New car caviar 4-star daydream

If it’s Saturday morning, it must be Econ Geek time!

*Sigh*  Yes, I’ll be right upfront about this:  I’m an economic ignoramus. I’m only vaguely cognizant of the basic philosophical differences between Keynesians (government good), Chicagoans (government bad) and Austrians (government?), but that’s about it.  (I myself subscribe to the up-and-coming Chickeynstrian school, haha. Ha.)

But as bad as “economic ignoramus” might sound, it’s actually an improvement from the days when I was an economic moran, so progress is being made.  I do a little day-trading, a fun little hobby that quickly drove home the sombre reality that as a matter of survival it was incumbent upon me to learn more about the vast and sleazy interconnected web of plutocratic conspiracy and criminal insanity that is Finance & Economy.  So I started trying to educate myself by reading commentary from a wide range of sources about the state of the economy today.  Some of it puts me to sleep, and some of it piques my interest.

I found an essay of the interest-piquing kind on the new libertarian blog “the Volunteer“. Those of you who didn’t stop reading as soon as you saw the word “libertarian” 😐 should check it out — it’s a thoughtful, scary, and probably, realistic assessment of the economic numbers game.

Aaaaaaand a little background music to enrich the reading experience:

22 Responses to “New car caviar 4-star daydream”


  1. 1 Dave Saturday, October 23, 2010 at 1:48 pm

    Yeah! That was pleasant. Go the link and get someone drooling over Maxime Bernier. Awesome!

  2. 2 JJ Saturday, October 23, 2010 at 2:03 pm

    ?? Where? The link should go to a post by Mike Brock about the economy.

    EDIT: The link is supposed to go to here

  3. 3 Terrence Saturday, October 23, 2010 at 2:30 pm

    Thanks for the link, JJ. Much appreciated.

    And come on, folks, you don’t have to be a libertarian to think this and this are at least a little amusing.

  4. 4 Dave Saturday, October 23, 2010 at 3:18 pm

    Aha! The second link goes there.

  5. 5 JJ Saturday, October 23, 2010 at 4:45 pm

    Terrence – LOL, love that Palin puppy-eating report — it’s just as we in Left Blogistan always suspected! 😯 😉

  6. 6 JJ Saturday, October 23, 2010 at 4:53 pm

    Dave – It used to be that every time you mentioned a site by name, it was good “netiquette” to link it up, thus one link to the home page and the other to the actual article.

    I think netiquette is going the way of all good things — I see bloggers mentioning other blogs all the time without bothering to link to them, or even hat tipping. Kids these days… 😦 😉

  7. 7 Bleatmop Monday, October 25, 2010 at 3:12 pm

    I don’t know who this guy is, but he does not strike me as being someone who is worth reading. Someone who quibbles bitches over the definition of what the unemployment rate is or what jobless claims are probably isn’t worth reading. This is macroeconomics 101, at least it was in my class. Everyone trained in economics, or writing an article about it at least, should realize that the unemployment rate is about people seeking jobs and not a good indicator on the progress of the economy.

    What a good indicator of economic recovery is actual job loss vs job creation and the net number. He said that the job market is demonstrably falling, but the actual numbers are showing a positive growth for 2010 in job creation, although the past 5 month have had modest losses.

    http://www.bls.gov/news.release/pdf/empsit.pdf

    While these job creation numbers are modest, especially considering the number of involuntary part time and underemployed people, they are a not as bad as the author of that post would seem to indicate. He is correct to offer skepticism at these un-sourced optimists (straw man optimists?) calling for a stock buying spree. But I never heard these so-called optimists say anything to that point.

    Also, I never heard of, and he never gave references for, that the US government is simply printing money and spending it. That would be highly unfortunately for the US markets as even a sum as small as a billion dollars would cause rampant and uncontrolled inflation not seen since Germany in the Great Depression. I know the US under Clinton and Bush2 undercut or outright revoked many of the laws designed to prevent another great depression, but I wasn’t aware that they had removed the laws regulating how much and when the Treasury can increase the sum total of US$ in the economy. If anyone has any actual evidence of them doing this (and not simply replacing worn out tender that was burned at the same Treasury) then I would be very interested in hearing about this.

  8. 9 Bleatmop Monday, October 25, 2010 at 3:16 pm

    JJ – WordPress keeps saying that I posted this comment, but its not showing up. Please accept my apologies if I’m multiposting.

    ***

    I don’t know who this guy is, but he does not strike me as being someone who is worth reading. Someone who quibbles bitches over the definition of what the unemployment rate is or what jobless claims are probably isn’t worth reading. This is macroeconomics 101, at least it was in my class. Everyone trained in economics, or writing an article about it at least, should realize that the unemployment rate is about people seeking jobs and not a good indicator on the progress of the economy.

