“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Thursday, November 19, 2009

"Many of the lost jobs – in construction, finance, and outsourced manufacturing and services – are gone forever"

Certainly and emphatically no less qualified than Barrack Hussein Obama

A Tale of Two American Economies

Nouriel Roubini
From Wednesday's Globe and Mail
Published on Tuesday, Nov. 17, 2009 6:32PM EST
Last updated on Wednesday, Nov. 18, 2009 5:35PM EST

While the United States recently reported 3.5 per cent GDP growth in the third quarter, suggesting that the most severe recession since the Great Depression is over, the American economy is actually much weaker than official data suggest. In fact, official measures of GDP may grossly overstate growth in the economy, as they don't capture the fact that business sentiment among small firms is abysmal and their output is still falling sharply. Properly corrected for this, third-quarter GDP may have been 2 per cent rather than 3.5 per cent.

The story of the U.S. is, indeed, one of two economies. There is a smaller one that is slowly recovering and a larger one that is still in a deep and persistent downturn.

Consider the following facts. While America's official unemployment rate is already 10.2 per cent, the figure jumps to a whopping 17.5 per cent when discouraged workers and partially employed workers are included. And, while data from firms suggest that job losses in the past three months were about 600,000, household surveys, which include self-employed workers and small entrepreneurs, suggest a number above two million.

Moreover, the total effect on labour income – the product of jobs times hours worked times average hourly wages – has been more severe than that implied by the job losses alone, because many firms are cutting their workers' hours, placing them on furlough or lowering their wages as a way to share the pain.

Many of the lost jobs – in construction, finance, and outsourced manufacturing and services – are gone forever, and recent studies suggest that a quarter of U.S. jobs can be fully outsourced over time to other countries. Thus, a growing proportion of the work force – often below the radar screen of official statistics – is losing hope of finding gainful employment, while the unemployment rate (especially for poor, unskilled workers) will remain high for a much longer period of time than in previous recessions.

Consider also the credit markets. Prime borrowers with good credit scores and investment-grade firms are not experiencing a credit crunch at this point, as the former have access to mortgages and consumer credit while the latter have access to bond and equity markets.

But non-prime borrowers – about one-third of U.S. households – do not have much access to mortgages and credit cards. They live from paycheque to paycheque – often a shrinking paycheque, owing to the decline in hourly wages and hours worked. And the credit crunch for non-investment-grade firms and smaller firms, which rely mostly on access to bank loans rather than capital markets, is still severe.

Or consider bankruptcies and defaults by households and firms. Larger firms – even those with large debt problems – can refinance their excessive liabilities in or out of court, but an unprecedented number of small businesses are going bankrupt. The same holds for households, with millions of weaker and poorer borrowers defaulting on mortgages, credit cards, auto loans, student loans and other consumer credit.

Did the Chinese scare Obama with some hard cold facts?

Consider also what is happening to private consumption and retail sales. Recent monthly figures suggest a rise in retail sales. But, because the official statistics capture mostly sales by larger retailers and exclude the fall by hundreds of thousands of smaller stores and businesses that have failed, consumption looks better than it really is.

And, while higher-income and wealthier households have a buffer of savings to smooth consumption and avoid having to increase savings, most lower-income households must save more, as banks and other lenders cut back on home-equity loans and lower limits on credit cards. As a result, the household savings rate has risen from zero to 4 per cent of disposable income. But it must rise further, to 8 per cent, in order to reduce the high leverage of the household sector.

To be sure, the U.S. government is increasing its budget deficits to put a floor under demand. But most state and local governments that have experienced a collapse in tax revenues must sharply retrench spending by firing policemen, teachers and firefighters while also cutting welfare benefits and social services for the poor. Many state and local governments in poorer regions are at risk of bankruptcy without a massive federal bailout.

Moreover, income and wealth inequality is rising again. Poorer households are at greater risk of unemployment, falling wages or reductions in hours worked, all leading to lower labour income, whereas on Wall Street, outrageous bonuses have returned with a vengeance. With the stock market rising and home prices still falling, the wealthy are becoming richer, while the middle class and the poor – whose main wealth is a house rather than equities – are becoming poorer and being saddled with an unsustainable debt burden.

So, while the United States may technically be close to the end of a severe recession, most of America is facing a near-depression. Little wonder, then, that few Americans believe that what walks like a duck and quacks like a duck is actually the phoenix of recovery.


  1. Sarah's got some hard core supporters out here in older white polite male land. Honestly, she's the only politician I've ever really been excited about.

    Lot of us geezers love that woman.

