Thoughts from the Frontline

What Happened to the Jobs?

By John Mauldin

July 8, 2011

Choose your language

So How’s That Stimulus Thing Working Out?
This Time Is Different
Vancouver, New York, and Maine

The US jobs report came out this morning, and it was simply dismal. This week we look at not only the jobs report but also “what-if” proffers for the US and global economies. There’s a lot to cover, so let’s jump in.

First, there were only 18,000 jobs created in June, the lowest since September 2010. While private employment rose by 57,000, government workers dropped by 39,000, continuing a trend as governments at all levels work to cut their budgets. Long-time readers know I think it is important to look at the direction of the revisions, and we got no help. May was revised down by 29,000 jobs and April a further down 15,000.

I…

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t odell

July 9, 2011, 1:40 p.m.

John Mauldin is a smart guy and I get that he doesn’t like government spending but he repeats two distortions about the stimulus in propaganda fashion.

First, $800 billion included $275 billion in tax cuts, so that was not all spending on stimulus.

Second, jobs were not the only result of that $500 billion or so spent. The money was largely spent on needed infrastructure with job creation as a benefit. I spent over $100,000 on a greenhouse last year, several people were employed part time on the construction but that doesn’t mean we spent $100,000 per job or whatever… we still have the greenhouse!

It is reasonable to debate how much and what to tax and spend, but it is not necessary and in fact reduces your credibility to distort the facts in this way.
respectfully,
Thom

Thom O’Dell, Ph.D.

Rodger Malcolm Mitchell

July 9, 2011, 11:37 a.m.

“Taxing or borrowing $266,000 from the private sector to create a single job is simply not a cost effective way of putting America back to work. “

Not one penny was taxed or borrowed from the private sector to pay for any stimulus effort.  The federal government is Monetarily Sovereign.  It has the unlimited ability to create money.  It neither needs nor uses tax money or borrowed money.

Federal spending is not funded by taxes or borrowing.  In fact federal spending creates money (That is how dollars are created).  If borrowing and taxing fell to $0 or rose to $100 trillion, neither event would affect the federal government’s ability to spend.

Rodger Malcolm Mitchell

julius corazo

July 9, 2011, 10:04 a.m.

By quoting the straight-shooter Canadian economist David Rosenberg, you have shown that you refuse to wear rose-colored glasses like many in the financial media such as CNBC. I respect your forthrightness and honesty about how tough it is out there in the REAL economy, where REAL people live and work and have to pay mortgages and day to day living expenses. Most businesses in the U.S. employ fewer than 10 people and they are the ones that are hurting the most, they are not planning to hire new workers anytime soon, they are most likely to reduce working hours in the coming weeks and months in things don’t improve. They are tapped out after dipping into their life savings, 401 k’s, RRSP’s (in Canada), lines of credits, just to keep their doors open. The GE’s, Googles, Nike’s, Caterpillars and Microsoft’s of this world may not be hurting for cash, and banks are always rushing to lend them more cash, but the struggling small businessman/woman are teteering on the edge and should be the ones the U.S. government should focus in propping up over the next 12 very critical months. The U.S. economy is like a patient in ICU, and it needs further medical economic procedure, of some sort, until it can stand on its own. Tim, Ben and Pres Obama’s team may have prevented a catastrophe after the 2008 financial meltdown, but they have not moved the economy to the next phase either, if you disagree with that, then just ask those 14 Million+ unemployed Americans and all the discouraged small business operators in your neighborhood, forget the talking heads in Washington or New York, most of them have never run a lemonade stand in their lives, let alone try to meet payroll every 2 weeks. Best of luck to your kids Amanda and Trey in their job search. As a father, I too appreciate your anxiety. We’re all in this together now, we’re all in the same boat, so to speak. We hope for the best, but we have to prepare for the worst, these guys in Washington are almost clueless on how to get us out of this serious economic funk we have been in since 2008.

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