nat,

It is a statement of fact. Economics blogs with liberal political bents (such as The Big Picture) as well as liberal columnists such as a Paul Krugman have been making this argument for months. Why? Because it suits their political purposes. They were happy to ignore U6 when it was falling (seemingly contradicting their argument that the 2000s were a time of jobless recovery), but now they want to claim that it is objectively the best measure of "unemployment" (never mind that it doesn't strictly measure unemployment to begin with). It's 100% political BS.

I'm not surprised by your reaction. There is really no way one can argue that U6 is the "real" (i.e. objectively best) measure of unemployment out there. So you would rather ignore my post. And that's fine with me. You have less than 500 posts anyways. N00b

PS* To clarify, I am not saying that U6 is uninformative or unimportant. I'm just saying that it isn't anymore "real" than other measures of unemployment. It all depends on what you want to measure.

[Edited on December 2, 2008 at 10:09 AM. Reason : PPS* Looking back at the series, I'd say it had really been falling since mid-2003, which still fits]

12/2/2008 9:52:01 AM

You responded how I expected, missing your own root claim, not attempting to actually back it up.

Quote :

"Why? Because it suits their political purposes."

Ok, convince me that Barry has a political bend and I'll go back and read what you had to post. I'm aware of Krugman and would agree with you that he probably does have a bias, for this reason I discount whatever it is he might have to say. In truth, I don't actively follow any blog or whatever he might have. But, Barry I've watched for quite awhile, and there is no mistaking him for a pure numbers driven money manager. He thrives on taking any headline, be it from NAR, the BLS, ISM, whatever, and deconstructing it via the actual data that is driving it. I don't see how you can make that a political game.


Edit:

I'll go ahead and state that I don't know the details of his U3 vs U6 stance, but he has been right about this aspect

Quote :

"They were happy to ignore U6 when it was falling (seemingly contradicting their argument that the 2000s were a time of jobless recovery)"

I'm not going back to read everything he has posted since 8 years ago, but his recent posts clearly state that this has been the weakest post-recession recover since WWII (I think), one key of that being that wages haven't matched the gains in the economy. I don't know how this jives with U6, maybe you can interpret it.

[Edited on December 2, 2008 at 10:17 AM. Reason : .]

Edit:

Ok socks, I took a few minutes to google, and you're just dead wrong, again.

Is Barry ignoring U6 here in Feb of 2005?

http://bigpicture.typepad.com/comments/2005/02/new_column_up_a_1.html

Or, here he is in January of 2004, not explicitly calling out U6, but he is talking about U3
http://bigpicture.typepad.com/comments/2004/01/augmented_unemp.html

Quote :

"Secondly, the lack of new jobs reveals what a bogus stat the present "Unemployment Rate" is. Amongst the many Enron like statistics the government generates, this one is the silliest. Indeed, it is so misleading, that another statistic must be considered along side of it: "The Augmented Unemployment Rate.""

Also, as I noted earlier in reply to LoneSnark he makes this comment:

Quote :

"For more objective observers, this enormous disappointment is revealing of two things: First, the difficulty for traditional economists to make predictions in this very untraditional cycle. Predictions are difficult enough to make under the best of circumstances, especially when they are, as Yogi Berra noted, about the future. Given our perspective that this cycle is anything but normal, it is extrordinarily challenging to make reliable forecasts."

So what say ye socks? Looks like you're off by a mile here.


[Edited on December 2, 2008 at 10:28 AM. Reason : .]

12/2/2008 10:13:07 AM

^^

I don't know if Barry is really that liberal. He just likes to be a fly in the ointment. I have talked to him about U6 and Birth/Death on more than one occasion and his basic argument is "well I just want figures that reflect reality"

Regardless of whether it is consistent or practical to produce such figures. Or whether or not there is a way to scientifically verify his sense of "reality"

I thought he was finally easing up on U6 after I and others pointed out that if Paris Hilton decides to go party for a year because she can't get a 7 figure movie deal that she is U6 unemployed but I guess not.

12/2/2008 11:00:05 AM

^^ Barry? Haha are you on a first named basis with this guy?

Look, I’m not interested in debating whether the Big Picture is liberal or not. But you are not doing the best job of defending his arguments. In the article you cite where he uses the U6 measure, he is only referring to it as a point estimate of unemployment in early 2005. Why? Explicitly because it is higher than the “official” U3 stat!! As I predicted, he does not mention the downward TREND in U6.

