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Are We In a Recession or Not?
"Of course not." - Outgoing Council of Economic Advisers Chairwoman Christina Romer, when asked if the recession was over.
The two senior White House economic advisers made their comments on the same day.
It's getting harder and harder to read the tea leaves with regard to Barack Obama's economic team, which in recent weeks has seen two fairly major resignations - the above-quoted Council of Economic Advisers chairwoman Romer, and budget director Pete Orszag, two very different people with different views on the economy.
Romer is a former Berkeley professor who was brought into the White House for two reasons; one, she was an expert on the Great Depression, which was looking extremely relevant at the time of Obama's election, and two, she lacks a Y chromosome, which was reportedly the problem with Chicago professor and onetime close Obama confidante Austan Goolsbee, the original favorite for the CEA job. Orszag meanwhile is a Bob Rubin disciple, a former head of Rubin's Hamilton Project think tank who often captained the deficit-reduction effort within the Obama White House.
One thing both of these people had in common was that neither of them got along with Larry Summers. In Orszag's case this reportedly was a personal thing, while in Romer's case it was more political, although her lack of a Y chromosome may also have played a role (Summers's famous dictum that "women lack the ability to succeed at the highest levels of math and science" is looming large now that Larry Fishface seems to have squeezed out one of the highest-ranking women in the Obama White House).
Most of the DC chatter class seems to have interpreted the dual resignations as a sign of the ascendant power of the Summers-Geithner axis within the Obama White House. This is a variation of the same theme that I kept hearing when I was in Washington last month covering the Dodd-Frank bill; that while the Geithner/Summers/Rubin clan briefly fell out of sight after Scott Brown's big win last winter, and relative liberals like Paul Volcker and Romer briefly got more room to push their views with Obama, that situation had reversed itself by late spring and Geithner/Summers once again had the presidential ear on economic matters more or less exclusively.
"[Summers] has kept Romer, [Austin] Goolsbee, [Paul] Volcker all outside the inner policy circle. For Romer, why stay under these conditions, when she would lose her tenure if she stayed for more than two years?" was how one unnamed White House advisor put it this week.
To me the interesting thing about Christina Romer's story is that she decided to leave at exactly the same time a horrific piece of news about jobless claims came out. The country lost 131,000 jobs in July, a much bigger number than anyone expected, and the key reason seems to be that the Obama administration made faulty calculations in its effort to boost unemployment via the government till - the end of Census jobs was apparently a major killer in the recent job stats. "The private sector is still hobbled," said Robert A. Dye, senior economist at PNC Financial Services Group in Pittsburgh, "and certainly is not nearly strong enough to overcome the drain on the government side."
This is interesting because Romer was the Obama administration official who was loudest in her advocacy of a much bigger stimulus, with the idea that the administration's economic strategy should have been based around creating jobs and shaving unemployment as quickly as possible. "You don't get your budget deficit under control at a 10 percent unemployment rate," she said last year. The final stimulus number ended up being $787 billion; Romer reportedly wanted that number at $1.2 trillion and wanted the job creation efforts to be more elaborate and focused on long-term, permanent positions as opposed to stat-juking temp gigs like the Census.
In the end the most telling thing about Romer's resignation is that she was really the only person close to Obama's economic inner circle who isn't a former Clintonite or Rubinite and isn't either a former Wall Street banker or, like Geithner, a public-sector tool of Wall Street. (Even Orszag's replacement, Jacob Lew, is a former Citigroup official who worked in the Clinton White House with Rubin). And the reason that is significant is because the economic data being presented to us these days suggests two completely different narratives, depending on your point of view.
If you're on Wall Street, and you've seen the stock markets recover and the banks go from virtual insolvency two years ago back to record profit numbers now, then like Summers you'll think "everybody agrees" that the recession is over.
If however you're just some schmuck looking for a job somewhere outside the Beltway and/or lower Manhattan, and you're noticing that the only easy job openings this year were temp gig taking census surveys (and even those have dried up), then your view of things is going to be no way the recession has ended, "of course not."