    What a good indicator of economic recovery is actual job loss vs job creation and the net number. He said that the job market is demonstrably falling, but the actual numbers are showing a positive growth for 2010 in job creation, although the past 5 month have had modest losses.

    http://www.bls.gov/news.release/pdf/empsit.pdf

    While these job creation numbers are modest, especially considering the number of involuntary part time and underemployed people, they are a not as bad as the author of that post would seem to indicate. He is correct to offer skepticism at these un-sourced optimists (straw man optimists?) calling for a stock buying spree. But I never heard these so-called optimists say anything to that point.

    Also, I never heard of, and he never gave references for, that the US government is simply printing money and spending it. That would be highly unfortunately for the US markets as even a sum as small as a billion dollars would cause rampant and uncontrolled inflation not seen since Germany in the Great Depression. I know the US under Clinton and Bush2 undercut or outright revoked many of the laws designed to prevent another great depression, but I wasn’t aware that they had removed the laws regulating how much and when the Treasury can increase the sum total of US$ in the economy. If anyone has any actual evidence of them doing this (and not simply replacing worn out tender that was burned at the same Treasury) then I would be very interested in hearing about this.

  9. 10 Bleatmop Monday, October 25, 2010 at 3:19 pm

    JJ – I have a comment that I’ve submitted a couple times for this post but it wont publish. I can’t think of what I might be doing wrong. Any tips?

  10. 11 JJ Monday, October 25, 2010 at 3:51 pm

    Let me check the spam bin!

  11. 12 JJ Monday, October 25, 2010 at 3:56 pm

    Bleatmop – I saw 2 comments from you in the spam bin and I clicked “not spam”, but I don’t see them here yet. Let me try again.

  12. 14 JJ Monday, October 25, 2010 at 5:57 pm

    Great comment there, Bleat! Great input. I haven’t got time to address it all right now, but just a couple of things:

    I also kind of disagree with the article about the employment numbers… I thought the private sector was starting to hire again, not at breakneck pace, but up from the losses that were going on 18 months ago. That is a good sign. Private sector jobs aren’t government make-work type jobs, they address real needs.

    Regarding the dollar, from what I’ve read, there are hard times ahead (I see it coming every day watching the price of precious metals). In Bernanke’s speech last week, he spoke of “Quantitative Easing”, which I think is a euphemism for printing presses going at top speed.(??) So that would mean a devalued dollar, right? (Correct me if I’m wrong, you’re more knowledgeable about this stuff than I am, that’s for sure.)

    I guess what I liked about M Brock’s article was the overwhelmingly dark tone 😆 — I don’t get the economy, but when I hear about this bailout or that war or all the other things that cost an arm & a leg, all I can think is: where is all this money coming from? It doesn’t just rain out of the sky.

  13. 15 Bleatmop Monday, October 25, 2010 at 7:35 pm

    JJ – I found a wiki article on quantitative easing.

    http://en.wikipedia.org/wiki/Quantitative_easing

    Apparently it is creating money, though its more complicated that that. They add value to it, but it basically sounds like another bank bailout so that they will loan more money out. It’s more like assuming debt than creating money, imo. So I guess I was wrong about that, though the author wasn’t exactly being honest about what was going on either.

    Also, my knowledge of economics isn’t that much more than yours. I only took the one economics course to round out my degree. It’s given me a basic knowledge, but I had never heard of quantitative easing before though.

  14. 16 Mike Brock Tuesday, October 26, 2010 at 9:04 am

    Bleatmop,

    You’re presumptuous to assume that I am not educated in economics. I most certainly am.

    First of all, I am fully cognizant of the dimensions of problems presented by calculating unemployment purely on a per capita basis. But you sort of missed the point.

    The labour market calculation has dropped just over 20% since 2008. And yet, the reported unemployment rate has not tracked that number.

    The link you posted only proves my point. Non-farm payrolls have only increased 6 months out of the last 24 months. And of those 6 months of job gains, the lion’s share of that was the 600,000 government census workers.

    Non-farm payrolls were negative all through September. So just what are you talking about?

    There is a statistical disconnect between the labour market calculation and the job creation numbers. And my point is that this CANNOT BE EXPLAINED BY PEOPLE RETIRING. For several reasons:

    1. Very, very few baby boomers have sufficient savings to retire early;
    2. Even if we assume that everyone reaching 65 years old in the past 24 months is retiring, because they can afford to — which they can’t — only about 15% of downward revisions in the labour market calculation can only be accounted for.

    This leads us to some starling problems. The vast majority of the people who have exited the labour market are not retirees? Who are they? Who are this people who just don’t need to work anymore and are magically not being counted in the unemployment figure? Have they all gone into business for themselves? If they have, I can’t seem to find the evidence for it.

