Given that the Fed’s first mission is to delay, confuse, hope, and otherwise attempt to buy time while engaging in wishful thinking along the way, that Bernanke is willing to admit this may be a jobless recovery is a sign that things will likely be at least that bad. In other words, prepare for a job loss recovery.
This should not come as a surprise to readers of this blog. However, when it comes to jobs, most, including president Obama have been expecting far too much from various stimulus packages.
Please consider Fed Chairman Sees Possibility Of ‘Jobless’ Recovery: Shelby
Federal Reserve Chairman Ben Bernanke sees the possibility of continued high unemployment even after the recession eases, a key Republican lawmaker who met with the Fed chief told CNBC.
“It was a rather sobering meeting,” Sen. Richard Shelby, an Alabama Republican, said in a live interview. “I said…’Could this be a jobless recovery?’…and he said it could be,” Shelby said.
Bernanke has predicted the recession will end this year, with many economists forecasting that the economy will start to grow again as soon as the current July-September quarter.
But Bernanke’s comment that unemployment could remain high for some time appeared to be more pessimistic than any of his recent public statements.
Maria’s interview with Shelby was quite lame until the end with a discussion of taxes and business incentives for small businesses. Shelby “I can tell you I’m voting against taxes because we need people to keep their money”.
Fundamentally Obama is doing the wrong thing when it comes to real job creation. The Administration’s programs are for the most part makeshift work that will do nothing but waste taxpayer money.
The problem is that small businesses face rising taxes (an incentive not to hire) and at the same time the world is awash in overcapacity and shrinking profit margins. The latter is a huge point that neither Shelby nor Maria seemed to realize.
Rising taxes on top of rampant overcapacity is a toxic brew that points to a jobless recovery at best. It is telling that Bernanke is willing to openly admit the possibility.
Mike “Mish” Shedlock
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