailored to particular communities.

Guest host Ari Melber defined redistributive government as any centralized mechanism for taking in funds and then reallocating them in ways that planners view as the most constructive for the economy or that achieves the maximum social benefit. Therefore, he says, nearly every government activity could be defined as redistributive.

“This redistribution word, which is a word that I’m sure is intended to be befuddle people because it’s not a word that real people use,” said Chicago Sun-Times columnist Lynn Sweet. “By using this word — I think it’s a bit coded, first of all. But why don’t we call it ‘Robin Hood-ism?’”

“I think that Romney goes into this argument at his own peril because you’re not necessarily saying, ‘redistribute – bad,” Sweet continued.

“I’m confused,” said New York Times reporter Nicholas Confessore. “I assume they have some focus group data than tells them this word is a hot button for some voters that they want to reach. But the fact is that this concept is baked into American government.” Confessore went on to say that America’s progressive tax rates are an example of redistribution. (Interpolation; Baked in where? I guess this guy never read the Constitution, Declaration of Independence or the Federalist Papers)

“Lynn said the word is a ‘bit coded,’ and I think it’s a lot coded,” said New York Times reporter Hugo Lindgren. “It’s meant to, sort of, confuse people and create this complicated concept that government is doing something sort of devious that you didn’t think they were doing, or that is going to, kind of, double cross you.”

What faith in the intelligence of the governed this panel demonstrates. The only reason why a voter would perceive the term, let alone the action, of redistribution in a negative light is because they are babes in the woods – utterly baffled by the meaning of words and the historic track record of confiscatory government.

Melber went on to cite New York Magazine’s Jonathan Chait who described Obama’s advocacy for market-based delivery systems of progressive government programs as “moderate.” Spare me. This is an example of a tired, contradictory trope that liberals tell themselves when they think no one is looking: American’s like government, just so long as it is hidden in plain sight.

But if one fallacy was not enough for the panel, MSNBC contributor Richard Wolffe trots out the straw man to end all straw men. After saying that even a purely flat tax rate was as redistributive as a progressive tax, Wolffe claimed, “If you don’t believe in redistribution, then you don’t believe in any public services at all.”

Perhaps the panelists should spend less time in the echo chamber and more time digesting polls. The most recent Gallup survey which showed that a majority of respondents – 54 percent, in fact – said that government is trying to do too much. Just 39 percent said that government should do more to solve the nation’s problems. Another clear majority, 51 percent, said that government has too much power. 8 percent said that they did not have enough power.

There are not many debates Republicans win with any consistency, but the scale and scope of government overreach is not one of them. The GOP has never shied away from that debate and they have the rugged individualist American DNA on their side. This MSNBC panel should invest some time talking to actual Republicans – it might inform the debate.

> >Follow Noah Rothman (@Noah_C_Rothman) on Twitter

"Redistribution" explains a lot about the American election, and in a greater sense what is happening in Europe and around the world. A very large segment of the population wants "free" goodies, and other people to pay for them, but it is now starkly apparent to those people who actually pay the bills that the payments are no longer sustainable, and they are no longer willing to pay. Actually, lots of people are not willing to pay beyond a certain point anyway (see how tax avoidance kicks in as taxes and fees rise), so the "Blue model" (Walter Russel Mead's term) has built in limitations due to human nature.

The model is collapsing now due to moral and financial bankruptcy, so the political story will be do the payers manage to take control and set up a controlled drawdown, or do the "redistributors" manage to fight to the last taxpayer and usher in a catastrophic collapse?

 

[Edward Campbell]

I pay attention to three indices: transparency - which defines levels of government corruption; education - which defines how "ready" a country is for change (because change always happens) and this one, economic freedom. This is a somewhat depressing review, reproduced under the Fair Dealing provisions of the Copyright Act from the National Review Online:

Table shows Hong Kong in 1st place, Singapore in 2nd, Canada in 5th and the USA in 18th place.

