Why the President's Jobs Plan Won't Work

The President has proposed a new plan to get people back to work.

The problem is one tax on businesses is skyrocking, not due to the federal govt. perse (though they are the ones extending benefits), but due to states.

State unemployment taxes have skyrocketed. Here in Florida a 12 fold increase.

"The minimum tax will jump from $8.40 per employee to $100.30 — an almost 12-fold increase — next year while the maximum will go up from $378 per employee to $459, state officials said Wednesday."

33 other states plan to hike these taxes a minimum of 3x the present rate. HI has a 500% increase coming.

This means we have gone past the tipping point. The action by the govt. will be too little too late.

Why the unemployment numbers went down...

The number of people in the workforce shrank by 291,000.


How this impacts the numbers is explained by the genius at Political Math:

Let’s say we have 20 people in the workforce and 2 of them fit the technical definition for unemployed, which means that they’re actively looking for work. That gives us an unemployment rate of 10%.

Now, let’s say one of the unemployed people got tired of being unemployed and decided to go back to school. She has now removed herself from the labor force, so we don’t count her when we count unemployed people. Let’s also say that one of the employed people lost his job and instead of looking for a new one, he decided to simply retire.

As you can see we haven’t added any jobs… in fact we have fewer jobs than we did before. But we took a higher percentage of people out of the “unemployed” group than we did out of the “employed” group. It’s now 1 person unemployed and 17 people employed. We’ve “slashed” the unemployment rate to 5.5%.

The economy is getting better?..BDI continues to fall. Update

Update: Bureau of Labor statistics are caught fudging their own data!

Here is that last piece of data, over the previous three months:
-June 39 states down, 10 states up (1 unchanged)
-July 29 states down, 21 states up
-August 42 states down, 8 states up
Already, we can see a huge discrepancy in the numbers. While both sets of data, show huge, fictional improvements between June and July, the state-by-state data shows a reversal for August – with the labour market obviously deteriorating dramatically based upon their own measurements. However, this didn't stop the BLS from refuting its own data to report an improvement between July and August, when it released its aggregate number.

Economists continue with their upbeat predictions yet I don't see it. Everyone is happy that 'only' 530,000 people filed NEW unemployment claims.....thats over half a million people...how is that positive?
Another indicator I watch is the Baltic Dry Index. It is still plummeting which means manufactured goods aren't shipping, because companies and thus people aren't buying.

Chart from investment tools

Getting worried...

Ok I'm not quite panicked yet, but perhaps my anxiety factor is rising. It seems almost as if there is a concerted effort by the US Government as well as some Wall Street "insiders" to paint a more rosy picture than really exists. I believe they are hoping things will turn around, but things aren't.

-Claims that unemployment numbers are improving are a gross fabrication. People continue to loose jobs....very few gaining jobs. Additionally, once someone stops looking for work, gets a part time job (because it is all they can find) or falls off the extended rolls, they aren't counted anymore. Hidden in yesterdays CBO report was a scare little number...2.3 million MORE people will be unemployed. How the heck is that an improvement?


- Claims the stimulus is working....but it isn't.

-Along with the new report from the FDIC on an increase in failing banks and those on the verge of failure, comes the obvious attempt to hide action behind the scenes. Bailing out banks with money that is itself debt money (remember we (the government) are $11.7 trillion in debt already and rising) seems somewhat insane.

So it begs the question....does the US Government and Wall Street have their heads up their fourth point of contact or are they merely stalling and preparing behind the scenes for what seems to be the inevitable economic collapse of the US?