Great Recession job loss continues as predicted here
This is a drum I’m going to beat for awhile: People need to stop listening to economists who are fixated on statistics like Gross Domestic Product or job gains as an indicator of where the economy is going. People need, instead, to read this blog if they want to know where the global economy is going.
This is more than beating my own drum or blowing my own horn. I am reminding people that the economists they trusted failed in total to see the Great Recession coming. Then they proclaimed the Great Recession had ended when clearly it continues to ravage the world.
They have on numerous occasions since then spread false hope of recovery every time jobs ticked upward, and they have been continually surprised when jobs went right back down. If you have been reading this blog, you have found none of that sort of thing here — just truths that people don’t want to see — even though they play out like clockwork in complete contradiction to what the economists are predicting. Thus, the economists are surprised by today’s news, and I am not.
The damage caused by of all that blind optimism is that we have done nothing to rebuild our economy on a solid foundation. We have, instead, rebuilt it on a reconstructed version of the foundation that already failed — its bits and pieces now held together by lots of government glue. I am speaking of a foundation of debt enticements and largely deregulated banks, a foundation of corporations with overpaid executives and underpaid workers.
Because no vision has led us forward to something better, Great Recession job losses continue to be reality for the masses. Income loss from the Great Recession also continues to be the reality for most of those who remain employed. Many who lost jobs are partially employed and have lower wages.
So, stop listening to the economists. They are fools who fail completely to understand their own specialty. They have been wrong at every major turn, so why do you still listen? They are blind because of economic denial. They do not see what they do not want to see. Do not be blinded, yourself, by their shiny credentials.
I am intentionally brazen in order to poke at them and to get you to stop paying attention to these gurus of our catastrophically failed economic age. My own economic predictions have a track record that is solid and that can be read right here. So, if you don’t believe, just click on article after article below. Take some time to really read, and see if any of my predictions here have been wrong.
(Yes, you will find one or two economic predictions that were a bit overstated along the way, but not by much. Imperfections, yes; but more accurate by far than all the economists combined and more accurate, also, than the heralds of doom and gloom who predicted a catastrophic economic bust in 2013 that never materialized. Neither recovery nor a bust were predicted here for 2013. In fact, rather than trying to whip up a profitable audience by sensationalism, I laid low and stopped writing so much, knowing an economic malaise had settled over the world that would result in not much changing for over a year and that I’d return to writing when the time appeared right. With nothing much about to change, there wouldn’t be much to write about.)
The hallmark of the Great Recession is economic denial
The economic predictions made on this blog are not based on fancy mathematics nor done with a crystal ball, and they do not come from someone with any economic credentials. I’m here as a fool to shame the wise. My economic predictions — continually playing out as forecasted — are based on simple understanding of the economic fundamentals that are at play. Common sense without sensationalism. I’m neither an optimist nor a pessimist but a realist. I am optimistic about my life and where I am headed even in the worst of times so that bad times do not scare me, but I seek to be a realist in how I see the world that is coming at me.
Others are in economic denial because they do not want to admit how flawed at its very foundation the economy is that they helped create. When you understand their own involvement in creating this economy, you’ll understand their blindness. You’ll understand how they are “surprised” every time job losses increase when they should have expected such losses. They are surprised because they continue to believe in a failed economic model that they helped build. They believe in their own religion. They believe it can work again, even though it is already dead.
There are others who are not economist but who are the benefactors of the old economy who do not want to change away from a system that provided fast and vast wealth for a few (albeit ultimately unsustainable wealth). The top five percent who have benefited along with the politicians who laid the foundation of the old economy and the economists who beguiled them as false prophets of a new religion … all continue to proclaim the virtues of the economic engine they created that gave rapid rise to the few. All are committed collectively to keeping the old dinosaur economy alive by injecting adrenaline. They preach the gospel of the old economy to keep the champagne flowing to the top. They are a chorus blinded by belief in a false gospel they composed. They are too wise in their own eyes to ever consider that they are entirely wrong.
But if you watch now, you’ll see that they are entirely wrong.
2014 is an interesting year because it is the year when their life support system, called quantitative easing, is being removed. So, it is the year when you will, again, get to catch a glimpse of reality. You will be able to see — if you are looking — whether the patient is truly recovering after many years of artificial life support, as the economist have been proclaiming. I am certain you will see — if you are looking — that the patient is dead.
So, I’m blasting my horn and banging my drums so that you’ll pay attention to what happens as this crucial time when artificial life support is slowly lifted. Watch the patient that appears to be living decline in proportion to the amount that quantitative easing goes away. Don’t miss the fact that, as money printing stops, job losses return.
