web analytics

US JOBS BOOST – KEYNESIANS STILL SURPRISED

By Pete Moore On December 2nd, 2011

US job numbers are out: cue head-scratching among the experts at the apparent economic ‘recovery’. To anyone who’s been looking, this ‘recovery was predictable and (predicted). The Telegraph, typical of the dismal media, headlines with “Surprise drop in US unemployment rate to 8.6pc” (hey, they’re going with government lies instead of the real rate).

The BBC is surprisingly low-key about it, possibly keeping back it’s “Obama the economic genius” piece for a comment page. It reports that analysts were ‘generally encouraged’ and that US manufacturing is growing at its fastest pace since June. ‘Analysts’ will be generally discouraged when this all goes wrong. Let me explain. What none of these analysts have been seeing is that Ben Bernanke, Central Economic Commissar at the Federal Reserve, has been printing money like a madman all year. It’s for this reason that the famed US double-dip recession, which ‘analysts’ predicted for this autumn, was never going to happen:

This money has been flooding into and through the economy, at very low interest rates, grossly distorting spending and investment patterns. It distorts economic fundamentals and how individuals and corporations decide on whether to save, spend or invest. What’s more, Bernanke rides the printing press like a roller coaster. Just before September 2008 he stopped the presses, money supply fell off a cliff and the market tried to correct. Then he started printing again, then he stopped again, and through much of this year he’s been printing again at around 15 per cent annualised. The man is mad, causing great swings and distrotions in the economy. He’s a one man economic wrecking machine.

The result of this year’s printing is not an economic recovery but yet another faked, inflationery boom. The result will be higher prices in 2012 and another bust when the printing stops.

70 Responses to “US JOBS BOOST – KEYNESIANS STILL SURPRISED”

  1. There will be higher prices in 2012 but they will be well under control, as they were in 2011.

    There is no hyperinflation on the horizon, anywhere and many commodities have gone down in price from a year ago, despite the prediction of endless inflation from the usual suspects.

  2. The official figures for inflation, as with the Orwellian figures for US/UK unemployment, are ‘massaged’ at best and absolute lies in reality. Only those of child-like credulity can believe them.

  3. as usual you have a point, but you miss a lot. The U6 number which is the real unemployment rate is at 17%, the jobs increase was a measly 125,000. 315,000 fell off the unemployment rolls, which means they went through their 99weeks of unempoyment and can no longer collect so they are no longer counted.

    Also the Bureau of Labor and Industry has removed 2 1/2 million jobs from the job pool. Those jobs no longer exist. So when you only count the people able to collect and you shrink the number of available jobs that lowers the number.

    This number will continue to be played with until by next November it is down in the 7 point something range.

    The fact that doesn’t change is there are 20-40 million people unemployed depending on whose numbers you use, and when you factor in the under employed those who have taken minimum wage jobs who were making between 40-60 thousand a year. The numbers are 30-50 Million.

    The U.S. is in the middle of the greatest depression it has ever suffered. No matter how they massage the numbers they can’t massage the reality of the suffering that the masses are enduring.

    It doesn’t matter who the Republican candidate is, they have already won.

  4. The U.S. is in the middle of the greatest depression it has ever suffered

    You boys ( Troll, Pete ) won’t start winning any arguments until you stop making stuff up.

    This economy has huge problems, and people are hurting, but you can’t have a depression when there is increasing economic activity, which is the current situation in the US.

    The depression of the 1930s was infinitely worse than the jobless recovery we are now in.

    Noone with any knowledge is saying that we are in a ” depression ” now. Only those with Republican axes to grind, even though it was your Republican homeboy dreamboat who is most responsible for where we are now.

  5. Phantom –

    No need to associate me with things I did not say. Note also that I do not “make stuff up”.

    The US is not in the middle of the greatest depression. I will explain why this weekend with a wee post on the actual greatest depression and the lessons to be learned.

    As for your “but you can’t have a depression when there is increasing economic activity, which is the current situation in the US”, you certainly can have such a depression.