In economics as in all other things, it all depends on how you look at things - and if everyone in the Obama White House is looking at things from the same vantage point, that sucks and is dangerous. Not that Christina Romer was a savior by any stretch of the imagination (one source of mine called her "totally mediocre"), but she was at least not completely a Wall Street pod job - she was pretty much the last inner-circle adviser who wasn't, and now she's gone, for whatever that's worth.
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124 Comments so far
Show AllSome are. Some are not. The subject can be quite subjective. Depending on your needs and wants.
Exactly.
Capitalist patriarchy rules as ever and is driving the vulture economy and the trashing of the earth. Obama the brand was false hope to stop building anger during the Bush administration.
Too many took and still take the bait.
If you are a job seeker, then yes.
If you are middle class, then yes.
If you are rich and still squeezing the other classes from the travesty that was Bush's tax cuts, then no.
Go go class war!
It's not a war.
It's an occupation.
True in a number of ways.
The class war is an occupation that doesn't care if you have one.
We occupy Iraq and Afghanistan.
Our national occupation is war ;-)
If anyone is looking for Obama's gonads, Bill Clinton and his happy band of financial thieves have them.
I thought he was a eunuch for Wall Street.
Obama never had any gonads - only a tornado of desire to become what he is, the most well known Nobody in the United States.
...And is managing the largest group of economic idiots ever assembled. If any of these dolts knew a dollar from a donkey, they've forgotten.
How far Matt Taibbi has fallen. From last July's "Vampire squid" to beating us over the head with the obvious a year later.
Why would anybody question the state of the "recession", when what we are experiencing is neither recession or depression, its paradigm change?
Agreed this one could have more teeth to it, but what's obvious to you and me isn't to our neighbors.
FWIW, this article is lifted from Taibbi's blog.
His blog comments, while generally interesting and certainly entertaining, aren't as ambitious or comprehensive as his full-fledged articles.
IMO, this wasn't so much an economics piece as an observation that Team Obama's reprehensible duo of Summers & Geithner continues to rule the economic policy roost, and that anyone who doesn't buy into their approach, or who fails to enthusiastically support it, is out on their ass.
Remember all that Doris Kearns Goodwin hype about Obama following in Lincoln's tradition of choosing a cabinet of rivals? Well, Taibbi's casual bulletin is the thousandth nail in that coffin, affirming that in fact Obama chose a Cabinet of Predators, including Amerika's most distinguished banksters.
"You don't get your budget deficit under control at a 10 percent unemployment rate," she (Romer) said last year."
And when you take into consideration the "real" unemployment number before data distortion, the 21+%(shadowstats.com)figure magnifies how much worse the budget deficit will be for years to come, not to mention the social unrest if this figure continues to increase.
"Should government refrain from regulation (taxation), the worthlessness of the money becomes apparent and the fraud can no longer be concealed." -- John Maynard Keynes, 'Consequences of Peace'
Ironically, as people exhaust their unemployment benefits and drop from the rolls of those receiving unemployemnt assistance, they are also no longer counted as being unemployed per the U3 index. Of course the U6 will expolde, but who in Washingtoon cares? Joe/Jane Sixpack doesn't know the U3 from chemical composition of his/her belly button lint and if he sees that unemployment is going down (being taken from the ranks of the unemployed because they have lost UE benfits) he will think that the republikkkans are responsible for this big drop in the unemployed.
Orwell would be proud.
Gotta love numbers. According to similar numbers, there is no inflation.
Are We In a Recession or Not?
We're in a depression.
If your in DC or on Wall st. it's a party, what's the problem? If your not and you have a job it's a Recession and your praying daily you can hold on to the job you have. If U don't have a job and millions no longer do or are working part-time ( almost as bad) then it's definitely a DEPRESSION. I've lived through many recessions since the 60's when I began working and none were anything near as bad as this one. I'm 61 and out of work and I don't expect to ever work again if present trends continue. How I will live is up in the air?
