Your Deficit Feathers At Work

Government finances are in a parlous state. The 12-month running budget deficit has grown to an astonishing 1.5 trillion dollars, a number so large in the normal context of "money" that it makes dollar signs entirely meaningless. We might as well call them chicken feathers dropping from madly twirling helicopters.

All Data: US Treasury

Treasury Deficit Reaches 1.5 Trillion Feathers

This monstrous deficit has not come about so much because of a shortfall in receipts; rather, it is outlays that are ramping up - vertically. Since September 2007 annual receipts are down 15.5%, but outlays are up by 34.6%. The result is a chart that looks like a snake with its jaws spread wide open to accommodate its oversized lunch (that's us).

The Deficit Snake

Deficit as a percentage of revenue is now at a record 70%, double the previous high reached in 1983.

Where is the extra spending going? In just the 11 months of the current 2009 fiscal year (it ends in September) outlays have increased by 512 billion versus the same period last year. The major spending increases from 2008 are shown in the chart below:

Where The Extra "Feathers" Went

The Treasury's Troubled Assets Relief Program (TARP i.e. direct bailouts for the financial sector) is by far the largest user of extra feathers at a massive 175 billion and accounts for a full 1/3 of the additional spending. By comparison, spending on all other economic recovery programs increased by less than half that. Interestingly, spending on education dropped by 10 billion.

I truly do not see how we will ever climb out of this deficit hole, without seriously reforming fiscal policy. Where are the massive initiatives to transform the U.S. into a localized green economy? Where are the incentives to use less imported oil and to rely on wind, solar, geothermal instead? Where are the subsidies to overhaul the antiquated electricity grid?

Why are we spending tax money to promote buying new cars without requiring them to be low or zero emissions? Why are we providing 8,000 feathers at a pop for houses, but don't insist they are highly energy efficient and have solar roofs installed?

Why is Mr. Obama's government so stubbornly insistent on following the old Bush/Bernake/Paulson agenda? Where's the outside-the-box thinking? The president is perilously close to wasting his entire political goodwill on a mild reform of the health system, while at the same time feathering the nest of a corrupt financial sector.

Taxpayers are in danger of becoming plucked chickens with nothing to show for it..

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P.S. A reader mentioned containerships yesterday and I realized I forgot to include data for them in the previous post about sea cargo. Such ships carry mostly finished goods and their charter rates are, thus, a gauge of consumer demand for imported goods. Here is a relevant chart:

Chart: VHSS

HAX Index

For vessels capable of carrying 2,000 - 2,300 TEU (a typical modern containership), daily charter rates have plunged from $12.5/day/TEU in the middle of 2007 to $2.50/day/TEU right now. For a 2,000 TEU vessel, this translates to its charter rates going from $25,000/day to $5,000/day. Importantly, the length of the average charter has gone down to a mere six months versus 3+ years. Both measures are the worst in at least 10 years.

Lost At Sea

A curious thing happened on the way to the market. While global share prices lift and float, nicely above the lows registered last March, something else entirely is happening at sea.

First, global share prices.

• The MSCI World Index of developed countries' stock markets is up a torrid 63% from the low reached some seven months ago, when even perma-bulls had turned into a bunch of chicken-littles. Since the sky did not, in fact, fall (quite predictably after the gushers of liquidity unleashed by central banks) prices rebounded. Shares have now regained three-quarters of the ground lost in the vertical plunge of September 2008 - March 2009 (see chart below- click to enlarge).

Data: MSCI Barra

MSCI World Share Index

Judging by share prices as discounting/predictive mechanisms, therefore, the global economy must be on its way to a significant rebound. But what about indicators based on more tangible assets that are less prone to emotional volatility and manipulation?

Thus, to sea..

• Merchant ship charter rates had exhibited a similar pattern of collapse and recovery until this past June, when they peaked and rolled over. For example, Capesize bulk carriers (the largest dry cargo ships that cannot usually sail through Suez or Panama and must go around the Capes) are now being spot-chartered at $22,000/day versus $90,000/day just three months ago - and a far, far cry from the king's ransom of $230,000/day in spring-summer of 2008 (see chart below - click to enlarge).
  

Chart: Dryships

Ship Charter Rates

Such huge vessels (upwards of ~170,000 dwt) carry widely used bulk commodities such as iron ore and coal in very large quantities; there is a direct correlation between how much it costs to ship them and global economic activity. For example, if China's steelmakers are ramping up production more ore and coal are shipped from Australia and charter rates go up. The economics of sea transportation being what they are, spot charter rates can be extremely volatile, while the price of ships themselves are also strongly affected.

