TCS Daily


A Note to Conservatives on the Cyclical Rebound

By Larry Kudlow - April 6, 2010 12:00 AM

Sometimes you have to take your political lenses out and look at the actual economic statistics in order to gauge whether we're on the road to recovery or not. Without getting personal, I'm watching many of my friends on certain cable stations attempt to trash the March employment numbers released last Friday. Don't do it, folks. The numbers were solid.

In fact, while everyone keeps saying that small businesses are getting killed from taxes and regulations out of Washington, the reality is that the Labor Department's household survey has produced 1.1 million new jobs in the first quarter of 2010, or 371,000 per month. If that continues, the unemployment rate will be dropping significantly.

Additionally, the corporate payroll number increased by 224,000 — not 162,000 — with the prior two months being revised up by 62,000. And if you take out the 48,000 temporary census-worker jobs, it turns out that government employment actually declined in March.

What's my point? Credibility. Conservative credibility.

No one has written more about the future tax-and-regulatory threats from the big-government assault of Obamanomics. But most of that is in the future. The current reality is that a strong rebound in corporate profits (the greatest and truest stimulus of all), ultra-easy money from the Fed, and some very small stimuli from government spending are all working to generate a cyclical recovery in a basically free-market economy that is a lot more resilient than capitalist critics would have us believe.

So conservatives should not lose their cool and blow their credibility over a cyclical rebound that is backed by the statistics.

Incidentally, the real-time ISM purchasing-managers reports for manufacturing and services show that the next few quarters, perhaps to year end, could be much, much stronger than the consensus expects. Higher future tax rates are going to be a problem. But then again, the tea-party revolution may overturn all those obstacles to growth. Think of it.


This article first appeared on Kudlow's Money Politic$.
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31 Comments

What a sellout!
Take out the over ONE MILLION temporary census workers that were 'hired' and those numbers all go to hell, Larry.

You've either been at the bottle again or have finally sold out to liberal pressure from your CNBC masters.

Sellout?
So...he says something you don't want to hear and is now a sellout? Geez.
Are you now hoping we do not begin to recover as a nation? Are you betting against America? Is the only way you win for America to lose?
I am furious over the whole health care bill. Yesterday I had the wild eyed thought of changing the initials for the US to USSR (United States Socialist Republic).
I would not think it wise to bet against the American people though. Substantial systems take time to break down and America is still a very productive nation.

I basically agree with you both
The article is a bit too rosy, but there are signs the economy is starting to rebound and I personally am hoping we are almost completely out of this recession by the end of the year. Too optimistic? Perhaps. But I think it is possible and very probably we will see 6% unemployment or less and some strong numbers in other areas as well.

No, I would not bet against the American people; a very bad bet!!

No, he has been saying SEVERAL somethings that prove he's a sellout
...as has been tracked and commented at length on these forums, if you go back and look.

"Are you now hoping we do not begin to recover as a nation? Are you betting against America? Is the only way you win for America to lose?"

No, I am watching you deliberately lying about my intentions w/o a shred of proof to back them up.

"I would not think it wise to bet against the American people though. Substantial systems take time to break down and America is still a very productive nation."

So was Germany and Japan. But their anti-growth governments have all but destroyed that.

Sure...it is rebounding because of all that extra montly cash flow the jingle mailers have freed up
Which is a good thing, overall.

But it doesn't help those who are structurally unemployed because of this mess. Those in construction and mortgage lending, etc. Those jobs aren't coming back and so those folks need to switch careers...and there are millions of them.

I've been getting a lot of hits from recruiters and staffing folks myself, lately. Esp starting in March. But I am not holding my breath. The trends are still heading down.

I bet for the tremendous damage Team Obama can do that makes it pointless to make the issue about betting against the American people. Nobody bet against the American people during the Great Depression either. But it didn't do any good, did it? It was about FDR's horrendous policies, not the American people.

You sure about that?
"Nobody bet against the American people during the Great Depression either. But it didn't do any good, did it? It was about FDR's horrendous policies, not the American people."

Not that accuracy is ever an issue with you, but didn't the Depression occur in October 1929? And didn't the banks collapse, credit freeze solid and all the businesses pay off their employees between then and March, 1933... when FDR finally took over?

It seems to me that the problems followed a thoroughly capitalist administration's policies being implemented by a Republican administration. Just like they did in 2007, in fact.

At any rate, unemployment is up to 27 million breadwinners now, when we include people who've been forced to accept part time and temporary employment. And I doubt that backlog's going to be soaked up in a bullish job market any time soon.

I will agree that Team Obama has done nothing to stem this flood of lost jobs. Nor has he had any positive results.

"Those in construction and mortgage lending, etc. Those jobs aren't coming back and so those folks need to switch careers...and there are millions of them."

I see a pattern here. The Republicans who get us into these messes by following the doctrines of the free market are never to blame. But the Democrats who follow them and try to wrestle with the intractable problems that have been created by bad policy get the entire blame. Would that be a correct description of your position?

The real estate and construction markets will certainly come back in decent time-- they're basic to our economy and cyclical in nature in the best of times. But as for those 27 million people trying to peddle their resumes-- what field do you think might be able to absorb them?

No, the Depression occured during the 1930s
Hoover's reaction was the worst thing a president could do. So was the FED's. FDR just jumped on that bandwagon and made it worse, esp after 1933.

"I see a pattern here. The Republicans who get us into these messes by following the doctrines of the free market are never to blame."