Seaglass, I'm nearing your age and I recently had someone tell me an interesting factoid: even the low-paying, no-benefit fast-food jobs, once available to those over 55, are now all going to desperate people under 30. Seems, according to what I heard, the fast-food joints can now pick and choose in the wide-open job market, and they want to project a 'youthful image,' so no more graybeards behind the counter. My sympathies on your job search but I think you're right -- there isn't any work out there for folks over 50 and damn little for those under that age.
You may wind up doing what I had to do, start Social Security at age 62, and get by as best as you can. It's less money, but it's survival.
Of course, the anti-Social Security people want to raise the retirement age because, "People are living longer." Yep, but they're not able to work even as long as they could a decade ago, because of recession and age discrimination ...
That's true. I know several people over 50 with long work experience and good educations who can't find a job even at half the salary they were earning before. "Over-qualified" is the most common reason given for rejecting these over-50s. Curiously, a few of them who were in IT and programming were rehired later by the same companies that had laid them off as 'temporary consultants' without benefits or pensions. They were brought in to train new workers in the systems they helped set up, or to correct the ungodly mess left when the new hires, or their equally dense supervisors, tried to fix the systems. Needless to say, they were let go after the panic passed, but the company knows it has them them over a barrel -- no one else if going to employ them at their age -- so they can be rehired as temps when the next panic hits. It's the era of the disposable employee, especially if you're over a certain age. One thing's sure: If this miserable situation isn't corrected soon -- and I don't think it will be -- we are headed for an economic collapse that will make the Great Depression look like a paper cut.
When soviet Premier Nikita Khrushchev predicted that the socialist republic would "bury" US capitalism, his oppositional emphasis was somewhat off the mark.
Endemic internal corruption buried the soviet system first.
Home-grown laissez-faire capitalism will bury itself.
And bury the hapless russians yet again.
On election night 2008, I was out in the streets watching people celebrate. I fell in with an older African-American woman who had been drinking and appeared to be feeling pretty good about the results.
But as we were about to split up, she leaned over and said, "I want to tell you something. You know how the white man always gives the black man stuff, after he's done with it. Think about it."
I wasn't sure what she meant then, but I see it now. The rulers are done with America. The only thing we're good for is being cannon fodder in their wars. Otherwise, it's ever-downward with Summers presiding over the destruction.
When do we fight back? And how?
I think it's too late GreenDragon. The die has been cast. As someone else noted, you need to find ways to work together to deal with the collapse.
"I want to tell you something. You know how the white man always gives the black man stuff, after he's done with it. Think about it."
That's one hip woman.
GreenDragon: Chilling but irrevocably astute observation by that woman you spoke with. Thank you for passing that along.
poitou: Good reply. I (sadly) agree that it's too late. We do need to find ways to work together for our collective survival.
***
To hell with them, every last one. I mean to go around them and I will not give up. I'm damned if I'm going to allow my dignity to be hammered into submission at this late date.
Recession...the word is a smokescreen !
The majority of Americans now have a permanently reduced standard of living, reduced wages, reduced opportunity, and higher living costs such as health care and education.
The real problem with the American economy is that all the money it at the top. This has become so extreme that the majority can no longer participate in the consumer economy or find jobs that provide a living wage. What a surprise, the economy is in decline with millions unemployed and many working for very low wages.
And to make matters worse, $Billion are being drained from the economy by the corporate imperial war crimes in Iraq and Afghanistan. These "wars" are about global hegemony over the resources in those regions. There will be no net benefit to the American economy from these corporate fascist occupations. This is public debt for private profit with endless human suffering.
What we see now in our economy is not an accident. The increased transfer of wealth (and reduction in their taxes) to the elite and the reduction in earnings for the working class has been a gradual process since the 1970's with both Republicans and Democrats participating in the destruction of the American dream.
