Unemployed – Explained by two eminent economists

So how can over 873,000 people come off the unemployment line when there were only a little over 114,000 jobs created?

Luckily I found a transcript of a conversation between two eminent economists discussing this very
question!

Abbott & Costello explain unemployment


Here we go, the recent unemployment report explained —

COSTELLO: I want to talk about the unemployment rate in America.


ABBOTT: Good Subject. Terrible Times. It’s 7.8%.


COSTELLO: That many people are out of work?


ABBOTT: No, that’s 14.7%.


COSTELLO: You just said 7.8%.


ABBOTT: 7.8% Unemployed.


COSTELLO: Right 7.8% out of work.


ABBOTT: No, that’s 14.7%.


COSTELLO: Okay, so it’s 14.7% unemployed.


ABBOTT: No, that’s 7.8%.


COSTELLO: WAIT A MINUTE. Is it 7.8% or 14.7%?


ABBOTT: 7.8% are unemployed. 14.7% are out of work.


COSTELLO: If you are out of work you are unemployed.


ABBOTT: No, Obama said you can’t count the “Out of Work” as the unemployed. You have to look for work to be unemployed.


COSTELLO: BUT THEY ARE OUT OF WORK!!!


ABBOTT: No, you miss his point.


COSTELLO: What point?


ABBOTT: Someone who doesn’t look for work can’t be counted with those who look for work. It wouldn’t be fair.


COSTELLO: To whom?


ABBOTT: The unemployed.


COSTELLO: But ALL of them are out of work.


ABBOTT: No, the unemployed are actively looking for work. Those who are out of work gave up looking and if you give up, you are no longer in the ranks of the unemployed.


COSTELLO: So if you’re off the unemployment roles that would count as less unemployment?


ABBOTT: Unemployment would go down. Absolutely!


COSTELLO: The unemployment just goes down because you don’t look for work?


ABBOTT: Absolutely it goes down. That’s how the current administration gets it to 7.8%. Otherwise it would be 14.7%. Our govt. doesn’t want you to read about 14.7% unemployment!


COSTELLO: That would be tough on those running for reelection.


ABBOTT: Absolutely.


COSTELLO: Wait, I got a question for you. That means there are two ways to bring down the unemployment number?


ABBOTT: Two ways is correct.

COSTELLO: Unemployment can go down if someone gets a job?


ABBOTT: Correct.


COSTELLO: And unemployment can also go down if you stop looking for a job?


ABBOTT: Bingo.


COSTELLO: So there are two ways to bring unemployment down, and the easier of the two is to have administration supporters stop looking for work.


ABBOTT: Now you’re thinking like the Economy Czar.


COSTELLO: I don’t even know what the hell I just said!


ABBOTT: Now you’re thinking like Obama.

O Canada, you sensible land!

You may already know that the U.S. dollar and Canadian dollar are almost identical in value . Currently the US dollar will buy about $1.10 Canadian. Just a few months ago the situation was reversed. Toronto and Vancouver homes are as expensive or more expensive than the same property in Los Angeles. Their housing boom tracked the U.S. boom before 2008. The exception is they did not experience the melt down. The price of homes has continued to rise throughout Canada. To quote the Financial Post: “Home ownership a passion for Canadians. It is a passion for ownership that has put Canada in the elite company of countries with estimates that more than 70% of households now own their own home.”

O Canada, you sensible land!

By Jay MacDonald · Bankrate.com
Monday, May 9, 2011
Posted: 9 am ET


What’s the best way out of our bubble-bust-bubble mortgage muddle that has resulted in a record 2.87 million  American foreclosures last year alone? The answer may lie due north.

O Canada, you have no doubt watched our housing-driven Great Recession with  the stern if sympathetic eye of a schoolmaster who well knows the fate of all  undisciplined schoolboys.

During our financial meltdown, not a single Canadian bank failed. Less  than 1 percent of Canadian mortgages are in arrears. And this in a land that  doesn’t even afford its homeowners the courtesy of a tax break on their mortgage  interest!

I was gob-smacked by a recent McClatchy report out of Toronto with the  headline, “Canada’s mortgage system works.” Of course, compared to our system,  falling as it does somewhere between a faulty pachinko game and three-card  Monte, most of the developed world could make the same claim.

Canada owes its housing stability in large part to a conservative regulatory  environment that holds its 71 federally regulated lenders to stricter  underwriting standards and larger reserve requirements for potential losses than  does its U.S. counterpart.

There is no Canadian equivalent of Fannie Mae and Freddy Mac, which purchase  mortgages from banks and bundle them into bonds. Did I mention that Fannie and  Freddy have been in government conservatorship since mid-2008?

As far as tax incentives go, Canadian homeowners are allowed an exemption on  capital gain from the sale of their primary residence, period. Yet their  homeownership rate is equal to or greater than ours here in Sud Moosejaw.

