Going Nowhere Fast

Blogger azleader of the Inform the Pundits blog and I agree on many things and disagree on a few things. One thing I know about azleader is that he is an excellent number cruncher and he likes to fact check. Recently he decided to do some fact checking on Obama’s claim of four million jobs created in the last two years. This is an excellent analysis and I hope you will take time to read it. He clearly demonstrates that Obama is exaggerating just a tad, The real number is closer to 3.5 million jobs created.

In the process of his fact checking, azleader downloaded a lot of data from the BLS and he produced three telling charts. I have borrowed two of them because I think they demonstrate why we are going nowhere fast.

We see in  first chart shown below is that in total average employment fell from its peak in 2007 by 7 million in 2010 and that between 2009 and 022 there was no job growth.

Now please look at second chart of workforce participation. We see the labor force participation rate has been falling since the year 2000. The workforce participation rate has fallen nearly 3%. That may not sound like a lot but it is huge. I found it interesting that workforce participation began falling in 2000 but total employment didn’t start falling until 2008. I asked azleader about this and he explained that this was due to the tech bubble burst at the start of the G. S. Bush administration and is why we got the Bush tax cuts in the first place.

Now, if I am understanding this, it appears that the Bush tav cuts stabilized the fall in workforce participation. So, what happened when the housing bubble burst? We bailed out the To Big  To Fail (TBTF) banks and we stimulated Obama’s campaign contributors and the workforce participation fell again to the lowest level since 1982. We are going nowhere fast.

Speaking of TBTF banks, how have we dealt with this SNAFU of all SNAFUS. Take a look at this article I picked off of Huffington Post a while back. The author is former US Senator from Delaware, Ted Kaufman. Now Kaufman didn’t use these words but in essence he reminds us that it was Bill “Slick Willy” Clinton and his sidekick Larry Summers initiated this SNAFU. Clinton wanted the poor to have homes they couldn’t afford and Summers wanted his banking buddies to be free from the confines of the Glass-Steagall Act. We all know how that turned out.

What Kaufman did say in his article was that after the bailouts there was outrage on both sides of the aisle. There was total agreement between Democrats and Republicans that never again should the American people be asked to bail out the TBTF banks. So, did they reinstate Glass-Steagall? Not a chance.

Our attempt to reinstate Glass Steagall went nowhere. Instead, what I have always thought of as a fig leaf — the so-called Volcker Rule — was attached to the Dodd Frank Wall Street Reform Act, which became law in July 2010. The can was kicked down the road; the Act left it up to regulators to write rules that would prevent banks from making the risky investments that led to the bailouts.

But, of course,  the regulators got plenty of help from those lobbyist that Obama promised would not happen in his administration.

The lobbying campaign over the past few months to influence the regulators in charge of implementing the Volcker rule has been something to behold. A study conducted by Duke Law School Professor Kimberly Krawiec shows that between July 26, 2010 and October 11, 2011, 93.2 percent of those who visited with Securities Exchange Commissioners or staff about the Volcker amendment were financial institutions, law firms, accounting firms, trade associations, lobbyists or policy advisors who represented financial institutions. The remaining 6.8 percent represented public interest or union groups.

The net result is the TBTF banks are bigger than ever and through their lobbying efforts you can be sure they will be able to continue gaming the system.

So, do you see why i say we are going nowhere fast?

Well, that’s what I’m thinking. What are your thoughts?



10 thoughts on “Going Nowhere Fast

  1. Hey Jim, since you’re discussing employment, have you checked out the graph I have posted on my site? It is a striking image of just how bad the unemployment picture truly is.

    Also, he’s touting 4 million jobs? Even if those were worthwhile, productive jobs, 4 million in a nation of 300 million is nothing. Let’s assume that just 30% of those 300 million work. That is, at best, an increase of 4.4%. That’s 2.2% per year; what’s there to be congratulatory about?

    Also, Glass-Stegall is a false flag. It was not responsible for the crash. Canada never had such a law and they are doing fine now. The problem is and always has been with our Federal Reserve system encouraging systematic malinvestment in the economy.

    1. Your graph is excellent, Tony. I agree the Fed is a serious problem but I am not sure that Glass-Steagall is a false flag. Maybe there is no causal relationship but it sure is on hell of a coincidence if it’s not causal.

      1. Tom Woods explains why it’s irrelevant in this post.


        Essentially, if the repeal of Glass-Steagall was the culprit, then we should have seen only hybrid commercial and investment banks fail. The fact is, we saw all banks fail, even those that separated commercial and investment transactions. This argument is used by Fed defenders to point to a lack of regulation as causing the crash. That’s why I call it a false flag. Regulation increased tremendously in the decade leading up to the crash, and Canada fared much better in the recession despite never having a Glass-Steagall law.

        The only coincidence is that interest rates fell dramatically under Greenspan after 9/11, and that is what caused the crash.

  2. I doubt that the 550 individuals who were offered “early retirement” at my company will ever be counted in any which way They are not elegible for unemployment if they take the health benefits. Just mutliply this across the board and one can appreciate the plight of the older worker who has a fat chance of getting the same equilvalent pay and position.

  3. @ Tony: The problem is and always has been with our Federal Reserve system encouraging systematic malinvestment in the economy.


    Great article Jim! The numbers are phony. Obama is on track to be the only president to have a net job loss.

  4. This is clearly information that the MSM will never discuss. Because, as we all know, getting Catholics to pay for birth control is the most pressing issue facing our Republic.

  5. Within the perspective of recent history, the charts above reveal that the jobs hole in the U.S. is far deeper and wider than any Obama administration official will ever admit.

    The revealing workforce participation chart above is a mini-compendium of the U.S. economy covering the last 4 presidents: Reagan, Clinton, GW Bush and Obama

    Its salient features are:
    1-It begins during the recession of 1982
    2-Its sharp rise in the early 1980s corresponds to President Reagan’s “supply side” economics
    3-There is a surprising and totally unexplained ragged drop off during Clinton’s presidency
    4-Participation peaks then declines because of the tech bubble collapse of 1999
    5-The GW Bush tax cuts were done to fight the resulting recession
    6-Participation leveled off after the Bush tax cuts took effect in 2003
    8-Participation plummeted because of the Great Recession
    9-Workforce participation has not yet leveled off or recovered

    I do NOT share the popularly held view that TARP – the “bailout of the big banks” – was a mistake. I firmly believe it prevented another 1930s style depression. The big banks have since paid taxpayers back every penny of their TARP loans and we’ve made a tidy profit off them.

    You touched on Bill Clinton’s role in the Great Recession.

    My next article will expand on your observation’s about Clinton’s role in shaping our current economic predicament.

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