Permanent "Recession"

[prole]

Higher jobless rates could be new normal

By TOM RAUM, Associated Press Writer Tom Raum, Associated Press Writer Mon Oct 19, 2:29 pm ET

 

WASHINGTON – Even with an economic revival, many U.S. jobs lost during the recession may be gone forever and a weak employment market could linger for years.

 

That could add up to a "new normal" of higher joblessness and lower standards of living for many Americans, some economists are suggesting.

 

The words "it's different this time" are always suspect. But economists and policy makers say the job-creating dynamics of previous recoveries can't be counted on now.

 

Here's why:

 

• The auto and construction industries helped lead the nation out of past recessions. But the carnage among Detroit's automakers and the surplus of new and foreclosed homes and empty commercial properties make it unlikely these two industries will be engines of growth anytime soon.

 

• The job market is caught in a vicious circle: Without more jobs, U.S. consumers will have a hard time increasing their spending; but without that spending, businesses might see little reason to start hiring.

 

• Many small and midsize businesses are still struggling to obtain bank loans, impeding their expansion plans and constraining overall economic growth.

 

• Higher-income households are spending less because of big losses on their homes, retirement plans and other investments. Lower-income households are cutting back because they can't borrow like they once did.

 

That the recovery in jobs will be long and drawn out is something on which economists and policy makers can basically agree, even as their proposals for remedies vary widely.

 

Retrenching businesses will be slow in hiring back or replacing workers they laid off. Many of the 7.2 million jobs the economy has shed since the recession began in December 2007 may never come back.

 

"This Great Recession is an inflection point for the economy in many respects. I think the unemployment rate will be permanently higher, or at least higher for the foreseeable future," said Mark Zandi, chief economist and co-founder of Moody's Economy.com.

 

"The collective psyche has changed as a result of what we've been through. And we're going to be different as a result," said Zandi, who formerly advised Sen. John McCain, R-Ariz., and now is consulted by Democrats in the administration and in Congress,

 

Even before the recession, many jobs had vanished or been shipped overseas amid a general decline of U.S. manufacturing. The severest downturn since the Great Depression has accelerated the process.

 

Many economists believe the recession reversed course in the recently ended third quarter and they predict modest growth in the nation's gross domestic product over the next few years. Yet the unemployment rate is currently at a 26-year high of 9.8 percent — and likely to top 10 percent soon and stay there a while.

 

"Many factors are pushing against a quick recovery," said Heidi Shierholz, an economist at the labor-oriented Economic Policy Institute. "Things will come back. But it's going to take a long time. I think we will likely see elevated unemployment at least until 2014."

 

At best, many economists see an economic recovery without a return to moderate unemployment. At worst, they suggest the fragile recovery could lose steam and drag the economy back under for a double-dip recession.

 

"We will need to grind out this recovery step by step," President Barack Obama said earlier this month.

 

Obama and congressional Democrats are having a hard time agreeing on how to keep the recovery going and help millions of unemployed workers — short of another round of stimulus spending amid rising voter alarm over soaring federal deficits.

 

So far, they've been unable to win even a simple three-month extension of unemployment insurance for people in states with jobless rates above 8.5 percent.

 

The extension easily passed the House earlier this month but is bogged down in the Senate over disputes over which states would get the funds. Hundreds of thousands of people have already lost their benefits or are about to lose them.

 

The White House credits the president's $787 billion stimulus plan passed in February for keeping job losses from becoming even worse. Since Obama took office in January, the economy has lost 3.4 million jobs.

 

Republicans argue that the stimulus program has not worked as a job producer and is a waste of tax money. And last week, the U.S. Chamber of Commerce launched a multimillion advertising campaign to celebrate small business entrepreneurs — and to argue that further government intervention will not spur permanent job growth.

 

Chamber leaders called for creation of more than 20 million new private-sector jobs over the next decade, saying it's needed to replace jobs lost in the recession and to keep pace with population growth.

 

"The government can support a few jobs in the short-run" while free enterprise is the only system that can create 20 million of them, said Thomas Donohue, the chamber president.

 

To many economists, such a goal seems unreachable given today's altered economic landscape.

 

"It's a new normal that U.S. growth is going to be anemic on average for years. Right now, the prospect is bleak for anything other than a particularly high unemployment rate and a weak jobs-creating machine," said Allen Sinai, president of Decision Economics Inc. He says he doubts that unemployment will dip below 7 percent anytime soon.