On the transparency index the key ratings are:

1. New Zealnd          - Least corrupt
5. Singapore
10. Canada              - Not very corrupt at all
12. Hong Kong
24. USA                    - Not very corrupt
46. Bahrain              - Pretty corrupt
180. Afghanistan  )
182. North Korea  )  - Irredeemably corrupt
182. Somalia        )

On the educational attainment index the key ratings are much harder to define and find but, generally, Canada ranks very high, often on top, the USA is high - almost always in the top 10 on everything except standardized test scores where it is often well below the top 10, Singapore and Hong Kong score lower on attainment, which is measured by years in school, but very, very high on standardized test scores. Very broadly:

  + Singapore and Hong Kong are full of very smart people, most of whom do not go to graduate school;
  + Canada and New Zealand are full of reasonably smart people who often go to grad school; and
  + America has far fewer smart people but an awful lot of them go to graduate school anyway.

Here is another index worthy of note: the World Economic Forum's report on the state of national infrastructure (Item 201). America has fallen from 5th just 10 years ago to 24th now. Canada isn't doing much better at 15th. As in so many of these performance indices Singapore and Hong Kong are in the top five.

 

[Kirkhill]

Here is another index worthy of note: the World Economic Forum's report on the state of national infrastructure (Item 201). America has fallen from 5th just 10 years ago to 24th now. Canada isn't doing much better at 15th. As in so many of these performance indices Singapore and Hong Kong are in the top five.

The Trans-Singapore Highway?
Hong Kong National Railways?

 

[Edward Campbell]

The Trans-Singapore Highway?
Hong Kong National Railways?

Actually, Singapore has some pretty impressive highways, they emphasize (supurb) public mass and rapid transit to move people, and highways, some of which run, mostly, underground, to move goods. Hong Kong does have a pretty good rail system: to move people and goods. You have to see both the HK and Singapore container ports and their supporting transportation systems to understand how modern, sophisticated countries take care of business.

I know we and America have huge distances with which to cope but we also have backwards politicians who do our countries major disservices by spending wasting money on welfare when building and sustaining first class infrastructure would create jobs which are always preferable to social welfare.


Edit: punctuation

 

[Kirkhill]

Actually, Singapore has some pretty impressive highways, they emphasize (supurb) public mass and rapid transit to move people, and highways, some of which run, mostly, underground, to move goods. Hong Kong does have a pretty good rail system: to move people and goods. You have to see both the HK and Singapore container ports and their supporting transportation systems to understand how modern, sophisticated countries take care of business.

I know we and America have huge distances with which to cope but we also have backwards politicians who do our countries major disservices by spending wasting money on welfare when building and sustaining first class infrastructure would create jobs which are always preferable to social welfare.


Edit: punctuation

Seen and agreed.  But the fact remains that we are still stuck with MacDonald's "Curse" of too much geography.  It cost's a wheen of a lot to connect Toronto to Vancouver with not a lot of people available to pay to bills.  The good news is that those few people are incredibly rich in treasure in the form of resources in the ground.  The obverse of the "Curse" of geography.

Hewers of wood and drawers of water are not in a bad position if they have lots of wood and water and everybody else is willing to pay.

Darius built his highway system to support his government and then charged locals for the "highspeed" service.  The Romans continued the policy.

In Canada MacDonald built his railway for the same reasons,  a combination of commercial, military and bureaucratic advantages.  His short term political and economic gamble is paying Harper dividends.

If we want to continue to enjoy the good life of wide open spaces, clean water, education and a safety net then we must continue to sell "wood and water" which in turn demands focusing investment on modern versions of Darius's highways.  Keystone and  Northern Gateway come immediately to mind. 

Nobody likes a highway through their backyard either.  But we build them (Allan Expressway notwithstanding - or is that just not standing?).

