Richie Nearsen
2010-08-08 18:09:33 UTC
VICTORIES come so fast for your president we can hardly keep track!
What next?
Forcing Mitch McConnell into a dunking booth filled with animal
urine? Headfirst?
Loading Image...
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"The anti-business president's pro-business recovery"
Op-Ed
Ezra Klein
Sunday, August 8, 2010; G01
This White House has "vilified industries," complains the U.S. Chamber
of Commerce. America is burdened with "an anti-business president,"
moans the Weekly Standard.
Would that all presidents were this anti-business: According to the
St. Louis Federal Reserve, corporate profits hit $1.37 trillion in the
first quarter -- an all-time high. Businesses are sitting on about $2
trillion in cash reserves. Business spending jumped 20 percent last
quarter and is up by 13 percent against 2009. And the Obama
administration has cut taxes for small businesses and big ones alike.
Maybe the president could be anti-me for a while. I could use the
money.
The reality is that America's supposedly anti-business president has
led an extremely pro-business recovery. The corporate community has
recovered first, and best. The populist tone that conservative
magazines and business groups decry is partly in reaction to this: As
corporate America's position is getting better and better, the
recovery is looking shakier and shakier. Unemployment is high. Housing
looks perilously close to a double dip. Job growth is weak. Businesses
aren't hiring. The 71,000 jobs the private sector added in July aren't
sufficient to keep up with population growth, much less cut into the
ranks of the unemployed.
That is the catch-22 of the recovery: Businesses will start hiring
when the economy recovers. And the economy will start to recover when
businesses start hiring.
Recently, it has been popular to blame the tension between
skyrocketing corporate profits and weak job growth on the White House
and the Hill -- hence the Chamber of Commerce and Weekly Standard
quotes. Something must have gone wrong, right? And it's probably
Washington's fault.
In fact, no: A look at the history of financial crises shows that our
slow, halting recovery is right on schedule and the business
community's caution is predictable.
Not all recessions are created equal. Recessions caused by financial
crises take a lot longer to dig out of than their more common cousins.
One is like the flu. The other, a car crash. When the flu goes away,
you're good. When a collision spins to a stop, that's when the long,
slow process of healing begins.
In "This Time is Different: Eight Centuries of Financial Folly,"
Carmen Reinhart and Kenneth Rogoff study every financial crisis of the
past 800 years. It's an exhaustive study, and its conclusions are
depressing for a country that believes itself exceptional even in its
suffering: We're not special.
If you consider unemployment, housing prices, government debt and the
stock market, Rogoff says, "the U.S. is just driving down the tracks
of a typical post-WWII deep financial crisis." In some areas, we're
even a bit ahead of the game: Economic output usually falls by 9
percent. We held the drop to 4 percent.
Even the unevenness of our recovery is predictable. "Housing and
employment come back much slower than equity and gross domestic
product," Reinhart says. GDP usually falls for two years and then
recovers. Equity can move even faster, which helps explain corporate
America's rapid revival. But employment tends to fall for five years.
And housing? That's usually a six-year slide.
So business may be back, but customers aren't. You can see this in a
recent survey that the National Federation of Independent Business --
a conservative small-business group -- conducted of its members:
Overwhelmingly, they said their "most important" economic problem is
slow or declining sales.
It's easier to understand, then, why only 6 percent said this was a
good time to expand. But that shouldn't obscure what is, in fact, sort-
of-good news (the frustrating stuff recoveries are made of):
Businesses can expand; they're just biding their time.
"If you're running a business, you can't start hiring on speculation,"
says Joseph Kasputys, chairman of IHS Global Insight. "You have to
wait until you see market signals that things are getting better. The
smart businesses are looking for the early signs so they get the first
advantage. They're ready to move."
That's a lot better than a world in which they have no capital and so
cannot move.
So what can we do to speed things along? More government stimulus --
either through direct spending or further tax cuts -- could offer some
quick help, but Senate Republicans won't allow anything large enough
to make much of an impact. The Federal Reserve could step into the
breach, but so far, it's been reluctant to do so. The Republicans want
to see the Bush tax cuts extended and Obama's health-care and
financial-regulation bills repealed, but none of that will make a big
short-term difference.
Instead, we're left with that frustrating old standby: time.
A financial crisis "is not something that policymakers can undo
quickly," Reinhart says. "If you look at the big, historic panorama,
deleveraging takes time. It's not pretty. That's not the answer people
want to hear, but these [recoveries] are lengthy."
So businesses are watching consumers, consumers are watching
businesses, and everyone is pointing at Washington. But given the
history of financial crises -- and in the absence of further
government intervention -- there's not much left to watch but the
clock.
http://www.washingtonpost.com/wp-dyn/content/article/2010/08/06/AR2010080606238.html
What next?