Job losses are a return to economic reality
From my point of view, the fundamentals in place right now clearly point to economic decline this fall, as I said last spring. The continuance of Great Recession job loss is a symptom of that. It proves that nothing has really be resolved in all this time. The increase in those job losses is also a cause of further decline, as it creates a feedback loop in the economy where people have even less money to spend, and the decline resumes. This month’s jobs report is that first glimpse of the reality that underlies this moribund economy. The decline will continue unless and until the Federal Reserve reinstates Q.E. to try to prop its brain-dead patient up a little longer.
With other greater forces at play, as I laid out in my Economic Forecast 2014 last spring, it’s unlikely that an application of Q.E. IV would have any effect. That doesn’t mean the government won’t attempt another round once it becomes clear the economy is still bereft of any life of its own; but it will get little to no economic benefit if it does because we’re on the steepening part of the downward curve when it comes to the law of diminishing returns for this artificial economic life support. A shot of adrenaline to a dead and decaying heart won’t cause much of a kick.
I laid out the fundamentals that would be cause economic turmoil and decline this year while nearly all economists predicted continued slow economic growth and talked about recovery. In the late spring/early summer they looked at an upward bump in jobs as a clear indicator that the economy was on track for continued recovery. I ignored that, knowing things are not on track at all. And look at where things are now:
The U.S. economy added just 142,000 jobs in August, falling short of a projected 225,000 new jobs. Peter Cappelli, a management professor at the University of Pennsylvania’s Wharton School, told Forbes the numbers were “worrying,” as they continue a downward trend of new jobs throughout the summer months. (“Twice as Many People Left the Labor Force as Found Jobs in August”)
The job losses are back with a vengence. That may have been disappointing for those who were predicting steady slow growth, but it was expected by me and by anyone paying attention to this blog. My prediction early last spring was that, as the Fed eased back on its quantitative easing, job growth would tank and the economy would slump because quantitative easing has been masking the Great Recession, making it appear to have ended by propping the economy up; but quantitative easing is not a solution. it is, in fact, an great effort to avoid a solution, and it is not sustainable.
I have said that here throughout the Great Recession, and you can read my articles here to verify that. Something like Q.E. might work to boost us out of a minor recession that is due to a bubble bursting, but the Great Recession is a complete economic collapse like the Great Depression. It is to the Great Depression what World War II was to World War I. It’s the failure of an economic system built on bankrupt principles of unregulated, debt-based expansion.
Quantitative easing only props up that bankrupt economy by assuring a continued flow of even cheaper credit (translate “ever more debt”) and by pumping vast amounts of newly created money based on nothing but hollow hopes into otherwise insolvent banks. The Q.E. hope is that creation of money out of nothing, lent out as cheap debt will create wealth.
When quantitative easing ends, the show is over, and the black hole of an economy, known as the Great Recession, will again start to suck everything into itself. Quantitative easing has perpetuated the very thing that created this economic collapse in the first place — wanton credit, leading to wild speculation with other people’s money. Even the huge inflation of the stock market is nothing but another “housing bubble” created out of the rapid inflation of the nation’s money supply. The money has to go somewhere, so it goes to wild bets in the stock market — the same speculation that led to the dot-com bust at the beginning of this millennium.
We have learned nothing. You cannot solve a problem by perpetuating its cause.
In my Economic Forecast 2014, I predicted that job loss from the Great Recession would worsen this year:
This year, we are off to a dead start with jobs stalling out, but that does not mean the year will be the opposite of past years by starting bad and then turning better. No. If the last few years started out fairly good and then got somewhat bad, this year can only do worse because of the major forces blowing in against it while there is nothing fundamentally fixed in our economy. It is more debt-ridden than ever and floating on a huge stock bubble created by quantitative easing, so more perilous than ever because the Q.E. is now slated to end. That means the artificial life support is coming off in 2014 just as global economic pressures are piling back up.
Sure enough, as quantitative easing has been backed off, job losses have returned to what they were during the belly of the Great Recession. The belly is back. As the prop is removed, the underlying reality reappears. The prop cannot be continued because you cannot keep inflating a flat economy by creating mountains of new debt with newly minted money. There is a cost to the nation’s credit rating that will erode economic gains from the other end if you continue that program long enough. It is not a sustainable solution.
Great Recession job loss not over
If the effect of the Great Recession is so deep and pervasive that its job losses and income losses are sustained today, how can we say, as so many economists do, that we are “recovering” or that the recession has “ended?” Yes, the statistical measure — Gross Domestic Product — has recovered. So, technically, the Great Recession ended; but household income remains suppressed and the downward trend in the overall jobs picture resumes unabated. As soon as the life support is lifted, death returns.
I bet my blog last spring that economic conditions would worsen this fall, and I’m staying with that bet. If I’m wrong you won’t have to hear me trumpet my horn and bang my drum any longer. I will simply go away.