Uh...no. Blaming either party won't bring those jobs back. Those folks are 'structural' unemployed, Roy.

"But the Democrats who follow them and try to wrestle with the intractable problems that have been created by bad policy get the entire blame. Would that be a correct description of your position?"

If the Dems actually DID 'wrestle' with these problems -- as you admit that they are not doing so -- then you might have a point. But since that isn't the case, you don't.

"The real estate and construction markets will certainly come back in decent time-- they're basic to our economy and cyclical in nature in the best of times."

No, they won't. Not a the levels what will employ all those people. Trust me: When I was on the receiving end of the dot.com bust, as a web developer it was rough. A lot of people in the business had to change careers and never came back.

"But as for those 27 million people trying to peddle their resumes-- what field do you think might be able to absorb them?"

Not much. That is what happens when you live in a job-killing Obama's America.

Structural unemployment
You misuse the term to say what we have now is structural unemployment. It's just the response to a credit freeze.

We have a consumer-based economy. So when money gets tight and lending contracts, people worry about their jobs and stop buying stuff. And without people buying stuff, the employment base has to contract. We're building less, importing less and selling less. There's less money out there in the street.

This is all material you should know. It's not like it's some big secret.

Naturally, as you have pointed out, it's not that there's actually any less money. It's just been withdrawn from circulation by the banks, who are lending less while waiting out the downturn. In a word, it's a replay of what happened back in 1929.

Structural unemployment is something different. When NAFTA was passed, and all our manufacturing jobs went south-- THAT was a structural problem. And those jobs won't be returning until our wage-to-productivity ratio approaches par with China and her subs, Indonesia and such.

Of course by then, we'll probably all be competing with Africa.

2. "That is what happens when you live in a job-killing Obama's America."

Now here's a question: do you remember back when George Bush supposedly pulled us out of the recession HE inherited? Sure you do. And do you remember for a couple of years this recovery was known as the 'jobless recovery'?

Of course you don't. Because he was a Republican. And although you won't admit it now, back then you were all for him. Okay. Now we have a Democratic president, who also inherited a recesion. And two years on, it's still been a jobless recovery.

My question is-- if you're not just being chauvinistic, what made Bush's jobless recovery okay, while Obama's jobless recovery isn't? What the fine distinction you make, if not mere ideological cant?

You can't even recognize structural unemployment
"You misuse the term to say what we have now is structural unemployment. It's just the response to a credit freeze."

No, I am not. And if you think that this is just a response to the credit freeze, you are extremely deluded.

A bubble like this one and the dot.com one before it creates artificial 'demand' for labor, finance, resources, etc. in the sector of the economy it primarily hits. When that bubble pops, that demand goes away and doesn't come back because activity settles to its normal level (after plunging quite a bit during the bubble's deflation).

So, all those jobs in construction and mortgage lending and title companies and realtors 'went south', Roy. Over 90% of them in most cases, are not coming back.

And to make things worse, all the government attempts to prolong this Japanese Style will keep pushing the adjustments needed for even the normal activity to properly reassert itself.

Perhaps 10 years from now things will rebound somewhat, but that is doubtful as there will be no 'baby boom' demographic bulb to propel it much. That and the fact that we have a housing surplus in the millions of units out there.

" And do you remember for a couple of years this recovery was known as the 'jobless recovery'?"

No, because the dot.com bubble was all on Clinton's watch and the recovery started under Bush's. And it was nothing like this (for most Americans, I was hit hard because I am a web developer).

"And two years on, it's still been a jobless recovery"

Correction: There hasn't been much of a recovery at all. Oh they jimmy the numbers and the press lies through its teeth otherwise. But there has been no real recovery, Roy.

At least with Bush there was.

No real recovery?
This is possibly the most ridiculous, least supportable thing you've said. Real estate and construction are anything but artificial appendages to the economy. They are central to it, and have been since 1946.

You have to ask yourself whether we actually DO have an economy, if you accept that we have a greatly withered manufacturing base, one that no one sees coming back. And we have a financial sector that no one in their right mind would have a shred of confidence in. What's left? Only that we can at least build and sell homes to the growing number of US citizens and businesses.

The industry employs many, many millions of us. Further, it employs several trillions of our dollars. You're trying to tell me that with its track record of regular ups and downs it has gone down this time but is never coming up again? Do you even think before you talk?

No one's going to let RE die, number one, because it's their livelihood. All that investment money's looking for a home in new mortgages. All those carenters want to hammer. The steel industry wants to sell them nails. And number two, there's the intense pressure of demand, from everyone who wants to buy a home or lease office space, or create a campus for their company.

You refer to the dot com bubble. Well real estate's a lot more intrinsic to everyone's life style than these electronic gizmos. And last I saw, the electronic gizmo industry's doing just fine, and getting better.

The problem is that when markets are unguided they never perform the miracles Milton Friedman assured us they would-- no matter what the product or service, they inflate and then tank, inflate and then tank. It's called cyclic activity. And for best performance it needs to be brought under intelligent control.

The mechanism that works best for real estate is mortgage rates-- and sensibly, they're poised to go up. That will bring home prices back down and keep them within a sensible range. And keep the market from going haywire again-- at least up to the moment investors once again think we've seen the end of history and bubbles will just keep on expanding forever.

That's our history. We're wise after the fall. But five years later, every time, we've forgotten everything we should have remembered. You can set your watch by it.