Other areas of investment for Canada that make sense to me are LTA barges for moving high value goods "upriver" into remote areas, seasonal navigation systems to float commodities "down river" from those same areas and continue the development of the network of airfields across the country.  Aircraft still make the most sense for moving people around in a timely fashion in Canada - for commercial, military and bureaucratic reason.

That infrastructure will bring in wealth from abroad, create natural nodes of growth as people determine how to best capture and exploit that wealth to their own advantage (renting forklifts or selling BC Bud).

Toronto will never look like Singapore or Hong Kong.  We need to invest in pipelines and airfields rather than subways and buses. (Or, gawdelpus, windmills).

 

[Edward Campbell]

Seen and agreed.  But the fact remains that we are still stuck with MacDonald's "Curse" of too much geography.  It cost's a wheen of a lot to connect Toronto to Vancouver with not a lot of people available to pay to bills.  The good news is that those few people are incredibly rich in treasure in the form of resources in the ground.  The obverse of the "Curse" of geography.

Hewers of wood and drawers of water are not in a bad position if they have lots of wood and water and everybody else is willing to pay.

Darius built his highway system to support his government and then charged locals for the "highspeed" service.  The Romans continued the policy.

In Canada MacDonald built his railway for the same reasons,  a combination of commercial, military and bureaucratic advantages.  His short term political and economic gamble is paying Harper dividends.

If we want to continue to enjoy the good life of wide open spaces, clean water, education and a safety net then we must continue to sell "wood and water" which in turn demands focusing investment on modern versions of Darius's highways.  Keystone and  Northern Gateway come immediately to mind. 

Nobody likes a highway through their backyard either.  But we build them (Allan Expressway notwithstanding - or is that just not standing?).

Other areas of investment for Canada that make sense to me are LTA barges for moving high value goods "upriver" into remote areas, seasonal navigation systems to float commodities "down river" from those same areas and continue the development of the network of airfields across the country.  Aircraft still make the most sense for moving people around in a timely fashion in Canada - for commercial, military and bureaucratic reason.

That infrastructure will bring in wealth from abroad, create natural nodes of growth as people determine how to best capture and exploit that wealth to their own advantage (renting forklifts or selling BC Bud).

Toronto will never look like Singapore or Hong Kong.  We need to invest in pipelines and airfields rather than subways and buses. (Or, gawdelpus, windmills).

For the very reason you enunciated we need to do both. We need to despoil the environment, temporarily, the environment in which only a tiny handful of us live, so that most of us, who live in urban and suburban Canada can have first rate infrastructure. One of the easiest ways to clean the air in Toronto is to build more and much better mass, rapid, public transit.

I like the Asian Tiger urban model: good, high capacity highways are, broadly, there to move goods, and a clean (both physically and environmentally), safe, hyper-efficient rapid, mass transit system moves people. In the HK suburbs one jumps on a smallish cheap, clean (both 'cleans' again) and frequent bus which takes one to a nearby MTR station which then gets you into one of the fastest and most reliable systems in the world. HK (and Singapore) transit systems serve the city, not the individual rider or the community. System design is done, above all else, to make money: lines and stations which cannot pay their way are, ruthlessly, pruned - to hell with public sentiment because, in fact, most of the public wants an efficient and effective system. Asian Tiger politicians are not afraid to piss off a local community in order to advance the bigger public good.

 

[tomahawk6]

We need to harden our electrical grid so as to be less vulnerable to an EMP type attack,or even a major solar event that would disrupt life as we know it. It would be every greenie's wet dream to turn back the clock 200 years.

 

[a_majoor]

The WSJ deconstructs the President's answers on "60 minutes", revealing what the next several Administrations are going to have to deal with (absent a terrifying economic crash). Anyone who is serious about the issue needs to know what the numbers actually are, such as the revenues and expenditures before and after various tax cuts or historic events, in order to determine what needs to be done. The full WSJ article provides numbers and context for the interested.

