In
the last few weeks much has been said about how the US economy, after
nearly collapsing in the Lehman aftermath has staged a gradual, if
painful and very slow improvement in the last 3 years. Sure enough,
After jobs peaked at an all time high of 138 million in January 2008,
they then tumbled to a depression low of 129.2 million in February 2010
and beginning in September 2010 have posted 24 consecutive months of
growth, rising to 133.5 million last month: a 4.25 million trough to, so far, peak. Not bad.
What,
however, has received very little discussion by either presidential
candidate, primarily because it is largely a byproduct of both
Republican and Democratic policy and action, is what can be seen on the
chart below courtesy of Diapason Securities, or the cost of said recovery - namely the New Normal angle of debt increase, which from merely steep, has mutated into beyond acute.
What
is worse, is that instead of a mere one-time bump in the rate of public
debt accumulation, as has happened in days past, the New post-Lehman
Normal has shifted the entire curve steeper by a factor of two!
This can be a zombie economy, Iv-B businesses were like the roots and branches of trees that grew very finely in the Great Moderation. Now to regrow them from the stumps of their ruins gives businesses which much less leverage. Because of this it costs much more to make jobs, the problem is the velocity of money is low and so more money is needed. Also there are areas between formerly networked businesses that are now stagnant, businesses are no longer country wide or global as much and so cannot be a specialized.
This can be a zombie economy, Iv-B businesses were like the roots and branches of trees that grew very finely in the Great Moderation. Now to regrow them from the stumps of their ruins gives businesses which much less leverage. Because of this it costs much more to make jobs, the problem is the velocity of money is low and so more money is needed. Also there are areas between formerly networked businesses that are now stagnant, businesses are no longer country wide or global as much and so cannot be a specialized.
What
one can also see is that the public cost of "normalization", aka the
Trade Off of the new normal is an additional $4.25 trilion in debt over
and above where the previous historic trendline would put total US debt,
just under $12 trillion. Instead total debt is now $16.2 trillion. Oddly enough, this translates to precisely $1,000,000 per job gained or saved from the first (and certainly not last) post-crisis trough: yet
another fact that will not be mentioned in either the mainstream press
or any presidential debate, as sadly trading off record amounts of
public debt for new jobs is the only game left in town for either
party.
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