Also you've said there's been no 'real recovery'. How, then, are we now in the midst of a true stock rally? Aren't the bears out there growling now? It just hasn't reached the consumer sector, as everyone knows. You're just shameless with this stuff, and I wonder whether you actually believe yourself.

But let's accept, for the sake of argument, that you do. And since 90% of the suspended jobs in real estate sales, development and financing are "never coming back", you predict we will all just be getting used to living in old trailers and not even wishing we had actual homes once. Because you have predicted that even though we're growing in numbers, and our existing homes are getting older, we will never again be able to stimulate demand with our dollars.

In my neighborhood construction has already resumed. All those empty lots at the end of those brand new streets? Crews are building on a number of them as I write.

Lying?
Lying about your intentions?

I asked questions. The goal of a question is to gather information and give you an opportunity to clarify your position.

I don't want you or any other conservative to sound like a liberal who has to have America lose to win politically.

Our common intention to prevail
I applaud your sentiment. What we should all be looking for is the best way out of this mess, to a stable and rewarding economic future for as many of us as possible. No one should be the party of NO, whose purpose is merely to wreck the dreams of their opponents, or to win hollow thrones at great expense to the republic.

I would go further, and say that any scheme is inherently unstable when it results in an increasing number of losers in compensation for a shrinking number of incomparably affluent winners. Which is, as it happens, where we've been trending since the slump of the mid-1970s.

So that kind of thing makes me a lefty. Fine, I still want America to win. For that matter, I want the world to win. Most of them aren't nearly so well off as we are, even in this prolonged slow patch we're mucking through.

The spirit of scientific inquiry tells us we should try each solution that has a reasonable hypothesis behind it, telling us that it very well might work. And we should evaluate our results, whether successes or failures, with a critical eye toward our own future behavior.

And we have tried the Holy Markets, Milton Friedman, trickle down approach for thirty years now. From here we can see clearly that what it has given us is ever-greater debts and deficits, both in our personal and our national accounts. It has given us a widening inequality gap in incomes, where we once built a strong middle class. And with our current financial wizards in control of our money it has given us intractable speculative bubble-and-bust cycles that seem to be getting worse with each iteration. In fact I really don't think we can stand another one.

So, in the face of such evidence, can one make the case that we should just continue letting unimpeded markets, deregulation, the defunding of government and the dismantling of social services set the pace of economic activity? Or is it time to let some other approach have a chance at fixing it? That is, once we know the result, should we still insist on doing things the same old way? Because to even try some other way would be disloyal to our great cause?

That, it has been said, is the definition of insanity.

Yes, lying...and deliberately mischaracterising me
"The goal of a question is to gather information and give you an opportunity to clarify your position."

No they weren't. The content of the questions came totally out of left field in a deliberate attempt to proactively associate their implied meaning towards me.

And I refused to take your bait.

Let me throw them back at you instead:

Are you now hoping we surrender to the Islamofascists? Are you betting against America? Is the only way you win for America to lose?

Have fun with that.

"I don't want you or any other conservative to sound like a liberal who has to have America lose to win politically."

Cut the crap. You're just Trolling. It won't fly.

And you don't sound like a Troll, you are a Troll.

Yup, just keep feeding the Troll, Roy.
.

No real recovery
"This is possibly the most ridiculous, least supportable thing you've said. Real estate and construction are anything but artificial appendages to the economy. They are central to it, and have been since 1946"

Only on Planet Roy.

"if you accept that we have a greatly withered manufacturing base, one that no one sees coming back."

No we don't. Our manufacturing output has increased steadily for over twenty years now, Roy.

"Because you have predicted that even though we're growing in numbers"

We are not growing in numbers. Their is no demographic 'bulge' to replace the Baby Boomers in demand. Immigration makes up for it somewhat. But in order to be affordable to most of them, homes prices will have to collapse further in those markets.

"In my neighborhood construction has already resumed. All those empty lots at the end of those brand new streets? Crews are building on a number of them as I write"

That's nice. After several years of going through planning and permit approvals, I would imagine that they would have to go ahead. It's happening even where I live. But, the ones that are finishing up can't sell...for the prices they are trying to sell them for.

"The mechanism that works best for real estate is mortgage rates-- and sensibly, they're poised to go up. That will bring home prices back down and keep them within a sensible range. And keep the market from going haywire again..."

Oh yes! The market on Planet Roy won't go haywire again. Meanwhile, here on Planet Reality, the downward pressure on prices will put those holding underwater mortgages more underwater and those who were just on the borderline into now officially underwater. Remember: Rate hikes affect ALL real estate markets pretty much universally.

"You refer to the dot com bubble. Well real estate's a lot more intrinsic to everyone's life style than these electronic gizmos. And last I saw, the electronic gizmo industry's doing just fine, and getting better."

Yes, because the crazy malinvestment stopped. Most of the jobs that were created during that time were destroyed. As a portion of GDP, that sector returned to a stable -- and lower -- amount. All of these trends are being duplicated (already have) to construction, lending and real estate.

"Also you've said there's been no 'real recovery'. How, then, are we now in the midst of a true stock rally? Aren't the bears out there growling now? It just hasn't reached the consumer sector, as everyone knows."

No, it is a 'true' recovery when the employment numbers increase -- and not by Mickey Mouse manipulations of the data like including 1 million purely temporary census workers in the mix.

"And since 90% of the suspended jobs in real estate sales, development and financing are "never coming back", you predict we will all just be getting used to living in old trailers and not even wishing we had actual homes once."