Now, that’s the last thing I’m going to say about The Big Picture. I have always thought of it as a liberal blog, but if you disagree, that's fine. Maybe his motivations for using U6 are pure. I can't say for sure and I really don’t want to turn this conversation into you yammering about your huge hard-on for “Barry.”

My comments were focused on agent and his description of U6 as the “real” unemployment rate. And I still don't think that he (or "Barry") can back up that assertion. If you don’t want to talk about these stats, then we don’t need to go any further.

[Edited on December 2, 2008 at 11:20 AM. Reason : For Nat Not Smith]

12/2/2008 11:00:46 AM

Quote :

"But you are not doing the best job of defending his arguments."

You haven't said anything to question his arguments and lets face it, you probably aren't capable of doing so.

It has nothing to do with a hard on for Barry and everything to do with guys like you thinking you somehow have more insight into the economy than a professional who has been in the business of making money off of understanding it for many years. And when you start your arguments by completely mislabeling what someone like Barry is all about then everything you have to say after that is worth infinitely less.

Quote :

"In the article you cite where he uses the U6 measure, he is only referring to it as a point estimate of unemployment in early 2005. Why? Explicitly because it is higher than the “official” U3 stat!! As I predicted, he does not mention the downward TREND in U6."

If you'd do some damn diligence and follow links, you'd see he did just that (well, if you allow that it's obvious U6 will probably trend with U3)

Quote :

"The 5.2% rate has been decreasing from a peak of ~6.3% in mid-2002. This number represents the percentage of people working, relative to the total labor pool. But too many investors stop their research after seeing the headline unemployment number. As we have mentioned previously, headlines can often be deceiving. There are several other measures worth reviewing."

while also being "true Barry" and talking about looking at the underline numbers that drive the headlines.

Quote :

"Over the next few quarters, however, I expect this issue to have little impact on our recent intermediate term Bullish commentary. If anything, it will be spun positively, rationalized into a convenient excuse for Mr. G and his band of merry Fed Governors to maintain their monetary policy of “accommodation” and the ongoing “measured pace” of moving towards a more neutral stance. But make no mistake about it: This has very significant ramifications for the broader economy, as well as the market. Investors are well advised that they ignore the economic fine print at their own financial peril . "

The bottom line is this, whether U3 is correct measure, or U6 is the correct measure, or something in between, the man is spot on in his assessment that the truth is somewhere in there and it has a lot more to do with a basic hard to measure number that makes the headlines.

So...run right along I guess. Isn't it about time to change your politics again?

12/2/2008 11:32:25 AM

Quote :

"Now, that’s the last thing I’m going to say about The Big Picture. I have always thought of it as a liberal blog, but if you disagree, that's fine. Maybe his motivations for using U6 are pure. I can't say for sure and I really don’t want to turn this conversation into you yammering about your huge hard-on for “Barry.” If you don’t want to talk about these stats, then we don’t need to go any further. "

OMG! He dissed my favorite blogger in passing while making a substantive point on unemployment figures!!! Let's take a 6 post detour clearing my favorite blogger's name!!!

[Edited on December 2, 2008 at 11:42 AM. Reason : "True Barry"? Someone is in love.]

12/2/2008 11:36:46 AM

As an Obama voter, why would I think it a diss for you to call Barry a liberal?

The point you attempted to make was that he has a political slant and selectively chooses which figure he want's to "push" in his blog to make whatever point it is he wants to make. I pushed you to reveal how you think he is biased and you ran away like a little girl. I pointed out that maybe U3 isn't the perfect metric for unemployment and you attack me for having man crush on a very successful money manager. You've said nothing of value, so run along.

12/2/2008 2:13:07 PM

agentlion

In case you missed it through all the KY and tears, here is my post again. I repost it because calling U6 the "real" unemployment rate sounds very silly (and partisan) for the reasons described below. To avoid the whole business with natteringnabob, I removed my reference The Big Picture blog from the post. I do so not as a concession (I still think Big Picture is a liberal econ blog), but to show how trivial nat's comments were to the substance of my post (two words about some blogger distracted a conversation on unemployment for *6 fucking posts*.

Enjoy! And Please stop reffering to the U6 as the "real" unemployment rate.

