by Damozel | As I noted Friday, jobs continue to disappear (345,000 more gone), but at least the rate of the loss has at least slowed down. Not exactly news to make you crack open the champagne or even the cheapest bottle of beer. Austan Goolsbee of Obama's Council of Economic said on Sunday: ""It is going to be a rough patch [difficult period], not just in the
immediate term, but for a little bit of time [in the future]," he said.
"You have to turn the economy around, and jobs and job growth tends to
come after you turn the economy around."" (VoA) Meanwhile, the administration concedes that it didn't expect things to be quite as bad as they now are.
Economists
point out that the current jobless rate is already higher than the
hypothetical rate that was used to calculate the health of banks and
other financial institutions in so-called "stress tests" earlier this
year. And, the upward unemployment trajectory is expected to continue
in coming months, even if the overall economy begins to recover. (VoA)
Is that what happens when you take your advice from a lot of free marketeers even as the free market collapses round your ears? As an ignorant layperson and no economist, I am not asking rhetorically; I really am asking. Paul Krugman said way back in January that Obama's stimulus measures were too timid to work as advertised. As Charles Lemos remarks at My DD, Krugo is being proved right.
Lemos writes:
[T]he median unemployment length is creeping up. As of May, it was 14.9 weeks compared to 12.5 weeks in April. Fifty percent of unemployed have been so over 15 weeks. The number of long-term unemployed (those jobless for 27 weeks or more) increased by 268,000 over the month to 3.9 million and has tripled since the start of the recession.
I would expect the Administration to consider another fiscal stimulus in the Fall because the current one is likely to fail in jump starting the economy. Earlier this week, World Bank President Robert Zoellick warned policy makers that fiscal-stimulus plans are insufficient to turn around the "real economy" and rising joblessness threatens to set off political unrest across the globe.
"While the stimulus has given an impulse, it's like a sugar high unless you eventually get the credit system working," Zoellick said in an interview yesterday with Bloomberg Television's Political Capital with Al Hunt. "When unemployment increases, that's probably the most political combustible issue." (emphasis added)
Annnnd here comes The Politico, reporting that Obama is "ramping up" the stimulus.
President Barack Obama is announcing Monday that he is ramping up stimulus spending exponentially in the next three months, allowing the administration to “save or create” 600,00 jobs — four times as many as during the first 100 days since he signed the bill.
The spending plans include National Parks, summer youth jobs, veterans’ medical centers, police and teachers. (More)
Yesterday, Sandy B. Lewis and William Cohan published a sobering op-ed at The New York Times., arguing -- as many, including our own Deb Cupples, have done -- that the system itself is broke and Obama's guys ain't really showing any commitment to fixing it.
We have both spent large chunks of our lives working on Wall Street, absorbing its ethic and mores. We’re concerned that nothing has really been fixed. We’re doubly concerned that people appear to feel the worst of the storm is over — and in this, they are aided and abetted by a hugely popular and charismatic president and by the fact that the Dow has increased by 35 percent or so since Mr. Obama started to lay out his economic plans in March. But wishing for improvement and managing by the Dow’s swings are a fool’s game.....
The storm is not over, not by a long shot. Huge structural flaws remain in the architecture of our financial system, and many of the fixes that the Obama administration has proposed will do little to address them and may make them worse....We are in one of those “generational revolutions” that Jefferson said were as important as anything else to the proper functioning of our democracy. We can no longer pretend that our collective behavior as a nation for the past 25 years has been worthy of us as a people. Many of us hoped that Barack Obama’s election would redress the dire decline in our collective ethic. We are 139 days into his presidency, and while there is still plenty of hope that Mr. Obama will fulfill his mandate, his record on searching out the causes of the financial crisis has not been reassuring. (emphasis added)
Lewis and Cohan have framed a series of questions designed to challenge charismatic Obama.
[2] Why is so much effort being put into propping up those at the top of the economic pyramid — the money-center banks, the insurance companies, the hedge funds and so forth — when during a period of deflation like the one we are in, any recovery will come only by restoring the confidence of the people down at the bottom of the pyramid?....
[3] Instead of promising the imminent return of good times, why isn’t Mr. Obama talking more about the importance of living within our means and not spending money we don’t have on things we don’t need?...
[4] Why is the morphine drip still in the veins of the financial system? These trillions in profligate federal spending are intended to make us feel better again even though feeling pain, and dealing with it responsibly, would be healthier in the long run.It is time to stop rescuing the banks that got us into this mess....
[5] Is there to be any limit on bailouts? We have now thrown money at the big banks, any number of regional ones, insurance companies, General Motors, Chrysler and state and local governments.....
[6] Why has Mr. Obama surrounded himself largely with economic advisers who are theoreticians and academics — distinguished though they may be — but not those who have sat on a trading desk, made a market, managed a portfolio or set a spread?...
[7] Why isn’t the Obama administration working night and day to give the public a vastly increased amount of detailed information about what happens in financial markets?...
[8] Why is the government still complicit in making the system ever less transparent, even when it comes to what should clearly be considered public information?...
[9] Why hasn’t President Obama insisted on public hearings over what happened during this financial crisis?...
[10] Why are we not looking to change our current civil and criminal racketeering statutes, which are playing a perverse role in investigations of the crisis? (New York Times; numbers added)
Er, I wonder if the answer to a lot of these questions can't be summed up as follows: Take a look at the guys Obama has chosen to advise him? Perhaps you don't need to go any further for answers. And on this score, The New York Times has an interesting piece on tension among Obama's pet economists and particularly between Chief Economic Adviser Lawrence Summers and....everyone else.
More blogger response to the stimulus ramp-up at Memeorandum
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Why the Stimulus Package Could/Won't/Might Not Work & Why It's Still Better Than Doing Nothing (Econoblogger Round-Up with Commentary by the Ignorant Layperson) (Feb 1 2009)
SEC Finally Goes After BIG (alleged) Crooks re: Sub-Prime Lending (yesterday)
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Leslie Gelb, president emeritus of the Committee on Foreign Relations, in Foreign Affairs: "The country's economy, infrastructure, public schools and political system have been allowed to deteriorate. The result has been diminished economic strength, a less-vital democracy, and a mediocrity of spirit." Or, as Heinlein put it, ""The America of my time line is a laboratory example of what can happen to democracies, what has eventually happened to all perfect democracies throughout all histories. A perfect democracy, a ‘warm body’ democracy in which every adult may vote and all votes count equally, has no internal feedback for self-correction. It depends solely on the wisdom and self-restraint of citizens… which is opposed by the folly and lack of self-restraint of other citizens. What is supposed to happen in a democracy is that each sovereign citizen will always vote in the public interest for the safety and welfare of all. But what does happen is that he votes his own self-interest as he sees it… which for the majority translates as ‘Bread and Circuses.’"
Posted by: flowerplough | June 08, 2009 at 10:11 PM