No, I made no such prediction. You are following KaseetaKen's poor example of mischaractising me. As I just said previously, the level of such activity will never be the same. It will return to sustainable levels after a sharp overcorrection. Therefore, the levels of employment in those sectors will likewise not return as before. Ditto for profits, compensation, etc. Such displaced people will have to find other careers.

Which means, from your point of view where real estate is so 'vital' to the US economy, then likewise said US economy on Planet Roy is SCREWED.

I will be magnanimous and just conclude with this: If the US continues down the path of further malinvestment in real estate (which you seem to actually think is a 'good thing'), then it deserves to be in the economic rat hole as a result.

The uninformed, preaching to the credulous
"Our manufacturing output has increased steadily for over twenty years now, Roy."

The Federal Reserve Board seems to think manufacturing output has stayed flat since 1998. Meanwhile, manufacturing employment has fallen off drastically. And that's an important factor. Because without employment, families are transformed from being consumers into being public charges.

"We are not growing in numbers. Their is no demographic 'bulge' to replace the Baby Boomers in demand."

US population today: 309 million.
In 2002: 288 million.
In 1992: 256 million.
In 1982: 232 million.
In 1972: 210 million.

Shall I go further back?

"After several years of going through planning and permit approvals, I would imagine that they would have to go ahead. It's happening even where I live. But, the ones that are finishing up can't sell...for the prices they are trying to sell them for."

The permit process is a lot speedier than that. Maybe a couple of months. Because one permit is not that different from the last one. It takes a day for someone to put a stamp on it, unless it's encroaching on some protected area.

And they don't have to "go ahead". Because that means spending more money. And the banks, from whom that money cometh, don't do business that way. Around here everybody's bright enough at this point in the game to wait until there are some customers. Then, when they've calculated how much they're willing to pay, they can figure out how many homes they can build and sell at X closing price.

The ones they finished and couldn't sell last year are now sold. At a lesser price, to be sure. But the ones going up right now are realistically priced.

I'm thinking you wouldn't do at all well in this business. Too theoretical.

"Meanwhile, here on Planet Reality, the downward pressure on prices will put those holding underwater mortgages more underwater and those who were just on the borderline into now officially underwater. Remember: Rate hikes affect ALL real estate markets pretty much universally."

We're seeing a lot of workouts now. Because the status quo won't hold. Banks just can't rely on people paying down an underwater mortgage, without some really sweet inducement.

The trouble is, everything that goes up must come down. So if we have an eye to the future, we should begin setting interest rates at (among other considerations) a point where homes neither appreciate nor depreciate. They should rise only gently, with the cost of living. The ancient RE industry myth about homes being a good investment needs reformulating. NOTHING should appreciate very much above the general rate of inflation. If it does it becomes an inflationary spur, as every other sector tries to catch up.

"No, it is a 'true' recovery when the employment numbers increase -- and not by Mickey Mouse manipulations of the data like including 1 million purely temporary census workers in the mix."

Those fraudulent figures should have been seen as an embarrassment. They quickly sank from sight.

And I agree, it's only a full recovery when the jobs come back up. Nice to see you're such a fan of full employment. But you'll have to admit that the more recent recessions have all taken the same form: first the markets come back strong and (relatively) early. Then a year and a half, two years later, here come the jobs. Finally.

So I'd say we're now at the early to midpoint of the full recovery process. By your metrics and mine. And by the time jobs are starting to get back to normal I'd raise certain taxes, like those on cap gains and royalties, to start addressing the Debt. As a manager, that's how I would manage the full recovery.

You did say, however, that 90% of those RE and devlopment jobs will not be coming back. And that's totally out of touch. They'll mostly come back. What I don't think we'll see again for a while (or at least I hope we don't see it) is more go-go boom years, where across the country every patch of woods is being levelled for yet another subdivision, built on spec with borrowed cash, and offered at totally unrealistic prices.

They need to look at affordability. Once mortgage rates start rising, people will be able to afford less and less, asking-price wise. And builders will have to get out their calculators if they want to price their offerings realistically.

"I will be magnanimous and just conclude with this: If the US continues down the path of further malinvestment in real estate (which you seem to actually think is a 'good thing'), then it deserves to be in the economic rat hole as a result."

It would be pretty evident to anyone reading this exchange that I had no good words to say for "malinvestment". In fact my whole thing has been in condemnation of it. The bubble was dumb. And I know that from the inside, having made my living during previous RE bubbles like the early and mid eighties.

However real estate run on an even keel is an integral part of the American success story. Unlike many societies, we can actually afford to house our workers in really nice homes. And, I hope, will continue to be able to.

Troll?
KaseetaKen's no troll, buddy. He's a welcome breath of fresh air. There aren't nearly enough of us contributing here. And he has a fresh set of opinions-- ones you took some offense to, but valid ones.

Wait. You also took offense at MY opinions. Are you the sort who can only tolerate people who agree with you, and cheer you on when you make baseless statements?

The Denier throwing out straw men in turn.
So what if the over all population is growing? Like I said, the additions are mostly immigrants, not births. That is why we are headed for a demographic timebomb on entitlements funded by demographic sources of taxation. Or have you been sleeping under a rock while throwing out straw men like those figures?

I will cop up to saying, "We are not growing in numbers" when I should have been more specific. Something like, "We are not replacing the baby boomers with another like size demographic boom that can match their spending (borrowing) power."