Stuart Gabriel, a finance professor at UCLA, sees it this way:

“They’ve insisted all along on the more rigorous mortgage underwriting, and  because of that never found themselves originating subprime and no-doc mortgages … some very basic items such as stringency of underwriting seem to go a long  way.”

Indeed. Now I’ll grant you, corralling a total of 71 lenders for 34 million  citizens may be a tad easier than wrangling 8,000-plus FDIC-insured lenders  serving 310 million. But it’s still ironic that Canada’s conservative mortgage  system is unfazed while our “free market” version – and I use those quotation  marks intentionally – has resulted in the largest financial meltdown since the  big one.

O Canada, please send some of your common sense our way as we attempt to  dismantle our house of cards and start over. Hopefully with  two-by-fours.

Read more:  http://www.bankrate.com/financing/mortgages/o-canada-you-sensible-land/#ixzz2vnqaMrGJ Follow us: @Bankrate on Twitter | Bankrate on Facebook

President Obama’s foreign policy is based on fantasy

When The Washington Post Editorial Board publishes a commentary critical of President Obama you have to take note. Accurately they point out the naivety of President Barack Obama.

Washington Post Editorial Board Opinion, March 2, 2014

FOR FIVE YEARS, President Obama has led a foreign policy based more on how he thinks the world should operate than on reality. It was a world which “the tide of war is receding” and the United   States could, without much risk, radically reduce the size of its armed forces. Other leaders, in this vision, would behave rationally and in the interest of their people and the world. Invasions, brute force, great-power games and shifting alliances – these were things of the past. Secretary of State John F. Kerry displayed this mindset on ABC’s “This Week” Sunday when he said, of Russia’s invasion of neighboring Ukraine, “It’s a 19th century act in the 21st century.”

That’s a nice thought, and we all know what he means. A country’s standing is no longer measured in throw-weight or battalions. The world is too interconnected to break into blocs. A small country that plugs into cyberspace can deliver more prosperity to its people (think Singapore or Estonia) than a giant with natural resources and standing armies.

Unfortunately, Russian President Vladimir Putin has not received the memo on 21st-century behavior. Neither has China’s president, Xi Jinping, who is engaging in gunboat diplomacy against Japan and the weaker nations of Southeast Asia. Syrian president Bashar al-Assad is waging a very 20th-century war against his own people, sending helicopters to drop exploding barrels full of screws, nails and other shrapnel onto apartment buildings where families cower in basements. These men will not be deterred by the disapproval of their peers, the weight of world opinion or even disinvestment by Silicon Valley companies. They are concerned primarily with maintaining their holds on power.

Mr. Obama is not responsible for their misbehavior. But he does, or could, play a leading role in structuring the costs and benefits they must consider before acting. The model for Mr. Putin’s occupation of Crimea was his incursion into Georgia in 2008, when George W. Bush was president. Mr. Putin paid no price for that action; in fact, with parts of Georgia still under Russia’s control, he was permitted to host a Winter Olympics just around the corner. China has bullied the Philippines and unilaterally staked claims to wide swaths of international air space and sea lanes as it continues a rapid and technologically impressive military buildup. Arguably, it has paid a price in the nervousness of its neighbors, who are desperate for the United States to playa balancing role in the region. But none of those neighbors feel confident that the United States can be counted on. Since the Syrian dictator crossed Mr. Obama’s red line with a chemical that killed 1,400 civilians, the dictator’s military and diplomatic position has steadily strengthened.

The urge to pull back – to concentrate on what Mr. Obama calls “nation­building at home” – is nothing new, as former ambassador Sestanovich recounts in his illuminating history of U.S. foreign policy, “Maximalist.” There were similar retrenchments after the Korea and Vietnam wars and when the Soviet Union crumbled. But the United States discovered each time that the world became a more dangerous place without its leadership and that disorder in the world could threaten U.S. prosperity. Each period of retrenchment was followed by more active (though not always wiser) policy. Today Mr. Obama has plenty of company in his impulse, within both parties and as reflected by public opinion. But he’s also in part responsible for the national mood: If a president doesn’t make the case for global engagement, no one else effectively can.

The White House often responds by accusing critics of being warmongers who want American “boots on the ground” all over the world and have yet to learn the lessons of Iraq. So let’s stipulate: We don’t want U.S. troops in Syria, and we don’t want U.S. troops in Crimea. A great power can become overextended, and if its economy falters, so will its ability to lead. None of this is simple.

But it’s also true that, as long as some leaders play by what Mr. Kerry dismisses as 19th-century rules, the United States can’t pretend that the only game is in another arena altogether. Military strength, trustworthiness as an ally, staying power in difficult corners of the world such as Afghanistan – these still matter, much as we might wish they did not. While the United   States has been retrenching, the tide of democracy in the world, which once seemed inexorable, has been receding. In the long run, that’s harmful to U.S. national security, too.

