Sunday, August 2, 2009

handouts

It finally made it into mainstream media that people’s extended unemployment benefits are running out. Estimates are 500,000 will run out by the end of September and 1.5 million by the end of the year. In about half the states you can receive benefits averaging $300 per week for as much as 79 weeks. This is the longest since the Depression and if real numbers were used the rate of unemployed would be Depression level as well. Democrats are planning to extend benefits this fall by another 13 weeks but thousands whose benefits have expired will become homeless by then.
The Republican talking point on this is that people don’t look for work until 3 weeks before their free handouts run out. They ignore the hundreds that stand in line for every minimum wage opening and a real job will bring 10,000 applications. College grads are not finding work and are moving back home with no idea how to make their student loan and credit card payments.

These conditions are even worse in states without extended benefits because they are losing service jobs at an accelerated rate since even more people have no money to spend. Ross Perot said "you can’t have an economy by giving each other haircuts"; he was right of course and now the barbers are being laid off too.

The closest Obama has come to doing anything about this is to ask China to expand their domestic market and to export less. China does have a 15% domestic growth rate but the only thing slowing exports to the US is that factories in China are no longer giving big box stores in the US easy credit and some won’t accept payment in Dollars.

Inventories are nearing record lows, if China were to cut us off, we would very quickly have empty store shelves. Germany is still the largest exporter of manufactured goods and has kept their factories going through this down turn. We could go to them hat in hand and ask for foreign aid. Most Germans don’t remember the bombing and some might remember the Marshal plan, of course we would still have to ration for years while we rebuilt our factories. This assumes we don’t drag them down with us. What’s the German word for handout?

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