Recession: The Sky is Not Falling

So we are in a recession ... What’s the big deal about that? This country goes into recession on an average of about every six years, and this one is right on schedule.

The biggest difference in this recession and past recessions is the Lame Stream Media (LSM), or perhaps the LEFTIST Media would be a better description since they have been in the tank with the Left for the better part of 15 years. All we have heard during this recession is DOOM and GLOOM, which we did not hear in any of the eleven (11) previous recessions this country has experienced since WW2. This time, the media has gone bonkers with left wing propaganda over this recession. If one actually takes time to look at the real raw numbers, this recession is actually a bit better than the earlier ones.

Now I’m not trained on the kinds of numbers the economists use to show just what makes a recession. And by the way, ninety-nine and forty-four one hundredths percent of our “leaders” aren’t either. Therefore, one could say that I know about as much as those in leadership in this country. If the truth were known, I may know a bit more since I am at least willing to do some reading rather than just taking some biased figures fed into the reports by those who want to spend a bunch of money to satisfy political debts and maintain power. I have read numbers from the WSJ, the NYT, and about a half dozen other business journals and magazines. And yeah, even that leftwing rag has posted some numbers, although they then covered up the real meaning with their typical doom and gloom. I tried to figure out a way to put them all into one nice list that would explain how this recession is a typical recession, not “the-sky-is-falling-and-we-are-going-into-depression-next-week” reports that we hear most of the time.

Then I ran across an article by Randall Hoven. Now I don’t know Randall Hoven from Jack, so I decided to see who Randall Hoven was. Is he an economist, a lawyer, or what? To my elation, I discovered that he is neither, which gave me a bit of hope that this guy might just be a smart guy who understand math a heck of a lot better than I. Yep, he does. The guy is an engineer, you know those guys who are plotters and never get in a hurry to do anything until they have the facts together. His education was impressive, at least to me. He has an M.S. in Systems Science & Mathematics, from Washington University, 1985, and before that he received his M.S. in Electrical Engineering, Johns Hopkins U., 1982, with honors. Not bad when it comes to arithmetic learning in my book. Anyhow he came up with some facts and figures that, I am happy to say, line up with a lot of other sources as well. In fact, he even furnished a list of his sources, which is more than the so-called leadership has furnished us in their attempt to sell us on this Spending Plan disguised as a Stimulus Plan. It is actually nothing more than a payback plan to groups and one in hopes of remaining in power in order to get more money from these same groups to stay in power to get more money to ... you get the idea.

Here is what Randall came up with:
The country had a decline of 3.8% culminated in the 4th quarter for the annual pace, this after a decline in the 3rd quarter. That makes the legal definition of “recession” two consecutive quarters of shrinking real GDP somewhat factual. The media, of course, made this to look like “the sky is falling” which suited the leaders in DC just fine because now they could pull the transfer of a lot of borrowed money to their special groups and make it look like they were doing something good for the country.

So if we look at the real numbers, first off, the "annual rate" of 3.8% shrinkage is what we'd get if that same one-quarter pace continued for four quarters. What actually happened was that GDP shrank 0.1% in the 3rd quarter and 1.0% in the 4th, for a combined loss of 1.1% over two quarters. Through all of 2008, the real GDP shrank just 0.2%, because the economy actually grew in the first half of the year. So far not bad and the “sky is not falling.” To date in this recession, and it is okay to call it a recession, real GDP has shrunk 1.1% from its peak, and non-farm payrolls has shrunk 1.9% from its peak. How do these numbers compare to previous recessions?

The maximum drop in real GDP for the previous 10 recessions, peak to trough, ranged from 0.4% to 3.8%, and averaged 1.9%. So far, it has dropped 1.1% in this recession.

The duration of GDP shrinkage, peak to trough, ranged from one quarter to five quarters, and averaged 2.4 quarters. So far, our recession has two quarters of negative growth.

The maximum drop in non-farm payrolls ranged from 1.3% to 5.2% (1949), and averaged 2.7%. So far, payrolls dropped 1.9% in this recession.

The duration of payroll shrinkage has ranged from 4 to 30 months, and averaged 13. So far, payrolls have shrunk for 12 months in this recession.

The peak unemployment rate ranged from 6.1% to 10.8%, and averaged 7.5%. The latest number for the current recession, December 2008, was 7.2%.

Since World War II, we've averaged a recession about every 6 years, start to start.