But the real estate business WILL get slammed by the Baby Boomers retiring with nobody in the 'food chain' to replace them in the numbers needed at the prices demanded: http://www.oftwominds.com/blogapr10/housing-demographics04-10.html?source=patrick.net

"The permit process is a lot speedier than that. Maybe a couple of months. Because one permit is not that different from the last one."

To put in a new subdivision? In my state it can take up to five years now. It can take almost a year (soon to grow to 18 months) to get all the permits just to add a new story to a private home, like a granny flat.

"At a lesser price, to be sure. But the ones going up right now are realistically priced"

Yes, I agree they CAN be sold. Any home in America can thus be SOLD if you look at it that way. But sold w/o taking losses? Perhaps in Texas and a few other exempted areas.

"We're seeing a lot of workouts now. Because the status quo won't hold. Banks just can't rely on people paying down an underwater mortgage, without some really sweet inducement."

That doesn't stop the slide in prices. And anyone with a brain won't go into that business until prices stabilize, will they?

"The Federal Reserve Board seems to think manufacturing output has stayed flat since 1998. Meanwhile, manufacturing employment has fallen off drastically. And that's an important factor. Because without employment, families are transformed from being consumers into being public charges"

As a share of GDP it dropped. That was because of the overall increase in GDP and being eclipsed by other, rapidly expanding sectors of the economy --especially the fast growing finance and real estate malinvestment bubble. But total manufacturing output has continued to increase.

"And I agree, it's only a full recovery when the jobs come back up. Nice to see you're such a fan of full employment. But you'll have to admit that the more recent recessions have all taken the same form: first the markets come back strong and (relatively) early. Then a year and a half, two years later, here come the jobs. Finally."

You had better hope so. I am not holding my breath. So much in fact I find myself in (mostly but not complete) agreement with Robert Reich on this particular issue: http://online.wsj.com/article_email/SB10001424052702304222504575173780671015468-lMyQjAxMTAwMDEwMTExNDEyWj.html?source=patrick.net#printMode

"You did say, however, that 90% of those RE and devlopment jobs will not be coming back. And that's totally out of touch. They'll mostly come back. What I don't think we'll see again for a while (or at least I hope we don't see it) is more go-go boom years, where across the country every patch of woods is being levelled for yet another subdivision, built on spec with borrowed cash, and offered at totally unrealistic prices."

Ok, re-read that entire paragraph. Note how your first sentence is totally invalidated by the following ones. It was the go-go boom years that expanded 'production' demand for those jobs, Roy. No more go-go boom years -- precisely as you described it, too -- means no more the demand for those jobs. Some will recover as the effected industries recover from the overcorrection, but that's it.

"They need to look at affordability. Once mortgage rates start rising, people will be able to afford less and less, asking-price wise. And builders will have to get out their calculators if they want to price their offerings realistically."

But what about existing homes? Their prices will fall also. Those that weren't underwater will be. Those that were will be in the Marianas Trench -- prime candidates for strategic defaulters, those types are.
That means more foreclosures. More downward pressure on prices. And this will happen in a short enough amount of time that a builder's subdivision that takes a year to finish will be worth a lot less over that time, just like they soared in value during that same time period during Da Boom.

"However real estate run on an even keel is an integral part of the American success story. Unlike many societies, we can actually afford to house our workers in really nice homes."

Which was only possible from the late 1940s onward, driven by unparalleled consumer access to debt-slavery. Did you know that many mortgages by law were restricted to a length of 7 years (from the bible) until the 1940s? Then they were extended to 10 and then -- in most places -- was the sky the limit. All that has really driven total prices has been how much debt buyers can get to outbid the other debt slave wannabes.

So, I have to take exception to your term 'afford'. We don't see things the same way on that, obviously.

I can't tolerate trolls, that's all
KaseetaKen doesn't 'disagree' with me. KK just wants to stir up trouble. Refresh your knowledge of what a 'troll' is. Then, re-read KKs posts to me.

http://en.wikipedia.org/wiki/Troll_%28Internet%29

Immigrants
You know, one would have hoped that after I've just shown everything you've said to be utter BS, you'd have had thre decency to keep quiet for a while. But not you-- you're posting even more furiously.

America has always replaced its population with immigrants. There's even a poem about it. "Give me your tired, your hungry, your weary..." It's quite a nice sentiment.

We are growing in numbers, as we always have been. And the immigrants have been workers, to keep the place going strong after we get old and weary, and just want to enjoy life. More power to them. They deserve this place-- and they helped build it.

As for housing starts, that's a remarkably stable curve that follows the demographic one. You're doing a lot of barking, but facts are facts. Housing is at the core of what it is we Americans build. It's unlikely to go down ninety percent on a permanent basis while the population continues to grow, and existing homes get older. Really.

You're starting to sound like an old man. Read your stuff over before hitting the 'post' tab.

Again, I really don't know how life is on Planet Roy..because it doesn't matter
"You know, one would have hoped that after I've just shown everything you've said to be utter BS"

You've only shown how little you get it.

"Housing is at the core of what it is we Americans build. It's unlikely to go down ninety percent on a permanent basis while the population continues to grow, and existing homes get older. Really."

Uh, I said that up to 90% of the excess jobs created in that industry are toast, not housing as an industry.
We used to have over 50% of Americans working in agriculture and related work in 1900 too. Now only about 3-5% do. Get a grip Roy.

