Wouldn't be any stranger than this:
Treasury Sec. Sees Recovery Coming Soon
U.S. Treasury Secretary John Snow on Tuesday said he saw an economy on the brink of a much faster recovery."This economy is poised to take off. It's spring-loaded to go," Snow said during a CNBC interview on a bus tour of Wisconsin and Minnesota with Commerce Secretary Don Evans and Labor Secretary Elaine Chao.
The tour was to promote President Bush's economic agenda, including the latest $350 billion tax cut package, in the run-up to the 2004 election.
Rolling Thunder, it's not. And shouldn't these guys be back in Washington, trying to actually do something about the President's economic agenda, instead of taking the scenic route from Sheboygan to Duluth?
Chao: Oh look, John: Another cornfield!
Snow: Shut up, Elaine.
Evans: Doesn't this fucking thing have a mini-bar?
Bad timing, in any case. Because unfortunately for the assorted secretaries (and their boss) American consumers appear to be distinctly "off message":
Consumer Confidence Suffers Surprise Fall
U.S. consumer confidence took a surprise spill in July as worries over rising unemployment took a heavy toll, the Conference Board reported on Tuesday.The result provided a muted counterpoint to cheerleading from government officials.
Siss, boom, bass -- hit 'em in the ass!
As explained here and here, unemployment is now the biggest skunk at the administration's economic garden party -- and it's threatening to spray all over, well, the Shrub.
Employment tends to drive consumer confidence. In the past, consumer confidence has tended to drive presidential approval ratings. While that connection may be weaker now, thanks to 9/11, the rapid decline of Bush's Iraq War boomlet in the polls suggests it still exerts a gravitational pull.
Or, to quote the late, great GOP President Calvin Coolidge: "When many people are out of work, unemployment results." Presidential unemployment, in particular.
There is, moreover, another two-tone critter sniffing around Bush's ankles, and this one has an even wider spraying radius, so to speak:
U.S. Treasury prices tumbled for the fifth straight day on Tuesday as the market's failure to steady itself even on weak economic data spurred sellers.
The stampede in the bond market has started to take on some of the self-feeding characteristics of a collapsing bubble. Selling is begatting more selling, just as a few months ago buying begat more buying. A lot of trades that were made earlier this year -- in particular, buying 10-year Treasury notes to hedge mortgage portfolios -- are being unwound now, and in a hell of a hurry.
That's an ugly chart, reminiscent in many ways of the spring of 1994, the summer of 1987, and other periods when the U.S. bond market -- if you'll excuse my crudeness -- completely shit the bed.
Until recently, the stock market bulls (who are also the bond market's bears) could comfort themselves with the thought that rising bond yields are a sure sign of faster economic growth ahead. This was true in both 1994 and 1987, although in both cases the financial markets hit some pretty jarring speed bumps along the way.
But that story is starting to look a little threadbare -- and never more so than today, when lousy economic news (which is usually good for bonds) failed to prevent another miserable day in the bond market.
Why? Because the market, instantly and efficiently discounting all known information, has discovered that the federal government is, in fact, plunging into an almost bottomless pit of red ink:
Investors' concern about the Treasury ratcheting up bond sales to help fund a $455 billion budget deficit for the year ending Sept. 30 has driven 10-year yields up from a 45-year low of 3.07 percent on June 16."Supply seems to be the obvious culprit" for higher yields, Miller said. "People have got more bonds on board than they would normally have, and the U.S. Treasury is going to sell a whole lot more"...
The Treasury's announcement on the amount of note sales, known as quarterly refunding, is due at 9 a.m. Washington time. The government said Monday it would borrow a net $104 billion in the quarter to September, and $126 billion in the subsequent three months, the highest ever for any quarter, exceeding the $111 billion borrowed in the first three months of the year.
This does rather inconveniently conflict with current GOP dogma, which (depending on whose listening) holds that the federal budget deficit either isn't really that big, or doesn't matter at all. To think otherwise is "Rubinomics," and since Rubin was Clinton's Treasury Secretary, and Clinton got a blow job in the Oval Office, "Rubinomics" obviously must be false.
And yet -- bond yields are rising on bad economic news. We'll just have to wait for the Wall Street Journal's op-ed page to explain why, and tell us the cure. I'm guessing it will have something to do with cutting the top federal income tax rate. It usually does.
Given the typical economic lags involved, the danger for Bush is that soaring bond yields (and mortgage rates) will translate into a sharp deceleration in GDP and employment growth six to nine months from now -- when his campaign can least afford it.
