Get PJ Media on your Apple

Belmont Club

The Collar of Money

January 11th, 2014 - 1:15 pm

Q: When is bad news good news?

A: When it kicks the can down the road.

The New York Times gives an example of how this works. “WASHINGTON — The surprisingly weak December jobs report might have strengthened Democrats’ hand in the current fight over emergency jobless benefits for the long-term unemployed even as it weakened the party in the larger midterm election battle.”

On Friday, the Labor Department said that the unemployment rate dropped to a five-year low of 6.7 percent. But the economy added only 74,000 jobs, and for every American who found work, five disappeared from the labor force. … Democrats have tried to harness middle-class families’ frustrations with the pace of economic growth by accusing the slow recovery in part on Republican recalcitrance….

Democrats have promised to continue to push for the extension, saying that millions of jobless workers still need the government lifeline. “The safety net has been just ripped away,” Mr. Reid said at a news conference this week. “The economy’s improving, but not for everybody.”

Rather than the jobs report being bad news, it’s good news. Now if only the can can be kicked past the larger midterm election battle all would be swell. But the real danger is one that the New York Times is beginning to fear. What happens if the government runs out of road? What if … for mercy’s sake … you can’t kick the can down the road indefinitely?

The AP says economists have pronounced themselves baffled by the declining rate of labor participation. Despite record stimuli by the administration, three million adult Americans have stopped looking for work.  What in the name of John Maynard Keynes is happening?  Relax. The economists tell us the noise we heard in the dark is just the random noise and not the face of disaster we imagined leering in at the window. Nothing to be worried about.

So what happened in December? Economists struggled for explanations: Unusually cold weather. A statistical quirk. A temporary halt in steady job growth. “The disappointing jobs report flies in the face of most recent economic data, which are pointing to a pretty strong fourth quarter,” said Sal Guatieri, an economist at BMO Capital Markets.

Whatever happens the libs have got the Money Press and the conservatives have not. So there’s nothing to worry about.

But do they have the Money Press still? What is perhaps of greater interest was reluctance by Federal Reserve officials to immediately reach for the bond market to fix this latest setback. “Another cut to bond purchases appears in the offing this month despite data that showed U.S. jobs growth slowed sharply in December, two top Federal Reserve officials said on Friday.”

“I would be disinclined to react to one month’s number,” St. Louis Fed President James Bullard told reporters after speaking at an Indiana bankers event. “For now we’re on a program where we’re likely to continue to taper (asset purchases) at subsequent meetings.” …

Jeffrey Lacker, the hawkish head of the Richmond Fed, said it would take a “couple of quarters” of bad news to change the U.S. economy’s improving trend.

“It takes a lot more than one labor market report to be convincing that the trend has shifted and in my experience one employment report rarely has an effect by itself on monetary policy,” said Lacker, who has been an opponent of bond buying from its start.

Maybe the Money Press Sentry Guns are running out of bullets. Jeffrey Dorfman, an economist at the University of Georgia has an interesting idea that explains why. He says that deficit spending doesn’t really boost the economy. It simply distorts it. He writes:

Deficit spending financed by borrowing does not create stimulus because the money that the government borrowed would have been borrowed by someone else and then spent by them. Money is just being shifted from the private sector to the public sector. Moving money from your left pocket to your right does not make you richer.

In fact, government spending will generally add less value to the economy than if the money had been left in the private sector. If people get to spend their own money, they will do so in a way that maximizes the benefits they get from that spending. When government spends money at best they can manage to perfectly anticipate what we want, thereby matching the benefit we would have gotten from our own spending, or they can do worse.

In other words massive government spending programs fueled by premium increases, mandates, taxes and fees don’t really increase jobs. They just make it impossible for the taxed businesses and entrepreneurs to creat them. Giant spending programs like those embarked upon by the Obama administration create massive distortions in the economy in pursuit of political goals and just cripple it.

One example of how government spending can actually destroy industries became evident when health insurance companies admitted they are going to lose money by participating in Obamacare. The health insurance companies were initially drawn to the Obamacare because it seemed to guarantee new business.

In fact, hidden within the December jobs report is a significant details. Many of the job losses were in the healthcare industry. The Washington Post notes: “as it turns out, construction wasn’t the biggest contributor to the disappointing results. That would be the education and health-care sector”.

CNN Money has more details: “the hardest hit areas were nursing homes, which jettisoned 3,900 jobs, and home health care, which lost 3,700 positions. Hospitals got rid of 2,400 jobs, while physicians’ offices reduced staff by 1,200. … Several notable hospitals, including the Cleveland Clinic, reported layoffs last year as the federal government cut reimbursement rates and patient care shifts more to outpatient and urgent care clinics. In fact, outpatient care centers were the only part of the health care sector to boost jobs last month, adding 3,600 positions.”