After looking at these numbers, would one be able to actually declare that “the sky is falling”? Actually, the numbers, like most numbers dealing with money, contain good news and bad news. According to Randall, this is what it means:

The good news is that our current recession is nowhere near unprecedented. In fact, it is better than the average recession in all measures above: real GDP, non-farm payrolls and unemployment rate. In fact, you could say it is a typical recession. It even started about six years after the last one.

The bad news is that this recession is probably not over. If this becomes an "average" post-WWII recession, our GDP will fall another 0.8%, in this quarter (1st of 2009) before it starts growing. And payrolls will shrink another 0.8% over the next month or so, before growing again. And unemployment will peak at 7.5%.

If this recession matches the worst of the previous 10, our GDP will shrink another 2.7% going into the fall. Payrolls will shrink another 3.3% for at least another year, and unemployment will peak at 10.8%.

So simply going by averages, this recession should end this year, maybe even in this quarter or the next. If things go bad, or no worse than in the last 60 years, we might not pull out of it until late this year, with lousy employment figures lagging into 2010.

After all of this, remember that none of the previous recessions was ended by the government spending a trillion dollars. Our current deficit is projected to be 7% of GDP or more. The deficit never exceeded 6% of GDP in any of the previous 10 recessions, or at any time since 1946. That projection, folks, is the result of trying to spend your way out of recession. So, as I have said before, when you are in a hole, STOP DIGGING. Sooner or later that hole is going to get so deep that what you are trying to shovel out is actually just falling back on top of you. And if you have any common sense, you will understand that you are soon going to bury yourself. Unfortunately, those in “leadership” in this country haven’t figured that out yet. Have you?


Data Sources:
Unemployment data came from the Bureau of Labor Statistics: http://www.bls.gov/. Click on "historical tables" under unemployment rate.
GDP and payroll data came from Bureau of Economic Analysis and the Bureau of Labor Statistics via the St. Louis Federal Reserve's Economic Data -- FRED: http://research.stlouisfed.org/fred2/, specifically Series GDPC96 and Series PAYEMS.

The Stimulus Bill that Isn't

The Democrats are dancing in the aisles as the Republicans vote against the so-called Stimulus Bill. They are claiming that the Republicans don’t really care about the country—the middle class or lower class—only the rich and corporations. You know, the same old song-and-dance they have been playing for the past two years since they became the majority in Congress and still haven’t done anything more than pass useless legislation that has lead to the loss of more jobs. I am sure you can remember the minimum wage bill and what many said would happen when it was passed. Look around, ’cause the “I told you so” is in order.

The Republicans, on the other hand, have finally grown some “spine” (I’ll be nice) and are, hopefully, standing up for what they were originally—small government and tight fiscal policy—instead of the spend, spend, spend that they have shown for the past 6 years.

Another thing that is happening, and for certain the big spending Democrats like Pelosi and Reid don’t like, is that some in their own party are having time to actually think about what they are voting for and are beginning to see that this is a Spending Bill, not a Stimulus Bill, and that there is too much PORK included in the mess. Obama did not want this to happen because it slows down his dash for the “superman” title in the first 100 days. He keeps repeating, “imminent,” “needs to be done immediately,” “it is not something we need to hesitate in doing,” etc., etc., but it isn’t working, thankfully. The longer the Republicans and a few Democrats can keep stalling this mess, the more the give-away pork items will be removed, just like the contraceptive spending and the re-sodding of the mall area. Those were drops in the bucket compared to the items that need to be removed.

Let’s see: $1 billion for Amtrak, the failed federal railroad that hasn't turned a profit in 40 years; $2 billion for child-care subsidies; $50 million for the National Endowment for the Arts, which is really a great job stimulator (said tongue-in-cheek); $400 million for global-warming research; and another $2.4 billion for carbon-capture demonstration projects. What are they going to do, put folks to work making “carbon spirit catchers”? There's even $650 million on top of the billions already doled out to pay for digital TV conversion coupons.

How about renewable energy funding ($8 billion) or mass transit ($6 billion) that have a low or negative return on investment and create few if any immediate jobs? Most urban transit systems are so badly managed that their fares cover less than half of their costs. However, the people who operate these systems belong to public-employee unions that are campaign contributors to ... guess which party?

They have spent billions bailing out the auto industry, but that evidently wasn’t enough, so Congress wants to spend $600 million more for the federal government to buy new cars. Uncle Sam already spends $3 billion a year on its fleet of 600,000 vehicles. Congress also wants to spend $7 billion for modernizing federal buildings and facilities. Why? For part time employees to enjoy? The Smithsonian is targeted to receive $150 million; I love the Smithsonian, too, but it’s not a job creator.

