I’d say in the end it ALWAYS rights itself….
But in this case the politician’s aren’t doing anything to help the recovery along…
Laying off public employee’s may help in the short term…
But it’s keeping the jobless rate higher than it should be…
….from Wonkwire….
What Explains the Slow Economic Recovery?
Matthew Yglesias looks at the two main theories behind the sluggish economic recovery: circumstances and policy failure.
“One is the Reinhart/Rogoff hypothesis, since embraced by the president, that recoveries from financial crises are simply long and painful compared to ‘ordinary’ recessions… The alternative view—which I hold to—is simply that the policy response to financial crisis tends to be bungled since the simple mechanism of interest-rate targeting doesn’t work.”
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Economists: Fed action will have minor impact
By Megan Woolhouse
| Boston Globe Staff
August 08, 2012
Eric Rosengren, president of the Federal Reserve Bank of Boston, has taken an unusually public and strong stand in urging his fellow policy makers at the Federal Reserve to take additional actions to strengthen the US economy. But even if the central bankers follow his advice, it would have minimal impact, analysts said.
The Fed has already cut its benchmark short-term rate to near zero and helped push long-term rates, such as for mortgages, to record lows. So the amount of additional stimulus the Fed can add to the sluggish economy is limited, economists said.
“I’m skeptical that monetary policy actions at this point will have a major effect,” said a Harvard University economics professor, Benjamin M. Friedman. “In my judgment, the effects would be relatively small.”
That isn’t necessarily to say that economists believe the Fed should do nothing. Many say a move by the Fed could be psychologically important, providing a boost to confidence in the face of mounting uncertainty. US employers have been wary of hiring workers due to concerns about worsening economic problems in Europe and the possibility of deep budget cuts and tax increases if the polarized Congress fails to act before the end of the year….
… continued at http://www.bostonglobe.com/business/2012/08/07/economists-fed-action-will-have-minor-impact/MnNSmM7UsgrWzAOTjZYAOJ/story.html#
That’s been my feeling (no doubt simply plagiarized from the conventional wisdom of the left): supply-push won’t increase the use of capital, there has to be a positive pull from perceived future demand (i.e. customers both willing and able to buy your goods and services).
The country, as in the 1930′s, is awash in unused capital and credit — financial, physical, social, intellectual and human — but, with the huge drag of government cutbacks and layoffs, that unused capital is not being used to increase employment, build things, accelerate commerce or return to normal levels of economic activity.
U.S. productivity rises in second quarter, 2011 revised upward
WASHINGTON (Reuters) – Nonfarm productivity rose more than expected in the second quarter as companies expanded output but only modestly increased the hours worked by their employees, data from the Labor Department showed on Wednesday.
Productivity climbed at a faster-than-expected 1.6 percent annual rate between April and June.
The still-modest reading could be a sign that companies will have to step up hiring to keep up with production, said Jeremy Lawson, an economist at BNP Paribas in New York.
“The pace of productivity growth is relatively soft at the moment. It’s hard to add production on a faster pace without adding more workers,” he said.
In the same report, the government said productivity rose 0.7 percent last year, more than the initially estimated advance of 0.4 percent. In another revision, productivity declined less than initially thought in the first quarter of 2012, the Labor Department said…
(Reporting by Jason Lange in Washington and Richard Leong in New York; Editing by Andrea Ricci)
… continued at: http://www.reuters.com/article/2012/08/08/us-productivity-rises-idUSBRE8770NC20120808
When Laws Twist Markets
By JASON ZWEIG
No matter how Congress monkeys with the laws, one always remains in force: the law of unintended consequences. Even efforts to smooth the financial landscape can end up making life harder for ordinary investors.
Just look at the Jumpstart Our Business Startups Act of 2012. The JOBS Act, which became law in April, was designed to cut red tape and reduce the burdens of financial disclosure for small companies seeking to raise capital in the stock and bond markets. The new rules were meant to make it faster, easier and cheaper for companies to go public. That, in turn, would help create American jobs as fast-growing businesses grew even faster, argued the law’s proponents.
To be sure, roughly three dozen mainstream U.S. companies have used the JOBS Act to go public in the past four months, raising at least $5 billion, mostly without incident.
But in the latest strange twist to the new law, the spirit of U.S. job creation will be embodied by none other than Manchester United, the British soccer club.
Next week, “Man U” is expected to net $300 million by offering shares to U.S. investors on the New York Stock Exchange. Never mind that the team is based in the land of bangers and mash; because it has revenues under $1 billion, it qualifies to sell its stock and report its financial results under the provisions of a law intended to help U.S. companies create American jobs.
Another $300 million for Man U should amply equip 11 strong men, a few substitutes and some coaches to keep soccer balls flying across grassy fields in Europe. It also could enable the company’s management to disclose fewer financial details to American investors. But how this kind of IPO will create jobs in the U.S. is anybody’s guess. A spokeswoman for Man U declined to comment, as is customary on the eve of a securities offering.
Some small U.S. companies are taking advantage of another wrinkle. Before the JOBS Act, issuers with more than 500 shareholders had to file financial statements with the Securities and Exchange Commission. The new law raises that threshold to 2,000. On Aug. 1, North State Bancorp of Raleigh, N.C., with a market value of $22 million, deregistered with the SEC. Chief Executive Larry Barbour estimates the move will save the community bank $150,000 to $200,000 a year. He says he doesn’t expect to hire new employees with the savings….
(A version of this article appeared August 4, 2012, on page B1 in the U.S. edition of The Wall Street Journal)
…. continued at: http://online.wsj.com/article/SB10000872396390443545504577567213170814048.html
Business not hiring? Congress’s solution (same as when business is hiring): Deregulate!
“in the end it ALWAYS rights itself….”
It didn’t in time for the elections in 2008.
Who says it will happen this time?
I contend that it will take 5-10 years before we are out of the fiscal hole that currently plagues us.