Alan Blinder Fires First Shot Across QE3 Bow: Says We Need More Stimulus ...

Discussion in 'Wall St. News' started by ASusilovic, May 12, 2011.

  1. All the QEs in the world won't stimulate employment to the extent they hope. Our unemployeds have to compete with Chindia and illegal aliens.. plus the generous unemployment benefits given by the government.

    We are in America's financial "end game"..

    :mad: :mad:
     
  2. scat - It's even more obtuse... North American workers aren't just competing against workers from Foreign Countries.. they are competing against capital itself..

    What sane businessman is gonna to grow his earthbound, employee led business when he can stuff all his savings into the Markets?!? - high yield bonds, equities, commodities.. he can choose his poison and can get out by 4:30pm each day... no late nites.
     
  3. what is the most powerful impediment that prevents an unemployed American to get a job:

    1. Chinese/Indian competition
    2. illegal workers in US
    3. unemployment benefits
     
  4. I'm afraid that by the time they wake up to the fact that QE WILL NEVER WORK... we'll have so much inflation and currency debasement that we will be in dire straits.... probably terminal.

    :mad:
     
  5. zdreg

    zdreg

    Argentina deja vu
     
  6. The deficit and QE support 25 million jobs. That's the "band-aid". The heroin that's got America fooled everything's just great while shortly before, it's legs were blown off by a landmine.

    Cut off the heroin, and we wake up in a nightmare.

    If you go by Official Government numbers (which are horseshit), during the '08 meltdown, total GDP contraction from peak-to-trough was 3.3%.

    Total jobs lost during the recession, from peak-to-trough, was 6.5 million.

    So for each 100 basis point drop in GDP, 1.9 million jobs were lost.

    Now do the math and project forward.

    The deficit accounts for 10% of GDP.

    QE suppresses rates, which buoys the economy by at least a few hundred basis points.

    So the deficit + QE account for 13% of GDP, conservatively.

    1.9 million x 13 = 24.7 million jobs.

    Balance the budget and end QE tomorrow, and 24.7 million jobs go down the shitter.

    Bear in mind, that's nearly 4 TIMES WORSE than the 08' crash.

    Then consider the ripple effects in the private economy: real estate, financial, insurance, construction, retail, consumer goods, autos.

    Bare minimum, you're talking 20% GDP contraction = 38 million jobs.

    That's 6 TIMES worse than the "Great Recession" of 2008...!!!!!!

    See where this is going, folks?

    We are at The Precipice.

    Nobody actually knows how many jobs were lost from off-shoring because estimates don't account for the unprecedented borrowing and over-consumption that occurred during that same period. That 10 year credit orgy masked the true employment picture. That's why, at the time, off-shoring didn't seem so bad. Everybody spent far beyond their means which, on the surface, made up for the jobs lost to Chindia. Now private sector borrowing is maxed out. Public sector borrowing hits Greek-levels in 4-5 years. When QE and the deficit end, the curtain will be drawn back, the gaping maggot-infested wound exposed, and this Country will plunge into Anarchy.

    This is one of the greatest scams ever pulled.

    The reality is, when it's all said and done, America will be looking at a total employment loss of 40-50 million jobs, from today's levels. 22-25% GDP contraction. Huge swaths of the Country will be thrown to the dogs. Blood in the streets. It will be on par with Argentina. If there ever was a time to panic, this would be it. The situation is incredibly dire. Can't overstate that enough. Imo, I would buy farmland outside the Country and leave. America is not the place you want to be in 4-5 years. It will be a fucking disaster zone. Now remember back to 911. What did the Government do in the aftermath? Seized Rights for Security. Same shit next time, except worse. It all comes down to 2012. If Ron Paul doesn't win the nomination, and general election, get the fuck out.
     
  7. AK100

    AK100

    A28

    Good points and scary, well thought out. Let's hope you're wrong, but the trouble is, even if you're just 25% right, a whole lot of crap is coming USA's way and in turn the rest of the civilised world.
     
  8. Thanks. And you're right, America is the economic engine of the World. And that engine is about to blow up. Unfortunately, it's simple economics.

    GDP = Private Consumption + Business Investment + Government Spending + Net Exports.

    Offshoring and the credit bubble decimated private consumption. The Government (and FED) stepped in to offset the black hole in consumption with borrow-and-spend policies. We can roughly deduce the decline in private consumption by the amount of Government spending needed to bring NFP/GDP back to equilibrium. We're now treading water with NFP/GDP and borrowing roughly 13-15% of GDP to do it. That means we lost around 13-15% of our GDP to offshoring and the credit collapse. That translates to around 25 Million jobs. And those 25 million are now only "employed" because the Government is tacking on 1.6 - 2 Trillion dollars a year to the National Debt and Fed Balance sheet. Which hits it's uncle point in 4-5 years. And that doesn't even consider ripple effects!

    In reality, there is no recovery. The recovery doesn't exist. The pathetic NFP gains are complete horseshit relative to the actual job losses suffered (~25 Million). If we end the deficit and QE, this illusion of a recovery will be exposed for what it really is and then the whole Country goes to shit. Hence more talk for QE3. They know if they don't roll over QE2, GDP will take a nice 3-5% haircut and we'll get another huge down-leg in employment, stocks, and foreclosures. Hence the equity and commodity selloff. What we need to see is a consumer-led recovery. That's what the Keynesians are waiting for. If we continue to spend 13% of GDP, but start getting bigger prints on NFP - like 200, 300, 400K, month on month, in full-time private sector - the Government can turn down the spigot just a tiny bit. TINY. But we're not getting that. It's been 3 years already, and I think we just got the first black print (non census related) a couple months ago. This is happening way, way too slowly. We don't have an infinite amount of time - OR MONEY - to sit around and pretend all the jobs we shipped off to China are coming back. The consumer will recover a bit - maybe we can drop the deficit down to 1 Trillion dollars a year - but not anytime soon! And employment will never recover to what it was. Time is running out. There is not much time left at all. We need to see HUGE EMPLOYMENT NUMBERS. MONSTROUS in the private sector. Bear in mind, a lot of the private sector employment losses during the collapse were offset by massive, concurrent Government hiring. So even the 6.5 million jobs lost is an understatement (1 Factory worker canned and 1 TSA employee hired = a wash). It's not going to happen. There is no way in hell it's going to happen barring some miracle. The mere fact alone America would dump 13% GDP overnight!!!! if we ended QE and the deficit TODAY, is proof enough. That's 4 TIMES the '08 contraction!!!!! We're in serious trouble. We need a fucking miracle. Like free energy, the telephone, the combustion engine.
     
  9. elon

    elon

    #10     May 13, 2011