The health insurance company Humana has revealed what the administration has so far resisting revealing. It’s the mostly old and infirm who have been joining the president’s flagship program. The company “now expects the risk mix of members enrolling through the health insurance exchanges to be more adverse than previously expected.”

Translation: it stands to lose its shirt and may seek a government bailout. Obama isn’t “helping” the health care industry. From all indicators he’s destroying it.  Marco Rubio just released this statement.

This week, insurance companies began making material filings to the Securities and Exchange Commission (SEC) regarding projections for their ObamaCare risk pools.

Already, one company has disclosed that “as a result of the December 2013 federal and state regulatory changes allowing certain individuals to remain in their previously existing off-exchange health plans, the Company now expects the risk mix of members enrolling through the health insurance exchanges to be more adverse than previously expected.”

“American taxpayers should not be on the hook for bailing out health insurers, especially because ObamaCare is not working the way it was sold,” said Rubio. “Congress should take an ObamaCare bailout off the table by passing legislation I’ve introduced to repeal the so-called risk corridor provision under the law.

“If ObamaCare can only survive through a taxpayer bailout of insurers, it’s yet another clear sign that it can’t survive and isn’t worth saving,” he added.

This is where Rubio is mistaken. The collapsing “risk corridors” only means they have to be propped up in same way that unemployment insurance has to be extended. Once “free money” — the deficit spending Dorfman spoke is introduced like a drug into the voters veins it will prove nearly impossible to withdraw.

In the world of demagogues you create failure then you reinforce it because you benefit from failure by demanding more power. The ruin of insurance companies will be used to the same effect that three million labor force dropouts have had. It will “strengthen the Democrats’ hand” in their “fight” for more spending.


Did you know that you can purchase some of these books and pamphlets by Richard Fernandez and share them with you friends? They will receive a link in their email and it will automatically give them access to a Kindle reader on their smartphone, computer or even as a web-readable document.

The War of the Words for $3.99, Understanding the crisis of the early 21st century in terms of information corruption in the financial, security and political spheres

Rebranding Christianity for $3.99, or why the truth shall make you free

The Three Conjectures at Amazon Kindle for $1.99, reflections on terrorism and the nuclear age

Storming the Castle at Amazon Kindle for $3.99, why government should get small

No Way In at Amazon Kindle $8.95, print $9.99. Fiction. A flight into peril, flashbacks to underground action.

Storm Over the South China Sea $0.99, how China is restarting history in the Pacific

Tip Jar or Subscribe or Unsubscribe

Comments are closed.

Top Rated Comments   
Simple poll: How many people reviewing this thread have either LOST their health insurance due to Obamacare, or are now priced out of the market? Maybe it was just my family impacted. No one is insured anymore, not me, my wife, adult children, son-in-law, and two of three sisters and their families.
13 weeks ago
13 weeks ago Link To Comment
They can't keep tapdancing forever. They changed the definition of "unemployed" and "labor pool" to drop people off so that the official U-3 unemployment rate would look a lot better than it is. If we used the same definitions as we used to, and counted the U-6 number like we used to, we would have had an official unemployment rate of 13-14%. That does not look good for the Federales. So they have reached the dead end of that manipulation. You can't claim that the economy has been recovering when over half of the working age population is neither working nor officially looking for work.

And it is even worse. They claim a growth in real GDP. Real GDP is the gross GDP minus inflation. Thus, how you calculate inflation is key. That calculation has been changed to de-emphasize things like energy and food [where prices are soaring and which affect everyone] and to increase the importance of mortgage interest rates, which are kept down by the Federal Reserve. The problem being that no one buys a house with every paycheck.

If real GDP was calculated according to the old methods, we would have had minimal to negative GDP growth for a long time. Two quarters of that is a recession. 3 or more is a Depression by the textbooks I used long ago in college. Modern texts say up to two years, because that is what we have. 5-6 years of it and still counting is an "Obama" or a "Democrat".

If GDP is growing less than the rate of inflation, the economic pie is shrinking. If the population is growing at the same time [and it is, largely because of illegal immigration] then every person's share of that shrinking pie is even smaller.

And it isn't getting better. With the Federal government deliberately destroying the economy with Obamacare; at the same time they want to push through permanent open borders and permanent amnesty for illegal aliens; the Gods of the Copybook Headings will not be denied, no matter how many state-controlled media stars admire Obama's pants creases.

Subotai Bahadur
13 weeks ago
13 weeks ago Link To Comment
They are seriously acting shocked and amazed by discovering the Substitution Effect, which has been understood since the New Deal.