    She has a future, I think.

  2. The affirmative action, never had a real job, the American lichen, Barack Hussein Obama, his smugness, the choice of 96% of black people, the tingler of white liberal thighs, phony, incompetent is singularly the worst possible choice at the worst possible time.

    Who will come next? Sarah Palin? Didn't George W. Bush T-up Barry Boy?

    Sarah Palin, maybe, just maybe.

  3. Forget Hugh Hewitt, forget Glenn Beck, you want the real deal, smarter by a mile, acquaint yourself to Mark Levin

  4. You can listen to the audios, commercial free and free on the audio section of his website. Hugh Hewitt has his on a pay-for-listen site.

    Who would pay to listen to Hugh Hewitt?

  5. Ditto Levin, ditto Hewitt.

    Right now, Levin is the preeminent talk show host (at least in my mind).

    The situation is looking pretty grim right now. Bad news comes from all fronts. We're being rolled back, in Afghanistan and in the larger world. It's as if we must pay for our hubris. Our President willingly grovels before the whirled as he begs forgiveness and promises a more conforming America.

    Domestically, the Republirats are being steamrolled as the Alinskyites and their allies in Congress advance their national socialist agenda.

    America is being remade in the night and fog of crisis.

  6. Melody, there is no poetry here. But just rather a man telling the truth about his life.

    Some two weeks ago or such I went for a hike, up through the old farm, where my grandfather fought it out.

    I walked past where his old house was. I had climbed up to the second story, when I was a kid. It was all gone, when I began to farm.

    There was a day, when I plowed over the place, and the moldboard drug up some old plates and stuff.

    I got down off the tractor, and nudged them with my knee.

    I don't know how he did it.

    He had two wives, three kids from the first, five from the second, and he got them all through college, two of them back at Columbia University, there in New York.

    My pappy was a lawyer, and pappy and grandpappy had a big argument.

    You see, grandpappy wanted dad to take up on the farm, and he didn't want to do so.

    It's odd, as pappy wanted me to be a lawyer, but I wanted to farm, and we had a big dispute bout that.

    It's odd. I'm the only one left here now, all the others have died, or gone away.

    I walked up past where grandfather lived, up past where I might build a dam someday, up far north where the old, old trees are, and then, a stag, heavy horned, burst into view.

    He stood there, and heavy horned, with some confusion, didn't know what to do.

    He took some steps, back and forth.

    Then he leaped, back into the forest deep.

    I think of those paintings on the old caves of Europe. I think I know what they did know.

    O Melody!

  7. Bob: I think of those paintings on the old caves of Europe. I think I know what they did know.

    Ever look at those paintings? There is true artistry there, and amazing technique with primitive materials. Even 25,000 years ago we weren't dummies. But the AARP supports PelosiCare so see if I accept their geezer card in six years. I ain't gonna be no official geezer when the geezer club supports putting off mammograms to biannual visits after fifty to shave costs.

  8. Mrs Palin would do worse than Goldwater, but better than McGovern in a run for the White House.

    Regardless, she'd still lose.

  9. T,

    Re: when the geezer club supports putting off mammograms

    But, but, but, the Brits are doing it. Doesn't that make it kosher? I thought the Brits were the arbiters of all things medical (apart from dentistry, of course).

  10. Re: European cave painting

    Recently, two books have been published, examining the art from all angles. While I do not have the titles on the tip of the tongue, this information is possibly in the e-archives of Arts & Letters Daily. Something to consider is the view that some of the work was done by children - bright lads and, like bob, unencumbered by all the blinding cultural noise of modernity.

  11. If one reads Mrs Palin correctly, then the disaster that would have been the McCain Administration becomes even more evident.

    It would have been worse, than Team Obamamerica.

  12. Talks about an entire team that was not ready for the "Prime Time".

    Team Maverick was it.

  13. Vindicated, again.

    This time by Sarah Palin, herself.

  14. Breaking video of wounded fort dix soldier

  15. WiO,


    Alley Back Bar, my friend!

  16. Funny how Levi has become a TV spokesperson, too.

    Famous for fuckin' the Governor's daughter. Kind of like Earl Flynn, in those swashbuckler movies of old.

  17. Concerning Obama's amazing debt understanding...

    Watch me quadruple what bush spent in 8 months, destroy industries, print money like paper and now watch me become a fiscal conservative...

    and it's all bush's fault...

    obama is a joker with power...

  18. Those things in your litney, "misdirection" are all Congressional powers and authorities.

    The President can do none of those things, except promote fiscal conservatism in the face of Democratic majorities in Congress.