Forcing Mitch McConnell into a dunking booth filled with animal
urine? Headfirst?
Loading Image...
------------------------------------
"The anti-business president's pro-business recovery"
Op-Ed
Ezra Klein
Sunday, August 8, 2010; G01
This White House has "vilified industries," complains the U.S. Chamber
of Commerce. America is burdened with "an anti-business president,"
moans the Weekly Standard.
Would that all presidents were this anti-business: According to the
St. Louis Federal Reserve, corporate profits hit $1.37 trillion in the
first quarter -- an all-time high. Businesses are sitting on about $2
trillion in cash reserves. Business spending jumped 20 percent last
quarter and is up by 13 percent against 2009. And the Obama
administration has cut taxes for small businesses and big ones alike.
Maybe the president could be anti-me for a while. I could use the
money.
The reality is that America's supposedly anti-business president has
led an extremely pro-business recovery. The corporate community has
recovered first, and best. The populist tone that conservative
magazines and business groups decry is partly in reaction to this: As
corporate America's position is getting better and better, the
recovery is looking shakier and shakier. Unemployment is high. Housing
looks perilously close to a double dip. Job growth is weak. Businesses
aren't hiring. The 71,000 jobs the private sector added in July aren't
sufficient to keep up with population growth, much less cut into the
ranks of the unemployed.
That is the catch-22 of the recovery: Businesses will start hiring
when the economy recovers. And the economy will start to recover when
businesses start hiring.
Recently, it has been popular to blame the tension between
skyrocketing corporate profits and weak job growth on the White House
and the Hill -- hence the Chamber of Commerce and Weekly Standard
quotes. Something must have gone wrong, right? And it's probably
Washington's fault.
In fact, no: A look at the history of financial crises shows that our
slow, halting recovery is right on schedule and the business
community's caution is predictable.
Not all recessions are created equal. Recessions caused by financial
crises take a lot longer to dig out of than their more common cousins.
One is like the flu. The other, a car crash. When the flu goes away,
you're good. When a collision spins to a stop, that's when the long,
slow process of healing begins.
In "This Time is Different: Eight Centuries of Financial Folly,"
Carmen Reinhart and Kenneth Rogoff study every financial crisis of the
past 800 years. It's an exhaustive study, and its conclusions are
depressing for a country that believes itself exceptional even in its
suffering: We're not special.
If you consider unemployment, housing prices, government debt and the
stock market, Rogoff says, "the U.S. is just driving down the tracks
of a typical post-WWII deep financial crisis." In some areas, we're
even a bit ahead of the game: Economic output usually falls by 9
percent. We held the drop to 4 percent.
Even the unevenness of our recovery is predictable. "Housing and
employment come back much slower than equity and gross domestic
product," Reinhart says. GDP usually falls for two years and then
recovers. Equity can move even faster, which helps explain corporate
America's rapid revival. But employment tends to fall for five years.
And housing? That's usually a six-year slide.
So business may be back, but customers aren't. You can see this in a
recent survey that the National Federation of Independent Business --
a conservative small-business group -- conducted of its members:
Overwhelmingly, they said their "most important" economic problem is
slow or declining sales.
It's easier to understand, then, why only 6 percent said this was a
good time to expand. But that shouldn't obscure what is, in fact, sort-
of-good news (the frustrating stuff recoveries are made of):
Businesses can expand; they're just biding their time.
"If you're running a business, you can't start hiring on speculation,"
says Joseph Kasputys, chairman of IHS Global Insight. "You have to
wait until you see market signals that things are getting better. The
smart businesses are looking for the early signs so they get the first
advantage. They're ready to move."
That's a lot better than a world in which they have no capital and so
cannot move.
So what can we do to speed things along? More government stimulus --
either through direct spending or further tax cuts -- could offer some
quick help, but Senate Republicans won't allow anything large enough
to make much of an impact. The Federal Reserve could step into the
breach, but so far, it's been reluctant to do so. The Republicans want
to see the Bush tax cuts extended and Obama's health-care and
financial-regulation bills repealed, but none of that will make a big
short-term difference.
Instead, we're left with that frustrating old standby: time.
A financial crisis "is not something that policymakers can undo
quickly," Reinhart says. "If you look at the big, historic panorama,
deleveraging takes time. It's not pretty. That's not the answer people
want to hear, but these [recoveries] are lengthy."
So businesses are watching consumers, consumers are watching
businesses, and everyone is pointing at Washington. But given the
history of financial crises -- and in the absence of further
government intervention -- there's not much left to watch but the
clock.
http://www.washingtonpost.com/wp-dyn/content/article/2010/08/06/AR2010080606238.html