As Mr. Putin ponders whether to advance further – into eastern Ukraine, say – he will measure the seriousness of U.S. and allied actions, not their statements. China, pondering its next steps in the will do the same. Sadly, that’s the nature of the century we’re living in.

What Country Are We In?

The Ukraine was part of the Russian Empire since 1783. It became an independent nation as a result of the breakup of the USSR in 1989.

Alsace-Lorraine is a frontier area between Germany and France of about 5,000 square miles. It was ceded by France to Germany in 1871 after the Franco-German War. Then was retroceded to France in 1919 after World War I, was ceded again to Germany in 1940 during World War II, and was again retroceded to France in 1945. The area has a large German-speaking population.

The Mexican-American War (Mexico-United States [1846-48]) resulted in Mexico ceding California, Arizona, and New Mexico to the United States. Texas had previously won its independence from Mexico with the help of the United States.

At least 50% of today’s California population are Spanish speaking. Most are probably from Mexico. Using Russian logic Mexico should consider re-annexing Alta-California.

Maine wreakage 1898

Wreckage of USS Maine, 1898. The sinking of the Maine was not an action by the Spanish. Investigations revealed that more than 5 long tons (5.1 t) of powder charges for the vessel’s six and ten-inch guns had detonated, obliterating the forward third of the ship.

Should these regional boundary disputes be subject to approval of the entire world? Why is the United States the court of justice? Other than WWI and WWII America’s track record in policing the world has been dismal.

Continuing High Unemployment

Today’s employment report for February is another set of contradictory results.  175,000 jobs were added to payrolls.  The number of long term unemployed has remained stubbornly high at 37% (or even higher) of the total unemployed since January of last year.  There were two months when the number dropped below this level but they were most likely statistical errors as they were not consecutive months.

Other nations would be happy with the unemployment rate that the USA is experiencing, 6.7%. That is not a fair comparison.  Americans are used to an unemployment rate of 5%.   That is a number that was last seen in April 2008.

Despite government optimism there is nothing on the horizon that says we will see any number near 5% in 2014.

Two issues make changes in unemployment likely. 1) Low cost labor in other countries.  2) Technology has reduced the need for so many workers.  Those long term unemployed need re-training into new careers that are experiencing labor shortages.

Conservative politicians won’t allow government funding of those kinds of programs.  They complain about welfare and long term unemployment benefits but won’t allow themselves to see the benefits of re-training programs.  If there was a conservative president making a case for re-training a conservative congress would enact the needed legislation.  Since Barack Obama is a Democrat no programs will be enacted.  It’s all about politics.

Where do we go from here? No where as long as there is a divided government.  Look for changes in 2017.  It makes me sad and dismayed.

“You’ve got to be carefully taught”

Discrimination, bigotry, hatred of any other group seems to be ingrained in many Americans. There is no easy solution. As a fan of New York musicals such as Oklahoma, My Fair Lady, etc. I recall South Pacific and the message about hatred. South Pacific is a musical composed by Richard Rodgers, with lyrics by Oscar Hammerstein II and book by Hammerstein and Joshua Logan. The original stage date was Apr 07, 1949. It does not appear we have learned very much about hatred since then.

Words from “You’ve got to be carefully taught”

You’ve got to be taught to hate and fear,

You’ve got to be taught from year to year,

It’s got to be drummed in your dear little ear,

You’ve got to be carefully taught.

You’ve got to be taught to be afraid

Of people whose eyes are oddly made,

And people whose skin is a diff’rent shade,

You’ve got to be carefully taught.

You’ve got to be taught before it’s too late,

Before you are six or seven or eight,

To hate all the people your relatives hate,

You’ve got to be carefully taught!

Oregon attorney generalThus I applaud Oregon’s State Attorney General, Ellen Rosenblum, who says she would not defend it’s ban on same sex marriage. The Catholic church of Oregon has taken an unmistakable opposite position.

From the Los Angeles Times
By Maria L. La Ganga

March 1, 2014, 9:39 p.m.

PORTLAND, Ore. — When Jackie Yerby and a small band of devout Catholics go to the cathedral for Mass this Ash Wednesday, they will be sending an unmistakable message. Pinned to their lapels will be big white buttons that proclaim, “Catholic Oregonians for Marriage Equality.”

more here>> http://www.latimes.com/nation/la-na-oregon-gay-marriage-20140302,0,6705402.story#ixzz2uqkwnfEX

The USA Cannot Police the World

Barack ObamaNews report in the Los Angeles Times today.