The point of the ACA was not to increase the number of jobs but to increase the number of jobs controlled by the SEIU. The SEIU is tied to ACORN, which faked going away when their numerous ballot box stuffing crimes were exposed. ACORN was tied to the New Party that Barry was affiliated with. The New Party was tied to the NorKs/CCP. Several of the threads in this administration, such as the Green scams, run back to Beijing.

What would solve the problem? We could try the same approach that revived the German economy after WW-II. We could simply say "No" to the Socialists and take the brakes off. Cut the policies that artificially inflate food and housing prices. Cut the subsidies and regulations that subsidize the SEIU without increasing patient care or safety. Cut the employer mandates to do other than pay their employees, excepting specific compensations for long term risk. Then watch the economy take off. In the short run there will be a real period of Deflation but that will even out as people get to work.
13 weeks ago
13 weeks ago Link To Comment
All Comments   (42)
All Comments   (42)
Sort: Newest Oldest Top Rated
If the unemployment rate is decreasing then it is definitely a good news.
With present market scenario increase in job shows that market is slowly getting better.
useful reference [http://www.kevinbradleyrealtor.com/]

12 weeks ago
12 weeks ago Link To Comment
Heads up, all -- Protein Wisdom has a post that will richly repay your attention and time:

http://proteinwisdom.com/?p=52429#comments

To wit: The People's Republic of California holding a "Public Commentary" meeting with the citizens/kulaks to allow them to "vote" on pre-ordained methods of the Government taking control over their private property, up to and including confiscation.

Watch the whole ten minutes: it gets better and better as it goes along, and the reactions of the citizens (as it dawns on them that they're on the menu) and the Government Numpties (who try to put down the nascent rebellion) are priceless.

More seriously: this is part of the Left's move on all fronts and in all Western democracies to strip all rights of ownership from the individual, which means enslaving us all (as our Founding Fathers well knew: without property rights, you have no liberty).

I hope you all watch it and do, please, pass it on.
13 weeks ago
13 weeks ago Link To Comment
The 'Government Numpties' just learned a valuable lesson - "note to self, no more 'public voting' sessions."

Next time, they will have to vote and pass the measure first in order for the citizens to see what is in it.
13 weeks ago
13 weeks ago Link To Comment
Thanks for the tip-- I just watched the video, and I can't say which of the spokespukes' buzz words is more Orwellian (and therefore ominous)-- "entice" (as in 'we want to entice people into thinking about this') or "visioning." But it is encouraging to see and hear the people at the meeting talking back to the gummint gumflappers rather than just allowing themselves to be "enticed" into going along with the plans of their would-be "betters."
13 weeks ago
13 weeks ago Link To Comment
8. Money borrowed to pay off political constituencies does not an infrastructure with return on investment make.

Several years ago when I started following this blog my dad and his cold warrior friends were spouting off about the concepts of world fiscal policy and the golden straight jacket that all players who wanted to be successful would have to don. Those concepts were based on Thomas Friedman’s book “The Lexus and the Olive Tree” and I remember parroting some lines here to unexpected groans. Since then I have realized what a sycophantic ideologue and horses asz that Friedman really is. But I wish that I could call out into the darkness of night ask my father and his spook asz punk friends who spent their life running roughshod againt the rule of law under the auspices that they were the gate keepers of virtue and keeping secrets that hobbled the last bastion of freedom into a perfect little star chamber unfettered tyranny. Would he be proud to see or did he just give up? Would he and his friends, his brothers in secret arms giggle at destroying a nation of laws and freedom for the sake of personal importance? My father and his cold warrior friends may not burn in hell but if all of their efforts led to this they might as well not have been born.

“There's no such thing as life without bloodshed. I think the notion that the species can be improved in some way, that everyone could live in harmony, is a really dangerous idea. Those who are afflicted with this notion are the first ones to give up their souls, their freedom. Your desire that it be that way will enslave you and make your life vacuous.”