    Throughout the 1930s the NYSE and job figures moved up and down (often as a response to government trying to “jump start the economy”, as Keynesians are wont to believe can happen). Nothing was down linearly.

  6. Troll –

    I saw that but wanted to concentrate on the distortions of the money supply.

    As with all government stats, pages of caveats and explanatory notes are needed. Mainly this is because they lie and concost elaborate charades to cover the lies.

    If firms reported income and profit for tax purposes the way governments report unemployment and prioce inflation, the prisons would be overflowing with company directors.

  7. Generally, periods labeled depressions are marked by a substantial and sustained shortfall of the ability to purchase goods relative to the amount that could be produced using current resources and technology (potential output).[2] Another proposed definition of depression includes two general rules: (1) a decline in real GDP exceeding 10%, or (2) a recession lasting 2 or more years.[3][4]

    From the great wiki

    We’re not in a big depression. We’re not in a little depression.

    We’re not in a recession either.

    The most accurate definition is ” jobless recovery “.

    And that’s that.

  8. Pete, you make an interesting point but please note that it’s being reported that the unemployment rate dropped largely because more people simply stopped looking for work and are not applying for unemployment payments so they are dropped from the roster. The drop in the rate largely reflects discouraged workers, not new jobs.

    Here, from the NYT:

    “… about 315,000 workers dropped out of the labor force. That left the share of Americans actively participating in the work force at a historically depressed 64 percent, down from 64.2 percent in October.”

    http://www.nytimes.com/2011/12/03/business/economy/us-adds-120000-jobs-unemployment-drops-to-8-6.html

  9. Pete

    You said we were in a depression a very short time ago.

    The alternative would have been to protect deposits, allow the banks to go bust, liquidate bad debts and let healthy institutions pick up the assets. That would never do, it would be to let market realities sort out the mess instead of the morons who got us into this depression. So now we’re out of pocket for mega-billions and we’ll never see it again.

    Pete Moore, December 1, 2011

  10. Here’s what I understand you’re saying here, Pete:
    The Fed prints a huge sum of dollar bills. Printing fiat money does not boost an economy, because the sum of real goods and services has not increased, but only the number of monetary exchange units (which have no value in themselves). So, if the Fed had distributed those newly printed bills equally to every citizen, then the inflationary effect would be much faster, as those bills would already be trading all over the place, in exchange for an unchanged sum of goods/services.
    So, it’s just that the effect of that money printing has not yet trickled down through the marketplace. The Fed gives that new money to banks, which at first makes those banks “feel” as if they suddenly have more money at their disposal. The banks will then lend that “extra” capital to businesses, who in turn might spend it employing new staff, who will eventually spend their “new” wages on goods. But this temporary surge in spending only produces a temporary surge in demand for goods, which, all else being equal, simply pushes their prices up until we’re back where we started.

  11. for all intents and purposes, we are in a depression. sure, job loss hemorrhaging has stopped but growth is anemic at best.

  12. ” jobless recovery “ = ROFL. that’s some recovery!

  13. If there is sustained growth for a couple of quarters, there cannot be a depression. And we’ve had if for longer than that.

    This is just Republicans, including the Ron Paul subset of the Republican Party, being fast and loose with the facts.

  14. Jobless recovery

    It’s not the recovery that anyone wants. But a recovery it is.

  15. 20-40 million people out of work, double digit inflation when you count food and fuel like they did in the 30s, longest period and greatest number home foreclosures and zero growth, greatest number of bank failures in history THESE ARE FACTS

    That is a depression, the only difference is that we have unemployment compensation and welfare, or we would have food kitchen lines 5 times greater than during the depression of the 30s, we would have them today and in reality we actually do when you consider 4 out of 10 americans are on food stamps.

    you are in a state of denial due to your own prosperity

  16. Phantom –

    Yes, I said this is a depression, not the greatest depression. It might turn out to be so, but we cannot say that yet.

    It’s still the case that some parts of the economy can bounce up and down during a depression.

  17. Troll

    How would you define a depression? Really?

    The number of unemployed can and does mean a huge social problem, but does not mean depression.

