US Loses 85,000 More Jobs in December 2009

I've been saying for maybe a year now that the economy likely would get worse before it got better. The trouble started back in the middle of the decade when the Federal Reserve System, under Alan Greenspan, caused the money supply to grow substantially faster than the real economy was growing. Much of the excess money, driven by Fannie Mae and Freddie Mac housing subsidies, wound up in real estate, artificially inflating real estate prices, creating a bubble that eventually had to burst. It did burst, as you probably know, starting in 2006 with the weakest borrowers in the so-called sub-prime mortgage market. The collapse of the sub-prime market led the bubble to burst in the rest of the housing market, dragging down the economy.

Starting in late 2007 the Federal Reserve System, then (and now) under Ben Bernanke, tried to stop what seemed like a likely recession caused by the first monetary bubble by--yes, that's right, by creating a second monetary bubble. It's a bit like trying to stop a cocaine addict from going through withdrawal by giving him more cocaine. I thought back in 2007 that we might have avoided a recession, but once Bernanke started inflating the money supply drastically faster than the real economy was growing, I predicted that we would have the very recession that he was trying to prevent.

Bernanke (and surprisingly, Greenspan) are Keynesian economists. Keynesian theory teaches that government can wave a magic wand and create new "aggregate demand" out of thin air. (We'll have more on Keynesian economics for those of you in my macroeconomics class.) By inflating the money supply, the government can create the short-term appearance that aggregate demand has risen, but when people figure out that it's just more money chasing the same level of goods and services, the monetary bubble bursts and rather than having more aggregate demand we actually end up with less of it. So by pursuing the fatally-flawed Keynesian polices to try to prevent the recession, Bernanke actually caused (or helped cause) the very recession he wanted to prevent.

Fiscal policy has the same effect as monetary policy: all the trillions of dollars of "TARP" and "stimulus" spending passed by the Democrats in Congress and supported by Republican President Bush and Democratic President Obama simply helps circulate all the new money that the Fed creates, making the bubble--and the bust--even bigger. You might recall those skyrocketing oil and gas (and food) prices in 2007, which hurt the auto and airline industries. The skyrocketing prices came directly from the Bernanke-Bush polices of inflate and spend. The stock market bubble of 2007, which alas for John McCain burst right after the Republican convention, also came directly as a result of the Bernanke monetary inflation. Obama and Bernanke have followed the same policies of inflation and government spending that led to the real estate and stock market bubbles, so it's not surprising that more than two years after Bernanke started them to try to stop the downward spiral caused by Greenspan's earlier inflation, we remained mired in recession.

Bernanke has testified before Congress because he's up for re-appointment and apparently he wants the job again very much. And has he learned his lesson, the lesson for which we paid so dearly in the 1970s and early 1980s, that government can't spend and inflate the economy into real growth? No. He sees his fatally-flawed policies, on the contrary, as having saved the economy from even worse. So more than two years after he started the current mess to try to clean up the mess caused by his predecessor, I'm still saying that I wouldn't be surprised if things get even worse before they get better.

You can read more about the bad employment news at
http://www.nytimes.com/2010/01/09/business/economy/09jobs.html?th&emc=th

2nd Quarter of 2009: Economy Shrank Faster Than Estimated

The economy shrank faster in the second quarter of 2009 (April, May and June) that originally estimated. The Bureau of Economic Affairs originally estimated that the US economy contracted by 0.7% in the second quarter. You might recall the Obama administration crowing about the smaller contraction (compared to the 6.4% contraction in the first quarter of 2009). Most likely a Republican administration would have crowed too, but a smaller contraction, while not as bad as a larger contraction obviously, means we're still in a recession.

As it turns out, the BEA now estimates that the economy actually contracted slightly more in the second quarter than initially estimated--by a full percentage point. Many economists predicted that the third quarter, which ended on September 30, will bring a 3% growth rate in the economy, which would be nice indeed after an already-severe recession. I suspect, however, that if we see any growth in the third quarter it will fall short of the 3% prediction. I wouldn't feel surprised to see continued contraction either. Keep your fingers crossed.

It will be interesting too, to see if one quarter of growth will lead the National Bureau of Economic Research, a private organization started by anti-market economist Wesley C. Mitchell, which declares the beginning and end of recessions, to declare the end of this one. In the past the NBER has always defined a recession as two consecutive quarters of contraction in the economy. By that measure the recession didn't start until late in 2008, a year after the Fed started its vain Keynesian attempt to prevent a recession by inflating the money supply. Suddenly, however the NBER changed it definition of a recession to something rather vague so that it could claim the recession actually started in 2007! I suspect that they made the change to make the Bush administration look worse. Will the NBER revert to the economic growth definition again to say it's over despite growing unemployment, in order to make the Obama administration look better, or will they stick to their new definition (whatever that might be) and wait until the employment picture improves? Stay tuned... :-)

http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

Unemployment Rose in September

This report came out a while ago and I've been meaning to share it. Despite the claims by the Federal Reserve Board that the recession has ended, the official unemployment rate rose in September, and not because the number of people who reentered the workforce exceeded the number of new jobs the economy created. The economy actually lost 263,000 jobs in September, worse than the 201,000 loss of August.

