The high job-seekers to jobs-available ratio

The ratio remains above 4:1, as the Economic Policy Institute reports. So, job seekers need to gird themselves to wait the long wait.

JOLTS for August, 2011

What does this fact mean? First, it means that Congress must extend unemployment compensation eligibility beyond the 99 week term currently in place. Second, it means that Congress and the Executive must quickly produce a jobs program that reduces this ratio. Third, it means securing Social Security, Medicare and Medicaid against the work of the political and economic reactionaries. Fourth, it means the United States would be better served if it returned to something better than “welfare as we knew it.” Fifth, it means a return to stimulus politics. And sixth, it means making a national commitment to a green-friendly reindustrialization program.

Quotes of the Day

As one would expect, yesterday’s stock market plunge elicited a broad response. Here are a few of the first-responders whose comments were mostly directed towards the United States:

Paul Krugman wrote an “I told you so” column:

In case you had any doubts, Thursday’s more than 500-point plunge in the Dow Jones industrial average and the drop in interest rates to near-record lows confirmed it: The economy isn’t recovering, and Washington has been worrying about the wrong things.

It’s not just that the threat of a double-dip recession has become very real. It’s now impossible to deny the obvious, which is that we are not now and have never been on the road to recovery.

Steve Pearlstein asked: “Why is this happening?” His “Short answer: Because we never really fixed underlying structural problems in the U.S. and global economies that had been building for decades and caused the financial and economic crisis in 2008.” (Pearlstein then goes on to recommend an IMF-style structural adjustment program for the United States, a policy choice that, if implemented, would turn a tragedy into a global catastrophe.)

Martin Weisberg looked at America, specifically, at Washington, DC, and found a political catastrophe that will have enduring economic consequences:

It is difficult to remember a more dismal moment in American politics. The debt ceiling crisis and the agreement that ended it point to deep dysfunction in our system. In a variety of ways, the episode portends continued short-term economic misery and long-term national decline. It is as if the US chose at the last minute not to commit financial suicide — but only out of preference for a slower, more excruciating form of self-destruction.

The crisis has, however, been clarifying in several respects. We can now say with some confidence that Washington will be doing nothing more to help the ailing economy. President Barack Obama is trying to push an employment agenda. But for the federal government to spur growth or create jobs, it has to spend additional money. The antediluvian Republicans who control Congress do not think that demand can be expanded in this way. They believe that the 2009 stimulus bill, which prevented an even worse economy over the past two years, is responsible for the current weakness. Their approach of depression economics — embedded in the debt ceiling compromise — demands that we address the risk of a double-dip recession by cutting public expenditure immediately.

So instead of trying to pull out of the stall, the US economy will simply have to absorb whatever blow is coming.

Ezra Klein made these remarks about the clarity of vision found within America’s Versailles on the Potomac:

A dramatic gap has opened between the economy as Washington sees it — and wants to intervene in it — and the economy that exists. Whatever weak recovery we might have hoped for is being hindered by global commodity prices, consumer deleveraging, fears of flagging demand in emerging markets, earthquakes in Asia and much more. Globally, it’s been an almost uninterrupted run of crises and bad luck. Meanwhile, Washington just spent two months arguing over whether it would pay its bills or spark an unnecessary financial crisis.

I confess that I find it difficult to avoid spoiling myself with a bit of Schadenfreude over this recent stock market outcome. I have indulged myself because the stock market plunge aptly punctuates the ridiculous political calamity that was the Debt Ceiling Debate. The political elite wanted us to believe that addressing the deficit by cutting spending during a recession was the reasonable, adult and necessary solution for the country to adopt. Nevertheless, the stock market concluded otherwise. Market instability such as this brings with it a portentous expectation of another recession in the United States and around the world. Life could become riskier and harsher than it had been if another recession follows. Disaster capitalism indeed.

In conclusion, I will quote Bill Mitchell who stated what ought to be obvious to everyone but which is mostly ignored in the classless society found the United States:

My phone has been ringing a lot with journalists seeking my views on what is going on and radio stations lining up interviews and “news grabs”. There is a sense out there that we are sliding backwards quickly into financial collapse and recession. I sensed some panic today among the press. And they won’t believe me when I tell them it is a crisis but a totally confected crisis that has origins in class conflict (the top-end-of-town seeking ways to get more of the real output for themselves).

The Confidence Fairy casts a black spell

The New York Times reports that:

Stocks around the world fell sharply Thursday on intensifying investor fears about a slowdown in global economic growth and worries about Europe’s ongoing debt crisis, which is centered now on Italy and Spain.

Stock market indexes in the United States and Europe dropped more than 4 percent as Japan intervened to weaken its currency and the European Central Bank began buying bonds to try to calm markets.

At the close, the Standard & Poor’s 500-stock index was down 60.27 points, or 4.78 percent, to 1,200.07. The Dow Jones industrial average was off 512.76 points, or 4.31 percent, to 11,383.68, and the Nasdaq was down 136.68, or 5.08 percent, to 2,556.39.

It was the biggest percentage drop since February 2009.

Why would anyone blame the Confidence Fairy?

A fear haunting markets is that the United States economy may be heading for a double-dip recession. And even after a second major rescue package for Greece and the agreement to raise the debt ceiling in the United States, investors are concerned that world leaders have not done enough to address fragile underlying economic growth, while Europe’s debt problems have moved on to the much bigger economies of Italy and Spain.

I cannot imagine why anyone would fear another recession when the United States avoided disaster by opting for a long-term austerity program. Did not America’s President assure his subjects and the world that the austerity measures were needed so that he could then take to the stump for his job creation initiative? Why does the world not find this reassuring?

Is this a dying canary moment signaling the onset of the next crisis?

CNN Money reports (h/t Yves Smith):

Squeezed by tight credit and tempted by record high gold prices, small business owners are finding an alternative to the bank: the pawn shop.

More than half of the customers at online pawn shop, Pawngo, are small business owners, said Todd Hills, CEO of the Denver-based company.

“These guys can’t wait. They have businesses. They have employees they need to pay,” said Hills, who launched Pawngo in June. “This is a great way to solve a short-term need.”

Mike Lee likes California so much

Senator Mike Lee (R-UT), Senate class of 2010, wants a Constitutional amendment to impose a ⅔rds supermajority requirement on the Congress whenever it votes for a tax increase. This, of course, is the Constitutional limit on democratic governance that has made California a basket case economy. Lee discussed his desires on Hardball with an incredulous Chris Mathews:

Ian Millhiser of ThinkProgress calls Lee’s gambit extortion:

So Lee wants to rewrite our Constitution to [sic] that the American people must always live under conservative governance, regardless of who they elect, and he’s got a simple plan to force his colleagues in Congress to make this happen. That’s a mighty nice economy we’ve got here, it would be a shame if Mike Lee had to break it.

And so it is.