    As I’ve shown you ( remember when you misstated the price of gas in Pa? ) the price of gasoline is essentially the same post Bush as it was pre Obama. Natural gas prices are significantly down. And oil is relatively cheap in the middle of the country.

    Home foreclosures need to be looked out in terms of percentage of the total number of people and houses because the country is bigger than it was in 1929

    And you intentionally tell a lie on the bank foreclosures – I showed you the other week the highest number of bank failures was during the time of your American Idols Reagan and Bush I

    You are doing some lazy and slipshod writing here. Pay attention for once.

    Food is up, but lots of things are down (

  18. Tom Tyler –

    Yep, that’s it.

    Another way of getting new money out there is by the central bank buying up government treasuries, as the Bank of England did in 2009 with a £275 billion slurge.

    The government spends it on wages, programmes, welfare and government contractors. This is a particualrly unfair method since it is inflationary, but by the time the money has trickled through to the larger economy price inflation will be in the system. State workers and government clients groups have had the advantage of the new money before price inflation hits and these gains are wiped out for everyone else.

  19. The banks will then lend that “extra” capital to businesses, who in turn might spend it employing new staff, who will eventually spend their “new” wages on goods.

    Tom

    That’s the theory. In practice the banks use most of it to pay off some their own massive debts or to speculate in wheat futures (driving up the price) or oil or other commodities. In other words, socially useless activities.

  20. Great jumping Jupiter, it’s hit me like a brick…I’ve just realised that I’ve answered a question that has bugged me for ages (and which I think I once asked on some economics thread on here, perhaps a year ago): “How does the Fed (or the BoE) know the *optimal* amount of currency to have in circulation in a country?” The answer: it doesn’t matter! There IS no ‘optimum’ amount of fiat currency that should be in circulation. I was making the error of still ascribing some inherent value to money. All that matters is that a fiat currency must be divisible into small enough units so that the smallest desired transaction can be done using it. (perhaps also that there needs to be enough of it that the largest possible transaction can be done in cash, too….or maybe not, I’m not sure if there’s a point beyond which it becomes unfeasible). If a currency has no value in and of itself, and is only useful as a means of exchange, then all it needs to stay useful, is to stay exchangeable.

    …But hold on, if I’m right there, that means I must be wrong about something else: I always thought that it was money-printing which led to the Weimar situation (and Zimbabwe)… I’ve either made a huge mistake in what I said above, or else it’s not money-printing which caused those currencies to crash. Because if the only thing a currency needs is to stay exchangeable, then (as long as wages keep up with inflation, and they will, in the long-term), then what does it matter what the exchangeable value of a stated unit is?

  21. no you were wrong about the price of gas in pa you only showed that you refused to admit when you are wrong. I define a depression as:

    20-40 million people out of work, double digit inflation when you count food and fuel like they did in the 30s, longest period and greatest number home foreclosures and zero growth, greatest number of bank failures in history THESE ARE FACTS

    That is a depression, the only difference is that we have unemployment compensation and welfare, or we would have food kitchen lines 5 times greater than during the depression of the 30s, we would have them today and in reality we actually do when you consider 4 out of 10 americans are on food stamps.

    no phantom as usual you are the one that’s wrong, you were wrong calling me a liar about the price I pay for gas, your wrong about the banks, your wrong when you say 20-40 million people out of work for more than 99 weeks doesn’t count, your wrong about home foreclosures, your wrong about guns, your wrong about who the republicans should pick for their candidate, there really isn’t anything that you are right about.

    You live in a bubble, and that bubble floats around an andy worhol world of delusion

  22. Let’s cherry pick among your bullshitting

    Who says that there is double digit inflation overall?

    And don’t quote me what your phoney baloney Tea Party blogs say.

    Gimme something credible.

  23. Tom Tyler –

    On your second point above, Weimer and Zimbabwe hyperinflation was caused by money printing, but it’s not a mathematical thing and there’s no slide rule which allows you to say “with this amount hyperinflation begins”.

    Hyperinflation is a loss of confidence in the currency. People no longer value it. They know the fiat currency is not backed by anything of value, they know the government printing machine is out of control and they realise everyone think it stinks, so they try to get rid of their money as quickly as they can for anything of any value.