It is time for a populist revolution, but I must admit, I am not sure how that will happen ?
"It is time for a populist revolution, but I must admit, I am not sure how that will happen ?"
It won't happen. Americans have been thoroughly trained to be obedient servants.
Well said.
It's the pondering your last question that has freaked me out the most.
The building blocks of a police state have been put into place, and for those who have been paying attention, this is not idle paranoia.
The Oilbomber Administration has continued putting such building blocks into place, with increasing, not pulling back, domestic spying by not only the NSA, but the thousands of private contractors exposed in Dana Priest's excellent expose.
The Security Industrial Complex being shoveled money, joins the Military Industrial Complex. The only thing that matters economically to policy makers is keeping their Corporate sponsors happy. The corporate sponsors that matter to them, are all now global players that have absolutely no allegiance to the bottom 90 percent of Americans, who's demise seems to be their secure path to profits. They don't really need American consumers anymore either. Sure, they want security, but the global players don't have a problem with that, with their worst nightmare being living in a locked down gated compound with a helicopter pad and some paid bodyguards from Ze.
If something big does start to happen, with more and more people with absolutely nothing else to lose hitting the streets, whatever coalescing of common interests might foster some sort of "movement", the leadership of such will scrutinized by the new security state like no other time in American history. When the new police state in America goes full swing to counter such, then maybe finally the dumbed down populace might start asking some pertinent questions of how did we get here, and "what is that patriot act thing you're talking about?".
Too late.
What blows my mind, are a lot of people who are aware of things like the Patriot Act, and that the current wars are resource wars fostered by the shadow government, still refuse to take another look at 9/11.
That is the crux.
Read Jack London's "The Iron Heel," and "People of the Abyss."
Read Sinclair Lewis' "It Can't Happen Here."
Reread Orwell's "1984" and "Animal Farm."
These authors are being proved prophets every day.
Watch this excerpt from the film "Network." I was stunned in 1976 that that much truth would be allowed into a movie for the general public, but apparently nobody was paying attention.
http://www.youtube.com/watch?v=CeCMSLP3Wy8&feature=related
A voter's strike would be the first step to an organized peace revolution.
Without a strike it would only insure that there is no organized resistance to the war machine on voting day.
There is a way forward but we must act together or hang separately which would be chaos and a crack down when things get worse.
We are not poor enough for peace yet but while we are waiting for that we could combine the voters strike for peace and justice with a write-in effort which would show up as recorded "No Votes" or virtual none of the above and "No Votes" are counted.
If you are fed up what will you do? If we stay home on purpose the smaller percentage of voters will show up in the counting... or should anyway but it is something that has not been tried so far.
I say they will pay more attention to a voters strike/write-in revolution than any peace march or endless letters. We need those as well but this would be a new organized action and it won't cost a dime and the Corporations will take notice because the billions they spend won't be effective against a combined Strike/Write-in.
If we got serious and passed the word, the politicians might think they could lose their jobs too.
If not now, when... a voters strike is a peoples vote of NO CONFIDENCE! America needs one don't you think?
Vote: None of the above. Vote for your city councilperson, your school board administrator, etc.; but when it come to the House or the Senate or the White House, if there are no real choices vote: None Of the Above.
Bricks, bottles and barricades.
and bullets.
Can't subscribe to that Slim. If you abhor war, exploitation and injustice, you don't pick up a gun and engage in war. They win in that scenario as you become part of the problem. What do these corporate fascists value above all? Treasure and property. Therein lies the key to any proposed solution.
The answer to this economic question may be the the pie chart. If you're lucky you get to eat a piece of Supply Side Pie. If not, then you get a piece of Humble Pie. One piece puts you on Easy Street. The other just puts you on The Street. One piece gets your garbage picked up. The other has you picking up and eating garbage. That is the " new normal " and it is now as American as apple pie. Trust me, I was a community organizer and worked, hand in glove, with the Piemakers.
How Pie-etic, and true.
