News, Research & Insights for American Homeowners, Patriots & Constitutional Conservatives
Boost.
The US economy had a good month for job creation in December, according to the new report this morning from the Bureau of Labor Statistics. We added 243,000 net jobs and the unemployment rate fell two-tenths of a percent to 8.3%: Total nonfarm payroll employment rose by 243,000 in January, and the unemployment rate decreased [...]
What really matters.
Forget birth certificates and tax returns: What really qualifies a person for president is straight As in college. No? Never mind, then. But wait — as long as we’re fixating on documents that, in the end, have no effect whatsoever on job creation or economic growth, why can’t we see Barack Obama’s college transcripts? As [...]
Sears and K-Mart to close 120 stores next year.
After a few weeks of trending reduction, if not overwhelming momentum toward a net job-creation level, the number of initial jobless claims rose last week by 15,000 to 381,000. The Department of Labor also reported that they adjusted last week’s figure upward by 2,000 claims, but this report will almost certainly be adjusted by a [...]
Perhaps only mostly dead.
It’s not a bad question, especially since it’s become clear that at least a few Senate Democrats want to claim some credit for job creation. Unfortunately for Claire McCaskill, who has more need than most to build some moderate credibility with her constituents, Senate Majority Leader Harry Reid is more interesting in being “combative all [...]
"the best intentions"
As has been frequently noted, if you want to talk job creation you should probably talk to some people who have actually created jobs. And in at least one case, it seems that President Obama did precisely that. Unfortunately, he didn’t get the message. Earlier this year, former Obama donor and CEO of Darden Restaurants, [...]
CBS isn't impressed, either.
Last Friday’s unemployment rate drop of 0.4% to 8.6% gave the Obama administration a couple of bragging points on the economy, an area where the President clearly needed some good news. But just how good was it? Gallup’s job-creation index shows that the drop in the jobless rate may be much ado about nothing: Job [...]
Over the top?
The president has no patience for the House of Representatives these days. Never mind that Republicans in the House have passed 15 different jobs bills or that the Republican Study Committee today unveiled a new job creation program. Did you hear they took time to pass a non-binding resolution to remind Americans of the nation’s [...]
Plus, Pethokoukis runs the numbers on Perry's economic plan.
Rick Perry has decided to focus on job creation in his new ad, a 30-second TV spot that will get hefty play in Iowa, where polling shows him deep in the second tier at the moment. Matt Lewis has the script for the ad, which highlights Perry’s best narrative as a public-sector executive that knows [...]
Skepticism.
If anyone doubts that Sen. Marco Rubio has earned his status as the star of the Class of 2010, this clip of his interrogation of Tim Geithner should cinch his reputation. Rubio picks apart Barack Obama’s proposals on deficit reduction and job creation by pointing out how high the top marginal tax rate will go [...]
Broken windows, etc.
Minnesota elected Keith Ellison to Congress, so it falls to Minnesota bloggers like Gary Gross, Scott Johnson, and myself to point out his many absurdities — including Ellison’s economics. The Congressman makes an argument that would shame even the Obama administration by claiming that expanding government regulation stokes job creation. Hey, businesses have to hire [...]
It's all about the energy
Congressman Lee Terry (NE-2) provides a special message for Hot Air readers this week detailing his own experiences with productive job creation, as well as lessons that President Obama could learn in the process. Not all of America is starving for jobs – at least not as badly as the rest of the nation – [...]
The power of over-suggestion.
Barack Obama has hit the road, trying to sell his new Porkulus II stimulus, er, job-creation plan, asking Congress for $450 billion for the usual government subsidies and “shovel ready” infrastructure projects that worked so well in keeping unemployment under control that we still haven’t seen it dip below 9%. That’s obviously a tough sell, [...]
Inconvenient truths.
Mitt Romney has tried to accomplish two tasks in his debate performances — defend his health-care overhaul in Massachusetts known as MassCare but often called RomneyCare, and tout his record as a governor whose policies fostered job creation in the state. A new study by a conservative think tank at Suffolk University will complicate both [...]