 

Many economists consider a jobless rate of 4 to 5 percent as reflecting a "full employment" economy, one in which nearly everyone who wants a job has one. After the 2001 recession the rate climbed to 5.8 percent in 2002 and peaked at 6.3 percent in 2003 before easing back to 4.6 percent for 2006 and 2007.

 

Will unemployment ever get back to such levels?

 

"I wouldn't say never. But I do think it's going to be a long time," said Bruce Bartlett, a former Treasury Department economist and the author of the book "The New American Economy: The Failure of Reaganomics and a New Way Forward."

 

"The linkage between growth in the economy and growth in jobs is not what it was. I don't know if it's permanently broken or temporarily broken. But clearly we are not seeing the sort of increase in employment that one would normally expect," said Bartlett.

[G-spotter]

90% of all life went extinct in the great Permian die-off, but those ecosystem niches are full today...

[G-spotter]

[KaskadskyjKozak]

 

Good work Obama!

[RuMR]

he didn't create this mess...your buddy bushie left it this way....'member??

[KaskadskyjKozak]

he didn't create this mess...your buddy bushie left it this way....'member??

 

but Barry promised change and the audacity of hope...

[kevbone]

Good work Obama Bush!

 

All fixed for ya!

[prole]

Good work Obama!

Ha! I can only imagine the alternate universe where you're blaming McCain for everything that's happening while everyone is yelling back that it was Bush's fault. God loves a moron, Kojak.

[letsroll]

we tried put off recession for so long by keeping intrest rates low creating "easy" money. well guess what that "easy" money was not so easy. With that easy money we decided we wanted to become a society that produces services not actual products. If we did not have that easy money this recession might not have happened and we would have more of the tools to get us out.

[whirlwind]

um well u almost had it..high intrest rates, such as the ones on credit cards and ajustable home loans, combined with the big corporation moving all our prodution over sea to get around labor and enviormental laws= people with a shit load of debt they cant pay, due to intrest being 90+% of thier monthy payments and no place they can go to work.

 

low intrest means people pay off there loans faster and the banks make alot less money. if banks and lenders would invest in prodution rather than feeding off peoples witless spending sprees we would all be ok, cept of cource the banks wouldnt have made as much money.

[olyclimber]

i thought i was because we were allowing gay people to get married, having abortions, and other stuff really bad stuff, and god got pissed?????

[tvashtarkatena]

Haven't you heard? Increased sexual freedom only thickens our chains.

[glassgowkiss]

Good work Obama!

yes, good work. with your front runner mcsame and palin at the helm the unemployment would be most likely about 20%.

[glassgowkiss]

BTW there are almost 3 million jobs to fill up. Of course uneducated populous (supporting republifucks) doesn't have educational requirements to fill them. good job bush and your education policies- cut more funding to community colleges!

[pink]

i was thinkin if i borrow some money for my business i should be able to create some jobs, then make this (euro dork above me) pay's it back....

Edited November 3, 2009 by pink

[glassgowkiss]

i was thinkin if i borrow some money for my business i should be able to create some jobs, then make this (euro dork above me) pay's it back....

Face the facts- these euro-dorks and chinese are actually giving this country the cash. so let's hope they don't call on these loans to soon, as this crisis would look like a child play. btw- you just described wall street of the past 10 years.

[letsroll]

Yes they could call in the loans but really they can't do that. That would tank them as well as us. What is saving the USA is the fact that we are the worlds reserve currency. But due the poor dollar calls for a basket of currency are getting louder and louder.

 

Face it. USA as number #1 is not going to last long.

[glassgowkiss]

Yes they could call in the loans but really they can't do that. That would tank them as well as us.

Face it. USA as number #1 is not going to last long.

 

That logic works only with electable governments. However China doesn't give a fuck about people, or how well off they are, so as soon they see we can't pay back it's over.

[bradleym]

all together now!

 

[video:youtube]

[tvashtarkatena]

the bums out or...er...at least a new bum in.

[prole]

Face it. USA as number #1 is not going to last long.

 

Stick a fork in it.

 

America the Superpower Melts Down

American preeminence is disappearing 15 years early. Get ready to be an ordinary nation

 

By Michael Klare

Nov. 02, 2009 |

 

...In November 2008, the National Intelligence Council (NIC), an affiliate of the Central Intelligence Agency, issued the latest in a series of futuristic publications intended to guide the incoming Obama administration. Peering into its analytic crystal ball in a report titled "Global Trends 2025," it predicted that America's global preeminence would gradually disappear over the next 15 years -- in conjunction with the rise of new global powerhouses, especially China and India. The report examined many facets of the future strategic environment, but its most startling, and news-making, finding concerned the projected long-term erosion of American dominance and the emergence of new global competitors. "Although the United States is likely to remain the single most powerful actor [in 2025]," it stated definitively, the country's "relative strength -- even in the military realm -- will decline and U.S. leverage will become more constrained."

