Markets always find their mark and the US government's and Fed's interference are disrupting this natural process.
US employers are voting with their chequebooks with the consequence that unemployment is up significantly more than economists expected in June. Parenthentically, economists' predictions over the last 12-18 months have been about as accurate as James Hansen's or Tim Flannery's climate predictions.
From Chart of the Day:
Today, the Labor Department reported that nonfarm payrolls (jobs) decreased by 467,000 in June. The stock market declined sharply on the news. Today's chart puts that decline into perspective by comparing job losses during the current economic recession (solid red line) to that of the last recession (dashed gold line) and the average recession from 1954-2006 (dashed blue line). As today's chart illustrates, the current job market has suffered losses that are nearly three times as much as the average. In fact, if this were an average recession/job loss cycle, the number of jobs would have begun to increase three months ago
Based on just this information would you take a guess that the green shoots are working or not having any effect?
Does this data give any credibility to President Obama's statement that the stimulus package is designed to 'save or create' jobs?
Australian economist Gerard Jackson on the situation:
The Institute for Supply Management reports that May was the "16th consecutive month of contraction in the manufacturing sector". Even though the contraction appears to be slowing the demand for capital goods continues to drop with no sign of a reversal in sight as of yet. Of course, this fall in demand has hit the producers of capital goods. In the meantime unemployment continues to rise with some commentators expecting it to reach 11 per cent before the year is out and maybe even climb to 12 per cent next year. Therefore the current signs suggest the US could be sliding into an actual depression, if it isn't there already.Regardless of your political affiliation do you think that:
It seems that Obama's borrow, spend and inflate policy is proving to be a complete failure. The idea that government borrowing is counter to recession was always a myth. The notion that transferring purchasing power from individuals to bureaucrats and politicians would expand aggregate demand is so stupid that — as George Orwell said with respect to another matter — only the intelligentsia could "believe a thing like that: no ordinary man could be such a fool". And Keynes was no fool. When he spoke of deficits and borrowing it was always with reference to monetary expansion. It's his disciples who keep getting it wrong.
A deepening economic crisis
plus cap and trade
plus socialised health care
will help the economy, harm the economy or have no effect on the economy?
The answer can only be one of the three.