    The Federals are on their trend lines, right on course. We would be right where we are, regardless of who won the White House last November.

  19. No sense putting the vote off.
    May as well vote today, as the next.

    They're not going to read it, regardless.

  20. Obama and Holder doing everything they can to poison chances of a fair trial for KSM. Mistrial, he walks, so he can "look for the real mastermind of 9-11"


  21. desert rat said...
    The Federals are on their trend lines, right on course. We would be right where we are, regardless of who won the White House last November.

    So true.

    "...abandon free-market principles to save the free market."

    A boot on the neck with the left foot or right foot is still a boot on the neck.

  22. "Bad news comes from all fronts."

    Not from mine, it doesn't.

    Don't know what's the matter that no one can hold down the fort anywhere else.

    Uribe may not be able to run for a third term but, even so, it's looking pretty bright this Thursday.

  23. You just need a change of venue, whit.

    As was pointed out to me the day I arrived, "Well. At least here we're winning."

    World's best kept secret.

    Which may be why we are. Winning, that is.

  24. The largest expansion of the welfare state, the biggest entitlement program in the history of US - still today - Medicare Part D - passed by the "party of small government."

    Congress - controlled by the "party of small government" in 2003.

    Executive - controlled by the "party of small government" in 2003.

    Piling on the debt. Let the "free" viagra and the good times roll.

  25. Re: "free Viagra"

    Darned straight!

    It's part of the Constitution, you know, implicit within "the pursuit of happiness". Yep, give my "Willie" life and the chance of liberty to use it in the pursuit of happiness.

    That's the ticket guaranteed to win elections for the "small government" party...Right?

  26. I do not wish to appear sanguine about it but, small government is long, long, long gone. I don't even know what I was doing hanging out at Cato and the Mises Institute all those years.

    Can someone pinpoint for me the last year we had a small government? A government largely unoccupied with the task of spreading its wings not only over the nation, but the world?

    Can anyone name for me a Chief Executive of the United States that was not hoisted into what Gene Healy refers to as The Cult of the Presidency?

    Does anyone believe that our foreign interests and foreign commitments and, along with them, our foreign adventures are going to cease?

    "Small government" ought to be resigned as a useful phrase.

    Maybe "less energetic government" should be substituted.

    Or "cheaper."

    Or stop trying to fool ourselves in any way, shape, or form and go with "national greatness conservatism." Has that Eisenhower-esque feel to it.

  27. Yeah, I do think the era of foreign adventures is drawing to a close.
    Afpakistan will be the last, for quite a while. Iraq will be drawn down to not much, in how many more months?

    Especially if the economy does not significantly recover, in the next three years. The public sentiment will mimic that of the 'Nam era with regards those "commitments". Divorce is socially acceptable and a big business, in the USA.

    Obama will have become LBJ, there'd be poetic justice and symmetry, in that.

  28. It's going to be time for a version of "America First" to rise in popularity, especially if the economy does not recover jobs and real estate values.

    Since Obama and the Democrats are the ones in power, and are Internationalists of the New Whirled Order, you'd think that the Republicans would grab that banner, but for the fact that the GOP is still a Bush machine, 2nd generation, and will not go there.

    Knowing that their "base" is to xenophobic to include Mexico and Canada in version of "America".

    Leaving the loyal opposition fragmented and the Democrats in control, through to the 2016 cycle.

    By then the Bush legacy and organization will be a distant memory.

  29. Can someone pinpoint for me the last year we had a small government? A government largely unoccupied with the task of spreading its wings not only over the nation, but the world?


  30. Trish - I'm going with Taft - not saying he was good, just a point in time. Anything pre-income tax and pre-federal reserve.

    Income tax and inflationary monetary policy seeming to be the common sources of revenue - real and imagined - for an expansive state.

    Now we have 535 knuckleheads and an executive branch that are quite successfully diminishing our national greatness. The Asians stiff-arming the bowing president at every opportunity. As with the Russians, Iranians, Hugo and the gang.

    $11 trillion in debt on track to adding $9 trillion more. Started by Reagan in the 1980s and continuing unabated today.

    The only way out to inflate the currency, wiping out the savings of everyone, default on the debt, wiping out the savings of everyone or raising taxes, becoming a nation of serfs, paying off government debts to our Chinese, Japanese and Arab masters.

    As Michael Scheuer put it on the crazy guy's show: "A tyranny of incompetence."

    How's about an hourly rate for the running of carrier groups protecting oil shipments to Asia? Apply it against the debt and we can fund our foreign obligations.

