Recovery? What Recovery?

Frank DeMartini
Today, the initial jobless claim numbers were released for last week.  The news:  The same as the last few weeks.  The numbers are up.  Further, the rolling four week average for unemployment is also up.  Tomorrow, the unemployment rate for June is scheduled to be released.  Economists expect the unemployment rate to increase to 9.8% from 9.7%.  I believe it will be closer to 10% again.  People are saying that we are in a jobless recovery.  Are we in a recovery at all?  Is this the beginning of a double dip recession?  Or, is the longest continuing recession since WWII continuing?
These are all sobering questions.  However, is there an answer at all?
In some of my earlier columns, I have alluded to the basic economic principle that the economy is cyclical.  The recession will last until the economy itself corrects.  Massive stimulus bills, in my opinion, will just alter the cycle in the wrong way.  It may make things temporarily better, but in the end it will make things worse.  In this case, there is evidence that that is exactly what is happening.
There are a number of economists who feel stimulus spending in the Great Depression is what turned it into the Great Depression.  There are members of the EU now telling our President to stop the spending for the same reason.  However, he is not listening.  Maybe the leaders of the EU know what they are talking about.  The unemployment rate in Germany just dropped to 7.5%.  Today, the Euro strengthened against the dollar.  In fact, a report came out today saying that even Greece is in a better position that the US right now.
There is further evidence that the economy is not in a growth period.  At least, the American populace does not believe so.  On Tuesday, the Consumer Confidence Report came out and showed that the index had fallen ten points in the last 30 days.  Every major economist was predicting that number to be far lower.  Since that report on Tuesday, the Stock Market has lost more than two percent of its value. 
Car sales for June were way done from May although the year to year numbers are better.  (They couldn’t get much worse).  Housing sales have been down since the First Time Home Buyer Credit expired about 60 days ago.  This is almost exactly what happened to auto sales when the Car Buyer Credit ended last year:  More evidence that stimulus creates fake economic blimps.  Unfortunately, I also believe the same will be true of the unemployment rate when the temporary construction jobs and temporary census jobs expire.  We may be looking at 12% national unemployment in a year.  Remember, in an earlier column I pointed at that 410,000 jobs out of 440,000 created last month were temporary Federal jobs.
So, how do we get out of this mess:  Just leave it alone!  Stop creating fake blips in the economy by spending money we do not have.  Just stop.  Enough is enough.  An hour ago, I was listening to Chris Christie, the ballsy governor of New Jersey, on Sean Hannity’s radio show.  He is fighting constantly with the Democratic Legislature in that state.  The man makes a lot of sense and in my opinion could become the standard bearer of our party shortly, especially if his policies start to work.
He has recently been criticized for empowering the rich by vetoing a tax on NJ residents with more than $400,000 a year in taxable income.  The Democrats are all over him for this position.  He stated that once you raise taxes on the rich, the is nothing to stop raising them on all of the other classes as well.  Further, these are the people that create jobs.  He is also being called a traitor by the teacher’s union.  His answer to them is also simple.  Fifty five percent of people in NJ either lost their jobs or had pay decreases as a result of this recession.  Why should those 55% pay for the teachers to get pay increases with no loss of benefits.  They must bear the burden as well.  This guy makes sense!
His position is based upon the following:  New Jersey is bankrupt.  So, what is his position on how to get people back to work and the economy back on course:  Lower taxes, smaller government, less spending.  These are tried and true conservative positions.  It worked when Ronald Reagan was President for the country.  It will work for New Jersey now!
If only President Obama, Speaker Pelosi and Senator Reid would listen!

PS:  Here is a link in commemoration of July 4 weekend.  A July 4 article will be put up tomorrow or Saturday.

http://www.youtube.com/watch?v=IrV8QPQAhxo

Copyright 2010 by Frank T. DeMartini.  Permission to copy will be given freely upon request.

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5 Responses to Recovery? What Recovery?

  1. Billy Dean on July 2, 2010 at 12:49 pm

    Right on the money Frank!!!! Were has common sense gone that people think government spending can fix anything!!!!! Keep up the good work and have a happy 4th weekend!!!!

  2. Frank T. DeMartini on July 2, 2010 at 2:40 pm

    To further the statistics regarding this column, today the job numbers for June came out. Unemployment went down to 9.5%. On it's face that would appear to be a good thing. But, further examination shows that it is just the opposite. 125,000 jobs were lost and 625,000 people stopped seeking employment and therefor are not being counted. If they were counted, the unemployment rate would have risen to almost ten percent.

    Further, Factory Orders were down 1.4% for June. This is the worst number in nine months.

    To quote a good friend of mine, "hooray for change." Or, just I change it to let's "hope for change," in Novmeber.