False dichotomy.
If this doesn’t prove the truth of Sarah Palin’s maxim that, to most people, poles are for strippers and skiers, I’m not sure what will. Just seven days ago, The Wall Street Journal released the results of its WSJ/NBC poll, which showed that 56 percent of “ordinary Americans” put reducing the deficit ahead of boosting [...]
Influence.
Bigger than Jindal’s endorsement? Our nation needs a leader in the White House who understands the role of government and our economy. Governor Rick Perry has the strongest record of job creation, fiscal discipline, and executive branch leadership among the presidential candidates. As a governor, Rick Perry created a tremendous blueprint for job creation and [...]
Deja vu.
“A tentative thumbs-up. “That was the assessment from economists, who offered mainly positive reviews of President Barack Obama’s $447 billion plan to stimulate job creation… “Mark Zandi, chief economist at Moody’s Analytics, estimated that the president’s plan would boost economic growth by 2 percentage points, add 2 million jobs and reduce unemployment by a full [...]
Basics.
Barack Obama’s supporters praised him for having it in his joint-session speech last night on job creation. A national economy needs plenty of it in order to expand. Consumers consider it one of the most pressing economic issues they face. Yet Obama’s speech was curiously absent of any mention of one word … energy. That’s [...]
Plus, a whole lot of Solyndra visits at 1600 Pennsylvania Avenue.
Barack Obama plans on talking about using stimulus funds for job creation tonight. Think he’ll mention Solyndra, which his administration fast-tracked to $535 million in taxpayer-financed loan guarantees? Naaaah: FBI agents armed with search warrants descended this morning on bankrupt solar company Solynrda this morning. The investigation comes after a request by the Department of [...]
He who cracked it, taxed it?
With Barack Obama looking for ways to regain momentum on job creation, expect the President to lecture Congress on the upcoming expiration of the federal gas tax when he speaks tomorrow to a joint session just before the NFL starts its season. Since the 18.4¢/gallon levy generates around $32 billion in revenue to the federal [...]
Numbers game
Anyone who wants to be president in January 2013 is talking about jobs, and for good reason. President Obama will unveil his new “plan” on Thursday night. Some candidates like Michele Bachmann and Ron Paul have a harder time, aside from the employees of their medical clinics. Herman Cain can certainly take credit for a [...]
Priorities.
The National Labor Relations Board yesterday issued three decisions that will make it easier for workers to unionize even when a majority of workers prefer to remain non-union. The Wall Street Journal reports: In a case known as Specialty Healthcare, the board decided that the union could seek to organize a group that consists only of [...]
Gibson Guitars and Antelope Valley.
Earlier today, I wrote about Ben Bernanke’s punt back to Washington on job creation and the need to roll back regulatory regimes in the US to spark real economic growth. We have two small but trenchant examples of how overregulation hurts businesses and people and destroys wealth. The first comes to us from the Wall [...]
A presidential thank-you might be nice.
Washington D.C. and energy-and-commodity-producing states dominated the best job markets in the first half of 2011, as they did during the same period in 2010, according to Gallup’s Job Creation Index, released today. North Dakota leads the pack, followed closely by the nation’s capital. In contrast, the finance states of the Northeast and the housing [...]
Plus, the Chart of the Day shows why it won't work.
The Washington Post reports that Barack Obama will go back to the drawing board during his vacation* this month and draw up a plan to stimulate job creation. At least that’s what Obama has promised, along with a deficit reduction plan that he has promised since April: President Obama has decided to press Congress for [...]
"The hips don't lie"?
I need a break from heavy analysis of America’s economic and political woes, and I’m betting you do too. Thankfully, in our hour of darkest need we have riding to our rescue — Barney Frank. While Frank tried to discuss job creation on Rachel Maddow’s show last night, he gave a clue as to a [...]
"He was always kind of a joke."
Via HuffPo, of course. Not only did he get C’s and D’s, he got a C in, er, gym and a D in … economics. Think that’ll give swing voters pause if/when they’re weighing Texas’s record of job creation against the economic magic of Hopenchange? One reason that might explain his hostility toward [Texas's public [...]
