The Job Loss Recovery

The Financial Times points out that the Obama administrations imagined or invented claims of 350 quintillion jobs created just today are completely meaningless:

Since jobs and wages dominate most people’s perception of the health of the economy, Mr Obama faces the awkward prospect that most Americans will still feel like they are in recession in the build-up to next year’s mid-term elections. To that extent his difficulties are predictable. Remember George Bush senior, who was defeated by Bill Clinton in 1992 in the “economy, stupid” election even though the US had returned to growth several months before.

However, neither Mr Bush senior, nor any recent US president, has simultaneously had to grapple with a jobless, or job-loss, recovery and an electorate seething with resentment against Washington’s generous treatment of the perceived authors of the recession – Wall Street. Previous downturns were induced by sharp interest rate rises to quell the consequences of overheating. In most people’s view, this recession was caused by the speculative greed of bankers – an entirely different kind of downturn that fits the plot of a morality play.

Unlike most morality plays, however, this one appears to be rewarding the baddies. While the job numbers continue to deteriorate, Wall Street is enjoying good times again and preparing another season of huge bonuses. Goldman Sachs, alone, is on track to pay out $21bn (€14bn, £12.7bn) in bonuses by the end of the year. Since it repaid the direct bailout money it received from Washington – as opposed to the implicit subsidies from which it continues to benefit – it was not subjected to the pay restraints announced last week by Ken Feinberg, Mr Obama’s “pay czar”.

(For what it’s worth, I do not believe the Obama administration has the constitutional authority to regulate pay. I’m also not a big fan of populist rhetoric. But I will point out that I believe Wall Street is being really, really stupid at the moment. Flaunting their new wealth with ridiculous bonus payouts at a time when the economy is still in real trouble is risking a populist backlash of biblical proportions.)

But the main point of the FT article is that the happy face of the Obama administration is meaningless to average Americans. They can still see the downturn happening around them. Layoffs are still continuing, new jobs are not being created. The imagined or invented claims of the administration and the relentless disavowal of any responsibility for the current economic situation are wearing thin in the face of what taxpayers can see with their very own mark one eyeballs.

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