---Reposted----

Wow, someone has been reading Paul Krugman's blog.
http://krugman.blogs.nytimes.com/2008/04/05/labor-market-deterioration/

Look, just because the liberal economics blogs tell you that this is the "real" unemployment figure, doesn't actually mean it is objectively the best measure of unemployment. It all depends on what you're interested in. There are 6 estimates of unemployment reported by the BLS nased on household survey data, U6 being the most broad. So broad in fact that it includes people that ARE employed (people that are employed in part-time positions for economic reasons). That's why it's better understood as a measure of "labor underutilization" than strictly as a mesure of unemployment.
http://www.bls.gov/news.release/empsit.t12.htm

So you really have to ask yourself what you're trying to measure when choosing which measure to look at. If you are strictly interested in joblessness (which I assume you are since you're talking about UNemployment), this isn't the measure you're looking for. Unfortunately, I think it's pretty clear a lot of pundits are just looking for the measure that fits their political agenda best.

For good evidence of this, try searching Paul Krugman's columns or blog to find him using the U6 measure before 2006. Chances are you will not find it. Why? Because U6 had actually been falling since 2002. Falling at the exact time that Krugman and others were complaining about a "jobless recovery".

Now, I'm not saying that U6 isn't useful. I'm just saying that it is only one of many measures of labor utilization we should consider. It is no more "real" than any other measure. Unless, of course, you have a political interest in picking the biggest number at any given time. But you're so objective and non-partisan, I'm sure you'd never do that.

[Edited on December 2, 2008 at 2:40 PM. Reason : ``]

12/2/2008 2:36:31 PM

Quote :

"For good evidence of this, try searching Paul Krugman's columns or blog to find him using the U6 measure before 2006. Chances are you will not find it. Why?"

Could the fact that his blog at the Times didn't come into existence until September of 05 have something to do with it? Just guessing.

Quote :

"Because U6 had actually been falling since 2002. Falling at the exact time that Krugman and others were complaining about a "jobless recovery". "

http://query.nytimes.com/gst/fullpage.html?res=980DE5DC103EF931A25750C0A9629C8B63

By PAUL KRUGMAN
Published: March 12, 2004

Quote :

"But the experts disagree. According to Alan Greenspan: ''I wish I could say the household survey were the more accurate. Everything we've looked at suggests that it's the payroll data which are the series which you have to follow.'' You may have heard that the establishment survey doesn't count jobs created by new businesses; not so. The bureau knows what it's doing -- conservative commentators are raising objections only because they don't like the facts. And even the less reliable household survey paints a bleak picture of an economy in which jobs have lagged far behind population growth. The fraction of adults who say they are employed fell steeply between early 2001 and the summer of 2003, and has stagnated since then. But wait -- hasn't the unemployment rate fallen since last summer? Yes, but that's entirely the result of people dropping out of the labor force. Even if you're out of work, you're not counted as unemployed unless you're actively looking for a job. We don't know why so many people have stopped looking for jobs, but it probably has something to do with the fact that jobs are so hard to find: 40 percent of the unemployed have been out of work more than 15 weeks, a 20-year record. In any case, the administration should feel grateful that so many people have dropped out. As the Economic Policy Institute points out, if they hadn't dropped out, the official unemployment rate would be an eye-popping 7.4 percent, not a politically spinnable 5.6 percent. "

I guess Greenspan is a liberal hack too huh? I might have a paltry number of posts, but it only takes 1 to reveal you're hackery.

12/2/2008 3:15:03 PM

what's sad, is that Socks`` used to be a good poster

12/2/2008 3:38:00 PM

natteringnaybob,

I said columns and blog posts. So sue me.

And I'm not sure how the Greenspan quote is relevant at all. He is talking about the pros and cons of household survey data v payroll data. He's saying we should pay more attn to payroll data. So in effect he's actually DISAGREEING with agents claim that U6 is the best measure of unemployment, because U6 is based on household data.

And the Krugman quote you bolded only proves my point that he ignores data that doesn't fit his political agenda. Notice that he is only talking about U6 (or what I guess is U6) as a *point estimate* (unemployment at a single point in time). He is deliberatley ignoring the *downward trend* in unemployment as measured by U6 during that time period (haven't we been here before).

You can see him doing this if you re-read the excerpt. See here that the only time he talks about the downward trend is when he talks about U3 data:

Quote :

"But wait -- hasn't the unemployment rate fallen since last summer? Yes, but that's entirely the result of people dropping out of the labor force. Even if you're out of work, you're not counted as unemployed unless you're actively looking for a job."

The exclusion of discouraged workers is only a problem for U3. However, U6 data INCLUDES discouraged workers and was STILL falling during this time period, which would seem to contradict Krugman's statement. So he ignores it. He obviously knows the data is out there. But he is IGNORING it.

Now honestly. You said yourself you really don't know anything about this stuff. Why are you even posting?????