Are we to deduce that lower rates for Capesizes mean that global economic activity is once again ebbing? It's not so easy. The erstwhile credit/asset bubble also produced a huge number of newbuilding orders for cargo ships. Loans were so plentiful, cheap and easy to obtain (e.g. no personal guarantees from the shipowners) that many non-traditional players entered the shipping market. Lots and lots of speculators unfamiliar with marine economics plunked down their money, leveraged it to the hilt and went to sea. Innocents before the mast, alas.. (obviously, the financiers who put it all together were not so unfamiliar, or innocent).

The following chart of scheduled newbuilding deliveries speaks for itself (click to enlarge):

Chart: Lorentzen & Stemoco

Scheduled Deliveries of New Dry Bulk Carriers

Unless sizeable order cancellations come in (some are occurring) there are going to be many more ships afloat by the middle of 2010 than can find gainful employment at rates covering both operating and financing costs. Following is a more detailed breakdown of pending newbuilding orders:

Chart: Barry Rogliano Salles

With charter rates so far below the record-breaking levels seen last year, prices for the ships themselves have also plunged (see chart below, click to enlarge). A typical 5-year old 172,000 dwt Capesize now goes for 65% less than just a year ago.

Chart: Barry Rogliano Salles

And if charter rates and second-hand prices for dry bulk cargo vessels stabilized and even came up a bit, oil tankers are in deep trouble. Very large crude carriers (VLCCs) are barely breaking even, or losing money.

Chart: Barry Rogliano Salles

Predictably enough, prices for second-hand tankers are still falling.

Chart: Barry Rogliano Salles

Lost at sea, thus, are many tens of billions of monies that were invested (gambled, really) with the prospect of an everlasting economic boom. A boom fuelled entirely by ludicrously easy credit and China's siren song.

There is a conclusion to be drawn here for the broader economy, one that goes well beyond the seemingly isolated case of charter rates and vessel prices. The global economy post-2000 rested almost entirely on an asset-credit bubble; it produced a vast excess of speculative assets which cannot now be gainfully employed in the real economy, since the artificial demand of the bubble itself has been stripped out. This goes not only for ships but also for homes, office towers and hotels in Las Vegas, Miami, London, Shanghai and Dubai. It goes for manufacturing plants in Shenzhen and shipbuilding yards in Guangzhou and all over Korea.

What the credit bubble created, the credit collapse has rendered useless; the real economy always exacts its revenge upon those last left holding the leverage bag. Trading sardines, indeed.

Food Stamps At Record

The number of people on food stamps reached a record 35.1 million in June 2009, up 21% from last year and +33% from the end of 2006. That's almost 12% of the entire population of the United States, the highest percentage since the food stamp program began in 1969.

Data: USDA

People On Food Stamps At Record High

As part of Obama's fiscal stimulus plan, benefits have been raised significantly. The average participant now receives $133 per month, up from $101 last year; the cost of the program presently annualizes to $56 billion vs. $34 billion last year and $30 billion in 2007.

Words vs. Deeds

Watch what I'm doing, not what I'm saying.. This common sense advice is very timely right now, since there is a world of difference between what the Federal Reserve is saying and what it is actually doing.

Mr. Bernanke said yesterday that the economy is recovering and that the financial system has bounced back. But, at the same time, the Fed made clear it will keep interest rates near zero for a long time and will purchase the entire $1.25 trillion of agency mortgage-backed bonds, just as it had originally planned.

Zero rates and massive quantitative easing, but "the economy is bouncing back"? The discrepancy between words and deeds is obvious to the naked eye. What gives?

Well, the truth of the matter is that with real GDP shrinking at -4.9% from a year ago and unemployment at 9.7% (the broader U-6 is at 17%) the real economy is not recovering.

Fed Funds and Real GDP

Oh sure enough, the rate of decline has moderated and we will likely see a bounce in GDP figures due to inventory adjustments and some improvement in gross domestic investment after the savage cuts during the last two years (down 33%). But when it comes to consumer spending, which accounts for a massive 70% of the economy, things are not likely to be improving much any time soon (remember unemployment..).

And that's why Mr. Bernanke's deeds are so much different from his words, or should I say his attempts at cheerleading..

Stuffing Sam

In financial market parlance "getting stuffed" is being left with a losing position in a trade because the counterparty to the transaction claims to not recognize it (also known as DK, or Don't Know). It's equivalent to someone dropping their trash on your doorstep and walking away, claiming it's not theirs.

