Mish's Global Economic Trend Analysis

Is this a "Quasi Recession" or simply a "Recession"?
Layoffs Gut East St. Louis Police Force
75% Say Free Markets Better Than Government Managed Economy, Politicians Disagree

Is this a "Quasi Recession" or simply a "Recession"?

Posted: 01 Aug 2010 05:52 PM PDT

Alan Greenspan is back mincing words. The big difference since Greenspan left the Fed is that his words are now understandable. It's a huge improvement.

Please consider Greenspan Sees Quasi Recession

The dollar traded near its weakest since November against the yen on signs the U.S. recovery is losing momentum and after Former Federal Reserve Chairman Alan Greenspan said the slowdown feels like a "quasi recession."

The U.S. economy might contract again if home prices decline, Greenspan said in an interview on NBC's "Meet the Press" yesterday. "We're in a pause in a recovery, a modest recovery, but a pause in the modest recovery feels like a quasi- recession," he said.

Fed Chairman Ben S. Bernanke will speak today on "Challenges for the Economy and State Governments" in Charleston, South Carolina.

Recession, Quasi Recession, or Quasi Recovery?

I believe the word "recession" fits the bill better than the term "quasi recession". Of course, this all depends on your definition of recession as well as the meaning of "quasi". A quick dictionary check of "quasi" shows the meaning is "resembling; seeming;"

This sure does seem like a recession. However, please note that the NBER has still not proclaimed the end of the recession that started in 2007. Thus, it is quite likely that the US is still in recession and "quasi" needs to be dropped.

At least Greenspan minced words in the proper direction. For example "Quasi Recovery" would mean something that "seems like a recovery" even though it isn't.

This sure does not "seem like" a recovery, for the simple reason it isn't, at least in any practical sense, regardless of what the NBER may decide. However, we did have a recovery on Wall Street, amidst a series of high-fives, but Main Street America has not benefited much it at all.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Layoffs Gut East St. Louis Police Force

Posted: 01 Aug 2010 11:14 AM PDT

Inquiring minds note that East St. Louis, Illinois is in such dire financial straits that massive layoffs in its police force are necessary. East St. Louis is a poor crime-ridden city and the union is up in arms.

Please consider Layoffs to gut East St. Louis police force

At a raucous special City Council meeting, East St. Louis Mayor Alvin Parks announced that the city will layoff 37 employees, including 19 of its 62 police officers, 11 firefighters, four public works employees, and three administrators. The layoffs take effect on Sunday.

"I want our citizens to know we have some of the bravest police officers and firefighters in the country," Parks said. "But we don't have the money to pay them. We have to have fiscal responsibility."

City officials wanted police and fire unions to accept a furlough program that would have required employees to take two unpaid days in each twice monthly pay period. If accepted, emergency responders would have seen a pay cut of about 20 percent for the rest of the year.

Parks said the two sides couldn't reach an agreement. On Friday, he stared at a standing-room only crowd and told his emergency response chiefs words they didn't want to hear: "Tell your workers to start packing their things."

The news spurred shouts from the crowd. "The blood is on your hands," yelled Michael Hubbard, an East St. Louis police officer.

Micheal Hubbard, if any blood is spilled over this, it is on the union's hands, including yours. Only idiots do not understand the budget constraints.

That aside, East St. Louis Mayor Alvin Parks is taking the wrong approach. Instead of layoffs, the city should outsource the entire force to the local sheriffs' association, declare bankruptcy, or better yet, both.

Where is the mayor's response?

On Friday, the city approved a proposal to defer bond payments until next year in order to free up $500,000.

"Next year is a different situation," Mayor Parks said.

The simple fact of the matter is the mayor is incompetent to propose such preposterous can-kicking measures.

What's worse is the union does not care how much blood is spilled as long as its senior officers get paid. Let's do the math. 19 layoffs out of a force of 62 is a massive 30+% layoff. Where is the sense of comradeship? Where is the share the pain fellowship? The union is willing to toss 30% of its membership to the dogs. That's what this has come down to.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

75% Say Free Markets Better Than Government Managed Economy, Politicians Disagree

Posted: 01 Aug 2010 01:58 AM PDT

Rasmussen has an interesting poll that caught my eye last week regarding the free market economy. Please consider 75% Say Free Markets Better Than Government Management of Economy, Political Class Disagrees.

A new Rasmussen Reports national telephone survey finds that 75% of Likely Voters prefer free markets over a government managed economy. Just 14% think a government managed economy is better while 11% are not sure. These figures have changed little since December.

Polling released earlier this week showed that Americans overwhelmingly believe that more competition and less regulation is better for the economy than more regulation and less competition.

Not surprisingly, America's Political Class is far less enamored with the virtues of a free market. In fact, Political Class voters narrowly prefer a government managed economy over free markets by a 44% to 37% margin. However, among Mainstream voters, 90% prefer the free market.