 

That, of course, was then; this -- some 11 months into the future -- is now and how things have changed. Futuristic predictions will just have to catch up to the fast-shifting realities of the present moment. Although published after the onset of the global economic meltdown was under way, the report was written before the crisis reached its full proportions and so emphasized that the decline of American power would be gradual, extending over the assessment's 15-year time horizon. But the economic crisis and attendant events have radically upset that timetable. As a result of the mammoth economic losses suffered by the United States over the past year and China's stunning economic recovery, the global power shift the report predicted has accelerated. For all practical purposes, 2025 is here already.

 

Many of the broad, down-the-road predictions made in "Global Trends 2025" have, in fact, already come to pass. Brazil, Russia, India and China -- collectively known as the BRIC countries -- are already playing far more assertive roles in global economic affairs, as the report predicted would happen in perhaps a decade or so. At the same time, the dominant global role once monopolized by the United States with a helping hand from the major Western industrial powers -- collectively known as the Group of 7 (G-7) -- has already faded away at a remarkable pace. Countries that once looked to the United States for guidance on major international issues are ignoring Washington's counsel and instead creating their own autonomous policy networks. The United States is becoming less inclined to deploy its military forces abroad as rival powers increase their own capabilities and non-state actors rely on "asymmetrical" means of attack to overcome the U.S. advantage in conventional firepower.

 

No one seems to be saying this out loud -- yet -- but let's put it bluntly: less than a year into the 15-year span of "Global Trends 2025," the days of America's unquestioned global dominance have come to an end. It may take a decade or two (or three) before historians will be able to look back and say with assurance, "That was the moment when the United States ceased to be the planet's preeminent power and was forced to behave like another major player in a world of many competing great powers." The indications of this great transition, however, are there for those who care to look.

 

Six way stations on the road to ordinary nationhood

 

Here is my list of six recent developments that indicate we are entering "2025" today. All six were in the news in the last few weeks, even if never collected in a single place. They (and other events like them) represent a pattern: the shape, in fact, of a new age in formation.

 

1. At the global economic summit in Pittsburgh on Sept. 24 and 25, the leaders of the major industrial powers, the G-7 (G-8 if you include Russia), agreed to turn over responsibility for oversight of the world economy to a larger, more inclusive Group of 20 (G-20), adding in China, India, Brazil, Turkey and other developing nations. Although doubts have been raised about the ability of this larger group to exercise effective global leadership, there is no doubt that the move itself signaled a shift in the locus of world economic power from the West to the global East and South -- and with this shift, a seismic decline in America's economic preeminence has been registered.

 

"The G-20's true significance is not in the passing of a baton from the G-7/G-8 but from the G-1, the U.S.," Jeffrey Sachs of Columbia University wrote in the Financial Times. "Even during the 33 years of the G-7 economic forum, the U.S. called the important economic shots." Declining American leadership over these last decades was obscured by the collapse of the Soviet Union and an early American lead in information technology, Sachs also noted, but there is now no mistaking the shifting of economic power from the United States to China and other rising economic dynamos.

 

2. According to news reports, America's economic rivals are conducting secret (and not-so-secret) meetings to explore a diminished role for the U.S. dollar -- fast losing its value -- in international trade. Until now, the use of the dollar as the international medium of exchange has given the United States a significant economic advantage: It can simply print dollars to meet its international obligations while other nations must convert their own currencies into dollars, often incurring significant added costs. Now, however, many major trading countries -- among them China, Russia, Japan, Brazil and the Persian Gulf oil countries -- are considering the use of the euro, or a "basket" of currencies, as a new medium of exchange. If adopted, such a plan would accelerate the dollar's precipitous fall in value and further erode American clout in international economic affairs.

 

One such discussion reportedly took place this summer at a summit meeting of the BRIC countries. Just a concept a year ago, when the very idea of BRIC was concocted by the chief economist at Goldman Sachs, the BRIC consortium became a flesh-and-blood reality this June when the leaders of the four countries held an inaugural meeting in Yekaterinburg, Russia.

 

The very fact that Brazil, Russia, India and China chose to meet as a group was considered significant, as they jointly possess about 43 percent of the world's population and are expected to account for 33 percent of the world's gross domestic product by 2030 -- about as much as the United States and Western Europe will claim at that time. Although the BRIC leaders decided not to form a permanent body like the G-7 at this stage, they did agree to coordinate efforts to develop alternatives to the dollar and to reform the International Monetary Fund in such a way as to give non-Western countries a greater voice.

