The Recovery Thread

[Zander]

California faces a budget deficit of $25.4 Billion. IS that a lot of money??..... not when taken in perspective. The state has a roughly $2 trillion economy!! The Golden state will be fine.

 

[william the wie]

California faces a budget deficit of $25.4 Billion. IS that a lot of money??..... not when taken in perspective. The state has a roughly $2 trillion economy!! The Golden state will be fine.

A 1% budget deficit would be laughable if not for the restrictions in the state constitution on taxes and expenditures. That is a particularly big if in that context. And it needs to be fixed soon before other states default or if the law changes and they go bankrupt. Goldman Sachs and Morgan Stanley were within hours of bankruptcy during the melt down despite relatively clean balance sheets. 10% munis could do irreparable damage to CA and that kind of rate after another state's default/bankruptcy or a drawn out battle over the debt ceiling is quite likely.

 

[Zander]

California faces a budget deficit of $25.4 Billion. IS that a lot of money??..... not when taken in perspective. The state has a roughly $2 trillion economy!! The Golden state will be fine.

A 1% budget deficit would be laughable if not for the restrictions in the state constitution on taxes and expenditures. That is a particularly big if in that context. And it needs to be fixed soon before other states default or if the law changes and they go bankrupt. Goldman Sachs and Morgan Stanley were within hours of bankruptcy during the melt down despite relatively clean balance sheets. 10% munis could do irreparable damage to CA and that kind of rate after another state's default/bankruptcy or a drawn out battle over the debt ceiling is quite likely.

We'll get through it fine. There has been a major influx of investment banker talent in all levels of government here in California. They bring a business focus that is sorely needed. One good year of growth and the entire deficit problem is solved. The state is not all nuts and fruits!!

I am especially bullish on Southern California. The city of Los Angeles recently added Austin Beutner (formerly of Blackstone and founder of Evercore) as First Deputy Mayor and Chief Executive for Business Policy for the City of Los Angeles. He has already streamlined the City permit process from 17 depts to 2 depts. I can pull a permit in 1/2 a day instead of a week! He also successfully enticed the large Chinese battery firm BYD to build their US plant in LA. I had lunch with him at a Chamber of Commerce event last week and he is as sharp as they come. His plan is to leverage our great Southern California weather and lifestyle, our celebrity and entertainment industry talents, and superb infrastructure (the city of LA owns the utilities, ports, and airports) to attract more foreign and (domestic! look out Austin Texas and Charlotte NC!) companies to come here. LA is the city of the future, regardless of what happens in Sacramento.

 

[william the wie]

I do hope you are right.

 

[loosecannon]

California faces a budget deficit of $25.4 Billion. IS that a lot of money??..... not when taken in perspective. The state has a roughly $2 trillion economy!! The Golden state will be fine.

A 1% budget deficit would be laughable if not for the restrictions in the state constitution on taxes and expenditures. That is a particularly big if in that context. And it needs to be fixed soon before other states default or if the law changes and they go bankrupt. Goldman Sachs and Morgan Stanley were within hours of bankruptcy during the melt down despite relatively clean balance sheets. 10% munis could do irreparable damage to CA and that kind of rate after another state's default/bankruptcy or a drawn out battle over the debt ceiling is quite likely.

We'll get through it fine. There has been a major influx of investment banker talent in all levels of government here in California. They bring a business focus that is sorely needed. One good year of growth and the entire deficit problem is solved. The state is not all nuts and fruits!!

I am especially bullish on Southern California. The city of Los Angeles recently added Austin Beutner (formerly of Blackstone and founder of Evercore) as First Deputy Mayor and Chief Executive for Business Policy for the City of Los Angeles. He has already streamlined the City permit process from 17 depts to 2 depts. I can pull a permit in 1/2 a day instead of a week! He also successfully enticed the large Chinese battery firm BYD to build their US plant in LA. I had lunch with him at a Chamber of Commerce event last week and he is as sharp as they come. His plan is to leverage our great Southern California weather and lifestyle, our celebrity and entertainment industry talents, and superb infrastructure (the city of LA owns the utilities, ports, and airports) to attract more foreign and (domestic! look out Austin Texas and Charlotte NC!) companies to come here. LA is the city of the future, regardless of what happens in Sacramento.

CA is the gift that keeps on giving. In most respects it may be the only state in the USA that is poised to actually increase living standards/capita over the next two decades.

 

[loosecannon]

Bernanke: Expect 3 to 4% growth in U.S. economy in 2011


Fed Chairman Ben Bernanke said the economy will see a three to four percent growth in 2011, but it will not hasten the reduction in unemployment.

“We see the economy strengthening. It’s looked better in the past few months,” Bernanke said. “We think a 3 to 4 percent growth number for 2011 seems reasonable.”


...


Warner argued that deficit reduction is on the forefront of legislators’ minds this session and touted the plan he and Sen. Saxby Chambliss are organizing, which would incorporate recommendations from the president’s deficit commission.

“I think we also have to longer term put in place a meaningful deficit reduction plan,” Warner said. “It’s put up or shut up time, and I think we will have a broad base of senators, Democrats and Republicans alike, who say the single largest threat, long term threat to our national economy, is not simply the short term challenges we face right now, or the financial crisis, but getting our nation’s balance sheet in order.”