Outside of the Political Class, free markets are preferred across all demographic and partisan lines. This gap may be one reason that 68% of voters believe the Political Class doesn't care what most Americans think. Fifty-nine percent (59%) are embarrassed by the behavior of the Political Class.

If we have all these free-market believers, how the heck do we keep electing politicians who believe in anything but free markets?

For example, president Obama is the worst combination possible of socialist, corporatist, and war-monger possible. Clearly he does not believe in a free market. However, he had a very catchy message "Change You Can Believe In".

Where was the change?

Then again, please remember he never promised change, just change you could believe in. People believed. However, the few changes were all for the worse.

That still does not explain how Congressional anti-free market clowns keep getting elected if the public wants something else.

Throw the Bums Out - But Not My Bum

Caroline Baum offers one possible answer in Throw the Bums Out as Long as My Bum Stays Put

Everywhere you turn, anti-incumbent sentiment is on the rise.

You can see it in opinion polls, where six in 10 Americans, the highest ever, say most members of Congress don't deserve to be re-elected, according to a June 11-13 Gallup survey.

You can see it in primary ballots, where long-serving lawmakers are being booted in favor of Tea Party candidates and other outsiders.

And you can see it at town meetings, at social gatherings and on talk radio, where ordinary Americans are eager to voice their discontent with the culture in Washington.

In fact, the only place you probably won't see it is at the bi-annual congressional elections. Incumbency, it turns out, is the best credential for winning an election.

In the House of Representatives, the incumbency rate has averaged 93.3 percent since 1964, according to the Center for Responsive Politics, a non-partisan independent research group tracking money in politics. It dipped below 90 percent only five times in the last 23 elections. The low was 85 percent in 1970.

Devil I Know

Even revolutions don't produce a dramatic shake-up in the composition of the House of Representatives. The Reagan Revolution of 1980 returned 91 percent of House incumbents to their seats. The Republican Revolution of 1994 saw the GOP pick up 54 seats and take control of both houses of Congress for the first time in 40 years. Even then 90 percent of House incumbents were re-elected.

What happens to all that angst when Americans walk into the voting booth on alternate Novembers and pull the lever for 16- term Congressman Peter Porkbarrel instead of Ida Unknown? In some cases, people never make it to the polls. Voter turnout in the U.S. since 1960 has averaged 55 percent at presidential elections and 40 percent in off-year elections, well below the 75 percent to 80 percent typical of most democracies.

Those who make it to their polling place often have limited options. Many incumbents run unopposed. And if there is somebody challenging the incumbent, "that somebody is invisible, lacks credentials and isn't an appealing alternative," says Stuart Rothenberg, editor and publisher of the Rothenberg Political Report. "It's not really a choice."

In an April Gallup poll, 28 percent of registered voters, the lowest on record, said members of Congress deserved to be re-elected. Forty-nine percent said their own member was worthy. (Translation: Throw the bums out, but spare my bum, at least until he brings home the funds for that civic center.)

Campaign Contribution Bribes

Baum's "bum-analysis" is correct. However, there are other reasons too, notably campaign contributions.

Businesses and public unions give hundreds of millions of dollars to politicians who will vote how they are paid to vote. Indeed, incumbents have a huge head start in ~~fund raising~~ bribe collection activities. This is why campaign finance reform and lobby reform is desperately needed, and exactly why it won't happen.

Topping that off, the incumbent gets free staff, free news mailings, etc. "Free" means at taxpayer expense of course.

Dumb and Dumber Choices

As to why election choices frequently appear to be between dumb and dumber, please bear in mind that corporations frequently bribe the incumbent's opponents as well, just in case.

The result is that is often hard to tell much difference between the candidates on major things like the economy. Frequently the only major differentiation between candidates is on lightening-rod issues like abortion. The banks and major corporations could not care less about such issues, so without hot and heavy money telling the candidates how to vote, energetic mudslinging surfaces.

Gerrymandering

Finally, many Congressional districts are so Gerrymandered on the basis of race, nationality, etc. that it is nearly impossible to defeat the incumbent. In such cases, there may be genuine political differences but no chance in hell of doing anything other than returning the incumbent to office, no matter how bad the incumbent candidate might be.

In Illinois, voters continually reelect known crooks up to the point of conviction and jail sentencing. Is Illinois unique? Probably not.

Will It Be Different This Time?

Unfortunately, it's highly unlikely this election will be any different than the last.

However, there is sufficient voter anger to throw out enough incumbents, many who were elected on Obama coattails, that I believe Republicans will win the House and pick up enough seats in the Senate to sink any legislation Obama wants.

That would be a good thing, even if 90% of the bums deserving to be thrown out on their bums get reelected.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

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Mish's Global Economic Trend Analysis

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