“If the rule you followed brought you to this, of what use was the rule?”
Cormac McCarthy

They prepared for their own deaths because they cannot live with the world they have created. Let us pray for them as we lower them down to be interned in the cold earth as those who stole from the future itself. No others in the course history were so bold as to steal from the unborn. May their souls be tortured in life as it must be in eternity. Let us count the days of reckoning.
13 weeks ago
13 weeks ago Link To Comment
Nobody learns a damn thing from history. At the turn of the twentieth century Great Britain was in the position we are in now. Britain was first up on the free market tracks, and in time they found out the bridge was out. Britain’s trade policy was to open her markets to all, free of tariffs, believing that in that way the rest of the world would earn enough selling their goods to Britain to be able to buy British made goods in return. An everybody wins policy. Like NAFTA. We climbed up on those same tracks and we too have plunged into the river. Why is there continuing unemployment in the United States? Cold weather? Wall Street villains? How about because there are no more jobs for them. In 1950 Philadelphia was the #1 manufacturing city in the US, making everything from Stetson hats to locomotives, with good paying jobs in chemical plants and oil refineries, publishing plants and shipyards. There were thousands of small manufacturing businesses scattered throughout the city where the working poor could find work at a decent wage. No longer. It’s all gone, gone to China and Viet Nam and South Korea and Mexico and every other low wage country in the world. And those good paying jobs are never coming back.
13 weeks ago
13 weeks ago Link To Comment
News flash, Hairy: safety nets aren't made of 18-in battleship hull.
13 weeks ago
13 weeks ago Link To Comment
Once again, the Iron Laws of Economics:

1. You can only spend a given dollar once.
2. By definition, if a dollar is used to buy good or service A, that same dollar cannot be used by buy good or service B. (this is generally know as opportunity cost).
3. A dollar, (or any other currency) must represent a certain amount of work and value. If the supply of dollars exceeds the work and value, inflation of one form or another must result.
4. A loan is by definition not a gift. If you borrow a dollar, sooner or later you must pay that dollar back. Borrowed money is a liability, not an asset.
5. Borrowing that cannot be sustained - will not be sustained.
6. Government programs that cannot continue - will not continue.
7. Debts that cannot be repaid - will not be repaid.

The democrats are no doubt thinking they can tax, borrow and spend their way to victory in the elections for 2014 and 2016. They are most likely right. LIV's and beneficiaries of government programs will always believe there is more stash to be looted for their benefit. I imagine after the midterms are safely over we will hear cries for the government to nationalize 401k's and take the money invested "so the poor can have a fair share" after all, "you didn't build that" and "need before greed" or some such. I would imagine other income-consfiscation schemes will follow.



13 weeks ago
13 weeks ago Link To Comment
Wretchard: "In the world of demagogues you create failure then you reinforce it because you benefit from failure by demanding more power."

Bingo.

And one other thing is also sure: The whole country is going to get a whole lot sicker.
13 weeks ago
13 weeks ago Link To Comment
Dorfman is right, and to summarize what he says: all government expenditures have a NET multipler that is negative, not positive.

If economists are mystified, then economists are idiots. Jay Leno is clear on the facts, too bad they don't watch. Commenters on virtually every economics-related thread on the Internet are clear on the facts, more commenters than not at this point, it seems to me. The jobs are all outsourced to China so vampire capitalists and banksters can pocket the difference (which is real), the real economy fell off a balloon in 2008 and even the much lower real economy is struggling or negative with the outsourcing, the rent-seekers have taken over the federal goverment who hold their position by feeding the nation's capital to the mob, and the government's published numbers have been an increasing fantasy for at least twenty years, abetted by an MSM that has no interest any more in anything related to facts.

I'm not much worried about the economy, it is what it is and it will be fixed when it gets fixed, or not, but I am worried when the public face of the economists is so moronic for that is a sign that no fix is yet on the horizon.
13 weeks ago
13 weeks ago Link To Comment
Not necessarily negative, just less than one. Less than one is all it takes for $1.00 of new government spending to translate into 70 cents of economic activity with a multiplier of 0.7. In some cases it is probably near or even below zero as well, especially where the spending comes with new regulations that multiply the misallocation of resources. Nobel laureate Robert Barro believes that the Keynesian multiplier is close to zero. For every dollar the government borrows and spends, spending elsewhere in the economy falls by almost the same amount.
13 weeks ago
13 weeks ago Link To Comment
I think if you reexamine this, you'll see that negative is the right *net* valuation. If you take two dollars that with multiplier would have been $3.00 in activity, and spend it to get just $1.40 worth of activity, the net is you've lost $1.60. It's not really counting twice, it's just that both operands are the multiplied numbers. Any positive valuation is still ignoring the effects of stealing the money in the first place. Er, collecting.
13 weeks ago
13 weeks ago Link To Comment
Simple poll: How many people reviewing this thread have either LOST their health insurance due to Obamacare, or are now priced out of the market? Maybe it was just my family impacted. No one is insured anymore, not me, my wife, adult children, son-in-law, and two of three sisters and their families.
13 weeks ago
13 weeks ago Link To Comment
I was informed that our policy was a product that our insurance company would no longer provide, effective Dec. 31, 2013.