 

3. On the diplomatic front, Washington has been rebuffed by both Russia and China in its drive to line up support for increased international pressure on Iran to cease its nuclear enrichment program. One month after President Obama canceled plans to deploy an anti-ballistic missile system in Eastern Europe in an apparent bid to secure Russian backing for a tougher stance toward Tehran, top Russian leaders are clearly indicating that they have no intention of endorsing strong new sanctions on Iran. "Threats, sanctions, and threats of pressure in the current situation, we are convinced, would be counterproductive," declared the Russian foreign minister, Sergey V. Lavrov, following a meeting with Secretary of State Hillary Clinton in Moscow on Oct. 13. The following day, Russian Prime Minister Vladimir Putin said that the threat of sanctions was "premature." Given the political risks Obama took in canceling the missile program -- a step widely condemned by Republicans in Washington -- Moscow's quick dismissal of U.S. pleas for cooperation on the Iranian enrichment matter can only be interpreted as a further sign of waning American influence.

 

4. Exactly the same inference can be drawn from a high-level meeting in Beijing on Oct. 15 between Chinese Prime Minister Wen Jiabao and Iran's first vice president, Mohammed Reza Rahimi. "The Sino-Iran relationship has witnessed rapid development as the two countries' leaders have had frequent exchanges, and cooperation in trade and energy has widened and deepened," Wen said at the Great Hall of the People. Coming at a time when the United States is engaged in a vigorous diplomatic drive to persuade China and Russia, among others, to reduce their trade ties with Iran as a prelude to toughened sanctions, the Chinese statement can only be considered a pointed rebuff of Washington.

 

5. From Washington's point of view, efforts to secure international support for the allied war effort in Afghanistan have also met with a strikingly disappointing response. In what can only be considered a trivial and begrudging vote of support for the U.S.-led war effort, British Prime Minister Gordon Brown announced on Oct. 14 that Britain would add more troops to the British contingent in that country -- but only 500 more, and only if other European nations increase their own military involvement, something he undoubtedly knows is highly unlikely. So far, this tiny, provisional contingent represents the sum total of additional troops the Obama administration has been able to pry out of America's European allies, despite a sustained diplomatic drive to bolster the combined NATO force in Afghanistan. In other words, even America's most loyal and obsequious ally in Europe no longer appears willing to carry the burden for what is widely seen as yet another costly and debilitating American military adventure in the Greater Middle East.

 

6. Finally, in a move of striking symbolic significance, the International Olympic Committee (IOC) passed over Chicago (as well as Madrid and Tokyo) to pick Rio de Janeiro to be the host of the 2016 summer Olympics, the first time a South American nation was selected for the honor. Until the Olympic vote took place, Chicago was considered a strong contender, especially since former Chicago resident Barack Obama personally appeared in Copenhagen to lobby the IOC. Nonetheless, in a development that shocked the world, Chicago not only lost out, but was the city eliminated in the very first round of voting.

 

"Brazil went from a second-class country to a first-class country, and today we began to receive the respect we deserve," said Brazilian President Luiz Inácio Lula da Silva at a victory celebration in Copenhagen after the vote. "I could die now and it already would have been worth it." Few said so, but in the course of the Olympic decision-making process the U.S. was summarily and pointedly demoted from sole superpower to instant also-ran, a symbolic moment on a planet entering a new age.

 

On being an ordinary country

 

These are only a few examples of recent developments that indicate, to this author, that the day of America's global preeminence has already come to an end, years before the American intelligence community expected. It's increasingly clear that other powers -- even our closest allies -- are increasingly pursuing independent foreign policies, no matter what pressure Washington tries to bring to bear.

 

Of course, none of this means that, for some time to come, the U.S. won't retain the world's largest economy and, in terms of sheer destructiveness, its most potent military force. Nevertheless, there is no doubt that the strategic environment in which American leaders must make critical decisions, when it comes to the nation's vital national interests, has changed dramatically since the onset of the global economic crisis.

 

Even more important, President Obama and his senior advisers are, it seems, reluctantly beginning to reshape U.S. foreign policy with the new global reality in mind. This appears evident, for example, in the administration's decision to revisit U.S. strategy on Afghanistan.