  3. Craig Covello on July 3, 2010 at 7:27 am

    Frank:
    On april 25, 2006, Bob Nightengale of USA TODAY wrote an article describing that day in 1984 when Rick Monday saved the American flag from being burned in Dodger Stadium. It included this detail:

    "Today, questions remain: Why did these protesters, William Thomas, 36, and his 11-year-old son run onto the field to burn the flag? They were arrested and fined $60. Monday said he never was interested in asking. Attempts to locate Thomas, or to determine whether he's still alive, were unsuccessful."

    According to one blogger, The Los Angeles Times may have had a brief explanation. "The man who tried to burn the American Flag at Dodger Stadium was attempting to draw attention to what he claims is his wife’s 'imprisonment' in a Missouri mental institution, authorities say.' (LAT, 4/30/1976)"

    This may be more than just trivia, because perhaps it offers a partial explanation of why some people want to dismantle this country and start over. Perhaps vilifying America is a coping mechanism for those angry with their own personal circumstance, both here and abroad. Just a thought.

  4. Anonymous on July 6, 2010 at 10:54 am

    On July 2, 1776 the Thirteen Colonies, by virtue of the Second Continental Congress, voted to approve a resolution for independence resulting in the Declaration of Independence from Great Britain on July 4, 1776. And things went relatively well until 1915-1920 when Woodrow Wilson, a “leading?” intellectual of the progressive era, segregated the armed services, the lunch counters and told people of color they were intellectually unqualified for Princeton. History was rewritten with special people of color, women and slaves, patriots all of them, all but erased from the school, history and legislative documents.

    George Washington, the one man who truly never wanted the weight of history on his shoulders, the man who only want to farm, but never denied the call of destiny, the one President who is head and shoulders over every other President of the United States, but is hardly known, understood or remembered beyond the “lie about the Cherry Tree.” Why is history allowed this false characterization? What he and our founding fathers gave us, and is truly in jeopardy now, was faith in a spirituality, the “true” meaning and purpose of the constitution and the historical “truth” that the founding fathers were not bigoted white people they were fist and foremost patriots. What should be remembered on Independence Day and is slowly fading into obscurity is;

    Samuel Adams, the father of the American Revolution, who said “We have proclaimed to the world our determination to die freemen, rather than live slaves.” Sounds like abolitionism and he is remembered as a “beer.”

    George Washington was truly the indispensable man to America, who again and again returned to the field of battle in the political and battle field arena in defense of “his” country. There are non who can match his resume. George Washington was a very unique individual in that he did “unite” America.

    Few are made fully aware of the distinguished roles of many patriots of color who have been purposefully pushed into the shadows of history. This must be rectified. Peter Salem, a man of color, once a slave, was a Battle of Bunker Hill hero, as witnessed by Col. Trumbull. At the Battle of Lexington a clergyman of color, Jonas Clark gathered his congregation against the best trained army in the world and “fired the shot heard round the world.” Many were wounded and some died that day including Prince Estabrook, a slave, a Minutemen Private. Prince Whipple, a patriot of color, is in front of the boat in Emmanuel Leutze’s 1851 painting “Washington Crossing the Delaware.” James Armistead Lafayette was the first African American double spy. Frederick Douglass was quoted as saying “I am a Republican, a black, dyed in the wool Republican, and I never intend to belong to any other party that the party of freedom and progress.” If he were alive today he would counsel us “Find out just what any people will quietly submit to and you have the exact measure of the injustice and wrong which will be imposed on them.” This puts the lie to victimization. Joseph Hayne Rainey was the first African American to serve in the United States House of Representatives. Abolition and the woman’s vote was part of the Constitution, clouded over time with the issue of property rights. In 1776 both blacks and whites resisted segregation. Richard Allen, a minister of color, pushed to segregate black congregations from white control and racism won out. At one time the legislature of Texas was 60 to 70% black. Find that in any history book!

    Benjamin Franklin, one of the Founding Fathers, started the first network of racially integrated schools. James Madison was the Father of the Constitution. What would the Fourth of July be without him?

    And no Fourth of July celebration should be ever be tolerabel, complete or worthy without mentioning the wonderful, the patriotic, the brave and courageous women, some behind some very influence men, women like Abigail Adams, Betsey Ross, Martha Washington, Prudence Wright, Elizebeth Zane, Emily Geiger and many more.

  5. Phantom of Pulp on July 17, 2010 at 8:50 pm

    Interesting that the government is doing exactly the opposite of what a bankrupt would be encouraged to do.

    Generally, if you have credit cards you can no longer make the minimum payment on, the first wise thing to do is cut them up and stop spending.

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