Not mentioned in the 60 minutes interview or in the WSJ article is the ominous background music as the Fed continues to purchase Treasuries, and is now in possession of 27% of the outstanding volume of US Treasuries, and this is before Q3...Crushing inflation was no fun last time (in the 1980's), and will be even less fun in the near to mid term. Another thing on a future Administration's "to do" list:

http://online.wsj.com/article/SB10000872396390444358804578016270614705726.html?mod=WSJ_Opinion_LEADTop

The 10% President
The annotated Obama: How 90% of the deficit becomes somebody else's fault.

A question raised by President Obama's immortal line on CBS's "60 Minutes" on Sunday—"I think that, you know, as President, I bear responsibility for everything, to some degree"—is what that degree really is. Maybe 70% or 80% of the buck stops with him? Or is it halfsies?

Nope. Now we know: It turns out the figure is 10%. The other 90% is somebody else's fault.

This revelation came when Steve Croft mentioned that the national debt has climbed 60% on the President's watch. "Well, first of all, Steve, I think it's important to understand the context here," Mr. Obama replied. Fair enough, so here's his context in full, with our own annotation and translation below:

Related Video


Assistant editorial page editor James Freeman on President Obama blaming George W. Bush for deficit he exploded and how the policies he endorsed while in the Senate contributed to the financial crisis. Photo: Associated Press

"When I came into office, I inherited the biggest deficit in our history.1 And over the last four years, the deficit has gone up, but 90% of that is as a consequence of two wars that weren't paid for,2 as a consequence of tax cuts that weren't paid for,3 a prescription drug plan that was not paid for,4 and then the worst economic crisis since the Great Depression.5

"Now we took some emergency actions, but that accounts for about 10% of this increase in the deficit,6 and we have actually seen the federal government grow at a slower pace than at any time since Dwight Eisenhower, in fact, substantially lower than the federal government grew under either Ronald Reagan or George Bush.7"

***
Footnote No. 1: Either Mr. Obama inherited the largest deficit in American history or he won the 1944 election, but both can't be true. The biggest annual deficit the modern government has ever run was in 1943, equal to 30.3% of the economy, to mobilize for World War II. The next biggest years were the following two, at 22.7% and 21.5%, to win it.

The deficit in fiscal 2008 was a mere 3.2% of GDP. The deficit in fiscal 2009, which began on October 1, 2008 and ran through September 2009, soared to 10.1%, the highest since 1945.

Mr. Obama wants to blame all of that on his predecessor, and no doubt the recession that began in December 2007 reduced revenues and increased automatic spending "stabilizers" like jobless insurance. But Mr. Obama conveniently forgets a little event in February 2009 known as the "stimulus" that increased spending by a mere $830 billion above the normal baseline.

The recession ended in June 2009, but spending has still kept rising. The President has presided over four years in a row of deficits in excess of $1 trillion, and the spending baseline going forward into his second term is nearly $1.1 trillion more than in fiscal 2007.

Federal spending as a share of GDP will average 24.1% over his first term including 2013. Even if you throw out fiscal 2009 and blame that entirely on Mr. Bush, the Obama spending average will be 23.8% of GDP. That compares to a post-WWII average of a little under 20%. Spending under Mr. Bush averaged 20.1% including 2009, and 19.6% if that year is left out.

Footnotes No. 2 through 4: Liberals continue to claim that the main causes of the current fiscal mess are tax rates established in, er, 2001 and 2003 and the post-9/11 wars on terror. But by 2006 and 2007, those tax rates were producing revenue of 18.2% and 18.5% of GDP, near historic norms.

Another quandary for Mr. Obama's apologists is that he has endorsed nearly all of these policies. The 2003 Medicare drug benefit wasn't offset by tax hikes or spending cuts, but Democrats expanded the program as part of ObamaCare.

