What Does Cutting-Edge Macroeconomics Tell Us About Economic Policy for the Recovery?
Department of "Huh?!" (Why Oh Why Can't We Have a Better Press Corps?)

Felix Salmon's Hair Is on Fire

Will _Helicopter Ben_ Bernanke Ride to the Rescue? - BusinessWeek.png

Felix Salmon:

Time’s running out for job growt: There’s absolutely nothing to get excited about in the September payrolls report. America has substantially fewer jobs than it did a month ago, in what is meant to be a growing economy. Even the uptick in private-sector employment (+64,000) is pretty pathetic: it’s not enough even to keep up with population growth, let alone to make a dent in the unemployment rate, which stays at 9.6%.

Meanwhile, as the school year begins, we have this:

Employment in local government decreased by 76,000 in September with job losses in both education and noneducation.

As states and municipalities around the nation start running out of money, they’re going to fire people; this is only the beginning. And if October is any indication, the job losses in the local government sector are going to be at least as big as the job gains in the private sector. No wonder the number of discouraged workers is up a whopping 71 percent even from the grim days of September 2009:

Among the marginally attached, there were 1.2 million discouraged workers in September, an increase of 503,000 from a year earlier. Discouraged workers are persons not currently looking for work because they believe no jobs are available for them.

The U.S. does not have the luxury of waiting indefinitely for job growth to resume. Already we’re at the absolute limit: any longer, and most of the unemployed will be long-term unemployed and, to a first approximation, unemployable. This country simply can’t afford an unemployable underclass of the long-term unemployed — not morally, not economically, and not fiscally, either.

One of the puzzles of the Obama administration that I have absolutely no read on is the reappointment of Ben Bernanke. When Obama reappointed Ben Bernanke I was sure--and I had reason to be sure--that the Ben Bernanke they were reappointing was the academic I knew well, "Helicopter Ben," the intellectual advocate of much more aggressive policy responses to the collapse of the real-estate bubble in Japan in the 1990s.

Obama would, after all, have to be a complete idiot to appoint somebody who did not view the world the way Ben-Bernanke-the-academic had viewed it in the late 1990s, and who had not assured him that he did still view the world the way he had viewed it in the 1990s.

So huh?! What happened?

Even if we do get quantitative easing the day after the election, it will be at 1/4 the scale we need and a full year late.