"To dig holes in the ground", paid for out of savings, will increase, not only employment, but the real national dividend of useful goods and services. It is not reasonable, however, that a sensible community should be content to remain dependent on such fortuitous and often wasteful mitigations when once we understand the influences upon which effective demand depends."
John Maynard Keynes
Commentary & Analysis
Jobs, jobs, jobs, jobs, jobs, jobs, jobs, jobs, jobs, jobs, jobs, jobs, jobs, jobs, jobs, jobs!
Sorry, did that sound like a cat food commercial?
Naturally, ahead of tomorrow’s US Nonfarm Payrolls report and President Obama’s upcoming jobs address to Congress, talk of creating jobs in the US has become top priority.
And thank goodness – I’ve been wondering why it’s taken so long to fire up the (clean-coal burning) jobs machine. Luckily I found an article this morning that explained why:
Top Senate Democrats outlined a broad plan later Tuesday to focus on job creation.
“It’s now time for Congress to get back to our regularly scheduled programming, and that means jobs,” Sen. Charles Schumer (D-N.Y.) told reporters.
“It’s time for jobs to be moved back to the front burner,” he said. “With this debt-reduction package completed, the decks are now cleared for a single-minded focus on jobs in September.”
Reid said staff will work during recess to flesh out the specifics of the jobs package, mentioning energy as one of several issues on Democrats’ agenda.
“So there are many things we can do. And we also, of course, are concerned about the new energy jobs that are out there, and we have a lot of other things that we — we don’t have them finalized yet, but we will,” Reid said.
The implication from the above remarks is that the federal government is capable of creating jobs–such as those in the “clean energy” sector–but gosh they’ve just been so busy lately, they haven’t had time to do so.
Rest assured – Congress is on it now. (Multi-tasking is so overrated, anyway.)
And hopefully they can get the jobs machine cranked up all the way to 11. Because if jobs don’t come back soon, the whole economic recovery charade will come crashing down as investors and commoners begin to see government job creation for what it is – a farce.
But it gets worse, especially for the central planners among US leaders – when you consider that the US will be critical in any potential global recovery. And this might become more accepted by the average guy when they see Europe crumble and China land on their faces.
The risk from Sovereign debt among eurozone members has not faded in the slightest.
There was a very poor auction held today for Spanish debt that saw sales fall well short of hopes and a major drop in the bid-to-cover ratio followed by the European Central Bank rushing in to buy up the debt, as promised.
This did not pair well with the PMI numbers that were released across Europe. Below are the big three European economies:
And here is a PMI selection of the Eurozone economies, note Italy (orange) and Spain ( yellow):
It’s ugly over there in Europe.
And a bit earlier, Chinese PMI numbers rose slightly in the most recent month but still came in below 50 again based on HSBC figures, indicating a second consecutive month of contraction. And it is suggested that this figure is more depressing when seasonally adjusted, i.e. there is typically much better growth from July to August:
China also just reported it saw its new export orders index drop to 48.3 from July’s 50.4.
That said, I’ll give you this article from Reuters yesterday:
PARIS, Aug 31 (Reuters) – A sharp slowdown in merchandise trade growth hit major world economies in the second quarter of 2011, affecting both imports and exports, the Organization for Economic Cooperation and Development said on Wednesday.
The deceleration in import and export growth affected all the Group of Seven industrialized nations and the bloc of BRICS emerging markets except Brazil and China, the OECD said in its quarterly report.
Total imports of G7 countries (the United States, Britain, Canada, France, Germany, Italy and Japan), and BRICS nations (Brazil, Russia, India, China and South Africa) rose by just 1.1 percent in the second quarter versus 10.1 percent in the previous three months.
Export growth for the same group slowed to 1.9 percent from 7.7 percent in the first quarter.
Weakening flows of goods and services reflect the fragility of the global economy and can largely be attributed to lower demand and belt-tightening in the developed world, notably the United States.
China and the United States saw the most dramatic slowdowns in import growth in the period — China’s imports grew 0.7 percent versus 11.1 percent in the first quarter, its slowest rate since the first quarter of 2009.
That contrasted with strong exports from China, the world’s largest exporter. Those picked up by 10 percent, compared with 2.9 percent growth in the previous quarter.
In the United States, growth in imports slowed to 3 percent from 11.1 percent in the first quarter, while export growth fell to 2.6 percent from 5.6 percent.
Brazil was the only country to see a sharp pickup in import growth, with inflows of foreign goods rising 11.2 percent compared with 5.7 percent in the first quarter.
What happened last time there was a marked contraction in global trade?
Uh oh – the US better get to work (pun intended.)
I’m sure John Maynard Obama can gin up something when he addresses Congress on jobs. If not, then he can surely consult Yale economist Robert Shiller who recently came out with a mind-numbing strategy straight out of The General Theory of Employment, Interest and Money:
“Well in my view, the fundamental problem is aggregate demand in the economy. We have a savings rate of over 5% — that’s high by recent standards. We don’t see enough expenditures to sustain a strong economy.
“That’s the problem … when the public is opposed to government expen[ditures] – they’ve taken on the idea, rather strongly, that the government shouldn’t expand … even in a time like this.”
Robert Shiller is a fairly well-known economist. He tried stopping himself from saying “government expenditures,” but we know what he was saying. He then tried to insinuate expansion. Nevertheless, JMK would be proud.
I would be scared.