The President also extended all the Bush tax rates in 2010 for two more years in the name of helping the economy, and he now wants to continue them for people earning under $200,000, which is where 71% of their "cost" resides. The Iraq campaign was won and beginning to be wound down when he took office, and he himself surged more troops in Afghanistan.

Footnote No. 5: Mr. Obama keeps dining out on the excuse of the recession, but that ended halfway through his first year. The main deficit problems since 2009 are a permanently higher spending base (see Footnote No. 1) and the slowest economic recovery in modern history. Revenues have remained below 16% of the economy, compared to 18% to 19% in a normal expansion.

The 2008 crisis is long over. The crisis now is Mr. Obama's non-recovery.

Footnote No. 6: Even at face value, Mr. Obama's suggestion that he is "only" responsible for 10% of what the government does is ludicrous. Note that in addition to his stimulus, what he calls "emergency actions" include his new health-care entitlement that will cost taxpayers $200 billion per year when fully implemented and grow annually at 8%, even using low-ball assumptions.

But the larger point concerns executive leadership. Every President "inherits" a government that was built over generations, which he chooses to change, or not to change, to suit his priorities. Mr. Obama chose to see the government he inherited and grow it faster than any President since LBJ.

The pre-eminent political question now is whether to reform the government we have to make it affordable going forward, or to keep growing the government and raise taxes to finance it, if that is even possible.

Mr. Obama favors the second option, though he pretends he can merely tax the rich to do it. Nobody who has looked honestly at the numbers believes that—not his own Simpson-Bowles commission and not the Congressional "super committee" he sanctioned but then worked to undermine.

At every turn he has demagogued the Romney-Ryan proposals to modernize the entitlement state so it is affordable, and he personally blew up the "grand bargain" House Speaker John Boehner was willing to strike last summer.

Footnote No. 7: Mr. Obama's posture as the tightest skinflint since Eisenhower is a tutorial in how to dissemble with statistics. The growth rate seems low because he's measuring from the end of fiscal 2009, after a one-year spending increase of $535 billion. That is the year of his stimulus and thus spending is growing off a much higher base. The real annual pace of government growth is closer to 5%, and that doesn't count ObamaCare.

***
In another news-making bit with "60 Minutes," which the program decided not to air, Mr. Obama conceded that "Do we see sometimes us going overboard in our campaign, mistakes that are made, areas where there's no doubt that somebody could dispute how we are presenting things, that happens in politics."

Note the passive voice, as if the President's re-election campaign is disembodied from the President. If Mr. Obama's campaign seems dishonest enough that even Mr. Obama is forced to admit it, this is because it's coming from the top.

 

[Kirkhill]

For the very reason you enunciated we need to do both. We need to despoil the environment, temporarily, the environment in which only a tiny handful of us live, so that most of us, who live in urban and suburban Canada can have first rate infrastructure. One of the easiest ways to clean the air in Toronto is to build more and much better mass, rapid, public transit.

I like the Asian Tiger urban model: good, high capacity highways are, broadly, there to move goods, and a clean (both physically and environmentally), safe, hyper-efficient rapid, mass transit system moves people. In the HK suburbs one jumps on a smallish cheap, clean (both 'cleans' again) and frequent bus which takes one to a nearby MTR station which then gets you into one of the fastest and most reliable systems in the world. HK (and Singapore) transit systems serve the city, not the individual rider or the community. System design is done, above all else, to make money: lines and stations which cannot pay their way are, ruthlessly, pruned - to hell with public sentiment because, in fact, most of the public wants an efficient and effective system. Asian Tiger politicians are not afraid to piss off a local community in order to advance the bigger public good.

ERC:

It would be easier for me to accept your prescription IF the Canadian tax regime were stood on its head.

Singapore and Hong Kong are cities with no hinterland and yet they are self-financing.  In fact they prosper. 

If a few million people on islands can be self-financing with no visible means of support then surely our cities can be as well.

