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« Obama's Georgia Eligibility Hearing Update | Main | Occupy vs TeaParty - A comparative summary »

03 February 2012


Douglas Keachie

And so George, would you say that this chart represents the coming divide between those with enough capital to invest it overseas and live off the income, and the rest, who will all be scrambling, with a very few exceptions, for what minimum wage jobs will still be left? I think the tipping point will be evidenced by a complete collapse of the fast food restaurants, and many other restaurants, as people have only enough money to by a $10 pound sack of potatoes, currently $1.99, soon to be just $19.95 plus shipping and handling.

The year we lived in Germany, 55-56, potatoes were bought by the pickup truck load, and dumped into the cellar through the same chute the coal went down. I had the job of cleaning out the bad ones. A family of five eats lots of potatoes.

George Rebane

DougK 241pm - not sure that the BOE model quite captures that "divide", because that would require interpretation (analysis into components) of the GDP growth represented. But your point is well taken.

As you play with the model, please notice how it captures the rock and the hard place in which making economic policy finds itself, not only in the US, but in all developed countries. Technology abetted productivity gains in the face of growing population and awkward public policies (e.g. minimum wages) is a daunting factor. There is no doubt that those who can work with and/or invest in such advancing technologies will pull away from those who are ill-served by our defunct public school systems.

Here's an example of people who very definitely will be left behind and desperately voting for any demagogue on a white horse.

Paul Emery

I won't argue your numbers since the chart is your design.

Today was good news for Obama with lower unemployment, good job creation and the DOW average being the highest in three years

Douglas Keachie

Here's an example of people who very definitely will be left behind and desperately voting for any demagogue on a white horse.

Yes, another sad case of parent(s) guardians, group homes, who send unmotivated and even demotivated students to school to slow down and even halt the educational processes altogether. It's a shame that some citizens are such poor parents, and it is quite possible that they are poor workers as well, and earn only a minimal amounts to provide for their households. It does seem to be an endless cycle, and I have no clue as to how to break it.

Brad Croul

Is the current "hokey way" different than the methodology used in determining employment/unemployment figures in years past?

If not, who cares?

Also, there are plenty of people working "under the table" around here, and elsewhere I am sure, and not just in the medical marijuana field (pun intended). How do you figure this into the calcs?

George Rebane

BradC 647pm - It's interesting to note that all commentators 'knowingly' answer their media hosts that the 'real unemployment' is somewhere around 15+%. No, I think your implication of hokey is correct, measuring unemployment is a political enterprise, and it was ever thus.

Medical or mob marijuana is just another aspect of the gray to black economy that burbles under every legal economy. I am told that in Nevada County this kind of agriculture is a very significant part of our economy and can be felt by all merchants when harvest time comes.

But the BOE model that I offer in this post is remarkable that in its simplicity it yet captures the vagaries of demographics, policy, and technology advance (in worker productivity). When you play with the inputs (blue numbers), you see how difficult it is to realistically reduce and maintain a low unemployment rate as it is reported. And almost all of this dynamic is beyond the prudent and purposive reach of politicians, who can only make things worse. The best answer IMHO is still to permit distributed knowledge and distributed control to rule - i.e. capitalism in minimally regulated markets.

Paul Emery


Your model works well in an regional earth based physical commodities market but I'm not sure than plays well in a global information based economy controlled by international corporations that have no direct connection to their customers or even the cultures they service. The mega bucksters achieve total control over the political process by unrestricted financial influence. What little shred of balance the average person can influence both economic and political then dissolves in the torrent of special interest money.

As I have stated before, the real purpose of government is to serve the ruling class that brings them to power. That's why there is so little difference between the Republicans and Democrats.

Deep inside it must be discouraging to see the lofty ideals of the Tea Party Movement dissolve in the flood of big money that is bringing Romney to the front. The Tea Party was the opening act for the big money takeover when it had to be done. It must have been fun while it lasted, thinking that mass movements with lofty ideals can make a difference.