That's what happened in 1995, and, to a lesser extent, in early 1988. But in both cases, the economic recoveries then in progress were robust enough to take the licking and keep on ticking. But this one ...
Bush just better hope that third time is a charm, because if it isn't, he's the one who could end up on the slow bus to nowhere.
My only answer is that Karl Rove is either so deluded or so power-mad that he thinks he can truly dupe the American people. Is this correct?
Never underestimate the power of sheer stupidity.
Actually, what's really happened is that on economic issues the Republican Party has become something like a cult -- with the supply siders in charge of the sacred Kool Aid. And woe to any member who dares to express doubts about the pending arrival of the Mothership, or whatever.
But the bond market is into another cult -- Mammon worship. And it's finally dawned on them that these loons could end up costing them a lot of money.
>My only answer is that Karl Rove is either
>so deluded or so power-mad that he thinks
>he can truly dupe the American people. Is
>this correct?
He's simply going on the basis of what worked before, and yes, on scores of occasions, on a dozen different issues, he has been able to 'truly dupe the American people'.
He's had some help from a servile and supine press, to be sure, but so far it's worked. So I don't think 'deluded' or 'power-mad' is quite accurate.
He's simply going on the basis of what worked before, and yes, on scores of occasions, on a dozen different issues, he has been able to 'truly dupe the American people'. (Davis)
Sure, on individual issues, Rove can dupe people all he wants. But it's still the economy, stupid. Yeah, you can convince some poor schlub that the dividend tax cut benefits him, too. But it's a hell of a lot harder to convince someone who's lost their job, or can't keep up with mortgage payments, etc. etc. that Bush's economic policies are helping them.
Actually, what's really happened is that on economic issues the Republican Party has become something like a cult (Billmon)
Eventually, though, all cults fall apart when their prophecies fail to come true. Then again, the GOP is remarkably good at moving the goalposts whenever it suits them - or whenever necessity forces them to do so. Hopefully at some point it just won't become possible to move the goalposts any further.
I've been reading what could pass for articles by the same author at places as far-distributed as NRO (written by Cato members), lewrockwell.com, American Prospect, and now whiskeybar.org. Never mind Paul Krugman, who's said similar things since forever. Except he started talking about deflation, when I was thinking: didn't Argentina go under after a massive bout of inflation?
You know something is seriously fucked up in America when all of these sites are actively praising (no lie!) Bill Clinton.
In fact, the NRO article takes the cake. Because they said that Bush is Clintonian. Except maybe that's unfair to Bill Clinton.
Oh, you negative nabobs...
There's a freaking BUS TOUR IN WISCONSIN in the cards, now.
I myself am one happy investor!
Oh great. High interest rates and a weak economy.
Stagflation?
Can we get a new name?
How about the 'crunch economy'? State budget crunches, Federal budget crunches, Corporate budget crunches, and the fearful overall credit crunch...
p mac: didn't Argentina go under after a massive bout of inflation?
No, Argentina went under after its runaway government debt became unpayable. The BBC has good summary of what happened:
http://news.bbc.co.uk/2/hi/business/1721103.stm
Paul Salmon had a truly bleak report on unemployment on The News Hour tonight; the thesis was that the official stats are drastically undercounting the "real" unemployed, because they don't take into account the discouraged, the disabled, the incarcerated, and some other group I've forgotten in the last 45 minutes. Anyway, counting all those folks, he came up with 10.6 percent, only .2 off the post-Depression high in 1982.
Eventually, though, all cults fall apart when their prophecies fail to come true.
At the risk of being blasphemous (not that that's ever stopped me before) the repeated failure of Christ to return when expected doesn't seem to have curbed the growth and survival of Christianity.
yes, billmon, but Christ pays off in the next world, not here. that's why Christianity has better staying power than Communism -- it's harder to check its ultimate claims.
maybe the koolaid kids think they're piling up treasure in heaven??
Christ is hailing the bus at Sheboygan. He has good stats about the housing market.
Yeah, it ain't what they said I should be looking forward to when I was still a good Catholic, but it's better than nothing...
To paraphrase Bill Maher: Half of America thinks we've found WMD and the other half thinks GWB is a fighter pilot. These guys knew when they convinced America that counting the votes in FL was Unamerican, that they could sell anything. They'll just make up (and carefully state their lies so that they cannot be proven to be technically false) economic data and paint a rosy picture through 11/04. Their motto will be "feel good."
