Mad Props to Larry Summers, Blue Dogs and the Republicans

or, as I like to call them collectively, the worthless shitboxes of DC

The economy shed 95,000 nonfarm jobs in September, the Labor Department reported Friday, with most of the decline the result of the layoffs by local governments and of temporary decennial Census workers.

The steep drop was far worse than economists had been predicting. Most estimates expected a loss of only a few thousand jobs.

“September’s U.S. payroll report adds to the evidence that the recovery is losing what little forward momentum it had,” said Paul Ashworth, senior United States economist at Capital Economics.

While total government jobs fell by 159,000, private sector companies added 64,000 jobs last month. The unemployment rate, which measures the percentage of workers who are actively looking for but unable to find jobs, stayed flat at 9.6 percent.

Paulie’s wrong… what this indicates is that the recovery has taken hold and that a ‘double dip’ back into recession isn’t going to happen. Of course, that’s scant consolation to the 17.1% of this country that is either out of work, is working less than they’d like to be or have just given up altogether.

While we’ve been hard on the President, especially for listening to bad advice from Larry Summers, we’ve not really addressed the role played by the Blue Dog Dems, the Republicans and the aforementioned Summers in keeping us mired in a recession-like recovery. This collection of, let’s be honest, The Less Than Smart People In Washington decided that fiscal stimulus wouldn’t work despite all the evidence that it would. They either worked hard against ARRA, whittling it down to a point their ideology could tolerate or opposing it completely. We can blame the D leadership in Congress along with the White House for not mounting a better defense or for even being willing to aggressively fight these lunatics, and we have, but at the end of the day it was Summers, the R’s and the BDD’s who were too ignorant to realize the damage they were doing.

For all the Republicans and conservatives out there (I know you’re there… I see your stupid emails all the time), here’s a little chart porn…

It was, in February 2009 that ARRA was passed. And it did just what people like me said it would do… stabilize things, but not really provide the kind of growth we needed. See, the economy has to produce 150k jobs per month just to account for population increases. We needed to double ARRA to around $1.6 trillion to really start building private sector jobs (it’s not that the money goes to that, it builds confidence and provides government spending on infrastructure, for example, using the private sector… see, government can create a lot of jobs).

But, McBlogger (I can hear you whining), the market won’t accept that much debt!

Actually, you’re wrong. It’s like when Bill White and Rick Perry (more on old Rick in a bit) say they don’t like how much debt the US is running up. Personally, it makes me want to punch them in their respective faces because it’s just such a stupid thing to say. Perry can be excused, he’s a career politico with zero real world business experience. White, on the other hand, HAS business experience and should know that WHEN YOU CAN BORROW AT OR NEAR INTEREST RATES LESS THAN THE RATE OF LONG TERM INFLATION, YOU NEED TO BORROW AS MUCH AS PEOPLE ARE WILLING TO GIVE YOU.

To illustrate, the long term rate of inflation is 3-4%. The effective interest rate on government debt, we’ll use the 10 year Treasury note, is UNDER 2.5% (the 30 year t-bond is trading 3.66%, just FYI). The most recent auction was just over three times oversubscribed, meaning that for the every $1 the government needed to sell, they got $3 in bids. Please keep in mind that this was done during a year in which the US government sold $2.3 TRILLION IN DEBT.

In other words, there’s more than enough demand for an additional $1-2 trillion in debt which could be used for real investments by the US Government in the US economy (schools, roads, trains, courthouses, etc). That would create millions of private sector jobs and finally give the nation as whole the confidence it needs by knowing that the Government is going to do what it takes to get the US back on a solid long term economic footing. As for the private sector, it’s not taxes or any other such nonsense keeping employers from hiring… it’s aggregate demand. If you put people back to work, they can spend money and voila! aggregate demand increases and suddenly everyone is hiring to meet that increased demand. Why? Well, even if they’re having to pay 2% more in taxes, private employers would LOVE to have the additional sales and profits from them. Seriously, think about it… you show me a business owner who is willing to give up, for example, $100,000 in profits because they’ll have to pay an additional $2,000 in taxes and I’ll show you just how fast I can put them out of business. Seriously, sight unseen, I’d short their stock to zero.

And, since we’re getting the money at less than the rate of inflation, the money is effectively free since the dollars that pay interest will always be worth less than the money the government is receiving right now. It’s EXCEEDINGLY rare to be in this type of situation.

White should know that. Perry’s too ignorant in terms of finance to understand that, which is beside the point because neither of them have a vote in DC. The Blue Dogs and Republicans don’t get it because it doesn’t fit their ideological frame (they don’t put a lot of stock in economic reality) and so we’re stuck without the investments we need, the debt markets are desperate for supply (and corporate America ain’t borrowing… they don’t need the money, they’re sitting on more than $1 trillion and have already borrowed a ton… remember what I said about ‘economic reality’ and what smart businesses do) and the US is missing a golden opportunity to literally get money for free to build the infrastructure needed for the next leg of economic growth.

So, for all of us suffering through without real economic growth, no wage growth and massive unemployment, now you know not only who to thank but also just how stupid they are for missing the opportunity of a lifetime.

Just as a side note on our Idiot Governor Rick Perry, he said this which was published in the WaPo today

Perry’s focus is Washington, and he presents himself as a bulwark against encroaching big government. “Somebody needs to stand up and say no to this activist government,” he told the Texas and Southwestern Cattle Raisers Association recently. To applause he added, “I hope on November the second we send a real powerful message to Washington, D.C.: We don’t want you spending any more money.”

Now, given the audience, you’d have thought they’d have been able to discern the smell of bullshit and not clap. But this is Texas and ‘evrybody hates tha’ fed’ral gub’mint’ and so, three cheers for Rick Perry who is leading a state that is rapidly heading into a budget deficit almost as large as California’s. What does infuriate me is the hypocrisy… Perry has been actively lobbying Republican members of Congress from Texas (and we have sources… I have eyes everywhere!) to ‘bring as much money home as possible so we can balance the budget’. Which is funny because that’s exactly what Perry did during the last biennium when Texas used almost $14 billion in federal money to balance the budget.

What’s shocking isn’t that he’s a hypocrite, it’s that no one is calling him on it. Not Bill White and certainly not the press. And, frankly, that kinda pisses me off.

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