Archive for October, 2013

Another Record Smashed: More Than 100,000,000 Americans Not Working

Friday, October 25th, 2013

The Labor Force Participation Rate has fallen and it can’t get up.

The U.S. Bureau of Labor Statistics (BLS) reported this week that 90,609,000 Americans who are 16 or older are neither working nor looking for work.  Only 63.2% of Americans are working or looking for work.  Anyone who is unemployed who has looked for a job in the past four weeks is counted as participating in the labor force.

LFPRAdd in unemployed Americans who are looking for work and the total exceeds 101 million.  With a total population of about 313,914,040, nearly one American in three is 16 or older and is not working.

The Labor Force Participation Rate peaked at 67.3% in 2000 and it hovered around 66% in 2007 and 2008, when the financial crisis began.  Now, after five years of stimulus spending and quantitative easing, it has dropped about 3%.  In July, the number of nonparticipants climbed by more than half a million.

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No, We Can’t

Thursday, October 17th, 2013

Someone had blunder’d:
Theirs not to make reply,
Theirs not to reason why,
Theirs but to do and die.

                                          From “The Charge of the Light       Brigade”

Take pity on the can.  It’s been kicked so far down the road, it could circle the globe a dozen times.  It’s been battered more than the New England Patriots’ starting lineup.  It’s been kicked harder than an Adam Vinatieri football.

And still it persists.

This week, Congress and President Obama reached a deal that reopens the government through January 15 and suspends the debt ceiling through February 7.  Calling it a deal, though, is an exaggeration.  One side, the Democrats, refused to negotiate.  The other side, the Republicans, asked for something it had no hope of getting.  So everyone agreed to kick the can three months down the road.free-the-fowl-games-photo-420-1196-FF11015_0

Beyond that, according to The Wall Street Journal, “The bill includes one minor change to the health law sought by Republicans, setting new procedures to verify the incomes of some people receiving government subsidies for health-insurance costs.  It also provides back pay for all federal workers who were furloughed during the government shutdown.”

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The Queen of QE

Friday, October 11th, 2013

Amidst a government shutdown, a debt-ceiling crisis and other assorted financial turmoil, President Obama this week nominated Janet L. Yellen to chair the Federal Reserve Board.

As a Keynesian economist and academician who served as second-in-command at The Fed, her boost to the top spot was about as predictable as another budget crisis in Washington.  She still needs to be confirmed by the U.S. Senate, but confirmation there is also as predictable as another budget crisis in Washington.

So what can we expect from the first woman to ascend to one of the most powerful positions in the free world?

Janet Yellen

Janet Yellen

The presses will keep rolling.  Current Chairman Ben Bernanke has become the King of Quantitative Easing, but he has been in denial about it.  His roots are as a monetarist.  You wouldn’t know it by his record as chairman, but he is a follower of Milton Friedman.

Ms. Yellen, conversely, is a true believer.  As an “unreconstructed Keynesian,” which we assume is the opposite of a reconstructed Keynesian, she believes that stimulus is a cure-all.  If the government spends more and the Fed prints more, evidence to the contrary, the economy will boom.

As such, we can expect a continuation of QE.  The King is dead, long live the Queen.

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Spending Our Way to Prosperity

Sunday, October 6th, 2013

Focusing on the government shutdown is like rearranging the deck chairs on the Titanic while drawing closer to the iceberg.

The iceberg in this case is the massive government debt that will be made worse by the implementation of the Affordable Care Act.

Later this month, Congress will need to lift the debt ceiling from its current $16.7 trillion to keep the government solvent and enable the U.S. to continue paying its massive bills.  In the meantime, as a result of the negotiations that led to sequestration, Congress had until the end of September (the end of the fiscal year) to reach a spending agreement.Yield Curve

It didn’t, of course, and now the government has shut down.  But what does the shutdown really mean?

The shutdown affects only “nonessential” services.  That means 85% of government services are still being funded and 63% of federal employees are still working.  Mail is being delivered, military personnel are still keeping us safe, and payments are still being made for Medicare, Medicaid, Social Security, the Supplemental Nutrition Assistance Program (SNAP) and the countless other programs that we can’t afford.  Amtrak trains will continue running, so if your train is late, don’t blame it on the shutdown.

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