How about the 'crunch economy'?
Ooh, I like it. Sounds very pro wrestling.
You know, maybe RoveBushCo thinks they have all the electronic voting machines in the bag because they're so easy to tamper with that in a close election Bush doesn't need to actually win. Maybe his Shrubness' brain thinks that all they have to do is get close enough that you'll never be able to prove that fraud tipped the election.
"This economy is poised to take off. It's spring-loaded to go,"
Classic hockey-stick graph reasoning. There's a Dilbert cartoon of some flack presenting a slide with saying something like, "I predict flat sales for two years followed by a incredibly steep rise in demand." When queried, he admitted, "We need the rise to make the business case and in two years I'm vested."
So recovery will always be "just around the corner." It's the only way to sell it.
The Secretary did notice the FALL in consumer confidence announced yesterday, didn't he?
Charles
It's as I said before, at the end of the day, the chips will be cashed in and there's nothing there. A crap shoot! When the rest of the world (especially, Germans and the Japanese) stop buying US T-bonds and T-bills and the US dollar collapses then it won't be a recession but a d…
Seriously, you can't avoid the natural laws of economics: you got to pay for it somehow and in some way!
Not to sound like a pessimist, but you people are giving the administration way too much credit for applying common sense and logic to economic problems.
They aren't! All they're interested in is looting the US Treasury! Remember Enron? Whatever they can get away with, they will!
This administration isn't interested in improving the economy. They are only interested in one sector - the top 1%. Piss on everybody else.
Sending Secty. Snow on a bus tour of the upper Midwest, proclaiming "happy days are just around the corner" is just one more manifestation of this.
So long as the wealth created in the past decade is "churned" and is going into (to quote Poppy Bush) "higher, righter, and tighter hands" then the current Republican economic plan is on time and on schedule. The plan for corporate feudalism doesn't include democracy and it's correction factors(things like elections and such prole poppycock.)
hey nofundy
where is that poppy bush quote from ?
>But it's a hell of a lot harder to convince someone who's lost their job
It's not just the lucky ducky who is actually unemployed. We're getting to the point where everybody knows somebody who has been canned, and everybody knows somebody who knows somebody who is stuck in Iraq.
That's unusual for, say, an Office Park Dad like me to be that few degrees away from the political "Kevin Bacon." I don't hardly know any black people, so I can be fooled into thinking racism is pretty much dead. I don't hardly know any poor people, so I can be fooled into thinking they're all lazy no-goods.
But now my demographic is getting this stuff up close and personal, whether we like it or not.
At the risk of being blasphemous (not that that's ever stopped me before) the repeated failure of Christ to return when expected doesn't seem to have curbed the growth and survival of Christianity.
I was going to mention something along these lines at the end of my previous post, but hesitated. Glad to know that there's always someone on this blog who will out-blaspheme me. :)
How about the 'crunch economy'?
I second this one as well.
Why are they on a bus from Shebougan to Duluth?
Because the Transportation Security Mission is pulling air marshalls from flights, citing that they're too expensive!
See
http://www.msnbc.com/news/945774.asp?vts=073020030950&cp1=1
The Cool Kids have probably decided they need another terrorist attack to boost their ratings...
Can someone explain to this Brit where the "Kool Aid Kids" thing comes from? Anything to do with The Electric Kool-Aid Acid Test?
You weren't supposed to notice the reduction of airline security. Another successful terrorist attack would, I fear, do wonders for the PNAC agenda. Subsequent to that, if they can sucker Old Europe to go into Iraq (like they sucker Old Europe into paying for the US deficit), the US can attack Syria and Iran on schedule.
It blows my mind that what is probably the only effective anti-hijacking tactic-- just look at ElAl-- that was ramped up after 9/11 is being emasculated over the cost of a fucking hotel room.
Ed_Finnerty,
Don't recall right off but it and old quote that I remembered from his salad days. Maybe not totally verbatim but the gist is very accurate.
Keith,
"Drinking the Kool Aid" came from the Jim Jones mass suicide. "The Kool Aid Kids" comes from those media whores in DC who buy the party line, i.e., they drank the Kool Aid...
Aargh...
Why do I never do proper proofing?! Sorry.
but it and old quote
but it's an old quote
The Crunch Economy it is.
Crunchonomics. Budget crunch. Credit crunch. Debt crunch. Housing crunch.