What evangelicals really pray for: pie in the sky, bye and bye, lord, bye and bye.
LOL, but apparently the Christopublican God they so adore has decided to serve them a pie in the face while they're here. What was the line from 'Animal House'? "Drunk and stupid is no way to go through life." Imagine how horrible it must be if you're not even drunk.
Cheers to Matt Taibbi for writing with a clear and basic voice that's widely digestible.
The Right have been successful with simply yelling that Obama is hell bent on "wealth distribution", which apparently seems to mean taking from the middle class and giving it to drug addicts and violent criminals. This article should help make the "Joe the Plumber" aware that competing economic perspectives are being dominated by the interests of the powerful elite to the detriment of the masses (novel concept).
I do wish Taibbi went further and challenged Romer's contention that stimulus for direct job creation should be tacked on top of the 800bn handed to Wall St. as opposed to being the largest piece of that pie.
"The Right have been successful with simply yelling that Obama is hell bent on "wealth distribution""
That happens to be true: he's distributing all the wealth to the richest .01%
"Supply side economics works. The money went to Wall Street, they got their bonuses and they are hiring."
Really? I thought they bundled the cash into bales and flew daily flights in enormous cargo planes from their headquarters in Stamford,CT to the Cayman islands to deposit it in numbered accounts.
In other words Mattt, WE'RE SCREWED!!!!!
Obama has bought into the Republican crapola that has completely stiffed us Seniors (we who aren't rich). Perhaps many, like me, have been victims of Legalized Corporate Greed, which allowed the best and the brightest to show us the door, while they took the money and ran.)
Obama (the good Republican that he is) has bought into the Republican lies about Social Security and Medicare. There will be no increases in Medicare until before the next election.
Medicare is paying less and less, and Rx cost increase on a regular, obscene, basis - because they can. And then there's Senator Boobie Hatch's Donut Hole. Do you suppose the fact that these 'Patriotic' vermin write the laws has anything to do with it?
The plan, of course, is to get rid of us because we are a detriment to their bottom line.
I am thinking of organizing a 1,000,000 Senior Suicide-March on Monument City. Some of us must sacrifice for the good of 'our' country.
This would be good for America. Great saving could instantly be realized, money needed now to pay for the PWs (Perpetual Wars).
The smell would be offensive to the privileged (ie. leaders), but they can hire slaves to quickly clean up after us, so this unfortunate collateral incident could quickly be swept under the rug.
Let me know if you would like to join in; however, I think we should limit the initial march to 1,000,000.
I can see the dissembling in the media now:
"Bob, you're down there with the million senior march now. What seems to be happening?"
"Well John, it seems like the heat in Washington, D.C. is too much for them, they are collapsing like flies, we have medics here to assist them, but most of them are not responding. The hospitals are stuffed, so we have them in make-shift tents providing first aid."
"What are do they seem to be marching about?"
"That's anyone's guess John. No one really knows. I think it might have to do with the tea party though. This is Bob reporting live from Washington, D.C."
Great response Poitou.
"Daddy, where's grandma?"
In P.D.James dystopian "Children of Men" (the novel, not the crapola movie), in a future where humans had lost the ability to reproduce, surplus seniors would voluntarily sail off in candle-lit boats to be scuttled at sea, drowning them all, in order to lighten the burden they placed on society.
Unknown to those watching reverently from shore, the ankles of the "volunteers" were chained to the bottom of the boat.
Soylent Green was better! Great music, great fields and wildlife!
"Romer is a former Berkeley professor who was brought into the White House for two reasons; one, she was an expert on the Great Depression, ... and two, she lacks a Y chromosome"
Great, there are millions of unemployed, our infrastructure is disintegrating, our industrial base is being abandoned, the country is teetering on the verge of bankruptcy, and there is a real possibility we may collapse like the Soviet Union. So naturally, before the white house chooses their economics advisers they have to check under the hood for a clitoris. We're doomed.