The Center for American Progress has published estimates showing that over the next two years, the Obama-GOP deal to extend the Bush tax cuts will “save or create” 3.1 million jobs.
Not a chance in hell. Not even one teensy, tiny, modicum of a chance.
Okay, so first of all, let’s dispense with the obvious… no one will ever be able to asses the “saved” jobs part of that sentence, any more than Bush was able to demonstrate the number of domestic terrorist attacks his administration’s policies prevented. I mean, if two yeas from now front page unemployment is still hovering around 10%, I suppose one could say… “Well, it would have been 12% without the extension of the tax cuts,” but that’s the kind of thing one does best by saying to a five year-old. After age five, my own daughter would have turned her cute little nose up at that sort of leaky unprovable logic.
But as far as the tax cuts “creating” any jobs… well, I suppose the most important question I have is: Does anyone know if there’s a place I could go to bet real money against or for these types of things. Because I’d view a bet against this inane estimate as a sure-fire way to get my half a million in lost home equity back, and bet the farm, the IRA, watches and jewelry, old silver dollars I have laying around… anything I could liquidate.
When I saw the Center’s 3.1 million job creation estimate, I just stared at it wondering if it was a hoax of some kind, but then I realized that it was real, and sat there wondering; Who in the world would even think such a thing? Were they kidding? Were they high?
Upon reading the piece written by Peter Cohan for Daily Finance, I was presented with the answer to at least two of my questions, and quite likely my third as well.
According to Cohan, and I have no reason not to believe him, the jobs creation forecast was “based on the Congressional Budget Office’s estimate that each 1% of GDP growth adds a million new jobs, and using calculations from the CBO and economist Mark Zandi about how much of each type of stimulus spending will boost overall GDP.”
And that, my friends, is pure and uncut forecasting crack cocaine… of the type our politicians have become addicted to over the years. I imagine this sort of crystal ball crap goes on all the time, and that perhaps it just seems like it’s more frequent today because of the disparity so readily seen between the forecasts and the stark reality of life in America today, and for the next two years.
So, the GDP is the Gross Domestic Product, and to begin with, there are three ways GDP can be determined: by product… by income… or by expenditure, with the product approach being the most straightforward. To use the product approach to determining GDP, you just determine the sum total of all the products and services produced domestically in this country.
The expenditure approach to determining GDP, on the other hand, is based on the idea that everything produced in this country has to be bought by someone, and therefore the sum total of all expenditures must be equal to the total product being produced. And the income approach to GDP, which is obviously the one used by the CBO, postulates that the incomes of “producers,” must be equal to the value of their products produced, so this approach calculates GDP by taking the sum of all producers’ incomes.
Best that I can tell, the CBO’s idea that “for every one percent in GDP growth, 1 million new jobs are created,” might be something used by some sort of broad based forecasters doing some kind of planning upon which no more meaningful method of forecasting would be available or practical. But, the way it’s being used here, well… it’s damn close to being utter nonsense. And it’s the kind of nonsense that should sort of slap you across the face.
Cohan’s article says that the Center starts with the CBO calculations and then works with economist, Mark Zandi. in order to take a shot at breaking down the number of new jobs likely to be generated by the different segments of our economy as a result of the tax cut extension. And here’s what the Center and Zandi came up with this year, looking out two years into the future:
Did anyone ever offer you this sort of advice when you were thinking of buying something based on its tax deductibility? Like perhaps… you might as well lease the car, that way you can write it off. Or, you might as well finance it, you can write off the interest. But you can’t eat a write off, right? I mean, just because you can deduct something from your taxes next year, doesn’t mean you should be paying for it this year.
Well, think of tax cuts like that for a moment. Let’s say you and I own a retail electronics chain… Best Buy, perhaps… if we’re going to dream, we might as well dream big…and our sales have been hit hard by the Great Recession that began in 2007, and in response we’ve cancelled the openings of new stores, delayed expansions into new product and service offerings, laid off all excess personnel, reduced executive bonuses perhaps… you know the drill. Money’s tight, and we’re experienced business people… we’re running lean and mean till we get through the storm.