[Edited on December 2, 2008 at 4:36 PM. Reason : vendication. ]

12/2/2008 4:07:21 PM

Nat and Socks

I think whether or not people are hacks is beside the point. You could be a hack and still happen to be right. However, I don't see any compelling reason to focus on U6.

When we think about unemployment we mean failure of the labor market to clear. If you are not looking for a job then you are effectively saying the prevailing wage is too low. For example, no matter how scarce jobs were, how many of us would not be looking if the prevailing wage was $500 a hour.

I admit that part-time workers is a stickier issue because they are not able to work as many hours as they would like, so in some sense the market is failing to clear.

However, there are some issues related to jobs and work hours that we don't have fully modeled. Like why can't most full time works have flex schedules? As such an hours issue is probably beyond what we are trying to get at with Unemployment.



If what you want is not a measure of the clearing the labor market but a measure of the people's suffering then you really have some work ahead of you. I don't think there is any number or index you can pull off the shelf that is going to give you that in anything approaching an unbiased way.

12/2/2008 5:06:51 PM

^ kwsmith2

Well, I was focusing on U6 because I was directly addressing agent's comment about it being the measure of "real" unemployment. Like I said earlier, If we're interested in trying to figure out whether unemployment is rising as a result of the business cycle (which seemed to be the case in a convo about the current recession), then I don't think U6 does a very good job.

It doesn't do a very good job, because it muddies the waters too much by including people working part-time "for economic reasons". Like you pointed out, there are many non-cyclical reasons for changes in part-time employment that would make attributing the entire rise in U6 to the business cycle a bit difficult. You seem to agree, but you also seem skeptical about other elements that are included in U6....

Quote :

"When we think about unemployment we mean failure of the labor market to clear. If you are not looking for a job then you are effectively saying the prevailing wage is too low. For example, no matter how scarce jobs were, how many of us would not be looking if the prevailing wage was $500 a hour."

This sounds like you're saying that we should not even attribute a rise in discouraged workers (included in U4, U5, U6) to the recession because they represent "voluntary" unemployment (the real wage is too low for them to even consider looking for a job). But I have to disagree. I think the rising number of discouraged workers has more to do with cyclical factors (job-search costs rising in times of a recession?) than with people suddenly changing their consumption/leisure preferences.


[Edited on December 4, 2008 at 2:00 PM. Reason : ``]

12/4/2008 1:41:08 PM

Why did everyone start calling Obama by his childhood nickname?

12/4/2008 3:37:18 PM

so this krugman guy won some nobel prize the other day or something didnt he?

12/5/2008 12:53:29 AM

This can't be good

http://www.telegraph.co.uk/finance/economics/3546471/Chinese-economy-1930s-beggar-thy-neighbour-fears-as-China-devalues.html

And surely they are pissed that all those MBSs they bought are worthless. Is this economic warfare?

12/5/2008 12:15:26 PM

It depends where market pricing is being determined. If U.S. companies, such as WalMart, are going to china and drumming up competition between Chinese firms then a devaluation of the Chinese currency would actually reduce China trade surplus in the short term, as WalMart uses a 10% yuan devaluation, for example, to pay 10% less (in dollars) to its chinese suppliers. Meanwhile, chinese importers are paying the world price and will be forced to pay the 10% more (in yuan) for their imports. In other words, dollars in falls by 10% and dollars out stays the same, so a smaller trade surplus.

[Edited on December 5, 2008 at 12:35 PM. Reason : .,.]

12/5/2008 12:33:49 PM

Quote :

"This sounds like you're saying that we should not even attribute a rise in discouraged workers (included in U4, U5, U6) to the recession because they represent "voluntary" unemployment (the real wage is too low for them to even consider looking for a job). But I have to disagree. I think the rising number of discouraged workers has more to do with cyclical factors (job-search costs rising in times of a recession?) than with people suddenly changing their consumption/leisure preferences. "

So yes, it is cyclical phenomenon but it is the way markets should work. That's why I don't count it.


So suppose that all wages and prices were perfectly flexible. Then a drop in real labor demand would lead to a drop in real wages, a reduction in the quantity of labor supplied and a new equilibrium. There is nothing inherently dysfunctional about that.

Basically what we are seeing is a reduction in the marginal value product of labor. This leads employers to pay a smaller real price, which pushes out the high marginal utility of leisure workers. Thus re-equilibrating the marginal value product of labor and leisure across the economy.

Unemployment on the other hand is a measure of the dysfunction of the market. There are people who want to work at the prevailing wage - including job search costs, but cannot. The market is not clearing and marginal utilities are not equalizing.



