Dr. Housing Bubble 10/12/09

[Crewleader]

No Country for Old Jobs: 10 Charts Showing the Fragile Recovery. Home Sales, Buying versus Renting, Unemployment, and Real Economy Data.

No country can go on spending more than they earn and expect sustained prosperity. Sure, they can get away with a façade of economic stability glazed over by copious amounts of debt but eventually the piper must be paid. The U.S. Treasury in combination with the Federal Reserve has made the ultimate bet that by forcing the dollar lower and injecting easy money into the economy that somehow it will jumpstart the economic engine. If we examine multiple levels of economic activity we are yielding very little overall for trillions of dollars in bailout funds. The big winners here are the banks and the American public is still waiting for the real recovery in the economy.

It is disturbing that there is a significant school of economic thought out there that somehow jobs do not matter. This line of reasoning is baffling. In many ways, this is similar to the collective deep capture that occurred during the housing bubble that somehow prices were justified even in the face of rampant fraud and mass delusion. They don’t call it mania for nothing. Take for example the wonderfully unstable budget of the biggest state of our country, California.

Only last week, State Controller John Chiang announced that the state is falling behind $1.1 billion in receipts from a budget only enacted three months ago. Keep in mind the estimates made only a few months ago were conservative by California standards yet somehow money isn’t coming in. This is occurring at the same time that the state has hiked taxes and is also front loading tax collections earlier. To the obvious person on the street, you cannot tax someone without a job. Well, that isn’t necessarily true because you can tax them on items they buy (in some counties like L.A. that rate is near 10 percent).

We are now 21 months into this recession. Job growth is no where on the horizon. It would appear that people are waiting for some ambiguous industry to emerge out of the ashes like some financial Phoenix. Will it be the green sector of our economy? Yet even in that optimistic scenario, does that sector have enough to make up for the 8 million jobs lost in this recession and the growing demands from a larger work force? If we examine eras like the 1920s in Florida and their real estate bubble, prices did not come back for years. So if you factor in the 1920s coupled with the Great Depression of the 1930s, things didn’t turn around for nearly two decades. California and Florida are coming off unsustainable highs. What does this mean? Let us go back to the State Controller report. What that translates to in the real economy is less money coming in to the government. And that means either more tax hikes or more spending cuts.

http://www.doctorhousingbubble.com/no-country-for-old-jobs-10-charts-showing-the-fragile-recovery-home-sales-buying-versus-renting-unemployment-and-real-economy-data/

[corkhead]

1. when the top 1% control more than 95% of the nation's wealth

it is easy to understand how "jobs do not matter"

[Robb]

2. I am increasingly disturbed

...at how much sense DoctorHousingBubble is making. Especially considering the implications of him/her being right. :(

[barb162]

3. "a significant school of economic thought out there

that somehow jobs do not matter."

And that school of economic thought is bought and paid for by those who offshore, plus the countries who love getting those offshored jobs.