I had to scramble like a dog on ice to get another PRIVATE policy, after I saw how ruinously expensive the Obamacare policies would be. (People pay no attention to how pathetic the "coverage/reimbursement" is, even if you DO get in on the orgy of grabbing your fellow citizens' money).

Said private policy is being "allowed" to continue on the old lines for the time being, because they have a Lord Protector in Sheldon Silver (NY leftist heavyweight pol who basically runs the state, regardless of what poltroon is sitting in the governor's chair). He made sure they were grandfathered in.

I can't say I feel the least bit secure about this, it just buys me a bit of time, maybe a year. And idiots I know (NY bohos) are saying, "Well, we can always get on Medicaid!" Effin' fools.

The State is standing on our necks. And by the way -- NO ONE knows what "Single Payer" means: it's a term the Leftists use to hide what they're up to. Can't we shine a light on the subject by translating it to Govt. Hellcare?
13 weeks ago
13 weeks ago Link To Comment
I just received a letter from Tufts saying my current plan is being cancelled and to call to find out more. I thought MA had some special exemption? Anyway, I called and was told the letter was just a legally required 90-day notice and more info would be coming out soon. So who knows?

BFtP--thank you for correcting the ex-Marine gaffe.
13 weeks ago
13 weeks ago Link To Comment
Old enough for Medicare, not that I’m happy about it. Our doctor touted it, and my husband liked the idea. Our doctor said, “You’ve paid for it. . .” Of course, that’s not exactly true - I think we paid for the older generation, in fact. Not that Medicare is free to us. I prefer the concierge concept, or the two-party system: doctor-patient.

I recommend the AAPS:

http://www.aapsonline.org/
https://aaps.wufoo.com/reports/m5p6z0/
http://www.surgerycenterok.com/
13 weeks ago
13 weeks ago Link To Comment
To the best of my knowledge I am covered by the VA, and I presume so should you be. I went to http://va.gov and searched "Affordable Care Act." The key passage follows:

"2. If you are enrolled in VA health care, you don’t need to take additional steps to meet the health care law coverage standards. The health care law does not change VA health benefits or Veterans’ out-of-pocket costs.

3 If you are not enrolled in VA health care, you can apply at any time."

As far as I can tell with rare exceptions the VA does nothing for your family. Hope this helps.

Wish we still had blockquotes.
13 weeks ago
13 weeks ago Link To Comment
Thanks.

I looked at the VA booklet earlier, at the urging of my ex-USMC son-in-law (who in truth, just registered for VA coverage, and believes he will get full coverage due to a service related partial disability). Without having a service related disability and not having enough "good years" (15 of 20) between Active duty and reserve, I don't see VA coverage available, or that is not means tested to make it unavailable. I'll need to review again.

However, if enrolling in VA coverage keeps me out of the IRS ACA penalty trap, that alone might be sufficient reason to enroll.
13 weeks ago
13 weeks ago Link To Comment
You are wrong on something. Your son-in-law is a former Marine, or even a medically retired and therefor still in a reserve status Marine, but not an ex-Marine. The only ex-Marine was a certain dirtbag jailbird ex-Congresscritter who dishonored his name by accusing honest men of war crimes.

I have fewer than 20 good years and I'm in. There is a means test for initial enrollment. There has been since 2003. In NYC a household income of less than $48,000 for an individual or $64,000 for a family of four gets you in. It is higher in some suburbs and less out in the boondocks. Copays are $15 to $50. Once you are in you are in, unless you are foolish enough to send them an "I quit" letter. We should encourage every decent young person to at least sign up at their National Guard. That does not get them VA coverage but it at least gives them a shot at qualifying. Anyone who was activated and deployed to a combat zone should apply. As I said on the last thread I'd rather see the healthy young Vets signed up with the VA than subsidizing Ms Obamaphone.

I am over the four post limit and out.
13 weeks ago
13 weeks ago Link To Comment
re: Marine:

I ABSOLUTELY stand corrected. He may even return as an officer after he finishes college this year. He'd be a good one, too.
13 weeks ago
13 weeks ago Link To Comment
I am still paying out of pocket for my crappy individual blue shield policy that is already twice my monthly car payment. Given all the not-covered's and copays, I'm considering dropping it for lack of value. I'm mystified that the policy category was NOT dropped due to Obamacare, it's a health care account policy and I thought those were categorically outlawed - even as it turns out that is the only kind available now under ACA!

None of it makes a lick of sense.
13 weeks ago
13 weeks ago Link To Comment
What if … for mercy’s sake … you can’t kick the can down the road indefinitely?

After several left turns the road is heading for a cul-de-sac. The can has become a barrel.
13 weeks ago
13 weeks ago Link To Comment
1 2 Next View All