New Jobless #s .. yikes. Inflation?

[blazespinnaker]

http://news.yahoo.com/s/ap/us_economy

Love to know where inflation is going to come from here. These people are losing their jobs due to the disintermediation of the internet, technical innovation, and the vastly larger labor pool of globalization which is also greatly enabled by the internet to outsource/work anywhere.

It's time to reduce the maximum # of weekly working hours before overtime kicks in to reduce unemployment and to start doing some massive technical innovation and automation in North America to be more competitive with Germany (which has been doing EXACTLY that) and China.

Huge tax credits to anyone who actually *destroys jobs* via creative destruction should be the order of the day. Tax credits to those who create work sharing.

What's really sad about this is that Obama and friends couldn't even rig it so unemployment would trough before election day.

[c1ue]

Re: New Jobless #s .. yikes. Inflation?

Blaze,

Inflation isn't always a monetary phenomenon. EJ and before him another iTuliper (can't recall offhand) pointed to the Wal-Mart prices increases.

I think the Wal-Mart crowd can definitely be conflated with the underemployed/unemployed crowd no?

[Rajiv]

Re: New Jobless #s .. yikes. Inflation?

Blaze,

Inflation isn't always a monetary phenomenon. EJ and before him another iTuliper (can't recall offhand) pointed to the Wal-Mart prices increases.

The logical outcome of this whole crisis should be that the Walmart heirs lose in their attempt to gut Estate taxes, and we go back to the late 50's in terms of income tax rate structure (adjusted for inflation) and have a massive works program. That may begin to set things back on track.

However, I do believe that over the last 30 years, greed has always trumped logic in American politics -- starting with the oft quoted "Mantra" - "Greed is Good."

[jk]

Re: New Jobless #s .. yikes. Inflation?

http://news.yahoo.com/s/ap/us_economy

Love to know where inflation is going to come from here. These people are losing their jobs due to the disintermediation of the internet, technical innovation, and the vastly larger labor pool of globalization which is also greatly enabled by the internet to outsource/work anywhere.

we know, for example, that unemployment was notably low during the notorious inflation of the 1970's.

[slippery]

Re: New Jobless #s .. yikes. Inflation?

we know, for example, that unemployment was notably low during the notorious inflation of the 1970's.

Unions had pricing power in the 1970s and could force wages up to keep the price spiral spinning. Unions, with the possible exception of public safety workers, have very little pricing power now.

When we entered this crisis, inflation was low. When we entered the 1970s crisis, inflation was high. Minsky spent a bit of time discussing this -- initial conditions make a difference.

Those are two differences between now and the 1970s that make the likely outcome different.

[we_are_toast]

Re: New Jobless #s .. yikes. Inflation?

The logical outcome of this whole crisis should be that the Walmart heirs lose in their attempt to gut Estate taxes, and we go back to the late 50's in terms of income tax rate structure (adjusted for inflation) and have a massive works program. That may begin to set things back on track.

However, I do believe that over the last 30 years, greed has always trumped logic in American politics -- starting with the oft quoted "Mantra" - "Greed is Good."

Agreed. America is so far off on the greed track, I see little hope that we will be willing to make the sacrifices needed to actually build a better country for our children.

[Starving Steve]

Re: New Jobless #s .. yikes. Inflation?

When we entered the stagflation of the 1970s, inflation was high, and inflation only got higher throughout the decade of the '70s as unemployment went UP. It would appear to a casual observer--- not an economist--- that unemployment and inflation are linked. They are joined at the hip.

I won't listen to the dribble from economists to-day, or ever. They are, and always have been, the dumbest of the dumb.

To-day, during the Great Recession, we have high unemployment and rising inflation. As the inflation goes higher, the unemployment will likely get worse. A double-dip to the misery of the Great Recession is all but certain. This is what the performance of stoxx on Fall Street appears to be telling us now.

If there is a path out of the misery of the Great Recession, it is to un-do everything Bernanke and the Obama Administration have done. The solution would be to raise interest rates, to punish dead-beats, to stop bailing-out bankers, to hike taxes, to declare a programme of national austerity, to raise the dollar value, to put common people to work on public-works projects, to foreclose on mortgages, to pay-down deficits, to let states like California default, to open borders, to welcome immigrants, to build atomic power plants, to develop heavy oil, to drill for more oil, to get the ecologists out of energy planning in Washington, to cut federal spending, and to close federal departments and agencies such as the Dept. of Education, the Dept. of Agriculture, and the Environmental Protection Agency.

