One of these monthly payroll reports will signal a turn in the economy to self-sustaining growth, and splatter the bond and mortgage markets all over the windshield.
Not today. The payroll positive in August: Non-government jobs rose by 67,000 (half of those in unaffordable health care, the only sector to gain jobs every month of the recession).
Details were thin cheer: Overall employment fell 54,000 in August, as cuts in one-time Census workers and other government jobs overwhelmed the private gain; and a June-July revision found that we did not lose 352,000 jobs, only 229,000.
Flat, going nowhere … but not a double-dip. Therefore, sell safety-bonds: 10-year T-notes jumped to 2.75 percent from 2.47 percent on Wednesday, but mortgages have held at 4.5 percent.
In the absence of double-dip or recovery, the policy vacuum hardened.
The doves at the Fed need ugly data to push the hawks aside, and allow hatching of more quantitative easing (call it QE2?), the direct purchase of financial instruments.
This is an election year, but the most peculiar in modern times.
The White House finds the economy so difficult that foreign policy looks attractive.
Old joke: Walking on a beach, a man finds an old brass lamp, rubs it, and out pops a very small genie.
GENIE: Ya get one wish. Let’s have it.
MAN: What about three wishes?
GENIE: I’m a little Genie. Move it.
MAN: Hmmm… altruism, or selfishness … Mr. Genie, my one wish … give us peace in the Middle East.
GENIE: Hey! I’m a little Genie — gimme something I can handle.
MAN: OK, to hell with mankind. Mr. Genie, I would like one more wildly romantic weekend with my wife of 52 years.
GENIE: (Long pause. Very long …) Hey! Ya gotta map of the Middle East on ya?
The White House adopted former U.S. Sen. George Aiken’s (R-Vt.) prescription for Vietnam: Declare victory, leave, and have a parade. "The end of combat" in Iraq does not quite square with the 50,000 troops still there. For cooks and bakers, maybe … mechanics … and the bands. Music is good.
This week we’ve got Egyptian President Hosni Mubarak and Israeli Prime Minister Benjamin "Bibi" Netanyahu in town, and we’re going to "solve" Palestine.
In any normal world, the Republicans would move to the middle to take advantage of a country annoyed with President Obama’s old-tired-left performance. The center gave him a landslide, but the center has not gotten center in return.
The Republicans do have one old political law to support their grumpy silence: "Never interfere with an opponent who is committing suicide."
However, the Republicans are swilling hemlock of their own in the Calvin Coolidge clubhouse, locked from the inside, lest anyone try to join them. Everybody who likes "I’ve got mine, you’re on your own" is already in.
Amazing. This is a democracy, and our government is supposed to mirror the people. Today’s detachment — abandonment — of the center and Main Street by both parties is without precedent: a fun-house mirror.
Yet, maybe the mirror is accurate: The people do not know what has happened to them nor what to do about it, and thus politics are lost in empty space.
All economic-fix proposals on the table are reruns, trying to stimulate "aggregate demand." More stimulus spending (less money, but better-targeted), tax cuts (payroll tax holiday?), QE2 — all the same deal, old-fashioned efforts to "jump-start" the economy that failed in mass and are not likely to work in mini.
Discussion of structural issues has halted. Some big part of our unemployment problem dates to the mid-’90s rise of predatory exports from Asia.
A new do-nothing, embarrassing delegation leaves next week to beg in China. Some say that labor force skills are obsolete, yet age 55-plus employment is rising, and it’s youth that’s in trouble.
Last, the elephant in the structure: The financial system cannot generate credit, and most of the economic glitterati think that’s OK. We borrowed too much, and now we have to pay it back. Suffer. It’s good for you. It made better people of your grandparents.
Void it is, until the economy declares itself. And it will.
Chart courtesy of Calculated Risk.
