Sick of the ‘R’ word

To David in Philadelphia: I am truly sorry for your bad run of luck and I hope things turn around. But your experience does evidence that advanced degrees bring no guarantee of employment.

To Andy in Connecticut: Give the guy a break, will ya?

To Scott in California: I don’t mind seeing badly run companies disappear, but many of the casualties are good companies that are collateral damage. I do care when hard-working people suffer the consequences while CEOs waltz out the door with bags of money. They should be drawn and quartered.

To John in Maryland: Boy, we know the Reagonomics bandwagon has a reserved seat in your name. The old “trickle down” theory, (aka “Voodoo Economics” as described by Poppy Bush), has never benefited ANYONE but those at the very top of the income scale. W’s tax cuts have only exacerbated the abominable disparity between the economic elite and the other 95% of Americans.

To Paul: I see you have now made a video on this topic. Oh my. Someone at CNN had a new camera to try out, right? Seriously, why do you waste your time, and your readers’ time, debating the symantics? Just present the facts and let us decide for ourselves what to call it.

The latest economic news from CNN? Unemployment 6.1% (5 year high). Job losses 2008 to date 605,000. Homes in foreclosure 2Q08 1.25 million. There is no turnaround in sight and worse news will come as the financial industry continues to collapse.

The conversation between David and Andy enforces my point further below in the posts. Americans have gotten soft, lazy, and demand hand outs. “I have two Masters and it shouldn’t be this way.” Did I miss the free tickets being handed out for cushy lives? You mentioned “two masters” numerous times, but yet you never mention what they are in! I have ONE BS in mechanical engineering and I’m steadily turning away job offers. Just because you got the degrees doesn’t mean you’re entitled to anything! If you believed that fantasy, then you my friend need more experience and less education. Experience unfortunately is one of those things you get right after you needed it though. I’m sorry that you’re having a bad time David, truly I am because I have been there. But take the opportunity to evaluate the marketability of your degrees and find the right angle for marketing yourself! Only difference between a flop and a superstar is the marketing program. Best of luck to you.

Paul La Monica’s approach to economics is on the cutting edge. He looks beyond the economic theories that have shaped fiscal planning at the federal level for more than 65 years. Americans are still living daily lives according to what they were taught to expect in terms of economics. A careful examination of the American economy reveals that a person cannot follow leading economic indicators anymore to predict trends and remedies to this failing economic situation we have in America.

Well David, your first mistake was getting two Master’s degrees. Instead of gaining relevant work experience, you spent nearly an extra decade in a classroom, likely learning material that would be outdated by the time you graduate. And probably to the tune of about 200K to boot.

Your second mistake, was assuming that those “Master’s Degrees” were Golden Wonka Tickets. I mean let’s be honest; you mentioned your “Master’s Degrees” about 15 times today, which leads me to believe that you’re the type of person who likes to be judged on paper, with paper. Which makes it much easier to cross your name off a dot matrix printout because you’re separated from your peers by decimals instead of character traits and a tangible portfolio.

Your 3rd mistake, is sitting around getting red-faced about all of this instead of creating a solution. Business bankruptcy is at a lofty +29% … but new business filings are at an even loftier +41%. Again, perception seems to win out over substance … courtesy of our friend Mr. La Monica and his minions, I’m sure. With a little help from the scattered anecdotal such as yours, of course.

I’m not sure if you’re quite desperate enough to take MY advice, but I’ll offer it anyway. Throw your “Master’s Degrees” in the trash and jumpstart a new career where you’re less likely to be judged on the grade you earned in Latin 15 years ago.

As a LAST resort, you could always become a daily columnist and content editor for CNN.com. I can’t imagine their requirements are all that tough.

Good luck either way.

To Andy,

Frankly, I do not at all see the economy recovering. I will reiterate that everywhere I look, companies are either laying people off or are on hiring freezes. Now that most of the slaughtering is done via mass layoffs, most companies are on hiring freezes or at the very least very reluctant to hire anybody.

I was laid off from my job, not fired. If you were educated enough, you would know the difference. And yes, I blame the shoddy economy for the bad state I am in. I have two Master’s degrees and I cannot find work; if it was a good economy, it shouldn’t be like this.