The vicious attacks on Ron Paul, who actually believes in something and does not flinch or hesitate to offer an unpopular opinion are examples enough to show how threatening real change is to the establishment.

Romney, who believes in nothing is perfect for the times and will say anything to be elected and then do what he is told if in power, which is becoming less likely by the day.

billy T

Its always confusing figuring out the true unemployment rate. The economy created 250,000 jobs. Ok, but there are 870,000 more people working than in December. To answer a question posed by Mr. Steele in a similar column by Dr. Rebane (Employment 2020), the teen unemployment rose one tenth to 23.3%. Governments lost 15,000 jobs.

Russ Steele

More insight from Zero Hedge

Sick of the BLS propaganda? Then do the following calculation with us: using BLS data, the US civilian non-institutional population was 242,269 in January, an increase of 1.7 million month over month: apply the long-term average labor force participation rate of 65.8% to this number (because as chart 2 below shows, people are not retiring as the popular propaganda goes: in fact labor participation in those aged 55 and over has been soaring as more and more old people have to work overtime, forget retiring), and you get 159.4 million: that is what the real labor force should be. The BLS reported one? 154.4 million: a tiny 5 million difference. Then add these people who the BLS is purposefully ignoring yet who most certainly are in dire need of labor and/or a job to the 12.758 million reported unemployed by the BLS and you get 17.776 million in real unemployed workers. What does this mean? That using just the BLS denominator in calculating the unemployed rate of 154.4 million, the real unemployment rate actually rose in January to 11.5%. Compare that with the BLS reported decline from 8.5% to 8.3%. It also means that the spread between the reported and implied unemployment rate just soared to a fresh 30 year high of 3.2%. And that is how with a calculator and just one minute of math, one strips away countless hours of BLS propaganda.

You will find the charts and graphs HERE.

Russ Steele


You do not have a clue as to what the Tea Party is all about. I suggest that you attend some of the meetings and listen to the speakers before running off at the mouth about the Tea Party. The Tea Party Patriots have far loftier goal than the next Presidential election. Change is not going to happen in one generation, it will take several, but we have a plan and a set of goals. Change starts local and moves forward up the chain, a generation at a time. You and I will not be around to enjoy the benefits of this movement, but my grandkids will.

George Rebane

PaulE 912pm - The BOE model actually operates within the context you are concerned about because it just applies growth rates to macro parameters that are in the range which have already operated within the global environment. But, of course, you are right in the implication that there are other parameters that are not directly considered like tax rates, federal borrowing, quantitative easing, and finally federal spending as a fraction of GDP.

Re the Tea Party - I see no "dissolving" of the movement's "lofty ideals". The ideals of constitutionality, fiscally prudent limited government, capitalism in minimally regulated markets, and individual liberty are indeed lofty and widely held ideals which are distributed very low (grass roots) and broadly in the American food chain. Adherence to such American basics is not much affected by what amounts of cash the political parties raise and spend. But I do understand that the opposite view is a fervent hope of the progressives.

billy T

All in all it was good news today. Some have confused corporate revenues with corporate profits. Profits are up cause companies have figured out how to cut costs and deal with fewer employees. You have heard it a millions times, how the 1% and greedy corporations are sitting on mountains of cash. That's true. But companies are not going to start hiring, make massive investments in equipment (which creates jobs), fixed assets such as new plants, and other expansion outlays until the consumer starts consuming. The consumer won't start consuming until the consumer confidence goes up when jobs are created. So, its a game of chicken. Consumers waiting for hiring to pick up and businesses waiting for demand to pick up. Who will blink first? Think the consumer will go first, tired of holding back and looking for any excuse to spend, spend, spend. But, the problem with consumer spending (70% of the economy) is that the more they spend, the more they need their disposable income to increase. Reminds me of those living off the credit card. The more they charge, the more they need an increase in income to pay the rising costs of the credit card debt and increasing minimum payments. Kinda like our government. They spend more hoping to get an increase in revenue. Does not work that way. Glad the private sector is showing some green sprouts.