There are MILLIONS of units in excess. The shadow inventory for the City of San Francisco is THREE times what is listed for SALE on the MLS. Realtors in cahoots with government and the banks have tried like hell to keep people ignorant of this but are failing.

Most immigrants can't qualify or 'afford' for the debt needed to buy the retiree's homes at the prices the retirees depend on selling them for. Not unless the Liar Loans come back and/or they engage in outright identity fraud -- both of which occurred in the boom. Most live 4+ people to a room, shop at Walmart...work at Walmart, too. I am not saying this to begrudge them. But I am pointing out that they won't be buying the vast majority of middle class homes in this nation at the prices that boomer retirees needing to cash out at. It takes a while for an immigrant fresh off the boat to 'make it' here.

And why should they even if they had the 'purchasing power' anyway with all the excess inventory pushing down prices for years to come? Being an immigrant doesn't equal stupid, Roy.

After an immigrant has 'made it' can they only do that. And most don't 'make it' except after being here at least 10 years on average, sacrificing.

So, Pedro who just crossed the border isn't going to be able to afford to buy even a $200,000 house. Let alone homes in the high-population bubble states like my own, where the bulk of the nation's housing and housing related industry activity reside.

Of course, Pedro MIGHT get a LIAR loan issued from the FHA in any event. Don't laugh. That is how the government seems to want to address this mess -- paper over and push this out to deal with later. I understand that the FHA and VA are both offering 'no questions asked' loans on their portfolio of foreclosed properties. The VA is even offering 'buy one and get one free' deals.

And as far as the educated immigrants Silicon Valley imports who do get paid more than unskilled immigrants from elswhere, they will rent, period. They aren't stupid either. I know, I work with these people.

Who cares about exceptions like North Carolina in this context? Oh I am sure you do. But we are talking about the nation here, Roy. Tell me: Does Planet Roy only orbit North Caroline too? If so, that would explain a lot.

And with the coming shortage of workers AND immigrants (Mexico is about to enter a phase where it will experience labor shortages too, given huge strides made in fertility control in the last two generations), the sheer numbers you seem to illogically base your fallacies on despite the above facts won't even be there either.

Oh yeah...I have no clue because LOCAL activity happening in Roytown, USA a.k.a. 'Planet Roy' totally is at odds with reality the vast majority of the rest of the nation faces.

Matching our work to our workers
"Uh, I said that up to 90% of the excess jobs created in that industry are toast, not housing as an industry."

Oh-- now it's excess jobs. Before, you just said jobs.

"We used to have over 50% of Americans working in agriculture and related work in 1900 too. Now only about 3-5% do. Get a grip Roy."

Large scale ag mechanizes very nicely. House construction doesn't. There's unlikely to be a machine that spits out finished houses any time soon-- or ever. It's a labor intensive field. And that's a good thing.

Why? Because "the economy" isn't just about some numbers getting higher. It's about our ability to find gainful employment for the millions of families we already have-- and the ones to come. America's goal is to facilitate a decent life for a maximum of 'We the People'. It isn't to excel at creating so-called wealth owned by the very few.

"Tell me: Does Planet Roy only orbit North Caroline too? If so, that would explain a lot."

NC is a good indicator. For instance here's a current statistic. Back in 2006 we had 249,500 people living in 34 counties in central and eastern NC (a third of the state) dependent on charitable food distribution, according to our Food Bank. And currently in that area we have 545,000 such people.

They used to be productive, self sufficient and paying their taxes to support the country. Now they're somewhere between useless and wards of the state. Lack of full employment is as it always has been, our number one problem to be solved.

Lack of investment capital's not even in the top twenty. We have so much of the stuff we've been running the world's biggest casino with it: Wall Street and the derivatives markets. Every few years, trillions of dollars turn out to have been worthlessly squandered on air ware, producing nothing but grief.

"There are MILLIONS of units in excess. The shadow inventory for the City of San Francisco is THREE times what is listed for SALE on the MLS. Realtors in cahoots with government and the banks have tried like hell to keep people ignorant of this but are failing."

It's no different here. We have huge empty subs, with only a handful of families living in immense abandoned construction sites. Many entire subdivisions have gone into foreclosure. At least one has been torn down so as not to constitute an arson hazard.

But you said our RE jobs had gone forever. That's not so. It will take several years for the markets to absorb what they can of this excess housing. And meanwhile they're already starting to build new homes, more suitable to families with realistic budgets than before. The market in superhomes ($279 K and above), around here, has collapsed. And the market in affordable homes is starting up.

"And with the coming shortage of workers AND immigrants (Mexico is about to enter a phase where it will experience labor shortages too, given huge strides made in fertility control in the last two generations), the sheer numbers you seem to illogically base your fallacies on despite the above facts won't even be there either."

Don't count your chickens before they hatch. We have a real shortage of work for our existing workers. Once we get to the point where (possibly) there aren't enough native Americans and Mexicans to fill the jobs, we'll get more Ethiopians and Vietnamese and Ghanaians and Peruvians and everyone else around the world who can't find work. We could fill a billion job openings with the people who want the work and are willing to train for it.

Trolling
I never heard of the phrase "trolling". Interesting.
Unfortunately, I consider your opening statements to be the words of a provocateur.
I have been around this board for a very long time--mostly I just lurk.
Your subject was: "what a sellout!" to an article that is trying to inform us that there is an economic recovery going on and that conservatives should not ignore that. How is that not provocative?

Your next statement is: "Take out the over ONE MILLION temporary census workers that were 'hired' and those numbers all go to hell, Larry." How is that not provocative? Those sound like fighting words to me.