    System administration. Everyone benefits, everyone pays.

  31. Through the Administration of Andrew Jackson.

    Truthfully, up until the Republicans took charge of the National scene, from 1860 through to 1912. Even beyond, Mr Wilson's Presidency being a fluke of Republican factions eating their own.

    The Republicans are and always have been a Party of Federal control and centralized power.

    Their forebears designed the basic governmental system as it is, today. I'd say their hundred and fifty years of policy dominance has run its' course.

    They've run out of ideas.

  32. The British made us a pause our nation building. They burned down the White House to let let us know they were quite vexed.

  33. From the time of the Louisiana Purchase and Jefferson's sending Lewis and Clark into the great unknown, the US has expanded - first as a contiguous empire (Manifest Destiny) and later as a world class empire. The expansion of sovereignty called for a growing Federal role, e.g. the subsidization of railroads. Obviously, the Civil War and two world wars could not have been fought and won without the growth of bureaucracy.

    The difference between now and then is the payoff. It's hard to see one. And because the US is not historically or culturally inclined to follow the Roman model of ruthlessly extreme exploitation by military means, there probably is not going to be one.

  34. You guys need to "dial back" the Glenn Beck a little bit. There's no reason why "inflation" should wipe out your savings.

  35. "1812"

    See what I mean?

    Not even remotely within anyone's living memory.

    And were we to Quantum Leap back there, we'd just be wandering around unhappily mumbling, "Is there no place that doesn't smell like horseshit?"

    End to our foreign adventures? We'll be lucky to get a decent nap in before the shit hits the fan and the next damn thing is ramped up. (I'll be on the catamaran. Not my worry.)

    I remember thinking back in 2004, "Oh, yeah. We've stepped in it now. The appetite for this kind of nonsense surely will come to a halt." Now, that strikes me as utterly preposterous. Utterly.

    Should we (significantly) lose Afghanistan the anxiety level in DC is going to go up a few notches and remain there indefinitely. Christ only knows what happens with Pakistan. Then there's Yemen. Then there's Somalia...Pat Lang gets all grumpy when running down the list of potential interventions (involving more than a handful of SF and a couple of operators, who are already there and everywhere else anyway). But that headache list is sadly real.

    I can entertain the possibility that part of the Big Green Machine is going to be left at home for awhile *at some point* (nap time for them); that the contractor gravy train will be somewhat diminished; that regime *removal* will be yesterday's news unless the regime in question is one feeble asshole and his body men.

    But that's about it.

    And even in regard to the Big Green Machine, I'm not sure that very many people have given thought to its transformation over the past eight years. It is not the Army that it was. Worn out and run down, but it is more thoroughly an expeditionary force than it ever has been in my lifetime. As was remarked to me, "No going back."

    Last thought: We like war. We may on occasion give it a bad name. But we like it anyway. It is fully a part of who we are as a people, that attraction to armed conflict.

    I say this not sneeringly. It is what it is.

    It used to be called Armistice Day.

    Used to.

  36. "It is well that war is so terrible. We should grow too fond of it."
    ___Robert E. Lee
    Fredericksburg, 1862

    Were we not so fond of war (winning), we would not have been so often engaged in it. The key is winning.

  37. Taft.

    Okay, I'm seriously wondering if a Taft would today have ANY CHANCE AT ALL of (a) successfully capturing the Republican nomination and (b) the presidency itself.

  38. "The key is winning."

    Well, look. You can't have everything. ; )

  39. "Winning isn't everything; it's the only thing."


  40. "Living well is the best revenge."

  41. Inflation used to be considered taxation by subterfuge. The government gets first use of the money. As money works its way through the system it depreciates in value. What started out as nominally $1 might be eventually worth $0.90, for example.

  42. Ahhh, but there is the rub, allen, the Government does not create the money, the Federal Reserve does.

    That is a private corporation, Federally chartered, but privately owned.

    The Federals borrow the dollars to start that ball rolling.

  43. You see, the Government gets "seconds", not firsts.

  44. Part and parcel of that Republican progress.

  45. America - Land of the Free

    I've always found it a head-scratcher that in a land where freedom is supposed to reign one can get prosecuted for hanging your laundry out to dry. Yeah, I know, the freedom to be free of others drying clothes is a freedom as well.

  46. Like the MSM around here:
    Focus fire on the GOP in order to avoid notice of the worst administration/Congress of our lifetime.

  47. What, you think the GOP doesn't deserve to be fired?

  48. What the generals won't tell the prez

    Gen. Stanley McChrystal's August report, which called for more troops, was one thing -- the commander on the ground's legitimate assessment as to what he believed he needed to execute his mission.