Paul Emery

George, Russ

If you scribe the Republican Party as an agent for meaningful change you have to be disappointed at the predictable ascension of Romney as the Lancelot of the Republican Party.

To the extent that you submit that the most important priority of the moment is to defeat Obama you compromise beyond acceptance the lofty ideals of the Tea Party and become a manageable legion of the Republican Party. Historically there is little difference between Obama and Romney they are more like interchangeable players that could be on either team.


Looking at the Tea Party and their dedication to Constitutional values I am disappointed as to the apparent dismissal of Ron Paul who more than any other Republican candidate supports their stated values. If the Tea Party represents any meaningful proportion of the Republican party why then does Ron Paul only receive around 15% support at best. Hypocrisy or just natural born Republicans coming home when they are called.

Douglas Keachie

Green seems to work OK in Switzerland.

billy T

Russ, you might find these graphs interesting

George Rebane

PaulE 1124pm - we seem to be talking past each other again. The TPP does not endorse any candidates - that seems to be a very illusive point.

Whether or not I believe that Romney is the best the Republicans can do, I don't believe that Obama and Romney are anywhere near each other (Romneycare withstanding) in overall ideology.

Russ Steele


You might find some insight to the Tea Party in this article at the American Thinker Tea Party Not Monolithic By Mark A. Skoda

Here are some excerpts:

During the 2010 election cycle, we saw a tsunami that delivered the House of Representatives to the Republican Party.  The Tea Party movement certainly had a great deal to do with that result through the energy and the activism that resulted from the 2009 protests, town halls, and of course the 9/12 march on D.C.  However, according to a detailed analysis of the results by Pew Research, it was the independents who delivered the decisive win to the Republicans.

The research narrative by Pew pointed this fact out:

The proportion of self-described conservative voters increased by nearly a third from 2006 -- from 32% to 42% -- and is the highest percentage of conservative voters in the past two decades.  However, the single biggest factor in the GOP's victories was its striking gain among political independents. By 56% to 37%, more independents voted for the Republican candidate this year; four years ago, independents favored the Democrat by nearly an identical margin (57% to 39%). And just two years ago, Barack Obama won the votes of independents (by 52% to 44%) on his way to the White House.

And there was this insight:

In the end, you can disagree with the numbers, ignore the data, and be "mad as hell."  But the Tea Party movement is clearly not a monolithic movement.  As Senator Jim DeMint said in his interview with S.E. Cupp when asked if he thinks that the Tea Party's credibility will be tested this election, "[t]here is no one candidate that fits the Tea Party because the Tea Party comprises so many different small groups around the country -- from Libertarians to disaffected Democrats to conservatives and Independents."

You will find in that diversity Ron Paul has some support, about 22%.

Douglas Keachie

The Tea Party is an ambiguous confederation of folks, and indeed they may not "endorse" anyone, but they collectively, with some variations in choice, sure as hell support a select few, and none of them are Democrats, to the best of my knowledge. Show me the identified Tea Party member who heartily endorse President (the winner) Obama, and I'll believe that the Tea Party doesn't endorse anyone and is non political. It's walking and squawking like a duck, all the way to the polls and the SuperPacs and even the Susan G Komen Foundation, for Christ's sake, so forgive the rest of us for believing it to be partisan. we have damn good reason for our beliefs.

And by the way, relive the "glory days" of 2010 while you can. OWS will hit the polls this November, and you are just going to have to wait generations before your clever and smug "serve the rich" party gets what they want, if it ever happens at all, which I doubt.

Douglas Keachie

B of A in Lakeport California refuses to take $1380 USA cash for a mortgage payment. Our currency is no good?

George Rebane

DougK 907am - that sure sounds like some revolutionary anger coming through. No one denies that the tea party movement tends toward the conservative (non-progressive) side of politics, just as the unions (labor movement) is leftist.