Your concerns are crunched. Need a bank loan? Need a job? Need health insurance?
Crunch those hopes.
So far it sounds like the bus tour is hurting the administration more than it's helping (so I for one am all for it).
Quotes from the stop at the Harley Plant in Milwaukee:
Michael Retzer, an executive at W.G. Strohwig Tool & Die Inc. in Richfield, which supplies parts to Harley, asked how tax rebates can revitalize the manufacturing base if Americans turn around and spend the cash on Made-in-China goods, effectively funneling $200 billion in tax cuts into the nation's $500 billion trade deficit.
"They really didn't answer it," said Tim Posnanski, a bargaining representative for the Wauwatosa factory's machinists, after he asked the panel whether the new jobs that can be expected in the coming recovery will pay as well as the manufacturing jobs that he said his friends are losing.
Also, check out John Andrew's site where he is chronicalling his Economic Reality tour. He's following Snow et al in his minivan.
Found an interesting perspective on this subject here.
An excerpt:
The Cheap-Labor Conservatives' "Dirty Secret": They Don't Really Like Prosperity
Maybe you don't believe that cheap-labor conservatives like unemployment, poverty and "cheap labor". Consider these facts.
Unemployment was 23 percent when FDR took office in 1933. It dropped to 2.5 percent by time the next Republican was in the White House in 1953. It climbed back to 6.5 percent by the end of the Eisenhower administration. It dropped to 3.5 percent by the time LBJ left office. It climbed over 5 percent shortly after Nixon took office, and stayed there for 27 years, until Clinton brought it down to 4.5 percent early in his second term.
That same period – especially from the late forties into the early seventies – was the "golden age" of the United States. We sent men to the moon. We built our Interstate Highway system. We ended segregation in the South and established Medicare. In those days, a single wage earner could support an entire family on his wages. I grew up then, and I will tell you that life was good – at least for the many Americans insulated from the tragedy in Vietnam, as I was.
These facts provide a nice background to evaluate cheap-labor conservative claims like "liberals are destroying America."In fact, cheap-labor conservatives have howled with outrage and indignation against New Deal liberalism from its inception in the 1930's all the way to the present.
Just go there and read the rest!
Keith - there are actually two slang terms:
"Drinking the kool aid" is slang for blind acceptance of an ideology and comes from the Jim Jones reference. It's usually a negative connotation.
"kool kids" is a separate and sarcastic slang term to indicate an insider clique. The reference is from the teenager cliques found in high schools. AFAIK, it was started by Atrios on Eschaton in reference to the media whores (as noted by No Fundy)
I like the conflation of Kool-Aid and Kool Kidz. It works well.
Kool Aid Drinkers, and cool kids remind me in turn of the kids in the Kool Aid ads of yore yelling "Hey, Kool Aid!", and then Kool Aid comes bursting through the wall to refresh them all with a hearty "Ohhh yeahhh!" and everyone celebrates. Always paints an amusing picture in my head when I read these terms being used... Kool Aid bursts through the wall of the oval office, in Jim Jones shades and cravat, offering up some Crawford Cranberry Quencher (or should that be Cruncher) to the neocon cabal...
I dunno. These guys remind me more and more of the way the Hoover administration tried to spin the Great Depression -- Prosperity is Just Around the Corner, etc. But the current administration would like nothing better than to see the general public enslaved by low wages, or endentured by debt. Anythning to help that 1% line the lining of their pockets a little more...
You know, David - Kool Aid Kidz does have a ring to it ...
>But honestly, what I don't understand is how >they can expect to do so while still pursuing >policies which make it HARDER to get re-elected.
Because they aren't going to let themselves lose. Expect thug violence, massive electoral fraud, and at least one dead Democratic candidate next year.
And unless we don't accept those facts, and take direct action to prevent them, we're going to have Bushes, looting, and war for the rest of this century.
Prediction for tomorrow's economic figures:
Official: 7%
Actual: 15%
Actual including "underemployed": 30%
I hear there's some minor scandal involving the three Secretaries, a hotel room, and a mudshark.
Bush seems to value cheerleading abilities above all else in his economic team. This is all very reminiscent of O'Neill and Lindsey.
While we can accept deficits while the economy is weak, there has to be a recognition that something must be done about them at some point. But the Central Dogma of Republican economics will prevent this from ever being done until we get a
president from the Party of fiscal responsibility.