Maybe you think I sound like sour grapes, but I am absolutely frustrated at the situation and it has taken both a psychological and economic toll on me personally. Even my parents are beginning to lose patience. I have done everything right: I went to college, then subsequently earned two Master’s degrees in two years. Have worked three years, and I was, along with many others in my company, unceremoniously laid off.

It has gotten to the point where if you, Andy of New Haven, CT, were telling me the truth, maybe you can lend a hand. I really need help in this situation and I’m getting desperate. A person with two Master’s degrees and three years work experience should not be unemployed.

I cannot accept the economy is recovering until I can find employment or at least I can find companies that are actually hiring.

Paul La Monica accused of being a cheerleader for the economy?

Is that some sort of joke? This dude is a doom & gloomer, through and through.

As for Davis … sounds a little like sour grapes to me. I just earned my second consecutive 10% pay increase and our company has a laundry list of new-hires. I imagine I’d be pissed off and looking to blame something if I was fired but the truth of the matter is, you need to be prepared for situations like this.

It astonishes me to see people complain about income adjustments after raking in 7 figures in the lending industry. These are the people who preyed on borrowers and caused this mess in the first place. Now I’m supposed to feel bad because you’re *only* earning 85K per year?

The economy is clearly in recovery, whether or not people are willing to accept it.

Davis, I’m sorry to hear about your situation and I do wish you the best of luck in finding a new job. I do know what it is like to be laid off since it happened to me during the last recession in 2001. So I understand what you are going through.

All that said, I don’t think that I am cheerleading for the economy. I am simply trying to point out that A. there are signs of recovery on the horizon even though it may take awhile for a rebound to begin and that B. this current economic period is not a sign of an impending depression. I am just trying to put things in context because I think many of my colleagues in the media as well as politicians are doing their best to try and scare people and foster a sense of panic.

I have never claimed in any of my columns that the economy is now in robust shape. I’ve gone out of my way to say that many consumers are struggling. And earlier this year, I was urging the Fed in many columns to take steps to help strengthen the dollar so that oil and food prices might ease. Inflation has been a problem for everyone.

So please don’t misinterpret my hopeful optimism for blissful ignorance and denial. I understand that many people are having a rough time in this economy.

Finally, as for my job. I actually write a daily, not weekly, column for CNN and I am an editor for the site. So trust me, I am keeping fairly busy at work.

Again, I do wish you (and all of my readers who are facing some economic difficulties right now) the best of luck and hope that this economic malaise does not wind up lingering for that much longer.

Take care.

PRL

Who cares if the country is in a recession or not? Economie move in cycles. You’re supposed to have ups and downs. That’s why individuals should diversify and keep an emergency fund.

Let the recessions clear out the rubbish companies. The stronger will survive to drive the recovery.

Mr. La Monica,

With all due respect, frankly I think you have the easiest job in the world. I have no idea what your salary is, but I am guessing that CNN is paying you a pretty decent amount for your to act as a cheerleader for the US economy. You frankly have the easiest job in the world because all you have to do is write a weekly column that essentially comes down to this: ra, ra, ra! Gimme a G-R-E-A-T! What’s that spell? GREAT! The economy is doing great!

Maybe that was not the message you are trying to convey, but you frankly do not understand the reality of millions of Americans who are struggling at the moment. People out there are struggling to pay their bills, struggling because their homes are about to be foreclosed, or struggling because they were laid off and cannot find jobs.

I was laid off in May. I am not only a college graduate; I have two Master’s degrees. And I have not been able to find employment. Even if the companies have stopped the mass layoffs — which the recent number of newly filed unemployment claims seem to indicate — nobody is hiring. Companies are tightening their belts and trying to squeeze as much productivity as they can from their workers. Those very workers are working harder for the same amount of money or even less out of fear that they might be laid off. Because of this, companies can get more for less from their employees and they don’t think it’s necessary to hire anybody else — or even if they want to, they simply cannot afford to hire anybody.

Right now, everywhere I look, it’s a hiring freeze. The labor market is very unsympathetic and unforgiving for those who have been laid off and millions of laid off and unemployed people are quietly being marginalized because many in America are beginning to buy into the government’s lies that the GDP is up and that the economy is doing well. Americans are hypnotized by the lies and misrepresentations of the government. They do not want Americans to realize the plight they are in and the plight of millions who are jobless and/or cannot even afford to pay their bills.