So with mortgages. Who do you think is left holding the bag of the toxic mortgages? Why, you and me and our collective Uncle Sam, of course. Between the end of 2005 and the first quarter of 2009 mortgages increased by $2.5 trillion to a total of $14.6 trillion (see chart below, click to enlarge).

Data: FRB

Owners Of Mortgages In The USA

Out of that $2.5 trillion increase, $1.65 trillion or 65% was accounted by mortgage pools or trusts issued and backed by Government Sponsored Enterprises (GSEs) like Fannie Mae, Freddie Mac and Ginnie Mae (mostly by the first two), plus some direct ownership of loans by the same agencies. Fannie Mae pools grew by 40%, Freddie Mac by 38% and Ginnie Mae by 67% (the latter accounts for a small portion of the total mortgage pie, however).

The following chart gives the breakdown in the 1Q2009; a massive 41% of all mortgages outstanding are now directly owned or guaranteed by Uncle Sam, since Fannie and Freddie have been placed into federal conservatorship.

The Government Owns and/or Guarantees 41% of All Mortgages

In other words, Sam - i.e. all of us - is getting "stuffed". Why? Because mortgage delinquencies are soaring along with unemployment (see chart below).

Delinquencies And Unemployment

In the last chart there is an interesting divergence: between 2001 and 2003 unemployment rose from 3.9% to 6.3% but mortgage delinquencies actually fell - and kept falling even further after that. That was due to Greenspan's slashing rates to create the real estate bubble, now bursting so spectacularly. Could it be that we are in for a long period of "pent-up" mortgage defaults, above and beyond what would be normally correlated with unemployment?

Are we going to be "getting stuffed" for years to come?

Healthcare Reform: Pour Epater Les Bourgeois

Something occurred to me yesterday: The current hubbub about healthcare is acting as a beautifully nasty red herring to confuse and befuddle voters, when the real issue should be radical financial system reform. Like the French would say: Healthcare reform? C'est pour epater les bourgeois, andouille (tr. It's to shock the middle class, dummy!).

It's the old conjurer's trick: get the masses all riled up about a minor tweaking in healthcare estimated to cost $1 trillion over ten years, while the banking lobby is quietly laughing as they prepare to cash their government-sponsored bonus checks, secure in their knowledge that nothing has changed. All thanks to a deluge of $13-14 trillion of public money in one year alone.

Hoot, hoot y'all, are we maybe chasing the wrong fox? Have a nice week ahead.

Helathcare Reform As Seen By A Banker

Please don't let me be misunderstood: I am all for Mr. Obama's healthcare reform plan as a first baby step towards meaningful change. But it is puzzling how much political capital he has to expend in order to get it passed, to the apparent detriment of the much tougher fight with the bank lobby.

More Taxes, Anyone?

Postscript on Danish government debt added at the end.
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Since the subject has been taxes for two posts running...

Four decades of unbridled voodoonomics like Friedman's old "the only social responsibility of business is to increase its profits" and more recent neo-liberal screeds, have turned Americans into "Just Say No's" when it comes to taxes.

For them, the following facts about Denmark:

• Denmark has the rich world's (OECD-18) second-highest total taxation burden at 48.8% of GDP (USA at #17 at 29.6%).
• It probably has the highest environmental and energy taxes of any country.
• There are taxes on drinking water and the disposal of waste water.
• Every company pays waste disposal charges and households are charged for garbage collection.
• Packaging is taxed.
• Danes pay 25% VAT (Value-Added Tax) on all goods and services.

...and yet...

• Forbes magazine - you know, the Capitalist Tool - just rated Denmark as the #1 country in the world for business. For the second year in a row.
• Economist magazine just did the same and added that this is to be so for another five years.
• Danes are #1 in life satisfaction (USA #11).
• Since 1980 Danish GDP has grown 70% while total energy consumption has remained flat.
  

Obviously, low taxes don't make for an enviable economy and it follows that lowering taxes does not make for infallible public policy, as Bush II and his incompetent gang proclaimed.

Now, no one enjoys paying taxes, and I'm sure Danes don't, either. But if tax revenues are demonstrably used for the greater benefit of the entire society - as apparently they are in Denmark - people will pay them with a great sense of civic duty and pride.

So, let's come to America. How can anyone justify the immense expenditure of public money to support the continued existence of a financial system that is based on little more than gambling? Unlike the Danes, what are Americans to expect for their $13 trillion in direct bailouts and guarantees to the likes of AIG? A better living standard, less pollution, increased energy security, better health and social security services? Hardly.