    Gresham’s Law states it.

    In this scenario even holding a tin of beans is preferable to money because you can eat or swap it later.

  24. Phantom –

    “If there is sustained growth for a couple of quarters, there cannot be a depression. And we’ve had if for longer than that.”

    Read the post again.

    You do not have a recovery, you have a phoney baloney inflated recovery. As soon as Bernanke slows up the printing the recovery will pop and the economy fall back.

  25. “This economy has huge problems, and people are hurting,” but as long as I’m not one of them, there’s no depression.

    Phantom’s Golden Rule of Economics

  26. It is the libertarians who want to take away all the government safety nets for those who are unemployed.

    Pete would let them all starve in the gutter, all in the name of a flawed ideology.

    I support unemployment insurance and other protections for those who need it. You guys do not.

    The very confused Troll presumably would like to remove those protections from himself.

    Great clarity, guys.

  27. Aaaah, right, I think I can see what you mean. It’s basically a matter of how FAST inflation is happening. I was thinking “how can something that has no inherent value in the first place, be said to ‘crash’?” But it is always in the process of a sort of slow-motion crash. (I know that my £500 will be worth much, much less in 20 years, but I don’t mind keeping it in the bank for the next month or so….but if inflation was happening 100 times as fast, that would be different!) It’s not that I have absolute confidence in the £ at this moment, it’s just a question of timescale…for how long am I confident that £500 will still be worth £500.
    This economics thing is fascinating.

  28. Tom Tyler –

    Yes, real economics is fascinating. Economics as studied is a terrible, sterile, mathematised, formulaic, jargon-ridden discipline. A rotten economist called Paul Samuelson is responsible for this, it wasn’t always so. He reduced a study of human action and behaviour to graphs and econometric numbers.

    I dropped out and discovered what real economics is elsewhere.

  29. The law of 72 states that prices will double in roughly the rate of inflation divided into 72. So 6% inflation means that prices double in 12 years, thanks to compounding.

  30. Peter –

    Yep.

    The Bank of England’s target rate of price inflation is 2 per cent, which doubles prices every 36 years. They’ve been hopelessly above target but even so, the official state policy equates to halving the value of our money every 36 years.

    You cannot hope to have a sustainable economy and real price discovery when official policy is to degrade our money.

  31. We’ve had a sustainable economy all through the post WW2 period, so that demolishes that theory

  32. It’s a strange thing to say, but being an accountant actually creates a huge preconceived hurdle in one’s mind, when it comes to thinking about economics!
    The most basic rule of “how ‘value’ is measured in a set of financial accounts” (as you might know) is called “the historical cost convention”. This rule says that we record the value of assets and liabilities on a balance sheet (and of income and expenditure on a P&L account) at their historical cost values, in pounds sterling. (where assets are purchased as an investment, we often also state their market value in the notes section). Gains on capital investments are not usually “recognised” until they are “realised” (converted into cash, upon their sale). Although this convention is necessary (for one thing, because taxation is calculated in pounds sterling), this produces in us the deeply ingrained habit of thinking of the pound sterling as the “constant” of monetary value.

  33. We’ve had a sustainable economy all through the post WW2 period, so that demolishes that theory

    Phantom

    We’ve had cheap oil through most of that period. What if oil goes from $100 to $400?

    Check this out if you want to see what we are facing with peak oil. This is the train coming down the track.

  34. I will read that, but an economy that has brought untold prosperity to hundreds of millions in N America / Europe / North Asia in the post WW2 period is by any definition sustainable

    I have concerns about oil supplies and pricing, but as Troll has said ( the one time he has been right ) the US and Canada could very well come to oil self sufficiency in the near future, and will be net natural gas exporters in the very near future.

    There’s also major oil finds in all sorts of places like Brazil, etc etc.

    This is good news I believe- you don’t want endless burning of fossil fuels but I’d rather this than us gasping for energy either.

  35. Tom Tyler –

    Is it that every accounting convention is governed by law? An investor would (should) always apply net present value of money to his calculations.