Mr. La Monica, I urge you to wake up and see the reality that millions of Americans are struggling because they cannot find jobs and/or cannot pay the bills. I have been unemployed since May and despite my educational credentials and experience, as well as my youth (I am in my mid-20s). However, I had to resort to my parents helping me through these hard times. But I am lucky that I still have my parents as my safety net. What about the 40 or 50 year old workers who were laid off and have families to feed and significant financial responsibilities?

In 2006 my husband and I made just over $240K. This year we will barely clear $85K. I have left my 16 year career in the lending industry. After living through nore than one of these cycles, I have had enough. Regardless of what the experts say, our family is in a RECESSION! Wake up people, positive attitudes will not make this go away. It stinks, but its real and we have to go through it so we can get it behind us. The more we prolong the inevitable, the worse it will be.

Yes! Very sick of the “R” word! There is no “R”ECOVERY in the near future!

The truth is not “when the unit(s) of measurement do not support the word they try to re-define the word (or discredit the measurement process).” It is the measurement always “surprises” you. I mean, one day they say it was 1.9%, the next they say 3.3%. You can pick whatever the “measurement” you want. I don’t know if you noticed that the “surprises” are abundant these days.

Yes, finance never need look behind to learn the lessons that lead us to this fiasco. Onward, forward to the next bubble from whence we can make our bonus checks! Quite responsible reporting, top notch job.

What happened to the time when banks were the most conservative institutions on the planet?

I always love when people use negative words like recession, and then when the unit(s) of measurement do not support the word they try to re-define the word (or discredit the measurement process).

If it doesn’t matter why do you use “R” word? It matters and it goes to show you what utter disrespect and contempt our leaders have for the people they lead. Americans are too delicate to understand their fate, too disinvolved, too spoiled! They have the BK syndrome, “Have it the good way, or no way.” I’d bet not a single person on this board has written their leaders and expressed their frustration! Why? Because you don’t want to face the bad news, it disrupts your grand illusion! Your leaders think you’re a fool and you consistently prove them right because you will believe the gibberish that they send out with news releases and you don’t demand the honest truth. GDP numbers are statistically skewed to the point that the number doesn’t even mean anything, long as the public hears positive. Let’s save everyone the time, energy, money, and frustration and just call every GDP from now on a positive 2.6% that way it falls in the “Feds” preferred zone and it will always meet expectations. Oh wait, no the expectation will have to be 2.5% so it beats everytime. The SEC can then put a law out suspending selling any shares, you can only buy shares from this point forward. Yeah, nothing but upside. Fools!

The GDP didn’t actually grow. Inflation drove prices up and that made it appear as if we grew. “Producer price index for durable manufactured goods shows a 9.4% year-on-year drop in real orders, the worst since early 2002.”

http://bigpicture.typepad.com/comments/2008/08/durable-goods-d.html

Of course the liberal press is rooting for a recession in the classical case,
but it is not going to happen. Even though a lot of bad things are happening in the economy. What is our GDP: 14 trillion? Apparently it will take even worse things to happen to slow it down. The Goverment bailout of over-leveraged homeowners is only going to delay the housing market recovery. The government/FED Reserve meddling in seemingly every detail of the country’s financial life only adds to these “new catastrophes” (ie, Greenspan and Co. keeping the Fed Rate so low for so long.) And if the government is willing to bailout millions of homeowners shouldn’t we also feel sorry for the oil speculators that have now lost about 20% of their investments since the Oil
Bubble burst. Give me a break!—from the Government!

the financial sector is, no doubt, in recession, and since they are the ones who generally conduct the national conversation on the economy we get a very negative message. as an example i just read another article citing experts urging us to not be fooled by the recent positive gnp numbers…what? thankfully the rest of the economy is moving along, giving the hard-hit (and apparently more garrulous) sectors a chance to sort themselves out.

Sick of the “R” word
what I am sick of is those “R”esponsible for causing this mess getting millions in low interest short term loans from the Fed…

The average American is not getting any relief from the erosion of our income due to RECESSION,INFLATION,lose of jobs to Americans….

