Right now, we’re at 10% unemployment. While we think of this as bad right now, it may very well be the “passably good” of ten years from now, or even considered great.

I recently read an article that showed how, without a double-dip recession and things working along normally enough after a recovery, we’d be at around just above 8% unemployment in 2020. That’s with Baby Boomers retiring on schedule and normal annual growth in the workforce each year. Should the Boomer stick it out longer, then unemployment will be higher. Same goes for a less-than-average recovery or a dreaded double-dip.

A double-dip recession, which is a very real possibility if the government allows the 2001 tax cuts to expire in 2011, would see unemployment hit 13% and then wend its way down to around 9-10%. This isn’t some sort of crazy conspiracy theory. This is looking at the numbers and assuming normal stuff happens.

The upshot of this is that what we once considered horrendous will soon become normal to us.

Don’t quit your day job.

If companies are reporting higher sales numbers over this time last year, or seeing their sales pick up after a series of rotten months, don’t run out and celebrate recovery just yet: check to see if their competition went bankrupt. Which it probably has. Which is good news for the survivors, but terrible news as far as real job growth goes. With fewer companies in business, fewer total jobs exist – and fewer total jobs can be created in the long run.

Look to sales tax numbers. If there’s more sales tax being paid, then consumer demand – anywhere from 60 to 65% of total GDP – is on the way up. If not, then it’s on the way down. Simple enough, right? Well, let’s look at those numbers… (goes to look at numbers)

Oh dear. They’re not good at all.

Sales taxes in Texas are down 12.8% compared to this month last year, and this month makes five double-digit drops in sales taxes in a row for the Lone Star State. California’s even worse, and all states are in the negative in terms of comparing this year to last year. Ouch ouch ouch ouch ouch.

So where do the rosy estimates about national recovery come from? Surveys that ignore small businesses and favor weighting to major retailers who, after closing many stores, are seeing some loyal customers coming back to remaining outlets. But they’re not at all the whole story, as the sales tax receipts show.

PBS’ Frontline recently ran a story on the former head of the CFTC, Brooksley Born, and how she sounded an alarm about the then yet to happen meltdown in derivatives. Because her call for tighter reform flew in the face of Greenspan’s Ayn Rand-dominated philosophy of complete separation of markets and state, Greenspan and Clinton’s Treasury people shut her up and sidelined her comments.

This is why I say economics cannot ever become a belief system. It’s imperfect as it is and can’t be used as the basis for an ideological guide for policy. Actually, I’m not so thrilled with hidebound ideologies in politics. Those always lead to tears and suffering whenever the followers of an ideology try to bend reality to fit their view of the world.

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According to a recent article in The Economist, not only are the big banks paying out huge bonuses once again, the owners of the banks are just letting it slide without argument.

I thought one of the Hallmarks of Capitalism™ was that if one owns a share of a company, one directs said company. These banks lost billions of dollars for their owners, and yet these same owners are letting these record bonuses go out without argument. Are the owners of corporations sheep to the slaughter?

Some say they were legally obligated to pay them out. You know what? Corporations are legally obligated to not dump nuclear waste in drinking water, but they do it anyway. How about not paying out a nickel and letting their lawyers take on the corporate lawyers? Certainly, the corporation’s got a case with “they lost billions of dollars doing possibly illegal things.” Even if it’s not true, it sure sounds good and could save a few bucks in bonuses.

Sorry, but the Free Market isn’t. It’s a great idea, but it’s been heavily compromised by huge corporations that are now so powerful, they can shake down the government of the United States of America. The USA is hostage as a collective whole to the captains of industry we love to laud in our mythology and propaganda. We need laws to keep stuff like what just happened from happening, and we need laws to keep those laws in place. We used to have them and stuff like the Panic of 2008 didn’t happen… until they were repealed, which led up to the Panic of 2008.

The question is how to go about getting the megacorporations out of government. It’s still “We the people,” right?

Or was Abbie Hoffman right when he said, “It’s too late. We can’t win. They’ve gotten too powerful.”?

OK, all my students: quit gravedigging old threads and read this one, mmmkay?

Debt and Deficit

I saw a version of that chart in this article by John Mauldin. I strongly recommend you read it. He takes Macroeconomics 101 and uses it to examine our current situation. His conclusion: even the Obama projections of future deficits are not a good thing.

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The boys that make the Consumer Price Index, or CPI, are cooking the books. We use the CPI to keep track of inflation, which is a measure of how prices are going up. If inflation’s negative, then it means prices overall are going down. Simple enough… so how do they cook the books if all they do is look at prices?

Well, they take $4500 off the price of every car in the USA because the “Cash for Clunkers” program was in effect. That’s a fudge of biblical proportions: now all the inflation-indexed payments will be slashed because if inflation goes negative, everything tied to inflation for monthly adjustments also take a walk on the negative side.

While I think deflation is on its way, this is just a way of the USG dodging its financial commitments. It has the power to do it and get away with it. It wouldn’t matter who runs the Congress or presidency: this is a bureaucratic thing, for which the only cure is stronger leadership.