  36. Phantom –

    Since 1913 the American economy has had inflationary booms and busts every 4-6 years. From households, to the state at all levels, your economy is now saturated with debt. This is not sustainable.

  37. They always do – which is why sustained low and predictable inflation is not necessarily a bad thing.

    Unless your savings is in non interest bearing instruments etc.

  38. I haven’t come across that “72” thing before, Peter, but surely it only works if you specify how often the compounding takes place:
    If annual inflation is 100% then something that costs £100 will cost (£100 plus (100% of £100)) a year later, ie, £200. But according to that “72” law, the cost will be (£100 plus (100/72 x £100)) = £238.88. Which is nonsense. So, the number 72 cannot be a constant in that formula, but a derivative of the rate of compounding…?

  39. Pete

    I have some idea of how the average person in Ireland / England / America lived in those days.

    We live like kings strolling through palaces of gold compared to those folks. We are healthier, and live longer, and have way more stuff.

    The current difficulties are a mere bag of shells.

    Worry about them, but don’t worry too much.

  40. but as Troll has said ( the one time he has been right ) the US and Canada could very well come to oil self sufficiency in the near future

    Phantom

    Check out the link I posted to see how this is total fantasy. If it costs 90% of a barrel of oil in energy to obtain 100% of a barrel you are looking at a vastly different world. All the easy oil has already been found and is being heavily exploited. What’s left is the stuff buried thousands of feet under the sea and shale deposits which are vastly more expensive to extract.

    The BP Horizon oilwell that blew up last year has enough oil to meet the entire world oil demand – for 12 days. If it ever gets exploited.

  41. The natural gas story is a very good one.

    And that form of energy can be used to power many more motor vehicles than they do now – I like what I hear of the Pickens Plan.

  42. Phantom

    How long would it take to switch all the vehicles in the USA from petrol or diesel to natural gas? And to install natural gas at all the filling stations, and the infrastructure of gas pipelines to keep them supplied?

    My guess is at least 20 years, and at vast cost.

    Our entire “just in time” way of life depends on oil. We will be paying $400 a barrel by 2020 because we will have no choice, but with a significant reduction in our living standards as a result.

  43. You wouldn’t need to change them all to make a big dent

    I believe that the Pickens Plan speaks of converting many large trucks and buses to natural gas, which could put a huge dent in the domestic demand for oil

    We have lots of buses and some other vehicles that run on natural gas here now – it’s great and relatively clean technology.

    If you focused on major cities ( which are moving in this direction anyway ) and the major north south and east west highways, this thing would feed on itself, the idea makes so much sense.

  44. And of course

    A huge part of the increased demand is because a huge number of Chinese and Koreans and Indians and other Asians are living better.

    That’s a good thing.

  45. Phantom

    Yes, natural gas will help to ease the pain, at least in the USA. But it will never be a total substitute for oil. How many towns in “the heartland” (as Fox calls it) will be on a natural gas grid by 2025?

  46. Pete M (9:22pm):
    Accountancy methods are governed partly by laws, and partly by commonly accepted conventions. The bottom line is that statutory annual accounts are not attempting to measure ‘real’ value in present terms, but only on the pre-decided standard of historical cost.
    At least, that way, because you know that every company’s accounts filed at Companies House are valued on the same basis (historical cost), you could take Barclays’ 1992 accounts, and compare them with Lloyds’ 2004 accounts, and apply the RPI to them both, and thus compare like with like at their present values.

  47. Peter

    See this map

    There are natural gas pipelines pretty much everywhere there are people in the US- in most all the urban areas.

    In my area in Brooklyn, forty years ago, most all the houses were heated with No. 6 heating oil. Now the majority of the one and two family houses are heated with gas, and even the apartment houses are increasingly going to gas.

  48. The US employment figures show the %-employed of the population as in decline, which means that unemployment cannot have fallen. To those who ‘give up looking for work’ i.e. fall off the unemployed stats, what happens to them? Do they no longer need money for food, housing etc?

    http://market-ticker.org/akcs-www?post=198461

  49. Well that won’t be a problem for the libertarians who don’t believe in any government benefits.

    Let ’em starve right?