Could you be any more irresponsible, Lamonica? If you don’t know the difference between unleashing the “R” word on the ignorant public and simply stating what it is … “a period of sluggish growth” .. then you shouldn’t be contributing to any significant media outlet.

To Sybil in Santa Rose CA:

I did not say I think highly of them. I said that the critics, the haters, can’t have it both ways. You can’t say they wont do anything and then say if it wasn’t for them, we wouldn’t have grown. I am saying we grew INDEPENDENT of the stimulus checks because our economy is STRONG. The slowdown is largely mental.

And yes, I believed I quantified this by suggesting that we should cut taxes AND SPENDING. This would also include BAILOUTS OF ALL FORMS.

For those at the bottom of the pay scale it is not only a recession, but a depression, but for those at the higher end of the pay scale life is remains good. I’ve been saying for a long time now that the gap between low wage earner and high salary income is too wide. So when you say words like recession and depression for who are you refering to? The upper or lower middle class? Or those who are forced to live on minimum wage? So the answer to your question is yes. It matters to those at the bottom who are struggling to make ends meet, because once denial is set aside we can begin to address the problem. Energies can be focused into other areas.

Before we start even trying to figure out how to get out of this bathtub, I think we desperately, totally, completely, are-you-kidding-ly need to get clean first.

And John in Maryland – those government stimulus checks you think so highly of, you know that deficit that IOUSA talks about killing us? Well every single solitary $ of those checks added to our government deficit. Borrowing and spending money is not an economy.

Does it make you feel better to say we are not a recession. Far be it from me to disrupt your illlusions. The facts are the facts, whatever you call them. How about the i word (inflation) or the s word (stagflation).

Are those any better?

Mike, you make a fantastic point. I do think that another reason why I find the recession debate tiresome is that there still is confusion as to how to define it. Many people are sticking with the classic textbook definition of two consecutive declines in GDP and I believe there is certainly merit to that. But others refuse to acknowledge a recession until the NBER declares it as such. So that muddles the recession definition picture as well. My main point though still stands. Regardless of what we call this current period, it’s a challenging time for many Americans and we need to acknowledge that and try to find solutions for the current malaise. Your suggestion about minimum wage increases is very intriguing. In fact, I think it’s something that I might look to explore a little further after Labor Day and as we get closer to the election in November.

PRL

Yes, it does matter if we’re technically in or not in a ‘recession’. Maybe I’m old-school, but I think we should go back to the old definition of ‘two quarters consecutively of declining GDP’, which closely approximates the total aggregate demand of classical economics. It keeps things simple and relevant, and it removes the possibility of people moving the goalposts (usually for political purposes). So, in our current situation, we would not yet be in recession, and we may avoid one altogether, which would be fine.

On the other hand, we have lots of problems: millions of destitute people. Companies are making lots of money, but the majority of workers are being hit by steadily declining real incomes. The price of stuff is going up, but the price of labor is not, except for a very small percentage of high-earners. This inequality of income distribution is the real problem.

An increase in the minimum wage will fix most of the problems that we have. Robert Reich has suggested that we set the minimum wage at half of the average wage (currently $19 per hour in the US), which would make for a $9.50 minimum wage. This would allow tens of millions of Americans to lift themselves out of poverty by working. Minimum wage jobs are largely onshore jobs that are extremely difficult to offshore to India, China, etc. In addition, if we raise everyone on the bottom rung, we probably raise some of the folks on the second-to-the-bottom rung, etc.

This has already been tried, and it works. To wit, I was in New Zealand a lot last year. The minimum wage is $11; there is no poverty.

I like Dave’s analysis. However, I will say this: banks will continue to fail, the credit markets will remain very tight for quite some time, jobs will continue to be shed, and the stimulus effect will soon fade. Add to that slowing exports due to slower growth abroad, and you have the makings of very weak, or negative, growth in the coming quarters. It may not be the end of the world, but the good times are over, and they won’t be back for at least two or three years. This economy is facing an awful lot of headwinds, and it’s going to take quite awhile before the winds die down and the economy can move forward again. But like Dave says, if we continue to try and patch the hole in the boat, eventually we’ll sink. Better to just take the boat ashore, let it fall apart, and go get a new boat. It’ll be stronger, and we won’t have to worry about patching up the holes anymore.