Bush is pushing tax cuts and increasing so-called defence commitments not to stimulate the economy but to kill any social expenditures (the so-called welfare state but the US is far from it…
Ultimately, with the states going broke too, any poor person will have to go to some faith-based charity? and listen to some quasi-religious harangue before being helped.
Back to the MIddle Ages… The only difference is that the right-wing evangelists will take the place of the Catholic Church.
Economic growth picks up speed
Fed Chairman Alan Greenspan and private economists believe the economy will stage a material rebound in the second half of this year. President Bush’s tax cuts along with near rock-bottom short-term interest rates should help out on that front, economists say. Some are predicting growth in the second half in the range of a 3.5 percent to 4 percent rate.
Analysts believe the combination of lower borrowing costs and fatter paychecks and other tax incentives might spur consumers and businesses to spend and invest more.
Of course this is all conjecture, but it looks the tax cuts will be good for the economy.
As was mentioned by Thomas Frank in a great piece in Harper's recently, one also has to realize the bizarre terms under which economic "growth" is understood in our wonderful world of tomorrow: lawyer fees, doctor bills, and prison construction all making up rather substantial parts.
A great individual stimulus for the economy would be to become horribly injured on the job and sue the crap out of your employer while being forced to use life-support apparatus 24/7.
Or building a criminal empire in a city in the American West to produce low-level drug-users that can be constantly shunted into the growing private prison industry.
So it's good to look at the specifics as well.
Niky,
I'm not sure where you got that info, but hows about this from the article:
... consumers ratcheted up such spending on “durable” goods in the second quarter by a whopping 22.6 percent.
or this ...
Businesses, which cut spending on equipment and software in the first three months of this year, boosted such investment in the second quarter at a sizable 7.5 percent rate
or this...
And, after six straight quarters of slashing spending on new plants, office buildings and other structures, businesses boosted this spending by 4.8 percent in the second quarter
Among these the article also mentions defense spending (I'm sure someone here is going to jump on this), and the housing market.
You're right lenny,
WASHINGTON (Reuters) - The biggest surge in defense spending since the Korean War era helped drive U.S. economic growth ahead at a surprisingly brisk 2.4 percent annual clip in the second quarter, the Commerce Department (news - web sites) said on Thursday
For a bunch of supply-siders, this sure seems like Keynesian economic policy to me.
lenny writes: "Some are predicting growth in the second half in the range of a 3.5 percent to 4 percent rate."
But not Greenspan. He recently said he didn't think we would hit 3.5 this year.
"Analysts believe the combination of lower borrowing costs and fatter paychecks and other tax incentives might spur consumers and businesses to spend and invest more."
It won't help very much if the businesses are investing in offshore jobs.
There will not be lower borrowing costs if the interest rates on US government paper continue to rise.
As they say "Where's the Beef? " (Meaning jobs.)
Fed Chairman Alan Greenspan and private economists believe the economy will stage a material rebound in the second half of this year. President Bush’s tax cuts along with near rock-bottom short-term interest rates should help out on that front, economists say. Some are predicting growth in the second half in the range of a 3.5 percent to 4 percent rate.
Analysts believe the combination of lower borrowing costs and fatter paychecks and other tax incentives might spur consumers and businesses to spend and invest more.
I seem to remember an old rhyme -- something about a slip between the cup and the lip ...
> I hear there's some minor scandal involving the three Secretaries, a hotel room, and a mudshark.
Boy that kind of scandal would go over like a lead balloon with the media. You'd think anyone involved in a scenario like that would have the Hammer of the Gods come down on them. I mean, it's been a long time since I rock and rolled, but you'd have to be a fool in the rain to miss the implications of that story.
So, `splain this to me: The gov't. has to sell a whole lot more debt. This will necessarily push up yields. This will in turn make economic recovery more difficult, principally because borrowing will be discouraged. And, as a result of the continued failing economy, George W. Bush's re-election will become much, much more difficult.
Now, I understand that Bushco's motivation for pursuing these economic policies is inspired by a radical crony capitalism. However, I also understand that Bush probably wants to remain President and the Republicans want to remain in power.
But honestly, what I don't understand is how they can expect to do so while still pursuing policies which make it HARDER to get re-elected. I mean, if they are satisfied with four years, they can lop off a lot of taxes and make life difficult for future Presidents for years to come (as they inherit monster deficits).
My only answer is that Karl Rove is either so deluded or so power-mad that he thinks he can truly dupe the American people. Is this correct? Because this is a very weak & risky plan.