  50. Phantom, no, it’s not a case of “let them starve”.
    The basic idea is that, if there had never been a welfare state in the first place, then so much more money would still be in the hands of those who had earned it, that all the necessary provisions would have already been created via private enterprise, that nobody need starve.
    The difficulty is that once you HAVE created a welfare state, then if you suddenly withdraw it, then sure, there are going to be difficulties for the poorest. I admit that, and it gives me no pleasure at all. However, that does not defeat the argument that in principle, the free market can and will take care of everyone if left to itself.

  51. Tom Tyler –

    The bottom line is that statutory annual accounts are not attempting to measure ‘real’ value in present terms, but only on the pre-decided standard of historical cost.

    Interesting how these things happen. I wonder if the banksters are behind it. Bank assets (as far as I’m aware) are valued this way. I’ve read that if they were accounted for on a mark-to-market basis (i.e. assigned present value instead of historical value) they would be wiped out.

    Football clubs, in the other hand, must enter the current value of players on accounts, i.e. depreciate their value as their contracts wind down since players can walk away for free at contract’s end.

  52. The free market has never taken care of everyone. And the lack of starvation is not in itself any type of good standard. The slaves in the American South didn’t starve, but they still had a few things to complain about.

    I love the free market more than anyone, but without social safety nets, it is a cruel and vicious thing that cannot withstand any scrutiny.

    Especially at at time when we have unlimited free trade with very low cost nations and where there is ( often good ) creative destruction of entire industries by things like the internet or other advanced technology.

  53. Phantom –

    When did Americans last starve and die in the gutter, as you suggest above would happen?

    And what happens to Americans who have been marked as ‘not looking for work’? Do they starve and die in the gutter?

  54. Phantom – the question as to what happens to those who ‘give up looking for work’ wasn’t intended as a joke. What actually does happen to these millions of people in the US – don’t they need food, homes etc? In short, are they made destitute?

  55. There was real hunger in the days of the Depression ( the real one )

    Allan, a lot of those folks lose their homes or apartments. Some live in cars or worse.

    Some get welfare, some live off aid from friends and family, some are given aid by food pantries and other charitable organizations.

    It is not fun. It is a very large social problem, esp. in the states with minimal safety nets, such as Florida.

  56. We have a massive government safety net, Allan – despite what the MSM would have you believe — including food stamps, free medical, school lunches, school dinners and housing.

  57. yeah, it’s not fun, Phantom. waaa! …neither is being taxed to death so govt. agencies can redistribute in a corrupt and inefficient manner while growing fiefdoms.

  58. school lunches AND school dinners.. wot about school breakfasts 😉

  59. The Occupiers even want free higher education – they don’t want jobs, mind you – I’ll bet that none would ever deign work as, say, a hotel maid – but they do think that they’re entitled to a free university stint where they major in things like “gender studies.”

    This is the fruit of modern Progressivism and Liberalism. Capitalism and “get a job” are now taboo things. Welfare and mooching off the productive citizen is now accepted and promoted.

    As Phantom points out, it’s not “fun” to not have money coming in. and the knee-jerk reaction is now: where’s the government safety net. It used to be “get a job” but the much maligned Protestant work-ethic has been in decline for years.

  60. Colm: good point. at this rate, parents will soon only have to occassionally visit their children for “self-esteem” sessions and “hug a child week” and the government can do the rest.

  61. “Some get welfare, some live off aid from friends and family, some are given aid by food pantries and other charitable organizations.”

    So they don’t starve and die in the gutter.

    Imagine how vast, multi-faceted and highly tuned real welfare would be if government hadn’t crowded out everyone else. No need to imagine, we have the glorious example of pre-welfare state Britain, where literally thousands of organisations provided welfare for everyone in need.

  62. So Phantom agrees that the official figures for US unemployment are bogus. Does anybody else here believe that the unemployment figures are the true rate of unemployment in the US? If so, why, and if not, can we agree to quoting the real figures and the government’s lies?