Another “stimulus” secret is that some $252 billion is for income-transfer payments—not investments that arguably help everyone, but cash or benefits to individuals for doing nothing at all. It has been estimated that these so-called tax cuts will work out to be about $12 a week. Not much you can do on $12 a week, and the majority of folks who get it will spend it not on food, but on beer and cigarettes. Don’t believe me? Check out who spends the most on these items, especially cigarettes—the poor. There's $81 billion for Medicaid; $36 billion for expanded unemployment benefits; $20 billion for food stamps; and $83 billion for the earned income credit for people who don't pay income tax. If someone can tell me how this is a job creator and will stimulate the economy, I am waiting to hear it. It is a tooth fairy story and won’t fly, folks. Poor people do not create jobs, period, and those who pay no taxes certainly do nothing to deserve a refund. While some of that may be justified to help poorer Americans ride out the recession, they aren't job creators.

As for the promise of accountability, some $54 billion will go to federal programs that the Office of Management and Budget or the Government Accountability Office have already criticized as “ineffective” or unable to pass basic financial audits. These include the Economic Development Administration, the Small Business Administration, the ten federal job-training programs, and many more. These are failed programs from Johnson’s Great Society program and need to be scuttled or seriously remade. The SBA is a joke; just ask anyone who has tried to deal with this level of bureaucrats.

Oh, and don't forget education, which would get $66 billion more. That’s more than the entire Education Department spent a mere 10 years ago and is on top of the doubling under President Bush. Some $6 billion of this will subsidize university building projects. If you think the intention here is to help kids learn, the House declares on page 257 that “No recipient ... shall use such funds to provide financial assistance to students to attend private elementary or secondary schools.” Looks like the Democrats of Queen Pelosi and Sir Court Jester Reid want to cut out any non-union teachers or programs. Talk about a payback! We used to call it vote-buying, but now it is the norm.

Some $30 billion, or less than 5% of the spending in the bill, is for fixing bridges or other highway projects. There’s another $40 billion for broadband and electric grid development, airports, and clean water projects that are arguably worthwhile priorities. Then add the roughly $20 billion for business tax cuts, which should be much higher because they are the ones who create jobs. Why not “stimulate” the “job creators,” and make it mandatory that the jobs be created in the U.S. for U.S. workers and that none of it can be used in overseas employment. Do that, and you have something that will work to improve the economy today.

By my estimate and from what I can find online, only $90 billion out of the proposed $825 billion stimulus package, or about 12 cents of every dollar, is designated for something that can plausibly be considered a growth stimulus. And many of those projects aren't even likely to help the economy immediately.

This is supposed to be a new era of bipartisanship, but this bill was written based on the wish list of every living—or dead—Democratic interest group. As Queen Speaker Nancy Pelosi put it, "We won the election. We wrote the bill." So they did. Republicans should let them take all of the credit, and then in 2010 and 2012, they can explain how spending trillions of dollars did nothing but put us deeper in the hole.

****Here are the names of the Democrats who voted for their country and not the party when it came to this ill-conceived spending bill. They are to be congratulated. If you notice most of them do not represent heavily “entitlement dependent” districts. These few should be congratulated for putting America first.

Reps. Bobby Bright (Ala.), Parker Griffith (Ala.), Allen Boyd (Fla.), Walt Minnick (Id.), Brad Ellsworth (Ind.), Frank Kratovil (Md.), Collin Peterson (Minn.), Gene Taylor (Miss.), Heath Shuler (N.C.), Paul Kanjorski (Pa.), and Jim Cooper (Tenn.).

Are We Really Ready for Socialized Medicine?