Bernanke: Expect 3 to 4% growth in U.S. economy in 2011 - The Note

This isn't good news. It's own text belies a continuation of severe unemployment with a suggestion that the Fed will finance more bubbles.

 

[antagon]

This isn't good news. It's own text belies a continuation of severe unemployment with a suggestion that the Fed will finance more bubbles.

welcome to the new economy wherein employment is a non-metric. undoubtedly unemployment will go the way of GNP, and suddenly some other way of looking at our economic landscape will supersede it, shaping policy for the proceeding generation or two.

 

[Toro]

The recovery is off and running. Employment is growing.

With the substantial Social Security tax-cut in effect for 2011, we should expect withholding-tax collections to decline. However, that has not been the case. W/H tax collections have actually increased a little bit over the year-ago period:

First 21 business days of 2010: $167,171,000,000
First 21 business days of 2011: $167,367,000,000

The only way this could happen is if there were quite a lot more workers on payrolls than there were last year at this time. Note that we saw the same thing occur after the Bush tax cuts were enacted in 2003 — tax collections did not decline because the economy was already expanding.

Withholding Tax Stronger Than BLS Employment | The Big Picture

 

[Trajan]

The recovery is off and running. Employment is growing.

With the substantial Social Security tax-cut in effect for 2011, we should expect withholding-tax collections to decline. However, that has not been the case. W/H tax collections have actually increased a little bit over the year-ago period:

First 21 business days of 2010: $167,171,000,000
First 21 business days of 2011: $167,367,000,000

The only way this could happen is if there were quite a lot more workers on payrolls than there were last year at this time. Note that we saw the same thing occur after the Bush tax cuts were enacted in 2003 — tax collections did not decline because the economy was already expanding.

Withholding Tax Stronger Than BLS Employment | The Big Picture

fair enough thx. so we should see this reflected in the q1 gdp data? and the monthly employment ( absent temps?)

 

[Toro]

fair enough thx. so we should see this reflected in the q1 gdp data? and the monthly employment ( absent temps?)

I don't know. We'll see.

 

[McDowell's]

Or existing employee compensation is growing at an increasing rate? Either way, bodes well for continued stabilization and recovery.

 

[Trajan]

Or existing employee compensation is growing at an increasing rate? Either way, bodes well for continued stabilization and recovery.

I think that has merit.......I know of several corps who are loosening the purse strings big time, they have reduced work force, piled on more work have not given raises/bonuses for 2 years, this year they are I hear and know, or at least my wife does , they are kicking out

 

[william the wie]

The good news is that the only thing that can upset this applecart is external shock. The bad news is that external shock is quite possible. The better news is that the US as the best of the worst is unlikely to be hit quite as hard as other parts of the world so a second dip is likely to be relatively shallow and shortlived as in U6 should stay below the 24.9% mark of the 1930s.

 

[Toro]

Good news again on the jobless front. Initial claims fell to 383,000, the lowest since 2008.

Econoday Report: Jobless Claims February 10, 2011

Continuous claims also continued its descent, falling to 3,888,000.

ETA Press Release: Unemployment Insurance Weekly Claims Report

 

[boedicca]

And 2.2M more people gave up looking for work altogether over the past year.

 

[Foxfyre]

And 2.2M more people gave up looking for work altogether over the past year.

Yup. When week after week the new unemployment claims are in the hundreds of thousands and the new jobs reported for the month are less than a hundred thousand, I don't know. It seems to me that it is safe to assume that more people are out of work than are people who found jobs?

 

[Care4all]

if oil continues to go up in price, and the saudi's move to another currency other than the dollar to trade oil....it will be the end to life as we know it.....our credit rating will fall, other countries will stop owning the dollar, our government will keep printing money, and INFLATION will skyrocket.... along with unemployment....

gosh, am i doom and gloomer or a seer?

 

[Toro]

And 2.2M more people gave up looking for work altogether over the past year.

Yup. When week after week the new unemployment claims are in the hundreds of thousands and the new jobs reported for the month are less than a hundred thousand, I don't know. It seems to me that it is safe to assume that more people are out of work than are people who found jobs?

All the evidence is that jobs are being created and people are being absorbed back into the workforce.

But I think most people would agree that jobs aren't being created fast enough.

 

[Trajan]

if oil continues to go up in price, and the saudi's move to another currency other than the dollar to trade oil....it will be the end to life as we know it.....our credit rating will fall, other countries will stop owning the dollar, our government will keep printing money, and INFLATION will skyrocket.... along with unemployment....

gosh, am i doom and gloomer or a seer?

Food Care imho, more than oil...the UN index is at its highest point ever I believe and no small part of the ME angst either...we also just gave permission for the ethanol thieves to up the % mixture by a third to 15%.......and No I think you are right to be worried.

 

[Trajan]

And 2.2M more people gave up looking for work altogether over the past year.

Yup. When week after week the new unemployment claims are in the hundreds of thousands and the new jobs reported for the month are less than a hundred thousand, I don't know. It seems to me that it is safe to assume that more people are out of work than are people who found jobs?

All the evidence is that jobs are being created and people are being absorbed back into the workforce.

But I think most people would agree that jobs aren't being created fast enough.

Q- if people are being abosrbed.....back into workforce, they are looking looking for jobs, if this grows, how is this seen statistically?..wouldn't the unemployment rate go ...up?