Now this is not to say that we don't want higher MVPL because that implies higher productivity. Just that it is not the same type of phenomenon.

12/5/2008 1:34:37 PM

Quote :

"It depends where market pricing is being determined. If U.S. companies, such as WalMart, are going to china and drumming up competition between Chinese firms then a devaluation of the Chinese currency would actually reduce China trade surplus in the short term, as WalMart uses a 10% yuan devaluation, for example, to pay 10% less (in dollars) to its chinese suppliers. Meanwhile, chinese importers are paying the world price and will be forced to pay the 10% more (in yuan) for their imports. In other words, dollars in falls by 10% and dollars out stays the same, so a smaller trade surplus."

Perhaps in the very short term but what they are expected is that price changes will induce changes in quantity, so that China will be exporting a higher quantity and importing a lower quantity.

This is an issue only because the US and many other developed nations do not target exchange rates. Otherwise a "race to the bottom" is just a race of monetary expansion, which is exactly what we need.

However, the US could be inclined to retaliate with trade restrictions that would be devastating.

12/5/2008 1:39:50 PM

also:

http://www.ft.com/cms/s/0/48ac15fc-c1bc-11dd-831e-000077b07658.html

http://www.youtube.com/watch?v=3l5GVP8-F08&feature=related

12/5/2008 2:04:49 PM

From what little information we have out of China, it seems as if the global slowdown is hitting China worse than the world's industrialized countries. As we would expect, since china's economy is heavily export dependent.

[Edited on December 5, 2008 at 2:46 PM. Reason : .,.]

12/5/2008 2:45:56 PM

idk but i'll take 9% growth anyday

12/5/2008 7:14:40 PM

The best statistic we think we have is that electricity production in China has fallen 4% from one month to the next. It is unlikely this has occured in conjunction with a 9% growth in GDP.

Back in America:
NY Times -- …82% of the job losses (1.932 million) were jobs held by males, and only 18% of jobs losses (430,000) were jobs held by females…Further, the November unemployment rate for men is 7.2% vs. only 6% for women, and the gap in jobless rates between men and women has been increasing for the last six months

[Edited on December 5, 2008 at 10:24 PM. Reason : ,..,]

12/5/2008 10:24:33 PM

Quote :

"82% of the job losses (1.932 million) were jobs held by males, and only 18% of jobs losses (430,000) were jobs held by females"

irrelevant w/o knowing what the ratio is in the company at large, or within the groups that have been cut.

12/5/2008 11:04:54 PM

I do not understand how knowing that would make it more relevant. As it is it does not mean anything beyond the fact that men respresent much of the construction, manufacturing, and finance sectors, which are contracting, while women tend to be better educated.

12/6/2008 12:38:05 AM

kwsmith2,

Quote :

"So yes, it is cyclical phenomenon but it is the way markets should work. That's why I don't count it.....Unemployment on the other hand is a measure of the dysfunction of the market. There are people who want to work at the prevailing wage - including job search costs, but cannot. The market is not clearing and marginal utilities are not equalizing."

It sounds like you want to have your cake and eat it too.

You want to say that unemployment is the result of the real-wage being higher than the market clearing level and that this bad, but you don't say why employers would refuse (against their own best interests) to lower their wages. I mean, if there are people out there wanting to work for less, why doesn't this bid down the real wage?

The answer has to be that there are COSTS to lowering the real wage--unions you would have to nagotiate with, contracts to break, etc. And these costs may make it more reasonable, from the firms perspective, to just lay people off instead of lowering their wages. Of course isn't that what they "should" do?

Firms are responding optimally (from their perspective) to costs of lowering wages just as unemployed workers are responding optimally (from their perspective) to perceived costs of looking for a job. The fact is that BOTH sets of costs results in outcomes that are not welfare maximizing (if your benchmark is a world without either costs) is an unfortunate consequence of markets being imperfect and costly to operate in. What I can't understand is why you want to ignore one set of costs and not the other, because it's clear both costs serve to complicate the market's response to demand shocks.

PS* Now you could try to go another route and say "oh no no what I was actually thinking of was employers paying higher than market wages to boost incentives work hard (Akerlof's efficiency wage model)" but that would lead us right back to the same conclusions. We have unemployed people that would want to work at the existing wage, but not because the market is "dysfunctional". Both firms and workers would be responding as best they could to the costs of operating in an imperfect market.


[Edited on December 6, 2008 at 2:25 PM. Reason : bbl studying for exams]

12/6/2008 2:02:31 PM

Quote :

"I mean, if there are people out there wanting to work for less, why doesn't this bid down the real wage? "

If prices are sticky on the way down, compensation is entrenched in fucking concrete.