I would be considerably more accomodating if Toronto, Montreal and Vancouver were granted the taxing powers available to provinces (in fact if they were declared separate provinces) and then get left to get on with it and live their lives as they see fit.  They then would be responsible for their own futures, both pluses and minuses.

But I'm afraid, as usual, I have dragged this US topic adrift.  Probably should take up the discussion on the Canadian economy threads.

 

[Edward Campbell]

An interesting video here.

You can, many will, quibble with his presentation of just one year's data ~ no one suggests that anyone balance their budget is just one year, but you cannot, in honesty, disagree with his conclusion. Cuts must happen everywhere, including in DoD and in entitlements, and revenues must go up, somehow.

 

[a_majoor]

Balancing the budget, recapitalizing American industry or even just getting ahead is difficult when incomes keep falling:

http://news.investors.com/092512-626958-household-income-down-82-under-president-obama.aspx

Household Incomes Fall In Aug., Off 8.2% Under Obama

By JOHN MERLINE , INVESTOR'S BUSINESS DAILY
Posted 03:55 PM ET

In another sign that the economic recovery under President Obama is not producing gains for average Americans, median household incomes fell 1.1% in August to $50,678, according to a report released Tuesday by Sentier Research.

Since the economic recovery started in June 2009, household incomes are down 5.7%, the Sentier data show, and they are down more than 8% since Obama took office.

"Even though we are technically in an economic recovery, real median annual household income is having a difficult time maintaining its present level, much less recovering," said Sentier co-founder and former Census Bureau official Gordon Green.

Earlier this month, the Census Bureau released its annual report showing that the number of people in poverty was nearly 3 million higher in 2011 than in 2009, an increase of 6%.

That report also found that average incomes for middle- and lower-income households fell in 2011 after adjusting for inflation. They rose only for the wealthiest 20% of households.

Middle-Class Squeeze

The average inflation-adjusted income for households in the middle 20% is now lower than it's been since 1995, the census report found.

Meanwhile, another report released Tuesday finds that per-capita health costs jumped 4.6% last year, marking a turnaround from previous years, which had seen annual cost increases moderating. The Health Care Cost Institutereport found that rising prices are a "major driver" of the cost increases.

And a report from the Centers for Disease Control and Prevention released this month found that the number of uninsured climbed 1 million in the first three months of 2012 compared with last year.

Food-Stamp Nation

Other bad signs: The number of people on food stamps is up more than 220,000 in the first half of this year and up almost 12 million — or 34% — from June 2009 to June 2012.

The number of people in the labor force has fallen more than half a million in the past two months, with the participation rate down to 63.5%, a rate not seen in the past 30 years, according to the Bureau of Labor Statistics.

Almost 83,000 signed up for federal disability benefits in September, and more than 736,000 have joined in the first nine months of this year, according to the Social Security Administration. That's a higher enrollment rate than the first nine months of the Obama presidency.

Analysts say the higher disability enrollment rates are in part a reflection of workers' inability to find jobs.

On the other hand, the Consumer Confidence Index climbed in September to 70.3, a nine-point increase from August, according to the Conference Board.

 

[Edward Campbell]

Reuters reports that "Economic growth was much weaker than previously estimated in the second quarter as a drought cut into inventories, setting the platform for an even more sluggish performance in the current quarter against the backdrop of slowing factory activity ... Gross domestic product expanded at a 1.3 percent annual rate, the slowest pace since the third quarter of 2011 and down from last month's 1.7 percent estimate, the Commerce Department said in its final estimate on Thursday."

It's important to remember that the GDP is still expanding, albeit very, very slowly and, in another report, Reuters also reports that "The number of Americans filing new claims for jobless benefits fell last week to the lowest level in two months, a hopeful sign for a labor market that has struggled to gain traction in recent months." Now, some will argue that this hopeful number just shows that more people have given up looking for work, but on its face this little bit of data can be seen as a glimmer of hope.