But what’s this? A tax cut… a tasty one at that. It’s Bush-flavored, the best kind. Gee, we say to each other… what should we do with our windfall created by the deal struck between Obama and the GOP?
“I have an idea,” I say…”let’s use it to hire more people.”
“Why would we want to do that,” you reply. “That would just increase our payroll costs and reduce our profits, unless you’re saying that tax cuts will somehow get more people to buy flat screen televisions.” How would it increase demand for our products and serivcers.
“Good point. How do we get more people to want to buy flat screen televisions?”
“I’m thinking creation of jobs would be the prerequisite for any sort of increases in demand, we might see. Because people have lost a lot… and they’re not going to borrow their way back to prosperity this time because there’s so little credit available.”
“Right… And I sure don’t see them spending the cash they have because we got a tax cut.”
And scene…
And if that’s not illustrative of what’s so goofy about the CBO’s formula this time around, just consider a few of the most absurd bullets above:
Hello? Reduce the taxes owed on their bonuses by 2%? And create 290,000 jobs? Why in the workd would that happen? Last year I remember Goldman Sachs paying out some pretty hefty bonuses and taxes were pretty darn low then… would someone like to show me the jobs they created last year. Oh don’t worry, I don’t expect to see 290,000 like this forecast shows because this one is the result of the 2% tax cut, but could someone show me the Goldman Sachs’ bonuses creating say… oh, I don’t know… what would be fair… okay… how about… ANY JOBS AT ALL?
And how about the star of the tax cuts?
I’m sorry, but this one is just not even a little debatable at this point. The proverbial jury has long-since come in, as they say. The Bush tax cuts may have done a number of things, but creating jobs for the bottom 98% is not one of them.
And while we’ve got our critical thinking caps on, why not take a look at this one:
Okay, this one is actually easy to understand if you understand depreciation. It’s not a hard concept to get your arms around. Businesses have expenses that they expense 100% in year one because their useful life expires within one year. But other purchases businesses make, such as those for capital equipment or vehicles, are around over some number of years after which they have been fully depreciated and the assumption is they will need to be replaced. Think of bonus depreciation as being “extra” amounts of depreciation that can be expensed at the rate of 100%. When Dubya was in office, he had this type of deal on vehicles that weighed more than 6,000 pounds, you could deduct 75% in year one… so, I bought two.
Okay, now this seems like a good moment to shock everyone as to my actual position on this extension of the tax cuts for the next two years… I’m not opposed to the deal Obama made. But I’m not for it because of its propensity to create jobs… that’s just a stupid lie that politicians use to keep us from storming the castle.
Now don’t get excited… I’m not saying that I think rich people shouldn’t return to paying the rates they paid during the Clinton presidency… they should… and they whine far too much about the issue. But this isn’t the best moment in time that I could think of to raise taxes on anyone. Our economy is nothing if not delicate and any tax increase must pull cash from the economy by definition. And that’s just a fact as well.
I realize that Obama was ready to allow the tax cuts to expire now, but he’s also okay with allowing another 4-5 million homes be lost to foreclosure next year, and the same number the year after that. And that’s very poor economic judgement as well, in my mind.
So, the fact that he was ready to allow the Bush tax cuts to expire doesn’t make me feel all warm and fuzzy inside that he would be exercising good judgement on this issue either. And were he to find out later that he had been wrong to let the cuts expire now, it wouldn’t just be a small mistake… we’re on a tight rope here, and without a net below us.
Obama’s track record when it comes to our domestic economy, is poor. So, with that in mind, I say erring on the side of caution is probably the right thing to do… don’t let the tax cuts expire now.
You see, the type of tax incentive that allows for the expensing of bonus depreciation is not a bad thing… it does give businesses an incentive to make capital expenditures now, and that won’t hurt the economy any. But it’s also not going to have the same sort of impact it would have in past years, because of things like broken credit markets, and weak demand ahead no matter what.
