Washington Has Swallowed Their Economic Compass

By
Real Estate Broker/Owner

What the chart (courtesy of Geoff) at the bottom illustrates is a point that I have been writing about for the better part of a year, Washington has been slow to recognize that we have a significant problem, they have been lethargic in their response to it, and their "solutions" have been impotent.    

The problem with Washington underestimating the gravity of the unemployment situation is that it calls into question the effectiveness of every other piece of legislation that has been passed or action that has been taken.  From the bank stress tests, to the $8,000 first time home buyer tax credit, to the $787 billion "stimulus", to the Fed's reckless decision to invest $1.25 trillion in mortgage backed securities.

Despite all of this "stimulus", the economy and housing market continue to deteriorate.  Credit card and mortgage defaults are only accelerating, and yes, the unemployment rate is nearly two points higher than Washington thought it was going to be. 

 

 

 

Comments (12)

Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

I would tend to agree with you.  However, what is your suggestion.  Mine is to cut taxes and spending like crazy.  Hold big businesses and politicians responsible.  I have nothing against big business, but their should be a fair playing Field.

Jun 21, 2009 12:45 PM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Mark - The government made a huge mistake by dedicating our resources to saving banks, Wall Street firms, and auto makers. Now we lack sufficient resources to deal with the real issues.

Jun 21, 2009 02:41 PM
Mike Saunders
Lanier Partners - Athens, GA

Mark - this is what happens when legislation is rushed through without reading it. Andwhen years of partisanship and ideology is placed ahead of the welfare of the United States and it's citizens.

Jun 21, 2009 11:38 PM
Terry Haugen STAGE it RIGHT! 321-956-2495
Stage it Right! - Melbourne, FL

Mark, show me  a graph that isn't from a right wing, anti-Obama website, then maybe I'll listen up.  Something from an esteemed economist would be good.

Jun 22, 2009 12:48 AM
Mark MacKenzie
Phoenix, AZ

Gene:  I wrote a book about my solution. :)

John:  What do you mean we don't have any money left? ;)

Mike:  Ideology can't run a business or a country.

Terry:  What specifically is wrong with the plotting of the unemployment rate on this chart?

Jun 22, 2009 12:56 AM
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

Seems like all the jobs being created are in the federal government. All of which are temporary at best.  Let's see some real stimulus like cutting taxes, cutting spending, and shrinking government. That would be a nice change.

Jun 22, 2009 04:22 AM
Terry Haugen STAGE it RIGHT! 321-956-2495
Stage it Right! - Melbourne, FL

Mark, I considered the source.  Innocentbystander.net is not exactly unbiased.  Thats why I'd like to see something from a non-partisan economist.  Anyone can draw lines on a graph to make their point.

Jun 22, 2009 06:35 AM
Mike Saunders
Lanier Partners - Athens, GA

Terry - the basic chart came from then President elect Obama, released on January 10 in order to justify his stimulus plan being passed. (You were provided the source to this the last time you accused an author of partisan statistics). The added maroon dots are the actual unemployment figures for that same time period based upon data released by the U.S. Bureau of Labor Statistics, which, is part of the now President Obama administration. But maybe that is not non-partisan enough for you.

Jun 22, 2009 06:47 AM
Mark MacKenzie
Phoenix, AZ

Mike:  Thanks for spelling that out.  Apparently if the souce is not NBC, it is not a valid source.

Terry:  There is no spin on this data, unless of course the BLS is a right-wing organization.

Jun 22, 2009 08:13 AM
Terry Haugen STAGE it RIGHT! 321-956-2495
Stage it Right! - Melbourne, FL

Mark, I didnt say there was spin, I only said its easy for someone to put their own spin on a graph.

Mike, here is the source of that graph.

By way of Paul Krugman, here is the estimated impact on employment provided by C. Romer and J. Bernstein.

The estimated impact on unemployment is shown below, in a figure from the document.

obamaplan1.gif

Jun 22, 2009 12:06 PM
Mike Saunders
Lanier Partners - Athens, GA

Terry - you use Krugman as a source, well that is certainly non-partisan, NOT! Actually, Krugman is not the source, it comes from the Jan 10, Council of Economic Advisors report the link to which I provided in an earlier post when you used the same non-partisan source label. As stated, the added maroon dots are showing the actual unemployment rate since this chart released by the BLS. The most current figure is 9.4%, as indicated on Marks graph. So what is the spin? BTW - Obama has indicated he believes the rate will go to above 10% before the end of the year.

The gist is, the Obama data is glaringly inaccurate and the stimulus package is not working. It is having no net effect on unemployment, or employment. It was very Pollyanish at best.

Jun 22, 2009 12:43 PM
Mark MacKenzie
Phoenix, AZ

Terry:  With due respect, what is the point you are trying to make?

We are all talking about the same graph and assumptions.  The red dots on the above graph indicate what is actually happening today.  Do you refute that the current unemployment rate is 9.4% and rising, above what the Obama administration had projected? 

Jun 22, 2009 12:45 PM