[blazespinnaker]

Re: New Jobless #s .. yikes. Inflation?

Rising inflation? I don't see it. I see oil prices dropping, I see wages stagnant, I see natural gas prices dropping. I see house prices dropping, rental rates stagnant. No price pressure out of China.

Are certain things costing more? Sure, if you look hard enough, I'm sure you can find some things rising in price .. but generally, I see the 30 year bond at historical lows. Not just in the US, but in Germany as well.

[Starving Steve]

Re: New Jobless #s .. yikes. Inflation?

In the U.S, the Federal Reserve Bank is buying the 30 year bond to make the bond have a value by fiat.

Thirty-year money should be worth something like 8% in America, but Bernanke dictates 2.6%, so that is the so-called "market". As they say, "Love it or leave it."

Was the U.S.S.R. worse?

[ThePythonicCow]

Re: New Jobless #s .. yikes. Inflation?

to declare a programme of national austerity

I'll believe in austerity when the powers that be honestly try to apply it from the top down. If "trickle down" was such a hot deal for lower taxes, reduced regulation and bailouts, why shouldn't we use it for higher taxes, increased regulation and claw backs?

Meanwhile, back in the real world, I fully expect any "austerity" to begin at home ... in the (remaining) homes of the (shrinking) American middle class. I say no to that.

[c1ue]

Re: New Jobless #s .. yikes. Inflation?

Rising inflation? I don't see it. I see oil prices dropping. And the I see wages stagnant, I see natural gas prices dropping. I see house prices dropping, rental rates stagnant. No price pressure out of China.

Are certain things costing more? Sure, if you look hard enough, I'm sure you can find some things rising in price .. but generally, I see the 30 year bond at historical lows. Not just in the US, but in Germany as well.

Again you seem to be speaking mostly from your own views, as opposed to from any actual data.

Oil prices, for example, are falling from their 1 year high. But they're still more than twice what they were in 2004, and have been rising for over a year:

Historical oil prices 2002 to July 2010.PNG

I can as easily say that you can find falling prices, if you focus on FIRE related areas.

[blazespinnaker]

Re: New Jobless #s .. yikes. Inflation?

At the end of the day the 30 year long term bonds are globally at historically low rates and the Bond Vigilantes are buying.

You're a smart guy c1ue, but you're not a 100B bond fund manager.

[Forrest]

Re: New Jobless #s .. yikes. Inflation?

The solution would be to raise interest rates, to punish dead-beats, to stop bailing-out bankers, to hike taxes, to declare a programme of national austerity, to raise the dollar value, to put common people to work on public-works projects, to foreclose on mortgages, to pay-down deficits, to let states like California default, to open borders, to welcome immigrants, to build atomic power plants, to develop heavy oil, to drill for more oil, to get the ecologists out of energy planning in Washington, to cut federal spending, and to close federal departments and agencies such as the Dept. of Education, the Dept. of Agriculture, and the Environmental Protection Agency.

Telling the truth wouldn't be a bad thing either, presuming our populace still can, or even wants to.

I'd just love to have fines for anyone who says or prints anything that can be proven untrue...we'd be down to even a short page in the Wall Street Journal!

And heck, maybe the fines for lying verbally or in print, could replace the capital gains tax, and business would begin to flourish, getting rid of all the underemployed, promote the saving and investment of money, and other nice things!

[blazespinnaker]

Re: New Jobless #s .. yikes. Inflation?

Great idea, Starving Steve, close the EPA and be like China. I like heavy metals in my drinking water.

Heedless drilling for oil? Hell, tar balls are fun to play with! Nuclear plants? Cherynobl was a blast!

Protecting our environment and national defense are the two most important things that Government does. Unless the government was protecting the environment, free market forces would just completely destroy it.

Getting rid of the department of education is a good idea, but make work projects? that's insane.. A terrible allocation of resources. That's just big government.

[GRG55]

Re: New Jobless #s .. yikes. Inflation?

Rising inflation? I don't see it. I see oil prices dropping, I see wages stagnant, I see natural gas prices dropping. I see house prices dropping, rental rates stagnant. No price pressure out of China.

Are certain things costing more? Sure, if you look hard enough, I'm sure you can find some things rising in price .. but generally, I see the 30 year bond at historical lows. Not just in the US, but in Germany as well.

Yep...just like da man said: "Disinflation, followed by LOTS of Inflation". We still have time to read the safety card in the seat pocket in front of us, and buckle up our seat belt. We're gonna need it.