Instead, we are comforted to know that Goldie, Morgan et. al. are on track to pay record-breaking bonuses this year. Sorry, but this is insane.

Here's a suggestion: any bonus in the financial sector over, say $50,000, to be taxed at 95%. Confiscatory, you say? Are we kidding? Recipients of such bonuses should be ecstatic to keep 5% of any such money they got, since it came directly from the public, or was made possible only because of public guarantees.

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PS: A reader mentioned Danish debt. According to Eurostat, Danish government debt at the end of 1996 stood at 69.2% of GDP, whereas at the end of 2008 at 33.3%.

Social Security Receipts Down 5.5%

I draw your attention to the blog's new masthead quotation. Unlike previous ones, which often dated from centuries and even millennia ago, this one is brand-spanking new, coming as it does from Paul Volcker, in my opinion the Fed's most respected and successful chairman ever (though he wasn't even made a KBE..). His speech, here.
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Today's entry is in response to a request made by a Seeking Alpha reader (this blog is cross-posted there) who wanted to know how FICA tax receipts are doing. To those who do not have the pleasure of knowledge by way of pay-check deduction, FICA is the Federal Insurance Contributions Act tax, i.e. the Social Security payroll tax which funds pensions, disability insurance and Medicare.

Here is the relevant chart (click to enlarge):

Social Security Income

Data: Social Security Administration

Income is now officially estimated to be flat (+0.6%) for the fiscal year 2009 ended September 30, 2009, but down -5.5% from what was originally budgeted. This may not sound like a lot, but please keep in mind that the income cut-off point for the application of such tax was raised for FY 2009 from $102,000/yr to $106,800/yr, an increase of +4.7% This action alone should have raised FICA receipts considerably, all other things being equal.

But all other things are not equal, are they..?

Treasury Receipts Down 15%

How's the economy doing? There is a huge raft of statistical data to choose from, but how about this one: U.S. Treasury receipts from all sources. It stands to reason that they are a pretty good indicator of overall economic activity since they include income and corporate taxes, customs and excise duties, etc.

The chart below shows a 12-month running total (blue line) and the percent change from the year before (red line); they are down 15% for the period ended in August 2009. That's not to say that nominal GDP is down 15% - don't forget the increase in government spending (which piles on even more debt, of course) and the artificial boost to numbers from the shrinking trade deficit. But what this chart is ultimately saying is that, when it comes to the private side of the economy, then yes, it is more or less down 15% from a year ago.

Data: US Treasury

12 Month Treasury Receipts down 15%

Another interesting observation has to do with the 2001-02 recession: as this chart indicates, it was not exactly mild. Treasury receipts went down around 13% because of the dotcom bust and 9/11, prompting Mr. Greenspan to respond with the disastrous monetary policy which eventually produced the massive credit and real estate bubbles.

It's The Economy, Stupid!

Today's subject: a bird's-eye view of the US economy (it's a big economy, so the bird sees a lot and the post is, necessarily, quite long).

• Comparing the pre-recession economy in 2006 with 2Q2009, the country's GDP is made up as follows (all numbers in current dollars):

Data: BEA

From this perspective, the major - in fact, the only - negative development in the economy is a plunge (-33%) in gross private investment, i.e. spending on plant, equipment and services by the country's businesses plus investment in residential property (i.e. homes). Personal consumption held up well, government spending rose significantly and net exports became a much smaller negative factor, as the trade deficit shrunk fast (but this is no cause for macro economists to celebrate since it came about due to (a) lower imported crude oil prices and (b) fewer imports of consumer goods).

• The next chart breaks down the economy in sectors, percentage-wise:

While personal consumption is still around 70% of GDP, private investment has been slashed and is now only 11% of GDP vs. 17.4% three years ago. Simply put, businesses and individuals are investing much less: in dollar terms, during the second quarter of 2009 they spent $800 billion fewer dollars than in 2006 (annualized figures). Government has taken up part of the slack, but the single biggest "positive" change between 2006 and 2009 has come from net exports, which are now a smaller negative by a whole 3.34 percentage points. Again, this is basically a "mirage" positive development and translates to no tangible gain for the day-to-day lives of working Americans, no matter what the macro GDP numbers may say.

Let's pause here.

From the above, we see that what has happened so far in this "crisis" is this: businesses and individuals slashed investment by an enormous amount, causing overall GDP to drop sharply and very fast. In round figures, a 33% decline in private investment - which made up 17% of GDP - produced a 6% decline in GDP. This was partially counterbalanced by government spending (Keynesian intervention) and by the large accounting entry of a shrinking trade deficit. Personal consumption, by far the largest component of GDP, was largely unaffected. That's where we are right now - the completion of Phase A, as it were.