    If we were using the unemployment measurement that was used in the United States prior to 1991, instead of the currently used method, the reading of unemployment in the US would be about 18%.

    Also, if you look at the actual BIS tables from the PDF you linked, I draw your attention to the HOUSEHOLD DATA, Summary Table A — last line item: “Discouraged Workers”. Those are people who report they are no longer looking for work because they simply believe they cannot find a job. Note that number has been tracking higher and higher, and also note that these people are discounted from the official unemployment rate.

  15. 17 Mike Brock Tuesday, October 26, 2010 at 9:13 am

    The US government has been printing money like crazy, and just because you haven’t seen massive inflation yet, doesn’t mean that it isn’t on it’s way.

    http://research.stlouisfed.org/fred2/series/BASE

    Newly created money can take 3-5 years to work it’s way through equity markets and onto store shelves. So I would caution you strongly against dismissing the coming inflation.

    All of the early signs of monetary inflation making it’s way into consumer prices are already there:

    Corn prices are up 60% this year.
    Oil is up on lighter demand.
    Gold is touching new highs.
    Silver is at an all-time high.
    Wheat is tracking higher.

    Commodities in US dollars are on a tear. And it’s only a matter of time before all those prices make it to store shelves. So I’d withhold judgement on my thesis if I were you. Give me another six months, and then we’ll see.

  16. 18 Bleatmop Tuesday, October 26, 2010 at 5:16 pm

    Mike,

    I don’t recall stating that you were not trained in economics. I did say:

    “Everyone trained in economics, or writing an article about it at least, should realize that the unemployment rate is about people seeking jobs and not a good indicator on the progress of the economy. ”

    To which I take it you are agreeing up in the second paragraph in your post directed to me. I will even grant you probably know more about economics about me, as I know only a small amount. However, that makes it all the more surprising that you would even bother to complain about the definition of unemployment. That’s the accepted definition, and the one that modern statistics are based upon. Perhaps I misunderstood and you were simply trying to educate your readers that the unemployment rate does not equal jobless workers? To your point I agree that if they counted unemployment in a different way, that the number of unemployed people would be higher.

    On your second response in this page, I don’t discount that there will be inflation. In fact, I think I said that there would be. I was just unaware of the quantitative easing that was going on. I actually find the fact that quantitative easing is going on to be quite disturbing.

  17. 19 Mike Brock Tuesday, October 26, 2010 at 5:40 pm

    That’s the accepted definition

    No. It’s the definition that the US Department of Labour and the Federal Reserve use. It’s not necessarily the same definition that all economists use. In fact, many economists use other metrics which completely disagree with the government figures.

    The Brookings Institution, for example, uses it’s own measure and it calculates 16.4%.

    John Williams of ShadowStats, using his SGS Alternate measure records about 22.5%.

    In fact, there’s a total of six “official” unemployment calculations that the BLS uses, called U1 through U6.

    U3 is what is reported by the BLS.

    U6 is defined as including “discouraged workers who have given up looking for employment, marginally attached, loosely attached, and those who are below retirement and able to work but have not recently and part-time workers who would like full-time employment but cannot find full-time jobs”.

    The “official” U6 figure is 17.1%

    Here is U6 for the past year:

    Sep 09: 16.1
    May 10: 16.6
    Jun 10: 16.5
    Jul 10: 16.5
    Aug 10: 16.7
    Sep 10: 17.1

    Are you witnessing a positive trend? I’m not. And these are official figures.

  18. 20 Mike Brock Tuesday, October 26, 2010 at 5:45 pm

    But let me return to this comment:

    “I don’t know who this guy is, but he does not strike me as being someone who is worth reading. Someone who quibbles bitches over the definition of what the unemployment rate is or what jobless claims are probably isn’t worth reading.”

    Considering that these sorts of things are the kinds of things that so easily can be quibbled with, I think it behooves everyone to make an effort to understand these things. As I’ve demonstrated, there are legitimate disagreements among real economists about the official figures. And don’t you think it’s worthwhile that people know this?

  19. 21 Bleatmop Tuesday, October 26, 2010 at 10:45 pm

    Mike:

    Yes, U3, also known as the official unemployment rate according to the ILO. I can wiki an article too. I’ll tell ya what, you go ahead an use whatever definition you want for unemployment that you want, and I’ll keep going ahead and using the official definition. You want to call U6 the unemployment rate, then go ahead. I’m not stopping you. My original critique still stands though.

  20. 22 Mike Brock Friday, August 5, 2011 at 7:26 pm

    I want to come back and revisit my predictions today. Just for the record. =)


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