  63. Oops – and NOT the government’s lies.

  64. phantom unless you’ve read it in NY Times you don’t consider it credible. You are a true NYr your opinion is the only one that counts, your standards are the only ones that are real, your facts are the only ones that are real.

    You are a walking, typing example of whats wrong with 1/3rd of the country but your thinking and belief system even though represented by half the govt is only 25% of the view of the country.

    This Black Friday broke the record for the largest one day of Gun sales, the day it beat was the Black Friday right after Obama’s election.

    The majority of the nation is holding their breath until next November, the silent majority that is normally silent is scared and going to voice their opinion at the polls.

    Although with the economy collapsing, the events in europe and the middle east, the occupy wall street loons bearing their teeth the possibility of a second Obama term is a direct cause in 3 years of the largest purchasing of guns and gold that this nation has seen in over 100 years.

    but you are unaware of all of it, yet YOU are the authority…..

  65. You don’t actually think people are going hungry for lack of food, do you, Pete?

    Seriously. Mexicans are pouring across the border for a reason. The US has plenty of food – and the only ones I know living in cars or on the streets are drug/mental cases.

    Even the mental cases are taken off the streets periodically, given clothes and a free haircut, a good meal, families called if they’re around.

    Liberal policies instituted during the Reagan years (remember One Flew Over the Cuckoos Nest?) resulted in the emptying of the “insane asylums.” and now crazy people have “the right” to live on the street. sure, it’s a problem. A big problem. but it’s not a “free market” problem – or the result of “capitalism.”

    Remember Hurricane Katrina? A whole city of impoverished homeless…were almost instantaneously given food, shelter, opportunities, schooling etc. Phantom’s continued hand-wringing as an argument for increasing the size of government is specious and disgusting emotional blackmail.

  66. Pete:
    Football clubs, in the other hand, must enter the current value of players on accounts, i.e. depreciate their value as their contracts wind down since players can walk away for free at contract’s end.

    No, no, no, depreciating the cost of a player over the life of their contract is NOT the same thing as “marking to market”; it’s merely a case of writing off [historical cost less residual value (at PRESENT value in Sterling)] over its lifetime. The same principle is used in depreciating any fixed asset, in every company’s accounts. If Arsenal bought a player for £1m, and it is thought that in 10 years time, his transfer value will be £100K (at present £ values) due to natural ageing, then we write off (depreciate) £900K over 10 years. If, by some miracle, the player got better as he got older, we would not ADD to his value on the balance sheet, unless he actually got sold for a higher value.

  67. “unless you’ve read it in NY Times you don’t consider it credible”

    lol, Troll. That’s exactly why I used the NYT for my data in comment above – lol – even the NYT doesn’t take the government unemployment numbers at face value.

  68. Actually, there’s a whole debate going on in the (UK) accountancy world, regarding depreciation of property on the balance sheet.
    Most accountants are reluctant to depreciate property (buildings), on the basis that property prices have appreciated with respect to their historical cost values.
    However, this reluctance to depreciate property is effectively “marking to market”, which is not what depreciation is supposed to be all about. Depreciation is supposed to be about writing off an historical cost over its useful lifetime, regardless of any appreciation in market valuations.
    The rule of “prudence” is supposed to apply: You should provide for potential losses upon diminishing market values, but you should only recognise potential gains when they are turned into hard cash.

  69. Tom Tyler –

    Yes, that’s what I meant with player valuations (probably I wasn’t precise), not that they’re marking to market. As for property, you’d be astonished at the number of commercial owners who have no sinking fund. Hey, just borrow replacement funds cheaply!

    Patty –

    Nah, I know no-one is starving in the gutter. It’s funny how these dread warnings of starvation are rolled out against the feared free market (what do people think is responsible for the stunning defaltion in food costs over the decades?), yet when you ask when did people starve in the UK/US in the industrial era, the answer is ‘never’.

  70. Pete: I hate the way statists/socialists play with people’s emotion and compassion to get their way. And then when their good intentions have turned everything to mud, they don’t take stock and change their plans.