(914am) Isn't there a federal law that says if cash payment (base metal coins excluded) for a debt is refused, then the debt is automatically considered to be paid? It would be interesting to follow this case to its resolution.

Douglas Keachie

Why Romney fataaly feel into the political candidates' safety net, and will never be able to get back up.

Christ_Safety_Net copy

Douglas Keachie

"fatally fell"

Douglas Keachie

I'm going to try this out at Chase, it would be fun to cash in at their expense. I have no doubt that this simply represents more tracking by MultiNats to identify places where they can pick up a few more sheckles, and to reduce risk when making refi's etc.

The "not endorsing anyone" stance reminds me much of the "no sex before marriage" stance that says everything except internal ejaculation is OK, which I had occasion to witness in my youth, when exploring various religious groups.

Russ Steele


President Obama does not support fiscal responsibility, constitutionally limited government, and free markets.

Obama has raised our debt by 4 trillion, that is not fiscal responsibility.

Obama has ignored the Constitution almost every day of his presidency with his unelected Czars, an EPA that violates our rights, and an Attorney General that cannot follow the laws of the land.

Obama does not support free markets in his administration. For example, they are trying to pick the winners and losers in alternative energy while shutting the fossil fuel industry and picking the cars we can drive. We are not longer free to choose.

Why would any Tea Party member endorse Obama?

Douglas Keachie

Russ, with opinions like those, why would anyone consider Tea Party members unbiased?

Douglas Keachie

As for not endorsing candidates, that is a total falsehood. Everyday across the nation, Tea Party members endorse checks supporting a particular subgroup of possible candidates. Let the money flow stop, and then, and only then, will Tea Party members not be "endorsing" anyone.

Paul Emery


I am of course aware that the TPP does not endorse candidates. Instead they individually support those that come closest to their principles. In that sense Romney historically and off his actual record in office should come in last place. Notice I said "historically". I'm not referring to the new Born Again Conservative Romney that is currently working his act in the Republican primaries.

Come on Russ. The Republicans for years have picked winners and losers. Look at the billions given to defense contractors with no bid contracts for example. How about the billions doled out to selected energy companies selecting some and ignoring others,

What I am trying to express here is that there is little significant difference between the Dems and Repubs They just package their message differently. When Ron Paul became a threat he was tossed out like dead flowers much like Ralph Nader was by the Dems. We can't have someone in power that actually has beliefs and values.

Do you believe for a minute that the big money behind Romney gives a rats ass about Tea Party ideals? Naw, they are just hedging their bet if Obama falters to make sure they have an acceptable partner in their endeavors.

George Rebane

PaulE 1108am - Agree that both Rs and Ds have passed legislation to support big companies. As often written in these pages, big corporations cannot exist without government help. The biggest difference is in how the Ds and Rs view the response of the economy to tax rates. And we've also done a few laps around that barn.

DougK 942am - no one has claimed that the TPP has no biases. We're are incontrovertibly biased to the principles I outlined in my 1021pm - guilty as charged and appreciate that you've taken notice.

Douglas Keachie

I thik the Republicans will lose, in a maneuver reminiscent of this one, as described by Joe Posnanski

"Manning handed the ball off to Bradshaw. He ran hard up the middle and it seems that it was at about the 2-yard line when he realized that nobody was trying to tackle him. And that's when Manning yelled at him to go down, and he tried to slam on the brakes, like Wile E. Coyote when he realizes that he's about to go over the cliff. You could almost hear the sound effects. Bradshaw managed to get his feet planted right about the goal line, and he put his hand down like he was going to take a knee. But his body was still going forward -- like those pro wrestlers who are thrown off the ropes -- and he turned and fell slowly backward, on to his behind, into the end zone. "A tushdown," comedian Billy Crystal would call it.

Read more:

In short, the Republicans will reluctantly start the economy just enough so that they lose. In fact, they may have already done so.

Douglas Keachie

"It is the best of times for the one percent, and the worst of time for everyone else"

In celebration of Dickens' birthday:

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