President Obama said today that he was “deeply concerned” by reports of Russian military activity in Ukraine and warned Moscow to use restraint as the former Soviet state struggles to forge a new government.
“Any violation of Ukraine’s sovereignty and territorial integrity would be deeply destabilizing,” Obama said in a statement from the White House. Such a move would be a “profound interference in matters that must be determined by the Ukrainian people.”
Obama’s remarks followed a day in which tensions mounted between the new Western-aligned government in the capital of Kiev and the Russian-speaking majority in the Ukrainian province of Crimea.

The USA has no economic interest in Ukraine. Of course we all feel sad for the Syrians, Iranians, North Koreans, and Ukranians.  We simply are exhausted.  Afghans may be to blame.  We are there to help them develop a free an independent society.  The problem is they don’t want our way of life. Our ‘manifest destiny’ idea that our way is the right way for societies to function and it has been handed down by God is our delusion.

The United States cannot police the world.  We lack the army, the money, and Americans have no appetite for new interventions this year.  That may become a long term attitude.  It is a consequence of our two most recent foreign involvements.  You know, Iraq and Afghanistan.  Neither of those efforts went as projected.  We spent millions, we lost lives, we saw thousands return home with permanent injuries with no success.  In fact the opposite has occurred.  More people and countries around the world either hate or intensely dislike the USA.

Much of the rest of the world does not accept our ideas.  President Obama’s comments about Russia’s invasion of Ukraine is more for domestic consumption than about stopping their action.

The exception is our war hawks.  They would have us involved in Syria, confronting Iran, and now confronting Russia over its invasion of Ukraine.

It Looks like another “cold war.”

Income inequality: Nothing New!

Lifestyles_of_the_Rich_&_FamousThe following article was in The Week magazine dated February 7, 2014.  Their title was Income inequality: Why does the gap keep widening?  Then the article proceeds to tell readers that it hasn’t widened.  It’s just great political rhetoric that might help win elections.

 Perhaps it’s the strong rhetoric of Pope Francis and President Obama, or the growing sense that the economic recovery is leaving the poor and the middle class behind. But income inequality-an issue that once preoccupied liberal policy wonks and scruffy Occupy Wall Street activists-has suddenly become “part of the mainstream kitchentable debate” in America, said Michael Hiltzik in LATimes.com.

 A startling new Gallup poll finds fully two thirds of adults either somewhat or very dissatisfied with the distribution of wealth in this country-and that includes 54 percent of Republicans. The rich just keep getting richer, said Harry Bruinius in CSMonitor.com, and “the public has been taking notice.” Since 2009, 95 percent of U.S. economic gains have gone to the wealthiest 1 percent of the population. Wall Street stocks and corporate profits are soaring to all-time highs, yet on Main Street, salaries have been stagnant, and millions can’t find jobs that pay middle-class salaries. Americans who once believed that anyone could climb the ladder with hard work and talent now suspect that the system is “stacked against them.”

The rich may be getting richer, said Nick Gillespie in TheDailyBeast.com, but that doesn’t mean it’s getting harder to join their ranks. A study released last week by Harvard economists shows that a child born into the poorest fifth of U.S. households has the same 7.8 percent chance of climbing the ladder into the richest fifth as he or she did 50 years ago. That figure is “unacceptably low,” but “upward mobility” is still happening. To address income inequality with effective policies, said David Brooks in The New York Times, we have to understand its real roots. The “growing affluence of the rich” isn’t causing the problems of the poor. Those problems are the result of globalization’s impact on “low-skill jobs,” and even more importantly, of social and cultural factors. America’s underclass lives in a world of broken homes, crime-filled communities, dysfunctional schools, and personal chaos. That’s what is keeping people stuck at the bottom, not the growing wealth of the top 1 percent.

Now there’s a convenient rationalization, said Matthew O’Brien in TheAtlantic.com. The reality is that as the rich award themselves with all the gains created by technology and cheap labor, they’ve come to inhabit “a different world.” Their kids grow up with $40,000-a-year preschools, tutors, private lessons, special college prep, and on and on. On this unlevel playing field, how do kids from the bottom 90 percent compete? Those at the top of the social ladder have one overriding goal, said David Horsey in the Los Angeles Times: “to protect what they have and get even more.” That’s why wealthy individuals and corporations flood Washington and state capitols with political contributions. It’s no accident that people who make $20 million on investments pay lower tax rates than struggling plumbers and teachers. Unless the rich suddenly get a conscience, the U.S. will soon be “the world’s biggest banana republic,” with the ruling plutocrats living behind gilded gates.

So what’s the answer? said Mickey Kaus in The Wall Street Journal. Democrats may moan about inequality, but when it comes to policies that might reverse the trends, “they got nothin’, as comedians say.” Raising the minimum wage? Hiking the top tax rates? Please. Small tweaks to the status quo will not “stop the top 10 percent from taking home 50 percent of the nation’s income.” Let’s face it: Everyone may be talking about income inequality, but thus far, it’s a problem without a solution.