Your final statement is: "You've either been at the bottle again or have finally sold out to liberal pressure from your CNBC masters." Isn't that provocative?

Larry Kudlow doesn't strike me as the kind of guy who gets very worked up about anything. I, on the other hand, find the name calling and vitriol in your statements to be provocative and it got my hackles up.

So... now I'm the troll. Larry is the sellout. Are you the kind of guy who feels that no one knows anything except you alone and you are the final decider of what is right and true?

I challenged your statements because I don't think you thought them through. It sounded like a gut reaction to something you didn't want to hear. I felt the same way.

But is it really unreasonable for someone who is sympathetic to a cause to try to warn those who are taking their arguments in the wrong direction that they are in danger of painting themselves into a politically disastrous corner? Does this make him a sellout?

Everyone has different strengths and weaknesses. Larry Kudlow sounds like he has a very high degree of objectivity. He has the ability to separate his feelings from the reality he is seeing in the economic numbers. He is warning those of us who are far more passionate to be careful.

I like your passion. I didn't feel your statements should be left unchecked.

Trolling
I never heard of the phrase "trolling". Interesting.
Unfortunately, I consider your opening statements to be the words of a provocateur.
I have been around this board for a very long time--mostly I just lurk.
Your subject was: "what a sellout!" to an article that is trying to inform us that there is an economic recovery going on and that conservatives should not ignore that. How is that not provocative?

Your next statement is: "Take out the over ONE MILLION temporary census workers that were 'hired' and those numbers all go to hell, Larry." How is that not provocative? Those sound like fighting words to me.

Your final statement is: "You've either been at the bottle again or have finally sold out to liberal pressure from your CNBC masters." Isn't that provocative?

Larry Kudlow doesn't strike me as the kind of guy who gets very worked up about anything. I, on the other hand, find the name calling and vitriol in your statements to be provocative and it got my hackles up.

So... now I'm the troll. Larry is the sellout. Are you the kind of guy who feels that no one knows anything except you alone and you are the final decider of what is right and true?

I challenged your statements because I don't think you thought them through. It sounded like a gut reaction to something you didn't want to hear. I felt the same way.

But is it really unreasonable for someone who is sympathetic to a cause to try to warn those who are taking their arguments in the wrong direction that they are in danger of painting themselves into a politically disastrous corner? Does this make him a sellout?

Everyone has different strengths and weaknesses. Larry Kudlow sounds like he has a very high degree of objectivity. He has the ability to separate his feelings from the reality he is seeing in the economic numbers. He is warning those of us who are far more passionate to be careful.

I like your passion. I didn't feel your statements should be left unchecked.

What is this Marxian BS about 'workers' all the time?
"Oh-- now it's excess jobs. Before, you just said jobs."

yeah, jobs that are effected. Obviously they are also excess -- not needed anymore. So...you're point is?

"It's a labor intensive field. And that's a good thing."

Not for long. http://en.wikipedia.org/wiki/Contour_Crafting

And no: it is NEVER a 'good thing' for production of a good/service to be labor intensive. Labor is actually a precious and limited resource, Roy. You are unbelievable.

"It's about our ability to find gainful employment for the millions of families we already have-- and the ones to come."

No it isn't. You know, for a guy who hates the EVIL corporations you sure want as many people being as dependent upon them as possible.

It about the ability to provide for the consumption needs of as many people as possible. That is what an economy is for.

"Lack of investment capital's not even in the top twenty. We have so much of the stuff we've been running the world's biggest casino with it: Wall Street and the derivatives markets."

Yeah, like in houses...which don't contribute much at all to increasing productivity so that our FUTURE standard of living improves.

So, just because investment capital -- which doesn't belong to you at all, I might add -- is not spent how Roy Thinks It Should means that all my points are invalid? Riiggghhhht.

"NC is a good indicator"

No it isn't. Not by a long shot. It's good that you are better off, no doubt. And I don't begrudge you for it. But as an 'indicator' it is hardly a blip on the radar. 60% of Option ARM resets coming in to play is happing in ONE state -- California. The level of damage that will have nation wide will pale in comparison too what NC does or doesn't do. I say this both in aggregate terms and in regards to proportion of the nation's population.

"But you said our RE jobs had gone forever."

Again, not on Planet Roy but for the vast majority of the rest of us, different story.

"Once we get to the point where (possibly) there aren't enough native Americans and Mexicans to fill the jobs, we'll get more Ethiopians and Vietnamese and Ghanaians and Peruvians and everyone else around the world who can't find work"

Uh, you seem to think that WE will be the only ones competing for those workers. Europe and Japan will be in even more demographic desperate straits than us. They will invest over in those countries and create jobs there (esp the Japanese), so the delta between life there and over here will shrink.


And more Trolling 101
http://en.wikipedia.org/wiki/Troll_%28Internet%29

"Your subject was: "what a sellout!" to an article that is trying to inform us that there is an economic recovery going on and that conservatives should not ignore that. How is that not provocative?"

No, it was the author of the article who I claimed was a sellout. And I backed up my claims with why I felt that way -- which you didn't even bother to address.

And there isn't any 'economic recovery' going on. Not to whom it matters to -- Joe Sixpac. And in politics, PERCEPTION is what defines what reality is. Pay attention.

Oh, and if you were a long-time lurker as you claim to be, you'd already know that this has been discussed before. Hmmm...you didn't. So much for your 'long-time lurker' claim.