I agree with everything Dave from Boston said except that this is not a recession. I agree that it would be OK to say it-if “IT” were real. Which it is not. I also, in a rare event (the moon’s must be aligned, right Paul?) agree with our author. This is a normal cyclical turn, but WE ARE STILL GROWING!!! We grew OVER 3% in the 2nd quarter.

The W haters want to say it was because of the stimulus checks. First people complained the stimulus checks were small. Now they are saying the economy wouldn’t have grown except for the stimulus checks. YOU CAN’T HAVE IT BOTH WAYS!! Our economy is GROWING because we have, for the first time since the mid-1990s, a grid-locked Govt which doesn’t go too far in either direction! When the Govt went far left from ‘92-94, we had disaster. When the Govt went left of center from ‘04-’06, we had disaster. I say left of center because even though they cut taxes, they offset fiscal conservatism by spending like drunken sailors and suffered the consequences in ‘06. The Govt needs to GET OUT OF OUR WAY!! Cut taxes, CUT SPENDING!!

We need to get back to conservatism in all it’s glorious forms. I would encourage all americans to see the nonpartisan movie, “IOUSA.” I am not an author, or affiliated with the film in anyway. I do not reep any financial benefits from touting the film. I am; however, a concerned citizen for the future of our great Republic. The movie lays down in details the fiscal deficit, monetary deficit, personal deficit, and leadership deficit that plaugues our country. We need tax reform to encourage savings, fiscal reform to end entitlements, personal responsibility to solve our own issues, and we need a leader who does not choose partisanship to solve the problems we can’t solve independently.

Dave is right-WE NEED TO WAKE UP. THERE IS NO SUCH THING AS A FREE LUNCH.

I am sick of the left saying we are in a R…If anything, the best is yet to come if we make tough choices!

Does it matter if Paul writes an article about it? Will you really learn anything or just waste time looking for the substance?

Correction: it was from 1.9% revised to 3.3%. What a magician!!

No. Especially the number from labor dept is no dependable. I mean from 2.5 to 3.3% revise makes the first number looks like from someone’s hat. Then define reccesion based on that number? you have got to be kidding me!

Why can’t anyone have the guts to come out and say YES this is a recession, and YES it is a good thing for the economy. Recessions are a NORMAL part of economic cycles. We have booms and busts. The busts clear out all the bad debt, unsuccessful business ideas, and all the other excesses of the market.

The last time we had a larger recession was 91-92, at which point people still accepted that this was a periodic occurrence. We became spoiled and complacent by the 90s, and have changed our mentality to believe that we are entitled to good times all the time, and never any bad times.

Take it from me, it doesn’t work that way. Every time societies try to “eliminate” recessions, they just create another bubble and delay the inevitable. We did it in 2001, and now we are paying the price. The only way to “eliminate” this recession will be to blow up another bubble. This will only make the pain and suffering worse down the road.

YES, it is OK to say the “r” word. YES, it is a recession. YES, it is good for the economy. We have 2 choices before us: (1) step back and allow this economy to implode quickly and painfully, but hit rock bottom within 1 to 2 years, and then start to rebuild, OR (2), keep trying to “fend off” the recession by debasing our currency, manipulating the markets and interest rates, and bailing everyone out. This option will only cause the pain and suffering to last for 10-12 years and be a slow, painful implosion that will only keep resurging every time we think it is over. Unfortunately, our government has taken the latter option, because somehow we are of the mentality now that we are to avoid recessions at all costs.

We have become spoiled and complacent in this country, and our politicians don’t have the courage to give us some tough love. Unfortunately, we will all end up suffering in the long run because of our inability to face the truth, as gasoline, energy, and food prices will continue to skyrocket due to a weakened dollar.

Every large empire has collapsed because it becomes overextended and resorts to printing money to pay off the bad debts. WAKE UP AMERICA! This is NOT smart monetary policy. If we don’t own up to our actions now and take responsibility, and strengthen our currency, we will all inevitably pay the price down the road.