JUL 1 - 15, 2004

VOL. 2 ISSUE 13

JULY 7, 2004 – All the experts are shocked.  They keep telling us there is a recovery – they are even telling us all sorts of jobs have been created – and yet people aren’t buying that things are improving.

Funny.  Back in December, in this article, we reported how, according to a Gallup poll, 3 out of 4 investors – professional investors and investment counselors – were seriously “spooked” and concerned about the long term prospects.

Why?  Because of something called the deficit.  Remember that?  From record surpluses to record deficits?  Deficits that have to be paid back at some point?  Deficits which are like running up the national credit cards, getting us deeper and deeper into a hole?

Ah, yes, now it’s all coming back – but not thanks to the non-Moderate Independent media, which has completely come to ignore this debt’s existence.

The non-M/I press ignored it when Gallup first reported these numbers back in December, and have politely – from Bush’s point of view – managed to keep ignoring this basic reality.

As we reported on December 13, 2003: 

According to a Gallup poll just released this week… three out of four investors are "spooked" by the deficit.

As Gallup reports, "The latest UBS/Gallup Index of Investor Optimism survey reveals that it's not just a few alarmist economists who are worried about the deficit."

They then directly suggest the findings show that the massive deficits created by Bush's tax cuts and massive spending are "hurting the investment climate."

So what about the deficit now?  Anybody?

Oh yeah, it’s still there… and growing and growing, piling on the debt our nation bears.  As we reported even long before this December article, all this talk of a “recovery” is just the rush of water into a toilet bowl moments before it is gone forever.  We ran up hundreds of billions in debt on the national credit cards, and that money is showing up as profits for corporations.  Whoopee!

It in no way is attached to any mechanism related to job creation – the companies can simply give their execs big bonuses with it.  Of course the money infused into the corporate and wealthy investor class part of the economy has made companies have better numbers in the short run, but the money we infused them with was money we never had to begin with and now will have to come up with.  How will we do that?

Ah, right, jobs.  That’s the lie, give companies and wealthy investors all this borrowed money and they will create jobs.  In fact, lots of jobs are being created right now, hundreds of thousands each month now, right?

Well, sorry, that turns out to be BS as well.

Reality check,  3 things to realize:

1)  As many of you know, the new way of figuring unemployment rates, as begun by Clinton toward the end of his second term, does not include anybody who has exhausted all their benefits or who has given up looking for work.  And guess what – the number of people who have given up or exhausted all of their benefits has just reached an all time record.

2)  People who are only working part-time out of desperation are included as having found work, no longer unemployed, and as a new job having been created.

3)  As reported today on KFWB new radio in Los Angeles, 80% - yes, 8 out of 10 – of the supposed “new jobs” created in May were… ready?… either temp jobs or part-time.  Yes, the press and the President gushed about over 300,000 jobs being created.  They didn’t mention 80% of them were not actual jobs.

Here are the stats directly from the Bureau of Labor Statistics website, last updated July 2, 2004:  available here.  (This one decent article from MSN Money Central  sums it up fairly nicely.)

Let’s look at the reality.  First, the number the press and President give you: 

U-3 Total unemployed, as a percent of the civilian labor force (official unemployment rate)....................... June 2004:  5.8%  June 2003: 6.3%  2000:  4%

Ok, looks just bad but not terrible, right.  Only about 50% more people unemployed than in 2000, and the rate did drop slightly from last June, right?

Wrong.  As usual, the number means little, because while fewer people are technically unemployed and so not a part of the unemployment number, most of the people who are now “back to work” are just working temp jobs or part-time jobs AND the number of people dropped from this number because they have completely given up has reached an all time high.

If you look at the above chart, you will see the actual complete number of people who’d like to work but can’t find a full-time job is right about 10%.  From the Bureau of Labor Stats chart: 

U-6 Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers......................................... June 2004:  9.8    June 2003: 10.3

Oops, not such a tidy little number.

Finally when the jobs report for July was not so rosy as “expected” (by idiots who ignore the debt,) some in the media started to actually report the reality.

As reported by the New York Times on July 3 (see article:  Trend Still A Friend, Bush Says, by Edmund A. Andrews:) 

It is normal in an economic downturn for discouraged workers to drop out of the labor market, but people usually jump back in when job prospects improve.

That has not been the case in this recovery. The work force participation rate dropped to 62.3 percent in Friday's report from 64.7 percent in the spring of 2000. Despite big monthly jumps in employment this spring, the participation rate has barely moved.

Or as UPI reported on July 2, 2004 (see:  US Job Growth Not As Robust As Expected, by Shihoko Goto:) 

"If unemployment were at 2000 levels, 2.4 million more Americans would have jobs. If labor force participation levels were at 2000 levels too, more than 4.7 million additional Americans would have jobs," argued Peter Morici, an economics professors at the University of Maryland.

Or this from the July 1, 2004 The Economist Intelligence Unit, Ltd. (see:  USA Economy, The Greenspan Putt:) 

For example, despite 947,000 workers having been added to the payrolls in the past three months alone, rates of participation in the labour force remain curiously low--at just 65.9%, compared with their peak in 2000 of 67.3%. The presence of these "discouraged workers" encourages Mr Kohn to believe that the current unemployment rate of 5.6% understates how far America still has to go before its workforce is fully occupied.

So finally a small segment in the media is finally coming clean about the “job creation” being a bunch of bunk, but for some reason they as quickly forget what they say and go right back to reporting about “recovery” and “jobs.”

And more importantly they all keep ignoring that the debt is growing and growing and growing.  The debt is real.  We have to pay it back, and pay interest on it until then.

Anybody?  Anyone care to remember that the deficit exists?  Care to stop pretending running up the nation’s credit cards is a “recovery,” care to stop pretending that people grabbing temp jobs or part-time work is “job creation,” care to stop pretending people who have given up looking for work are no longer unemployed?

Um, yes, actually, that would be us here at The Moderate Independent.

For some reason we don’t see showing up with a new car you bought with a credit card to be the same good news as showing up with a car you bought with the salary from your new job.

And speaking of credit cards, don’t forget this statistic (which, yes, the entire non-M/I media pretends doesn’t exist:)  a new record for personal bankruptcies was set this year again.  Yes, a personal debt disaster looms along with the national debt.

In order for the economy to actually turn around, it has to be taken a new direction and any tax cuts have to be directly tied to job creation and encourage employers to hire full-time workers.

No such plan or mechanisms are in place at the moment, and so there is and can be no recovery at this time.

If Kerry is elected and leads the nation on a course to develop alternative energy technology and changes the hand-out Bush tax cuts to targeted, job-related tax incentives, then there would be some hope.

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