"Your next statement is: "Take out the over ONE MILLION temporary census workers that were 'hired' and those numbers all go to hell, Larry." How is that not provocative? Those sound like fighting words to me."

Too bad. You seem to equate hurting your feelings as somehow disproving true statements. Nice trick...usually one that Trolls use. And why would you care? You're not Larry, are you?

"You've either been at the bottle again or have finally sold out to liberal pressure from your CNBC masters." Isn't that provocative?"

First of all Mr/Mz Long Time Lurker (discredited), if you had been truly following these forums, it was Joanie who offered up the 'selling out to liberal pressure at CNBC' theory and backed it up with some rational observations, not me. I was just continuing that line of discussion. Second, Larry had a big problem with alcoholism. That doesn't make him a bad person -- but it is a valid explanation for how such a whopping screw-up with analyzing the data got past him.

"Larry Kudlow doesn't strike me as the kind of guy who gets very worked up about anything. I, on the other hand, find the name calling and vitriol in your statements to be provocative and it got my hackles up."

What name calling? Other than sellout, that is. And Larry DOES get worked up about almost EVERYTHING. You must not watch his show on TV much. Usually it is a positive way (his passion, that is).

"So... now I'm the troll. Larry is the sellout. Are you the kind of guy who feels that no one knows anything except you alone and you are the final decider of what is right and true?"

Nice rhetorical trick. Won't work. Here...let me rip it to shreds for you:

"So... now I'm the troll"...that's right. As the sky is blue. No need for opinion there. But if you wish to consider it such, that's fine.

"Larry is the sellout" That's an opinion. yes.

"Are you the kind of guy who feels that no one knows anything except you alone..."

And that is you mischaracterizing and misdirecting the issue. Clearly, my opinions are just that...opinions. You don't have to like them...and in fact, the less YOU don't like them the better, in my view.

"...and you are the final decider of what is right and true?"

No. And you must have incredibly looowww self-esteem to believe that, too.

"I challenged your statements because I don't think you thought them through."

No. You have repeatedly 'challenged' my statements because they 'provoke' you, as you keep saying. As for me, I just explained thoroughly just now much I thought them through. The provocation is just a unintentional bonus for the occasional fool/troll that comes around here.

The problem with Trolls is that most aren't that good -- they can't keep track of the BS they spew. And when they do, they change the subject because debate is not their goal -- wasting people's time is. And I just exposed several times when you've done this.

"But is it really unreasonable for someone who is sympathetic to a cause to try to warn those who are taking their arguments in the wrong direction that they are in danger of painting themselves into a politically disastrous corner? Does this make him a sellout?"

First off, now you are claiming to know it all by stating an opinion as a fact. "sympathetic to a cause to try to warn those who are taking their arguments in the wrong direction that they are in danger of painting themselves into a politically disastrous corner". Second, I offered another possibility than 'sellout'.

"Everyone has different strengths and weaknesses. Larry Kudlow sounds like he has a very high degree of objectivity. He has the ability to separate his feelings from the reality he is seeing in the economic numbers. He is warning those of us who are far more passionate to be careful."

Uh-huh. Reminds me of what people said of some chump promising me 'hope' and 'change' too. Oh, and objectivity doesn't equate with accuracy. But then again, you seem to equate how something impacting your feelings as equating with accuracy or not, too. So...I'm guessing you're a woman? (now THAT was intentionally provocative as well as a good guess, btw)

"I like your passion. I didn't feel your statements should be left unchecked."

That ruse also doesn't work, Troll. FYI, in the future I'll be sure to apply even more vitriol in responding to your postings just because you are special. Call me the Anti-Troll.



I have a question for you
Are working people human beings?

In your calculus, labor is always an unwanted expense-- something to be minimized or elimiated for the world to work better. Whereas I always thought we tried to order our affairs in such a way that the maximum good could be achieved for the maximum number.

Which is it? Are you working to build a world where the poor ignorant workers are fated to just become unemployed and drift away? Or is there some room in your world for humans?

Speaking as devil's advocate
In all fairness, I've been following this exchange. And Mr K does not seem to be maligning you unreasonably (acting as a troll) so much as he is making reasonable observations that don't fit your odd world view.

For instance, is there a recovery going on now? To the guy in the street it certainly doesn't seem like it. (Home foreclosures, as you relish pointing out, are still on the rise.) But then I've never known you to be an advocate of the guy in the street.

Wall Street's again posting handsome profits. Which is not surprising as our current government has been pretty much installed by the gang over at Goldman Sachs. And the Dow's just gone past eleven thousand. So for some people (in fact, the ones you champion) the recovery's steaming along nicely.

So are you just being obstinate and difficult? Such a conclusion would be hard to escape. Your promise to add more vitriol in future postings seems like it comes from the heart.

Sorry, Roy
But you haven't been following it enough.

When it comes to mismatching apples and oranges, Mr/Ms K even beats you.

Doesn't matter if people were cats, same problem
No, labor is expensive because it is precious. And maximizing the efficiency of the use of any resource that precious is what counts.

And when beef at the store rises in price enough, people will switch to eating more chicken or going with less meat or both.

Econ 101. You can't suspend the laws of economics no matter who much in denial you are in.

On which side are you? I am surprised reading your comment is like listening to Harry Reid, "everything is great, the President is great, himself is great" why is America suffering you make me wonder. Please wake up, maybe you overslept

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