Friday, April 5, 2013
Random ruminations from your resident curmudgeon...
The March unemployment numbers were released today, and they were disastrous. Non-farm payrolls, the measure of the new jobs created in the economy, increased 88,000 in March. Expectations for new job creation had been between 150,000 to 190,000 new jobs. The unemployment rate FELL from 7.8% to 7.6%, which on the surface would appear to be surprising and counterintuitive with the anemic job growth. However, when the numbers are analyzed, we find that the labor force participation rate- the rate of all people working to work eligible people- collapsed to a 30 year low of 63%. That means that although the unemployment number may be improving, it is because the fewest number of people are in the work force since the first term of Ronald Reagan. Understand that to begin to bring down the unemployment number, the economy has to create around 250,000 new jobs per month., and we are not even close. Also remember that we have spent $3.6 trillion dollars to stimulate the economy and keep it from slipping into a recession. That stimulus has done nothing but add to the debt and distort the markets.There will be a lot of discussion, argument, and finger pointing as to the cause of this dismal number. Many on the left are blaming the sequester and the fact that government spending has been ever so slightly curtailed. I think that the confusion over the muddled policies out of Washington, the concern over the ever ballooning debt, and the rapidly increasing taxes and regulatory costs on the job creators may be a better place to start looking.
Veni, Vidi, Velcro- "I came, I saw, I stuck around."
As mentioned above, the labor force participation rate has dropped to a 30 year low. While we have averaged creating 150,000 new jobs over the past 12 months, another interesting trend has emerged. Approximately 250,000 new applications for disability income are received monthly by the Social Security Administration. That number is stunning, and today, over 11 million U.S. workers receive Social Security disability payments. That is the highest number in the history of our nation. Here are some points of comparison: in 1960, when there were many more jobs that required physical labor than today, .65% of the labor force participants were receiving disability payments. Today, that number has grown to 5.6%. In 1960, there were 134 American workers for every officially recognized disability case. Today, that number is 16 to 1. The number of people on disability has been doubling every 15 years, but now the rate of growth is accelerating rapidly. Lest you think that is the aging Boomers that are claiming disability, the Social Security Administration reports that the average age of a disability income recipient is dropping. A legitimate question that we all should ask is have disability payments/programs begun to replace the welfare system in this country? Benefits are usually better under disability and have no time limit. The more salient question is how long can you and I as tax payers continue to support this type of system?
My wife was injured in a kitchen accident while cooking Chinese food. The doctor has told her she may never wok again.
Think back to the early part of 2007. The Federal Reserve, under Alan Greenspan, had been supplying a lot of easy money to the banks and the markets were soaring as a result. Mortgage interest rates were some of the lowest that had been seen in decades, and if you could fog a mirror, you could qualify to buy a house. We all painfully remember what ensued: the housing bubble burst, taking down banks and property values, and the taxpayer was called upon to bail out Fannie Mae and Freddie Mac, the quasi governmental agencies that bought all those bad mortgage loans. Mortgage lending requirements were suitably tightened and the arduous process of working through massive foreclosures and bailing out the mortgage giants began. 5 years later, the Obama Administration is asking banks and mortgage lenders to make more loans to people that currently do not qualify for a home loan because of tightened lending standards. Administration officials say that the rebound in the housing market is leaving too many people behind because they do not qualify for a mortgage. In fact, the Administration has asked the Justice Department to give banks and mortgage lenders assurances that these institutions will not be prosecuted if the loans to riskier borrowers go into default. Friends, you cannot make this stuff up. The very same practices that created a massive real estate bubble and the subsequent mountain of foreclosed properties are being re-introduced. This after a brutal five year period of cleaning up bad loans, massive losses by banks, scads of foreclosures, and taxpayer funded bailouts of FHLMC and FNMA to the tune of over a trillion dollars. This Alice in Wonderland approach to governing and life is doomed to failure.
Blood is thicker than water, but it isn't as refreshing after a long run.
And that, my friends, is my view.