But what is the future direction of the economy? In my view we are about to enter Phase B, one that will be shaped by the current rapid increase in unemployment and the resulting pull-back in personal consumption.

• U-6 is the measure of unemployment that includes those marginally attached to the economy, discouraged workers and those working part-time because they can't find full-time work. It has shot up to 17%, more than one in six Americans in the workforce. Notice how the difference between U-6 and U-3 (the commonly cited figure for unemployment) has widened out from 2.5% to 7.5%, meaning that actual conditions in the job market are much tougher than U-3 alone indicates and certainly tougher than during other recessions.

• This difficult situation is finally hitting personal spending: look at the chart of payrolls and personal consumption below. Spending has only turned negative in the beginning of 2009 but it is, understandably, well correlated with shrinking payrolls.
  

Personal Consumption Expenditures and Payrolls Are Tightly Correlated

Remember, personal consumption is the Holy Grail of the economy - it makes up 70% of GDP - so even a slight drop in personal spending translates into a large decline in headline GDP. Let's look closer at this Holy Grail..

• Personal consumption is made up of Services (68%), Non-Durable Goods (22%) and Durable Goods (10%), (see chart below, click to enlarge). Not surprisingly, durable goods have taken it on the chin: cars, furniture, appliances - but that's only 10% of overall spending. Non-durable goods, things like clothing and food, are also down but significantly less, whereas spending on services is still growing, albeit at a much slower pace.
  

PCE and It's Components

Such consumer services make up nearly 50% of the economy (68% of 70%) and this sector is still growing, at around 1% per year. It makes sense, if we consider how people react to economic difficulties: they immediately stop big purchases like cars and appliances (the credit crisis is at play here, too), then smaller ones like unneeded clothing, cosmetics, etc. and finally slow down on things like vacations, movies and dining out. Health care is, obviously, going to be cut last.

So, for Phase B this is the crux of the matter: what is going to happen to consumer services?

Again, we need to drill down on the data, where services are broken down into:

Housing services: 28%
Health services: 24%
Financial services: 12%
Food services: 9%
Recreation services: 9%
Transportation services: 4%
Other services: 14%

Housing and financial services (taken together, 40% of total services) are connected through the mortgage and home equity loan links. No great prospects there for the foreseeable future. Health services make up a massive 24%, a proportion that has more than doubled since 1960 (see chart below, click to enlarge). As I pointed out in previous posts, I see this sector as having reached a peak and likely to deteriorate as an engine of growth - the Obama plan is an obvious warning flag.

Breakdown Of The Consumer Services Sector

Thus, two thirds of the consumer services sector of the economy (remember, this is 50% of GDP) is going to be facing headwinds. Let's see what growth looks like in each of the service sectors (see chart below, click to enlarge).

Consumer Services Sectors, Y-O-Y Growth

There are only three service sectors that are, in fact, still growing, though at lower rates than previously: Health, Housing and Other. I can't predict anything about the catch-all "other", but health and housing are obvious targets for negative developments in the near future, as I already discussed.

Everything else that matters in the private sector of the economy is already in negative territory and all that remains is Health, Housing and Other services, together making up a massive 33% of GDP. And that's the rub, isn't it...? The economy is hanging by a very thin thread, indeed.

Can the other sectors of the economy make up for the present and upcoming decline in personal spending on goods and services? Let's see..

• Private investment: are businesses going to go on an investment spree soon? Highly unlikely - with unemployment rising and demand for all goods and services slackening businesses are going to be playing defence for a long time to come. And quite obviously individuals are not going to be buying new houses in great numbers, either.
  
• Exports: unless the dollar slides very, very substantially exports are not going to be a driver for the real economy. Yes, the trade deficit may shrink further due to a drop in imports and thus affect GDP accounting, but that doesn't change things.
  
• Government spending: This is the wild card- or joker, if you prefer. A massive Keynesian intervention is always a possibility, theoretically. But, in the real world... with what money? The government is already facing a $1+ trillion dollar budget deficit this year, having foolishly spent a boatload of money on ill-considered bailouts. Can it keep borrowing even more from the Chinese, et. al.? I don't think so..

