4 Responses

  1. And Japan doesn’t want us to get ahead in the Output Gap race.

    Japan’s Prime Minister Reorganizes Cabinet in Push for Tax Increase
    http://www.nytimes.com/2012/06/05/world/asia/japans-prime-minister-reorganizes-cabinet.html?_r=1

    “a desperate gambit to win the backing of the largest opposition party for his unpopular bill to double the national sales tax”

    looks like an internal battle between the Harvard & Pragmatic EconPolicy gangs; the Harvard python seems to be squeezing the life out of it’s opponents;
    desperation? Are they worried some output might escape their grasp?

  2. From the comments at Mike Norman’s – My explanation of the graph

    The chart needs a bit of explaining. This is standard unemployed/underemployed that go into the u-6 plus all the people that are no longer in the work force because they cannot find employment.

    Till 2000, the ratio of (people not in the work force)/(Total Labor Force) was steadily declining and had reached a figure of 48%, and this ratio had been declining since 1948. Suddenly, after 2000, this ratio has steadily increased. So if I subtract the low point from the ratio, I get the amount of adjustment needed for the U-6 to assume the same labor force participation that existed in 2000. I add this back to the U-6 to get my corrected U-6
    ……….

    The decline in the ratio was obviously coming from the addition of increasing number of women to the work force.

    The increase in the ratio can come from two possible sources.

    1) An increase in perceived family wealth, so that one partner decides that it is no longer necessary to work.

    or

    2) People can no longer find a job, no matter how hard they try.

    You be the judge as to which of the above two factors apply.
    ……….

    once you have exhausted your UI – Think of the 99 weekers – you are no longer considered to be a part of the work force and fall into this category. You are only seeking work as long as you are on UI – this is how the numbers are calculated.

    Among these 99r’s, you will find many between the ages of 62 to 68, who have been forced to go on Social Security because they could not find a job – though they would rather be working. Also, a similar thing afflicts younger workers (typically unmarried) who may take on student loans and go back to school, thinking that continuing education may help them find a job. Others just become sofa surfers, and bear the slingshots hurled upon them by “helpful” relatives and friends.

    The ones with a poor social net become the “new” street persons
    ………

    the problem with measuring U-6 began in 2000=2001 the dot com bubble bursting. The problem is that we never recovered from the bursting of that bubble – the ratio clearly demonstrates that. We never got employment back on track after that.

    See the graph of the ratio by itself http://research.stlouisfed.org/fred2/graph/?g=7JV and you will see the deramatic change that occurred then.

    1. @Clonal Antibody, Predatory capitalism is what’s deranged. Once it’s circled the globe, it turns inwards, from institutional momentum alone.

      http://www.reuters.com/article/2012/06/05/us-spain-funds-idUSBRE8540DW20120605
      “A flock of vulture funds is gathering in Madrid in the hope that a banking sector shakeout will finally deliver a bonanza of real estate and distressed company assets at rock bottom prices.”

      “Investors, get thee to a country just after a war or other disaster.” Jim Rogers, paraphrased, and he just paraphrased the British (who had no qualms about starting wars to buy up afterwards). The early bankers caught on to that strategy back in the 1500s, and ‘royalty’ caught on when it was suggested by a Pope ~300AD. Bankers found they could buy out bankrupt royalty after a disastrous war.

      The rational way to mitigate class-momentum is efficient democracy – i.e., full-group policy discourse. That’s exactly what we’re having trouble ramping up quickly enough. Our institutions that barely saved us in 1933 just aren’t up to producing equally agile policy review now that we have ~3x the population throughout the G7.

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