Look no further than the UAW. They are actually arguing that salaries shouldn't be lowered when everyone on the planet would disagree.

Many salaries are contracted and aren't immediately negotiable.

Politically cuts in salary aren't viable. Bonus compensation is more flexible but it will take some serious wage stagnation before market clearing takes place and unemployment subsides.


Also, people feel they are "worth" a certain salary and it takes them some time to realize they aren't before they settle for what is available.

Look at mortgage brokers who were clearing six figures. Many of them will allow themselves to go through their entire savings, equity, credit limits, etc before they realize they were earning fake wages and that their true value in the world is less than half of that.

The same will be true to a greater extent to financial analysts, debt securitization, and various other wall streeters. These guys are about to get a taste of the real world.

12/6/2008 2:26:50 PM

Quote :

"I do not understand how knowing that would make it more relevant."

i had a couple misunderstandings there:
1) i thought you were making some point about men unfairly getting laid off, or something
2) where you said "Back in America", I read that as "Bank of America" for some reason, and applied the next paragraph to the BoA, with the implication that BoA has laid off 82% men (in which case, it obviously would be relevant to what the gender breakdown of BoA is)
3) I obviously didn't process the numbers in parenthesis, or else I would have realized that Bank of America has not lost 2.4M jobs

12/6/2008 3:24:35 PM

I've been thinking about it and I may have misinterpreted kwsmith2's response. Maybe the distinction he's drawing is that the costs firms face to lowering wages is an impediment to reaching a new equilibrium and search costs are not (the rising search costs actually help define the labor market's new equilibrium).

I guess that's fair enough, but I don't think that's what anyone cares about. From that point of view, no one should really care about a 100% tariff (essentially another type of transaction cost) on automobiles because the market would still clear just fine. But obviously people care less about market clearing and more about the tariff resulting in a significant welfare loss. In the same vein, if a recession raises the cost of job search, markets could still clear fine (absent wage rigidity) but there will be a corresponding welfare reduction as a result of the rising transaction cost.

Welfare losses like that are kinda the reason people care about recessions to begin with. That's why I was explicitly talking about cyclical unemployment and not measures of "market dysfunction" (whatever that means).

Either way I'm done printing my stuff. Better head back and study a bit more.

[Edited on December 6, 2008 at 4:03 PM. Reason : ``]

12/6/2008 3:53:05 PM

Anyone want to say what this has to do with U6? I'm not trained in economics, but I get the feeling what your spouting is bullshit. Just sayin.

Are these guys liberal bloggers as well?

http://market-ticker.denninger.net/archives/675-Quick-Ticker-Unemployment-12.2%25.html

http://www.portfolio.com/views/blogs/market-movers/2008/09/06/chart-of-the-day-u6

http://globaleconomicanalysis.blogspot.com/2008/12/depressionomics-poof-12-million-jobs.html


Also, when people cite the depression era statistic of 25% jobless, is that in the vein of U3 or is it more similar to U6?

12/6/2008 4:25:00 PM

^ Denninger (market-ticker.denninger.net) is a lifelong Republican/"True Conservative". He said he has never voted for a single Democrat, until this year. He said he didn't think that either of the candidates had a good, full grasp of the economic problems, but he said that McCain was completely ignorant of the economy in general, while he felt Obama wasn't great, but had a much better grasp on it.

If you go read some more of his posts, you will see he is very, very pessimistic, to the point of being maniacal about how bad the economy is now and how much worse it's about to get.

i've stopped paying much attention to him because he's had a lot of "BAD THINGS ARE GOING TO HAPPEN [TOMORROW/NEXT WEEK/NEXT MONTH] UNLESS ______ HAPPENS", and usually ____ doesn't happen, and usually whatever he said is going to happen doesn't. However, he does have a "Genesis Plan" of what needs to happen, which I don't think many people could argue with
http://www.denninger.net/letters/genesis.pdf

Quote :

"The short version of The Genesis Plan is: 1. Everyone must expose their balance sheet; all Level 2 and 3 assets must be declared and all models disclosed in full immediately and every quarter hereafter. 2. The CDS monster must be caged by forcing it onto an exchange where O/I and margin supervision can be maintained. This is already in process and must be completed. 3. Leverage must be returned to no more than 12:1 across the system - no exceptions."

12/6/2008 5:10:13 PM

http://www.nytimes.com/2008/12/06/business/economy/06idle.html?em

But, they're a liberal rag so we won't pay attention to this.