Bottom line: We are now entering Phase B of the recession (it is better described as a depression, with a small "d"). We are likely to see sustainable declines in personal consumption for several quarters, since unemployment is high and still rising, crimping earned income. I very much doubt that banks will go on a lending spree to households to support spending - in fact, I believe they can't, given the atrocious shape of their balance sheets.

After the current transition period in GDP figures, which is characterized by a stabilization in business spending and inventories, I am looking for a series of quarters of -2% to -3% GDP declines, almost all of it from consecutive declines in consumer spending, particularly in services.

Once again, I note that all figures are nominal, i.e. not inflation adjusted.

Without Further Comment

As an addition to yesterday's post on healthcare spending and related jobs in the United States, I offer the charts below. No further comment from me.

• Obesity.
  

Data: OECD Health Data

Note: BMI: Body Mass Index = weight in kg/height in meters squared. For example, if you are 1.85 meters tall and weigh 110 kg ----> BMI = 110/1.85/1.85 = 32.14

• Public expenditure on health as a percentage of total expenditure on health.

• Spending-adjusted index for Potential Years of Life Lost (PYLL) for males age 0-69, all causes.

The index is constructed by multiplying the number of potential years of life lost from all causes for males 0-69 years old (PYLL), by healthcare spending as a percentage of GDP and then dividing by 1,000. PYLL is in years per 100,000 individuals and is considered a measure of premature mortality. My indexing it to healthcare spending is designed to give a more comprehensive "bang-for buck" measure than the infant mortality chart in the previous post.

Healthcare Jobs

My last post finished with a question: Where are the new jobs going to come from?

A reader (Juanita de Talmas) commented that, after the dotcom and real estate bubbles failed to generate jobs in a sustainable fashion, healthcare is likely to implode next. I find this an intriguing subject and today - Labor Day in the U.S. - I will look more into it, also taking into account that a devoted follower of this blog (Thai) is in healthcare and frequently provides valuable insights.

The original question is modified thus: Can healthcare provide the additional jobs needed for an economic recovery?

First, as always, some data in chart form.

• Job creation in healthcare significantly outpaced overall employment for many years and is still going strong. In August, when overall non-farm payrolls were down -4.3% from last year, healthcare jobs grew by +2.3%.

• This divergence in job creation has been happening for many years. Today, more than one in ten working Americans is employed in the healthcare services field, up from one in thirteen fifteen years ago (* see note below the fold for healthcare manufacturing jobs).
  

• It's no secret why this is so: spending on medical care has exploded in the last 25 years, and now accounts for a whopping 20% of personal consumption expenditures and 14% of GDP.

• The United States spends far more on health than any other nation in the world. According to the World Bank, it spends 15.4% of GDP when Switzerland spends 11.5%, Canada 9.8% and - surprise, surprise - Sweden 9.1% and Denmark 8.6%, both presumed "nanny states".
  

Data: World Bank

• But what are we getting in return, what is the bang for our buck? Pretty terrible, I'm afraid. As an example, take infant mortality (deaths of infants under one year old per 1,000 livebirths) and multiply by the above spending as a percentage of GDP. The result is the chart below - and by this measure alone we are a sad laggard in healthcare efficiency.

Data: World Bank

The answer to the jobs question becomes pretty straightforward, therefore: No, healthcare cannot generate many millions of new jobs because it is already overstretched and inefficient, most likely crowding out other essential spending, e.g. investment on energy and transportation infrastructure.

Are there any signs that the consumption of scarce economic resources for healthcare services will stop growing unchecked? Well, of course: Obama's healthcare reform plans are, by design, geared towards avoiding the wholesale collapse of American household finances, particularly since the baby boom generation is "greying" fast. Despite cries of "where are we going to get the money?" the ultimate objective, I believe, is to spend less overall, not more.

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*This total does not include related fields in manufacturing, such as pharmaceuticals and medical equipment makers (a combined 586,000 jobs in July). There is an interesting fact: such healthcare manufacturing jobs have not been growing at anywhere near the pace of healthcare services jobs. In fact, those two sectors combined now employ 2.7% fewer workers than last year. No manufacturing sector is immune from relentless Chinese outsourcing, even much vaunted healthcare.

Tangential Inferences

August marked the 20th month in a row of job losses in the US, bringing the total to 7 million fewer people at work since January 2008 (data from BLS).

Non-Farm Payrolls

According to the Green Shoot Brigade (Bernanke, Dow Jones, et. al.), however, the economy is on the mend.

Uhhh.. based on what data, exactly? That (dJ/dt), the slope of the curve above, is becoming very, very slightly less negative?

Ok then, I have a question: where are the new jobs going to come from?