I've been saying for more than a year now that the Fed's inflationary policies, a vain Keynesian attempt to trick the economy into real growth by inflating the money supply, were only making things worse, as are the trillion-dollar Bush-Obama big business corporate bailouts, which crowd out real investment in efficient businesses. I've predicted for months now that things would get worse before they get better, and the prediction certainly proved true in September. Notice that the real unemployment rate reached 17%, the highest ever since the BLS started measuring the rate.

If the government stops trying to "help" the economy with more bailouts, borrowing and inflation, it will eventually recover on its own, but government could speed the recovery by spending less and cutting marginal tax rates. Presidents Kennedy and Reagan both got impressive rates of growth after making large cuts in marginal income tax rates. I don't see the current president and Congress cutting marginal tax rates or reducing the growth rate of federal spending (much less actually cutting spending, which hasn't happened since the 1930s) so I think we're still in for a long, bitter recession.


http://www.foxnews.com/politics/2009/10/02/jobless-rate-climbs-percent-september/

Liberal Baucus Proposes Fine for No Health Insurance

One definition of totalitarianism is a society where everything not forbidden is mandatory. Despite their penchant for using government to threaten the use of force (and sometimes actually use force) to achieve their social goals, liberals, however, tended to prefer a society where everything not forbidden is simply subsidized. As the following article demonstrates, however, liberals have been moving increasingly toward imposing a society where everything not forbidden is not merely subsidized but mandatory.

When I couldn't afford to pay my own rent even one month out of the year, I tended not to be able to afford health insurance either. The liberal "solution" that liberal leader Max Baucus proposes would have fined me about three months' rent when I couldn't even pay one month rent. Making someone who cannot even pay his own rent pay months' worth of rent for not buying health insurance would be funny, if it weren't an actual proposal from liberal Democrats. Welcome to liberal Democrat "compassion," better known as totalitarianism.

http://news.yahoo.com/s/ap/20090908/ap_on_go_pr_wh/us_health_care_overhaul

Rambo Rabbi Arms to Defend Congregation Against Terrorists

It's about time that American Jews started arming themselves against mass-murdering Muslim terrorists (and the occasional homegrown antisemitic terrorist). I wish more of us would arm instead of believing the fairy story that government can protect us at all times everywhere by banning guns. If someone will break a law prohibiting MURDER, he's not going to think twice about breaking a law prohibiting gun possession.

http://www.breitbart.tv/chosen-guns-rambo-rabbis-grab-revolvers-for-synagogue-defense

But Liberals HATED The Taliban!!

Some liberals, apparently, don't feel too happy with Obama right now, even though he had the lowest (most liberal) rating from the National Taxpayer's Union of any member of the US Senate. Liberal Democrats, it turns out, now want ONLY the "public option" or communist health care, and don't want something with even a little less government, like the fascist health care plan proposed by Hillary a scant 16 years ago that they all supported.

If that's not bad enough, some liberal Democrats don't feel too happy about Obama actually trying to destroy the Taliban in Afghanistan. You might recall that it was Hollywood liberals who, in the 1990s, make such a big fuss over the Taliban and how they treat women as property. Well liberals, what did you THINK was going to get rid of the Taliban--singing "Kumbaya" and holding candlelight vigils? What do a bunch of mass-murdering Muslim monsters care about your songs and candles? They're MURDERERS. Really liberals, if you'd try to think rationally a little more and emote a little less we'd all be better off. So Obama is doing what you WANTED him to do--getting rid of the Taliban--and you want to dump him for someone even further left. Good luck with that.

http://www.rasmussenreports.com/public_content/politics/current_events/afghanistan/20_say_pull_all_troops_out_of_afghanistan_immediately


http://www.rasmussenreports.com/public_content/politics/obama_administration/september_2009/does_obama_face_a_2012_challenge_in_his_own_party

Obama Reaches New Low in Daily Tracking Poll (-13)

Apparently accusing all the elderly, Medicare-receiving protesters of ObamaCare as unpatriotic, anti-religious right-wing radicals did not actually work for Obama and his liberal media proxies, and so his poll numbers continue to worsen, as Republicans widen their lead in the Generic Congressional Ballot. Members of the liberal media, who loved Scott Rasmussen when his polls showed Obama leading before the election and popular after it, have begun attacking Rasmussen for continuing to publish his polls now that they show Obama's growing unpopularity. I can't say I feel surprise, since liberalism, which simultaneously holds that all moral systems are equally valid and that a moral system that rejects homosexual marriage and abortion isn't valid, doesn't bother much with consistency anyway.

http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll

http://www.rasmussenreports.com/public_content/politics/mood_of_america/generic_congressional_ballot