And as long as the housing market is allowed to remain in free fall, and as long as we’re too scared to take over another bank, clean it up and resell it to the private sector… well, the longer we’re gong to see consumers sitting on the sidelines, choosing not to repeat their past behaviors… and that makes the future less than clear, perhaps, but not pretty.
Cohan’s article, which is worth reading by the way, points out that this forecast uses the same math that was used by the Obama administration when they said that the first economic stimulus would “save or create” 3.5 million jobs. The CBO has reduced that overly enthusiastic forecast to something vague, but the fact is he was wrong then and he’ll be wrong again this time. That doesn’t mean compromising with the GOP on this issue was so wrong, but this had better not be the only thing he does job creation-wise.
Because this is mostly a political hot potato type of issue than it is some sort of magic bullet. In fact, it’s more than likely to be a cap gun. So, to get an idea of how much impact the deal will have, make your finger into a gun and say… BANG!
Mandelman out.
I have a lot of conversations with people about our economy, foreclosures and such… from clients to friends in business to attorneys. Everyone who’s asked me what I foresee coming I’ve told them that 2010 will be a very tough year and they better prepare now. We aren’t done yet folks… and the policies of the Obama Administration and our collective disaster we call Congress, are going to make things even worse – and very well will extend the recession quite painfully. I have told people to expect another wave of foreclosures. As long as you have no job creation and more job loss happening every day, this cycle won’t stop. It’s as simple as that.
And with that, I bring you fresh news…
08/20/2009 By: Carrie Bay
More than nine percent of all mortgages in the United States are now delinquent, according to figures released Thursday by the Mortgage Bankers Association (MBA).
The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to 9.24 percent of all loans outstanding at the end of the second quarter, MBA reported. The new number breaks the record set in the first quarter of this year, when 9.12 percent of the nation’s homeowners were behind on their mortgage payments.
Important to note is that the biggest jump in delinquencies last quarter came from prime fixed-rate mortgages. These seemingly low-risk loans also accounted for one in three of the nation’s foreclosure starts in Q2. A year ago they were only one in five.
Like prime, Federal Housing Administration loans are generally thought to be “safe,” but foreclosure starts among government-insured mortgages jumped to 9.1 percent last quarter – a record-high for the agency.
The states of California, Florida, Arizona, and Nevada continue to drag down the national numbers. These four had 44 percent of all the nation’s new foreclosures in Q2. Rhode Island, Georgia, and Michigan also posted foreclosure start rates above the national average. All
other states in the country fell below the national benchmark, and roughly half even saw their new foreclosure numbers decline.
But then, there’s the not-so-sunny Sunshine State. Florida has cemented itself as the worst state in the union for mortgage performance. Twelve percent of all mortgages there were somewhere in the process of foreclosure at the end of June, and another 5 percent were more than 90 days past due and about to cross that threshold. Based on MBA’s numbers, Florida has the highest foreclosure and delinquency rates in the country, and MBA’s chief economist, Jay Brinkmann, says he doesn’t expect to see a turnaround in Florida’s housing market for a long, long time.
Some fortunate regional markets are faring better and offsetting Florida’s bad numbers because the nation’s total foreclosure starts during the second quarter actually dropped slightly. Foreclosure actions were initiated on 1.36 percent of the nation’s outstanding mortgages, compared to 1.35 percent during the first three months of the year, MBA reported.
Despite the leveling off of foreclosure starts, the fact that loans 90 or more days past due continues to climb in all categories suggests an overhang of foreclosure activity and engorged inventories of repossessed homes may be looming in the coming months.
So, when is the foreclosure problem going to crest? Brinkmann, points out that unemployment is currently the primary driver behind missed mortgage payments.
The number of jobless Americans is forecast to peak in mid-2010, and Brinkmann says he expects delinquencies to top out at about the same time. But because of the lag time associated with foreclosure proceedings, he doesn’t see a break in the upward trend of foreclosures until six months later, at the close of next year.
Foreclosure News