 

It was only in March, after all, that the president embraced a new counterinsurgency-oriented strategy in that country, involving a buildup of U.S. boots on the ground and a commitment to protracted efforts to win hearts and minds in Afghan villages where the Taliban was resurgent. It was on this basis that he fired the incumbent Afghan war commander, Gen. David D. McKiernan, replacing him with Gen. Stanley A. McChrystal, considered a more vigorous proponent of counterinsurgency. When, however, McChrystal presented Obama with the price tag for the implementation of this strategy -- 40,000 to 80,000 additional troops (over and above the 20,000-odd extra troops only recently committed to the fight) -- many in the president's inner circle evidently blanched.

 

Not only will such a large deployment cost the U.S. Treasury hundreds of billions of dollars it can ill afford, but the strains it is likely to place on the Army and Marine Corps are likely to be little short of unbearable after years of multiple tours and stress in Iraq. This price would be more tolerable, of course, if America's allies would take up more of the burden, but they are ever less willing to do so.

 

Undoubtedly, the leaders of Russia and China are not entirely unhappy to see the United States exhaust its financial and military resources in Afghanistan. Under these circumstances, it is hardly surprising that Vice President Joe Biden, among others, is calling for a new turn in U.S. policy, forgoing a counterinsurgency approach and opting instead for a less costly "counter-terrorism" strategy aimed, in part, at crushing al-Qaida in Pakistan -- using drone aircraft and Special Forces, rather than large numbers of U.S. troops (while leaving troop levels in Afghanistan relatively unchanged).

 

It is too early to predict how the president's review of U.S. strategy in Afghanistan will play out, but the fact that he did not immediately embrace the McChrystal plan and has allowed Biden such free rein to argue his case suggests that he may be coming to recognize the folly of expanding America's military commitments abroad at a time when its global preeminence is waning.

 

One senses Obama's caution in other recent moves. Although he continues to insist that the acquisition of nuclear weapons by Iran is impermissible and that the use of force to prevent this remains an option, he has clearly moved to minimize the likelihood that this option -- which would also be plagued by recalcitrant "allies" -- will ever be employed.

 

On the other side of the coin, he has given fresh life to American diplomacy, seeking improved ties with Moscow and approving renewed diplomatic contact with such previously pariah states as Burma, Sudan and Syria. This, too, reflects a reality of our changing world: that the holier-than-thou, bullying stance adopted by the Bush administration toward these and other countries for almost eight years rarely achieved anything. Think of it as an implicit acknowledgment that the U.S. is now descending from its status as the globe's "sole superpower" to that of an ordinary country. This, after all, is what ordinary countries do; they engage other countries in diplomatic discourse, whether they like their current governments or not.

 

So, welcome to the world of 2025. It doesn't look like the world of our recent past, when the United States stood head and shoulders above all other nations in stature, and it doesn't comport well with Washington's fantasies of global power since the Soviet Union collapsed in 1991. But it is reality.

 

For many Americans, the loss of that preeminence may be a source of discomfort, or even despair. On the other hand, don't forget the advantages to being an ordinary country like any other country: Nobody expects Canada, or France, or Italy to send another 40,000 troops to Afghanistan, on top of the 68,000 already there and the 120,000 still in Iraq. Nor does anyone expect those countries to spend $925 billion in taxpayer money to do so -- the current estimated cost of both wars, according to the National Priorities Project.

 

The question remains: How much longer will Washington feel that Americans can afford to subsidize a global role that includes garrisoning much of the planet and fighting distant wars in the name of global security, when the American economy is losing so much ground to its competitors? This is the dilemma President Obama and his advisers must confront in the altered world of 2025.--more here.

[Pete_H]

I predict by 2025 Americans will be moving to India to open corner convenience stores.

[letsroll]

LOL...that be about right.

[prole]

One of the better medium to long term analyses of what the future may hold for us.

 

The coming depression may reveal that the national economic statistics of the period of bubble economics were fictions, not wholly unlike those operative in the old Soviet system. Of course, the recurring crises of capitalism are supposed to be different from the terminal stages of non-capitalist civilizations and modes of production. Such social orders seem to have lacked capitalism’s distinctive capacity for creative destruction, for periodic renewal through downturns that liquidate inefficient conditions of production and life forms, opening up frontiers for the next round of expansion. In accordance with this pattern, nearly all commentators on today’s economic meltdown have assumed that this Schumpeterian tale of crisis and renovation will repeat itself in one form or another. But is it, in fact, inevitable that new phases of accumulation will emerge from the aftermath of what now promises to be an enormous and protracted shake-out? I would like to propose that this scenario of capitalist renewal is distinctly less likely than a long-term drift towards what the classical political economists used to call ‘the stationary state’ of civilization.

-- the rest

[KaskadskyjKozak]

 

New Left Review? You are a fucking clown.