Folks may be getting more than they asked for. People paying attention to 30 second sound bites on this subject will allow it to come to fruition. It seems that people can no longer read or at least can not read anything longer than the McDonald or Starbucks menu and be expected to comprehend it. Of course understanding the ingredients in their favorite latte is easier and vastly more enjoyable than understanding what socialized medicine will be like. Some of us older folks can understand a bit about it, at least those who have experienced the Medicare wonderment and general FUBAR(Fouled Up Beyond All Repair for those who were never in the military) made by the Feds out of this ill conceived and rapidly thought up program. The same results will be found in the new socialized medicine that is about to be foisted upon us. It has been talked about and argued for years but without any actual thought of how the thing is suppose to work or how it will be paid for over then next 10 years much less over then next generations to come. I hear the argument for single payer systems from many who actually don’t have a clue or have failed to look at the current singer payer system that is rapidly falling apart.
I see young doctors regularly who run at the thought of going into family practice. I have friends who are doctors and in family practice and are now on the verge of losing all that they have worked for. They can not pay the bills because the program does not work in other words the government doesn’t pay the bills on time if ever. They continue to treat patients while their kids wear hand me downs and their car continually needs repairs. That’s called dedication but dedication will not go very far in feeding and housing their kids. So take time to read this. Yes , it’s a bit long but reading something as important as this will go much further than the 30 second sound bites that you will soon be receiving by way of the boob tube. It pays to be informed!
Just a note concerning an item that is thrown into the so called Stimulus Bill that would give government MORE control over health care and treatment than any other plan other than Hillary’s failed 1990’s plan. The stimulus legislation would create a council for Comparative Effectiveness Research. This is about medicine but not about healing the economy. The CER would identify (this is language from the draft report on the legislation) medical "items, procedures, and interventions" that it deems insufficiently effective or excessively expensive. They "will no longer be prescribed" by federal health programs.
The next secretary of health and human services, Tom Daschle, has advocated a "Federal Health Board" similar to the CER, whose recommendations "would have teeth": Congress could restrict the tax exclusion for private health insurance to "insurance that complies with the Board's recommendation." The CER, which would dramatically advance government control — and rationing — of health care, should be thoroughly debated, not stealthily created in the name of "stimulus."
Talk about raw socialism ! But then coming from someone like Daschle what do you expect.

A Health Care Model For Failure
Taken from INVESTOR'S BUSINESS DAILY

Socialized Medicine: Anyone who thinks a national single-payer system would be an improvement isn't paying attention. Medicare, which provides coverage for less than 15% of the population, can't get it right.
The federal government seems to always be in a hurry to dole out pork, but it has problems reimbursing doctors who see Medicare patients.
Payments have been so late in some cases that doctors from New York to California have had little choice but to take out loans — some as large as $3 million — to bridge the gap.
The late payments, which can be over $100,000, are only part of the problem for doctors.
In too many instances, the compensation that is eventually provided by Medicare — an amount determined by bureaucrats, not the market, and is therefore subject to error — is simply not enough to cover the physicians' costs.
"When I saw a Medicare patient with pneumonia and they needed a shot that cost $30, and Medicare would reimburse only $21, I gave him the shot," Eugene Wood, a recently retired Jackson physician, told the Mississippi Business Journal last fall.
"I went ahead and practiced good medicine. But I just kept going in the hole."
The trend toward late and below-cost reimbursements creates trouble at two levels.
First, some doctors are cutting back on the number of Medicare patients they see — limiting medical care access for the elderly who rely on Medicare and have paid into it for 40 years or more.
Still others found that they have had to lay off staff and trim their own salaries to continue their practices.
Second, the arrangement kills incentives for medical school students to practice family medicine, which already seems to be a dying art, as only 8% of 2006 U.S. medical school graduates opted for family practices. That's about half the number of graduates who were choosing to go into family practice in the early 1990s.
Making $150,000 a year right out of school might sound like a dream to many, but when doctors owe a year's salary and often more in medical school student loans, their handsome incomes don't look as attractive. A family physician has to be as good a businessman as a doctor if he is to keep his practice above water.
If this is the mess that Medicare is producing, imagine the intractable complications that a universal government system would bring.
Who would want to practice medicine under those conditions? Where will sick Americans go when doctors are fleeing practices and the demand for care under a "free" system outstrips supply?
Medicare and Medicaid, the program for low-income Americans, cover a quarter of the U.S. population and will account for a fourth of federal outlays this year.
No matter how much a Washington player promises that he or she can bring health care costs down through a national system, the numbers say that under a universal program, the entire federal budget will be dedicated to providing health care.
Like it or not — and we don't — Medicare and Medicaid, both established in 1965, have become deeply embedded in the American fabric. They will not go away. The best we can hope for is some sort of reform that lessens the taxpayers' liabilities and increases the responsibility of individuals.
What the country doesn't need is universal care. If universal care is the only alternative, we'd prefer the status quo.
But even that's trouble. Already Medicare's Hospital Insurance is paying out more in benefits than it takes in from tax revenues. By next year, outlays for the entire program will exceed income. The Hospital Insurance Trust Fund will be exhausted by 2019.
System trustees estimate that over the long term, Medicare will have $36 trillion in obligations that aren't funded under the current setup. That, according to analysts at the Heritage Foundation, means "every American household's share of Medicare's unfunded obligation is like a $320,000 IOU."
If Washington can't run a program for 44.1 million people without bankrupting the nation, how can it possibly operate a national health care system for more than 300 million? Think about it!