I have a question. If 6.7% isn't all that bad (it was above 6 in mid 02 during the last, much milder recession) then why is everything else in this economy so shitty and getting shittier? Could it be that U6 is indeed a better indicator of things to come and as such you have to pay more attention to it during rapidly changing economic times (...like I said earlier?).

12/6/2008 5:10:30 PM

because I think they say unemployment generally lags the rest of the economy overall, maybe by as much as 6 months. So, even when the market in general "hits bottom", or whatever you want to call it, unemployment may continue to rise for ~6 months.

in general, though, don't worry - unemployment is going to get much, much worse

[Edited on December 6, 2008 at 5:15 PM. Reason : .]

12/6/2008 5:12:28 PM

Since the thread is over a year old, I wanted to go back and see what "predictions" were made

Quote :

"LoneSnark All American 7840 Posts user info edit post IMStoned420, you must remember these are people that otherwise would not have had a home at all. As such, foreclosure is not a big deal: they are just back where they started. Would you have preferred all 2.3 million subprime borrowers be refused a loan in the first place if it would spare 300 thousand being foreclosed later? In hind sight the banks sure would prefer they had not made any of the 2.3 million loans, but they did, and it will hurt them. But they would not be the only corporations posting huge losses this year. Similarly, why is it a terrible thing for home prices to fall $5k? Sure, it hurts sellers and makes it difficult to clean up the mortgage mess. But it helps buyers, and since the U.S. population is growing there are more buyers than sellers (obviously excluding home builders, but they can get jobs in other industries). Home prices were inflated; they need to come down. As such, falling home prices are a sign of returning rationality, clearly not terrible news. 11/14/2007 12:41:08 AM"

Quote :

"kwsmith2 All American 2680 Posts user info edit post Quote : "I am, however, trying to identify the vanguard of trends, and the market is clearly bullish right now. The U.S economy is--in fact--impressive" I wouldn't call the current market bullish. Even bear markets have rallies. As for the overall economy, while of course the US economy is impressive, I think we are looking at a likely recession. In the absence of Fed action I think we would be looking at a rather large recession, perhaps, the largest since the Great Depression. I know that sounds rather strong, but the history of debt deflation is not pretty. For those who have a bit of technical training I would point to http://www.kc.frb.org/publicat/sympos/2007/PDF/2007.10.11.Leamer.pdf Now Leamer, at least a while back, didn't think a recession was coming because he didn't think manufacturer could post the kind of job losses we need for a recession. However, I think that times have changed a bit and we could shed enough retail and financial jobs to produce a recession. Moreover, it is important to note that in the modern economy it is possible to produce a recession without a significant rise in unemployment. Job shifiting could produce productivity losses large enough to create a recession. 12/1/2007 5:55:32 PM"

12/7/2008 9:53:59 PM

Oh look... the stupid stoned kid was right and the professional economist CSC major was wrong.

12/8/2008 5:57:14 AM

ouch. guess lonesnark should stick to talking about oil prices

[Edited on December 8, 2008 at 7:46 AM. Reason : .]

12/8/2008 7:43:33 AM

I'm confused. I only see myself making one prediction in what you have quoted, "they (banks) would not be the only corporations posting huge losses this year" which turns out to have been remarkably true in terms of the auto industry.

12/8/2008 10:21:27 AM

Quote :

"As such, foreclosure is not a big deal: they are just back where they started."

yeah, no big deal.
We're just back to where we started.


cognitive dissonance is a bitch

12/8/2008 10:35:00 AM

http://www.brentroad.com/message_topic.aspx?topic=500489&page=17#11880199

I thought the recession was suppose to have passed 5 months ago?

12/8/2008 11:18:44 AM

Quote :

"IMStoned420, you must remember these are people that otherwise would not have had a home at all. As such, foreclosure is not a big deal: they are just back where they started. Would you have preferred all 2.3 million subprime borrowers be refused a loan in the first place if it would spare 300 thousand being foreclosed later? In hind sight the banks sure would prefer they had not made any of the 2.3 million loans, but they did, and it will hurt them. But they would not be the only corporations posting huge losses this year."

agentlion, your cognitive dissonance is interfering with your reading comprehension. If I had meant 'they' to mean 'us' I would have used the word 'us', I did not. The sentence before states "these are people that otherwise would not have had a home at all". Unless you would have not had a home but for the subprime mess, then you were not included in 'they'.

You are grasping at straws to say I was wrong here, when the sentence didn't say anything profound: those that took out bad mortgages and got foreclosed are back where they started from: either renting or living with others. Especially when there is no need for you to lie about what I said just to prove me wrong; I've been wrong about lots of my predictions over the past year, and I will be wrong again eventually.