    The insubordination came later -- when President Obama asked for strategic options.
    The Pentagon was obligated to respond with a full range of alternatives that re-examined the premises of the mission and offered genuine choices.
    It didn't.

    Instead of serious alternatives, the president got slightly different versions of the single option the top generals liked.
    The issue was reduced to
    "How many more troops will you send, Mr. President?"

  49. Gosh, I wonder what Petraeus thinks.

  50. Bet he thinks he needs more guys.


    ran: Suspicious Death of the Notorious Kahrizak Detention Center's Physician
    Report Source: Radio Zamaneh

    Dr. Ramin Pourandarjani

    Reformist news outlets report that Ramin Pourandarjani, "physician of Iran's Kahrizak detention centre" died last Tuesday. Norooz website reports that the 26-year-old physician died in his room at the medical building of Tehran's Security Forces. Reportedly, officials announced the cause of death to be "heart failure while sleeping."

    According to Norooz, Dr. Pourandarjani had examined some of the victims of Kahrizak detention centre such as Mohsen Ruholamini whom he had examined prior to his death.

    Norooz also claims that a week after Ruholamini's death, this physician was taken into custody until he made the announcement that cause of Ruholamini's death was meningitis.

    The report goes on to state that following the announcement, Pourandarjani was released on bail and after that, was called for questioning several times by officials of Security and Armed Forces.

    Norooz also claims that Pourandarjani "had discussed the issues concerning Kahrizak with a few close friends and expressed concern about his own safety."

  52. If you recall General Casey was opposed to the surge, before he were for it.

    Now Petraeus and Stan "The Man" are still fighting the last war.

    Generals are always wanting to fight the last war, again.

    The Ambassador got out of the Army and ahead of the curve.

  53. The Governator says he will not seek another term as governor of CA. Probably a good decision. Now if he could convince the rest of the state legislature to do the same, it would be real progress.

    Tuition Rates to Rise 32% in CA

  54. Favorable/Unfavorable?

    Palin's a likeable person (although her laugh is a bit irritating). But I would be extremely surprised if she goes very far in national politics.

    Besides its been reported one of the big reasons she quit the Alaskan governorship was to make more money. Now if she made it to Congress there would be a good chance she would end up making a lot of money (one way or another). However, in that case would you still want her? Or would it just be more of the same ol same ol?

  55. is evidently a wiki site.

    People can go there and post without having to worry about the government checking out what you've posted.

    Government Stimulus Reporting Site

  56. Well, I Don't know. One thing I do know is: there are, exactly, TWO Rockstars in American Politics, and she's one of them.

    BTW, that Votecount up there in NY 23 was, completely, whacked. Hoffman (her candidate) might end up winning that thing.

    We'll see who she campaigns for this year, and how they do. She really needs to get a strong "position paper" out. She Really needs some help.

  57. I do admit she is influential. The Dems are using her for fund raising. See the post.

    Palin is Dangerous. Send Money

  58. The U.S. Preventive Services Task Force put out study findings indicating that women shouldn't have regular mammogram exams until they reach the age of 50. At the end of the study, they even recommended that women shouldn't bother doing self breast exams until 50.

    What's interesting is that there were no oncologists on the task force but there were three insurance industry representatives. Clearly, the panels recommendations were based on political as opposed to medical considerations. Even Sabelius has come out and told women to ignore the recommendations of her own task force.

    In an interview on MSDNC, I heard that this panel will have input into decisions affecting what procedures will be approved under the proposed healthcare reform.

    Some death panels never die.

  59. I find it interesting that no one is commenting on how Barack Obama and the Democratic Congress are probably going to inadvertently destroy the social welfare state that they are seeking to enlarge and extend. When Reagan tried to strangle the Federal government in debt, the liberals howled with outrage. But they are now running up a debt so huge that rather than finishing the work of FDR and LBJ they will likely bring on the collapse of medicare, social security and medicaid. The math and actuarial data seem plain as day to me, but they are so intoxicated by the victory almost won that they can’t see it. Like Hitler pushing to the Volga-blocks away from the final hard fought victory at Stalingrad- and missing the trap being laid for the 6th army by Zhukev’s massed armies.

  60. Lord Acton,

    Good to see you!

    The reach exceeds the grasp.


  61. All spending bills orginate in the House, not the Federal Reserve. I rest my case, DR.

  62. Thanks for the information and I think that the global reession has affected lots of the industry and the worst industry affected is Construction industry.

    Portable Storage,