 

[Edward Campbell]

But, on the downside, Reuters also reports that "New orders for long-lasting U.S. manufactured goods in August fell by the most in 3-1/2 years, pointing to a sharp slowdown in factory activity even as a gauge of planned business spending rebounded ... The Commerce Department said on Thursday durable goods orders dived 13.2 percent, the largest drop since January 2009, when the economy was in the throes of a recession ... Economists polled by Reuters had expected orders for durable goods -- items from toasters to aircraft that are meant to last at least three years -- to fall 5 percent ... Manufacturing, which has been the main driver of the recovery from the 2007-09 recession, has been hit by turbulence from sluggish domestic and global demand ... Fears that the U.S. Congress could fail to avert a "fiscal cliff" -- the $500 billion or so in expiring tax cuts and government spending reductions set to take hold in 2013 -- have also left businesses with little incentive to boost production."

A 13% fall in durable goods orders is HUGE and it is very bad news.

 

[cupper]

Nick Hanauer in both an article for The Atlantic, and a speech at TED debunks the myth that the Rich are the "Job Creators" but rather that it is the Consumer that creates jobs, and that we have had it all backwards for the past 30 years as to how the economy should be run.

http://www.thedailybeast.com/articles/2012/09/29/who-are-the-real-job-creators.html

http://www.theatlantic.com/business/archive/2012/09/rich-americans-arent-the-real-job-creators/262833/

http://youtu.be/bBx2Y5HhplI

When the economy is understood in 21st-century terms, as an ecosystem, it becomes obvious that jobs don't squirt out of business-people like jelly from doughnuts. Rather, jobs are the consequence of the feedback loop between customers and businesses. For this reason, it is middle-class consumers and the demand they create that are our true job creators, not rich business-people.

Best quote from the video:

When business people take credit for creating jobs, it's a little bit like squirrels taking credit for evolution.

 

[Kirkhill]

Consumers create jobs
Consumers create jobs by consuming goods and services

Goods and services require money

People without money can't by goods and services.
People without money are called destitute.
A destitute person creates no jobs. 
(Except for public service jobs).

People with little money can by few goods and services.
People with little money are called poor.
A poor person creates few jobs.
There are many poor people.
Many poor people individually creating few jobs collectively create many jobs.

People with lots of money can by many goods and services.
People with lots of money are called rich.
A rich person creates many jobs.
There are few rich people.
A few rich people individually creating many jobs collectively create many jobs.

Jobs are created by everybody.

Not difficult.

 

[cupper]

Consumers create jobs
Consumers create jobs by consuming goods and services

Goods and services require money

People without money can't by goods and services.
People without money are called destitute.
A destitute person creates no jobs. 
(Except for public service jobs).

People with little money can by few goods and services.
People with little money are called poor.
A poor person creates few jobs.
There are many poor people.
Many poor people individually creating few jobs collectively create many jobs.

People with lots of money can by many goods and services.
People with lots of money are called rich.
A rich person creates many jobs.
There are few rich people.
A few rich people individually creating many jobs collectively create many jobs.

Jobs are created by everybody.

Not difficult.

The only problem with what your simplified analysis is that, as Hanauer points out, that even though the rich have hundreds to a thousand times the income or spending capacity, they do not spend proportionally. As he says, his family only owns  cars, not 3000. He may only buy several pairs of pants each year, not several hundred. The rich alone cannot make up for the loss of consumer spending in the lower and middle income levels.

And he also points out, if lowering taxes causes the rich to spend more creating jobs, we should be flooded with jobs that cannot possibly be filled by the current population ("we'd be flooded with jobs").

Until the ability of the lower and middle income levels to purchase returns, the economy will remain glacial in its recovery.

 

[tomahawk6]

The rich create jobs. They drive the engine that powers western economies. Its the communists that believe in class warfare. It worked so well in Russia. Even the PRC is more capitalist than some western countries.