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?