^ there you go. I was working with the clinical definition of 'recession' and I took a quarter of 2.3% growth to mean either the recession was over or it had not started yet. I was wrong, the National Bureau of Economic Research (NBER) overrulled me. Just as moron said, "By that definition, technically, we're NOT in a recession." Which we were, it turned out later.

[Edited on December 8, 2008 at 12:33 PM. Reason : ^]

12/8/2008 12:28:01 PM

Quote :

"Much as looking at percentage moves in the Dow is much more meaningful than looking at nominal points moves (500 points means a lot less when the average is at 10,000 than when it is at 1,000), it is useful to look at the recent jobs report in the same way. While 553,000 lost jobs is certainly a lot, it is only the 41st worst loss since WWII when looked at as a percentage of the workforce (and it would be much further down the list if we had similar metrics back into the 1930's and 1920's)."

http://bespokeinvest.typepad.com/bespoke/2008/12/41st-worst-monthly-jobs-report-on-recordyes-41st.html

12/8/2008 1:49:25 PM

http://www.youtube.com/watch?v=pUcznOLh5gw

Does Paulson always look so insecure and fidgety?

12/9/2008 10:33:08 PM

only when he's lying.
so yeah..... pretty much always

12/9/2008 10:40:59 PM

^ whenever I see your name I always think of that Outkast album, ATLiens.

I got some kinda reading disease.

12/10/2008 7:21:00 AM

i saw a graph illustrating this a couple week ago, but can't find it.
It's the point that if you subtract debt out of the GDP, then the GDP hasn't grown since 1996. For previous decades, GDP minus debt grew at the same rate as total GDP, but in 1996, total GDP kept going up, but GDP minus debt flatlined until today

Quote :

"Let me explain this in very simple terms - again, assuming more-or-less linear expansion of the debt (which is in fact not true since claimed GDP expanded, so the growth in debt rate is actual a derivative function) there was actually a $9 trillion dollar contraction in GDP over the previous eight years, since taken-on-debt that is spent is not actual output expansion any more than I am "improving my wealth" if I go borrow $200,000! In fact I am damaging it because I must not only pay the $200,000 back I must pay interest as well! That's right folks - we haven't had an expansion in GDP over the last eight years. Congress and its organs of reporting economic "facts" have lied. We have in fact actually seen about a 10% contraction in real GDP from 2000 levels; all of the so-called "expansion" of the Bush Administration has been a lie intended to prevent recognition and working through of the recession that should have happened in 2000."

http://market-ticker.denninger.net/archives/684-Den-Of-Liars.html

12/11/2008 12:00:13 PM

the dollar crash is coming..

12/11/2008 12:07:56 PM

^ it's been "coming" for 6 or 7 years.

12/11/2008 1:33:13 PM

agentlion, in order to believe what you linked to, you must make a fundamental error. First, they are grossly exagerating the national debt by saying it is $27 trillion when it is only $11 trillion. I suspect they are including implied debt to cover social security and medicare benefits, which is not debt as congress has made no legally binding promise to pay.

Also, you cannot discount debt from GDP. GDP is the goods and services produced by the economy, whether there was debt spending or not does not necessarily change the output. This is because all the money borrowed by the government to spend was taken away from others that might have spent it if it had not gone to the government (just as tax cuts with equal spending cuts do not necessarily result in a lower GDP). If the Federal Government had not been there to sell an unlimited number of treasury bonds to the Chinese then the Chinese might have been forced to buy airplanes or other American products. Even if the Chinese had opted instead to burn the money, the men and materials freed up by the cessation of deficit spending would be deployed to make something else that private holders of dollars would pay for.


That said, in terms of industrial output, we are not much higher from the peak of 1998. Recessions tend to do that, especially severe ones like we are experiencing.

12/11/2008 2:25:42 PM

Take that post here

http://www.tickerforum.org/cgi-ticker/akcs-www?post=74848

I'd like to see what you can do with (what I assume) a handful of people that have more econ knowledge than posts here.

12/11/2008 3:17:20 PM

^^ I think it is referring to GDP minus the debt used by companies and individuals to support that GDP. i.e. lines of credit that are still open and growing to buy shit, the same shit that accounts for the GDP.

If my credit card bill has grown from $1k to $10k in the past 8 years, then technically I have contributed $9k to the GDP, but if I can't or won't pay that balance off, have I really contributed anything?

12/11/2008 3:35:59 PM